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Amazon reports $3.5 billion profit for Q4 2021; hikes Prime fee

Amazon has reported its financial performance for the last quarter of 2021, posting an operating income of $3.5 billion. The company also revealed it would increase the cost of its Prime membership.

The online retail giant, into other businesses, has given an account of Q4 2021, and it is a mixed bag at best. The quarter was boosted by gains from its investment in EV startup, Rivian. It was enough to send the share price rising 14 percent in extended trading. This was different for Meta, whose share price went down after reporting less than impressive numbers.

Sales grew by 9.4 percent, at $137 billion. However, it is the first time sales have increased single digits since 2017. Operating income fell noticeably from $6.9 billion to $3.5 billion.

Amazon also reported numbers for its new advertising business, which grew 32 percent year on year, bringing in $9.7 billion during the quarter. This will be the first time the company released revenue from the new business. Before, the unit was reported together with Amazon’s “other” business category. However, the chief financial officer Brian Olsavsky admitted adverts had been the majority of the revenue in the class.

The advertising business has now grown to the third position in the US market, after Google and Facebook. For context, Google brought in $61.2 billion in advert revenue while Facebook earned $32.6 billion.

Cloud business continues to prop Amazon, with revenue rising by 40 percent to $17.8 billion.

Amazon ended the year with 1.608 employees, about a quarter more than the previous year. It paid a lower income tax of $334 million in the quarter, compared to $420 billion in Q4 of 2020.

The company forecasts revenue of “between $112.0 billion and $117.0 billion, or to grow between 3% and 8% compared with first-quarter 2021” for Q1 2022. It expects an operating income between $3.0 billion and $6.0 billion, compared with $8.9 billion in first-quarter 2021.”

Amazon is also expected to finalize its purchase of MGM in 2022, but the deal is awaiting regulatory approval. The former company will $8.45 billion.

CEO Andy Jassy, who took over from founder Jeff Bezos last year, said, “A big thank you to employees across Amazon who overcame another quarter of COVID-related challenges and delivered for customers this holiday season. Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we’ve continued to grow on top of that in 2021, our Retail teammates have effectively operated in peak mode for almost two years…As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron. Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”

Meanwhile, Amazon has indicated it will hike the price of Amazon Prime to $139 per year, the third time in the US that prices jumped. This represents a $20 increase. The monthly subscription also jumped from $12.99 to $14.99. The company said the increase resulted from “the continued expansion of Prime member benefits as well as the rise in wages and transportation costs.”

The new pricing will go into effect for new members on February 18th and on March 25th for existing members.

Prices remain the same for Prime members outside the US. The last time there was an increase was in 2018. The service has more than 200 million subscribers.

Written by HackerVibes

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