Will Amazon’s Bottom Line Continue Its Rapid Rise?

Though Amazon’s (AMZN) revenue growth is slowing down, it’s continuing to post record earnings.

Sanmit Amin - Author

Feb. 1 2019, Updated 2:55 p.m. ET

uploads///Amazon net income Q

Amazon posted another record profit

Though Amazon’s (AMZN) revenue growth is slowing down, it’s continuing to post record earnings. During the fourth quarter, the tech giant posted net income of $3.0 billion, a 59.3% rise from the corresponding quarter of the previous year.

For the whole year, Amazon made $10.07 billion in net profit, a rapid rise from the $3.0 billion it made in 2017. Rapid growth in lucrative businesses such as Amazon Web Services has helped fuel the company’s earnings growth.

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Can Amazon continue to grow its bottom line at the same clip?

Amazon’s rapid earnings growth in 2018 was also driven by its lower spending on warehouses and infrastructure, unlike in the previous two years. The company expects this spending to resume this year, which could dampen its net income in the short term.

Meanwhile, the company’s shipping costs rose 23% year-over-year to $9.04 billion compared to the 31% growth in its shipping costs in the same quarter of the previous year.

The company has been trying to reduce its dependence on the likes of FedEx and UPS. To that end, Amazon has extended its partnership with Air Transport Services Group by leasing ten more aircraft, adding to its growing fleet.

While Amazon is expected to resume its spending on warehouses and infrastructure this year, its bottom line still has a few tailwinds. The company’s lucrative businesses continue to grow quickly, which has led to the widening of its operating margins, as those businesses represent a higher percentage of the company’s business.


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