First, Amazon’s Fire Phone tanked. Then, the company pulled its new line of diapers just weeks after they launched, due to design flaws. Investors, ever skeptical of CEO Jeff Bezos’s aggressive emphasis on investments in growth and product innovation, began to lose the faith.
But today’s earnings announcement may bring them back to the Amazon altar, at least until next quarter. During the last three months of 2014, Amazon sales surged 15% year-over-year to $29.3 billion. Moreover, the company posted a profit of $239 million, a major improvement over the prior quarter’s $437 million net loss.
The secret to that holiday season success: Refocusing on the speed and value that Amazon customers prize.
Amazon Prime members and Amazon Web Services customers are at the heart of the shift back to basics. Prime’s subscriber base is growing at 53% globally and 50% in the U.S., and those customers spend more than twice their non-member counterparts. Amazon says it is looking to deliver additional value to Prime members by building additional sortation centers, which shorten delivery times, and extending Christmas delivery cutoff dates.
“We see that Prime members are buying more; that speed of delivery helps,” chief financial officer Thomas Szkutak told investors during today’s call. In addition, he reinforced the company’s emphasis on value: “We need to make sure we have great prices; it’s something we’re very focused on.”
As for AWS, Amazon’s cloud-computing business line, the company is rolling out WorkMail, an email and calendar service that may portend a growing interest in moving up the stack.
“We’re excited overall about our web services offerings. In terms of the future roadmap, we’re not talking about that, you’ll have to stay tuned,” Szkutak said in response to an analyst question about Amazon’s SaaS operations.
WorkMail will cost companies $4 per inbox, a price on par with corporate email offerings from market leaders Google and Microsoft.
Investors welcomed the results, sending Amazon shares up 7% to $311.78 in after-hours trading.