(AMZN 1.49%) reported fourth-quarter and full-year 2018 results after the market close on Thursday.

As it did in the first three quarters of the year, the e-commerce and cloud computing giant once again beat Wall Street's earnings expectation. It also slightly exceeded the Street's revenue consensus estimate. 

Shares declined 4.9% in after-hours trading on Thursday. We can attribute the market's reaction to first-quarter 2019 revenue guidance coming in lighter than Wall Street was expecting, along with concerns about the company's plans -- shared on the earnings call -- to increase spending on investments in 2019 relative to 2018.  

Here's an overview of Amazon's quarter, along with its guidance for the first quarter of 2019, using five metrics.

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1. Revenue jumped 20%

Amazon's net quarterly sales increased 20% year over year to $72.38 billion, exceeding the $71.87 billion Wall Street consensus estimate and coming in at the high end of the company's guidance range of $66.5 billion to $72.5 billion. Excluding the $801 million loss from foreign exchange, revenue grew 21%.  

Revenue growth slowed considerably this quarter after beginning to slow last quarter, when it increased 29% year over year. This is largely because this quarter Amazon fully lost its revenue bump from its Whole Foods acquisition, as it bought the organic grocer in the third quarter of 2017.

Here's how segment growth broke out:


Revenue Q4 2018

Change (YOY)

North America

$44.12 billion



$20.83 billion


Amazon Web Services (AWS)

$7.43 billion



$72.38 billion


Data source: Amazon. YOY=year over year.

AWS's revenue continued to grow at a breakneck pace. Its revenue growth isn't accelerating anymore, as it was for several quarters through to Q2 2018, but it's also not decelerating, as it did last quarter. In constant currency, the cloud computing service's revenue has increased year over year as follows: 46% in Q4 2018, 46% in Q3 2018, 49% in Q2 2018, 48% in Q1 2018, 44% in Q4 2017, and 42% in Q3 2017.

Check out the latest Amazon earnings call transcript.

Breaking out revenue another way:

  • Online retail sales grew 13% year over year as reported, and 14% in constant currency, to $39.82 billion.
  • Physical-store sales declined 3% on both a reported and constant currency basis to $4.40 billion. 
  • Third-party seller commission and fulfillment fees rose 27% as reported, and 28% in constant currency, to $13.38 billion. 
  • Subscription services (Prime and other) jumped 25% as reported, and 26% in constant currency, to $3.96 billion. Year-over-year growth slowed considerably from the previous three quarters because in 2018 the company changed the way it accounted for subscription revenue. This change resulted in some revenue that in the past would be booked in Q4 being pushed into the prior three quarters. 
  • AWS sales surged 45% as reported, and 46% in constant currency, to $7.43 billion.
  • Other sales, which include advertising revenue, rocketed 95% as reported, and 97% in constant currency, to $3.39 billion. 

2. Operating income soared 78%

Operating income increased 78% year over year to $3.79 billion, comfortably exceeding Amazon's guidance of $2.1 billion to $3.6 billion. As has been the story all year, increased efficiencies in North America and AWS drove the growth in operating income.


Operating Income Q4 2018

Change (YOY)

North America

$2.25 billion



($642 million)

Loss narrowed by 30.1%


$2.18 billion



$3.79 billion


Data source: Amazon. YOY=year over year.

The quarter's big story had to be AWS' scorching 61% year-over-year growth in operating income, followed by the North America segment's quite solid growth in operating income, driven by a strong holiday quarter. 

AWS continues to get more profitable on a year-over-year basis. Its operating margin (operating income divided by revenue) was 29.3% in the quarter, up from 26.5% in the year-ago period, though down slightly from 31.1% in the third quarter.

3. Adjusted EPS rocketed 180% 

Net income increased 63% to $3.03 billion. On a per-share basis, earnings per share (EPS) leaped 61% to $6.04, up from $3.75 in the year-ago period. 

The fourth quarter of 2017 included a provisional tax benefit of approximately $789 million associated with U.S. tax reform. Excluding this benefit, EPS nearly tripled, up from $2.16 in the year-ago quarter. Adjusted EPS comfortably beat the $5.67 that Wall Street was looking for.

4. Operating cash flow surged 67% over the trailing-12-month period

Operating cash flow rose 67% year over year to $30.7 billion for the trailing 12 months. Free cash flow more than doubled to $19.4 billion, from $8.3 billion.

5. Revenue growth of 10% to 18% is expected in Q1 2019

For the first quarter of 2019, Amazon guided for net sales of $56 billion to $60 billion, representing growth of 10% to 18% year over year. The high end of this range falls a little short of the $60.96 billion Wall Street was projecting, which was probably the main reason for the market sending shares of Amazon down in after-hours trading on Thursday evening. 

The company expects operating income of $2.3 billion to $3.3 billion, representing growth of 21% to 74% year over year. 

The bottom line

In short, Amazon turned in a strong quarter.

Its first-quarter 2019 revenue and operating income outlook ranges are both quite wide. There's a huge difference between year-over-year revenue growth of 10% with operating growth of 18% (the low end of both ranges) and year-over-year revenue growth of 18% with operating income growth of 74%. Given that Amazon tends to issue conservative guidance, it seems more likely than not that investors can probably expect the first quarter of 2019 to be at least quite solid, perhaps even robust.