Amazon (AMZN -1.11%) is set to report its fourth-quarter earnings on Feb. 2. The e-commerce giant's revenue has surged ever since the start of the pandemic. Adding the holiday shopping season to an already elevated level of spending on its site may have lifted sales through the roof last quarter. Some analysts expect the company to report quarterly revenue of more than $120 billion.

The remarkable revenue number will likely grab headlines, but it's not going to be the whole story. Here are three important things you will want to look at in Amazon's fourth-quarter earnings report. 

A group of boxes delivered on a porch.

Image source: Getty Images.

Amazon is delivering sales growth 

First, you will want to know the overall revenue figure. Three months ago, Amazon projected that it would generate between $112 billion and $121 billion of revenue in the fourth quarter. The wide range reflects the uncertainty surrounding the pandemic. Given that coronavirus cases have been surging worldwide since Amazon gave its guidance, it would not be surprising if its sales were higher than expected. Shareholders will want to see an increasing proportion of its sales coming from the Amazon Web Services segment, which operates at higher profit margins than the rest of Amazon.

Second, you will want to look at Amazon's reported operating income. Again, Amazon guided investors to a wide range of between $1 billion and $4.5 billion of operating income. Three months ago, Amazon told investors that it expected to spend roughly $4 billion on COVID-19-related costs, constraining its profitability. Additionally, the surge in e-commerce sales during the pandemic may have increased Amazon's fulfillment costs during the holiday quarter. These sources of volatility make this earnings report all the more interesting for shareholders. 

Finally, Amazon will likely update investors on its Prime membership totals. A year ago, the company disclosed that it had over 150 million Prime members. Given that Amazon's popularity has grown further because of the pandemic, member totals have probably ballooned. Subscription services revenue, which includes fees associated with Prime memberships, increased 32.5% year over year in the third quarter and 29.8% in the first nine months of 2020. If Amazon announces it has surpassed the 200 million Prime member milestone, that alone could send the stock higher.

Ready for the holiday rush 

It's impressive that Amazon is handling the substantial surge in customer orders as well as it is. Still, it hasn't been able to deliver packages as quickly and reliably during the pandemic as it did in previous years. Always saying it wants to put the customer experience first, Amazon significantly increased its capital investments in the first nine months of 2020 to $21.9 billion, up from $8.7 billion in the same period of 2019. Most of that spending went towards improving its fulfillment capabilities.

Those investments helped Amazon fulfill the holiday surge in demand with limited hiccups. Perhaps more importantly, it put Amazon in a position to enhance the customer experience far beyond the pandemic. It will be interesting to observe if management discusses enhancements to the Amazon Prime program, such as more availability for one-day and two-day shipping. 

What this could mean for investors  

On average, Wall Street analysts expect Amazon to report revenue of $119.7 billion and earnings per share of $7.19 for the fourth quarter: up 37% and 11% year over year, respectively. But considering the uncertainty created by the pandemic, investors interested in starting a position in Amazon could reduce both upside and downside risk by splitting their purchase in two and buying half of their allocation before the earnings release and the other half afterward.