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Amazon's Earnings Demolish Expectations: 5 Metrics You Should See

By Beth McKenna - Updated Feb 3, 2021 at 9:01AM

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In Q4, the e-commerce titan's business continued to get a boost from the pandemic, but investors are probably anxious about Jeff Bezos stepping down as CEO.

Amazon (AMZN -2.78%) reported powerful fourth-quarter results after the market close on Tuesday.

Shares were little changed during Tuesday's after-hours trading session. We can probably attribute the market's initial less-than-enthusiastic response to two factors. The first is the news that founder Jeff Bezos will transition to the role of executive chair in the third quarter, with Andy Jassy, the head of Amazon Web Services (AWS), becoming CEO. Second, first-quarter 2021 operating income guidance came in lower than many investors were probably expecting based on Wall Street's consensus earnings estimate. 

The fourth-quarter results were stellar, however, and left analysts' expectations in the dust. Management's revenue guidance for the first quarter of 2021 also easily topped the Street's forecast.

Here's an overview of the technology giant's quarter, along with its guidance.

Close-up of an Amazon Prime package traveling on conveyor belt.

Image source: Amazon.

1. Revenue surged 44%

Amazon's net quarterly sales surged 44% year over year to $125.6 billion, speeding by the $119.7 billion Wall Street had expected. The company also easily beat its guidance range of $112 billion to $121 billion. Excluding the boost from foreign-currency exchange, revenue jumped 42%.

The company's year-over-year revenue growth overstates the strength of its underlying performance. That's because its massive annual Prime Day event was held in the fourth quarter this year, rather than in its usual spot in the third quarter, due to the COVID-19 pandemic, as outlined in my earnings preview. Nonetheless, revenue growth is still impressive. 

For context, in the first, second, and third quarters of 2020, Amazon's year-over-year revenue growth was 26%, 40%, and 37%, respectively. 

Here's how revenue broke down by segment:


Q4 2020 Revenue 

Change (YOY)

North America

$75.3 billion



$37.5 billion


Amazon Web Services

$12.7 billion



$125.6 billion


Data source: Amazon. YOY = year over year. 

As expected, Amazon's e-commerce businesses around the world continued to benefit from the pandemic. Consumers are still largely shying away from shopping in brick-and-mortar stores.

For context, in the third quarter, year-over-year revenue growth in its North America, international, and AWS segments was 39%, 37%, and 29%, respectively.

2. Operating income soared 77%

Operating income increased by 77% year over year to $6.9 billion, which crushed Amazon's guidance of $1 billion to $4.5 billion.  


Q4 2020 Operating Income

Change (YOY)

North America

$2.9 billion



$363 million

N/A. Improved from a loss of $617 million in the year-ago period.


$3.6 billion



$6.9 billion


Data source: Amazon. YOY = year over year.

3. EPS more than doubled

Net income rocketed 118% year over year to $7.2 billion. This translated to earnings per share (EPS) also growing by 118%, to $14.09. Wall Street was only expecting EPS of $7.19. 

4. Operating cash flow jumped 72%

Operating cash flow increased by 72% year over year to $66.1 billion for the trailing 12 months. Free cash flow rose 20% over the same period to $31 billion.

5. First-quarter 2021 revenue is expected to grow by 33% to 40%

For Q1, Amazon guided for net sales in the range of $100 billion to $106 billion, which would equate to year-over-year growth of 33% to 40%. That entire range exceeds Wall Street's consensus estimate of $95.5 billion.

The company also expects that its operating income will be between $3.0 billion and $6.5 billion, compared with $4.0 billion in the year-ago period. That range means management thinks operating income could decline by as much as 25% or rise by as much as 63%. This outlook includes about $2 billion in costs related to COVID-19.

Going into the report, Wall Street had been modeling for Q1 EPS growth of 80% year over year. So, we can deduce that the company's operating income guidance is lower than analysts had expected. That said, Amazon has been regularly whipping its operating income guidance, so we can probably assume that its current guidance for this metric is quite conservative. 

In short, Amazon turned in a fantastic quarter -- again.

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