Amazon Just Posted Its Most Profitable Quarter Ever

Amazon Profits

Amazon on Thursday announced record profits in the fourth quarter of 2015 but its share price still fell 13 percent in after hours trading, to $551.50.

The online retailer saw profits of $482 million for the quarter ending December 31, up substantially from the previous year’s $214 million. Amazon’s total sales in the quarter jumped 26 percent from the prior year, to $35.7 billion. That also brought the company’s annual sales total beyond $100 billion for the first time in its history.

And 2015 was exceptionally good for the notoriously unprofitable retailer considering that it was, actually, profitable on the entire year. Its $596 million annual profit was the highest since 2011.

But all that good news fell quite a bit short of what Wall Street expected, thanks largely to high operating costs that rose 20.5 percent. According to Thomson Reuters, the average forecast for Amazon’s fourth quarter profits was $1.56 a share. Instead, it was $1.00 a share.

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Shipping has been one source of rising costs for Amazon, prompting investor interest in the company’s drone delivery vision. Amazon CFO Brian Olsavsky says the retailer’s current shipping partners, which include UPS, FedEx and the U.S. Postal Service, are “just not able to handle all the deliveries our customers are demanding on their own.”

Amazon did say its Prime service continues to be a success, growing by 51% in 2015. And according to CNN, a recent report found that about 46% of U.S. households had at least one Prime member.

Amazon Web Services, the company’s cloud computing product, continued to grow but at a slower pace. Its 2015 sales were up 70 percent from 2014, to $7.9 billion. AWS handles hosting for Netflix, Yelp and Major League Baseball, among others.

Written by Gene Giannotta

Gene Giannotta is a writer based in Washington, D.C. He reports on economic policy, finance and business news.