Amazon reported its fourth quarter earnings Thursday night and the stock went flying thanks, up nearly 14% after-hours.
The stock was up more than 12% Friday.
What has investors so excited?
Amazon turned a profit!
The company reported earnings per share of $0.45, which was a beat on expectations and a big improvement from the $0.95 loss last quarter.
The company's gross margin (Amazon's profits excluding the cost of sales) rose to 29.5% from 26.5% from the same period last year, on net sales of $29.33 billion.
Another factor in the stock spike was Amazon's announcement that it plans to start breaking out the financials of its cloud-computing business, Amazon Web Services, next quarter. AWS powers a lot of the services you use on the web, supporting tiny startups as well as major companies like Netflix. Amazon has dominated the cloud services space in the past, but competitors like Microsoft, IBM, and Google have increasingly been stepping up their game.
Amazon CEO Jeff Bezos has said that he expects AWS to eventually be Amazon's biggest business, and investors look forward to seeing exactly how big it's grown (analysts take the fact that Amazon will start breaking it out at all as a hint that the news is probably good).
Although Amazon didn't list revenues for AWS yet (it's in the "other" category, which reported yearly net revenue of $5.6 billion, up from $3.9 billion last year), the company said on its call that AWS has over 1 million active customers and that it saw usage grow 90% year over year.
Analysts from Credit Suisse also highlighted the company's moderate shipping losses in their post-earnings note, which they say proves that all of Amazon's investments in new fulfillment centers are paying off.
Finally, Amazon pleased analysts and investors with news that its number of Prime subscriptions grew 53% in 2014, on a base of "tens of millions."
"This growth in Prime is perhaps the most bullish indicator we’ve seen for AMZN in years," Macquarie Securities Ben Schachter writes.
Prime is one of the most important parts of Amazon's business, not because of its $99 annual fee, but because members spend more than double what nonmembers do on the site, according to a recent CIRP survey.
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