Amazon.com reported holiday-quarter revenue and profit that exceeded expectations, as the world’s biggest online retailer shortened delivery times and drew more shoppers to its loyalty club Prime.

Fourth-quarter net sales increased 21% to $87.4 billion in the fourth quarter, compared with $72.4 billion in fourth quarter 2018. Excluding the $120 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 21% compared with fourth quarter 2018.

Operating income increased to $3.9 billion in the fourth quarter, compared with operating income of $3.8 billion in fourth quarter 2018.

Net income increased to $3.3 billion in the fourth quarter, or $6.47 per diluted share, compared with net income of $3.0 billion, or $6.04 per diluted share, in fourth quarter 2018.

Amazon is spending to fend off rivals. In e-commerce, the company is rolling out next-day delivery, up from its previous two-day offering, to fight intensified competition from Walmart Inc. and other retailers. Walmart has marketed two-day shipping without subscription fees.

The company has said it added more than 250,000 full and part-time seasonal positions to fulfill holiday orders, which brought its global headcount to 750,000.

Its Amazon Logistics unit delivered more than 3.5 billion boxes globally in 2019.

The Amazon Web Services cloud business is building new data centers and hiring engineers in response to steady gains by Microsoft and a renewed customer push from Google. Meanwhile, Amazon continues to plow money into overseas markets such as India and Brazil.

Paid members of Amazon’s Prime subscription, which offers free fast shipping and other perks, topped 150 million, the company said. That was up from about 100 million in 2018.

“Prime membership continues to get better for customers year after year. And customers are responding — more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” said Jeff Bezos, Amazon founder and CEO. “We’ve made Prime delivery faster — the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year. Members now have free two-hour grocery delivery from Amazon Fresh and Whole Foods Market in more than 2,000 U.S. cities and towns. Prime members watched double the hours of original movies and TV shows on Prime Video this quarter compared to last year, and Amazon Originals received a record 88 nominations and 26 wins at major awards shows. A huge thank you to teams across Amazon for their dedicated work to build, innovate, and deliver for customers this holiday.”

First Quarter 2020 Guidance

• Net sales are expected to be between $69.0 billion and $73.0 billion, or to grow between 16% and 22% compared with first quarter 2019. This guidance anticipates a favorable impact of approximately 5 basis points from foreign exchange rates.
• Operating income is expected to be between $3.0 billion and $4.2 billion, compared with $4.4 billion in first quarter 2019. This guidance includes approximately $800 million lower depreciation expense due to an increase in the estimated useful life of our servers beginning on January 1, 2020.