Amazon's mixed Q4: Surpasses EPS targets, revenue miss, outlook light

UPDATED: Amazon will start breaking out AWS results starting with the first quarter earnings report of 2015.

Following a big miss in the third quarter mixed with high expectations for holiday season results, the pressure is reaching a boiling point for Amazon.

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The Internet giant reported a net income of $214 million (statement).

Non-GAAP earnings were 45 cents per share on a revenue of $29.33 billion, up 15 percent annually.

Wall Street was looking for earnings of 17 cents per share on top of revenue of at least $29.68 billion.

Still, Amazon shares rallied by more than eight percent in after-hours trading immediately after the report went live.

For the full year, Amazon posted $88.99 billion in revenue, up 20 percent from $74.45 billion in 2013.

Amazon founder and CEO Jeff Bezos acknowledged some of the question marks -- to some extent -- in the Q4 report, noting in prepared remarks that Amazon "paid billions of dollars for Prime shipping and invested $1.3 billion in Prime Instant Video" last year.

"When we raised the price of Prime membership last year, we were confident that customers would continue to find it the best bargain in the history of shopping," Bezos said. "The data is in and customers agree -- on a base of tens of millions, worldwide paid membership grew 53% last year -- 50% in the U.S. and even a bit faster outside the U.S."

The Seattle-headquartered corporation does not break out sales results for its cloud unit, Amazon Web Services, instead folding it in to the "Other" category with various advertising products.

Domestically, this vertical continues to scale well, posting $1.764 billion in revenue in Q4, up from $1.34 billion in Q3, $1.168 billion in Q2 or $960 million from Q3 2013.

For the first quarter of 2015, Wall Street is expecting Amazon to deliver earnings of 12 cents per share on top of revenue of $23.05 billion.

Amazon responded with a much softer revenue guidance range of $20.9 billion to $22.9 billion.

On a product front, Amazon has already hit the ground running with Wednesday's debut of Amazon WorkMail, a new cloud-based email and calendar service aimed at corporate customers.

Such a platform also takes aim at Google Apps and Microsoft Office 365, among other enterprise software providers.

Nevertheless, there is a good deal of support and room for these competitors on WorkMail. Amazon is promising employees can continue to use "the same email applications they use today" for managing email, contacts, calendars, and book resources.

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For example, WorkMail includes native support for Microsoft Outlook on both Windows and Mac OS X, and it's also ready for integration with existing corporate directories, such as Microsoft Active Directory. Users can sync mailboxes with iOS, Android, Amazon Fire, and Windows Phone devices (using the Microsoft Exchange ActiveSync protocol).

The cloud email service is one of the first debuts from the Seattle-based corporation this year. Some of last year's hits and misses included the cloud-connected personal assistant Echo and the infamous Fire Phone flop.

On the enterprise front, Amazon hosted more than 13,500 attendees from 63 countries at its third annual AWS re:Invent customer and partner conference. At the Las Vegas show, AWS introduced and upgraded a number of products reflecting IT hot trends, from open source to containers.

AWS pushed out over 515 service and feature releases in 2014, up more than 80 percent year-over-year, according to the Q4 report. The cloud service also serves more than one million active customers, with usage growth close to 90 percent year-over-year in the fourth quarter.

UPDATE: Reflecting continuous growth and success in its cloud unit, Amazon will start breaking out AWS results starting with the first quarter earnings report of 2015.

As a result, AWS questions popped up even more frequently than usual during the quarterly shareholders call on Thursday afternoon.

Amazon chief financial officer Tom Szkutak provided few further details in response, only stressing an optimistic outlook for AWS, repeatedly describing it as a "great opportunity."

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