A rendering of the next phase of Amazon's HQ construction
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02/03/2021

Amazon Details Monster Q4 & Previews HQ2

Lisa Johnston
Managing Editor
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Amazon reported yet another record-breaking quarter and shared images for its second headquarters, both of which were somewhat overshadowed by the news that founder and CEO Jeff Bezos would be transitioning to executive chair.

The retailer recorded net sales increases of 44% to $125.6 billion in the fourth quarter. Operating income grew to $6.9 billion, up from the prior-year's $3.9 billion, and net income rose to $7.2 billion in the fourth quarter, up from last year's $3.3 billion.

Results were driven by a later-than-usual Prime Day, held in October rather than the traditional July. The company also experienced strong seasonal holiday demand, and the quarter largely reflects the continuation of demand trends it’s seen since the early months of the pandemic, said Brian Olsavsky, chief financial officer, in an earnings call.

For the full year, net sales grew 38% to $386.1 billion, while operating income increased to $22.9 billion and net income increase to $21.3 billion.

Company executives provided some insight into the performance of its grocery efforts, with Dave Fildes, director of investor relations, describing the Go Grocery stores as being off to a good start. He noted there has been a lot of interest in the self-checkout technology that both the Go and Amazon Fresh stores offer.

“I think [consumers] appreciate that not just in times of maybe not wanting to have physical contact with everyone in the store, but just even beyond that — the general convenience of being able to move throughout the store and check out more efficiently than you otherwise would in a traditional retail environment,” said Fildes. “So excited to do more on that front.”  

In discussing the news of Bezos’ new role, Olsavsky reiterated on the call that although he was stepping down, Bezos would continue to play an active role in the company. He will involved in the decision-making of the larger, “one-way-door issues,” such as acquisitions and entering markets.

Andy Jassy, currently CEO of Amazon’s AWS business, will take over as Amazon CEO. Jassy has been with the company since 1997, and Olsavsky described him as both a strong operator and visionary leader.

“Andy has a chance to put his imprint on Amazon. He is certainly going to carry through the culture and the vision and the invention factory that Amazon is and will take that to the next level,” he added.

Noting the sheer size of the company, Neil Saunders, managing director of retail at GlobalData, didn’t expect a big change in its direction based on this news. “Although it is Jeff’s baby, it has not been run by just one person for many, many years,” he said to RIS. “Amazon’s culture is very well established and Andy Jassy has been around a long time and is a true Amazonian. Operationally, Amazon will continue to thrive, and Bezos will have more time to innovative and move the company forward.”

Given Jassy’s background with AWS — one of the most profitable segments of the company and with strong growth potential — “the appointment underlines the fact that Amazon is more than a retailer; it is also a technology and data company,” Saunders added.

Josh Perkins, field CTO at cloud solutions and service provider AHEAD, echoed this, saying the even further solidifies the value of the role that AWS plays in the broader pan-Amazon strategy.

“It is crucial to its operations and the future of its revenue-generation potential. AWS was born out of Amazon's own needs and its commercialization was market-defining. The move makes sense in that Andy's track record is well-aligned to Jeff's vision and unflinching commitment to innovation as the focus for the future of the company that he founded," he said.

In the short term, Jassy’s biggest challenges will be keeping the business running while keeping staff protected from the pandemic, said Saunders. “The biggest long-term issue for Jassy is dealing with any potential antitrust investigations. These appear more likely, and Amazon will need to work hard to defend itself against the often illogical nature of antitrust regulations.”

Amazon HQ2

Amazon also shared details on the design for the second phase of its upcoming headquarters in Arlington, VA, which is expected to create 25,000 jobs and pump $2.5 billion into Arlington over the next decade.

Submitted as proposed development plans, the new construction of is designed to meld nature and sustainable working environments for its associates. “PenPlace” will encompass 2.8 million square feet of new office space distributed across three 22-story LEED Platinum buildings.

Employee workspaces will promotes well-being and physical exercise, as well connection with the local community. The ability for employees to choose when, how, and where to work will also be promoted.

The project includes an all-electric central heating and cooling system that will run on 100% renewable energy from a solar farm located in South Virginia.

Much like its Seattle HQ opens its “Spheres” to the public, “The Helix” will also be feature public tours several weekends a month. There will also be 2.5-plus acres accessible for public use, as well an amphitheater to accommodate outdoor concerts, farmers’ markets, and movies.

Other plans include retail pavilions, restaurants, a childcare center, dog run, bike and walking paths, a food truck area and a 20,000-square-foot community space for educational initiatives.

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