• The upbeat tone, as denoted by the “record-breaking holiday season” language, runs contrary to recessionary fears and their implications on consumer spending in the December quarter. While the tone was positive, Amazon could still miss Dec-18 estimates, as a “record-breaking” season requires only slight y/y growth, compared to analyst expectations of 19% y/y revenue growth.
• Prime membership continues to grow. Amazon indicated today that “tens of millions of people worldwide started Prime free trials or began paid memberships.” We estimate there are ~110M Prime subscribers today; adding “tens of millions” of subs would put Amazon ahead of our expectations. Prime membership adoption is a leading indicator of growth in Amazon’s share of consumer spending.
• Items available for 1-day or faster delivery are growing rapidly. The company indicated that “millions of unique items in the U.S. shipped with Prime FREE Same-Day, Prime FREE One-Day or FREE two-hour delivery with Prime Now.” We believe that the addition of Whole Foods to the Prime Now ecosystem helps Amazon offer “millions of unique items” with same-day delivery.
• As we noted in our Annual Smart Speaker IQ Test, Alexa is maturing beyond the initial music and weather use cases. Amazon indicated that people made 8x as many reminders, set more than 100M timers, asked for 3x as many recipes, and used their voice for shopping 3x more this year compared to last year. Voice is becoming a more versatile and useful interface, as evidenced by users’ behavior.

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