Amazon.com Inc.’s business hit a new level in 2020, and apparently it was enough to convince founder Jeff Bezos it was time to put someone else in charge.
Bezos announced Tuesday afternoon that he will step down as CEO in the third quarter of 2021 and Amazon Web Services head Andy Jassy will take over. In the same release, Bezos revealed that Amazon AMZN, +1.11% sales topped $100 billion in a quarter for the first time and earnings reached a record level for the third consecutive quarter, capping a record-breaking year.
“When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention,” Bezos said in Tuesday’s announcement. “Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”
Bezos will remain as executive chairman of the company when Jassy takes the CEO reins. Jassy has led AWS, Amazon’s cloud-computing startup that became a dominant leader in a category it basically created, since its inception.
For more: How Amazon created AWS and changed technology forever
“Those of us who know Andy are excited to see him take on this greater responsibility,” Chief Financial Officer Brian Olsavsky said in a conference call Tuesday. “He is a visionary leader, a great operator and he understands what makes Amazon such a special innovative company.”
The change at the top is not the first this year for Amazon, with the CEO of Amazon’s e-commerce business, Jeff Wilke, leaving at the beginning of the year and being replaced by Dave Clark. Amazon did not name a new AWS CEO to replace Jassy, with Olsavsky saying “We’ll talk more about that in the future, but for today, it’s about Andy and Jeff Bezos.”
Bezos “will be involved in many large one-way-door issues, as we say, meaning the more important decision things like acquisitions, things like strategies, and going into grocery and other things,” Olsavsky said. “Jeff’s always been involved with that and that’s where we’ll keep his time focused on.”
Bezos said in a letter to employees that he intends “to focus my energies and attention on new products and early initiatives” as executive chairman.
“Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else,” Bezos wrote. “As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring.”
See also: Amazon’s stock performance since its IPO makes the S&P 500 look like a flat line
At the same time as Bezos’s announcement, Amazon reported fourth-quarter revenue of $125.6 billion, trouncing its own forecast and analysts’ expectations. Profit hit a record for the third consecutive quarter, as the trope about Amazon not being a profitable company completely disappeared as it recorded annual earnings of $21.3 billion, nearly double the $11.59 billion in 2019 profit.
Revenue for 2020 rose to $386.1 billion from $280.5 billion, as Amazon’s focus on online sales and rapid delivery as well as its Amazon Web Services cloud-computing offering found wider acceptance as COVID-19 forced consumers to stay home and businesses to support remote workforces.
For the fourth quarter, Amazon reported earnings of $7.2 billion, or $14.09 a share, up from $6.47 a share in the holiday period a year before. Amazon’s revenue total increased 44% from the previous holiday period’s total of $87.44 billion. Analysts on average expected fourth-quarter earnings of $7.20 a share on sales of $119.72 billion, according to FactSet.
Quarters with more than $100 billion in sales are relatively rare for companies not named Walmart Inc. WMT, +1.08%, which has recorded more than $100 billion in quarterly revenue in every period since mid-2010. Tech’s $1-trillion-plus companies are getting there, however, with Apple Inc. AAPL, +0.63% posting its first $100-billion quarter in the same period as Amazon.
Amazon expects to continue putting up $100-billion quarters, guiding for first-quarter sales of $100 billion to $106 billion, up from $75.45 billion in the first quarter of 2019. It is worth noting that executives’ forecasts severely undershot the actual performance amid 2020’s rise — for example, Amazon guided for fourth-quarter sales of $112 billion to $121 billion.
While Amazon’s financial growth, especially in recent years, has led to huge growth in the company’s valuation and importance, Bezos focused on other initiatives in his letter to employees. While Bezos and Amazon have faced criticism for how employees are treated and the company’s effect on the world writ large, the outgoing CEO pointed to efforts he made on those issues.
“As Amazon became large, we decided to use our scale and scope to lead on important social issues. Two high-impact examples: our $15 minimum wage and the Climate Pledge,” he wrote. “In both cases, we staked out leadership positions and then asked others to come along with us. In both cases, it’s working. Other large companies are coming our way. I hope you’re proud of that as well.”
Amazon shares bounced between gains and losses of less than 1% in after-hours trading, after gaining 1.1% in the regular session Tuesday. The stock has gained 68.3% in the past 12 months, as the S&P 500 index SPX, +1.39% has gained 17%.
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