The company reported a 21.8% increase in pre-tax profits to Â£14.5m for the year to 27 November.
Ocado chief executive Tim Steiner said it had achieved "robust trading" in a challenging environment.
However, the average order size fell 2.7% to Â£108.10 against the backdrop of continuing supermarket price wars.
The rise of German competitors Aldi and Lidl has shaken up the sector, putting pressure on the big four supermarkets, Tesco, Sainsbury's, Asda and Morrisons.
But investors welcomed Ocado's latest results, sending its share price up by more than 7% to 262p in morning trading.
Annual revenues rose 14.8% to Â£1.27bn, and the retailer's customer base grew by almost 14% over the year to 580,000.
However, Ocado said it was still in continued talks with several international retailers in regards to a partnership using the Ocado Smart Platform.
When it released its full-year results in February last year, Ocado said it was in "advanced discussions with multiple potential international partners" for the platform, adding it expected to sign "multiple deals" in the medium term.
Analysts believe agreements with retailers in the US and western Europe are important in driving Ocado's share price.
George Salmon, equity analyst at Hargreaves Lansdown said: "The group has long said it's making progress on deals with third parties, but there hasn't been much in the way of tangible progress recently.
"The appointment of Luke Jensen [from Sainsbury's] as head of Ocado's Smart Platform will raise hopes that the group can finally get someone to sign on the dotted line."
However, Mr Salmon warned that "following Amazon's entry into the market, competitive pressures are rising in its core business".
"In this context, it's arguably more important than ever for the group to get something over the line."
Last year, Morrisons agreed to supply groceries to Amazon customers in the UK under a new deal with the US online giant.
Amazon's entry into the market was seen as escalating competition in the sector.
In August 2016, Morrisons also built on its existing relationship with Ocado expanding its home delivery service nationwide in a new deal with the online grocer.
Ocado said it had "provided the capability and execution for strong growth" in regard to its partnership with Morrisons.

The controversial memo broke the firm’s code of conduct, Google’s chief executive Sundar Pichai said on Monday in an email to employees.
The memo, shared widely at the weekend, suggested there were fewer women at Google due to biological differences.
Mr Pichai said the text crossed the line due to it "advancing harmful gender stereotypes in our workplace”.
Entitled Google’s Ideological Echo Chamber, the paper argued that "the abilities of men and women differ in part due to biological causes and that these differences may explain why we don't see equal representation of women in tech and leadership”.
The author wrote: "We need to stop assuming that gender gaps imply sexism."
Google has not confirmed who the employee is, but media reports name him as James Damore.
"[I was fired for] perpetuating gender stereotypes," he told Reuters.
He also claimed to have received "many personal messages from fellow Googlers expressing their gratitude" for speaking out.
In his note to staff sent on Monday afternoon, Mr Pichai spoke at length about protecting free speech in Google’s ranks, and that "much of what was in that memo is fair to debate, regardless of whether a vast majority of Googlers disagree with it”.
But he added: "To suggest a group of our colleagues have traits that make them less biologically suited to that work is offensive and not OK.
"It is contrary to our basic values and our Code of Conduct, which expects 'each Googler to do their utmost to create a workplace culture that is free of harassment, intimidation, bias and unlawful discrimination’."
The tech firm's new head of diversity, Danielle Brown, had earlier criticised the memo saying it had "advanced incorrect assumptions about gender".
Online grocer Ocado has announced a rise in annual profits, but a long-awaited overseas deal has not yet materialised.
[NEXT_CONCEPT]
A Google employee who wrote a controversial memo about workplace diversity has been fired, the BBC can confirm.