E-commerce giant Amazon beat expectations as it reported a total of $127.4 billion in revenue for the first quarter of the year – a quarter that was characterized by mass layoffs by tech companies and economic downturn in the market. Wall Street estimated Amazon to generate $124.5 billion in revenue for the quarter.
The jump in its revenue amounts to an annual growth of 9%, which is an improvement from the 7% increase and $116.4 billion in the corresponding quarter in the previous year. For the quarter that ended March 31, 2023, the company reported a net income of $3.2 billion (an improvement from the net loss of $3.8 billion it clocked in Q1 2022). Its earnings per share (EPS) amounted to 31 cents per share. Amazon’s shares are currently priced at $109.82. Its sales in North America rose by 11% YoY to $76.8 billion, making up the majority of the behemoth’s net sales.
Amazon’s operating income rose to $4.8 billion for the first quarter of the year, while the operating expenses rose to $122.5 billion. The company added that this includes approximately $0.5 billion of charges related to estimated severance costs. The severance cost comes as the company has been aggressively cutting costs in recent months, including cutting 27000 jobs across business units (including 9000 in corporate roles).
For the second quarter, Amazon expects its revenue to fall between $127-133 billion, which falls in line with analyst estimates of $129.8 billion in sales. For the twelve months ended March 31, 2023, Amazon also generated $21.4 billion in net income.
For the second quarter, Amazon expects its revenue to fall between $127-133 billion, which falls in line with analyst estimates of $129.8 billion in sales.
In terms of specific business units, it was Amazon’s advertising unit that came out shining. The ad segment clocked sales of $9.5 billion, an increase of 21% year-over-year, exceeding analyst expectations of a growth of 15% and revenue of $9.1 billion. “Advertising was a strong growth during the quarter at 23%, and that is continuing to hold up very well in an environment where perhaps the underlying sales of products are slowing,” Amazon CFO Olsavsky said on a call with reporters.
“There’s a lot to like about how our teams are delivering for customers, particularly amidst an uncertain economy,” Amazon CEO Andy Jassy said while announcing the results. “Our Advertising business continues to deliver robust growth, largely due to our ongoing machine learning investments that help customers see relevant information when they engage with us, which in turn delivers unusually strong results for brands.”
The performance of its cloud computing business exceeded analyst estimates as well – sales at Amazon Web Services (AWS) beat Wall Street estimates of $21.22 billion and rose by 16% in Q1 2023 to $21.35 billion. However, this marks a slower rate of growth when compared to the previous quarter, when AWS clocked a growth of 20%. Nonetheless, revenue from AWS represents almost 17% of Amazon’s overall revenue. Its operating income amounted to $5.12 billion, while the operating margin for AWS came at 24%, the narrowest since 2017.
“AWS sales and support teams continue to spend much of their time helping customers optimize AWS spending so they can weather this uncertain economy,” Olsavsky said on the conference call. It also comes as companies are winding down their cloud expenditure in recent months, and rivals like Alphabet, Microsoft, and Alibaba continue to compete with Amazon in the cloud infrastructure market.
