Amazon shares rose 8% in extended trading on Thursday after the e-retailer reported first-quarter revenue that topped analysts’ estimates, bolstered by strength in its cloud and advertising businesses. Profits were stronger than expected, suggesting the company’s recent cost-cutting measures are beginning to pay off.
Here are the key numbers:
- Earnings: 31 cents per share
- Revenue: $127.4 billion vs $124.5 billion expected, according to analysts surveyed by Refinitiv
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Here’s how other key Amazon segments did during the quarter:
- Amazon Web Services: $21.3 billion vs. $21.22 billion expected, according to StreetAccount
- Advertising: $9.5 billion vs. $9.1 billion, according to StreetAccount
It is not immediately clear if the reported earnings are comparable to the Refinitiv analyst estimate of 21 cents per share.
For the second quarter, Amazon said revenue will be $127 billion to $133 billion. Analysts had called for sales of $129.8 billion, according to Refinitiv.
“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,” CEO Andy Jassy said in the earnings statement.
Jassy said that while AWS continues to navigate more cautious spending from cloud customers, he believes “there’s much growth ahead,” pointing to the company’s investments in large language models.
Jassy, who succeeded founder Jeff Bezos at the helm in July 2021, has been aggressively slashing costs at the company as it grapples with slowing sales in its online shopping and cloud computing divisions. Amazon has shuttered several of its more unproven bets, like a telehealth program, a virtual reality tours service, and a fitness wearable, that weren’t growing as quickly as other businesses.
Amazon is also laying off 27,000 employees, the largest job cuts in its 29-year history. Earlier this week, some employees in AWS and human resources were let go, following cuts in advertising and Twitch live streaming.
Amazon shaved its headcount by about 76,000 people to 1.46 million employees as of the end of the end of the first quarter, reflecting in part the recent layoffs, as well as attrition in its warehouses that typically occurs following the peak holiday shopping period.
Revenue increased 9% from $116.4 billion a year earlier. While the figure exceeded expectations, Amazon remains mired in single-digit sales growth coming off its weakest year for expansion in its quarter-century as a public company.
The second-quarter forecast suggests Amazon expects sales to rise between 5% and 10% from the same period a year earlier.
Sales at AWS rose about 16% in the first quarter to $21.35 billion, above the $21.22 billion projected by Wall Street. Still, that’s a deceleration from the previous quarter, when AWS grew 20%. Companies have been trimming their cloud spend in recent months amid a challenging economic environment.
Operating income in the quarter rose to $4.77 billion from $3.67 billion a year earlier. The company is still dependent on AWS for its profitability, as the cloud unit generated operating income of $5.1 billion in the quarter.
Amazon’s advertising unit continues to hum along, with revenue growing 23% year-over-year to $9.51 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 is slowing,” CFO Brian Olsavsky said on a call with reporters.
Prior to the after-hours rally, Amazon shares were up 31% for the year after losing roughly half their value in 2022.
This story is developing. Check back for updates.
