Amazon Posts $3.2B in Profit as Q1 Earnings Beat Estimates

Amazon has released its earnings report for the first quarter of 2023. The company has turned its fortunes around, increasing revenue and posting a profit.

These results were announced by company CEO Andy Jassy in an earnings call with investors earlier today. The results, which have so far exceeded expectations, were largely attributed to the e-tailer’s cost-cutting measures.

Amazon Flips Green Compared to Last Quarter

Retail consumer giant Amazon generated $3.2 billion in net income compared to its $3.8 billion loss in the first quarter of 2022. Given this, Amazon’s fully diluted share stands at $0.31 per share, compared to the $0.38 it had in the same period in 2022.

The e-tailer’s net sales increased 9% to $127.4 billion compared to $116.4 billion in the same period. Amazon’s North American sales volume surged 11% year-over-year to $76.9 billion, while its international sales only managed to post 1% to $29.6 billion.

$AMZN's earnings beat yesterday came with a warning for reduced spending.

CFRA Research's Arun Sundaram discusses investors' concerns around economic headwinds: pic.twitter.com/h8NoESMf1e

— Yahoo Finance (@YahooFinance) April 28, 2023

Like always, its AWS division was one of the shining lights in the company’s otherwise dark economic climate. The Amazon Web Services segment saw a 16% increase in sales to $21.4 billion in year-over-year (YoY) changes.

Amazon’s turn-around quarter has been largely due to savvy business practices and major cost-cutting measures instituted by current CEO Andy Jassy.

Highlighted in its earnings report, Amazon saw an operating loss of $0.9 billion in its North American market compared to the $1.6 billion loss it suffered in the same region a year ago.

The Seattle-based e-commerce behemoth also shaved off $100 million in operating loss in its international segment after it cut its operational expenses from $1.3 billion last quarter to $1.2 billion this period.

To crown it all, the company generated an operating income of $5.1 billion from its AWS division which helped offset most of those losses.

Elsewhere, Amazon stated that its operating cash flow increased 38% to $54.3 billion for the last twelve trailing months compared to $39.3 billion in the same period.

The online retailer’s free cash flow improved to an outflow of $3.3 billion, compared to $18.6 billion for the last twelve months.

Speaking on the e-tailer’s performance, CEO Andy Jassy noted that the company is still optimizing its delivery timeframe, with its Prime deliveries set for their fastest ever this year.

I have been an @amazon Prime member for 16 years. The late deliveries have made it useless. Time to cancel Prime.

— Tevaron Elson (@OttoPlane) April 22, 2023

The company’s stock price jumped 11% after the company’s earnings call. At press time, the AMZN stock price is trading at $105.6, down -3.77% in the last 24 hours.

The asset is slightly below its 200-day moving average (MA) price of $106.53, which reflects a bearish market sentiment overall.

Jassy also spoke on its Amazon ads business experiencing robust growth, which has played a key role in the e-commerce giant’s growth despite an uncertain economic climate.

For 7 years it looked like Amazon ads was following the growth curve of Facebook ads, which started five years earlier. It started to slip behind now. pic.twitter.com/mktXzcG73B

— Juozas Kaziukėnas (@juokaz) April 28, 2023

According to him, the company’s ads business has been able to thrive largely due to the company’s ongoing investment in machine learning technologies.

Layoffs and Investments Helping Amazon Profit

Amazon’s recent earnings report might have surprised many, but it was not achieved without some sacrifices. In order to reduce costs and increase revenues, Amazon fired 18,000 employees in January.

The company has also announced it plans to dismiss more personnel by the end of April.

Despite this wave of layoffs, Amazon has continued to expand its business use case and invested in the fast-growing artificial intelligence (AI) market.

According to the company, it is developing its Large Language Models (LLMs) and Generative AI using cost-effective machine learning chips ‘Trainium’ and ‘Inferentia’ via its AI concept Bedrock and AI code companion CodeWhisperer.

Given the expansive nature of the AI landscape, Amazon is looking to use this new-fangled technology to significantly boost its customer relationship in a hyper-competitive marketplace.

Meanwhile, the AI market is one of many sectors Amazon is targeting. The retail giant has also made several key acquisitions in the healthcare industry.

One such is One Medical which offers 24/7 virtual medical care services for preventive and everyday healthcare treatment.

As part of its strategy to stay competitive, it has also set its sights on the Malaysian and Australian markets for its AWS business.

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