Taylor Soper
2023-08-03 16:07:39
www.geekwire.com
Amazon shares were up more than 7% in after-hours trading Thursday after the Seattle tech giant topped analyst expectations for both profits and revenue.
Amazon reported $134.4 billion in first quarter revenue, up 11% year-over-year. Net income was $0.65 per share, or $6.7 billion.
Wall Street analysts expected revenue of $131.5 billion and earnings of 35 cents a share.
Operating income came in at $7.7 billion, up from $3.3 billion in the year-ago quarter and well above the high end of analyst estimates and the company’s guidance.
Amazon’s cloud computing business reported revenue of $22.1 billion, up 12% from the year-ago period, but down from a growth rate of 33% a year earlier, part of a trend of slowing growth in the market-leading public cloud platform during the past year.
Microsoft and Google both posted strong cloud results in their earnings reports last week, benefitting in part from early interest in infrastructure and services to help corporate customers develop generative AI applications.
Amazon made a series of generative AI announcements at an AWS event in New York last week, including new and updated pre-trained large language models to power AI applications.
Amazon Prime Day took place after the quarter ended and isn’t reflected in this week’s report.
Amazon’s stock is up more than 50% this year.
Here’s a breakdown of Amazon’s financials for the second quarter.
Online stores: Revenue was up 4% year-over-year at $52.9 billion.
Amazon Web Services: Amazon’s cloud business was up 12% at $22.1 billion, with $5.3 billion in operating income, which was down 6% year-over-year. AWS reported $21.3 billion in revenue in Q1, which was up 16% year-over-year, and 33% growth in the year-ago quarter.
Advertising: Along with AWS, advertising is one of Amazon’s higher-margin businesses. Advertising brought in $10.6 billion in revenue in the quarter, up 22% over a year ago. That compares to a 23% growth rate in Q1, and 21% growth in the year-ago quarter. “Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment,” Amazon CEO Andy Jassy said in an earnings press release statement.
Third-party seller services: Amazon has been expanding services and products for third-party merchants in recent years. Revenue from third-party seller services was up 18% to $32.3 billion.
Shipping costs: Amazon on Monday announced a new milestone for delivery speeds after overhauling its U.S. operations to put more items closer to customers. Amazon spent $20.4 billion on shipping in Q2, up 6%.
Physical stores: The category, which includes Whole Foods and Amazon Go stores, posted revenue of $5 billion, up 6%.
Headcount: Amazon now employs 1.46 million people, down 4% year-over-year. That figure does not include seasonal and contract workers.
Prime: Subscription services revenue, which includes Prime memberships, came in at $9.8 billion, up 14%.
Guidance: The company forecasts Q3 sales of $138 billion to $143 billion. Operating income for the third quarter is expected to range between $5.5 billion and $8.5 billion.