Amazon, the world’s largest online retailer after Microsoft, Alphabet and Meta, has also published its latest figures. The company income It rose 9 percent to $127.4 billion in the first quarter, beating analysts’ expectations of $124.5 billion.
Amazon continues to roar advertising department, whose revenue increased by 23 percent to 9.51 billion dollars. The cloud business that investors pay special attention to is Amazon Web Services (AWS) had revenue of $21.4 billion, up 16 percent year-over-year — minimally but above market expectations. However, the growth rate still slowed down, as AWS grew by 20 percent in the previous quarter.
Why is AWS so important to the company and investors?
In short, because the company’s profitability depends on it. The cloud unit generated operating profit of $5.1 billion, while group operating profit was $4.8 billion. That is, it is understandable if the market reacts sensitively to any negative news concerning AWS.
The slowdown experienced in AWS is explained by the fact that, in view of the uncertain economic environment, companies have rationalized costs, so they spend less on the cloud. Amazon CFO Brian Olsavsky said,
that they expect a further slowdown for the next period
As expected, customers will continue to evaluate how to optimize their cloud spending in the first quarter in response to difficult economic conditions. We see these optimizations continuing into the second quarter, with April revenue growth rates around 500 basis points lower than what we saw in the first quarter
– said Olsavsky.
This means that the revenue growth rate at AWS in April was about 5 percentage points lower than in the first quarter.
On the positive side, the net profit was $3.2 billion, i.e. a profit of 31 cents per share, in the quarter, compared to a loss of $3.8 billion, i.e. 38 cents per share a year earlier.
Regarding the expectations, the company stated that the sales revenue could be between 127-133 billion dollars, which corresponds to an increase of 5-10 percent. This is roughly in line with what the market expects, as the analyst consensus currently stands at $129.8 billion.
Immediately after the report came out, Amazon’s stock jumped 10 percent after earnings rose more than expected. However, the momentum quickly waned and the paper turned negative as the investor presentation started after the quick report, and Olsavsky detailed the slowdown in AWS. According to the current situation, the paper may open close to $107.5, i.e. 2.1 percent below yesterday’s closing price.
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