Amazon on Thursday reported quarterly sales and profit ahead of expectations, projecting confidence in its cloud business despite a clampdown in customers’ spending and touting how its aggressive cost cuts were starting to pay off.
Shares rose 8% in extended trading, also bolstered by a forecast for second-quarter results roughly in line with investors’ targets.
Addressing ongoing worries about the economy, CEO Andy Jassy has aimed to slash spending across Amazon’s vast array of businesses.
Last month, he said Amazon would cut more jobs, now from its long-profitable cloud and advertising divisions, expanding the company’s layoffs since November to 27,000 employees, or 9% of its roughly 300,000-strong corporate staff. Full and part-time headcount in the just-ended first quarter dropped 10% from a year earlier to about 1.47 million employees, reflecting in part attrition in warehouse staff.
Amazon likewise has ended entire services, including on Wednesday when it said it would pull its lineup of Halo health trackers and refund recent purchases.
In the middle of such cost cuts, Amazon has sought new revenue. Brian Olsavsky, its chief financial officer, told reporters that the economy had brightened internationally at the same time as Amazon increased its ad sales.
Regarding international sales, he said: “It’s good to see inflation going down there. It’s good to see consumer confidence increasing.”
In North America, he said, demand had held up, even though “you see signs that customers are looking for value” and “probably putting off some discretionary purchases.”
Ultimately, the online retailer reported better-than-expected sales of $127.36 billion in the first three months of the year, and it forecast revenue between $127 billion and $133 billion in the second quarter. Amazon’s net profit stood at $3.17 billion in the quarter ended March 31, compared with a loss of $3.84 billion, a year earlier.
Andrew Lipsman, an analyst with Insider Intelligence, said the company had done what it needed to reassure investors.
“Amazon’s stronger-than-expected performance for its key profit centers of AWS and advertising indicate that the enterprise and the digital ad sectors may be turning the corner,” he said.
Amazon’s outlook has long been intertwined with the fortunes of its cloud-computing division, Amazon Web Services. The growth of AWS slowed to 15.8% in the first quarter, while recession-wary businesses scrutinized their spending.
Still, Olsavsky said, Amazon had seen no shift in the competitive balance among cloud providers. His comments followed a financial report by Microsoft this week that exceeded analysts’ expectations as the Amazon rival drew business through AI.
“We like the fundamentals we are seeing in AWS and believe there is much growth ahead,” Jassy added in a statement.
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