Amazon just announced astronomical profits, exceeded sales expectations and provided upbeat guidance. Since the release of its fourth quarter 2020 results report, the corporation has produced its largest earnings beat. On Thursday, August 3 the stock increased during extended trading.
What did Amazon Say About Financial Reports for its Second Quarter?
On August 3, 2023, Amazon surpassed analysts’ expectations for second-quarter profits and provided a forecast that suggests accelerated revenue growth. Over 10% of the stock increased during extended trading.
- EPS: 65 cents versus the 35 cents anticipated, according to Refinitiv’s survey of analysts.
- Revenue: Revenue came in at $134.4 billion versus the $131.5 billion analysts surveyed by Refinitiv projected.
Wall Street is also keeping an eye on the following important report numbers:
- Web Series: Revenue for Amazon Web Services was $22.1 billion compared to $21.8 billion.
- Advertisement: Advertising brought in $10.7 billion versus $10.4 billion in revenue.
Since its fourth-quarter 2020 earnings announcement, Amazon’s biggest earnings surprise was this one. The massive profit shows that CEO Andy Jassy’s relentless cost-cutting initiatives are starting to pay off.
You can check out the below tweet shared by Amazon for their financial results.
— Amazon News (@amazonnews) August 3, 2023
Since late fall, Amazon has started the largest round of layoffs in company history, eliminating 27,000 positions. The world’s largest online retailer stopped hiring for corporate positions and Jassy has been trying to reduce costs across the board.
At the end of the second quarter, there were 1.46 million people worldwide, a 4% decrease from the previous year. Amazon anticipates sales of between $138 billion and $143 billion for the third quarter or growth of between 9% and 13%.
Analysts predicted a $138.25 billion revenue. The forecast reflects the success of Amazon’s July 48-hour Prime Day sale, which the firm dubbed its biggest ever. After seeing single-digit growth for five of the previous six quarters, Amazon has now seen double-digit growth.
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What did Jassy Say About AWS Growth & Profit?
Jassy, who succeeded founder Jeff Bezos in July 2021, credited AWS which had previously been experiencing clients slowing their spending due to economic uncertainties for some of the improvement. Jassy said in a statement:
“Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment.”
Sales at AWS increased 12% in the second quarter to $22.1 billion, exceeding the Wall Street forecast of $21.8 billion. Even yet, that is a slowdown from the previous quarter, when sales rose 16% and the worst growth since Amazon started separating out cloud revenue in 2015.
70% of Amazon’s $7.7 billion operational profit came from AWS. Following a loss of $2 billion or 20 cents per share, the business declared a net income of $6.7 billion or 65 cents per share. The company’s investment in Rivian, a maker of electric vehicles was devalued which led to a loss from the prior year.
Along with Apple’s report, Amazon’s announcement brings to a close the earnings season for the mega-cap tech firms. Apple’s performance which was fueled by the services sector exceeded Wall Street projections for both earnings and revenue.
While much of the large-cap tech group’s growth is still below historical norms, earnings are starting to improve after a challenging 2022 and cost-cutting initiatives are boosting profitability. Amazon is also concentrating on artificial intelligence much like its competitors.
In its earnings release, Amazon mentioned Royal Philips, 3M, Old Mutual and HSBC as some of the companies using AI solutions from AWS. Amazon’s advertising business is still rising with quarterly revenue increasing by 22% to $10.7 billion. Facebook’s ad revenue increased 12% while Google’s only increased by 3.2% during the second quarter.
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