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Thursday June 13, 2024

Amazon beats earnings expectations in Q1 with help from cloud and ads units

Amazon's net income was approximately $1 billion more than analysts had predicted

By Web Desk
April 28, 2023
Amazon beats earnings expectations in Q1 with help from cloud and ads units. AFP/File
Amazon beats earnings expectations in Q1 with help from cloud and ads units. AFP/File

Amazon reported strong earnings for the first quarter of this year, with its cloud and advertising units helping the company beat expectations despite cautious spending from shoppers and businesses. 

The company's shares surged more than 10% following the release of the earnings report, which revealed a profit of $3.2 billion on revenue of $127.4 billion, a 9% increase from the previous year. This net income was approximately $1 billion more than analysts had predicted.

Insider Intelligence principal analyst Andrew Lipsman commented that "for the first time in several quarters, Amazon may finally have a bit of wind at its back," and Amazon CEO Andy Jassy praised his team's performance, particularly during a period of economic uncertainty. Jassy also spoke about the company's continuing efforts to improve its fulfillment network's cost to serve while increasing delivery speed.

However, Amazon did warn that customers remained watchful of their budgets, leading to a slight dip in share prices below the day's closing price. In March, Jassy announced a plan to cut 9,000 more jobs from Amazon's workforce, following the 18,000 layoffs that took place in January. Jassy said that these layoffs were necessary as the company seeks to downsize after years of hiring, particularly during the pandemic when online shopping became more popular.

Amazon's "Robin" robotic system, which uses computer vision and AI to help workers sort and handle packages, handled over a billion packages during the quarter. Amazon's AWS cloud computing unit also saw revenue rise by 16% to $21.4 billion, but costs affected operating income, which came to $5.1 billion, down from $6.5 billion in the same quarter of the previous year.

The report also noted the strong performance of Microsoft's cloud and AI offerings, which more than offset drops in revenue from licensing Windows software. Google parent Alphabet reported that its cloud computing business turned a profit for the first time since it began reporting separate figures for that unit.

Despite these positive earnings reports, media reports suggested that Google's release of its own language-based AI, Bard, has so far disappointed observers and company insiders. Microsoft's ChatGPT, backed by the technology giant, has quickly gained popularity since its release last year, and has been added to Bing search engine and office software.