Amazon reported first-quarter revenue that beat analysts’ estimates based on cloud revenue growth

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Amazon reported financial results for its first quarter ended March 31, 2023 that beat analysts′ expectations in terms of revenue and earnings.

Led by Andy Jassy, Amazon easily beat revenue expectations when it reported that first-quarter sales rose 9% to $127 billion, far exceeding analysts’ forecasts of $125 billion, according to Refinitiv. Shares of Amazon rose 10% in after-hours trading before settling back down.

Excluding the $2.4 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 11% compared with first quarter 2022 with North America segment sales increased 11% year-over-year to $76.9 billion.

International segment sales increased 1% to $29.1 billion while AWS segment sales increased 16% year-over-year to $21.4 billion.

Operating income increased to $4.8 billion, compared with $3.7 billion in first quarter 2022 and includes approximately $0.5 billion of charges related to estimated severance costs.

North America segment operating income was $0.9 billion, compared with operating loss of $1.6 billion in first quarter 2022 and international segment operating loss was $1.2 billion, compared with operating loss of $1.3 billion in first quarter 2022.

AWS segment operating income was $5.1 billion, compared with operating income of $6.5 billion.

The company’s total operating margin was 3.7%, the best result in the last six quarters, and roughly in line with what Wall Street also expects for Walmart’s first quarter.

Net income was $3.2 billion Q1 2023, or $0.31 per diluted share, compared with net loss of $3.8 billion, or $0.38 per diluted share, in first quarter 2022.

First quarter 2023 net income includes a pre-tax valuation loss of $0.5 billion included in non-operating expense from the common stock investment in Rivian Automotive, Inc., compared to a pre-tax valuation loss of $7.6 billion from the investment in first quarter 2022.

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The company’s enterprise value is just over 11 times projected EBITDA for the next 12 months, roughly in line with competitors like Target and Walmart. Five years ago, it was well above those two.

There’s a lot to like about how our teams are delivering for customers, particularly amidst an uncertain economy,” said Andy Jassy, Amazon CEO.

“Our Stores business is continuing to improve the cost to serve in our fulfillment network while increasing the speed with which we get products into the hands of customers (we expect to have our fastest Prime delivery speeds ever in 2023).

Our Advertising business continues to deliver robust growth, largely due to our ongoing machine learning investments that help customers see relevant information when they engage with us, which in turn delivers unusually strong results for brands.

And, while our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritize building long-term customer relationships both by helping customers save money and enabling them to more easily leverage technologies like Large Language Models and Generative AI with our uniquely cost-effective machine learning chips (“Trainium” and “Inferentia”), managed Large Language Models (“Bedrock”), and AI code companion CodeWhisperer. We like the fundamentals we’re seeing in AWS, and believe there’s much growth ahead.”

Second Quarter 2023 Guidance

Net sales are expected to be between $127.0 billion and $133.0 billion, or to grow between 5% and 10% compared with second quarter 2022. This guidance anticipates an unfavorable impact of approximately 30 basis points from foreign exchange rates.

Operating income is expected to be between $2.0 billion and $5.5 billion, compared with $3.3 billion in second quarter 2022.
This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.