Amazon beats analysts' expectations after cost-cutting measures
Amazon has been saving money by delaying, cancelling, and subleasing warehouse projects across the country.
Amazon.com Inc., (Nasdaq AMZN), which suffered its biggest yearly loss in its history as a publicly traded company in 2022 has begun its fiscal year with a profit.
Seattle's tech giant, which reported $127.4 Billion in revenue for its first quarter fiscal 2023, not only beat analyst estimates but also posted a profit of almost $3.2 Billion. It reported a $3.8 billion loss for the same period last year.
In a press release issued on Thursday, Amazon CEO Andy Jassy stated that "there's much to be pleased about the way our teams deliver for customers in an uncertain economy." Our Stores division is improving the cost of serving in our fulfillment network, while increasing the speed at which we deliver products to customers. We expect to reach our fastest Prime delivery rates ever in 2023.
Over the last year, the company has cut costs by delaying or cancelling warehouse projects in various parts of the country. Jassy also stopped the expansion of physical stores in the stores sector over the last quarter.
Jassy, along with his senior leadership, have focused the entire company on cost-cutting over the last year. This culminated on Wednesday, when a round of layoffs involving 9,000 employees was completed. The layoffs were particularly hard on the cloud teams at Amazon Web Services.
Globally, the company employs 1.47 million people, a 10% drop from last year.
Amazon's growth is being boosted by AWS and advertising. The e-commerce division of Amazon still brings in more revenue than the other divisions, but the growth rate has flattened or even shown signs of decline. Sales were $51.1 billion just a little bit lower than last year.
Amazon's cloud-based and advertising businesses have raised concerns, but they are not unique to Amazon. Google, Microsoft, and Amazon are seeing slower growth in cloud and advertising as the economy is affecting customer demand.
There is still growth among high-margin segments. AWS's revenue reached $21.4 billion, with a profit $5.12 billion.
Jassy mentioned that it uses generative AI in its cloud division, to boost growth and future customer demand.
He said, "We are impressed with the fundamentals of AWS and we believe that there is much growth to come."