Amazon Surpasses Expectations with Strong Quarterly Profit
Amazon has reported a quarterly profit of $6.7 billion, exceeding market expectations. The impressive earnings were driven by robust sales, supported by the company’s annual Prime discount event. Amazon’s CEO, Andy Jassy, expressed satisfaction with the company’s progress, stating that it was another strong quarter for Amazon.
Following the release of the earnings figures, Amazon shares surged more than 7 percent to $138.79 in after-market trades. The tech giant’s net sales revenue increased by 11 percent to $134.4 billion compared to the same quarter last year.
Amazon boasted about its “biggest Prime Day event ever” in July, with global subscribers ordering over 375 million items. Analysts believe that the upturn in Amazon’s commerce business bodes well for the second half of the year and is expected to boost the company’s profitable advertising business.
Andy Lipsman, principal analyst at Insider Intelligence, highlighted the flourishing online sales and their potential impact on Amazon’s advertising services. Jassy also mentioned strong demand for advertising services on Amazon’s platform, which includes “Prime” streaming television and music services.
Amazon’s delivery speeds in the US reached their fastest ever, as the company continues to optimize efficiency and reduce costs at its fulfillment centers. Jassy emphasized their commitment to lowering the cost of service while providing Prime customers with exceptional delivery speeds.
Investors are eagerly awaiting the results of Amazon’s tightened budget and improved efficiency measures. In March, Jassy announced plans to cut an additional 9,000 jobs from the company’s workforce, following the 18,000 layoffs in January. These measures are part of Amazon’s cost-cutting campaign and downsizing efforts after years of significant hiring.
Amazon Web Services (AWS), the company’s cloud computing unit, experienced increased revenue of $22 billion in a year-over-year comparison. However, costs also rose, resulting in an operating income of $5.4 billion, slightly lower than the same period in 2022.
Jassy highlighted AWS’s stable growth as customers transitioned from cost optimization to new workload deployment. Despite this, AWS faces pressure to demonstrate growth as the broader economy recovers and companies invest in cloud-based computing power. Analysts believe that AWS’s leadership position in the cloud, coupled with its generative AI releases, will help maintain its competitive edge.