Amazon reports $143.3B revenue in Q1, beats market expectations
Amazon's first quarter earnings and revenue have surpassed Wall Street's predictions, largely due to a surge in advertising and cloud computing. The company reported earnings per share of 98 cents, significantly higher than the 83 cents predicted by the London Stock Exchange Group (LSEG). Revenue also exceeded forecasts, reaching $143.3 billion against the projected $142.5 billion during the January-March quarter of 2024.
Amazon Web Services and Advertising revenue also exceed estimates
Amazon Web Services (AWS) and advertising were key contributors to Amazon's impressive Q1 performance. AWS generated a revenue of $25 billion, surpassing the expected $24.5 billion. Advertising revenue also exceeded expectations at $11.8 billion, slightly higher than the forecasted $11.7 billion. These figures have notably piqued Wall Street's interest.
Amazon's operating income skyrockets, boosting bottom line
Amazon's operating income saw a dramatic increase of over 200% to $15.3 billion during Q1, outpacing revenue growth. This significant leap is attributed to the company's effective cost-cutting strategies and focus on efficiency. AWS accounted for 62% of total operating profit, while net income more than tripled to $10.4 billion, or 98 cents a share, up from $3.17 billion or 31 cents a share a year ago.
Amazon forecasts continued profitability growth in Q2
Amazon anticipates continued growth in profitability for Q2, albeit at a slower pace. The company projects its operating income to be between $10 billion and $14 billion, up from $7.7 billion a year earlier. Revenue for the current quarter is estimated to be between $144 billion and $149 billion, indicating growth of 7% to 11%. However, analysts were expecting growth of 12% to $150.1 billion.
Amazon's earnings growth driven by cost-cutting and stabilization
Amazon's earnings growth has been partially driven by widespread cost-cutting, adjustments to its fulfillment operations, and the stabilization of cloud spending. CEO Andy Jassy has enforced more disciplined spending within the company while expanding profitable services like advertising, cloud computing, Prime memberships, and its third-party marketplace. The company has laid off over 27,000 employees since late 2022, with the cuts continuing into 2024.
Amazon's advertising unit and third-party seller services flourish
Amazon's advertising unit saw sales increase by 24%, slightly ahead of consensus estimates. This is the first report since Amazon began running ads in Prime Video, a move analysts predict could generate significant revenue over time. Revenue from third-party seller services, which includes commissions collected by Amazon, fulfillment, shipping fees and other charges, continued to surge. Sales in this unit grew by 16% year over year to $34.5 billion.
