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Amazon Sees Sales And Profit Ahead Of Expectations

By Reuters
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Amazon Sees Sales And Profit Ahead Of Expectations

Amazon.com Inc has reported quarterly sales and profit ahead of expectations but said that it was seeing a sharp drop in cloud revenue growth as businesses grappled with an uncertain economy.

April growth rates for Amazon Web Services (AWS) were about 5 percentage points lower than in the first quarter, chief financial officer Brian Olsavsky told analysts on a conference call.

"AWS growth slowing is a signal for investors to take profits," said Dennis Dick, equity trader and market structure analyst at Triple D Trading. "I think [Amazon] is priced for perfection, any signs of slowing growth and the stock likely gets hit."

Cost Cutting Measures

Addressing ongoing worries about the economy, CEO Andy Jassy has aimed to slash spending across Amazon's vast array of divisions.

Last month, he said the company would axe jobs from its lucrative cloud and advertising businesses, expanding Amazon's corporate layoffs since November to 27,000 employees.

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Its full and part-time head count dropped 10% as of the just-ended quarter to about 1.47 million workers, including changes to warehouse staffing.

The company likewise has ended entire services, including on Wednesday when it said it would pull its lineup of Halo health trackers.

In the middle of such cost cuts, Amazon has sought new revenue. Olsavsky told reporters that the economy had brightened internationally at the same time as Amazon increased its ad sales.

Regarding international sales, he said, "It's good to see inflation going down there. It's good to see consumer confidence increasing."

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In North America, he said, demand had held up, even though "you see signs that customers are looking for value" and "probably putting off some discretionary purchases."

Quarterly Highlights

Ultimately, the online retailer reported better-than-expected sales of $127.36 billion (€115.5 billion) in the first three months of the year, and it forecast revenue between $127 billion (€115.2 billion) and $133 billion (€120.6 billion) in the second quarter.

Amazon's outlook has long been intertwined with the fortunes of AWS. The growth of AWS slowed to 15.8% in the first quarter, while recession-wary businesses scrutinised their spending. That is poised to fall further, the company said.

Still, Olsavsky told reporters, Amazon had seen no shift in the competitive balance among cloud providers. His comments followed a financial report by Microsoft Corp this week that exceeded analysts' expectations as the Amazon rival drew business through AI.

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"We like the fundamentals we are seeing in AWS and believe there is much growth ahead," Jassy added in a statement.

Amazon's net profit stood at $3.17 billion (€2.9 billion) in the quarter ended 31 March, compared with a loss of $3.84 billion (€3.5 billion), a year earlier.

News by Reuters, edited by ESM – your source for the latest technology news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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