E-commerce giant Amazon.com inc. returned to double-digit revenue growth and also issued guidance that points to that growth sustaining. The stock rose 8 percent in extended trading.
The company reported revenue of $134.4 billion, compared to estimates of $131.5 billion, while Earnings per Share of $0.65 was well above the estimate of $0.35. This was Amazon's biggest earnings beat since the October-December period of 2020. The profit beat is signs that CEO Andy Jassy's cost-cutting efforts are starting to bear fruit.
Since Jassy took over as CEO two years ago, Amazon has fired 27,000 people, pledged to keep headcount flat for the foreseeable future, scrapped dozens of projects hatched during Jeff Bezos’s tenure and put multiple businesses under review.
Overall revenue for the quarter grew by 11 percent, a number that has been in single digits in five out of the last six quarters. Sales in the online stores category grew by 4 percent from last year to $53 billion.
AWS, Amazon's cloud division, which contributes to majority of the company's operating profit, reported $22.1 billion in revenue, higher than the $21.8 billion projection. While this business grew 12 percent from last year, it was slower than the 16 percent growth in March and the slowest since 2015, when Amazon began reporting the cloud revenue separately.
For the July-September period, Amazon expects sales between $138 billion and $143 billion, which translates into a 9-13 percent growth year-on-year. Analysts projected revenue to be $138.25 billion. The guidance includes the Amazon Prime-Day event in July, which the company called "its biggest-ever."
In its earnings release, Amazon said AI products from AWS are being used by numerous customers, and it named Royal Philips, 3M, Old Mutual and HSBC
Amazon's advertising revenue grew by 22 percent during the quarter, outperforming its peers like Google and Meta, whose respective ad revenues grew by 3.2 percent and 12 percent.
After several difficult quarters in which Amazon had to address overspending and over hiring, it’s back to showing investors a clear path to boost sales and profits at the same time, said Brian Yarbrough, an analyst at Edward D. Jones & Co.
Shares of Amazon rose 8 percent in afterhours trading to reach close to a 52-week high.
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