Amazon.com Inc. AMZN-Q on Thursday reported quarterly sales and profit ahead of expectations, projecting confidence in its cloud business despite a clampdown in customers’ spending and touting how its aggressive cost cuts were starting to pay off.
Shares rose 8 per cent in extended trading, also bolstered by a forecast for second-quarter results roughly in line with investors’ targets.
Addressing continuing worries about the economy, chief executive Andy Jassy has aimed to slash spending across Amazon’s vast array of businesses.
Last month, he said Amazon would cut more jobs, now from its long-profitable cloud and advertising divisions, expanding the company’s layoffs since November to 27,000 employees, or 9 per cent of its roughly 300,000-strong corporate staff. Full- and part-time headcount in the just-ended first quarter dropped 10 per cent from a year earlier to about 1.47 million employees, reflecting in part attrition in warehouse staff.
Amazon likewise has ended entire services, including on Wednesday when it said it would pull its lineup of Halo health trackers and refund recent purchases.
At the same time, it is seeking new revenue in the face of inflation that hurt retail demand in Europe, among other challenges. Beyond higher grocery-delivery fees for U.S. Prime loyalty members, it is offering them an add-on generic-drug subscription and it marketed discounted membership for primary-care services after it closed a deal to buy provider One Medical in February.
The world’s biggest online retailer reported better-than-expected net sales of US$127.36-billion in the first three months of the year and forecast sales between US$127-billion and US$133-billion in the second quarter.
Analysts had expected sales of US$129.83-billion in the quarter ending June 30.
The growth of Amazon Web Services, long a major source of profit, slowed to 15.8 per cent in the first quarter, while recession-wary businesses have slowed their spending.
Net profit stood at US$3.17-billion in the quarter ended March 31, compared with a loss of US$3.84-billion a year earlier.
The surge in Amazon’s shares following its results after the bell added US$125-billion to its stock market value, on top of a US$50-billion increase during Thursday’s regular trading session.