Amazon Q1 Earnings Beat Estimates Despite Layoffs, Shares See 11 Per Cent Gain

Amazon reported that its revenue increased to $127.4 billion, up from $116.4 billion year-on-year.

Amazon CEO Andy Jassy acknowledged that the pandemic had caused shoppers to be more conscious of their spending and return to in-store shopping.

Amazon's shares experienced an increase of more than 11 per cent following the announcement of first-quarter earnings that exceeded industry estimates. Despite the company laying off 27,000 workers and focusing on cutting costs, its revenue increased to $127.4 billion, marking a 9 per cent growth compared to the $116.4 billion reported during the same period last year. Profits also surpassed expectations, with the Seattle-based company reporting $3.17 billion or 31 cents per share, which is higher than the $2.24 billion anticipated by industry analysts.

Amazon's AWS cloud unit, which has maintained its lead in the market for over 15 years, experienced a slower growth of 16 per cent during the first quarter compared to the 37 per cent reported in the previous year. However, the advertising unit's revenue grew 23 per cent year-over-year to $9.51 billion, benefiting from the company's investment in machine learning.

CEO Andy Jassy acknowledged that the pandemic had caused shoppers to be more conscious of their spending and return to in-store shopping. This led to no growth in Amazon's online retail business, and the company has since cancelled some warehouse expansion plans, laid off workers in various departments, and paused construction on the second phase of its headquarters in northern Virginia.

Despite these challenges, Amazon plans to expand into other areas, including healthcare, generative AI, and Kuiper, a satellite broadband project. Jassy stated that Amazon's storage and machine learning services provide growth opportunities ahead, even though business customers are spending more cautiously on cloud services.

Amazon's first-quarter earnings report comes after upbeat earnings by Facebook's parent company, Meta, and Microsoft. Amazon's shares had already risen by 31 per cent for the year, making the company's results a significant improvement from a year earlier. Jassy attributed this to the team's delivery for customers during an uncertain economy.