Video Source: CNBC Television on YouTube
Amazon.com Inc (Nasdaq: AMZN) reported better than anticipated fiscal 2023 second-quarter results. The e-commerce giant also issued a robust revenue outlook for the third quarter. The revenue guidance reflects accelerating revenue growth. The stock of Amazon ended Friday’s trading session at $139.57, up $10.66, or 8.27%, from the prior close. The Seattle, Washington-based company reported second-quarter sales of $134.38 billion, an increase from $121.23 billion in the same quarter of fiscal 2022.
For the quarter ended June 30, 2023, Amazon posted a net income of $6.75 billion, or $0.65 per share, compared with a net loss of $2.03 billion, or $0.20 per share, in the quarter ended June 30, 2022. The loss recorded last year was an outcome of a downward revision of Amazon’s investment in electric vehicle manufacturer Rivian. Analysts surveyed by Refinitiv had anticipated Amazon to record earnings of $0.35 per share on revenues of $131.50 billion.
Commenting on the quarterly results, Andy Jassy, Amazon CEO, stated “It was another strong quarter of progress for Amazon. We remain excited about what lies ahead for customers and the company.”
Segment wise:
- Net product sales rose by 4.30% y-o-y to $59.03 billion
- Net service sales were $75.35 billion, an increase of 16.50% on a y-o-y basis
Geographically:
- North American revenues increased 10.90% y-o-y to $82.55 billion
- International revenues were $29.70 billion, up 9.70% from last year
- AWS revenues surged 12.20% y-o-y to $22.14 billion and surpassed StreetAccount’s estimate of $21.80 billion. However, the pace of growth, representing the slowest since 2015, declined from 16% in the first quarter. The company revealed that its AI tools are being used by several clients, including 3M, HSBC, Royal Philips, and Old Mutual. Interestingly, AWS generated 70% of the company’s aggregate operating income of $7.70 billion
Notably, Amazon recorded advertising revenues of $10.70 billion in 2Q 2023, up 22% from last year. The reported figure was higher than the $10.40 billion forecast by StreetAccount.
This is the biggest earnings beat reported by Amazon since 4Q 2020, signaling that Jassy’s initiatives to slash expenses are yielding positive results. It can be remembered that, as part of its cost-cutting plan, Amazon has eliminated 27,000 jobs since last fall. Along with temporarily halting corporate hiring, Jassy has been prudently working to minimize costs across various units within the organization. At the end of the June quarter, Amazon’s global headcount had declined by 4% year over year, amounting to 1.46 million people.
Furthermore, Jassy, who took over the role of CEO from founder Jeff Bezos in July 2021, attributed some of the improved financial performance to the stupendous performance of Amazon Web Services (AWS). Previously, AWS went through a slowdown in client spending due to economic uncertainties. Looking forward, Amazon projects Q3 sales in the range of $138 billion to $143 billion, implying a growth of 9% to 13%. Analysts polled by Refinitiv anticipate revenue of $138.25 billion.
The earnings beat and solid Q3 revenue outlook is expected to keep Amazon’s stock slightly bullish in the short term.
The historical price chart indicates that the stock of Amazon has broken the resistance at 135. Additionally, the stock is trading above its 50-day moving average, while the MACD indicator’s reading has turned positive. Therefore, we anticipate the uptrend to remain intact for the next few trading sessions.
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