Amazon beats Q1 expectations but warns of slowed cloud growth
Overall, profits rose to $4.8bn (£3.9bn) in the first quarter, compared with $3.7bn (£3bn) in the first quarter of FY22
Amazon has beaten analysts’ expectations in the first quarter of trading, as revenues rose by 9% to $127.4bn (£102bn) against the $116.4bn (£93.4bn) reported the prior year.
Over the period, North America sales and International sales increased by 11% and 1%, respectively, while Amazon Web Service AWS segment sales increased by 16% year-over-year to $21.4bn (£17.2bn).
Overall, profits rose to $4.8bn (£3.9bn) in the first quarter, compared with $3.7bn (£3bn) in the first quarter of FY22.
Despite posting strong results for the period, the group warned that growth had slowed for its AWS cloud division as customers “continue to evaluate ways to optimise their cloud spending in response to these tough economic conditions”. In light of this, profits for the AWS division fell to $5.1bn (£4bn), compared with $6.5bn (£5,2bn) the prior year.
However, Amazon CEO Andy Jassy said he believed there was “much growth ahead” for the division.
He said: “There’s a lot to like about how our teams are delivering for customers, particularly amidst an uncertain economy. Our Stores business is continuing to improve the cost to serve in our fulfilment network while increasing the speed with which we get products into the hands of customers (we expect to have our fastest Prime delivery speeds ever in 2023).
“Our Advertising business continues to deliver robust growth, largely due to our ongoing machine learning investments that help customers see relevant information when they engage with us, which in turn delivers unusually strong results for brands.”
He added: “And, while our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritise building long-term customer relationships both by helping customers save money and enabling them to more easily leverage technologies like Large Language Models and Generative AI with our uniquely cost-effective machine learning chips, managed Large Language Models, and AI code companion CodeWhisperer.
“We like the fundamentals we’re seeing in AWS, and believe there’s much growth ahead.”
