Amazon returned to profit and recorded better than expected profit of $3.2 billion for the first quarter. This return to profits came after reporting a loss of $3.8 billion in the year-ago quarter.
Significantly, Amazon's strong numbers and positive outlook for the next quarter came after the company cut more than 27,000 employees in the last several months in one of the biggest job culls in the industry.
The e-commerce giant had made serial warnings against a worsening economic outlook as it went ahead laying off people in thousands. In November, it was reported that the e-commerce giant was eliminating 10,000 jobs. More jobs were cut in January, as Amazon assessed the company was to take a bigger hit from the changing economic situation. "Between the reductions we made in November and the ones we're sharing today, we plan to eliminate just over 18,000 roles," CEO Andy Jassy said in January.
According to the latest earnings report, Amazon's revenue rose 9 percent during the quarter from the previous year. Amazon also said it expects second-quarter net sales to expand between 5 percent and 10 percent from the quarter a year ago. The second quarter net sales guidance was pegged at between $127 billion and $133 billion against an estimated $130.1 billion.
"The results indicate that ongoing cost-cutting measures are having a positive impact on Amazon's business prospects ... Amazon's strong guidance for Q2 revenue is another indicator that the company may be starting to come out of the woods," Investing.com senior analyst Jesse Cohen said, according to NDTV.
Among its business segments, Amazon Web Services recorded strong sales growth. AWS sales increased 16 percent from the corresponding quarter a year ago to$ 21.4 billion. "While our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritise building long-term customer relationships," Chief Executive Officer Andy Jassy said.
Amazon stock surged more than 10 percent late on Thursday on better than expected performance.
Amazon's net sales sales was $127.36 against analyst estimates of $124.7 billion, while earnings per share was 31 cents while expected EPS was 20 cents. Operating margin was 3.7 percent against 2.38 percent expected. Net sales at Amazon Web Services segment was $21.35 billion against analyst estimates of $21.03 billion.
CEO Jassy said Amazon was doing well amid economic uncertainty. "There's a lot to like about how our teams are delivering for customers, particularly amidst an uncertain economy," he said. "Our Stores business is continuing to improve the cost to serve in our fulfillment 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)," he added.
Google, Microsoft Report Robust Performance After Massive Job Cuts
Earlier this week, tech giants Alphabet and Microsoft reported higher than expected quarterly revenues and the companies' shares rose more than 5 and 9 percent respectively. Alphabet, Google and YouTube parent company also launched a massive share buyback worth $70 billion, indicating its strong cash position and driving its share price.
Google's advertising revenue surged to $54.55 billion against an analyst expectation of $53.75 billion, despite concerns over ad revenue slowdown, which was cited as one of the reasons for the massive job cuts the company announced earlier this year. Microsoft reported quarterly revenue of $52.9 billion, which beat analyst expectations of $51.1 billion.
In January this year, Google CEO Sundar Pichai confirmed in a letter to employees that about 12,000 people will be laid off globally, accounting for more than 6 percent of the total workforce. The cash-rich tech giant also shocked the industry by adopting several other cost-cutting measures like cutting down on free snacks and workout classes for its existing employees.