Amazon (AMZN) posted better-than-expected first quarter earnings Thursday, as solid retail sales and moderately firmer revenues from its Web Services division boosted the tech giant's bottom line.
Shares in the group, which surged on news of the stronger March quarter earnings, turned lower in after-hours trading after CFO Brian Olsavsky told investors that Amazon Web Services growth rates were slowing markedly into the start of the current quarter.
Just after the close of trading Thursday, Amazon said its first quarter net income was pegged at $3.2 billion, or 31 cents cents per share, down from a split-adjusted profit of 37 cents per share over the same period last year and north of the Street consensus forecast of 21 cents per share.
Revenues rose 9.4% from last year to $127.4 billion, firmly ahead of analysts' estimates of a $124.5 billion tally.
Amazon Web Services contributed $21.4 billion, rising 16% from last year, slowing five percentage points from the three months ending in December but coming in just ahead of the Street forecast of around $21.2 billion. Operating income was pegged at $5.1 billion, down 21.8% from last year's total.
Online sales were 3% from last year to $51.1 billion, suggesting moderately improving consumer spending over the first three months of the year, with the tally largely matching Street forecasts.
Looking into the current quarter, Amazon said it sees operating income of between $2 billion $5 billion on revenues in the range of $127 billion to $133 billion, compared to the Refinitiv forecast of around $129.8 billion.
“There’s a lot to like about how our teams are delivering for customers, particularly amidst an uncertain economy,” said CEO Andy Jassy. “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)."
"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 prioritize 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.”
Amazon shares were marked 2.66% lower in after-hours trading following the earnings release to indicate a Friday opening bell price of $107.40 each, a move that would extend the stock's year-to-date advance to around 30%.
Amazon said third-party seller services revenues are likely to rise 20% from last year to $29.82 billion, well ahead of the 10% growth forecast, with subscription services also up 20% to $9.66 billion. Ad sales rose 23% to $9.51 billion, following on from a better-than-expected first quarter update from Meta Platforms (META).
