Amazon profit more than triples, topping Wall Street expectations

Amazon reported better-than-expected earnings and revenue for the first quarter, driven by growth in advertising and cloud computing. The stock ticked higher in extended trading.

Here’s how the company did:

• Earnings per share: 98 cents vs. 83 cents expected by LSEG
• Revenue: $143.3 billion vs. $142.5 billion expected by LSEG

Wall Street is also looking at these key numbers:

• Amazon Web Services: $25 billion vs. $24.5 billion in revenue, according to StreetAccount
• Advertising: $11.8 billion vs. 11.7 billion in revenue, according to StreetAccount

Operating income soared more than 200% in the period to $15.3 billion, far outpacing revenue growth, the latest sign that the company’s cost-cutting measures and focus on efficiency is bolstering its bottom line. AWS accounted for 62% of total operating profit. Net income also more than tripled to $10.4 billion, or 98 cents a share, from $3.17 billion, or 31 cents a share, a year ago.

Sales increased 13% from $127.4 billion a year earlier.

Amazon expects a continued jump in profitability for the second quarter but at a more measured pace. The company said operating income will be $10 billion to $14 billion, up from $7.7 billion a year earlier.

Revenue in the current quarter will be $144 billion to $149 billion, Amazon said, representing growth of 7% to 11%. Analysts were expecting growth of 12% to $150.1 billion, according to LSEG.

Sales at AWS accelerated 17% in the first quarter to $25 billion, topping Wall Street’s forecast for sales growth of 12% to $24.5 billion. For the past year, growth in AWS has slowed, as businesses trimmed their cloud spend. But Amazon executives have said they’re seeing cost optimizations taper off, and they’ve indicated that demand for generative artificial intelligence can be a boon for its cloud business.

Amazon’s earnings growth has been driven in part by widespread cost-cutting, tweaks to its fulfillment operations, and the stabilizing of cloud spending. CEO Andy Jassy has become more disciplined in the company’s spending, while growing profitable services like advertising, cloud computing, Prime memberships and its third-party marketplace.

The company has laid off more than 27,000 employees since late 2022, with the cuts bleeding into 2024. During the first quarter, Amazon let go hundreds of staffers in its health and AWS businesses.

Amazon’s advertising unit saw sales surge 24%, just ahead of consensus estimates. It’s the first report since Amazon started running ads in Prime Video, a move analysts predict could generate significant revenue over time.

The company’s ad business, which grew faster than retail or cloud computing, has become an increasingly important profit driver for Amazon and has emerged as a main player in online advertising.

That market overall started growing again after a brutal 2022, when brands reeled in spending to cope with inflation and rising interest rates. Meta, Snap and Google parent Alphabet all reported first-quarter results last week and showed better-than-expected revenue growth, which was primarily driven by improvements across their ad businesses.

Revenue from third-party seller services, which includes commissions collected by Amazon, fulfillment, shipping fees and other charges, continued to surge. Sales in the unit grew 16% year over year to $34.5 billion.

Amazon remains a standout among mega-cap internet companies in that it’s yet to implement a quarterly dividend, even as cash and equivalents jumped to $73.9 billion in the quarter from $54.3 billion a year earlier. Meta announced its first dividend in February at 50 cents a share, and Alphabet followed, telling investors last week that it will start paying a dividend of 20 cents a share. Those companies also announced plans to buy back tens of billions of dollars in stock.

This story is developing. Check back for updates.