Amazon’s first quarter earnings (opens in new tab) outcomes look to be a breath of contemporary air in a regularly troubled economic system, displaying indicators of restoration and development in a nod to what’s hopefully a extra optimistic 12 months forward, however there’s a twist.
Throughout the board, web gross sales, working earnings, web earnings, and money stream all confirmed indicators of enchancment in contrast with earlier quarters and the previous 12 months.
However a big a part of the corporate’s 9% year-on-year improve in web gross sales, totalling $127.4 billion within the first quarter, is because of the corporate’s cloud division, Amazon Internet Providers (AWS).
AWS success
In the course of the firm’s first quarter of the 2023 fiscal 12 months, AWS noticed gross sales improve by 16% in contrast with the identical interval final 12 months, to the sum of $21.35 billion. The determine represents virtually 17% of the corporate’s complete web gross sales, and a slight lead forward of analysts’ predictions of $21.22 billion.
Finally, extra gross sales is sweet information for cloud firms and the economic system extra typically, and the information ties in to earlier projections that cloud spend was on the rise once more.
Nevertheless, AWS is just not out of the woods but. Resulting from unmentioned components, that are prone to entail at the least partly the rising prices across the globe, the cloud division’s working earnings cut back to $5.1 billion throughout the quarter, versus $6.5 billion the 12 months earlier than. That represents a 21.5% decline, regardless of a wholesome enhance to gross sales.
In the course of the earnings name, CFO Brian Olsavsky warned traders that “prospects proceed to guage methods to optimize their cloud spending in response to those robust financial circumstances” – a pattern that he says continues to be seen into the second quarter.
This, together with the corporate’s persevering with cost-cutting measures extending past the mammoth 27,000 layoffs, has left a bitter style in some traders’ mouths.
