Amazon Q1 2024 Earnings

Amazon Q1 2024 Earnings

The Company's Stock Surged by 5% on Q1 Earnings Performance

Amazon for the first quarter reported revenue of $143.3 billion increased by 13% Year over Year. The revenue increase was fueled by expansions in advertising and cloud computing.

In the first quarter, Amazon's advertising business revenue saw a 24% growth rate and stood at $11.8 billion, surpassing that of both retail and cloud computing. This report marks the first since Amazon initiated advertisements on Prime Video.

For Q1 2024, sales at Amazon Web Services (AWS) surged by 17% to reach $25 billion. Over the past year, growth in AWS has been decelerating as businesses reduced their cloud expenditure. However, Amazon executives have noted a stabilization in cost optimizations and highlighted the potential of generative artificial intelligence to drive demand and benefit its cloud business.

Moreover, Amazon's operating income surged by over 200% during the period, reaching $15.3 billion, which significantly outpaced revenue growth. This underscores the effectiveness of the company's cost-cutting strategies and emphasis on efficiency in strengthening its bottom line. AWS contributed to 62% of the total operating profit.

In Q1 net income more than tripled to $10.4 billion, equivalent to $0.98 per diluted share, compared to $3.2 billion, or $0.31 per diluted share, in the first quarter of 2023.

Cash and equivalents surged to $73.9 billion in the quarter, marking a significant increase from $54.3 billion reported a year earlier.

Amazon's earnings growth has been fueled by several factors, including extensive cost-cutting measures, optimizations in fulfillment operations, and stabilization in cloud spending. CEO Andy Jassy has adopted a more disciplined approach to spending while prioritizing the expansion of profitable services such as advertising, cloud computing, Prime memberships, and the third-party marketplace.

However, these improvements have come with organizational changes. Since late 2022, Amazon has laid off over 27,000 employees, and these cuts have continued into 2024. Moreover, during the first quarter, the company let go of hundreds of staff members in its health and AWS divisions.

Amazon anticipates revenue in the range between $144.0 billion and $149.0 billion, indicating expected growth of 7% to 11% compared to the second quarter of 2023.

Furthermore, Amazon anticipates a further increase in profitability for the second quarter, albeit at a more moderate rate. The company stated that operating income is projected to range between $10 billion and $14 billion, compared to $7.7 billion reported a year earlier.

Amazon's stock is up 18% so far in 2024 and is the third-best performer within the S&P 500 over that span. The Company's shares surged by 5% in after-hours trading following the company's earnings and revenue report.

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