Amazon.com Inc. (NASDAQ: AMZN) reported its second-quarter earnings on Thursday, August 3, 2023, and surpassed Wall Street’s expectations on both revenue and profit. The e-commerce giant also issued an optimistic guidance for the third quarter, indicating that its growth momentum is not slowing down despite the increasing competition in the cloud computing market.
Amazon’s Revenue Grows 11% Year-Over-Year
Amazon’s net sales increased 11% to $134.4 billion in the second quarter, compared with $121.2 billion in the same period last year. Excluding the $0.3 billion unfavorable impact from year-over-year changes in foreign exchange rates, net sales increased 11% compared with the second quarter of 2022.
The company’s revenue growth was driven by strong performance in its North America and International segments, which increased 11% and 10% year-over-year, respectively. The company also benefited from its 48-hour Prime Day discount event, held in July, which it touted as its “biggest ever”.
Amazon’s operating income increased to $7.7 billion in the second quarter, compared with $3.3 billion in the second quarter of 2022. The company’s net income was $6.7 billion, or $0.65 per diluted share, compared with a net loss of $2.0 billion, or $0.20 per diluted share, in the same period last year.
The company’s earnings per share (EPS) beat analysts’ estimates of $0.35, according to Refinitiv. It was also Amazon’s biggest earnings beat since its report for the fourth quarter of 2020.
AWS Stabilizes As Customers Shift To New Workload Deployment
One of the key highlights of Amazon’s earnings report was the performance of its cloud computing unit, Amazon Web Services (AWS). AWS reported sales of $22.1 billion in the second quarter, up 12% year-over-year and above analysts’ expectations of $21.8 billion, according to StreetAccount.
However, AWS’s growth rate decelerated from the previous quarter, when it grew 16%, and was the slowest since 2015, when Amazon began breaking out cloud revenue. AWS also accounted for 70% of Amazon’s operating profit of $7.7 billion.
Despite the slowdown, Amazon CEO Andy Jassy said that AWS’s growth stabilized as customers started shifting from cost optimization to new workload deployment. He also said that AWS has continued to add to its leadership position in the cloud market with a slew of new releases that make it easier and more cost-effective for companies to use artificial intelligence (AI) and machine learning (ML).
Some of these releases include Trainium and Inferentia chips, which are designed to accelerate training and inference for ML models; Bedrock, which allows customers to customize large language models for generative AI applications and agents; and CodeWhisperer, which helps developers write code more efficiently.
Amazon Issues Optimistic Guidance For Q3
For the third quarter, Amazon expects net sales of between $138 billion and $143 billion, or growth of between 9% and 13%. Analysts were expecting revenue of $138.25 billion, according to Refinitiv.
The company also expects operating income of between $6 billion and $7.5 billion, compared with operating income of $6.2 billion in the third quarter of 2022.
The guidance reflects Amazon’s confidence in its ability to sustain its growth momentum amid the ongoing pandemic and the increasing competition from rivals such as Walmart, Shopify, Microsoft, and Google.
Amazon also announced that it plans to hire more than 55,000 corporate and technology employees globally in the coming months, as part of its “Career Day” event on September 15. The company said that this is the largest hiring spree in its history and that it reflects its ambition to innovate across its businesses.
