Amazon’s earnings beat expectations amid fears of softer demand

Amazon reported better than expected sales and profits in the March quarter, despite persistent inflation and a weakening economic environment that analysts had feared would result in softer spending among consumers and enterprise cloud customers.

Overall revenues grew 9 per cent to $127.4bn, ahead of forecasts of $124.6bn, according to S&P Capital IQ. Sales at Amazon’s online stores were flat at $51.1bn, beating forecasts of $50.4bn.

Revenue at Amazon Web Services, its cloud unit, grew 16 per cent to $21.4bn, ahead of forecasts for $21.2bn. Andy Jassy, Amazon chief executive, said AWS customers were “spending more cautiously”, but added: “We like the fundamentals we’re seeing in AWS, and believe there’s much growth ahead.”

Amazon said it expected revenue in the current quarter to be between $127bn and $133bn, versus analysts’ estimates of $130bn.

Amazon shares jumped as much 12 per cent in post-market trading, but later gave up those gains. Its shares were up 28 per cent year-to-date.

Overall, the company recorded $3.2bn in net income, a stark reversal from its $3.8bn net loss a year ago. Operating income at the Seattle-based company was $4.8bn, versus $3.7bn a year ago.

Advertising revenues jumped 21 per cent to $9.5bn, ahead of forecasts for 16 per cent growth. Jassy said the ads team “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”.

The upbeat report follows solid earnings from Microsoft, Alphabet and Meta earlier this week. Like its Big Tech peers, Amazon has been focused on trimming headcount and costs, having previously announced it would be slashing 27,000 jobs — about 9 per cent of its corporate workforce. It paid $500mn in severance charges for the quarter.

Operating income margins rose to 3.7 per cent, up from 3.2 per cent a year ago and above forecasts for 2.7 per cent. Analysts at Jefferies said before the report they were looking for “clear evidence that profitability is improving”.