Amazon’s strong revenue and guidance reassures Wall Street

Amazon shares rose 10 per cent on Thursday after it reported better than expected quarterly revenue and issued strong guidance for the current quarter.

The company said its overall sales increased 7 per cent year-on-year to $121.2bn, higher than the $119bn analysts had expected, according to data from FactSet.

Revenues at AWS, its cloud computing business, reached $19.7bn, up 33 per cent from a year ago, and slightly higher than Wall Street had anticipated. Amazon’s advertising business also outperformed, growing 18 per cent to $8.8bn.

Amazon said it expected overall revenue to land between $125bn and $130bn, which would represent growth of 13-17 per cent.

The company recorded an overall net loss of $2bn, owing to the poor performance of its investment in electric vehicle company Rivian, which cost Amazon $3.9bn in non-operating costs.

Amazon’s operating income for the quarter was $3.3bn, down from $7.7bn in 2021.

Amazon’s strong performance in cloud and advertising offset a second straight quarter of sales decline for its online store, where sales fell 4 per cent year-on-year to $50.9bn. Analysts had been looking for $51.8bn.

The pressures of inflation and supply chain headaches have dragged on Amazon’s performance so far in 2022, forcing it to make several moves to counteract the additional operating costs.

The company earlier this week announced it would be raising the price of its Prime subscription scheme in five of its European markets, including the UK, where the price of annual membership rose 20 per cent.

That followed an earlier move to raise the price for US Prime customers, where it also added a 5 per cent surcharge to delivery costs for sellers, in an effort to offset rising fuel prices.

The company has also had several high-profile departures. Last week Jay Carney, Amazon’s outspoken and influential head of corporate affairs, announced he was leaving to join travel company Airbnb.

The appointment in 2015 of Carney, who was Barack Obama’s press secretary, had been a coup for Amazon as it increased its efforts to lobby on a number of policy positions.

Other recent departures include Dave Clark, head of worldwide consumer and architect of its logistics network. Amid spiralling costs since the pandemic, Amazon conceded it had overexpanded — on both warehousing and headcount — during the crisis. It has subsequently pulled back on some of it plans to open new warehouses this year.