Despite laying off 27,000 workers as part of its cost-cutting measures, the e-commerce giant reported growth in revenue
Amazon’s stock price surged by over 11% after its cloud computing and advertising divisions generated more revenue than expected in the first quarter of the year. Despite the company’s ongoing cost-cutting efforts, including the dismissal of 27,000 employees, its revenue for the quarter totaled $127.4bn, representing a 9% increase from the $116.4bn it reported during the same period in the previous year.
Amazon exceeded industry analysts’ predictions with reported profits of $3.17 billion, or 31 cents per share, which was higher than the anticipated $2.24 billion. However, the company’s AWS cloud unit, which has been a dominant player in the market for over 15 years, experienced a slower growth rate of 16% in the first quarter, compared to the 37% growth it reported in the same period the previous year.
Amazon’s results demonstrate a significant improvement from the previous year and align with the positive earnings reported by Meta, the parent company of Facebook, and Microsoft. Prior to Thursday’s earnings report, Amazon’s stock had increased by 31% since the beginning of the year, after losing almost half its value in 2022.
According to a statement from Amazon’s CEO, Andy Jassy, the company’s teams have been performing well in delivering for customers, especially given the current economic uncertainty. Jassy also noted that the company’s investment in machine learning had contributed to a 23% year-over-year revenue increase in its advertising business, which brought in $9.51 billion. Despite business customers being more cautious about spending on cloud services, Jassy expressed optimism that Amazon’s storage and machine learning offerings would lead to significant growth in the future.
Earlier this month, Amazon cautioned that consumers are increasingly cost-conscious and trying to save money where possible. Additionally, many shoppers have returned to in-store shopping after relying on e-commerce during the pandemic. Consequently, the company’s online retail business did not experience any growth.
To adapt to the post-pandemic business landscape, Amazon has cancelled certain warehouse expansion plans. In the past two quarters, the company has ramped up its cost-saving efforts, resulting in the layoff of 27,000 employees in corporate positions such as devices, advertising, AWS, and live-streaming. This marks the largest job cuts in Amazon’s 29-year history.
Amazon intends to halt construction on the second phase of its headquarters in northern Virginia and close some of its Amazon Fresh and Go convenience stores, as well as pausing its grocery business expansions. However, the company has also expressed plans to expand into new fields such as healthcare, generative AI, and Kuiper, a satellite broadband project that it announced in 2020.
