Amazon topped expectations for its holiday quarter, reporting record revenue of $169.9 billion, up 14% year-over-year, and earnings per share of $1.00.
Wall Street expected earnings of $0.80 per share and revenue of $166 billion.
Amazon shares were up more than 6% in after-hours trading.
The company’s cloud, advertising, and third-party seller services businesses met or exceeded estimates in Q4, while overall operating income increased to $13.2 billion.
It’s been a year since Amazon announced its largest layoffs ever, cutting 18,000 positions, then another 9,000 in March. The company continues to trim its headcount, with smaller cuts coming to Alexa, music, and other divisions.
“Recent workforce reductions signal continued cost discipline and reinforce commitment to margin expansion,” Wedbush analysts wrote in a recent report.
On the AI front, Amazon just today announced a new assistant called Rufus embedded in its mobile shopping app. Generative AI was the big theme at the AWS re:Invent conference in November.
Amazon stock is up more than 50% in the past 12 months, among the “Magnificent 7” tech stocks helping boost the S&P 500. Other tech giants including Microsoft, Apple, and Meta also reported earnings this week.
Here’s a breakdown of Amazon’s financials for the third quarter.
Online stores: Revenue was up 9% year-over-year at $70.5 billion, a new record for holiday quarter online sales, surpassing a previous high in 2020 at the height of the pandemic.
- Sales included October’s Prime Day event.
- Wedbush noted that 62% of respondents in a recent consumer survey said they increased holiday spending on Amazon compared to the year-ago quarter. Overall U.S. retail sales rose in December, outpacing estimates.
Amazon Web Services: Amazon’s cloud business was up 13% at $24.2 billion, with $7.1 billion in operating income, up 38% from the year-ago period.
- AWS reported $23 billion in revenue in Q3, which was up 12% year-over-year. AWS reported 20% growth in the year-ago quarter.
- Analysts are keeping a close watch on AWS growth rates, particularly earlier last year amid the tech slowdown, but the business seems to be rebounding — though still behind growth of Microsoft Azure and Google Cloud.
Advertising: Along with AWS, advertising is one of Amazon’s higher-margin businesses. Advertising brought in $14.6 billion in revenue in the quarter, up 27% over a year ago. That compares to a 26% growth rate in Q3, and 19% growth in the year-ago quarter.
- Amazon recently launched new advertisements within its Prime Video platform.
Third-party seller services: Amazon has been expanding services and products for third-party merchants in recent years; independent businesses now account for a majority of total retail sales. Revenue from third-party seller services was up 20% to $43.5 billion.
Shipping costs: Amazon spent $27.3 billion on shipping in Q4, up 11%.
- Amazon earlier this week touted improved shipping times, crediting its inventory placement and a shift to regional fulfilment centers.
Physical stores: The category, which includes Whole Foods and Amazon Go stores, posted revenue of $5.1 billion, up 4%.
- Amazon closed two clothing-focused stores in November but said it will continue to invest in physical grocery stores.
Headcount: Amazon now employs 1.52 million people, down 1% year-over-year. That figure does not include seasonal and contract workers.
Prime: Subscription services revenue, which includes Prime memberships, came in at $10.4 billion, up 14%.
Guidance: The company forecasts Q1 sales of $138 to $143.5 billion. Operating income for the first quarter of 2024 is expected to range between $8 billion and $12 billion.
