Amazon Beats Fourth-Quarter Revenue, but Gives Light Guidance

Amazon’s online store segment saw a 2% drop in sales year-over-year

Slowing sales have been a problem for Amazon as consumers are forced to cut back on discretionary spending due to rising food and gas prices. Consumers are returning to physical retailers after the e-commerce boom that was fuelled by pandemics has also waned.

CEO Andy Jassy succeeded founder Jeff Bezos at the helm. He has spent the last year trying to reduce costs. After cutting a number of employees, Amazon announced that it would be eliminating 18,000 of its corporate employees in January. In an attempt to reduce rising costs, the company also instituted a freeze on its corporate ranks and stopped the expansion of warehouses.

Jassy surprised analysts by appearing on the earnings call. He stated that he wanted the opportunity to share his thoughts with them after his first year as CEO. According to The Wall Street Journal, his predecessor, Bezos stopped participating in earnings calls.

Jassy stated that they are working hard to reduce our costs, but that they also want to continue making long-term strategic investments in the areas that can make a difference to broad customer experiences and Amazon’s long-term future.

Jassy stated in a statement, that the company is “encouraged” by the “continued progress” in lowering retail prices.

Jassy stated that while we are uncertain about the economy’s future, “in the short-term, we face uncertainty, but we remain optimistic about long-term opportunities for Amazon.”

Amazon’s cloud business, Amazon Web Services did not meet its fourth quarter estimates. This is due to a slowdown of business spending. AWS saw a 20% increase in usage, compared to 27.5% for the third quarter.

Advertising revenue increased 19% over a year ago (23% excluding foreign exchange rate changes), still outpacing online advertising companies like Google, Facebook, and Snap. Amazon is a leader in digital advertising, offering sellers and brands more options to pay for promotion on the company’s website and apps.

The quarter’s operating income was $2.7 billion, compared to $3.5 billion last year. According to the company, $2.7 billion in charges were incurred during the fourth quarter, with $640 million coming from severance expenses related to layoffs.