Amazon shares fell 13% in extended trading on Thursday after the company issued disappointing fourth-quarter guidance and missed sales expectations.
Here are the key numbers:
Profit: 28 cents per share
Revenue: $127.46 billion compared to $127.1 billion in revenue, according to Refinitiv estimates
Here’s how Amazon’s other key divisions fared during the quarter:
Amazon Web Services: $20.5 billion vs Street Account’s $21.1 billion estimate
Advertising: $9.55 billion vs Street Account’s $9.48 billion estimate
Amazon expects fourth-quarter revenue to be between $140 billion and $148 billion, up 2% to 8% year over year. Analysts expected revenue of $155.15 billion, according to Refinitiv data.
Revenue rose 15% in the third quarter, marking a return to double-digit sales growth, but still missing Wall Street expectations.
Like other big tech companies, Amazon has had a rough year as it faces macro headwinds, rising inflation and rising interest rates. Those challenges coincide with a slowdown in Amazon’s core retail business as consumers return to stores.
This is the second time this year that Amazon has had a disappointing performance that has sparked a double-digit selloff. In April, weak second-quarter guidance sent the stock down 14%.
Under CEO Andy Jassy, who took over from founder Jeff Bezos in July 2021, Amazon has cut costs aggressively in a number of business areas in recent months. Cope with rising spending. It has cut warehouse space, halted some experimental projects, shut down telehealth services and froze corporate hiring at retail stores.
Amazon CFO Brian Olsavsky said that after investing heavily over the past two years in expanding its fulfillment and logistics network to meet pandemic-related demand, among other things, the company has moved the Its capital expenditure budget was cut by a third.
Olsavsky said the company is now taking steps to “tighten its belt, including stopping hiring at certain companies and stopping products and services where we think our resources can be better deployed elsewhere.” Sell your products online
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He added that the economic environment in Europe was worse than in North America this quarter because “the issue of the war in Ukraine and the energy crisis has really increased in the region.”
Amazon’s gloomy forecast doesn’t bode well for holiday shopping. Analysts are bracing for a drab season, with Adobe saying online sales are expected to rise just 2.5%.
Data collected by outside analysts suggests Amazon’s Prime Early Access sales are likely to be muted as shoppers feel inflationary pressures.
Amazon’s operating income fell nearly half a year from a year earlier, from $4.85 billion to $2.53 billion. Amazon Web Services accounts for all of the company’s profits, plus the cloud division generated $5.4 billion in operating income. Still, AWS reported its slowest revenue growth since Amazon began reporting results for the division in 2014.
Amazon’s ad business was a bright spot in the results, bucking the trend of its digital ad rivals Facebook, Google and Snap, whose ad businesses have been hit by the economic climate and Apple’s iOS privacy changes over the past year. Advertising revenue for the quarter rose 25% year over year to $9.55 billion, easily beating analysts’ estimates of $9.48 billion.
Source: cnbc.com
