Amazon ad sales and cloud services helped the business grow
According to Amazon, the company may be struggling in its core e-commerce business, but the profit-making part of the business is delivering.
The company said online sales in the first three months of this year were low compared to last year. But this got covered by the sales in its “cloud services” and “advertising units.”
Additionally, profits increased, suggesting that the company’s cost-cutting drive may be beginning to pay off.
As consumers resume in-store shopping following the pandemic and have tightened budgets in reaction to rising living costs, Amazon sales have been slow.
As businesses become more frugal with their spending, worries about the direction of the economy have also had an impact on their operations.
Since taking over last year, Mr. Jassy has worked to improve the company’s performance, delaying plans for real estate development, reorganising its US delivery network, and announcing thousands of employee losses. One such programme, the Halo fitness business, was just wound down last week.
The firm’s headcount has decreased by 10% since March of last year, losing more than 75,000 workers since the year ended.
This might be beginning to pay off, according to “Insider Intelligence lead analyst,” Andrew Lipsman.
Revenue at Amazon’s advertising division increased 23% over the previous year, while sales at the company’s long-standing major profit generator, Amazon Web Services, increased 16%.
Overall sales increased by 9% to $127.4 billion between January and March, which is similar to the increase at the end of last year but a significant downgrade from the global epidemic, when sales increased by more than 40% in some months.
Even so, the company outperformed many analysts’ predictions, as profits increased to $3.2 billion from a $3.8 billion loss in the same quarter last year.
The company’s stock increased by more than 7% in after-hours trading.
In the first quarter, Amazon “did what it needed to do by reversing, or at the very least stalling,” its most problematic decreasing growth trends, according to Mr. Lipsman.