Amazon.com Inc (AmazonN.O) reported its quarterly earnings and sales ahead of expectations on Thursday. It affirmed confidence in its cloud business despite a clampdown on customer spending and also highlighted how its aggressive cost-cutting program was starting to pay off following its aggressive cost-saving measures.
In extended trading on Tuesday, shares of the company rose 8% on the strength of a forecast that showed results for the second quarter would be roughly in line with investors' expectations.
With the economy continuing to be a major concern, Amazon's CEO Andy Jassy has decided to slash spending across all of the company's businesses in an effort to address the issue.
He announced last month that Amazon would be laying off more workers, now from its highly profitable cloud division and advertising division as well, thereby expanding the company's layoffs so far since November to 27,000 employees or 9% of its approximately 300,000-strong corporate workforce. In the just-ended first quarter, the number of full-time and part-time employees fell by 10% from a year earlier to about 1.47 million, which was partly due to attrition in warehouse staff.
Likewise, Amazon has abruptly ceased all of its services as well, including the Halo health trackers that it was selling, and refunded the purchases that had already been made.
While it is trying to find new revenue avenues, the company must also contend with inflation, which is hurting retail demand in Europe as well as other challenges. Aside from raising the grocery delivery fees for U.S. Prime loyalty members, Amazon is now offering them a generic-drug subscription as an add-on service, and it has begun marketing discount memberships for primary care services after it closed a deal to buy provider One Medical in February of this year.
This is the first quarter of the year that the world's biggest online retailer reported better-than-expected net sales of $127.36 billion. The company expects sales for the second quarter to range between $127 billion and $133 billion.
The sales for the quarter that ended on June 30 were expected to be $129.83 billion, based on analyst estimates.
While Amazon Web Services, which for many years has been one of the leading sources of revenue for the company, slowed its growth in the first quarter to 15.8%, recession-wary businesses have slowed their spending.
There was a net profit of $3.17 billion in the quarter that ended March 31, compared with a loss of $3.84 billion, a year earlier.
There was a huge surge in Amazon shares after it reported its results after the bell, adding $125 billion to its stock market value, which is on top of a $50 billion increase that occurred during Thursday's regular trading session.
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