Amazon.com, Inc.
CEO : Mr. Andrew R. Jassy
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 8.6% YoY | -20.9% | -142.5% | 2023-02-02 |
Brian Olsavsky says,
Q4 Revenue
- Worldwide net sales were $149.2 billion, a 12% YoY increase, excluding approximately 360 basis points of unfavorable impact from changes in foreign exchange rates and above the top end of Q4 guidance range.
- Customers were careful about how they allocated their resources and chose to spend their money during periods of economic uncertainty.
- Customers shifted to lower-priced items and value brands in categories like electronics but continued to spend on everyday essentials.
Advertising Revenues
- Advertising revenues in Q4 increased 23% YoY, excluding the impact of foreign exchange.
- Sellers, vendors, and brands looked to Amazon’s advertising capabilities to reach customers during the holiday season, even as the macro environment required them to scrutinize their own marketing budgets.
Prime Membership and Entertainment Offerings
- Prime membership continues to be a great value for customers, and expanding entertainment offerings have increased Prime sign-ups.
- The Lord of the Rings: The Rings of Power and Thursday Night Football were successful in increasing viewership and new Prime member acquisition.
- Amazon invested approximately $7 billion in 2022 across Amazon Originals, live sports, and licensed third-party video content included with Prime.
AWS Performance
- Net sales increased $21.4 billion in Q4, up 20% YoY and representing an annualized sales run rate of more than $85 billion.
- The growth rate slowed in the middle of Q3 as enterprises evaluated ways to optimize their cloud spending.
- Optimization efforts are expected to continue to be a headwind to AWS growth in at least the next couple of quarters.
Operating Income and Charges
- Reported $2.7 billion in operating income in Q4, negatively impacted by 3 large items that added approximately $2.7 billion of costs in the quarter.
- The operating income would have been approximately $5.4 billion if these charges were not incurred in Q4.
- The job eliminations during the quarter resulted in an estimated severance cost of $640 million.
- Impairments of property and equipment and operating leases resulted in a charge of $720 million.
- Increased reserves for general product and automobile self-insurance liabilities resulted in additional expense of $1.3 billion.
Andrew Jassy says,
Cost Reduction of Operations Network
- The company is working to streamline their costs while not giving up on long-term strategic investments that can change customer experiences and the company over the long term.
- Reducing the cost to serve in the operations network is the top priority as the company doubled its fulfillment center footprint and built out a transportation network for last mile roughly the size of UPS in a couple of years.
- The company is working to optimize and make the operations network more efficient and productive while being highly utilized.
- The work on optimizing and making the operations network more efficient will extend into 2023.
Speed in Delivering Products
- The company believes that continuing to deliver products faster to customers makes them happier and converts at a higher rate.
Selection and Sharp Pricing
- The company works with hundreds of thousands in the U.S. and millions overall in the world of selling partners and provides unmatched selection.
- Pricing being sharp is always important, particularly in this type of uncertain economy, where customers are very conscious about how much they’re spending.
- The company will continue to work really hard on being sharp on pricing.
Customer Experience Improvements
- The company is maniacally focused on providing a better experience to the customers in all aspects of their business.
- The company is constantly researching and implementing innovative ways to improve customer experiences, such as adding Buy with Prime, RxPass in the health care space, and virtually trying on shoes with outfits in the apparel business.
- The company has a lot more planned for improving customer experiences.
Q & A sessions,
Improvement in North America operations costs
- Cost structure pre-pandemic has changed due to a doubling of network expansion
- Working to regain cost structure and get more efficient on the assets added in the last 2-3 years
- Expecting big improvements in 2023 in North America operations costs
Grocery as an important and strategic area
- Grocery is a large market segment with a lot of frequency in how consumers shop
- Grocery is expected to be omnichannel with a hybrid of online and physical stores
- Amazon has a significant-sized grocery business with a large online grocery offering
- For market segment share in perishables, physical stores are needed
- Amazon has Whole Foods for the very best organic physical store experience and selection
- Amazon Fresh is for mass physical store offering with a few dozen stores so far
- Amazon is working on finding a format that resonates with customers and has good economics in the physical Fresh stores
- Expecting to find that equation in 2023 and expand more expansively
No bad stock 