NEW YORK (AP) — Amazon reported strong first-quarter results Tuesday, driven by growth in its cloud-computing unit and new ad dollars from its Prime Video streaming service.
The Seattle-based e-commerce giant said it brought in $143.31 billion in revenue in the first three months of this year, a 13% jump compared to the same period last year. Net income came in at $10.43 billion, or 98 cents per share. That apparently beat Wall Street analysts’ expectations of 84 cents a share, according to FactSet.
“It was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results,” Amazon CEO Andy Jassy said in a statement.
The nation’s largest online retailer is coming off better-than-expected results for the holiday shopping period, where it saw strong consumer spending helped by discounts and faster shipping speeds. Amazon held another discount event at the end of March, just before the end of the first quarter.
Overall, US consumer spending has continued to grow despite higher prices and higher borrowing costs as a result of the Federal Reserve’s interest rate hikes. The nation’s economy slowed during the first three months of this year, but hiring has also been robust.
Amazon’s U.S. customers are “very thoughtful” about their spending, Chief Financial Officer Brian Olsavsky said in a call with reporters. He noted that consumers are looking for deals and shopping down, and that the company is “especially” seeing lower spending in Europe.
Excluding its core retail business, Amazon said first-quarter sales of its cloud computing unit, Amazon Web Services, totaled $25.04 billion, up 17% from the same period last year.
AWS, whose customers are mostly enterprises, has been the cornerstone of Amazon’s strategy in the competitive AI race among big tech companies. The unit saw a slowdown in growth last year as companies cut costs amid concerns about the economy. However, Amazon has used its AI offerings to push back against this trend and attract more companies to its cloud business.
Jassy said AI capabilities have accelerated AWS’s growth rate, and it is now on track for $100 billion in annual revenue.
Hours before Amazon released its earnings report on Tuesday, the company announced the full rollout of a business chatbot called Q, which it says can help employees be more productive at work. Last month, it closed its $4 billion investment in San Francisco-based AI startup Anthropic, a competitor to Microsoft ally OpenAI. Anthropic collaborates with Amazon to develop so-called foundational models that support AI technologies.
The company’s online advertising sales also rose 24%, the majority of which is driven by advertising for sponsored products, Olsavsky said.
He said Amazon, which began showing ads on Prime Video in late January, currently has a “light” number of ads on the streaming service compared to TV or other streaming providers. Olsavsky said the ads, which customers can avoid for an additional $2.99 monthly fee, are doing well and are “attracting a number of new advertisers who are not currently using Amazon’s advertising services.”
The shares of Amazon.com Inc. rose about 2% in after-hours trading.
Under Jassy, Amazon has cut costs in various parts of its business to remain profitable. This year, the company cut hundreds of positions across AWS, Prime Video and MGM Studios. Its subsidiaries, popular social media platform Twitch and audiobook service Audible, have also laid off employees.
In addition, Amazon has also faced regulatory hurdles. In January, the company canceled a deal to buy robotic vacuum cleaner maker iRobot after facing regulatory hurdles in Europe. It has also been sued by the Federal Trade Commission over antitrust concerns.
Amazon says it expects to sell between $144 billion and $149 billion during the second quarter. Analysts were expecting $150.2 billion, according to FactSet.
