Amazon reported strong first-quarter earnings, with revenue of $143.3 billion, up 13% year-over-year, and earnings per share of $0.98, beating analyst expectations. The main drivers of profit for Amazon were Amazon Web Services, which saw a 17% revenue growth, and advertising, which experienced a 24% revenue growth. Overall operating income for the quarter was $15.3 billion, well above estimates, leading to a 5% increase in shares during after-hours trading.
In terms of revenue breakdown, online stores revenue increased by 7% to $54.6 billion, while Amazon Web Services revenue grew by 17% to $25 billion, generating $9.4 billion in operating income, an 84% increase from the previous year. AWS is now a $100 billion annual revenue business. Amazon’s advertising revenue also saw significant growth, with $11.8 billion in revenue, up 24% year-over-year. Third-party seller services revenue also grew by 16% to $34.6 billion, showcasing Amazon’s support for independent businesses and new revenue-generating strategies.
Demand for generative AI tools and services has boosted business for cloud providers, including Amazon. The company aims to appeal to AI application developers by offering a variety of AI models through its Bedrock managed services. With the release of its AI assistant for developers, Amazon Q, the company is looking to enhance its position in the AI market. Additionally, Amazon’s recent launch of new advertisements on its Prime Video platform further showcases its focus on expanding its advertising business.
Retail media advertising spend growth is beneficial for Amazon, as it sells advertising space to sellers on its marketplace. Amazon’s physical store revenue, including Whole Foods and Amazon Go stores, increased by 6% to $5.2 billion. Despite closing two clothing-focused stores, Amazon continues to invest in physical grocery stores, although it is shifting away from its “Just Walk Out” technology in large grocery stores. The company spent $21.8 billion on shipping in Q1, up 10%, setting new records for Prime delivery speeds in the process.
Amazon now employs 1.52 million people, marking a 4% increase year-over-year. Subscription services revenue, including Prime memberships, was $10.7 billion, up 11%. After initially hiring more employees during the pandemic, Amazon laid off 27,000 employees last year and continues to reduce its corporate workforce. Looking ahead, the company forecasts Q2 sales of $144 to $149 billion, slightly below estimates, with expected operating income ranging between $10 billion and $14 billion.
