For much of this year, Amazon’s growth has slowed and losses have increased as it grapples with high costs and changes in people’s shopping habits with the ebb of the coronavirus pandemic. .
On Thursday, the e-commerce giant reported that its business was rebounding. But he warned growth would be slow, possibly falling to its lowest level since 2001.
The Seattle-headquartered company posted third-quarter revenue of $127.1 billion, up 15% from a year earlier, showing that high inflation is not did not weigh on consumer spending. It also returned to profitability, earning $2.9 billion after two quarters of losses.
Amazon’s results come amid tough times for the tech giants. Microsoft, Meta and others indicated in their results this week that tough days could be ahead.
Amazon forecast sales could slow by up to 2% in the current quarter, which includes the holiday shopping season. This estimate, well below Wall Street expectations, includes a forecast that the strength of the US dollar will continue to depress international sales.
Amazon shares fell more than 19% in after-hours trading.
For the third quarter, Amazon benefited from its annual two-day Prime Day sale in July. In previous years, Prime Day had taken place before July. The company called this year’s event “the biggest ever” and generated about $6.8 billion in revenue, about $5 billion more than the typical two days, according to bank estimates. Cowen investment.
Growth for Amazon’s cloud computing division was the slowest on record, rising 27% to $20.5 billion. Amazon Web Services accounted for 16% of the company’s total sales, but was the only division to generate operating profit.
Its international activities, penalized by the strength of the dollar, generated 2.5 billion dollars in operating losses.
After two years of meteoric expansion, Amazon has spent much of the year on the brakes. Andy Jassy, who took over as CEO last year, moved to cut costs quickly after the company overbuilt in anticipation of a prolonged pandemic-fueled e-commerce boom. Amazon scaled back plans to open warehouses and worked to improve the efficiency of its fulfillment operations, and imposed a hiring freeze on corporate and technology positions for its retail division in detail.
The company employed 1.5 million people at the end of the third quarter, nearly 100,000 less than at the start of the year.
The tightening is bearing fruit. The cost of shipping products has increased more slowly than the number of units sold.
Amazon’s lucrative advertising business, which Morgan Stanley says is worth about $185 billion, rose 25% to $9.5 billion. Its subscription business, primarily Prime membership, grew 9% to $8.9 billion.
In addition to the volatile economic environment, the value of Amazon’s investment in Rivian Automotive, an electric truck maker that has struggled to meet production targets, has added fluctuations to Amazon’s earnings this year. . Its valuation rose by $1.1 billion, helping Amazon’s earnings last quarter.