Amazon bulls are hoping recent spending cuts will yield strong bottom-line numbers when the e-commerce and cloud giant reports on Thursday afternoon.
Among analysts polled by FactSet, the consensus is for Amazon to report revenue of $145.71 billion (up 6% annually) and GAAP EPS of $0.17 (down 87.5%) for its seasonally big fourth quarter.
Amazon typically shares quarterly sales and operating income guidance in its reports. For the first quarter, the company’s sales consensus stands at $125.09 billion (up 7.4%) and its GAAP operating income consensus stands at $4.04 billion (up 10.1%).
Eric Jhonsa, Real Money’s tech columnist, will be live-blogging Amazon’s earnings report, along with a call with management that’s scheduled for 5:30 P.M. Eastern Time.
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6:27 PM ET: Amazon's call has ended. After rising 7.4% in regular trading, shares are down 4.1% after-hours to $108.30 after Amazon shared a mixed set of numbers in its Q4 report.
Q4 revenue beat estimates, while EPS (hurt by a charge related to Amazon's Rivian investment) missed. North American and International segment revenue topped estimates, while AWS revenue missed. Q1 sales guidance was in-line with consensus, while Q1 op. income guidance was below.
CEO Andy Jassy appeared on an Amazon earnings call for the first time. During the call, CFO Brian Olsavsky disclosed that AWS revenue (up 20% Y/Y in Q4) has been growing at a mid-teens clip thus far in Q1, and that Q4 op. income would have been $2.7B higher if not for severance, impairment and reserve charges. Jassy reiterated Amazon's commitment to making big long-term bets in various growth areas (emerging markets, grocery stores, new Prime services), even as it tries to run a tighter ship.
Thanks for joining us.
6:18 PM ET: A question about whether AWS can maintain mid-teens AWS growth this year. Also one about how Jassy's priorities are different from Jeff Bezos'
Olsavsky says he can't forecast AWS' growth rate with a high level of certainty. Adds AWS' long-term trends remain intact amid short-term headwinds.
Jassy says good leadership teams look for ways to adjust in response to unique circumstances, and that there was a clear need for the company to become more efficient. Adds that some of the businesses Amazon recently shuttered or trimmed were ones where the company didn't have a high level of conviction about them being needle-movers. Says Amazon will continue investing a lot in various long-term bets, though "it's a long shot" that all of them will pay off.
6:09 PM ET: A question about Prime member engagement.
Olsavsky says spending per Prime member remains strong, and that high-profile video content such as The Rings of Power provide an engagement boost.
Jassy asserts the full gamut of services offered by Prime make it "a remarkable value," and that Amazon will keep looking for ways to improve Prime's value.
6:06 PM ET: A question about AWS headwinds.
Olsavsky says there are headwinds tied to verticals such as mortgage firms, crypto firms, online advertising, etc., and that customers have a variety of options to cut costs.
Jassy adds most enterprises are looking for ways to streamline costs. Says Amazon is looking to work with customers to help them spend less, rather than trying to boost quarterly numbers, and that the elastic nature of cloud compute allows spending to be dialed down when firms need less capacity. Asserts AWS still has more absolute dollar growth than any public cloud rival, and that a lot of additional on-prem IT spending will shift to the cloud over the next 10-15 years.
6:00 PM ET: A question about Amazon's international e-commerce efforts. Also one about the impact of restructuring charges on the Q1 op. income guidance.
Olsavsky says some severance charges will be recorded in Q1. Jassy notes Amazon saw strong growth in big international markets during the pandemic, and that there are macro headwinds in Europe related to inflation, Russia/Ukraine and energy prices. Says Amazon remains committed to investing for the long run in emerging markets such as India and Brazil.
5:56 PM ET: A question about how Amazon is looking to grow grocery share. And one about investments in "emerging bets" such as self-driving cars, robots, etc.
Jassy says a lot of grocery shopping will be omnichannel, with consumer leveraging both online and offline resources. Notes physical stores are needed to have a large share of the perishables market, and that Amazon is doing a lot of experimentation with its Fresh stores to get the formula right, with Amazon planning to step up store expansion once it does so.
5:52 PM ET: First question is about priorities for driving North American retail growth. Also one about margin expectations for NA retail.
Olsavsky reiterates Amazon is now trying to run more efficiently, after having massively increased warehouse/transportation capacity during the pandemic. Expects major NA cost improvements to stem from these efforts.
Jassy does some PR work. He says Amazon remains committed to making big long-term investments to improve the customer experience, even as it tries to become more efficient. Adds that improving delivery times, selection, pricing, customer experiences, etc. also remain priorities.
5:45 PM ET: The Q&A session is starting. Amazon's stock is now down 2.1% AH.
5:44 PM ET: $640M worth of severance costs were recorded in Q4, as were $720M worth of impairment costs. There was also a $1.3B increase in liability reserves.
5:41 PM ET: Olsavsky notes Amazon's operating income would've been $5.4B in Q4 (compares with a reported $2.7B) if not for one-time costs related to improving operational efficiency.
5:40 PM ET: Olsavsky talks up Prime engagement, including for Prime Video content. Says $7B was invested in Prime video content last year, up from $5B in 2021.
Regarding AWS, he says "optimization efforts" by clients continued weighing on revenue in Q4, and will remain a headwind at least for the next couple of quarters. Quarter-to-date AWS revenue growth is in the mid-teens (compares with 20% Q4 growth).
5:36 PM ET: Olsavsky says e-commerce customers remain cautious amid macro/inflation pressures, spending less on discretionary items and showing price-sensitivity.
5:35 PM ET: Olsavsky is talking. He notes that CEO Andy Jassy is also on the call this time.
5:33 PM ET: IR chief Dave Fildes is going over the safe-harbor statement. In recent quarters, Amazon's call has featured prepared remarks from CFO Brian Olsavsky, after which Olsavsky and Fildes take questions from analysts.
5:32 PM ET: The call is starting. Amazon's stock is down 2.9% AH heading into it.
5:26 PM ET: I'm back to cover Amazon's call, which should start in a few minutes. Here's the webcast link, for those looking to tune in.
4:58 PM ET: I'm taking a short break, but will be back to cover Amazon's call, which is set to kick off at 5:30 PM ET.
Shares are down 3.7% AH to $108.71 after Amazon beat Q4 sales and op. income estimates (EPS missed due to a Rivian-related charge) and issued in-line Q1 sales guidance and below-consensus Q1 op. income guidance.
4:53 PM ET: Stock comp totaled $5.61B in Q4, up 1% Q/Q and 52% Y/Y.
4:51 PM ET: Amazon ended 2022 with $70B in cash/equivalents and $67.2B in debt. No stock was repurchased during Q4 ($6B was spent on buybacks earlier in 2022).
4:47 PM ET: With Amazon in cost-cutting mode, headcount fell 4% Y/Y to 1.54M and was also down by 3K Q/Q in spite of holiday-related hiring.
4:46 PM ET: Paid units were up 8% Y/Y, after having grown 11% in Q3. Third-party sellers accounted for 59% of paid units, up from 56% a year ago and representing a new high.
4:44 PM ET: With Amazon paring its fulfillment/transportation capex, purchases of property and equipment fell 12% Y/Y to $16.59B, and property and equipment acquired via finance leases fell to just $317M from $1.61B.
4:38 PM ET: Amazon's Q4 operating expenses:
Fulfillment +3% to $23.1B
Technology and content +36% to $20.81B
Sales and marketing +19% to $12.82B
G&A +32% to $3.33B
Fulfillment and sales/marketing growth slowed meaningfully relative Q3's growth rates, while tech and content growth was unchanged.
4:34 PM ET: For the last 12 months, Amazon's free cash flow minus all leasing and financing payments is negative $12.8B. That compares with negative $21.5B at the end of Q3 and negative $14.3B a year earlier.
Massive fulfillment/transportation capex has been weighing on Amazon's FCF. With Amazon now cutting spending, investors will be looking for additional FCF improvement as 2023 progresses.
4:29 PM ET: With a greater-than-expected mix shift towards services revenue streams providing a boost, Amazon's GAAP gross margin came in at 42.6%. That's above a 41.5% consensus and up from 39.8% a year ago.
4:26 PM ET: It's notable that seller services grew 20% while online stores fell 2%. The former is a much higher-margin business than the latter.
4:24 PM ET: Q4 sales by revenue stream:
Online stores (direct e-commerce) -2% to $64.53B, below a $65.13B consensus
Third-party seller services (commissions, fulfillment, etc.) +20% to $36.34B, above a $32.13B consensus
Subscription services (Prime memberships, content subscriptions, etc.) +13% to $9.19B, above an $8.85B consensus
Ads +19% to $11.56B, above an $11.4B consensus
Physical stores (Whole Foods, Amazon Go, etc.) +6% to $4.96B, above a $4.92B consensus
"Other" revenue (credit cards, content licensing, etc.) +77% to $1.25B, above a $1.18B consensus
4:15 PM ET: Of note: Amazon's shipping costs were up only 4% Y/Y in Q4, after having grown 10% in Q3. Cost-cutting efforts and lower energy prices likely helped out some.
4:12 PM ET: Amazon is now down 3.4% AH. With the stock having run up strongly ahead of earnings, the AWS revenue print and Q1 op. income guide appear to be overshadowing the Q4 top-line beat.
4:10 PM ET: While Q4 EPS missed consensus due to the Rivian charge, GAAP op. income was $2.74B, a little above a $2.61B consensus.
4:08 PM ET: Q4 revenue by reporting segment:
North America +13% Y/Y to $93.36B, above a $90.37B consensus
International -8% to $34.46B (+5% in constant currency), above a $33.95B consensus
AWS +20% to $21.38B, below a $21.83B consensus
4:05 PM ET: Revenue rose 9% Y/Y in Q4 (12% in constant currency), and the Q1 guide implies 4% to 8% growth, with forex expected to be a 2.1 percentage point headwind.
4:04 PM ET: Amazon's stock has reversed course: Shares are now down 1.7% AH.
4:03 PM ET: Amazon guides for Q1 revenue of $121B-$126B vs. a $125.09B consensus, and for Q1 op. income of $0 to $4B vs. a $4.04B consensus.
4:02 PM ET: Results are out. Q4 revenue of $149.2B beats a $145.71B consensus. GAAP EPS of $0.03 (pressured by a $2.3B charge related to Amazon's stake in Rivian) misses a $0.17 consensus.
Shares are up 2.9% AH.
4:00 PM ET: Amazon closed up 7.4%. The Q4 report should be out shortly.
3:54 PM ET: Though still down 25% over the last 12 months, Amazon's stock is up 6.9% today and 34% YTD. As a result, expectations are higher now than they were a month ago.
3:52 PM ET: The FactSet consensus is for Amazon to report Q4 revenue of $145.71B and GAAP EPS of $0.17.
Amazon's Q1 operating income guide will likely get a lot of attention, given recent layoffs and other cost-cutting efforts. The Q1 op. income consensus is at $4.04B, while the revenue consensus is at $125.09B.
3:50 PM ET: Hi, this is Eric Jhonsa. I'll be live-blogging Amazon's earnings report and call.