Amazon.com posted its strongest quarterly profit in a year and a half on Thursday, driven by recovering health in its core online retail business and the effects of months of cost cutting.
The Wall Street Journal reports the Seattle company on Thursday reported $6.75 billion in profit for the three months through June, reversing a loss a year earlier and close to twice the amount analysts were expecting. Revenue rose by nearly 11% to $134.2 billion, also beating expectations.
Sales growth in Amazon Web Services, the cloud-computing division that accounts for the bulk of the company’s profit, continued to slow after hitting its weakest pace on record in the first quarter of the year.
Amazon projected a range for revenue in the current quarter that broadly topped analysts’ projections.
The company’s shares rose by 6.8% in after-hours trading Thursday. As of the close of regular trading Thursday, the stock had jumped by more than half this year, regaining ground after steep losses. Amazon’s stock hit an all-time high in 2021 but then fell by more than 50% through the end of last year, as the company worked through changes in consumer demand and an expensive overbuild of its logistics network.
As with other tech giants, Amazon’s business has been whipsawed in recent years as sales boomed during the pandemic, when much of work and life shifted online, then slowed afterward as more normal patterns of shopping and business spending resumed. In the spring of last year, Amazon was still adjusting to that newer reality, which led to a $2 billion loss for the second quarter of 2022..
Amazon has laid off more than 27,000 employees over the past year. Its office workforce could shrink further as it rolls out a new policy requiring employees to either relocate to major Amazon corporate hubs, such as Seattle and New York, or face termination.
Amazon continues to face challenges. Investors have been watching a slowdown in spending by Amazon Web Services customers. Revenue at the cloud-computing unit rose by 12.2%, somewhat better than expected but still its slowest pace since the company began separating out the unit’s performance in 2015. The unit’s operating profit fell from the year-earlier period to $5.4 billion, though it still accounted for the bulk of the company’s total.
Amazon said it expects its operating income for the third quarter to be between $5.5 billion and $8.5 billion, compared with $2.5 billion in the third quarter of 2022. It expects sales between $138 billion and $143 billion, suggesting growth of about 9% or higher from the same quarter last year.
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