Giant e-commerce company Amazon has reported its second quarter (Q2) earnings, showing a return to double-digit revenue growth.
Amazon recorded a double-digit growth after expansion was mired in the single digits for five of the past six quarters. The company’s CEO Andy Jassy, who took over the helm from founder Jeff Bezos in July 2021, attributed some of the improvement to AWS, which had previously been seeing clients slow their spending due to economic uncertainty.
He said in a statement, “Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment”.
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Amazon’s second-quarter result surpassed analysts’ estimates and issued guidance that points to accelerating revenue growth.
The e-commerce company delighted investors on Thursday, posting earnings of 65 cents a share, surpassing analysts’ estimate of 35 cents a share. The company’s stock surged almost 9% in extended trading.
Amazon reported a revenue growth of 11% $134.4 billion surpassing $131.5 expected. Advertising hit $10.7 billion vs $10.4 billion in revenue. Advertising continues to be a booming business for Amazon, with quarterly revenue jumping 22% in the period to $10.7 billion.
Amazon Web Services (AWS) recorded $22.1 billion compared to analysts’ expectations of $21.8 billion. In its earnings release, Amazon said AI products from AWS are being used by numerous customers, which include; Royal Philips, 3M, Old Mutual, and HSBC. AWS accounted for 70% of Amazon’s $7.7 billion operating profit.
Reports disclosed that Amazon’s second-quarter earnings is the biggest earnings beat since its report for the fourth quarter of 2020. This indicates that CEO Andy Jassy’s cost-cutting measures at the company have so far been effective.
Recall that under Jassy, Amazon since last fall, cut 27,000 jobs and froze hiring, as the CEO looked to trim expenses in units across the company. Global headcount fell 4% year over year to 1.46 million people as of the end of the second quarter.
Amid growing anxiety over the potential for a recession, Amazon in the past few months shut down a subsidiary that’s been selling fabrics for nearly 30 years and shuttered its hybrid virtual, in-home care service Amazon Care among the cost-cutting moves.
Jazzy has morphed the company into a leaner version of itself, following a decline in sales and a challenging economy that pushed the company to perform abysmally.
More so, the firm is adding AI in Alexa and other products, notes LinkedIn News
Amazon wants to use artificial intelligence to revitalize its Alexa voice assistant. The company plans to announce new AI-powered devices for the home at a Sept. 20 event, Axios reports. The goal: Allowing users to interact with Alexa more conversationally as they seek help with tasks around the home. More than half a billion devices currently use Alexa, Axios notes, making Amazon’s focus on putting AI in users’ homes a tall task. Generative AI at scale is expensive, demanding vast computing resources. The tech giant says it is also eager to limit time lags in responses by Alexa.
Forecasting a third quarter (Q3) report, Amazon has predicted a bright (Q3) on resilient cloud sales, and shopping trends. For the third quarter, Amazon expects sales of between $138 billion and $143 billion or growth of between 9% and 13%.
Amazon’s report, along with Apple’s on Thursday, wraps up earnings season among the mega-cap tech companies. Apple’s results topped Wall Street expectations for both earnings and sales, driven by the services business.
Meanwhile, Meta is not giving up on its Ray-Ban smart glasses, reports LinkedIn News.
Meta is working on a second generation of its Ray-Ban smart glasses as it looks to move on from the tepid consumer reaction to its first iteration. The tech giant launched Ray-Ban Stories in 2021, allowing users to take photos and listen to music through their glasses, but two years later, less than 10% of the 300,000 units it sold are still actively in use. Customers reported problems such as poor connectivity and short battery life, The Wall Street Journal writes, though Meta is hoping a new version of Ray-Ban Stories will engage and retain users. First-generation Ray-Ban Stories currently retails for up to $299. Meta’s Reality Labs division, which reported $8 billion in losses in the first half of 2023, created the glasses.
Last week, Meta reported a robust advertising revenue. “Shares of Meta climbed in early trading Thursday, after the Facebook parent reported a 12% surge in second-quarter revenue Wednesday — its first double-digit growth since the end of 2021 — and boosted its outlook for the third quarter. The company’s ad-targeting efforts, now augmented by artificial intelligence, are helping it regain ground after Apple’s privacy-policy changes stifled much of that revenue last year. Meta’s Reels, short-form videos on Facebook and Instagram that compete directly with TikTok, are also helping lure new users and advertisers. Reality Labs, Meta’s metaverse business, reported an operating loss of $3.7 billion due to “ongoing product development efforts … and investments to further scale our ecosystem,” the company said. Google parent Alphabet posted robust earnings earlier this week, partially thanks to ad dollars from its search engine and YouTube.”