Commerce giant Amazon posted lower-than-expected income in the fourth quarter but saw solid year-over-year growth within its cloud platform, Amazon Web Services.
WHY IT MATTERS: The company missed earnings estimates due to both a $2.3 billion loss on electric vehicle manufacturer Rivian and economic uncertainty causing consumers to be more careful with their spending, Chief Financial Officer Brian Olsavsky said Thursday during the Q4 earnings call.
BY THE NUMBERS: Amazon reported for Q4:
- Net income plummeted 98% YoY to $278 million;
- Worldwide net sales grew 8.6% YoY to $149.2 billion;
- Operating expenses increased 9.3% YoY to $146.5 billion; and
- AWS revenue increased 14% YoY to $21.4 billion.
NOTEWORTHY: AWS will continue to see growth, Olsavsky said, as banks and fintechs continue to move their data centers from on-premises to the cloud. In addition, the company expects new workloads to come to the cloud soon.
“Some of the key benefits of being in the cloud compared to managing your own data center are the ability to handle large demand swings and to optimize costs relatively quickly, especially during times of economic uncertainty,” he said. “Our customers are looking for ways to save money, and we spend a lot of our time trying to help them do so.”
FLASHBACK: The company recently cut 18,000 employees due to the growing sentiment of a potential recession further into the year, primarily in “stores, device businesses and human resource teams,” according to the earnings presentation.
Several other tech companies have seen similar layoffs due to a slowdown in e-commerce spending following the COVID-19 pandemic.
FUTURE LOOK: The company’s belief in the future of AWS is unwavering — even amid economic uncertainty — both for its cloud capabilities and its cost-saving implications, Olsavsky said during the call.
“Ninety percent to 95% of the global IT spend remains on-premises. I really do believe in the next 10 to 15 years that most of it will be in the cloud if we continue to have the best customer experience,” he said. “It means we have a lot of growth in front of us in the AWS business.”
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