Amazon Q4 sales rise 9%; profit takes a beating

Amazon reported better-than-expected fourth-quarter sales, but a loss on its stake in electric-truck maker Rivian Automotive took a big bite out of its profits. 

The online giant also warned of slower growth for the short term, with CFO Brian Olsavsky saying on a call that the company expects slower rates for the next few quarters amid an uncertain economic environment. 

Amazon's net income plunged to  $0.3 billion, or $0.03 per share, in the quarter ended Dec. 31, compared with $14.3 billion, or $1.39 per diluted share, in the year-ago quarter. (Amazon said its Q4 2022 income includes a loss of $2.3 billion included in non-operating income – expense - from the common stock investment in Rivian Automotive.)  

For the full year, Amazon posted a net loss — its first since 2014 — of $2.7 billion.

Net sales in the fourth quarter increased 9% to $149.2 billion, compared with $137.4 billion last year and beating analysts’ estimates of $145.42 billion.  North America segment sales increased 13% year-over-year to $93.4 billion. For the full year, Amazon’s revenue increased to $513.98 billion, up from $469.82 billion a year ago 

Amazon’s brick-and-mortar business increased year-over-year, while its direct e-commerce revenue declined. Sales at Amazon’s physical stores, including Whole Foods Market and Amazon Go, rose 6% to $4.96 billion, just topping estimates. Direct e-commerce sales fell 2% to $64.53 billion, missing estimates of $65.13 billion.

Third-party seller services (commissions, fulfillment, etc.) jumped 20% to $36.34 billion, well above estimates of $32.13 billion.  Amazon’s ad business also grew, rising nearly 19% to $11.56 billion, which topped estimates.

Sales at the company’s closely watched cloud-computing division, Amazon Web Services, increased 20% year-over-year to $21.4 billion, just short of estimates.

"In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” CEO Andy Jassy said in a statement.

He also said the company is “encouraged by the continued progress”  it is making in reducing retail costs.

First Quarter 2023 Guidance

Amazon expects net sales to be between $121.0 billion and $126.0 billion, or to grow between 4% and 8%, compared with the  first quarter 2022. Analysts were expecting sales of $125.1 billion.

Operating income is expected to be between $0 and $4.0 billion, compared with $3.7 billion last year.