Amazon Q2 FY23 Earnings: Will strong sales, AWS subscription growth aid Amazon share price?
Amazon's revenue grew 11% YoY (year-over-year) to $134.4 billion, beating the consensus estimate of $131.5 billion, driven by the firm’s cloud computing division - Amazon Web Services (AWS). AWS sales rose 12% YoY to $22.1 billion during the quarter.
However, according to data from Refintiv, the pace of revenue growth for Amazon’s cloud services division has slowed to its lowest on record on rising competition from peers Google and Microsoft in the cloud services segment.
Amazon's advertising revenue increased 23% to $10.7 billion. Amazon's retail business also grew since North America retail sales grew 11% YoY to $82.5 billion and International retail sales grew 10% YoY to $29.7 billion.
Amazon's stock price rose more than 7% in after-hours trading following the earnings report on 3rd August 2023. The company's market capitalization is over $1.32 trillion, as of 4th August 2023. The company's earnings per share were $0.65.
Amazon Q2 2023 Earnings: Key Highlights
- Amazon increased selection in the U.S. Amazon store by adding new brands like D’Amelio Footwear, Dyson hair care, IT Cosmetics, Ralph Lauren Fragrances, and Urban Decay, and extended its collaboration with Victoria’s Secret.
- AWS unveiled new AWS technologies, including Amazon Bedrock, AWS HealthScribe, Amazon Elastic Compute Cloud, AWS AppFabric, and more, with generative AI to help customers of all sizes.
- Amazon introduced new Echo devices to give customers more choices for how to access Alexa.
- Amazon did not declare any dividend during the quarter.
Amazon Q2 2023 Earnings: What elements pushed the growth?
Stable AWS growth: Amazon's cloud computing division, AWS, saw its sales growth stabilize in the second quarter. Sales at AWS were up 12% year-over-year to $22.1 billion, which is a healthy growth rate in itself, however the pace of this growth has slowed over the previous quarters.
| Net Sales Mix | Revenue | % Contribution | % change (YoY) |
| North America | $82.5 billion | 61% | 11% |
| International | $29.7 billion | 22% | 10% |
| AWS | $22.1 billion | 17% | 12% |
Pre-valuation gain: In the second quarter of 2023, the company earned a profit of $0.2 billion from the value of its investment in Rivian Automotive, Inc. before taxes which further led to the increase in overall net income.
Increase in Operating income: Rise to $7.7 billion in the second quarter, compared with $3.3 billion in the second quarter of 2022. The operating income segment from North America was $3.2 billion, while the International segment operating loss was $0.9 billion, compared with an operating loss of $1.8 billion in the second quarter of 2022.
Amazon Q2 2023 Earnings: A $6.8 billion profit against a loss
| Segments (Numbers in billion dollars) | Q2-2022 | Q2-2023 | % Change |
| Net income (loss) | -2.03 | 6.75
| 432.84% |
| Total net sales | 121.23 | 134.38 | 10.85% |
| Total Expense | 117.91 | 126.70 | 7.45% |
Amazon Q2 2023 Earnings: Financial Outlook
Amazon's guidance for the third quarter is for Net sales between $138.0 billion and $143.0 billion while Operating income is expected to be between $5.5 billion and $8.5 billion.
Overall, Amazon's strong second-quarter earnings were a result of strong demand for its cloud computing, e-commerce, and advertising services. The company is well-positioned to continue growing in the years to come.
Amazon Q2 2023 Earnings: Historical Share Price Performance
| 1 month | 6 months | 1-year | 5-years |
| -1.13% | 26.16% | -9.58% | 36.67% |
(As of 3rd August, 2023)