After laying off nearly 30,000 people, Amazon turned a profit.
Amazon recently announced its financial report for the second quarter of 2023 (as of June 30). The financial report shows that its revenue in the second quarter reached $134.4 billion, an increase of 11% year-on-year; Net profit was $6.7 billion, compared with a net loss of $2 billion in the same period last year. Among them, AWS (Amazon Cloud Service) business revenue reached 22.1 billion US dollars, up 12% year-on-year, but lower than the growth rate of 33% in the same period last year.
Amazon has taken cost-cutting measures in the past year, and has laid off about 27,000 people in two rounds. Andy Jassy, CEO of Amazon, said that the company continued to reduce the transportation cost of the logistics network under the condition of protecting the logistics speed rights of Prime customers, and customized LLMs (Large Language Model) to build a generative AI application and service Bedrock.
After the financial report was released, Amazon's after-hours share price once rose by more than 10%.
First, the investment in generative AI increased, and the net profit of AWS decreased by 6%.
In the second quarter of fiscal year 2023, AWS business revenue reached $22.1 billion, a year-on-year increase of 12%; However, due to the larger increase in operating expenses, the net profit decreased slightly compared with the same period of last year, reaching $5.365 billion, down 6% year-on-year.
A considerable part of Amazon's investment in AWS business comes from capital expenditure on AI-related technologies and hardware. Although the current return on investment in AI is not significant, Amazon still plans to invest more money in the future. AWS invested $100 million to establish AWS Generative AI Innovation Center, aiming to help customers successfully build and deploy generative AI solutions.
Its CEO Andy Jassy revealed in the company's quarterly earnings conference call that AI is the core of Amazon's plan in the next few years, and there are several ongoing generative AI projects in each business unit, spanning AWS, advertising, offline retail and intelligent voice assistant Alexa.
Second, revenue increased by 11%, and e-commerce business revenue was 53 billion US dollars.
In the second quarter of fiscal year 2023, Amazon achieved steady growth. The financial report shows that Amazon's revenue in this quarter reached $134.4 billion, an increase of 11% year-on-year and a net profit of $6.75 billion. Compared with the same period last year, operating cash flow increased by 74% to reach $61.8 billion.
In this quarter, among Amazon's business segments, the largest proportion of revenue was e-commerce, third-party sales services and AWS cloud services, with the amounts of 52.966 billion US dollars, 32.332 billion US dollars and 22.14 billion US dollars respectively, accounting for 39%, 24% and 17% of the total revenue respectively.
In the next quarter, Amazon expects its performance to achieve sustained growth. The overall revenue is expected to be between $138 billion and $143 billion, and the net profit is expected to be between $5.5 billion and $8.5 billion. However, foreign exchange rate fluctuations, inflation, the Internet and other uncertain factors may have a substantial impact on their income; In addition, due to the huge investment cost of generative AI, the net profit of AWS business is not as good as last year, and this situation may continue.
Third, lay off nearly 30,000 people and continuously reduce logistics costs.
In the second quarter of fiscal year 2023, the revenue of the North American branch reached $82.5 billion, an increase of 11% year-on-year, while the net profit turned losses into profits, reaching $3.2 billion.
Amazon has taken a variety of cost-cutting measures in the past year, including two rounds of layoffs and continuous reduction of transportation costs of logistics networks.
In January this year, Amazon announced the largest layoffs in history, with about 18,000 layoffs; In March, layoffs were announced again, affecting nearly 9,000 employees. Amazon once said that the surplus of employees was caused by a large number of enrollment expansion during the epidemic.
In addition, Amazon continues to reform and optimize its distribution network. Brian Olsavsky, its chief financial officer, mentioned in a conference call that Amazon is reducing transportation costs and shortening delivery time by shortening user distance, expanding user selection and changing inventory management methods.
In the financial report released this time, Amazon promised to hire at least 5,000 European refugees by 2026 and expand its refugee support program Welcome Door to Australia, Germany and Poland.
Conclusion: Amazon continues to make efforts to cut costs and increase investment.
Amazon achieved steady growth in the second quarter of 2023. The cost-cutting effect of the North American branch is remarkable, and the AWS branch is still increasing its investment. Although the net profit decreased slightly, the revenue increased significantly year-on-year.
In the next quarter, according to Amazon's expectation, although its performance may fluctuate due to exchange rate fluctuations, inflation and other factors, it remains optimistic as a whole.