Amazon’s outlook brightens on consumer confidence overseas, cloud hopes By Reuters

By Akash Sriram and Jeffrey Dastin

(Reuters) -Amazon.com Inc on Thursday reported quarterly sales and profit ahead of expectations as the company expressed renewed confidence in its cloud business and said consumer sentiment was improving overseas and that cost cuts were paying off.

Amazon (NASDAQ:) shares traded near the closing price of $109.82, giving up early after-hours gains of as much as 12%.

Addressing ongoing worries about the economy, CEO Andy Jassy has aimed to slash spending across Amazon’s vast array of divisions.

Last month, he said the company would axe jobs from its lucrative cloud and advertising businesses, expanding Amazon’s corporate layoffs since November to 27,000 employees. Its full and part-time head count dropped 10% as of the just-ended quarter to about 1.47 million workers, including changes to warehouse staffing.

The company likewise has ended entire services, including on Wednesday when it said it would pull its lineup of Halo health trackers.

In the middle of such cost cuts, Amazon has sought new revenue. Brian Olsavsky, its chief financial officer, told reporters that the economy had brightened internationally at the same time as Amazon increased its ad sales.

Regarding international sales, he said: “It’s good to see inflation going down there. It’s good to see consumer confidence increasing.”

In North America, he said, demand had held up, even though “you see signs that customers are looking for value” and “probably putting off some discretionary purchases.”

Ultimately, the online retailer reported better-than-expected sales of $127.36 billion in the first three months of the year, and it forecast revenue between $127 billion and $133 billion in the second quarter.

Andrew Lipsman, an analyst with Insider Intelligence, said the company had done what it needed to reassure investors.

“Amazon’s stronger-than-expected performance for its key profit centers of AWS and advertising indicate that the enterprise and the digital ad sectors may be turning the corner,” he said.

Amazon’s outlook has long been intertwined with the fortunes of its cloud-computing division, Amazon Web Services. The growth of AWS slowed to 15.8% in the first quarter, while recession-wary businesses scrutinized their spending.

Still, Olsavsky said, Amazon had seen no shift in the competitive balance among cloud providers. His comments followed a financial report by Microsoft Corp (NASDAQ:) this week that exceeded analysts’ expectations as the Amazon rival drew business through AI.

“We like the fundamentals we are seeing in AWS and believe there is much growth ahead,” Jassy added in a statement.

Amazon’s net profit stood at $3.17 billion in the quarter ended March 31, compared with a loss of $3.84 billion, a year earlier.