E-commerce giant Amazon has reported a profit of $3.2 billion for the first quarter, a significant turnaround from the $3.8 billion loss it posted in the same period last year. The company’s revenue also increased 9% during the quarter, exceeding analysts’ estimates.
Amazon’s cost-cutting measures, including two rounds of layoffs and product cancellations, appear to have paid off. Despite lingering recession fears, key areas of Amazon’s business continue to grow. Amazon Web Services (AWS), a profit engine for the company, saw double-digit percentage growth during the quarter, with segment sales rising 16% from the previous year to $21.4 billion.
Amazon CEO Andy Jassy said in a statement that while AWS is navigating companies spending more cautiously in this macro environment, the company continues to prioritize building long-term customer relationships.
Investors responded positively to Amazon’s strong performance, with shares rising nearly 8% in after-hours trading on Thursday. Analysts note that the results and strong guidance for second-quarter net sales indicate that Amazon may be starting to come out of the woods.
Despite the positive results, Amazon is not resting on its laurels. The company has canceled physical store expansions and continues to look for ways to cut costs and improve efficiency. Amazon expects second-quarter net sales to grow between 5% and 10% from the same period last year, or be between $127 billion and $133 billion.
The strong earnings report comes as Amazon continues to face criticism over its treatment of workers and dominance in the marketplace. Last month, workers at an Amazon warehouse in Alabama voted against unionizing, but the fight for unionization continues at other Amazon facilities.
In response to criticism over working conditions, Amazon announced last week that it would raise wages for over 500,000 of its employees, at a cost of over $1 billion. The company has also faced scrutiny over its impact on small businesses, with some accusing the tech giant of driving smaller competitors out of business.
Despite the criticism, Amazon’s stock has continued to climb, reaching a record high earlier this week. The company’s market value now exceeds $1.7 trillion, making it one of the most valuable companies in the world.
Analysts say that Amazon’s strong earnings report is a sign that the company is weathering the pandemic and its aftermath better than many other businesses. As the world slowly emerges from lockdowns and economic uncertainty, Amazon’s focus on cost-cutting and its strong e-commerce business may continue to drive growth and profits.
“The pandemic has accelerated the shift to e-commerce, and Amazon is well-positioned to benefit from that trend,” said Cohen. “As long as the company can maintain its focus on costs and continue to innovate, I think we can expect to see continued growth in the coming quarters.”