August 7, 2023: Amazon founder Jeff Bezos famously ignored Wall Street’s earnings obsession, declaring the customer was always better important.
While his successor, Andy Jassy, stated plenty about serving customers, investors have pushed him to get serious regarding profitability. And his efforts are paying off.
On Thursday, Amazon delighted investors, publishing earnings of 65 cents a share, blowing past estimates of 35 cents a share. The company’s stock surged almost 9% in extended trading.
The last time Amazon had revenues beat that big was in February 2021, when profit for the fourth quarter of 2020 came in at $14.09 per share, almost double analyst forecasts. At the same time, the company surprised investors by announcing Bezos would step down as CEO.
Jassy closed out his two year at the helm in July. Under Jassy, Amazon has morphed into a leaner version of itself, as slowing sales and a challenging economy forced the company to eschew the relentless growth of the Bezos years. Investors dialed up the pressure after watching the stock lose half its value in 2022.
Jassy pared back underperforming projects in riskier, newer verticals like health care and grocery, froze corporate hiring, and eliminated 27,000 jobs.
In Jassy’s prepared remarks at the start of Thursday’s earnings call, cost cuts were one of his central themes. He emphasized steps the company has taken to reduce expenses in its fulfillment system, such as moving from a national network to a “series of eight separate regions serving smaller geographic areas.”
“We keep a broad selection of inventory in each area, making it faster and less expensive to get these outcomes to customers,” he said.
Amazon said its core business of selling goods in North America earned $3.21 billion during the quarter, a reversal from a year ago when the segment lost $627 million.
The broad-based changes under Jassy have left the company less dependent on its cloud business, Amazon Web Services, for profits. AWS, which provides cloud infrastructure and a wide range of software services to businesses worldwide, has often accounted for all, or almost all, of Amazon’s profit.