Amazon, which frequently conveys "cold air" to the outside, what is the revenue in the fourth quarter of last year?

Time: 2023-03-13 15:42

Last month, Amazon announced its financial report for the fourth quarter of 2022 (2022/9/30 to 2022/12/31).
IAN Consulting analyzed and commented on Amazon's fourth-quarter financial report, looking for some core points and future trends.


1.The main performance data of the first and fourth quarters

Amazon's net sales in the fourth quarter were $149.204 billion, an increase of 9% compared to $137.412 billion in the fourth quarter of 2021, excluding the negative impact of $5 billion from currency changes. Net sales rose 12% year-over-year. Net profit for the fourth quarter was US$278 million, a year-on-year decrease of 98%.
Overall, Amazon's fourth-quarter revenue slightly exceeded expectations, but earnings per share missed market expectations.


2. Advertising revenue maintains a growth trend, and the Prime membership service attracts more allies, increasing its attractiveness

In the fourth quarter, Amazon’s advertising revenue increased by 19% year-on-year to US$11.55 billion, continuing the trend of the previous quarter and maintaining a relatively high position. Now that the global economy is not very prosperous, e-commerce advertising has the highest conversion rate among all kinds of advertising, so Amazon's advertising revenue will maintain a high growth trend.
Amazon’s net sales of Prime membership service subscriptions in the fourth quarter increased by 13.1% year-on-year to $9.2 billion, basically in line with expectations. At present, the attractiveness of Amazon's Prime membership service to users is steadily increasing, mainly because it has transformed from a simple shopping site membership to a comprehensive membership that combines cloud games and online streaming media.


3. The performance of the third-party retail business is still strong

Amazon's third-party seller service revenue increased by 20% year-over-year, exceeding expectations of 7%, and the data is very good; third-party seller service sales units accounted for 58% of the total sales units in the third quarter, a record high, and we expect this trend will last.
The absolute value of international business revenue fell by 10.5% in this quarter, mainly due to the impact of the European economic recession, the Russian-Ukrainian war and the energy crisis, and the overall sluggish consumption.
Focusing on the North American region, the pan-retail business grew by 13% year-on-year, which was higher than the 7% of the overall retail market, maintaining a very strong state.


4. The growth rate of AWS business has slowed down sharply. How long can the cash cow last?

Although Amazon's fourth-quarter performance slightly exceeded expectations, its cash cow, AWS, did not perform as well as expected.
For a long time, under the repeated suppression of inflation and supply chain disruption, Amazon's retail business costs have risen and profits have thinned, and its cloud business unit AWS has become Amazon's most dependent cash cow.
The growth rate of AWS business in the third quarter was 27.5%, but the growth rate in the fourth quarter dropped to 20%, a sharp slowdown in growth rate. The main reason is that corporate customers have become more cautious about spending on the IT part under economic downturn and uncertain conditions, which may also drag down Amazon's performance in the future. Another reason may be that the performance of Microsoft's cloud business unit, Amazon's main competitor in the cloud business, fell short of market expectations in the last quarter. Therefore, the market generally has increased concerns that the cloud business will continue to drag down Amazon's performance.
AWS revenue has continued to slow down, and its performance is hard to satisfy the market.

Overall, Amazon reported mixed results for the quarter. In the foreseeable future, although consumption in the first quarter of 2023 is still bottoming out, it is clear that the downward space has become limited. Amazon has been implementing cost reduction and efficiency increase, and the retail industry is likely to return to a better state in the future.

Under the fierce market competition of the cloud business, the growth rate of the AWS business will further slow down, and it will be difficult to provide a large source of cash in the short term as in the past.

In the future, everyone should continue to pay attention to inflation risks, regulatory risks, consumption recovery, and the cloud computing field with intensified competition. IAN Consulting will continue to track and bring the latest analysis and opinions in a timely manner.

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