The interpretation of Amazon's last quarter's financial report has these core points
Time： 2023-03-09 16:20
Last month, Amazon released its financial results for the fourth quarter of 2022 (from September 30, 2022 to December 31, 2022).
IAN Consulting analyzed and commented on the fourth quarter financial report released by Amazon to find out some core points and future trends.
1、 Key performance data of the fourth quarter
Amazon's net sales in the fourth quarter was $149.04 billion, up 9% from $137.412 billion in the fourth quarter of 2021. Excluding the negative impact of $5 billion caused by exchange rate changes, Amazon's net sales in the fourth quarter increased by 12% year-on-year. The net profit in the fourth quarter was US $278 million, down 98% year on year.
Overall, Amazon's revenue in the fourth quarter slightly exceeded expectations, but its earnings per share failed to meet market expectations.
2、 The advertising revenue maintains the growth trend, Prime membership services attract more allies and enhance the attraction
In the fourth quarter, Amazon's advertising revenue increased by 19% year-on-year to 11.55 billion US dollars, continuing the trend of the previous quarter and maintaining a relatively high position. At present, the world economy is not very prosperous, and the conversion rate of e-commerce advertising in all kinds of advertising is at the top, so Amazon's advertising revenue will maintain a high growth trend.
Amazon's net sales of Prime member service subscriptions in the fourth quarter increased by 13.1% year-on-year to 9.2 billion US dollars, basically in line with expectations. At present, the appeal of Amazon's Prime membership service to users is steadily improving, mainly because it has changed from a simple shopping website member to a comprehensive member of combined cloud games and online streaming media.
3、 Third-party retail business performance remains strong
Amazon's third-party seller service revenue increased by 20% year-on-year, exceeding the expected 7%, and the data performance was very good; The number of third-party seller service sales units accounted for 58% of the total sales units in the third quarter, setting a record. We expect this trend to continue.
The absolute value of international business revenue fell by 10.5% in the quarter, mainly due to the impact of the European economic recession, the Russian-Uzbekistan war and the energy crisis, and the overall downturn in consumption.
Focusing on North America, the growth rate of pan-retail business reached 13% year on year, better than 7% of the overall retail market, maintaining a strong state.
4、 The growth of AWS business has slowed down significantly. How long can cash cows last?
Although Amazon's fourth-quarter performance slightly exceeded expectations, its cash cow, AWS's revenue was less than expected.
For a long time, under the repeated suppression of inflation and supply chain disruption, Amazon's retail business cost increased and its profit became thinner, and its cloud business department AWS became 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%, and the growth rate slowed significantly. The main reason is that corporate customers become more cautious about spending on IT under the conditions of economic downturn and uncertainty, which may also drag down Amazon's performance in the future. Another reason may be that the performance of Microsoft's cloud business unit, the main competitor of Amazon's cloud business in the last quarter, did not meet the market expectations. Therefore, the market is generally worried that the cloud business will continue to drag down Amazon's performance.
AWS revenue has a trend of continuous slowdown, and its performance is difficult to satisfy the market.
On the whole, Amazon reported mixed results this quarter. In the foreseeable future, although the consumption in the first quarter of 2023 is still in the bottom, 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 recover to a better state in the future. Under the fierce market competition of cloud business, the growth rate of AWS business will further slow down, and it is difficult to provide a large amount of cash sources in the short term as in the past. In the future, we should continue to pay attention to the inflation risk, regulatory risk, consumption recovery, and the cloud computing field of intensified competition. IAN Consulting will also continue to track and bring the latest analysis and views in time.