In the third quarter, Amazon benefited from a two-day annual Prime Day sale in July. In the previous year, Prime Day was celebrated earlier than July. The company calls this year’s event “the biggest ever,” and it generated about $6.8 billion in revenue — about $5 billion more than the usual two days — according to estimates from Cowen investment bank.
Amazon’s cloud computing division grew the slowest on record, growing 27% to $20.5 billion. Amazon Web Services accounts for 16% of the company’s total revenue but is the only division that generates a profit from its business. Mr Olsavsky said growth slowed towards the end of the summer, as Amazon saw “a lot of customers cut their bills, which we’re happy to help”.
Its international operations, dragged down by the strong dollar, generated $2.5 billion in operating losses.
The company employed 1.5 million people at the end of the third quarter, nearly 100,000 fewer than at the beginning of the year.
Mr. Olsavsky said Amazon has generated more than $1 billion in productivity savings, about half a billion less than executives had hoped. Product shipping costs increase more slowly than the number of products sold. The slowdown in sales growth makes it more difficult to operate at optimum efficiency as the company can make the best use of its fulfillment and delivery infrastructure as more orders come in, Mr. Olsavsky said. .
Amazon’s lucrative advertising business, which Morgan Stanley estimates is worth about $185 billion, grew 25% to $9.5 billion, although there was a quarter-on-quarter slowdown as advertisers withdrew. retreat. The company’s subscription business, which is dominated by Prime members, grew 9% to $8.9 billion.
Mr. Olsavsky said overall operating profit had fallen due to the high costs of marketing the two main video services to Prime members – Thursday night football match with the National Football League and new “Lord of the Rings” series.
In addition to the volatile economic environment, the value of Amazon’s investment in Rivian Automotive, an electric truck maker that has struggled to meet production targets, added volatility to Amazon’s profits this year. That valuation rose by $1.1 billion, contributing to Amazon’s profit in the latest quarter.
