AMZN Finally Starts to Care About its Margin After The Disappointing Earning

2022 fiscal revenue $514b, up 9% YoY. Operating profit $12.2b, down more than 50% YoY. Only Cloud business made positive profit, AWS operating profit $22.8b, up 23% YoY.

Company guidance expect Q1 revenue between $12.1b-$12.6b, 4-8% growth, but medium is less than analyst estimation. Operating profit expect between $0-$4b, meaning if economy continue to slow, Amazon could turn into loss in Q1. CEO stated that short-term uncertainty is high, but he is optimistic over the long-term.

Amazon has restructured its over all cost over the past 6months. Other than 18,000 job cuts, Amazon also shut down Amazon Care Service, closed all but left one of its US call centers, closed several underperformed retailer store and warehouse. It all hint that Amazon is starting to focus profit margins, and CEO added that cost-cut is happening, and the primary focus now is to improver delivery efficiency.

The earnings data sticks with expectations as revenue growth is slightly above guidance and consumer power stays solid. And surprisingly, Amazon’s advertising business hit 19% growth YoY under the current market environment, when Google advertising underperformed in Q4. Amazon’s prime+ advertisement model is continuing to hold AMZN’s value. Also, it is worth looking forward to Amazon’s cost-cuts. Amazon hasn’t been focusing on its margins in the pas years, cutting cost now could benefit its value when economy turnaround. But its guidance also indicated that macro-economic uncertainty will be a challenge in the short-term.