Amazon had better net sales during its holiday quarter than even its best projections, but the results still show a company struggling with economic slowdowns across its divisions.
Net sales were up 9 percent year over year, according to Amazon’s just-released Q4 2022 earnings, surpassing the company’s guidance it gave last quarter that growth would be up between 2 and 8 percent year over year. That said, it was its least profitable Q4 ever; the company earned $0.3 billion for quarter, a sharp drop from $14.3 billion a year before.
And for the full year, the company posted a net loss of $2.7 billion, its first since 2014 and reversing a trend of rising annual profits and booming growth during the pandemic. Substantially at fault for that: Amazon noted a $12.7 billion pre-tax valuation loss in 2022 due to its investment in the EV company Rivian.
One area that particularly underperformed last year was the company’s international business, which saw net sales decline 8 percent year over year in FY2022 after a 22 percent growth in FY2021. The other three of the company’s main business segments, including its lucrative AWS business, grew less than they did the year before.
Amazon’s fourth quarter was a busy one, featuring things like the first Prime Early Access Sale, the launch of the note-taking-focused Kindle Scribe, the beginning of its phased rollout of Matter to Alexa devices, the discontinuation of the Amazon Glow, and the retirement of the exec in charge of Prime Video, Twitch, and gaming. It reached a major agreement with the EU to try to level the playing field for third-party sellers. On the labor front, it faced scores of walkouts ahead of the holiday season, though union organizers at a California warehouse withdrew its petition to hold an election.
However, Amazon’s fourth quarter also marked the beginning of significant layoffs, which have since become the biggest in the recent huge wave of job eliminations in the tech industry. In November, Amazon announced initial layoffs, including cuts to its hardware and services teams, and at the time, CEO Andy Jassy promised more were on the way.
In early January (which is outside the quarter being discussed today), he followed through, saying that the company planned to cut “just over” 18,000 jobs. The “majority” of the layoffs hit the Amazon Stores and People, Experience, and Technology organizations, and CNBC reported that staffers in robotics, Zappos, payments, Prime Air, and more were affected.
Last quarter, Jassy also said that the company was working through a “set of initiatives” that would “yield a stronger cost structure for the business moving forward” and was lowering costs in its stores fulfillment network. On Thursday, Jassy said that Amazon is “encouraged” by the progress it’s making to reduce its “cost to serve in the operations part of our Stores business.”