Amazon’s ad revenue grows by 19%; tech giant rakes in $11.56 bn in year-end quarter

Amazon released its first-quarter forecast on Thursday, which was below estimates and overshadowed the fourth quarter's revenue that was more than anticipated. The stock lost most of its rise from the regular trading day when it fell after hours.

Following are the key figures:

• Earnings: 3 cents per share

• Revenue: $149.2 billion vs $145.42 billion expected, according to Refinitiv estimates

Here’s how other key Amazon segments did during the quarter:

• Amazon Web Services: $21.4 billion vs $21.87 billion expected, according to StreetAccount

• Advertising: $11.56 billion vs $11.38 billion expected, according to StreetAccount

In its 25 years as a publicly traded corporation, Amazon has finished its slowest year of growth. As rising rates and pressure from inflation restrained consumer spending, revenue for the year climbed by 9%. In 2022, the stock price nearly lost half of its worth.

The online retailer predicted first-quarter revenue of between $121 billion and $126 billion, or 4% to 8% rise over the same period last year. Analysts anticipated that sales would total $125.1 billion.

Sales in the online retail division of Amazon decreased 2% year over year. As a result of consumers cutting back on discretionary spending due to increased gas and food prices, the company has been dealing with declining sales. With consumers increasingly resorting to physical businesses, the pandemic-driven e-commerce boom has also petered out.

A slowdown in business spending caused Amazon Web Services, its cloud division, to fall short of expectations for the fourth quarter. Just 20% of AWS's growth during that time, compared to 27.5% in the third quarter.

The growth in advertising revenue outpaced that of online ad businesses like Google, Facebook, and Snap, increasing by 19% from a year earlier (23% ignoring changes in foreign exchange rates). By providing companies and sellers with new opportunities to pay to advertise their products throughout the company's website, applications, and media holdings, Amazon has recently become one of the leaders in digital advertising.

Operating income for the quarter decreased from $3.5 billion a year ago to $2.7 billion. About $2.7 billion in charges were made during the fourth quarter, $640 million of which were due to severance payments for layoffs, according to the business.