Despite plenty of shoppers turning to Amazon this holiday season, the company's profits were less than jolly in the final three months of 2022. In an earnings statement Thursday, the company reported a steep drop off.
Amazon's revenues were up 9% from the fourth quarter of 2021, coming in at $149.2 billion. However, the e-commerce giant posted earnings of 3 cents per share, down from $1.39 in the final three months of 2021. This was lower than analyst estimates of 17 cents per share, according to Yahoo Finance.
The results capped off a year of promises to investors that Amazon would cut costs created by its much-expanded fulfillment infrastructure and a workforce that doubled from the start of the pandemic. The company is now in the position of demonstrating that its layoffs of 18,000 people and mothballing of parts of its fulfillment network have put Amazon on firmer financial ground. CEO Andy Jassy joined a call with investors, reassuring them that the company is "working really hard to streamline our costs."
"Our relentless focus on providing the broadest selection, exceptional value, and fast delivery drove customer demand in our Stores business during the fourth quarter that exceeded our expectations" Jassy said in a statement. "We're also encouraged by the continued progress we're making in reducing our cost to serve in the operations part of our Stores business."
Amazon shares were down 3.6%, at $109.05, in recent after-hours trading, after they'd closed regular trading up more than 7%. Revenues from Amazon's advertising services -- the source of all those sponsored search results you see when looking for a product -- gave extra oomph to the company's sales, growing faster than overall revenues. Amazon Chief Financial Officer Brian Olsavsky told reporters that the company sees this as a "good sign," even though the growth of Amazon's ad business is slowing down.
Amazon's investment in electric vehicle maker Rivian had a negative impact on its balance sheet, deducting $2.3 billion from its net income. The investment has become a wild card in the tally of Amazon's profit. In 2021, Rivian had a valuation gain, boosting Amazon's balance sheet by $11.8 billion.
The company's operating income, which excludes valuations of Amazon's investments, came to $2.7 billion, a decrease from $3.5 billion at the same time in 2021. The cost of severance for employees laid off at the end of 2022 sliced off $640 million from the company's operating income. Olsavsky confirmed Thursday that all laid off employees have been notified.