Amazon (AMZN) earnings Q4 2022

Amazon CEO Andy Jassy speaks at the ribbon cutting ceremony ahead of tomorrow’s opening night for the NHL’s newest ice hockey franchise, the Seattle Kraken, at the Climate Pledge Arena on October 22, 2021 in Seattle.

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Amazon will report fourth quarter results after the market close on Thursday. What analysts expect:

  • Merits: 18 cents a share, according to estimates by Refinitiv
  • Revenue: Refinitiv estimates $145.42 billion
  • Amazon Web Services: $21.87 billion, according to StreetAccount
  • Advertising: $11.38 billion according to StreetAccount

Amazon has ended what is likely its worst year for revenue growth in its quarter-century as a public company, and is expected to post another single-digit quarter of revenue growth as the company grapples with flagging consumer demand from inflation and a slowdown in its cloud business has.

The company warned in its latest earnings report that fourth-quarter sales would rise just 2% to 8% year over year.

Amazon shares lost half their value in 2022 as higher costs related to inflation, the war in Ukraine and supply chain constraints forced the company to recalibrate after its pandemic-driven growth. Meanwhile, consumers continued their return to in-person shopping and withdrawing discretionary spending, adding to Amazon’s pain.

Even the holiday season was seen as rather lackluster. According to FactSet estimates, Amazon’s online stores segment is expected to see a 1.4% decline in sales year over year.

“While there was an expected surge in consumer spending around the Cyber ​​Five period in late November (Thanksgiving Christmas shopping weekend was Amazon’s biggest weekend ever), that surge was likely short-lived as retail sales in December fell around 1.1% declined. [month over month]sharpest drop in 2022,” analysts at Canaccord Genuity, who continue to rate Amazon stock a ‘buy’, wrote in a note to clients earlier this week.

CEO Andy Jassy’s efforts to contain costs will be a key focus. In January, Amazon announced it was cutting 18,000 jobs from its corporate workforce after shedding a number of employees last November. The company has also imposed a hiring freeze among its ranks, cut some projects and halted inventory expansion to contain rising costs.

Amazon Web Services is expected to show slowing growth in the fourth quarter as companies rein in spending to cut costs. Cloud Computing Rival Microsoft last week reported a slowdown in expansion at its Azure unit.

AWS CEO Adam Selipsky said in an interview at the company’s annual Reinvent customer conference late last year that “we’re seeing some customers tightening their belts now.”

One bright spot could be Amazon’s advertising business, which is expected to post solid revenue growth during the quarter. Online advertising has come under pressure as inflation has prompted some brands to rebalance their budgets.

But Amazon’s ads business is poised to grow “in the mid-teens” in 2023, even against a tough macro backdrop, as sellers and vendors continue to buy targeted product ads, according to analysts at CFRA Research, which has a Buy rating on Amazon stock .

Apple and alphabet also report results after Thursday’s bell, closing out the earnings season among top-rated technology companies.

LOOK AT: RBC’s Brad Erickson explains Big Tech

RBC's Brad Erickson explains Big Tech Amazon (AMZN) earnings Q4 2022

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