Analysts watch margins, cloud

Amazon (AMZN) is set to release its fourth quarter 2022 results on Feb. 2, as the company looks to deliver after a tough year that rocked its shares.

Here’s what Wall Street expects to see from Amazon’s key numbers, as compiled by Bloomberg.

Net sales – $145.8 billion expected

Online store net sales: $65.03 billion

Physical store net sales: $4.93 billion

Earnings per share (EPS): 17 cents expected

Amazon Web Services (AWS) Net Sales: $21.76 billion expected

Operating result: $2.51 billion expected

Amazon shares have fallen around 47% in 2022 as the company has been plagued by a slowdown in digital advertising, high inflation and rising interest rates. ‘interest. After the company expanded rapidly to meet pandemic demand, last year’s wide-ranging economic uncertainty left Amazon in a bind. To that end, Amazon announced some of Big Tech’s most notable layoffs, seeking to get rid of 18,000 of its employees. This is the largest layoff in the company’s history to date.

This round of revenue will also tie the year in which a union drive at Amazon fully materialized. In April, the Amazon Labor Union (ALU) won a union election at a warehouse in Staten Island, New York. The company has been struggling ever since, but that hasn’t stopped the labor movement from gaining momentum. This month, workers at a UK Amazon warehouse staged the first such strike in that country.

What experts are looking for

Wall Street will be watching Amazon’s cloud results in particular this week. Amazon Web Services (AWS) is a mainstay of the Seattle-based company’s business, a cloud giant that has long been a reliable source of revenue and growth for the company. However, Microsoft’s (MSFT) grim earnings call last week – in which the company predicted cloud growth would slow – indicates that cloud growth at Amazon could also be sustainably slowing.

Analysts also hope to see retail growth that demonstrates the resilience of Amazon’s e-commerce business. Raymond James analyst Aaron Kessler pointed out in a Jan. 24 note that “MasterCard Spending Pulse data indicates U.S. e-commerce sales grew 11.3% year over year.” ‘other in Q4’, so we could see moderate or even modest retail growth. off Amazon. Margins also matter, he added.

“Given the slowdown in retail revenue growth, we expect investors to focus heavily on retail margins,” Kessler wrote.

As the company’s workforce is reduced, Kessler also expects the company to be able to save Amazon on its operating expenses – although we may not yet begin to see the effects of these job cuts. .

“We believe these reductions could result in an annualized operating expense reduction of more than $4 billion for Amazon,” he wrote. “We expect the lower operating expenses to show more from the 2Q23 results given the severance payouts.”

Allie Garfinkel is a senior technical reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.

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