Amazon Q3 2022 Revenue Plunges Below Analyst Expectations

UTC by Ibukun Ogundare · 3 min read
Amazon Q3 2022 Revenue Plunges Below Analyst Expectations
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Amazon repressed its sales growth across many of its subsidiaries in Q3 2022. Many experts believe Amazon will maintain its position in the last quarter of 2022.

American multinational technology company Amazon (NASDAQ: AMZN) has announced its revenue for Q3 2022. The revenue figures were below analysts’ expectations. According to Amazon, the revenue growth of its cloud-computing unit dwindled to 27.5%. The company said the revenue growth is the slowest recorded since it began publishing the group’s finance in 2014.  Amazon (AMZN) stock is down more than 13% in the pre-market, trading at $95.89.

Analysts at StreetAccount, a real-time equity news service, had projected that Amazon Web Service (AWS) would generate $21.1 billion in Q3 2022. However, AWS generated only $20.5 billion in the third quarter of 2022. In the second quarter of 2022, AWS revenue rose to 33%, topping analysts’ expectations. Currently, Amazon Web Services is responsible for 16% of Amazon’s revenue. During a conference call with analysts, the finance chief of Amazon, Brian Olsavsky, disclosed that the revenue growth of AWS was in the mid-20s towards the end of the third quarter.

Estimates from a technology industry researcher, Gartner, shows AWS controlled the cloud-computing market by 41% and 39% in 2021 and 2022 respectively. Further reports indicate that other cloud-computing firms like Google, Huawei, and Microsoft gained shares in 2021. No doubt, AWS is constantly growing as several business firms are uploading their data to the cloud.

Commenting on AWS’ growth, Brian Olsavsky said:

“The ongoing macroeconomic uncertainties have seen an uptick in AWS customers focused on controlling cost, and we are proactively working to help customers cost-optimized, just as we have done throughout our history, especially in periods of economic uncertainty. The breadth and depth of our service offerings enable us to help them do things like move storage to lower-priced tiered options and shift workloads to our Graviton chips.”

How AWS Affected Amazon Revenue in Q3 2022

Amazon Web Services had an operating income of $5.4 billion, below StreetAccount’s prediction of $6.37 billion. Comparing the third quarter of 2022 operating income of AWS to last year’s, the company fared better. In Q3 2021, AWS generated an operating income of $4.9 billion. AWS’s operating margin reduced from the second quarter’s 29% to 26.3% in Q3 2022. Olsavsky disclosed that the inflation of wages at Amazon in 2022, especially in AWS, reduced the operating income. He buttressed that high energy prices also contributed to the reduced operating income.

A spokesperson at AWS has disclosed that Amazon has reduced its hiring pace at the cloud-computing unit. Although some departments at AWS have hired enough staff, numerous job positions are open in most sections of the firm. Meanwhile, Google and Microsoft recently announced they would reduce headcount growth at their firms.

Generally, Amazon repressed its sales growth across many of its subsidiaries in Q3 2022. Many experts believe Amazon will maintain its position in the last quarter of 2022. Amazon currently assists large-scale businesses and small enterprises to evaluate and reduce their expenditure in the tech space.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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