Amazon suffered steep losses in year-over-year income as post-pandemic shopping habits and inflation threw the retailer for a loop. In its third quarter 2022 earnings report today, Amazon revealed that operating income decreased to $2.5 billion in Q3 2022 compared to $4.9 billion the same quarter last year, while net income dipped to $2.9 billion versus $3.2 billion during Q3 2021.
Operating income refers to earnings after expenses excepting the cost of debt, taxes and certain one-off items. Net income shows the profit remaining after all costs are subtracted from revenue generated from sales.
Amazon noted an operating loss of $0.4 billion in North America in Q3 2022, an unfavorable outcome compared to the nearly $1 billion in operating income the company achieved the quarter a year ago. Internationally, the tech giant fared worse, notching a $2.5 billion operating loss versus Q3 2021’s $900 million loss.
As is usually the case, Amazon Web Services (AWS), Amazon’s cloud services division, was a bright spot in an otherwise gloomy quarter. AWS’ operating income reached $5.4 billion in Q3 2022 versus $4.9 billion the same quarter last year. That is, however, down from the $5.72 billion in operating income that AWS raked in during Q2 2022.
On news of Amazon’s Q3 losses, the company’s stock dropped ~20% in after-hours trading. Likely, that also has to do with Amazon’s shockingly vague Q4 guidance, which estimates operating income at between $0 and $4 billion compared to $3.5 billion in Q4 2021. No, that’s not a typo — between zero dollars and four billion dollars. My goodness.
“We’re … encouraged by the steady progress we’re making on lowering costs in our stores fulfillment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward,” CEO Andy Jassy said in a press release. “There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.”
Amazon spent billions doubling the size of its fulfillment network during the pandemic — a move that served it well initially, but which proved to be short-sighted. The company was forced to shut down or delay plans for over a dozen facilities as ecommerce sales this year grew slower than expected.
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