Amazon today reported their Q1 2023 Earnings, and revealed that they are making progress on expenses. While they have much to optimize, it’s also clear they have very far to go regarding progress. Also, don’t look now but Walmart online is growing about 50% faster than Amazon.

A few notables:

1 - Net Sales increased 9%, North America increased 11%. Slower than Walmart eCommerce growth of 17%.

2 - Company has reached 2.5% net operating margin across all businesses, and 1.2% in North America. This is still worse than Walmart (~3.5%).

3 - Before pandemic, they were at 4-6%, and the CFO said they can get back there over time. CEO Andy Jassy stepped on that saying they can recover more than pre-pandemic. Not a smart thing to say if you are trying to sandbag expectations.

4 - I didn’t see the company give or reiterate 2023 guidance and analysts didn’t ask. Curious.

5 - AWS sales increased 16% y/y, with 23.8% operating margin. Ads sales increased 20%, this is still significant progress. Without these two segments, Amazon would be sunk. No one is challenging Amazon’s ads business anytime soon.

6 - Seller Services revenue up 20% (double net sales growth). How long can this trend continue of Amazon’s share of the pie growing faster than sellers?

7 - Company took a page out of Shopify’s playbook, saying they added some new brands: Lancôme, Shiseido, World of Martha by Martha Stewart, Rent the Runway.

8 - 50% more Same Day Delivery orders than last year. That’s impressive.

9 - Still not sure why they are working on Zoox and Kuyper. Willing to be misunderstood I guess ;-)

10 - Grocery seems on a short leash. “We have an unusual selection. Have been experimenting for years.” None of them worked. Have a new basket of experiments that “could very well work this year.” Sounds to me like they better work, or else.

Amazon’s grocery scaling plans are not credible until new evidence emerges.

Still more profitability wood to chop, Amazon.