Amazon Q4 and FY 2023 Earnings: Free Cash Flow Engine - Activate!
Amazon reported its earnings yesterday and with it, served notice to the retail industry that it's profitability-challenged 2022 was fully in the rear view mirror. Investors loved what they had to say, and in a huge turn of events, started wondering what Amazon would do with its growing pile of cash.
Sounds like a good place to be. Let's get into it:
FY 2023:
* Net sales increased 12% to $574.8 billion in 2023, compared with $514.0 billion in 2022.
* Operating income increased to $36.9 billion in 2023, compared with $12.2 billion in 2022. Tripled operating income.
And now for the eye-popping turnaround:
- NA operating income was $14.9 billion, compared with an operating loss of $2.8 billion in 2022.
* Net income was $30.4 billion in 2023, compared with a net loss of $2.7 billion, in 2022.
Q4 2023:
* Net sales increased 14% to $170.0 billion in the fourth quarter, compared with $149.2 billion in fourth quarter 2022. (stable to Q3 growth)
- NA increased 13% (growth up), International increased 17%
- AWS increased 13% year-over-year to $24.2 billion. (vs Q3 12%)
* Operating income increased to $13.2 billion in the fourth quarter, compared with $2.7 billion in fourth quarter 2022.
- NA op income was $6.5 billion, compared with an operating loss of $0.2 billion in fourth quarter 2022. ($4.3B in Q3)
Clearly the company has remembered how to make money. Oh yeah, put inventory closer and reduce transportation costs. More to come here.
* Net income increased to $10.6 billion in the fourth quarter, up from 9.9 billion in Q3 2023.
Q4 Segment Data
* Seller Services: 3P Revenue Up 19% y/y (+20% yearly) (2023 FY revenue 139.9B)
* Advertising: $14.6B, up 26% y/y, (2023 FY revenue 46.7B)
Q1 2024 Guidance:
* Net sales are expected to be between $138.0 billion and $143.5 billion, or to grow between 8% and 13% compared with first quarter 2023. (down)
* Operating income is expected to be between $8.0 billion and $12.0 billion, compared with $4.8 billion in first quarter 2023.
* No full-year 2024 guidance, boo!
Tidbits:
* # items same day or overnight up 65% y/y
* AWS lion share of optimization has happened, new projects have restarted. (good sign for software vendors)
* 3P Seller Unit Mix up to 61% from 60% (vs 1P)
* “This Q4 was a record-breaking Holiday shopping season and closed out a robust 2023 for Amazon,” Andy Jassy
* Increased total viewership for the second season of Thursday Night Football (TNF) on Prime Video by 24% year over year,
* • Salesforce, which runs much of its cloud on AWS, expanded its global partnership.
(your move, Larry Ellison)
* Announced Rufus, a new generative AI-powered conversational shopping experience. This one could go south fast. Reserving judgment :-)
* Notably missing - grocery. But you knew that right? Amazon's physical store strategy is MIA and is in the "willing to be misunderstood" (or even forgotten) phase.