Amazon Q1 2022 Earnings

Revenue: $116.4 billion

Net loss: $3.8 billion

E-commerce sales: $51.1 billion (down 3% year over year)

Ad sales: $7.8 billion (up 23% year over year)

On April 28, local time, Amazon reported its first quarterly loss since 2015 . Amazon’s first-quarter financial performance reflected a slump in e-commerce, rising costs due to inflation and supply chain woes, and unease about Amazon’s investments in electric-vehicle startups.

According to the financial report, Amazon ’s revenue in the first quarter reached 116.4 billion US dollars, an increase of 7% year-on-year, and the growth rate was the slowest in 20 years . The company posted a net loss of $3.8 billion, compared with a profit of $8.1 billion a year earlier, when e-commerce sales surged amid the coronavirus pandemic.

E-commerce sales hit biggest drop

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Amazon sold roughly the same number of products in the quarter as it did a year ago, but its e-commerce segment sales fell 3% year over year. This mainly includes sales on Amazon's e-commerce site and digital media content. The 3% drop was the highest since Amazon first disclosed the metric in 2016 .

Meanwhile, revenue growth in Amazon's Prime subscription business has slowed. In digital advertising, ad serving revenue rose 23% in the first quarter, a much slower increase than the 33% in the fourth quarter of 2021 and the 76% in the first three months of last year.

Rising inflation, higher fuel and labor costs, clogged global supply chains and the ongoing COVID-19 pandemic pose challenges for Amazon. To offset some of those costs, Amazon earlier this month announced a 4.3% fuel and inflation surcharge on third-party sellers, the first such fee in its history. Last quarter, Amazon raised the price of its U.S. Prime membership from $119 to $139 for the first time in four years. Amazon said this year's Prime Day will take place in July.

Amazon CEO Andy Jassy said at the earnings conference: "In the past two years, our consumer business has grown by 23% annually, and in 2020, it has even grown by 39% year-on-year. Such achievements require us to Double the size of Amazon’s fulfillment network. Today, instead of chasing bigger warehouses and more people, our teams are focusing on improving productivity and cost efficiency across the fulfillment network. ”

Investing in electric vehicles brings huge losses, AWS is the only bright spot

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Amazon's investment in U.S. electric-car maker Rivian Automotive Inc. took a toll on the quarter's financial performance. Rivian's stock has plunged more than 65% this year, costing Amazon about $7.6 billion in losses .

Rivian electric vehicles, source: Rivian official website

This quarter, Amazon's cloud technology (AWS) business revenue was US$18.44 billion, accounting for 15.84% of total revenue, an increase of about 37%. Amazon Cloud Technology ( AWS) has long been the world's leading cloud computing service provider, but the unit has faced pressure from Microsoft and Google in recent years.

Amazon: More uncertainty is coming

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Amazon said that many uncertainties, including the epidemic, currency fluctuations, inflation and the labor market, will continue, and the company's performance growth may decline further . For its second-quarter outlook, Amazon expects net sales to be between $116 billion and $121 billion, or a 3% to 7% increase compared to the second quarter of 2021.

Amazon shares fell about 10% after the earnings report, hitting their lowest point since June 2020.

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