Amazon has released its first quarter results, with sales for its AWS segment having increased 16 percent year-on-year (YoY) to $21.4bn.
The operating income for the AWS first quarter was $5.1bn, compared with operating income of $6.5bn in Q1 2022. This drop was despite new investments and migrations from AWS customers in the quarter counting the likes of Southwest Airlines, Zurich Insurance Group, BBVA, Snowflake, Stripe, TELUS and more.
In the Amazon earnings call, both CEO Andy Jassy and CFO Brian Olsavsky put the decline down to optimizations from existing AWS customers.
“As expected, customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter,” Olsavsky commented. “And we are seeing these optimizations continue into the second quarter.”
The CFO also admitted operating income was negatively impacted by Amazon’s recent layoffs of 9,000 of its employees. There was an estimated employee severance charge of approximately $470m in Q1 for the parent company, including $270m related to AWS.
On the results, Jassy commented: “While our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritize building long-term customer relationships both by helping customers save money and enabling them to more easily leverage technologies like Large Language Models and Generative AI with our uniquely cost-effective ML chips (“Trainium” and “Inferentia”), managed Large Language Models (“Bedrock”), and AI code companion CodeWhisperer.
“We like the fundamentals we’re seeing in AWS and believe there’s much growth ahead.”