Amazon signalled on Thursday that its long-soaring cloud growth would drop even further as its business clients braced for turbulence and cut back on spending, overshadowing the company’s quarterly sales and profit, which were above forecasts.
The share price fell in response to remarks by Chief Financial Officer Brian Olsavsky, who told analysts that cloud customers were still attempting to reduce their bills as of the second quarter and that Amazon was assisting them in doing so in order to build long-term relationships.
That means sales growth rates were around 5 percentage points lower in April than in the first quarter, which saw a sequential dip, he said.
Amazon’s unexpected rise and fall signal a hazardous period for the firm. In response to what he has described as an unpredictable environment, CEO Andy Jassy has sought to reduce expenditure across Amazon’s huge array of departments.
At the same time, Amazon is facing a new threat from cloud rivals Microsoft and Google, both of whom are releasing high-profile artificial intelligence capabilities.
The cost-cutting measures have been extensive. Since November, Amazon has sought to eliminate 27,000 corporate positions, and its workforce has reduced 10% to 1.47 million full and part-time employees, including those working in warehouses, as of the most recent quarter.
The corporation is also discontinuing entire services, including its Halo health trackers. It has restructured its nationwide fulfilment operation in order to locate goods closer to customers and deliver them faster and more cheaply.
These actions contributed to Amazon’s $3.17 billion profit in the fiscal year ending March 31, compared to a loss of $3.84 billion the previous year.