Amidst constant external challenges, Amazon has achieved revenue and profit growth through the shopping season. On February 2nd, Amazon released its financial report for the fourth quarter of 2023.
The financial report shows that Amazon's net sales in the fourth quarter of 2023 increased by 14% to $170 billion, exceeding analysts' previous expectations. The sales of the North American division increased by 13% year-on-year to $105.5 billion, while the international business sales increased by 17% year-on-year to $40.2 billion. International business has resumed growth, with a sales growth rate of only 1% in the first quarter of 2023. Amazon's core business AWS achieved a net sales revenue of $24.2 billion in the fourth quarter, a year-on-year increase of 13%. The 12% growth rate in the previous three quarters was the lowest for Amazon's cloud computing business since 2014, with a growth rate of 16% in the first quarter of 2023.
In terms of net profit, Amazon's fourth quarter net profit was $10.6 billion, compared to a net profit of $300 million in the fourth quarter of 2022. Due to better than expected revenue and profits, Amazon's post market stock price rose by over 7.11% to $170.6.
One of the reasons why Amazon's fourth quarter earnings were better than the same period in 2022 was due to a pre tax valuation loss of $100 million in Amazon's investment in electric vehicle Rivian Automotive common stock during that quarter. In the fourth quarter of 2022, Amazon's pre tax valuation loss on its investment in Rivian common stock reached $2.3 billion. Rivian's stock price has been continuously declining since January 2022, and as of now, the stock price has dropped 80% from its offering price of $78. However, Amazon is still optimistic about the development of electric vehicles and plans to put 100000 Rivian electric delivery vehicles on the road by 2030.
In addition to narrowing losses from investing in Rivian, Amazon's retail business also improved in the fourth quarter, with the North American and International divisions performing well in the fourth quarter. The revenue of the North American division in the fourth quarter was $6.46 billion, and the operating loss for the same period last year was $240 million. The operating loss of the international division in the fourth quarter narrowed from a loss of $2.2 billion in the same period last year to a loss of $400 million.
Amazon CEO Andy Jassy said, "The fourth quarter was a record breaking holiday shopping season, bringing Amazon a strong year of 2023. Although we have made significant progress in revenue, revenue, and free cash flow, what we are most satisfied with is the continuous innovation and customer experience improvement in our various business areas."
In terms of annual performance, Amazon's net sales increased by 12% in 2023, reaching $574.8 billion, with AWS department sales increasing by 13% year-on-year, reaching $90.8 billion. The net profit in 2023 was $30.4 billion, while the net loss in 2022 was $2.7 billion.
According to the financial report, in terms of business in China, Amazon will provide more tools and resources for Chinese Amazon sellers in 2023, including announcing the establishment of an innovation center specifically for sellers, introducing Amazon's supply chain to Chinese sellers, and establishing five regional global sales centers.
From the trend of stock price performance, after experiencing a continuous decline in stock price in the second half of 2022, Amazon's stock price gradually rose in 2023. Amazon faced multiple challenges last year, including regulatory and market competition.
In an uncertain macro context, global companies are reducing spending on cloud and IT infrastructure projects, and competition in cloud computing business is becoming more intense. Looking at the performance of other technology companies in their cloud business, Microsoft's intelligent cloud division's revenue in the fourth quarter was $25.9 billion, a year-on-year increase of 20%, with a recovery in growth rate. Google's cloud business grew by nearly 26% in the fourth quarter.
In addition, Amazon still faces monopoly investigations. In late September 2023, the Federal Trade Commission and 17 state attorneys general filed a lawsuit against Amazon, accusing Amazon of using its "monopoly power" to raise prices, lower the quality of shoppers, and illegally exclude competitors, thereby undermining competition. Amazon countered in October by claiming that the Federal Trade Commission had filed a misleading lawsuit against Amazon, which, if successful, would force Amazon to take actions that actually harm consumers and businesses.
In addition, Amazon's proposed acquisition of iRobot in January this year did not receive approval from EU regulatory authorities, and subsequently both parties terminated the acquisition transaction.
From a competitive perspective, Amazon has been continuously facing competition from emerging platforms since last year. According to SensorTower data, from September 2022 to November 2023, Temu's global download volume exceeded 300 million times. Since May 2014, SHEIN has accumulated 830 million downloads, with Latin America and Europe contributing 31% and 25% of the total downloads, respectively. To address the challenge, on December 6th last year, Amazon announced that the US site would implement a series of fee changes to reduce costs for both the platform and sellers. In terms of specific policies, Amazon will reduce the sales commission for clothing products: for clothing products priced below $15, the sales commission will be reduced from 17% to 5%. For clothing products priced between $15 and $20, the sales commission will be reduced from 17% to 10%. The sales commission for other products remains unchanged.
In addition, Amazon plans to continue layoffs this year. In January, Amazon announced that streaming platforms such as Twitch and Prime Video would cut more positions. From 2022 to 2023, Amazon laid off 27000 employees.