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Amazon shares jump as cloud, advertising units drive revenue beat

Amazon shares rose 8% in extended trading on Thursday after the e-retailer reported first-quarter revenue that topped analysts’ estimates.

Here are the key numbers:

  • Earnings: 31 cents per share
  • Revenue: $127.4 billion vs $124.5 billion expected, according to analysts surveyed by Refinitiv

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Here’s how other key Amazon segments did during the quarter:

  • Amazon Web Services: $21.3 billion vs. $21.22 billion expected, according to StreetAccount
  • Advertising: $9.5 billion vs. $9.1 billion, according to StreetAccount

It is not immediately clear if the reported earnings are comparable to the Refinitiv analyst estimate of 21 cents per share.

For the second quarter, Amazon said revenue will be $127 billion to $133 billion. Analysts had called for sales of $129.8 billion, according to Refinitiv.

“Our advertising business continues to deliver robust growth, largely due to our ongoing machine learning investments that help customers see relevant information when they engage with us, which in turn delivers unusually strong results for brands,” CEO Andy Jassy said in the earnings statement.

Jassy said that while AWS continues to navigate more cautious spending from cloud customers, he believes “there’s much growth ahead,” pointing to the company’s investments in large language models.

Jassy, who succeeded founder Jeff Bezos at the helm in July 2021, has been aggressively slashing costs at the company as it grapples with slowing sales in its online shopping and cloud computing divisions. Amazon has shuttered several of its more unproven bets, like a telehealth program, a virtual reality tours service, and a fitness wearable, that weren’t growing as quickly as other businesses.

Amazon is also laying off 27,000 employees, the largest job cuts in its 29-year history. Earlier this week, some employees in AWS and human resources were let go, following cuts in advertising and Twitch live streaming.

Amazon shaved its headcount by about 76,000 people to 1.46 million employees as of the end of the end of the first quarter, reflecting in part the recent layoffs, as well as attrition in its warehouses that typically occurs following the peak holiday shopping period.

Revenue increased 9% from $116.4 billion a year earlier. While the figure exceeded expectations, Amazon remains mired in single-digit sales growth coming off its weakest year for expansion in its quarter-century as a public company.

The second-quarter forecast suggests Amazon expects sales to rise between 5% and 10% from the same period a year earlier.

Sales at AWS rose about 16% in the first quarter to $21.35 billion, above the $21.22 billion projected by Wall Street. Still, that’s a deceleration from the previous quarter, when AWS grew 20%. Companies have been trimming their cloud spend in recent months amid a challenging economic environment.

Operating income in the quarter rose to $4.77 billion from $3.67 billion a year earlier. The company is still dependent on AWS for its profitability, as the cloud unit generated operating income of $5.1 billion in the quarter.

Amazon’s advertising unit was a bright spot during the quarter, with revenue jumping 23% year-over-year to $9.51 billion.

“Advertising was a strong growth during the quarter at 23%, and that is continuing to hold up very well in an environment where perhaps the underlying sales of products is slowing,” CFO Brian Olsavsky said on a call with reporters.

Prior to the after-hours rally, Amazon shares were up 31% for the year after losing roughly half their value in 2022.

This story is developing. Check back for updates.

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Fintech unicorns are watching Klarna’s debut for signs of when IPO window will reopen

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Fintech unicorns are watching Klarna's debut for signs of when IPO window will reopen

Hiroki Takeuchi, co-founder and CEO of GoCardless. 

Zed Jameson | Bloomberg | Getty Images

LISBON, Portugal — Financial technology unicorns aren’t in a rush to go public after buy now, pay later firm Klarna filed for a U.S. IPO — but they’re keeping a watchful eye on it for signs of when the market will open up again.

Last week, Klarna made a confidential filing to go public in the U.S., ending months of speculation over where the Swedish digital payments firm would list. Timing of the IPO is still unclear, and Klarna has yet to decide on pricing or the number of shares it’ll issue to the public.

Still, the development drew buzz from fintech circles with market watchers asking if the move marks the start of a resurgence in big fintech IPOs. For now, that doesn’t appear to be the case — however, founders say they’ll be watching the IPO market, eyeing pricing and eventually stock performance.

Hiroki Takeuchi, CEO of online payments startup GoCardless, said last week that it’s not yet time for his company to fire the starting gun on an IPO. He views listing as more of a milestone on a journey than an end goal.

“The markets have been challenging over the last few years,” Takeuchi, whose business GoCardless was last valued at over $2 billion, said in a CNBC-moderated panel at the Web Summit tech conference in Lisbon, Portugal.

“We need to be focused on building a better business,” Takeuchi added, noting that “the rest will follow” if the startup gets that right. GoCardless specializes in recurring payments, transactions that come out of a consumer’s bank account in a routine fashion — such as a monthly donation to charity.

Lucy Liu, co-founder of cross-border payments firm Airwallex, agreed with Takeuchi and said it’s also not the right time for Airwallex to go public. In a separate interview, Liu directed CNBC to what her fellow Airwallex co-founder and CEO Jack Zhang has said previously — that the firm expects to be “IPO-ready” by 2026.

“Every company is different,” Liu said onstage, sat alongside Takeuchi on the same panel. Airwallex is more focused on becoming the best it can be at solving friction in global cross-border payments, she said.

An IPO is a goal in the company’s trajectory — but it’s not the final milestone, according to Liu. “We’re constantly in conversations with our investors shareholders,” she said, adding that will change “when the time is right.”

‘Stars aligning’ for fintech IPOs

One thing’s for sure, though — analysts are much more optimistic about the outlook for fintech IPOs now than they were before.

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“We outlined five handles to open the [IPO] window, and I think those stars are aligning in terms of the macro, interest rates, politics, the elections are out the way, volatility,” Navina Rajan, senior research analyst at private market data firm PitchBook, told CNBC.

“It’s definitely in a better place, but at the end of the day, we don’t know what’s going to happen, there’s a new president in the U.S.,” Rajan continued. “It will be interesting to see the timing of the IPO and also the valuation.”

Fintech companies have raised around 6.2 billion euros ($6.6 billion) in venture capital from the beginning of the year through Oct. 30, according to PitchBook data.

Jaidev Janardana, CEO and co-founder of British digital bank Zopa, told CNBC that an IPO is not an immediate priority for his firm.

“To be honest, it’s not the top of mind for me,” Janardana told CNBC. “I think we continue to be lucky to have supportive and long-term shareholders who support future growth as well.”

He implied private markets are currently still the most accommodative place to be able to build a technology business that’s focused on investing in growth.

However, Zopa’s CEO added that he’s seeing signs pointing toward a more favorable IPO market in the next couple of years, with the U.S. likely opening up in 2025.

That should mean that Europe becomes more open to IPOs happening the following year, according to Janardana. He didn’t disclose where Zopa is looking to go public.

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Super Micro hires new auditor to maintain Nasdaq listing; shares pop 23%

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Super Micro hires new auditor to maintain Nasdaq listing; shares pop 23%

Charles Liang, chief executive officer of Super Micro Computer Inc., during the Computex conference in Taipei, Taiwan, on Wednesday, June 5, 2024. The trade show runs through June 7. 

Annabelle Chih | Bloomberg | Getty Images

Embattled server maker Super Micro Computer said on Monday that it’s hired BDO as its new auditor and submitted a plan to Nasdaq detailing its efforts to regain compliance with the exchange. The shares jumped 23% in extended trading.

“This is an important next step to bring our financial statements current, an effort we are pursuing with both diligence and urgency,” Super Micro CEO Charles Liang said in a statement.

Super Micro is late in filing its 2024 year-end report with the SEC, and said earlier this month that it was looking for a new accountant after its previous auditor, Ernst & Young, stepped down in October. Ernst & Young was new to the job, having just replaced Deloitte & Touche as Super Micro’s accounting firm in March 2023.

Super Micro said it told Nasdaq that it believes it will be able to file its annual report for the year ended June 30, and quarterly report for the period ended Sept. 30. The company said it will remain listed on the Nasdaq pending the exchange’s “review of the compliance plan.”

Shares of Super Micro soared more than twentyfold over a two year period from early 2022 until their peak in March of this year. But the stock has been hammered on troubling news about its compliance with Nasdaq. Once valued at about $70 billion, the company’s market cap was at $12.6 billion at the close on Monday, following a 16% rally during regular trading.

Super Micro has been one of the primary beneficiaries of the artificial intelligence boom, due to its relationship with Nvidia. Sales last fiscal year more than doubled to $15 billion.

On Monday, Super Micro announced that it was selling products featuring Nvidia’s next-generation AI chip called Blackwell. The company competes with vendors like Dell and Hewlett Packard Enterprise in packaging up Nvidia AI chips for other companies to access.

Super Micro was added to the S&P 500 in March, reflecting its rapidly growing business and then-soaring stock price. Less than two weeks after the index changes were announced, Super Micro reached its closing high of $118.81.

The troubles began within months. In August, Super Micro said it wouldn’t file its annual report with the SEC on time. Noted short seller Hindenburg Research then disclosed a short position in the company, and said in a report that it identified “fresh evidence of accounting manipulation.” The Wall Street Journal later reported that the Department of Justice was at the early stages of a probe into the company.

The month after announcing its report delay, Super Micro said it had received a notification from the Nasdaq, indicating that the delay in the filing of its annual report meant the company wasn’t in compliance with the exchange’s listing rules. Super Micro said the Nasdaq’s rules allowed the company 60 days to file its report or submit a plan to regain compliance. Based on that timeframe, the deadline was Monday.

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Canva hires former Zoom CFO Kelly Steckelberg to run finance ahead of expected IPO

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Canva hires former Zoom CFO Kelly Steckelberg to run finance ahead of expected IPO

Kelly Steckelberg attends an Evening from the Heart LA 2022 Gala hosted by the John Ritter Foundation for Aortic Health at Valley Relics Museum in Van Nuys, California, on May 5, 2022.

Araya Doheny | Getty Images

Canva, a high-valued design software startup that competes with Adobe, said Monday that it hired Kelly Steckelberg as its chief financial officer, five years after she helped take Zoom public and then guided the company through its Covid-19 pandemic surge.

Founded in 2013, Canva was valued recently at $32 billion, a drop from its peak of $40 billion in 2021.

“Kelly’s impressive track record as a strong leader and strategic thinker, combined with her proven expertise in scaling enterprise companies, make her the perfect addition to our leadership bench,” Canva said in an emailed statement.

Canva is generating about $2.5 billion in annualized revenue and boasts 220 million monthly users. The company is widely viewed as a top initial public offering candidate for venture-backed tech companies after a historically slow period for new offerings dating back to early 2022.

On Monday, ServiceTitan, which sells software for the trades, filed to list on the Nasdaq. Cerebras, a maker of artificial intelligence chips, has been on file since late September, and online lender Klarna said last week that it has confidentially filed its IPO paperwork with the U.S. Securities and Exchange Commission.

A Canva spokesperson declined to comment on the startup’s timeline for an IPO.

Steckelberg held financial positions at Cisco and was CEO of online dating company Zoosk before joining Zoom in 2017. Steckelberg is based in Austin, Texas, while Canva has its headquarters in Sydney, Australia.

Zoom went public with Steckelberg’s help in 2019. The video-chat company saw its market cap soar to upward of $160 billion in October 2020, early in the Covid-19 pandemic, as users working from home swarmed to the app. Zoom has since lost more than 85% of its value.

Steckelberg announced her departure from Zoom in August after seven years at the company. Last month, former Microsoft executive Michelle Chang replaced Steckelberg as Zoom’s CFO.

Canva’s previous finance chief Damien Singh resigned in February after the company said it was conducting an internal investigation surrounding inappropriate behavior.

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