Trending: Capital gains tax ruled constitutional by Washington state Supreme Court
Amazon CEO Andy Jassy says the company will “continue to invest for the long-term” even as it deals with economic uncertainty. (GeekWire File Photo / Dan DeLong)

Amazon CEO Andy Jassy joined the company’s earnings call with analysts and investors for the first time Thursday afternoon, explaining that it’s something he plans to do “from time to time going forward.”

His predecessor, Amazon founder Jeff Bezos, traditionally left the quarterly earnings calls to the company’s CFO, and Jassy had continued the tradition until now.

“Given that this last quarter was the end of my first full year in this role, and given some of the unusual parts in the economy and in our business, I thought this might be a good one to join,” Jassy explained.

His surprise appearance followed a quarter in which Amazon’s profits fell to $278 million, from $14.3 billion a year earlier, including charges related to its layoff of 18,000 employees, and other pullbacks in its business.

Jassy began the ensuing Q&A with the equivalent of a few warm-up swings, addressing an analyst’s question about the company’s priorities by explaining that Amazon will remain “maniacally focused on the customer experience” and its long-term strategic investments even as it looks to streamline costs in the short term.

But he got quickly into some meaningful details. Here are the highlights.

Jassy described the four-part test that Amazon is using to evaluate businesses and opportunities, and named some of the non-core businesses that he believes pass the test.

These are the questions that the company asks itself, he said.

  1. Could the business become big enough to “move the needle” in the context of the broader company? This is “a high bar at a place like Amazon,” Jassy said.
  2. Is it in an area being well-served by others already?
  3. Does Amazon have a differentiated approach?
  4. Does Amazon have some competence in the area, or could it acquire some quickly?

Jassy explicitly named several businesses in which the company will continue to invest despite its cutbacks: streaming entertainment, devices, the Project Kuiper satellite internet business, and healthcare. These are in addition to core businesses of online and physical stores, Amazon Web Services, and advertising.

He acknowledged that it’s unlikely, of course, that every one of Amazon’s investments will be successful.

“However, it only takes one or two of them becoming the fourth pillar for Amazon, for us to be a very different company over time,” he added. “We’re going be very thoughtful about how we streamline our costs … but we’re also going to continue to invest for the long term.”

Reducing fulfillment and delivery costs is the top priority for Amazon’s core North American e-commerce business, Jassy said.

This assertion by Jassy came after Amazon’s operating loss in its North American stores segment was $2.8 billion for the full year 2022, compared with an operating profit of $7.3 billion in 2021.

Jassy said it’s important to remember that Amazon took a fulfillment center footprint that had been built over 25 years, “and doubled it in just a couple of years.” At the same time, the company built a last-mile delivery network that he described as “roughly the size of UPS.”

“To get those functional, it took everything we had,” he said. “And so there’s a lot to figure out how to optimize, and how to make more efficient, and more productive.”

Jassy said he was pleased with the progress in the fourth quarter, when the operating loss in the North American stores segment was $200 million, roughly even with the result a year earlier.

Jassy said grocery remains an “important and strategic area” despite cutbacks.

This came as Amazon said it decided to exit some Amazon Fresh and Amazon Go physical retail store locations with low growth potential, taking a $720 million impairment charge for exiting leases, and other costs.

Grocery is a very large market segment in which customers shop at a high frequency, Jassy said, explaining at a high level why Amazon still considers this an area worth investing in.

He said the company increasingly sees grocery as an omnichannel business, including online ordering and in-person pickup, and other combinations that blend the physical and digital shopping experiences.

Amazon is still doing “a fair bit of experimentation” in its Amazon Fresh stores to differentiate them in the market, Jassy said, adding that the company has decided that it’s not going to expand the physical Amazon Fresh stores “until we have that equation with differentiation and economic value that we like.”

Addressing the Whole Food Markets chain, which Amazon acquired in 2017, Jassy said he “really liked the progress that [Whole Foods] has made on profitability in the last year.”

Amazon Web Services is focused on long-term growth over short-term results.

Cautious customers cut Amazon’s cloud growth in half. Revenue grew 20% in the fourth quarter, down from 40% growth a year earlier. Amazon CFO Brian Olsavsky said growth slipped into the “mid-teens” in January.

Jassy, the former AWS CEO, said Amazon will help cloud customers adjust to the uncertain economy by finding ways for them to spend less money in the short run.

“We are not focused on trying to optimize in any one quarter or any one year,” he said. “We’re trying to build a set of relationships and business that outlasts all of us.”

Like what you're reading? Subscribe to GeekWire's free newsletters to catch every headline

Job Listings on GeekWork

Software Engineer III – DevOpsNational Center for Atmospheric Research (NCAR)
Technology Services SpecialistGlobal Innovation Exchange, University of Washington
Find more jobs on GeekWork. Employers, post a job here.