Shares of Amazon (AMZN -0.09%) closed Thursday's volatile after-hours trading session down 2.1%, following the e-commerce and cloud computing leader's release of its first-quarter 2023 report. 

Shares surged 11.4% immediately after the release, but then nose-dived and gave back all their gains and then some soon after the company's earnings call began at 5:30 p.m. ET. The initial gain was primarily attributable to the company's first-quarter revenue and earnings beating Wall Street's estimates, with the bottom-line beat a sizable one. Investors were also likely satisfied with second-quarter revenue guidance, which was in line with the analyst expectation. 

What spooked investors on the earnings call was chief financial officer Brian Olsavsky saying that the substantial deceleration in revenue growth in the company's AWS cloud computing business in the first quarter had continued in April: "As expected, customers continue to evaluate ways to optimize their cloud spending ... . And we are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points [5 percentage points] lower than what we saw in Q1."

Below is an overview of Amazon's first-quarter results and its guidance, centered around five key metrics.

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1. Revenue grew by 9%

Amazon's net quarterly sales grew 9% year over year to $127.4 billion, exceeding the $124.6 billion Wall Street had expected. That result also surpassed the company's guidance range of $121 billion to $126 billion. Excluding the negative effect from foreign-currency exchange, revenue increased 11% from the year-ago period.

For context, in the prior quarter (the 2022 fourth quarter), revenue grew by 9% as reported, and 12% on a constant-currency basis.

Amazon Segment Q1 2023 Revenue Change YOY
North America $76.9 billion 11%
International $29.1 billion 1% (9% in constant currency)
Amazon Web Services (AWS) $21.4 billion 16%
Total $127.4 billion 9% (11% in constant currency)

Data source: Amazon. YOY = year over year.

Growth at AWS continued to slow significantly. In the prior three quarters, the cloud computing unit's year-over-year revenue grew 20% (Q4 2022), 27% (Q3 2022), and 33% (Q2 2022).

AWS' continued slowdown in revenue growth was widely expected. Many businesses are paring back their discretionary spending due to the challenging macroeconomic environment and concerns about a possible recession. 

2. Operating income increased by 30%

Operating income increased 30% year over year to $4.8 billion. This result surpassed Amazon's guidance range for operating income between $0 and $4 billion. Operating income includes about $500 million of charges related to the company's estimate of severance costs.

Amazon Segment Q1 2023 Operating Income Change YOY
North America $900 million Up from a loss of $1.6 billion in the year-ago period. 
International ($1.2 billion) Loss narrowed by 8% from $1.3 billion in the year-ago period.
Amazon Web Services $5.1 billion (22%)
Total $4.8 billion 30%

Data source: Amazon. 

While AWS remains very profitable, its profitability continued to decline. In the first quarter, this unit's operating margin (operating income divided by revenue) was 24%. In the prior three quarters, this metric was 24.3% (Q4 2022), 26.3% (Q3 2022), and 29% (Q2 2022).

3. EPS was $0.31, up from a loss per share of $0.38 in the year-ago quarter

The quarter's net income was $3.2 billion, or $0.31 per share, up from a loss of $3.8 billion, or $0.38 per share, in the year-ago period. This result sailed by the earnings per share (EPS) of $0.21 that Wall Street had expected. 

This isn't an apples-to-apples comparison, however. In the just-reported quarter, net income includes a pre-tax valuation loss of $500 million included in non-operating expense from Amazon's common stock investment in electric vehicle maker Rivian Automotive, which went public in November 2021. And the year-ago quarter's net income had included a pre-tax valuation loss of $7.6 billion from the Rivian stock. 

We can't know exactly what Amazon's results for the two periods would have been absent its fluctuating Rivian investment because the valuation changes are pre-tax numbers. Absent the impact of its Rivian holdings, the company's tax bill would have been different. 

Investors should use operating income when gauging how Amazon is performing with respect to profitability relative to the year-ago period. 

4. Operating cash flow rose by 38% for the trailing year 

Operating cash flow jumped by 38% to $54.3 billion for the trailing-12-month period. Free cash flow (FCF) was negative $3.3 billion for this period, compared with negative $18.6 billion in the year-ago period.

The company ended the quarter with cash and cash equivalents of $49.7 billion, and long-term debt of $67.1 billion.

Investors should mainly focus on Amazon's operating cash flow. Its FCF can vary considerably based on how much money it's investing in growth initiatives. 

5. Revenue is expected to grow by 5% to 10% in the second quarter

For the second quarter, management guided for net sales in the range of $127 billion to $133 billion, which would amount to growth of 5% to 10% year over year. This guidance builds in a headwind of about 30 basis points from changes in foreign exchange rates. 

Going into the first-quarter report, Wall Street had been modeling for second-quarter revenue of $129.8 billion, so Amazon's guidance, at the midpoint of the range ($130 billion), was in line with what analysts had been expecting.

Amazon, which doesn't provide earnings guidance, also said that it expects that second-quarter operating income will be between $2 billion and $5.5 billion, compared with $3.3 billion in the prior-year period.

A solid quarter given the challenging macro environment

Amazon turned in a solid quarter given the uncertain macroeconomic environment, which has led both consumers and businesses to be more cautious in their discretionary spending.

With its leading positions in two massive growth markets -- online shopping and cloud computing -- along with its continuous expansion into other businesses, Amazon still has robust long-term growth potential.