Amazon.com, Inc
We'll share investor expectations below, but we're also going to look at a seemingly muted indicator that could spell some serious trouble for the growth and overall life of the Jeff Bezos-founded company.
Amazon Earnings, Expected: Investors are looking for Amazon to issue earnings of 34 cents per share, on revenues of $131.54 billion, which would come ahead of the 20-cent loss per share on revenues of $121.23 billion the company posted in the same quarter last year.
Amazon investors will be watching the company's cloud revenues, retail sales, retail sales margins, ad revenue and AI efforts.
Since the company is the fifth-largest in the world, investors are also going to use Amazon's earnings as a gauge for consumer health.
Now for the not-so-talked-about indicator: Amazon might run out of people to hire.
More than that, the company could have an $8-billion problem due to its industry leading turnover rate, according to an investor. Marred with alleged inefficiencies in its internal learning and development programs, a heap of issues may have considerable financial implications for Amazon, possibly affecting the company's future growth and profitability.
Last year, internal documents from Amazon leaked to Engadget - supported by several independent investigations - suggested that Amazon's high employee turnover rate in its fulfillment warehouses was so significant that it literally could "deplete the available labor supply in the U.S." in certain areas within just a few years.
Amazon's turnover rate was 3.9% in 2020, according to the data, representing nearly 120% on an annualized basis, significantly higher than the industry average of 10%-15% and equates to approximately $8 billion in annual financial impact, considering the cost of hiring and training new employees.
Another internal document from April 2022 criticized Amazon's internal learning and development department, Corporate Training Science and Metrics Division (CTSMD). The document cited CTSMD's lack of standardized processes to measure the impact of their training programs and assesses their training definition of "completion" as just clicking through to the end of a course.
Using the Kirkpatrick Model - a framework for evaluating training programs - the report from Engadget showed that of the 26 programs examined, only three tracked the degree to which learners applied knowledge they gained from the course. None reached Kirkpatrick level four, which measures the business impact of the training.
Apart from CTSMD's $90-million annual budget, it is estimated that Amazon's managers spend an average of 113 hours annually on training, leading to a potential waste of up to $715 million.
As raining is often crucial for employees to ascend within Amazon's organizational structure, lack of meaningful advancement can also contribute to the high turnover rate. One document Engadget reported on suggested that even a 15% reduction in employee churn could save Amazon $726 million annually.
The documents indicate that Amazon is aware of the problems, despite never disclosing the gaps in its 10-K reports.
The New York Times also reported on issues within Amazon back in 2021, highlighting the company's high turnover rate, systemic problems with employee benefits and termination procedures and concerns over racial inequity and the company's stringent monitoring of workers.
Benzinga's Take: While Amazon continues to maintain a powerful presence in the global market, its internal challenges highlight severe vulnerabilities in its business model.
