AMAZON COM INC Q4 FY2024 earnings call

• Stores business: Saw 10% and 9% year over year revenue growth in North America and international segments respectively, with continued focus on expanding selection, lowering prices, and improving convenience. Launched Amazon Haul in Q4, expanded same-day delivery sites by over 60% in 2024. Prime membership growth driven by better selection, price, and delivery speed.
• Advertising: Generated $17.3 billion in revenue in the quarter, growing 18% year over year, with a $69 billion annual revenue run rate. Strong growth on a large base, with opportunities for more growth. Made it easier to do full funnel advertising.
• AWS: Grew 19% year over year, with an annualized revenue run rate of $115 billion. Built custom AI silicon like Tranium 2, which is more price-per-formative. Amazon SageMaker AI, Bedrock, and Amazon Q are key services with strong growth. Continues to innovate in non-AI key infrastructure areas.

In the North America segment, fourth quarter revenue was $115.6 billion, an increase of 10% year over year. The international segment revenue was $43.4 billion, an increase of 9% year over year excluding the impact of foreign exchange. AWS revenue was $28.8 billion, an increase of 19% year over year, and now has an annualized revenue run rate of $115 billion. Worldwide paid units grew 11% year over year. North America segment operating income was $9.3 billion, an increase of $2.8 billion year over year, with an operating margin of 8%. International segment operating income was $1.3 billion, an improvement of $1.7 billion year over year, with an operating margin of 3%.

Q1 net sales are expected to be between $151 billion and $155.5 billion, with an estimated foreign exchange headwind of approximately $2.1 billion and comping the impact of last year's leap year. Q1 operating income is expected to be between $14 billion and $18 billion. Guidance includes estimated impact of updates to the useful life of fixed assets, with a decrease in full-year 2025 operating income by approximately $400 million due to server and network equipment useful life changes, and an increase by approximately $900 million due to heavy equipment useful life changes.

Results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions, and customer demand and spending, including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the Internet, online commerce, cloud services, and new and emerging technologies and the various factors detailed in filings with the SEC. Guidance assumes no additional business acquisitions, restructurings, or legal settlements.

Q: Two quick questions. So, Brian, that's $100 billion CapEx we should think about in 2025. And then, Andy, were there any—so would you describe that AWS growth as being currently moderated down by supply constraints. Do you see those across the industry, or do you see those materially impacting AWS today?

A: On the CapEx side, $26.3 billion was spent in Q4, and that is reasonably representative of 2025 CapEx. The vast majority is for AI in AWS. On AWS growth, it is growing triple-digit percentage year over year but could be growing faster due to supply chain constraints like chip availability, power constraints, etc., with constraints expected to relax in the second half of 2025.

Q: Thanks for taking the question. I'll just ask one that's building on Mark's questions there. Andy, when you think about the news that came out of China over the last couple of weeks and think longer term about bending the cost curve lower with AI. I understood the commentary around CapEx for 2025. Would you look at where you sit in the industry the move towards open-source elements of custom silicon, How do you think about bending the cost curve and either speeding up or amplifying time deployment to market or possibly, you know, higher returns on capital for AI?

A: If you're able to decrease the cost of any type of technology component, in this case, inference, it will make it much easier for companies to be able to infuse all their applications with inference and with generative AI. The cost of inference will meaningfully come down, which will be very positive for customers and our business. What happens is companies will spend a lot less per unit of infrastructure, but then they get excited about what else they could build that they always thought was cost prohibitive before and usually end up spending a lot more in total on technology once you make the per-unit cost less.