AMAZON COM INC Q1 FY2025 earnings call

• Store business: Strong consumer resonance with continued work on selection, value, and shipping speed. Welcomed new brands and a new shopping experience with Saks. Held deal events driving customer engagement.
• Fulfillment network: Redesigned inbound network drove productivity, leading to better inventory placement, record delivery speeds for Prime members, and lower delivery costs. Plans to refine the inbound network, build same-day delivery sites, expand rural delivery, and add robotics/automation.
• AWS: Grew 17% y/y, with an annualized revenue run rate over $117B. Focus on AI, with initiatives like Trainium 2, Amazon Bedrock, and various AI models. Expanding generative AI capabilities and agentic actions.
• Alexa+: Next-generation personal assistant launched, smarter and more capable, starting to roll out in the US with plans to expand globally.
• Other initiatives: Part of a joint venture for James Bond films, Project Kuiper launched first satellite, expecting to offer service later this year.

North America segment: First quarter revenue was $92.9 billion, an increase of 8% year-over-year. Operating income was $5.8 billion, with an operating margin of 6.3%. International segment: Revenue was $33.5 billion, an increase of 8% year-over-year ex foreign exchange. Operating income was $1 billion, with an operating margin of 3%. AWS segment: Revenue was $29.3 billion in Q1, an increase of 17% year-over-year, with an annualized revenue run rate of more than $117 billion. Advertising: Generated $13.9 billion of revenue in the quarter and grew 19% year-over-year.

Q2 net sales are expected to be between $159 billion and $164 billion. Q2 operating income is expected to be between $13 billion and $17.5 billion. Guidance incorporates order trends and assumptions. Includes stock-based compensation expense step-up in Q2 and Kuiper launch costs. The external environment remains complex with various uncertainties.

• Fluctuations in foreign exchange rates.
• Changes in global economic and geopolitical conditions.
• Tariff and trade policies.
• Customer demand and spending, including recessionary fears, inflation, interest rates, etc.
• Unpredictable demand for goods and services, affected by multiple factors detailed in SEC filings.

Q: Ross Sandler from Barclays asked about AWS AI workload supply/demand imbalance and when AWS will capture enough AI revenue.

A: Andy Jassy said AI business is multi-billion annual run rate growing triple-digit, capacity issues exist but supply chain will improve.

Q: Eric Sheridan from Goldman Sachs asked about company strategy for trade uncertainty and Q2 EBIT guide.

A: Andy Jassy focused on low prices, broad selection, and customer care; Brian Olsavsky mentioned stock-based comp and Kuiper launch costs in Q2.

Q: Justin Post from Bank of America asked about AWS revenue lumps and growth vs competitors.

A: Andy Jassy said revenue lumpy due to sales cycles, AI growth, and large base; AWS growth significant despite base size.

Q: Doug Anmuth from J.P. Morgan asked about AWS margins and Alexa shift.

A: Brian Olsavsky attributed AWS margin outperformance to growth and innovation; Andy Jassy talked about Alexa+ capabilities and user adoption.

Q: Brian Nowak from Morgan Stanley asked about retail operational focus and Q2 EBIT guide.

A: Andy Jassy focused on seller support and inventory management; Brian Olsavsky mentioned stock-based comp, Kuiper costs, and tariff-related factors in Q2.

Q: Brent Thill from Jefferies asked about AWS backlog and migration.

A: Dave Fildes mentioned backlog $189B, up 20% y/y; Andy Jassy talked about enterprises needing to do both AI and infrastructure migration.