Yahoo Finance Amazon.com Inc (AMZN) Q1 2024 Earnings Call Transcript Highlights: Soaring Profits and ...
Revenue: $143.3 billion, up 13% year-over-year excluding foreign exchange impacts.
Operating Income: $15.3 billion, a 221% increase from the previous year.
Free Cash Flow: $48.8 billion in trailing 12-month, adjusted for equipment finance leases.
Advertising Sales: Grew 24% year-over-year excluding foreign exchange impacts.
AWS Revenue: Accelerated to 17.2% growth in Q1, reaching a $100 billion annualized revenue run rate.
Third-Party Seller Services Revenue: Increased 16% year-over-year excluding foreign exchange impacts.
North America Revenue: $86.3 billion, up 12% year-over-year.
International Revenue: $31.9 billion, an 11% increase year-over-year excluding foreign exchange impacts.
North America Operating Income: $5 billion, up $4.1 billion year-over-year.
International Operating Income: $903 million, a $2.2 billion improvement year-over-year.
Capital Expenditures: Expected to increase significantly in 2024, primarily to support AWS growth including generative AI.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Doug Anmuth from JPMorgan asked about Amazon's investment strategy, particularly in relation to gen AI, grocery, Kuiper, and healthcare, and its impact on profitability. A: Brian Olsavsky, CFO, explained that Amazon is balancing investment and profitability, with significant improvements in operating income and free cash flow driven by the stores business and AWS. He highlighted that capital expenditures, especially for AWS and gen AI, are expected to increase, impacting depreciation but ultimately leading to long-term growth.
Q: Ross Sandler from Barclays inquired about the CapEx intensity in AWS and the costs associated with training new generative AI models. A: CEO Andrew Jassy noted that AWS is seeing strong demand, particularly in generative AI, with significant investments in training models. He emphasized the ongoing shift from cost optimization to innovation and infrastructure modernization, with AWS being a preferred platform due to its security and operational performance.
Q: Brian Nowak from Morgan Stanley asked about Amazon's goals for cost to serve and its implications for North America retail margins and cash flow. A: CFO Brian Olsavsky addressed that while specific targets for cost to serve were not disclosed, Amazon continues to focus on reducing costs and improving efficiency. He reiterated Amazon's priority to reinvest in growth opportunities and manage cash flow, including repaying debt incurred during periods of negative free cash flow.
Q: Youssef Squali from Truist Securities questioned the progress and potential of Amazon's logistics as a service globally. A: CEO Andrew Jassy described the growth in third-party logistics as mirroring AWS's early days, where internal capabilities developed for Amazon's use were extended to third-party sellers. He highlighted the efficiency and cost-effectiveness of these logistics services for sellers, indicating significant growth potential without substantial additional CapEx.
Q: Justin Post from Bank of America asked about the growth drivers in grocery and Prime Video ads. A: CEO Andrew Jassy expressed optimism about the grocery sector, citing significant growth in nonperishables and organic groceries through Whole Foods. He also noted the early success of Prime Video ads, emphasizing their potential to enhance Amazon's advertising offerings.
Q: Ronald Josey from Citi asked about the trajectory towards consistent profitability in Amazon's international segment and the impact of inbound fulfillment architecture on shipping efficiency. A: CFO Brian Olsavsky confirmed positive trends in both established and emerging markets, with efforts to improve cost structures and customer experience driving profitability. CEO Andrew Jassy added that lessons from regionalization in the U.S. are being applied internationally to enhance efficiency and reduce costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
