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Revenue: $158.9 billion, up 11% year-over-year excluding foreign exchange impact.
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Operating Income: $17.4 billion, up 56% year-over-year.
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Free Cash Flow: $46.1 billion, up 128% year-over-year.
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North America Sales Growth: 9% year-over-year.
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International Sales Growth: 12% year-over-year.
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Advertising Revenue: $14.3 billion, 18.8% year-over-year growth.
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AWS Revenue: $27.5 billion, 19.1% year-over-year growth.
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AWS Annualized Run Rate: $110 billion.
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North America Operating Margin: 5.9%, up 100 basis points year-over-year.
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International Operating Margin: 3.6%, up 390 basis points year-over-year.
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AWS Operating Income: $10.4 billion, up $3.5 billion year-over-year.
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Capital Investments Year-to-Date: $51.9 billion.
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Expected CapEx for 2024: Approximately $75 billion.
Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Amazon.com Inc (NASDAQ:AMZN) reported a significant revenue increase of 11% year-over-year, reaching $158.9 billion.
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Operating income surged by 56% year-over-year to $17.4 billion, marking the highest quarterly operating income ever for the company.
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AWS experienced a robust growth of 19.1% year-over-year, with an annualized revenue run rate of $110 billion.
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The company saw strong growth in its advertising segment, generating $14.3 billion in revenue, an 18.8% increase year-over-year.
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Amazon.com Inc (NASDAQ:AMZN) continues to innovate with AI and robotics, enhancing efficiency and safety in its fulfillment network.
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The company faces challenges with foreign exchange rates, which had a 20 basis point unfavorable impact on revenue.
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Despite strong growth, AWS margins are influenced by high costs associated with AI infrastructure and chip supply constraints.
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The third-party unit mix declined slightly in Q3, indicating potential shifts in consumer purchasing behavior.
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Amazon.com Inc (NASDAQ:AMZN) is investing heavily in capital expenditures, with expectations to spend approximately $75 billion in 2024, which could impact short-term cash flow.
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The company acknowledges the competitive landscape in retail, with traditional retailers growing quickly online, posing a challenge to its market share.
Q: Brian, could you elaborate on the drivers behind the 38% AWS margins and the sustainability of these margins? Also, any insights on CapEx for 2025? A: Brian Olsavsky, CFO: The margin increase is driven by accelerating top-line demand, cost control efforts, and extending the useful life of our servers, which added about 200 basis points. We’re being measured in hiring and maintaining efficiencies in infrastructure. AWS margins will fluctuate based on investment levels and product development. For CapEx, we expect to spend more than $75 billion in 2025, mainly driven by generative AI, which is a significant growth opportunity.
Q: Andy, how do you see the AI business evolving compared to early AWS, and what are the margin expectations for AI data centers? A: Andrew Jassy, CEO: AWS’s early days were similar to AI now, with competitive pricing and lower margins. However, as the market matures, we expect healthy margins in the generative AI space. Managing logistics and capacity efficiently will be crucial for margin improvement over time.
Q: Can you discuss the drivers of international retail profitability and the role of robotics in your operations? A: Brian Olsavsky, CFO: International profitability is improving due to lower costs, advertising contributions, and faster delivery speeds. Established countries like the UK and Germany are performing well. Regarding robotics, we’re in the early stages of automation in fulfillment centers, aiming to improve speed, cost-effectiveness, and safety.
Q: What are the trends in consumer behavior regarding ASPs and unit growth, and how is Amazon capitalizing on lower ASP items? A: Andrew Jassy, CEO: Consumers are price-conscious, leading to strong unit growth, especially in everyday essentials. We’re focused on lowering costs to serve, enabling us to offer lower ASP items economically. This strategy enhances customer engagement and increases order frequency.
Q: Are there any capacity constraints in AWS, and how do you view competition from traditional retailers online? A: Andrew Jassy, CEO: We have more demand than capacity, particularly in chips. Our partnership with NVIDIA and custom silicon like Trainium will help address this. In retail, competition is healthy, and we focus on broad selection, low prices, and fast delivery, which are key differentiators.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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