Executive Summary

Q1 2025 net sales were $155.7B (+9% YoY; +10% ex-FX) and diluted EPS was $1.59; AWS grew 17% YoY to $29.3B with 39.5% operating margin, and consolidated operating margin expanded to 11.8% .
Results exceeded Wall Street consensus: revenue beat by ~$0.5B ($155.7B vs ~$155.1B*) and EPS beat by ~$0.23 ($1.59 vs ~$1.36*)—helped by strong AWS profitability and a $3.3B pretax non-operating gain from Anthropic . Values retrieved from S&P Global*.
Management guided Q2 2025 net sales to $159–$164B and operating income to $13–$17.5B, noting FX headwinds and tariff uncertainty; Q1 operating income finished ~$0.4B above the top end of prior guidance .
Key operational drivers: record Prime delivery speeds from redesigned inbound network, ads revenue +19% YoY to $13.9B, and continued AI product momentum (Alexa+, Nova, Trainium2) supporting AWS growth and backlog ($189B; 4.1-year WAM) .
Watch items: one-time charges (historical returns and pulled-forward inventory ahead of tariffs) reduced retail margins by ~90bp in NA and ~70bp International; Q2 includes seasonal SBC step-up and Kuiper launch expenses .

What Went Well and What Went Wrong

What Went Well
- AWS: 17% YoY revenue growth to $29.3B and operating margin of 39.5%, driven by efficiency gains (custom silicon, networking, data center optimization) and AI demand; annualized run-rate >$117B .
- Retail ops: fastest-ever Prime delivery speeds globally, redesigned inbound network improving inventory placement and cost-to-serve; management sees resilience even amid tariff uncertainty .
- Advertising: revenue $13.9B (+19% YoY), accelerating on a large base, with full-funnel capabilities across Prime Video, Twitch, IMDb, and DSP .
- Quote: “We’re not dabbling here… giving builders the broadest possible capabilities at every level of the AI stack” — Andy Jassy on AWS AI strategy .
What Went Wrong
- Retail margin headwinds: one-time charges related to historical customer returns and pulled-forward inventory ahead of anticipated tariffs reduced NA/International operating margins by ~90bp/70bp .
- FX headwind: ~$1.4B drag on quarterly net sales YoY .
- Free cash flow TTM compressed to $25.9B (from $50.1B) as capex ramped for tech infrastructure (AI capacity, fulfillment) .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$158.877	$187.792	$155.667
Diluted EPS ($)	$1.43	$1.86	$1.59
Operating Income ($USD Billions)	$17.411	$21.203	$18.405
Operating Margin (%)	11.0%	11.3%	11.8%

Segment Breakdown (Net Sales and Operating Income)

Segment	Q3 2024 Net Sales ($B)	Q4 2024 Net Sales ($B)	Q1 2025 Net Sales ($B)	Q3 2024 Op Inc ($B)	Q4 2024 Op Inc ($B)	Q1 2025 Op Inc ($B)
North America	$95.537	$115.586	$92.887	$5.663	$9.256	$5.841
International	$35.888	$43.420	$33.513	$1.301	$1.315	$1.017
AWS	$27.452	$28.786	$29.267	$10.447	$10.632	$11.547

KPIs and Mix

KPI	Q3 2024	Q4 2024	Q1 2025
Advertising Services Revenue ($B)	$14.331	$17.288	$13.921
Subscription Services Revenue ($B)	$11.278	$11.508	$11.715
WW Paid Units – YoY Growth (%)	12%	11%	8%
WW Seller Unit Mix (% of paid units)	60%	62%	61%
WW Shipping Costs ($B)	$23.501	$28.549	$22.495

Versus Wall Street Consensus (S&P Global) – Q1 2025

Metric	Consensus*	Actual	Surprise
Revenue ($USD Billions)	$155.120*	$155.667	+$0.547B
Diluted EPS ($)	$1.362*	$1.59	+$0.23

Values retrieved from S&P Global*.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	Q1 2025	$151.0–$155.5B; FX headwind ~$2.1B; Leap Year +$1.5B reminder	Actual delivered $155.667B	Beat high end
Operating Income	Q1 2025	$14.0–$18.0B	Actual delivered $18.405B	Above top end
Net Sales	Q2 2025	N/A	$159.0–$164.0B; FX headwind ~10bps	New period
Operating Income	Q2 2025	N/A	$13.0–$17.5B	New period

Notes: Amazon does not provide guidance for margins, OpEx line items, OI&E, tax rate, or dividends in these periods .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
AI/Technology initiatives (Bedrock, Nova, Trainium2)	re:Invent launches incl. Nova, Trainium2 GA, Bedrock features; multi-customer adoption	AI business multi-billion run-rate, triple-digit growth; Nova Sonic, Nova Act, expansion of Bedrock models; Alexa+ rollout	Accelerating
AWS demand, backlog, margins	AWS rev +19% in Q4; margin high-30s; infrastructure investments ongoing	AWS +17% in Q1; backlog $189B, WAM 4.1 years; margin 39.5%; capacity constraints easing later in year	Positive with investment
Supply chain & delivery	Fastest-ever speeds in holiday/Q4; continued ops improvements	Fastest-ever speeds in Q1; redesigned inbound network improving placement and costs	Improving
Tariffs/Macro	Limited explicit mentions in prior releases	Extensive tariff commentary; forward buying by first/third-party; pricing not yet broadly changed; diversified sourcing	Heightened uncertainty
Advertising	+19% YoY in Q3; continued growth in Q4	+19% YoY to $13.9B; key profitability contributor	Strong growth
Project Kuiper	Notable expansion plans in Q4	First satellites launched; Q2 bears launch expense prior to commercialization	Ramp with near-term costs

Management Commentary

Strategic focus on AI stack breadth and cost-performance: “We’re not dabbling here… giving builders the broadest possible capabilities at every level of the AI stack cost effectively” — Andy Jassy .
Retail positioning amid tariff uncertainty: “We haven’t seen any attenuation of demand yet… everyday essentials grew more than twice as fast… one out of every three units sold in the U.S.” — Andy Jassy .
AWS profitability drivers: “Software/process improvements… custom networking… power optimization… advancing custom silicon like Graviton… margins will fluctuate with investment level” — Brian Olsavsky .
On guidance drivers: “Q2 includes seasonal step-up in stock-based comp… additional Kuiper launch costs” — Brian Olsavsky .
Net income item: “Q1 net income includes a pretax gain of $3.3B related to Anthropic” — Brian Olsavsky .

Q&A Highlights

Tariffs and inventory: Management highlighted forward buys by first-party and inbounding by third-party sellers, aiming to keep prices low; diversified sourcing reduces concentration risk .
AWS margins and capacity: Near-40% margin driven by efficiency gains; AI capacity constraints easing as more Trainium2 and NVIDIA instances land; backlog $189B (WAM 4.1 years) .
Alexa+: Transition to action-oriented agents; early user response positive; broader rollout planned .
Q2 guide composition: Seasonal SBC step-up and Kuiper launch costs; tariff-related costs smaller in Q2 given Q1 pre-buys .

Estimates Context

Q1 2025 delivered above consensus: revenue ~$155.1B* vs $155.7B actual; EPS ~$1.36* vs $1.59 actual. Beats driven by AWS profitability, ad strength, and non-operating Anthropic gain . Values retrieved from S&P Global*.
Q2 2025 guidance ($159–$164B) brackets consensus revenue of ~$162.1B*; EPS consensus ~$1.32* ahead of seasonal SBC and Kuiper expenses . Values retrieved from S&P Global*.
Prior quarters: Q3 2024 and Q2 2024 both modestly exceeded consensus on revenue and EPS, showing consistent execution and margin expansion . Values retrieved from S&P Global*.

Key Takeaways for Investors

AWS profitability and AI momentum are the core drivers: 39.5% AWS margins and expanding AI offerings (Trainium2, Nova, Bedrock) support sustained growth and backlog conversion .
Retail ops efficiency continues to improve unit economics: redesigned inbound network, faster delivery, and higher units per package lower cost-to-serve; watch for margin normalization as one-time charges fade .
Ads is a durable profit engine at scale: $13.9B revenue (+19% YoY) across full-funnel placements positions AMZN to monetize traffic and media assets further .
Near-term watch list: tariff developments (pricing behavior, demand shifts), FX headwinds, Q2 SBC step-up and Kuiper launch costs impacting operating income range .
EPS quality: note $3.3B non-operating gain from Anthropic in Q1; adjust for non-recurring items when modeling normalized EPS trajectory .
Sequential setup: after an above-top-end Q1 operating income, Q2 guide is conservative given costs; underlying AWS and Ads trends remain supportive .
Medium-term thesis: expanding AI stack economics (inference cost reductions), cloud migrations, and retail/ads operating leverage can sustain margin expansion and FCF recovery as elevated capex translates to capacity and growth .

Footnote: Values retrieved from S&P Global* for consensus estimates. Non-GAAP measures: free cash flow and FX effects are non-GAAP; see company reconciliation in 8-K exhibits .

AMAZON COM INC (AMZN)·Q1 2025 Earnings Summary