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AMAZON COM INC (AMZN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 10% to $187.8B; excluding ~$0.9B FX headwind, growth was 11%. Operating income reached a record $21.2B (+61% YoY), and diluted EPS was $1.86. AWS revenue grew 19% to $28.8B with $10.6B operating income .
  • North America and International segments expanded margins, with International moving from a $0.4B loss to $1.3B operating income. Advertising revenue reached $17.3B (+18% YoY) .
  • Q1 2025 guidance: net sales $151.0–$155.5B (5%–9% YoY) and operating income $14.0–$18.0B; guidance embeds an unusually large ~$2.1B FX headwind (150 bps) and a ~$1.5B leap-year comp from Q1 2024 .
  • Key narrative catalysts: accelerating AWS AI momentum (Trainium2, Nova, Bedrock), continued cost-to-serve reductions via inventory placement, automation and robotics, and robust advertising growth. FX headwinds and near‑term depreciation policy changes temper 2025 operating income trajectory, but management’s tone was confident on medium‑term AWS demand and margin sustainability .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and record profitability: Operating income hit $21.2B; AWS operating income rose to $10.6B, with consolidated operating margin 11.3% vs 7.8% a year ago .
  • AWS AI product velocity: Launch of Trainium2 (30–40% price-performance vs current GPU instances), Amazon Nova foundation models, Bedrock features, and Amazon Q transformations; CEO: “remarkable innovation delivered across all of our businesses, none more so than in AWS…” .
  • Fulfillment speed and cost-to-serve: Delivered 65% more items same/overnight to U.S. Prime members; continued regionalization and inbound network redesign lowered per-unit cost. CFO: “second year in a row where we've lowered our global cost to serve on a per unit basis” .

What Went Wrong

  • FX headwind: ~$0.9B revenue headwind in Q4, ~$700M worse than anticipated; Q1 2025 guidance assumes ~$2.1B FX headwind (150 bps) .
  • Capacity constraints in AWS: Chips, power, and components (e.g., motherboards) constrained the pace of AI growth; CEO expects constraints to relax in 2H 2025 .
  • 2025 depreciation updates: Shortening useful life for some servers/networking from 6 to 5 years and early retirements lower 2025 operating income (~$1.3B combined headwind), partly offset by increasing fulfillment heavy equipment life (+$0.9B benefit) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Billions)$169.961 $158.877 $187.792
Diluted EPS ($USD)$1.00 $1.43 $1.86
Operating Income ($USD Billions)$13.209 $17.411 $21.203
Operating Margin (%)7.8% 11.0% 11.3%
Net Income ($USD Billions)$10.624 $15.328 $20.004

Segment breakdown

SegmentMetricQ4 2023Q3 2024Q4 2024
North AmericaNet Sales ($B)$105.514 $95.537 $115.586
North AmericaOperating Income ($B)$6.461 $5.663 $9.256
InternationalNet Sales ($B)$40.243 $35.888 $43.420
InternationalOperating Income ($B)$(0.419) $1.301 $1.315
AWSNet Sales ($B)$24.204 $27.452 $28.786
AWSOperating Income ($B)$7.167 $10.447 $10.632
AWSOperating Margin (%)29.6% 38.1% 36.9%

KPIs

KPIQ4 2023Q3 2024Q4 2024
Online Stores Revenue ($B)$70.543 $61.411 $75.556
Physical Stores Revenue ($B)$5.152 $5.228 $5.579
3P Seller Services Revenue ($B)$43.559 $37.864 $47.485
Advertising Services Revenue ($B)$14.654 $14.331 $17.288
Subscription Services Revenue ($B)$10.488 $11.278 $11.508
AWS Revenue ($B)$24.204 $27.452 $28.786
WW Paid Units — Y/Y Growth (%)12% 12% 11%
WW Seller Unit Mix (%)61% 60% 62%
WW Shipping Costs ($B)$27.326 $23.501 $28.549

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($B)Q1 2025N/A$151.0–$155.5New; embeds $2.1B FX headwind (150 bps) and leap-year comp reminder ($1.5B in Q1’24)
Operating Income ($B)Q1 2025N/A$14.0–$18.0New
FX AssumptionQ1 2025N/A~$2.1B headwind (150 bps)New/Unfavorable
Q4 2024 Net Sales vs GuidanceQ4 2024$181.5–$188.5B Actual $187.8BAchieved near high end; would have exceeded top end excluding extra FX headwind
Q4 2024 Operating Income vs GuidanceQ4 2024$16.0–$20.0B Actual $21.2BBeat above high end

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
AWS growth & AI“Reacceleration in AWS growth” with AI stack (SageMaker, Bedrock, Trainium, Q) ; AWS +19% YoY revenue in Q3 AWS +19% YoY; Trainium2 GA; Nova models; Bedrock features; Anthropic Project Rainier; strong AI momentum but capacity constraints noted Accelerating product velocity; near-term growth moderated by capacity
Fulfillment speed & cost-to-serveFastest speeds; Prime Day records; continued regionalization 65% more same/overnight items; inbound redesign; per-unit cost declines second year in a row Improving speed and efficiency
AdvertisingStrong growth; new AI creative tools; $69B run rate implied by management narrative in Q3 $17.3B revenue (+18% YoY); full-funnel capabilities; multi-touch attribution Scaling on large base
Robotics & automationOngoing investments; broad operational improvements New tranche deployed (Shreveport pilot); early strong productivity and cost-to-serve gains; rollout planned Increasing deployment
Macro/FXGuidance with FX impacts (Q3 set Q4 guide) Q4 FX headwind ~$0.9B; Q1 guide embeds ~$2.1B FX headwind FX headwinds elevated
Depreciation policy (servers/equipment)Not highlighted previously2025 server/network life ↓ (6→5 years), early retirements; fulfillment heavy equipment life ↑ (10→13 years) Near-term op income headwind, offset in fulfillment

Management Commentary

  • CEO: “remarkable innovation delivered across all of our businesses, none more so than in AWS… Trainium2 AI chip, our own foundation models in Amazon Nova… Amazon Bedrock… Amazon Q… SageMaker…” .
  • CEO on AWS silicon: Trainium2 instances “30-40% better price-performance than current generations of GPU-based instances,” collaboration with Anthropic “Project Rainier” to build the world’s largest AI compute cluster .
  • CFO: “Operating income was $21.2B, our largest… ever and was $1.2B above the high end of our guidance… worldwide paid units grew 11%… second year in a row where we've lowered our global cost to serve on a per unit basis” .
  • CEO on capacity: chips, power and components constraining AI growth; expects constraints to relax in 2H 2025 .

Q&A Highlights

  • CapEx intensity and AI demand: Management suggested the ~$26.3B Q4 CapEx run rate is “reasonably representative” for 2025, largely for AWS AI capacity; higher CapEx signals strong demand and opportunity in AI .
  • AWS margin outlook: Margins will be “lumpy” near term given AI investment; ~200 bps margin uplift in Q4 from 2024 server life change; 2025 operating income headwind from shorter server life and early retirements partly offset by longer fulfillment equipment life .
  • Logistics mix: UPS volume shift manageable; Amazon’s own last-mile network handling more shipments efficiently .
  • Robotics rollout: Shreveport pilot combining several initiatives shows promising speed/productivity/cost-to-serve results; expansion planned across network .
  • Discovery and agents: Rufus becoming more prominent; summarization, personalization and review insights improving customer experience .

Estimates Context

  • Wall Street consensus from S&P Global (Capital IQ) was unavailable due to request limits at the time of analysis; therefore, explicit comparisons to consensus EPS/revenue are not presented. We will update with S&P Global consensus once accessible [GetEstimates error].
  • Directionally, Q4 revenue was near the high end of company guidance despite incremental FX headwinds, and operating income exceeded the high end of guidance, suggesting upward bias to prior-quarter models for operating profitability .

Key Takeaways for Investors

  • Operational efficiency and margin durability: Two consecutive years of per-unit cost-to-serve reductions plus inbound/last‑mile optimization support sustained margin strength even as shipping costs scale seasonally .
  • AWS AI cycle: Rapid product cadence (Trainium2, Nova, Bedrock, Q) positions AWS to capture expanding inference and training workloads; capacity constraints are a near-term gating factor but expected to ease in 2H 2025 .
  • Robust advertising monetization: $17.3B quarterly revenue and mature full‑funnel capabilities provide a high‑margin growth lever supportive of consolidated profitability .
  • FX sensitivity in guidance: Q1 2025 embeds an unusually large FX headwind; risk to near-term topline prints, but underlying demand trends remain solid across segments .
  • Depreciation policy changes: 2025 operating income headwinds from server life reduction and early retirements are partially offset by longer fulfillment equipment life; monitor AWS margin prints through transition .
  • Trading setup: Near-term headline risks (FX, depreciation updates) vs. positive narrative (AWS AI momentum, record profitability, advertising scale). Pullbacks tied to FX or CapEx may present opportunities for medium‑term AI-driven upside .
  • Medium-term thesis: AWS leadership in custom silicon and model platform breadth, combined with fulfillment automation and advertising flywheel, supports multi-year earnings expansion as AI demand normalizes and capacity constraints abate .

Appendix: Prior Quarter Reference

  • Q3 2024: Revenue $158.9B (+11% YoY), EPS $1.43, Operating income $17.4B; AWS revenue $27.5B (+19% YoY); Q4 2024 guidance then was $181.5–$188.5B revenue, $16–$20B operating income .
  • Q2 2024: Revenue $148.0B (+10% YoY), EPS $1.26, Operating income $14.7B; AWS revenue $26.3B (+19% YoY) .