Amazon(AMZN) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenue of $155.7 billion, a 10$18.4 billion, up 20% year over year, exceeding guidance by approximately $400 million [6][28] - Free cash flow for the trailing twelve months was$25.9 billion [6] Business Line Data and Key Metrics Changes - North America segment revenue was $92.9 billion, an 8$33.5 billion, also an 8% increase year over year excluding foreign exchange impacts [29] - Worldwide paid units grew by 8% year over year [29] - Advertising revenue grew by 19% year over year, contributing significantly to profitability [34] Market Data and Key Metrics Changes - AWS revenue was $29.3 billion in Q1, a 17$117 billion [36] - The backlog for AWS was reported at $189 billion, up about 20% year over year, with a weighted average remaining life of 4.1 years [89] Company Strategy and Development Direction - The company is focused on maintaining broad selection and low prices for customers, especially in light of tariff uncertainties [50][52] - Investments are being made in fulfillment and transportation networks to improve delivery speeds and cost structure [37][40] - The company is diversifying production locations to mitigate risks associated with tariffs and supply chain disruptions [52] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to navigate uncertain economic conditions and maintain customer trust through low prices and fast delivery [40][52] - The company is closely monitoring macroeconomic factors, including tariffs, and is prepared for various outcomes [35][39] - There is a strong focus on AI and cloud services, with expectations for significant growth in these areas over the next decade [18][36] Other Important Information - The company has launched Alexa Plus, a next-generation personal assistant, which is expected to enhance user experience significantly [25][73] - The company is investing heavily in AI capabilities, with a multi-billion dollar annual revenue run rate for its AI business [24][44] Q&A Session Summary Question: AWS and AI workload supply-demand imbalance - Management noted that the AI business is currently a multi-billion dollar annual run rate, growing triple digits year over year, but capacity constraints are limiting revenue potential [44] Question: Strategic priorities amid global trade uncertainty - Management emphasized the importance of maintaining broad selection and low prices while managing inventory effectively to ensure smooth operations during peak periods [50][82] Question: AWS revenue fluctuations and competitive growth - Management explained that revenue can be lumpy due to the unpredictable nature of enterprise sales cycles and the rapid growth of AI workloads [58][64] Question: AWS margin performance and future outlook - Management attributed strong AWS margins to growth and efficiency improvements, while also noting that margins will fluctuate based on ongoing investments [70] Question: Alexa's evolution and user behavior - Management highlighted the enhanced capabilities of Alexa Plus and the need for users to adapt to new functionalities, which are expected to improve user engagement [73][78]