Key Metrics
- North America Revenue: $95.5 billion (9% yoy)
- North America Operating Income: $5.7 billion
- International Revenue: $35.9 billion (12% yoy)
- International Operating Income: $1.3 billion
- AWS Revenue: $27.5 billion (19% yoy)
- AWS Operating Income: $10.4 billion
- Total Revenue: $158.9 billion (11% yoy)
- Total Operating Income: $17.4 billion (56% yoy)
- Paid Units Growth: 12% yoy
Forward guidance
- 2024 Capital Expenditures: Expected to spend approximately $75 billion in capital expenditures in 2024, primarily for AWS and technology infrastructure.
- AWS Annualized Revenue Run Rate: AWS now has an annualized revenue run rate of $110 billion.
- AWS Operating Income: AWS operating income increased to $10.4 billion, with margins expected to fluctuate based on investment levels.
- Generative AI Growth: AWS's AI business is growing at a triple-digit percentage year-over-year, significantly faster than AWS's early growth.
- Pharmacy Delivery Expansion: Plans to launch operations in 20 new cities next year, enabling delivery of medications within hours to nearly half of US Prime members.
- Fulfillment Network Improvements: Expect a 25% improvement in cost to serve from new robotics and fulfillment center designs.
- Same-Day Delivery Growth: Over 40 million customers received free same-day delivery in the last quarter, an increase of more than 25% year-over-year.
Key takeaways
- Positives:
- Andy Jassy highlighted a significant revenue increase of 11% year-over-year, with operating income up 56%, indicating strong financial health despite macroeconomic pressures.
- The company is focusing on customer-centric initiatives, such as expanding Prime benefits, which include unlimited grocery delivery and fuel savings, to enhance customer loyalty during a time of cautious consumer spending.
- Amazon's fulfillment network is being optimized, with a 25% improvement in inventory spread across fulfillment centers, which is expected to enhance delivery speed and reduce costs.
- AWS is experiencing a reacceleration in growth, with a 19.1% increase year-over-year, driven by increased demand for cloud services and AI capabilities, positioning it as a leader in the cloud market.
- The introduction of custom silicon like Trainium is expected to improve price performance for AI workloads, which could drive further AWS growth.
- Negatives:
- The company acknowledges potential challenges from macroeconomic factors, including inflation and recessionary fears, which could impact consumer spending and demand unpredictably.
- There is a noted decline in the third-party unit mix, attributed to a shift towards lower ASP items, which may indicate changing consumer preferences or competitive pressures.
- AWS margins are expected to fluctuate due to ongoing investments in innovation and infrastructure, which could impact profitability in the short term.
- Competitive pressures in the retail space are intensifying, with traditional retailers growing online, necessitating continued innovation and cost management to maintain market share.
Peer Summary
- Consumer Demand Softening: eBay's CEO noted, "We continue to face a dynamic macro and consumer spending environment," indicating challenges in consumer spending that may affect overall e-commerce performance.
- Competitive Pressures: Walmart's Doug McMillon emphasized the need for branded suppliers to invest in pricing to maintain value, highlighting intensifying competition in the retail space.
- Cautious Consumer Behavior: Wayfair's Niraj Shah remarked, "Consumers remain trepidatious in their spending patterns," reflecting a broader trend of cautious consumer spending across the sector.
- Discretionary Spending Challenges: Target's Brian Cornell acknowledged ongoing pressure in discretionary categories, suggesting that certain segments may struggle to maintain growth.
- Macroeconomic Uncertainty: Both Walmart and Target expressed concerns about the uncertain economic backdrop, with Walmart's Rainey stating, "the economic and geopolitical backdrop... is perhaps more uncertain than normal," which could impact future performance.
- Declining Growth Rates: Etsy's GMS declined 4.1% year-over-year, with management noting that macroeconomic pressures are weighing on consumer budgets, indicating a broader trend of reduced discretionary spending.
