Amazon.com, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• AWS: Growth continued to accelerate to 24%, the fastest in thirteen quarters. AWS is a $142 billion annualized run rate business. Chips business (Graviton and Tranium) is over $10 billion in annual revenue run rate. Bedrock is a multibillion-dollar annualized run rate business with customer spend growing 60% quarter over quarter. Launched NovaForge, Tranium three. Expect to invest about $200 billion in CapEx, predominantly in AWS.
• Stores: Expanded selection, including new beauty and fashion brands. Amazon Hall has over a million items under $10 in over 25 countries. Everyday essentials grew nearly twice as fast. Prime members had fastest delivery speeds. Launched Amazon now in India, Mexico, UAE. AgenTik AI shopping assistant Rufus used by over 300 million customers last year; Lens visual search up 45% year over year.
• Ads: Continued strong growth. Prime Video ads available in 16 countries. Ads agent and creative agent innovations. Live sports on Prime had record viewership. Alexa Plus available to all US customers. Amazon LEO has launched 180 satellites, with over 20 launches planned in 2026.

Segment Performance

• North America segment: Fourth quarter revenue was $127.1 billion, an increase of 10% year over year. Operating income was $11.5 billion with an operating margin of 9%, up from an 8% margin in 2024.
• International segment: Revenue was $50.7 billion, an increase of 11% year over year excluding the impact of foreign exchange. Operating income was $1 billion with an operating margin of 2.1%. Excluding special charges, international segment operating margins also expanded year over year.
• AWS segment: Revenue was $35.6 billion, and growth accelerated to 24% year over year. AWS now has an annualized revenue run rate of $142 billion.
• Amazon Ads: Generated $21.3 billion of revenue in the quarter and growing 22% year over year.

Guidance

• Q1 net sales: Expected to be between $173.5 billion and $178.5 billion, anticipating a favorable impact of approximately 180 basis points from foreign exchange rates.
• Q1 operating income: Expected to be between $6.5 billion and $21.5 billion.
• North America: Expect a year over year cost increase of approximately $1 billion related to Amazon LEO.
• International: Continuing to invest more in stores to enhance the customer experience and encourage retail demand to move online more quickly.

Risks

• Fluctuations in foreign exchange rates and energy prices.
• Changes in global economic and geopolitical conditions.
• Tariff and trade policies.
• Resource and supply volatility, including for memory chips.
• Customer demand and spending, including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events.
• The rate of growth of the Internet, online commerce, cloud services, and new and emerging technologies.

Question and Answer

• Q: On the strong long-term return on invested capital, could you give more insight into how investors will see that?

A: Brian T. Olsavsky said investments are put into service immediately, see long arc of additional revenue, AWS has 35% operating margin in Q4 up 40bps y/y, work hard to offset CapEx with efficiencies, see strong demand and long strong return on invested capital.

• Q: Talk about how Project Ranir is running with Anthropic after first full quarter and financial guardrails?

A: Andrew Jassy said Tranium has better price performance, Project Rainier with Anthropic is going well, Tranium three has strong interest, sees long strong return on invested capital.

• Q: How is the AI market changing as you look out into '26 and extend relationship with OpenAI?

A: Andrew Jassy said AI market is barbelled, middle of barbell will be largest, AI movement will be thousands of companies, has significant agreements with many companies including OpenAI.

• Q: How does AI play out for retail business and on-site ads?

A: Andrew Jassy said optimistic about agented shopping, Rufus has many users, customers using Rufus 60% more likely to complete purchase, will work with third-party agents but optimistic about retail's shopping agent.

• Q: Global retail business, areas of efficiency and investment?

A: Andrew Jassy said continue to expand selection in everyday essentials and luxury brands, QuickCommerce growing, perishables delivery successful; efficiencies include regionalization, robotics, improving fulfillment network.

• Q: Current state of AWS revenue backlog and supply demand around AI?

A: Andrew Jassy said backlog is $244 billion, up 40% y/y; internally many AI applications, externally AI labs and enterprises have various workloads, adding capacity as fast as possible