Amazon (AMZN 2.38%), the global e-commerce giant, has announced its results for the fourth quarter of 2024 on February 6, 2025.
The earnings reveal standout financial achievements, with revenue rising to $187.8 billion, exceeding the $187.3 billion expectation. This growth is primarily credited to Amazon Web Services (AWS) and significant international sales improvements. Diluted earnings per share leaped to $1.86, well above the $1.49 projection.
Overall, the quarter showcases Amazon's robust financial momentum, notwithstanding impending capital expenditure challenges.
| Metric | Q4 2024 Actual | Q4 2024 Estimate | Q4 2023 | Y/Y Change |
|---|---|---|---|---|
| EPS (Diluted) | $1.86 | $1.49 | $1.00 | 86.0% |
| Revenue | $187.8B | $187.3B | $170.0B | 10.5% |
| Operating Income | $21.2B | N/A | $13.2B | 60.6% |
| Net Income | $20.0B | N/A | $10.6B | 88.7% |
Source: SEC filings. Analyst estimates provided by FactSet.
Amazon's Business Overview
Amazon is a leader in both e-commerce and cloud services, known for its wide range of products and fast delivery options worldwide. Its main revenue sources include online retail, cloud computing (through AWS), and digital advertising. AWS, in particular, stands out as a hub for innovation, offering scalable computing power and services globally. This segment underpins Amazon’s profitability due to its generous profit margins.
Amazon is strategically expanding its cloud services and optimizing its logistics operations for e-commerce. Key areas of focus include enhancing Prime services and integrating advanced technology like artificial intelligence (AI) into AWS offerings. Growth in subscription services, particularly Amazon Prime, strengthens its expansive ecosystem by increasing customer retention and enabling cross-selling.
Quarterly Highlights
Amazon reported major financial strides in Q4 2024, driven largely by AWS. The segment achieved a 19% sales growth to $28.8 billion, enhancing its operating income by 48% to $10.6 billion. Investments in AI, like the introduction of the Trainium2 AI chip, are bolstering AWS capabilities and delivering competitive advantages.
In North America, Amazon's sales rose to $115.6 billion, marking a 10% increase year-over-year and driving a 43% boost in operating income. This growth was supplemented by a record-breaking Black Friday and Cyber Monday, as well as improved delivery performance for Prime members. Sales in international markets also rebounded, moving from a prior loss to a current operating income of $1.3 billion, with sales rising 8% to $43.4 billion.
Advertising revenue, a growing segment for Amazon, increased 18% as brands continue to leverage Amazon's vast customer base. These gains underscore advertising's essential role in diversifying income streams beyond retail.
Nonetheless, Amazon faces challenges with hefty capital expenditures, driven by AWS expansions and fulfillment enhancements aimed at improving service delivery. It anticipates that these investments will exert pressure on operating margins going forward.
Management's expectations for Q1 2025 indicate revenue between $151 billion and $155.5 billion, incorporating potential foreign exchange impacts. This forward guidance suggests a 5% to 9% growth over Q1 2024.
Looking Ahead
Amazon’s future looks promising with continuous investment in its foundational segments. AWS remains central; strategic advancements in AI and expanding its server infrastructure are anticipated to enhance AWS's growth trajectory. However, high capital outlay linked to such expansions will require careful cost management to maintain profit levels.
Investors should watch Amazon's ongoing efforts to propel e-commerce efficiency and widen AWS's global footprint. Expected growth in subscription and advertising services also presents opportunities for sustained revenue diversification.
