7 February 2025
If you are covering Amazon’s latest financial results, please find a comment below from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
“Amazon reported its final quarter numbers last night with operating income coming in ahead of expectations (12% ahead), despite revenues being in line. The key highlight of the numbers was the profit upside, along with the operating leverage coming through the North American retail business. Margins here finally broke out and hit 8%, well ahead of consensus (2ppt). The catalyst this time around was efficiencies on the inbound inventory process which is expected to continue into 2025. The International business on the other hand maintained its 3% margin.
“Meanwhile, AWS revenues grew 19% in the quarter, and basically met consensus, with operating margin at 35% was slightly ahead. Similar to Microsoft and Alphabet, AWS is seeing the same supply/capacity constraints, which is expected to persist over the next couple of quarters. This also means revenue growth could well have been higher. What disappointed investors was the comment that growth trajectory would be lumpy going into the year. But management did note that they expect revenue growth to accelerate in the second half of the year once new capacity is brought online.
“Amazon’s capex guide also raised concerns of overbuild. Management did a good job emphasising that it was only adding capacity in response to the demand signals it was seeing and that any DeepSeek-related efficiencies across AI training and inference would likely only lead to greater demand as costs fall.
“Looking ahead, guidance on revenues from management was a little below expectations, though this shortfall is fully explained by a $3.6bn FX / Leap Year impact and the profit guide will likely be viewed as conservative given the material beat from this quarter.”
