Amazon reports profits for Q1 2024 with surge in AWS sales

Seattle-headquartered retail giant Amazonreported $10.4 billion in profit on revenue for the quarter ending March 31, 2024, compared to $3.2 billion on $127.4 billion in sales for the corresponding quarter in the previous year. This was driven by growth in the AWS, retail, and ads business. 

“It was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results,” said Andy Jassy, Amazon President and CEO in the statement issued by Amazon. 

“The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate (now at a $100 billion annual revenue run rate); our Stores business continues to expand selection, provide everyday low prices, and accelerate delivery speed (setting another record on speed for Prime customers in Q1) while lowering our cost to serve; and, our Advertising efforts continue to benefit from the growth of our Stores and Prime Video businesses,” he added. 

AWS business 

Amazon’s cloud computing business, AWS, saw 17% growth year-on-year in Q1 to $25 billion, reaching the $100 billion-plus Annualised Revenue Run Rate (ARR).

“We remain very bullish on AWS. We're at $100 billion-plus annualised revenue run rate, yet 85% or more of the global IT spend remains on-premises. And this is before you even calculate GenAI, most of which will be created over the next 10 to 20 years from scratch and on the cloud. There is a very large opportunity in front of us,” said Brian Olsavsky, Chief Financial Officer at Amazon during the earnings call. 

AWS also released its enterprise focused generative AI-powered assistant, Amazon Q, from beta. 

Advertising business

The company’s advertising business grew 24% in terms of sales year-on-year, driven by Amazon’s decision to introduce ads for Prime Video users in January. 

“The strength in advertising was primarily driven by sponsored products, supported by continued improvements in relevancy and measurement capabilities for advertisers. We still see significant opportunity ahead in our sponsored products, as well as areas where we're just getting started like Prime Video ads,” said CEO Jassy during the earnings call. 

International business

The sales from international business increased by 10% year-on-year to $31.9 billion, driven by established countries and cost efficiencies. The retail business also held sale events in geographies including spring sale in Canada and the US, as well as Europe. Amazon also held Ramadan sales in Egypt, Saudi Arabia, and UAE. The company claimed that the speed for delivery through Prime was the fastest for Q1. 

“Looking ahead, we see several opportunities to further lower cost to serve and improved profitability in our worldwide stores business while still investing to improve the customer experience. Within our fulfillment network, we are focused on investing in our inbound network, streamlining and standardizing process paths, and adding robotics and automation,” said Jassy.

The company revised its Q2 guidance expecting net sales to grow between 7% to 11% compared to Q2 2023. Operating income is expected to be between $10 billion to $14 billion for the upcoming quarter.