Amazon Q4 Earnings Wins the Grammy for Free Cash Flow: "They Not Like Us"
Many of us watched the Grammys this week, and if I had to award a Grammy for cash flow this earnings season, it would go to Amazon. They are indeed not like the rest of us.
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- Q4 NA Segment revenue grew 10% y/y, but operating income was up 43%. (Globally up 60%). NA Operating margin jumped to 8% in Q4 (from 6% last year on average)
- Q4 INTL Operating income y/y went from -$400M to +$1.3B.
- Q4 Net Income doubled. Doubled. DOUBLED.
- 2024 NA operating income up 68% y/y (net sales up 10%)
- Intl operating income went from -$2.6B to +$3.8B. wow. Wow. WOW. (net sales up 8%)
- AWS operating income up 62% (net sales up 19%)
- AWS now $115B annual run rate / Ads business now $69B run rate
Growing cash flow faster than revenue. International profitable for the first time ever.
Odds and ends:
* Online stores up 8%
* Physical stores up 8% (at this point, they should sell it off? 6th times the charm?)
* Advertising up 18%
* Will spend $100B+ on capex in 2025, mostly on AWS (say 80% = my number). rest on logistics, tech, etc.
* Third-party unit % = 62% (highest ever)
* Overall sales and marketing expenses went down by 1%, yet sales went up 8%. Who does that?
* Unit sales up 11% (ahead of revenue)
* Redesigned inbound inventory network ("big architectural change") in Q4. Of course it shit the bed. But they will fix. Give them 2 quarters. Why they redesigned this in Q4 I don't understand.
* We've got about 1,000 different generative AI applications we've either built or in the process of building right now.
Overall, financial types didn't love guidance reduced because of AWS server useful life decreasing, currency headwinds, and they also don't love Capex so much. But still, a lot to like here and 9-10% growth is a good baseline for the leader in eCommerce.
And... oh yeah. I expect Walmart and Shopify to come in higher than this. We will see what I award them the Grammy for this quarter.
