Amazon 2024 Q2 Earnings Analysis

1. Total revenue:

It reached 148 billion US dollars, an increase of 11% year over year, after excluding exchange rate effects.

2. Earnings per share (EPS):

The actual value was $1.26, higher than the forecast of $1.0373.

3. Net profit:

Net profit was $13.5 billion.

Performance of each business unit

1. North American and international e-commerce business:

Revenue in North America was $90 billion, up 9% year over year.

International revenue was $31.7 billion, up 10% year over year, after excluding exchange rate effects.

2. Amazon Web Services (AWS):

Revenue was $26.3 billion, up 18.8% year over year, excluding exchange rate effects.

AWS's annualized revenue exceeds $105 billion.

AWS revenue was $9.3 billion, up 43% year over year.

3. Advertising business:

Ad revenue exceeded 5 billion dollars, an increase of 2 billion dollars year-on-year.

KEY HIGHLIGHTS

1. AWS growth:

AWS's year-over-year growth rate increased from 17.2% in Q1 to 18.8% in Q2.

Key drivers include enterprises completing most cost optimizations, starting new modern infrastructure construction, and migrating to cloud computing.

AWS excels at generative AI, generating billions of dollars in annual revenue.

2. Advertising business:

The advertising business continues to grow, showing huge potential in video advertising in particular.

I participated in an advertising and marketing conference for the first time in the world and received positive feedback.

3. Retail business:

The North American and international e-commerce business performed well, particularly in the sale of everyday necessities and low-priced products.

Fast delivery speeds and additional Prime membership benefits, such as free restaurant delivery and drug subscription services, have increased customer shopping frequency and overall expenses.

4. AI and technology investments:

Significant investments in generative AI and machine learning, including Amazon SageMaker and Amazon Bedrock.

Generative AI assistants, such as Amazon Q, have excelled in software development and customer service applications.

5. Prime Video:

Prime Video performed well, receiving 62 Emmy nominations.

Original shows and sporting events, such as long-term contracts with the NBA and WNBA, attracted large audiences.

6. Kuiper project:

Accelerate the manufacture and deployment of the low-orbit satellite Kuiper, which is expected to be launched in the fourth quarter of 2024.

Partnering with Vrio to expand satellite broadband services to 7 countries in South America.

Management outlook

Andy Jassy (CEO)

We are optimistic about the long-term potential of AWS and generative AI, and believe that cloud computing and AI will continue to drive business growth.

Highlight the company's ongoing efforts to reduce costs and improve efficiency, such as regionalized inventory management and increased single-box shipments.

Brian Olsavsky (Chief Financial Officer)

The importance of the advertising business and AWS in the company's profitability was emphasized.

The third quarter of 2024 is expected to continue to see an increase in unit sales, but consumer price caution may affect sales of high-priced products.

In-depth analysis and review

1. Profitability and cost control

Amazon has made many efforts to cut costs, and in particular, has made some progress in the profitability of the e-commerce business. However, in the face of huge demand for AI services, Amazon's investment in this area has increased significantly, which may put pressure on its short-term profits. While CEO Andy Jassy has been pushing for cost control, investments in AI and cloud services could have a negative impact on short-term profitability.

2. Growth prospects for cloud businesses

Despite AWS's strong performance in the second quarter, there are concerns about its future growth prospects. Revenue guidance for the third quarter fell short of expectations, indicating that enterprise customers are more cautious in their demand for cloud computing services in the current economic environment. Although AWS still has long-term growth potential, it may face some challenges in the short term.

3. Investment and innovation

Amazon's investments in AI and other innovative fields are likely to pay off in the long term. Although these investments may impact profits in the short term, they are expected to drive future growth and market competitiveness.

conclusions

Although Amazon's performance in the second quarter was steady, the third quarter's performance guidance revealed some potential problems. In the face of economic uncertainty and changes in customer demand, Amazon needs to maintain a leading position in innovation and technology investments while maintaining cost control. It's going to be a tough balance.