Amazon.com Q2 2025 Earnings Report

Amazon.com EPS Results

• Actual EPS: $1.68
• Consensus EPS: $1.31
• Beat/Miss: Beat by +$0.37
• One Year Ago EPS: $1.26

Amazon.com Revenue Results

• Actual Revenue: $167.70 billion
• Expected Revenue: $161.80 billion
• Beat/Miss: Beat by +$5.90 billion
• YoY Revenue Growth: +13.30%

Amazon.com Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 5:00PM ET

Amazon.com (NASDAQ:AMZN) engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content. In addition, the company offers programs that enable sellers to sell their products in its stores; and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, it provides compute, storage, database, analytics, machine learning, and other services, as well as advertising services through programs, such as sponsored ads, display, and video advertising. Additionally, the company offers Amazon Prime, a membership program. The company's products offered through its stores include merchandise and content purchased for resale and products offered by third-party sellers. It serves consumers, sellers, developers, enterprises, content creators, advertisers, and employees. Amazon.com, Inc. was incorporated in 1994 and is headquartered in Seattle, Washington.

Amazon.com Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Amazon reported $167.7 billion in revenue (up 12% year-over-year ex-FX) and $19.2 billion in operating income (up 31%), driving $18.2 billion in free cash flow.
• Positive Sentiment: The stores business expanded selection with the return of Nike and new premium brands, launched same-day perishables (75% of users were first-time shoppers), and maintained industry-leading low prices.
• Positive Sentiment: Delivery network efficiency improved as direct shipping lanes rose by 40%, package travel distance fell 12%, handling touches dropped 15%, and Prime same-day/next-day deliveries increased 30% in the US.
• Positive Sentiment: AWS grew 17.5% to a $123 billion annualized run rate and ramped up AI investments, rolling out custom chips (Trainium 2), new Bedrock models, and developer tools like Curo and Agent Core.
• Positive Sentiment: Advertising revenue rose 22% to $15.7 billion, fueled by sponsored products growth and major DSP partnerships with Roku and Disney’s real-time ad exchange.

Presentation

[Operator]

Thank you for standing by. Good day, everyone, and welcome to the amazon.com Second Quarter twenty twenty five Financial Results Teleconference. At this time, all participants are in a listen only mode. After the presentation, we will conduct a question and answer session. Today's call is being recorded.

[Operator]

And for opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Dave Files. Thank you, sir. Please go ahead.

[Dave Fildes, VP - IR at Amazon]

Hello, and welcome to our Q2 twenty twenty five financial results conference call. Joining us today to answer your questions is Andy Jassy, our CEO and Brian Lisowski, our CFO. As you listen to today's conference call, we encourage you to have a press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2024. Our comments and responses to your questions reflect management's views as of today, 07/31/2025 only and will include forward looking statements.

[Dave Fildes, VP - IR at Amazon]

Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent annual report on Form 10 ks and subsequent filings. During this call, we may discuss certain non GAAP financial measures. In our press release, slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website. You will find additional disclosures regarding these non GAAP measures, including reconciliations of these measures with comparable GAAP measures.

[Dave Fildes, VP - IR at Amazon]

Our guidance incorporates the order trends that we've seen to date and what we believe today to be appropriate assumptions. Our results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions, tariff and trade policies, and customer demand and spending, including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the Internet, online commerce cloud services, and new and emerging technologies, and the various factors detailed in our filings with the SEC. Our guidance assumes, among other things, that we don't conclude any additional business acquisitions, restructurings or legal settlements. It's not possible to accurately predict demand for our goods and services, and therefore, our actual results could differ materially from our guidance. And now I'll turn the call over to Andy.

[Andy Jassy, President & CEO at Amazon]

Thanks, Dave. Today, we're reporting $167,700,000,000 in revenue, up 12% year over year, excluding the impact from foreign exchange rates. Operating income was 19,200,000,000.0 up 31% year over year and trailing twelve month free cash flow was $18,200,000,000 We saw good progress across our various customer experiences and businesses this past quarter. Starting with stores, we feel good about both the inputs and outputs of the business. At Amazon, we think of our business in terms of inputs and outputs.

[Andy Jassy, President & CEO at Amazon]

Outputs are metrics like revenue or operating margin, but, of course, you can't manage at the output level. It's the inputs that drive the outputs. So we spend virtually all of our time internally talking about and going against inputs. The inputs that matter most to customers in our stores business are selection, low prices, and speed of delivery. We've taken another step forward in selection these past few months, headlined by the much requested return of Nike's products to Amazon's retail store.

[Andy Jassy, President & CEO at Amazon]

We've added premium brands like Away, Aveda, Marc Jacobs fragrances, and brands from Saks and Amazon like Dolce and Gabbana, Etro, Stella McCartney, Rosetta Getty, and La Prairie. And we started expanding our very successful perishables pilot, where we offer customers perishables at the point of purchase when they're ordering other items that will be delivered same day from our same day fulfillment nodes. We're seeing strong customer adoption as 75% of customers who've used the service this year are first time shoppers for perishables on Amazon, with 20% of customers who use the service returning multiple times within their first month. Our prices continue to be low and sharp for customers. It's one of the reasons our everyday essentials growth outpaced the rest of the business globally and represented one out of every three units sold.

[Andy Jassy, President & CEO at Amazon]

It's also why well known research firm, Perfidero, has concluded for eight years in a row that Amazon has the lowest prices of any US retailer. But perhaps the clearest outputs are the rate at which our stores business grew this past quarter and the success we saw in our recent Prime Day event. This year's Prime Day was our biggest ever with record sales, number of items sold, and number of Prime sign ups in the three weeks leading up to the Prime Day. Customers saved billions of dollars and independent sellers, most of which are small and medium sized businesses, saw their best sales performance of any Prime Day event yet. There continues to be a lot of noise about the impact that tariffs will have on retail prices and consumption.

[Andy Jassy, President & CEO at Amazon]

Much of it thus far has been wrong and misreported. As we said before, it's impossible to know what will happen. Where will tariffs finally settle, especially China? What happens when we deplete the inventory we forward bought or that our selling partners forward deployed in advance of the tariffs going into effect? If costs end up being higher, who will absorb them?

[Andy Jassy, President & CEO at Amazon]

But what we can share is what we've seen thus far, which is that through the first half of the year, we haven't yet seen diminishing demand nor prices meaningfully appreciating. We also have such diversity of sellers in our marketplace, over 2,000,000 sellers in total, with differing strategies of whether to pass on higher cost to consumers that customers are advantaged shopping at Amazon because they're more likely to find lower prices on the items they care about. Further improving delivery speed remains a key focus, and we continue to make progress. We've previously shared how we rearchitect our US inbound network into a regional structure, allowing us to place inventory and shift from locations closer to customers, improving speed and lowering costs. That work is delivering tangible results.

[Andy Jassy, President & CEO at Amazon]

In q two, we increased the share of orders moving through direct lanes where packages go straight from fulfillment delivery without extra stops by over 40% year over year. We've also reduced the average distance packages traveled by 12% and lowered handling touches per unit by nearly 15%. We've made progress on order consolidation. With more products positioned locally, we're able to pack more items into each box and send fewer packages per order. That has helped drive higher units per box and improved overall cost to serve.

[Andy Jassy, President & CEO at Amazon]

Taken together, these improvements are making the network faster and structurally more efficient. We've also set another global speed record in q two, delivering to Prime members at our fastest speeds ever. In The US, we delivered 30% more items same day or next day than during the same period last year. Items customers used to pick up locally in nearby physical stores are now arriving at their door often within hours, and we're working to further improve delivery speeds no matter where customers live. We've recently announced plans to expand our same day and next day delivery to tens of millions of US customers in more than 4,000 smaller cities, towns, and rural communities by the end of the year.

[Andy Jassy, President & CEO at Amazon]

Today, it's already available in more than a thousand of these communities across The US. The early response from customers in these areas have been very positive. They're shopping more frequently and purchasing household essentials at meaningfully higher rates. Automation and robotics are also important contributors to improving cost efficiencies and driving better customer experiences over time. We deployed our one millionth robot across our global fulfillment network and unveiled innovations at our last mile innovation center, such as automated package sorting and a transformative technology that brings packages directly to employees in an ergonomic height.

[Andy Jassy, President & CEO at Amazon]

We rolled out Deepfleet, our AI whose robot travel efficiency by 10%. At our scale, it's a big deal. Deepfleet acts like a traffic management system to coordinate robots' movements to find optimal paths and reduce bottlenecks. For customers, it means faster delivery times and lower costs. For our team members, our robots handle more of the physically demanding tasks, making our operations network even safer.

[Andy Jassy, President & CEO at Amazon]

This combination of robotics and generative AI is just getting started. And while we've made significant progress, it's still early with respect to what we'll roll out in the next few years. Moving on to Amazon Ads. We're pleased with the strong growth generating $15,700,000,000 of revenue in the quarter, growing 22% year over year. We continue to see strength across our broad portfolio of full funnel advertising offerings that in The US alone help advertisers reach an average ad support audience of more than 300,000,000 across our own properties.

[Andy Jassy, President & CEO at Amazon]

These are properties like our retail marketplace, Prime Video, Twitch, and Fire TV, in live sports such as NFL, NASCAR, and the NBA, as well as third party websites and apps. Another area we're excited about is our demand side platform or Amazon DSP. Our DSP enables advertisers to plan, activate, and measure full funnel investments. Our trillions of proprietary browsing, shopping, and streaming signals paired with extensive supply side relationships and our secure clean rooms provide advertisers the ability to optimize advertising, deliver greater precision, and drive efficient and effective advertising outcomes. And in June, we announced a momentous partnership with Roku, giving advertisers access to 80,000,000 connected TV households, the largest authenticated connected TV footprint in The US exclusively through Amazon DSP.

[Andy Jassy, President & CEO at Amazon]

It's a giant leap forward for advertisers bringing best in class planning, audience precision, and performance to TV advertising. We also announced an integration between Disney's real time ad exchange and Amazon DSP. This collaboration allows advertisers to gain direct access to Disney's premium inventory across platforms like Disney plus, ESPN, and Hulu, while allowing them to leverage insights from both companies. When advertisers work with Amazon, they're not just buying ad space. They're benefiting from exceptional programming, innovative technology, and unrivaled signals, measurement, and audience development that provides strong relevancy for consumers and return on investment for brands.

[Andy Jassy, President & CEO at Amazon]

Moving on to AWS. In q two, AWS grew 17.5% year over year and now has over a 123,000,000,000 annualized revenue run rate. We continue to help organizations of all sizes accelerate their transition to the cloud, signing new agreements with companies including PepsiCo, Airbnb, Peloton, Nasdaq, London Stock Exchange, Nissan Motor, GitLab, SAP, Warner Brothers Discovery, Twelve Labs, FICO, Iberia Airlines, SK Telecom, and NatWest. In the rapidly evolving world of generative AI, AWS continues to build a large, fast growing, triple digit year over year percentage, multibillion dollar business with more demand than we have supplied for at the moment. A few points to make.

[Andy Jassy, President & CEO at Amazon]

First, on the hardware side, our custom AI chip, Trainium two, is landing capacity in larger quantities and has impressively emerged as the backbone for Anthropic's newest generation cloud models and many of our most essential offerings like Amazon Bedrock. We've also launched Amazon EC two instances powered by NVIDIA Grace Blackwell Superchips, AWS' most powerful NVIDIA GPU accelerated instance. Second, in Bedrock, we've recently added Anthropix Cloud four, and it's the fastest growing model ever in Bedrock. We've also continued to see strong adoption of Amazon Nova, our own frontier model, and it's now the second most popular foundation model in Bedrock. New features in Nova allow customers to customize their Nova models in ways they can't on other foundation models, allowing organizations to infuse these models with their unique expertise while optimizing for cost and speed.

[Andy Jassy, President & CEO at Amazon]

As people have become excited about building agents, they're realizing they lack the tools to build them. In May, we released Strands, an open source way to more easily build agents that's taken off with a wide range of customers with already 2,500 stars on GitHub and over 300,000 downloads on Pipedrive. Are also struggling with deploying agents into production in a secure and scalable way. It's holding up enterprises scaling agents. To help solve that problem, Bedrock just released Agent Core.

[Andy Jassy, President & CEO at Amazon]

Agent Core is a set of building blocks that gives customers the industry's first secure serverless runtime to provide both synchronous and asynchronous execution, agent identity and boundaries, a memory service, a gateway that translates services to MCP compatible interfaces, built in code execution and web browser tools, and an observability service. Customers are excited about agent core, and it frees them up to start deploying agents more expansively. Third, you're starting to see AWS release more powerful applications at the top layer of the AI stack. AWS Transform is an AWS agent that dramatically reduces mainframe modernization timelines from years to months, completes VMware to EC two conversions up to 80 times faster, and makes it simple to move from dot net Windows to dot net Linux implementations, reducing licensing costs for dot net applications by up to 40%. We've also just released Curo, our new agentic integrated development environment coding agent.

[Andy Jassy, President & CEO at Amazon]

There's a lot of buzz around Curo with several 100,000 developers using or requesting access in the first couple weeks, a 100,000 used in the first five days of the preview. What struck a chord for developers is that Cura allows them to do vibe coding where developers use natural language to chat with a coding agent to build code. But unlike other coding agents where developers don't really have any structure to build on top of, Cura allows developers to use natural language to build a spec and then automatically updates that spec as they continue to vibe code or interact with Kiro. This makes it much easier to go from prototyping to production. Customers also like Kiro's event driven agent hooks that act like an experienced developer catching things developers might miss.

[Andy Jassy, President & CEO at Amazon]

When developers save a React component, hooks update the test file. When they modify API endpoints, hooks refresh read me files. When they're ready to commit, security hooks scan for leak credentials. It's still very early for Quiro, but it seems clear we're onto something customers love, and Quiro has a chance to transform how developers build software. I say this frequently, but remember that 85 to 90% of worldwide IT spend is still on premises versus in the cloud.

[Andy Jassy, President & CEO at Amazon]

In the next ten to fifteen years, that equation is going to flip, further accelerated by companies' excitement for leveraging AI. So AWS has significantly broader functionality, stronger security and operational performance, and much deeper experience helping enterprises modernize their infrastructure bodes well for the AWS business moving forward. We're also seeing momentum in a number of our other areas across Amazon. I'll mention just a few. We're excited about our progress with Alexa Plus, our next generation assistant powered by generative AI.

[Andy Jassy, President & CEO at Amazon]

We've been rolling out early access to US customers to start. Millions of customers have access now. We're seeing very positive feedback, and we'll continue to iterate on the experience. We've recently completed our third successful launch of Project Kuiper. We haven't launched this service commercially yet, but already have an impressive amount of enterprise and government customers who signed agreements to use Kuiper.

[Andy Jassy, President & CEO at Amazon]

In prime video live sports, our first season of NASCAR drew about 2,000,000 viewers per race and the youngest audience among NASCAR broadcasters in more than a decade. We've recently announced our stellar broadcasting crew for our upcoming first NBA season, including Iron Eagle, Stan Van Gundy, Kevin Harlan, Dwayne Wade, Taylor Rooks, Blake Griffin, Dirk Nowitzki, Steve Nash, and Candice Parker. We also announced Denis Villeneuve, an Academy Award nominee as the director for the next James Bond film. James Bond is in the hands of one of today's greatest filmmakers, and we cannot wait to get started on double o seven's next adventure. Finally, we continue to be very pleased with the growth and resonance of Amazon Pharmacy as it's grown 50% year over year, year to date on an already significant size base.

[Andy Jassy, President & CEO at Amazon]

A lot of good things happening across the company. With that, I'll turn it over to Brian for a financial update.

[Brian Olsavsky, SVP & CFO at Amazon]

Thanks, Andy. Let's start with our top line financial results. Worldwide revenue was a $167,700,000,000, a 12% increase year over year excluding the impact of foreign exchange. Foreign exchange had a $1,500,000,000 favorable impact to revenue in the quarter as foreign currencies generally strengthened versus the U. S.

[Brian Olsavsky, SVP & CFO at Amazon]

Dollar. As a reminder, our Q2 revenue guidance had anticipated an unfavorable impact of approximately 10 basis points or $100,000,000 Although that operating income was $19,200,000,000 which is $1,700,000,000 above the high end of our guidance range. Across our segments, we continue to prioritize cost effective innovation that delivers value for our customers. In the North America segment, second quarter revenue was $100,100,000,000 an increase of 11% year over year. International segment revenue was $36,800,000,000 an increase of 11% year over year, excluding the impact of foreign exchange.

[Brian Olsavsky, SVP & CFO at Amazon]

Worldwide paid units grew 12% year over year. We remain focused on inputs that matter most to our customers. In the second quarter, we saw broad based strength across our key performance metrics. This includes sharp pricing and more in stock availability, as well as record delivery speeds for Prime members. Our millions of global sellers continue to be an important contributor to our vast selection.

[Brian Olsavsky, SVP & CFO at Amazon]

This helps customers find the items they need and does so at a competitive price. Our investment in tools, services, and fast delivery speeds help our selling partners reach more customers and further scale their businesses. In q two, worldwide third party seller unit mix was 62%, the highest ever, up on 100 basis points from q two of last year. We're also closely monitoring the macroeconomic environment, including the impact of tariffs. As Andy mentioned, our Q2 plan factored in a range of assumptions, not all of which materialized.

[Brian Olsavsky, SVP & CFO at Amazon]

We will continue to consider a range of assumptions going forward. Shifting to profitability, North America segment operating income was $7,500,000,000 an increase of $2,500,000,000 year on year. North America operating margin was 7.5%, up 190 basis points year over year. International segment operating income was $1,500,000,000 up $1,200,000,000 year over year. International operating margin was 4.1%, up three twenty basis points year over year.

[Brian Olsavsky, SVP & CFO at Amazon]

We're pleased with the strong execution of our operations teams and the positive experience they delivered for customers. In q two, we saw productivity gains in our transportation network driven by improved inventory placement, strong leverage on high unit volumes, and higher levels of in demand inventory from both first party and third party selling partners. These factors contributed to faster delivery speeds and lower costs. Outbound shipping costs were up 6% year over year and continue to grow at a meaningfully slower pace than unit growth, which as I mentioned earlier was up 12% year over year. We're committed to initiatives that further improve our cost structure.

[Brian Olsavsky, SVP & CFO at Amazon]

Strategic inventory placement drives multiple benefits, including better in stock availability, shorter delivery routes, and faster customer delivery times. When we optimize inventory location, we can consolidate more items per package, reducing packaging materials and costs. To achieve this, we will continue to improve upon our inbound network, expand our US same day delivery facilities, including in rural communities, and implement robotics and automation across our facilities. While year over year improvements in operating margin may fluctuate, we have a purposeful strategy to achieve sustained progress over time. Shifting to advertising.

[Brian Olsavsky, SVP & CFO at Amazon]

Advertising revenue grew 22% year over year, driven by sponsored products as we saw strong traffic in our stores. Advertising remains an important contributor to profitability in the North American international segments. Our full funnel advertising approach of connecting brands with customers is resonating. Moving next to our AWS segment. Revenue was $30,900,000,000 an increase of 17.5% year over year.

[Brian Olsavsky, SVP & CFO at Amazon]

AWS now has an annualized revenue run rate of more than a 123,000,000,000. During the second quarter, we continue to see growth in both our generative AI and non generative AI businesses. As companies turn their attention to newer initiatives, bring more workloads to the cloud, restart or accelerate existing migrations from on premise to the cloud, and tap into the power of generative AI. AWS operating income was $10,200,000,000. We did see AWS segment margins decline from a record high of 39.5% in q one to 32.9% in q two.

[Brian Olsavsky, SVP & CFO at Amazon]

The largest quarter over quarter driver of the decrease for about half is due to the seasonal step up in stock based compensation expense driven by the timing of our annual compensation cycle. AWS margins also saw headwinds from higher depreciation expense as well as unfavorable impacts from year over year fluctuations in foreign exchange rates. The depreciation expense is a result of our growing investments in capital expenditures in AWS. As we've said in the past, we expect AWS operating margins to fluctuate over time, driven in part by the level of investments we are making at any point in time. We will continue to invest more capital in chips, data centers, and power to pursue this unusually large opportunity that we have in generative AI.

[Brian Olsavsky, SVP & CFO at Amazon]

Now turning to our cash CapEx, which was $31,400,000,000 in q two. We expect q two CapEx to be reasonably representative of our quarterly capital investment rate for the back half of this year. AWS continues to be the primary driver as we invest to support demand for our AI services and increasingly in custom silicon like Tranium, as well as tech infrastructure to support our North America and international segments. Additionally, we continue to invest in our fulfillment and transportation network to support growth of the business, improve delivery speeds, and lower our cost to serve by investing in same day delivery facilities as well as robotics and automation. Collectively, these investments will support growth for many years to come.

[Brian Olsavsky, SVP & CFO at Amazon]

Moving on to our third quarter financial guidance. As a reminder, our guidance considers a range of possibilities which take into consideration Q2 results, trends we see quarter to date, and expectations around the macroeconomic environment including tariffs. Q3 net sales are expected to be between $174,000,000,000 and $179,500,000,000 We estimate the year over year impact of changes in foreign exchange rates based on current rates, which we expect to be a favorable impact of approximately 130 basis points. As a reminder, global currencies can fluctuate during the quarter. Q3 operating income is expected to be between $15,500,000,000 and $20,500,000,000 In this dynamic environment, we'll focus on what matters most, delivering exceptional customer value through broad selection, competitive prices, and unmatched convenience.

[Brian Olsavsky, SVP & CFO at Amazon]

We remain focused on driving a better customer experience and believe putting customers first is the only reliable way to create lasting value for our shareholders. With that, let's move on to your questions.

[Operator]

Thank you. At this time, we will now open the call up for questions. Thank you. Our first question comes from Doug Anmuth with JPMorgan. Please proceed with your question.

[Douglas Anmuth, MD & Internet Analyst at JP Morgan]

Thanks so much for taking the questions. I have two. First, can you just help us understand with some more granularity how tariffs are being absorbed across suppliers, Amazon and consumers and whether you anticipate any change going forward? And then second on AWS, we're seeing significantly faster cloud growth among the number two and three players in the space. I totally appreciate that AWS is coming off of a bigger base. But beyond that, do you think the output gap is due more to customer demand or infrastructure supply or both? Thanks.

[Andy Jassy, President & CEO at Amazon]

Yes, I'll take both of those. I'll start with the tariffs. I think what we said a number of times and we still believe it is we just don't know what's going to happen moving forward. It's hard to know where the tariffs are going to settle particularly in China. It's hard to know what will happen when we deplete some of the pre buys that we did on our own first party retail and then some of the forward deploying that we saw of our third party selling partners.

[Andy Jassy, President & CEO at Amazon]

And when, you know, if costs go up over time, it's, you know, we're unsure at this point who's gonna end up absorbing those higher costs. What we can tell you is what we've seen so far in the first half of the year. In the first half, we just haven't seen diminished demand and we haven't seen any kind of broad scale ASP increases. And, you know, so that that could change in the second half. There are a lot of things that we don't know, but that's what we've seen so far.

[Andy Jassy, President & CEO at Amazon]

On the question on AWS, you know, the first thing I'd say is, you know, it's as you said, Doug, in your question, know, year over year percentages and growth rates are always a function of the base in which you operate. And we have a, you know, a meaningfully larger business in the AWS segment than others. I think the second player is about 65% of the size of of a AWS. And we when we look at the results over the last number of quarters, there's sometimes where as far as we can tell, we're growing faster than others and sometimes others are growing faster than us. But it's still like if you if you look at second place player you're talking about, it's a pretty it's still a pretty significant segment, you know, market segment leadership position that we have.

[Andy Jassy, President & CEO at Amazon]

And regardless, these are all really just moments in time. The last week is a moment in time too where the reality of what really matters is what customers' experiences are in operating on these platforms. And if if you look at what matters to customers, what they care they care a lot about what the operational performance is, you know, what the availability is, what the durability is, what the latency and throughput is of of the various services. And I think we have a pretty significant advantage in that area. They care a lot about security.

[Andy Jassy, President & CEO at Amazon]

If you have data that matters and for most companies, they're putting data that they really care about in the cloud. The security and the privacy of that data matters a lot, and there are very different results in security in AWS than you'll see in other players. And, yeah, you could just you just look at what's happened the last couple months. You can just see kind of adventures at some of these players almost every month. And so very big difference, I think, in security.

[Andy Jassy, President & CEO at Amazon]

And then I I think a a really significant difference in functionality where not just in the core infrastructure do we have a lot more functionality in our services. But I think if you look at our end to end offering in AWS in in AI, it's you know, from the bottom of stack all the way to the top, it it's pretty different. So, you know, I feel good about the the the inputs and the services that we're offering to customers across AI as well as non AI. And, you know, we could we we have more demand than we have capacity right now. So we could be doing more revenue and helping customers more, and we're working very hard on on changing that outcome and how much capacity we have, but it's still like, you know, you go get the business, it's a $123,000,000,000 annual revenue run rate business, and it's still early.

[Andy Jassy, President & CEO at Amazon]

I mean, how often do you have an opportunity that's a $123,000,000,000 of annual revenue run rate where you say it's still early? It's it's a very unusual opportunity that we're very bullish about.

[Operator]

Thank you. Our next question comes from Mark Mahaney with Evercore. Please proceed with your question.

[Mark Mahaney, Senior MD at Evercore ISI]

Okay. I'll stick with AWS to start it with. Could you just disclose the backlog number? And then in the past, I know you've talked about these supply constraints and hoping that they will sort of resolve themselves by the back half of the year. Is that still your intention?

[Mark Mahaney, Senior MD at Evercore ISI]

Anything that suggests that the supply constraints are going to get resolved earlier or later? And then a long term question on Alexa Plus. And I've been experimenting with it for a while. Andy, when you think about the potential that that has in terms of increasing engagement, maybe tapping into some services revenue, advertising, maybe a little bit more retail sales per household, you're just reducing friction. Just talk about what from a financial perspective, how you think that could play out?

[Mark Mahaney, Senior MD at Evercore ISI]

How we would maybe see that in the numbers? Thank you very much.

[Dave Fildes, VP - IR at Amazon]

Mark, this is Dave. I'll just start off to give you the backlog figure. So at the end of the quarter at June 30, that was $195,000,000,000 so that's up about 25% year over year.

[Andy Jassy, President & CEO at Amazon]

On the supply constraints as it relates to AWS and what we see there, You know, as I mentioned, well, we have more demand than we have capacity at this point. And I think that and and you see, you know, some of the constraints, and they kind of exist in multiple places. The single biggest constraint is power. But I you know, you also see constraints off and on with chips and then some of the components that, you know, once you have the chips to actually make the servers, you know, you there are you know, sometimes you have new generations of chips that are a little bit later than they're supposed to be and sometimes you get the chips and, you know, the yield you get in making servers isn't what you what you expect when you get to ramp. So there are a bunch of those pieces today that we're working on.

[Andy Jassy, President & CEO at Amazon]

It's really true across the industry today. I I don't believe that we will have fully resolved the amount of capacity we need for the amount of demand that we have in a couple quarters. I think it will take several quarters. But I do expect that it's gonna get better each quarter and I'm optimistic about that. I think on the Alexa question, you know, I I think what I'd start by saying the Alexa Plus experience is so much better than I think our prior Alexa experience.

[Andy Jassy, President & CEO at Amazon]

She's much more intelligent than her prior self. She's much more capable. And I would say unlike the the other chatbots that are out there today who are good at answering questions but really can't take any action for you, Alexa Plus can take a lot of action for you, which is very compelling. So I can ask Alexa to play music for me or play video for me or move my music from one device to another. Or if I'm listening to a a song that's on a that's in a movie, I can ask Alexa plus to actually put that movie scene on that of a song I'm playing, and it'll put it on my Prime Video on on Fire TV.

[Andy Jassy, President & CEO at Amazon]

Or if I have guests coming over, I can say, you know, Alexa, draw the curtains, put the light on the porch and the driveway, increase the temperature by five degrees, and put on music that would be great for a dinner party. And and she does all that just for using natural language. So she could take a lot of actions, and it's compelling. And what we see so far, you know, we've we've been rolling out Alexa Plus starting in The US. It's it's with millions of customers now.

[Andy Jassy, President & CEO at Amazon]

The rest come the rest in The US coming in the next couple months and starting the international rollout more broadly later in the year. And customers really like the experience. They recognize how much better it is than what it was before. The ratings are very high. The usage is is much more expansive than what they were using before.

[Andy Jassy, President & CEO at Amazon]

The number calls they're making is is meaningfully higher. And I I think there are a number of different areas where we'll see benefit. I I think first, you know, if you if you build the world's best personal assistant, that has a lot of utility for customers and, therefore, it gets used a lot. So it means everything from people are excited about the devices that they can buy from us that has Alexa Plus enabled in it. People do a lot of shopping, and it's it's really it's a delightful shopping experience that will keep getting better.

[Andy Jassy, President & CEO at Amazon]

I think over time, there will be opportunities, you know, as as people are engaging more multi turn conversations to have advertising play a role to help people find discovery and also as a lever to drive revenue. And I think over time, could also imagine as we keep adding functionality that there could be some sort of subscription element beyond what there is today. Today, Prime members get Alexa Plus for free and non Prime members pay $19.99 a month for Alexa Plus. So I think it's very it's still very early days, but we're very encouraged by the experience we're providing and you can bet we're gonna be iterating on it constantly.

[Operator]

Thank you. And our next question comes from the line of Colin Sebastian with Baird. Please proceed with your question.

[Colin Sebastian, Senior Research Analyst at Baird]

Thanks for taking the questions. I guess first off with respect to the international segment and the progress in both revenues and margins, I was hoping you could add maybe some color on the drivers of each of those and the sustainability of the improved efficiency in those markets. And then Andy, you mentioned Kuiper. We haven't heard as much about that of late. So maybe if you could review where things stand relative to next year's launch target, timing of the service rollout and maybe any perspective you have on the longer term ambitions for the satellite network? Thank you.

[Brian Olsavsky, SVP & CFO at Amazon]

Thanks, Colin. This is Brian. I'll start with the international segment question. So, yeah, very strong quarter for international segment both on revenue growth and also on operating margin. Operating margin was up three twenty basis points year over year to 4.1%.

[Brian Olsavsky, SVP & CFO at Amazon]

And if you look, that's the continuation of a strong progression we've seen quarter by quarter over the last ten quarters in total. We've seen an increase of close to 700 basis points during that time period. So really, it's a tale of two pieces of two segments or excuse me, sections within international. One is established countries like UK, Germany, and Japan already at similar margin profiles to The US. So we'll you know, as they continue to grow, their contribution and profit will grow over time, that's what we're seeing. In the quarter, we saw strong productivity in our transportation network in those countries, much like we saw in The US, and that's led to higher units for package and faster delivery speeds at lower cost. So again, the theme of lower cost to serve and also increased speed and, you know, better selection for customers continues, to grow in internationally as well. In our emerging countries, you know, we're pleased with the progress we're making there. We've launched eight countries, of course, in the last five years, and they're all varying degrees of upfront investment and, you know, different point times in their journey to profitability. But they're all making very nice improvements quarter over quarter in growing selection, adding prime members, and expanding our customer offerings.

[Brian Olsavsky, SVP & CFO at Amazon]

So I think what you're saying again is sustained improvement in those areas. Feel very good about it. The established countries are continuing to grow and develop and very much look like The United States. And the emerging countries, again, all very different stages of growth right now.

[Andy Jassy, President & CEO at Amazon]

On the Project Kuiper question, so Project Kuiper is our low Earth orbit satellite constellation that we're putting up and launching. And, you know, there's 400 to 500,000,000 households worldwide who don't have broadband connectivity. And it means they can't do a lot of the things we take for granted like education online or business online or shopping or or entertainment. There is really a digital divide, and it's much needed. And it's also true for enterprises and for governments if they have assets or needs to have visibility or connectivity that they can't get today given the lack of broadband in a bunch of places around the world.

[Andy Jassy, President & CEO at Amazon]

So there's there's a high need. I would say that as we get our constellation into space, there will really be two players that have what I would consider the the modern technology in low earth orbit satellite. You know, one is is the incumbent in in the market today, and the second will be Project Kuiper. I think that we will have a a pretty meaningful differentiation here in performance. If you look at the performance of what I expect on the uplink and downlink, I think Project Kuiper will be advantaged.

[Andy Jassy, President & CEO at Amazon]

I also think the pricing is gonna be very compelling for customers. And then I think if you think about the three key customer segments who want, low Earth orbit satellite, consumers, enterprises, and governments, We have very strong relationships with all three customer segments given our consumer businesses and our AWS business. And I think if you if you think about enterprises and governments, a lot of what they wanna do when they take the data down from space is they actually wanna put it into a cloud to do analysis, analytics, and and AI and and various operations on top of it. And the fact that Project Kuiper and AWS are so seamlessly connected is very attractive to enterprises and to governments. I'm kind of amazed.

[Andy Jassy, President & CEO at Amazon]

We we haven't launched Project Kuiper yet, but the number of enterprise and government agreements that have been signed already to use Project Kuiper is impressive. So we're we're working very hard to get the satellites into space. We have some delays with some of the rocket providers, but we we have most of the available rocket launches over the next couple of years. And we're very hopeful to get this service into commercial into commercial beta later this year or early next year.

[Operator]

Thank you. And our next question comes from the line of Brian Novak with Morgan Stanley. Please proceed with your question.

[Andy Jassy, President & CEO at Amazon]

Thanks for taking my questions.

[Brian Nowak, Managing Director at Morgan Stanley]

Andy, I have two for you on AWS. They're a little tough, but I'm gonna throw them at you. So there is a Wall Street Finance person narrative right now that AWS is falling behind in GenAI with concerns about care loss to peers, etcetera. Can you just sort of address that? What what is your rebuttal to that?

[Brian Nowak, Managing Director at Morgan Stanley]

And talk to us about your and the team's most important focal points just to ensure that AWS stays on the knife's edge of innovation versus hyperscaler peers? And then secondly, I know AWS is a big business, but is there any reason to assume it shouldn't accelerate in the back half and into '26 given the size of the opportunity and all of the Gen AI capabilities gonna sort of come to us in the next next twelve months?

[Andy Jassy, President & CEO at Amazon]

Yeah. So on on the first one around AI, the first thing I would say is that I think it is so early right now in AI. If if you look at what's really happening in the space, you have it's it's very top heavy. So you have a a small number of very large frontier models that are being trained that's that spend a lot on computing. A couple of which are being trained on top of AWS and others are are being trained elsewhere.

[Andy Jassy, President & CEO at Amazon]

And then you also have, I would say, a relatively small number of very large scale generative AI applications. You know, you know, the one category would be chatbots with the largest by a fair bit being ChatGPT, but the other category being really, I'll call it, coding agents. So these are companies like Cursor, Vercel, and Lovable, some of the companies like that. Again, several of which run significant chunks on top of AWS. And then you've got a very large number of Generve AI applications that are in pilot mode that are in pilots or that are being developed as we speak, and a very substantial number of agents that also people are starting to try to build and and figure out how to get into production in a broad way.

[Andy Jassy, President & CEO at Amazon]

But but they're all they're they're quite early. And many of them that are out there are you know, they're significant, but they're just smaller in terms of usage relative to some of those top heavy applications I mentioned earlier. We have a a very significant number of enterprises and startups who are running applications on top of AWS's AI services. And and then, you know but but they're all again, like, the the amount of usage and the expansiveness of the use cases and how much people are putting them into production and the number of agents that are gonna exist, it's still just earlier stage than it's gonna be. And so then when you think about what's gonna matter in AI, what's gonna what what are customers gonna care about when they're thinking about what what infrastructure to use, I think you kind of have to look at the different layers of the stack.

[Andy Jassy, President & CEO at Amazon]

And, you know, I think for those that are, you know, both building models, but also just if you look at where the real costs are, they're gonna ultimately be an inference. Today, so much of the cost in training because customers are really training their models and trying to figure out how get applications into production. But in at scale, you know, 80 to 90% of the cost will be an inference because you only train periodically, but you're spitting out predictions and and inferences all the time. And so what they're gonna care a lot about is they're gonna care about the compute and the hardware they're using. And, know, you we have a very deep partnership with NVIDIA and and will for as long as I can foresee, but we we we saw this movie in the CPU space with Intel where customers are hankering for better price performance.

[Andy Jassy, President & CEO at Amazon]

And so, you know, we built just like in in the CPU space where we built our own custom silicon and building Graviton, which is about 40% more price performance than the other leading x 86 processors. We've done the same thing on the custom silicon side in AI with Tranium. And our second version of Tranium two has really you know, it's it's become the backbone of Anthropix, you know, next cloud models they're trading on top of, and it's become the the backbone of of Bedrock and the inference that we do. So I think a lot of the inference, it's about 3040% better price performance than the other GPU providers out there right now. And we're already working on our third version of trading as well.

[Andy Jassy, President & CEO at Amazon]

So I think a lot of the you know, compute and the inference is gonna ultimately be run on top of Tranium too. And I think that that price performance is gonna matter to people as they get to scale. You know, then I would say that that middle layer of the stack are really it's it's a combination of services that customers care about to be able to build models and then to be able to leverage existing leading frontier models and then build, you know, high quality generate AI applications that do inference at scale. And, you know, we see it for people building models. They continue to use SageMaker AI very expansively.

[Andy Jassy, President & CEO at Amazon]

And then Bedrock, you're leveraging leading frontier models, is also growing very substantially. And, you know, as I said in my opening comments, the the number of agents of scale is still really small in the scheme of what's gonna be the case. But part of the problem is it's actually hard to actually build agents, and it's it's hard to deploy these agents in a secure and scalable way. And so I think the launches we made recently in strands that make it much easier to build agents and then agent core that make it much easier to deploy at scale and in a secure way are are being very well received and customers are excited. It's gonna change what's possible on the agent side.

[Andy Jassy, President & CEO at Amazon]

Yeah. And then and then I think that it's you've got a very large number. I mean, remember, 85 to 90% of the global IT spend is still on premises. If you believe that equation is gonna flip, which I do and we do, you have a lot of legacy infrastructure that you've gotta move. These are mainframes.

[Andy Jassy, President & CEO at Amazon]

These are VMware's instances. And, you know, when we build agents like AWS transform to make it much easier to to move mainframes to the cloud, much easier to move VMware to the cloud, much easier to move dot net windows to dot net Linux to save money. Like, those are compelling for enterprises or things like Curo that allow customers to develop in a in a much easier way and in a much more structured way, which is why I think people are excited about. So I think I really like the inputs in the set of services that we're building in the in the AI space today. Customers really like them, and it's resonating with them.

[Andy Jassy, President & CEO at Amazon]

I still think it's very early days in AI and in terms of adoption. But I the other thing I would just say is that, remember, because we're at a stage right now where so much of the activity is is training and figuring out how to get your generative AI applications into production, people aren't paying as close attention as they will in making sure that those generative AI applications are operating where the rest of their data and infrastructure is. Remember, a lot of generative AI, inference is just gonna be another building block like compute, storage, and database. And so people are gonna actually wanna run those applications close to where their other applications are running, where their data is. There's just so many more applications and data running in AWS than anywhere else.

[Andy Jassy, President & CEO at Amazon]

And I'm very optimistic about as we get to a bigger scale, what's gonna happen for AWS on the AI side. And I think we have a set of services that is unique top to bottom in the stack. I think on the last part about what do we expect with respect to acceleration. You know, we don't we don't give guidance by segments. I'm not gonna try and give you guidance, but I I do I do believe that the combination of more enterprises who have resumed their march to modernize their infrastructure and move from on premises to the cloud, coupled with the fact that AI is going to accelerate in terms of more companies deploying more AI applications into production that start to scale, coupled with the fact that I do think that more capacity is gonna come online in the in the coming months and quarters, make me optimistic about the AWS business.

[Operator]

Thank you. And the next question comes from the line of Ron Josey with Citi. Please proceed with your question.

[Ron Josey, Managing Director at Citi]

Great. Thanks. Thanks for that, Andy.

[Ron Josey, Managing Director at Citi]

That was really helpful. Maybe taking that same question, but focusing internally on Amazon. I think you penned an article or a blog post back in June just talking about the ability or potential with GenAI agents and improving efficiencies and speed to market internally. So would love to hear your thoughts as as you think about how Amazon is adopting gen.ai internally, how perhaps, you've seen improving speed to market as a result of of everything you've just talked about. Thank you.

[Andy Jassy, President & CEO at Amazon]

Yeah. I I think that AI is is the biggest technology transformation of our lifetime, which is saying a lot because, you know, even in in some of our relatively short lifetimes, we've we've been through, you know, the cloud, mobile, and the Internet itself. But I I think it's gonna be the biggest transformation technically in our lifetime. And I think it's gonna not not only change every customer experience that we know and enable customer experiences we really only dreamed about before, but it's also gonna change very substantially the way we work. And if you think about it, you know, the way that we do coding, the way that we do analytics, the way that we do research, the way that we do finance, you know, and and and measure fine I mean, really, the way we do business process automation, you know, the way we do customer service, every single area that I can think of in the way we work is likely gonna be impacted in some meaningful way by AI.

[Andy Jassy, President & CEO at Amazon]

And I think when you have a big shift like that, you have two macro choices. You could you can either decide that you're gonna embrace it and you're gonna and you're gonna help shape it, and you're you're gonna figure out how to build the right tools to allow you to take advantage of the technology, or you can wish it away and have it shape you. And, you know, the the posting that you're referencing, Ron, that I that I made was just really being clear with the team that we're gonna pursue that former approach. We are going to embrace it. We're gonna try and shape it.

[Andy Jassy, President & CEO at Amazon]

And so we have, you know, we have a number of of of tools and agents that we've built already inside the company. And, you know, these are things like if you think about Curo and and the opportunity to have coding agents do a lot of of of the coding that's that's very compelling. It's gonna allow our our teammates to be able to start from a more advanced starting spot and to be able to invent for customers much more quickly and much more expansively. If you think about services like Connect, which is our AWS service that does call center software, that has a lot of AI built into it that changes the productivity of all your customer service agents. And you can just imagine across the board the types of things we're gonna do to make it easier to get software out, to build high quality software, to to do operations, QA, to automate a lot of the business process coordination happens inside the cloud.

[Andy Jassy, President & CEO at Amazon]

We're gonna we're gonna work on a whole bunch of those areas to allow ourselves primarily to be able to invent for customers much more quickly and expansively. But, also, I think it's gonna make all of our teammates' jobs much more enjoyable because they won't have to do as many of the rote parts of the job that we all do right now. They're gonna be able to own more pieces of what they're trying to solve for customers, and and we want deep owners that wanna end own as much end to end as possible.

[Operator]

Thank you. And our final question will come from the line of Justin Post with Bank of America. Please proceed with your question.

[Justin post, Managing Director at Bank of America Merrill Lynch]

Great. Thanks. I'll just ask on the revenue guidance. It looks pretty robust growth in the third quarter. I know you won't say whether AWS is expected to accelerate, but could you talk about some of the drivers and what kind of tariff and other contingencies you've put in there?

[Justin post, Managing Director at Bank of America Merrill Lynch]

And then maybe any thoughts on how you're thinking about how the Q4 is shaping up? Thank you.

[Brian Olsavsky, SVP & CFO at Amazon]

Yes. Hi, Justin. This is Brian.

[Brian Olsavsky, SVP & CFO at Amazon]

I'll take this one. Yes, we've got it to $174,000,000,000 to 175,000,000,000 and we excuse me. A 179,500,000,000.0. That's a typo. We, feel good about the growth rate, in q two that we had and the acceleration in a number of areas, including units.

[Brian Olsavsky, SVP & CFO at Amazon]

And, you know, we had a very successful Prime Day earlier this month. So, you know, there are is uncertainty on where tariffs will settle and maybe the ultimate impact on consumers, as Andy mentioned earlier. But, we feel really good about the key inputs we control, price selection and convenience. We've talked about delivery speeds increasing. We've talked about selection increasing, high end stock levels, well dispersed inventory close to customers.

[Brian Olsavsky, SVP & CFO at Amazon]

So we think that all works in our favor. So I would say we're cautiously optimistic. I'm not going to give any guidance for Q4 at this time, we'll talk about that next time.

[Dave Fildes, VP - IR at Amazon]

Thanks for joining us on the call today and for your questions. A replay will be available on our Investor Relations website for at least three months. We appreciate your interest in Amazon and look forward to speaking with you again with you next quarter.

[Operator]

Ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Brian Olsavsky, SVP & CFO

Analysts

• Dave Fildes, VP - IR at Amazon
• Andy Jassy, President & CEO at Amazon
• Douglas Anmuth, MD & Internet Analyst at JP Morgan
• Mark Mahaney, Senior MD at Evercore ISI
• Colin Sebastian, Senior Research Analyst at Baird
• Brian Nowak, Managing Director at Morgan Stanley
• Ron Josey, Managing Director at Citi
• Justin post, Managing Director at Bank of America Merrill Lynch