Table of Contents
a. Key Points
Multi-year AWS growth record.
AI chips and services businesses both crossed $25B in annualized revenue.
Raised CapEx guidance due to memory inflation.
Expects to be capacity constrained at least through 2027.
b. Demand
Beat revenue estimates by 1.9% & beat guidance by 2.1%.
Growth was helped by Prime Day shifting into Q2.
AWS revenue beat estimates by 4.2%.
North America revenue beat estimates by 2%.
International revenue missed estimates by 1%.
Amazon delivered 10%+ Prime subscription membership growth.
c. Profits
Beat EBIT estimates by 16.5% & beat guidance by 25%.
EBIT got $1.2B of help from tariff refunds and a change in energy contract fair value. Without this help, EBIT would have been 19% ahead of guidance and EBIT margin would have been 13.1%. The 20% AWS EBIT beat was also aided by this. Segment margin expansion also would have been 520 bps instead of 650 without this help.
North American EBIT beat by 7%.
International EBIT missed by 9.5%.
The giant EPS beat was driven by a giant Anthropic investment gain. Focus on net income margin ex-equity instead of net income margin in the table below.
Operating cash flow missed by 13% or $6.3B. CapEx was $5B larger than $49.4B estimates. FCF missed by $11.3B.
Trailing 12-month FCF was -$7.6B vs. $1.2B Q/Q, $11.2B Y/Y & $53B 2 years ago.
d. Balance Sheet
$143B cash & equivalents.
$119B debt. After Q2 ended, Amazon raised $25B in U.S. bonds and $10B in Canadian bonds.
0.8% Y/Y dilution.
e. Guidance & Valuation
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