Supply Chain Matters provides highlights and added perspectives of Amazon’s recently reported Q1-2024 financial performance.

 

Q1-2024 Quarterly Financial Performance

Once again, Amazon exceeded Wall Street and investor expectations in delivering stellar financial performance for the recent Q1 reporting period.

Headlines included:

  • Net Sales increased 13 percent to $143.3 billion, noted as an all-time high for the Q1 period.
  • Operating Income increasing to $15.3 billion compared to $4.8 billion in the year-earlier quarter.
  • Net Income of $10.4 billion compared to $3.4 billion in the comparable year-earlier quarter.
  • Operating Cash Flow increase of 82 percent to $99.1 billion for the trailing 12 months compared to $54.3 billion for the trailing twelve months ending March 31, 2023.

Commenting on the performance, Andy Jassy, President and CEO indicated: “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. It’s very early days in all of our businesses and we remain excited by how much more we can make customers’ lives better and easier moving forward.”

AWS Business Growth

Business media financial headlines especially honed-in on Amazon’s AWS Cloud infrastructure business unit which logged $25 billion in quarterly revenue, reflecting a 17 percent year-on-year increase. Operating income rose nearly 84 percent, amounting to $9.4 billion.

CEO Jassy noted to analysts that AWS’s current sales resurgence is being driven by Generative and other AI related sales and that annual sales are on a $100 billion growth trajectory.

In his April Annual Letter to Shareholders, Jassy indicated that “Generative AI may be the largest technology transformation since the cloud.” In the financial performance briefing, Amazon CFO Brian Olsavsky indicated that the company spent $14 billion in capital expenditures related to data centers and IT infrastructure during Q1, the majority of which was associated with needs to support Generative AI opportunities being observed in various business industry segments.

The company reported the number of full-time employees (excluding contractors and temporary personnel was 1.52 million in Q1, compared to 1.46 million in Q1-2023.

Worldwide Consumer Retail Businesses

Online business unit net sales were reported as $54.7 billion in Q1, an increase of 7 percent on a year-over-year basis.

On a regional basis, total North America based net sales increased 12 percent to $86.3 billion. Sales grow was especially strong for advertising related sales. Operating income was reported as $5 billion compared with $0.9 billion reported for Q1-2023.

International based net sales were $31.9 billion based on a 17 percent growth in sales. Operating income of $903 million compared to a nearly $1.3 billion loss in the year-earlier period. This was a significant milestone.

Supply Chain and Service Level Highlights

Noted in the release was that Amazon Prime members experienced faster delivery speeds in the latest quarter, “with more than 2 billion global units arriving the same or next day in Q1.” Specifically noted was that in March, “Across the 60 largest U.S. metro areas, nearly 60 percent of Prime member orders arrived the same or next day, and in London, Tokyo and Toronto, 3 out of 4 items were delivered in the same or next day.”

As noted in our Supply Chain Matters summary of Amazon’s Q4 and full year 2023 financial performance, we noted Amazon’s statements related to lowering its overall cost to serve after realigning online fulfillment on a more regional basis.

Part of that realignment was an indication of lower inventory and overall shipping costs.

In the latest Q1 financial details, we observed that Inventories have declined by $2.2 billion on an annualized basis, from $33.32 billion in 2023, to $31,15 billion in 2024.

Worldwide shipping costs were noted as $21.8 billion in the latest quarter, compared to $19.3 billion in Q1-2023, reflecting a 10 percent increase.

Quarterly highlights pointed to Robotics fulfillment center now deployed in 11 countries globally to help improve workplace ergonomics, reduce heavy lifting and repetitive tasks.

Q2 Forward Guidance

Forward looking guidance related to current Q2 financial performance indicates net sales expected to be in a range of between $144 billion and $149 billion a growth rate of between 7 percent and 11 percent compared to Q2-2023. Operating income is reportedly anticipated to be between $10 billion and $14 billion, compared to $7.7 billion in Q2-2023.

 

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