Amazon smashed Wall Street expectations for the first quarter, bolstered by an 18% increase in advertising revenue.
Advertising services revenue, which includes sales to sellers, vendors, publishers, authors and others through programs such as sponsored ads, display and video advertising, came in at $13.9 billion for the quarter. Excluding the impact of foreign exchange rates, the segment’s revenue increase was 19%.
Meanwhile, net sales for its subscription services segment grew 9% to $11.72 billion during the quarter. The segment includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book and other non-Amazon Web Services subscription services.
“We’re working hard to be the best place for brands of all sizes to grow their business. We’re seeing strength across our broad portfolio of full funnel advertising offerings that help advertisers reach an average ad supported audience of more than 275 million in the U.S. alone,” Amazon CEO Andy Jassy told analysts on Thursday. “We continue to see a lot of opportunity to further expand our full funnel capabilities for brands.”
Here are the key quarterly results:
Net income: $17.1 billion, compared to $10.4 billion a year ago.
Earnings per share: $1.59 per diluted share, compared to $1.35 per share expected by analysts surveyed by Zacks Investment Research.
Net sales: $155.7 billion, up 9% year over year, compared to $154.56 billion expected by analysts surveyed by Zacks Investment Research. Excluding an unfavorable impact of $1.4 billion due to year over year changes in foreign exchange rates, net sales increased 10% compared to the first quarter of 2024.
Operating income: $18.4 billion, compared to $15.3 billion a year ago.
North America sales grew 8% year-over-year to $92.9 billion, while international sales rose 5% year-over-year to $33.5 billion, or 8% when excluding changes in foreign exchange rates. AWS sales jumped 17% year-over-year to $29.3 billion.
Looking ahead, Amazon is expecting net sales between $159 billion and $164 billion in the second quarter, or year over year growth between 7% to 11%. The guidance anticipates an unfavorable impact of approximately 10 basis points from foreign exchange rates. Operating income is expected to be between $13 billion and $17.5 billion, compared with $14.7 billion in second quarter 2024.
Shares of Amazon are down 2.65% in after-hours trading following the earnings announcement.
Amazon said it is “closely monitoring” the macroeconomic environment, including the impact of tariffs.
“We’re planning for various outcomes, and we’ve taken a number of actions to protect the customer experience,” Jassy said. “We’re doing everything we can to keep our prices low for customers in a way that makes economic sense.”
Thus far, the tech and retail giant’s stores business has not seen a reduction in demand, with “heightened buying” in certain categories that may indicate stocking up in advance of any potential tariff impact.
“We also have not seen the average selling price of retail items appreciably go up yet. Some of this reflects some forward buying we did in our first party selling, some of that reflects some advanced inbounding our third party sellers have done, but a fair amount of this is that most sellers just haven’t changed pricing yet. This could change depending on where tariffs settle,” Jassy said.
“As it relates to China, retailers who are buying directly from China are typically buying from companies who themselves are buying from China, marking these items up, rebranding and selling to us consumers,” he continued. “These retailers are buying the product at a higher price than Chinese sellers selling directly to us consumers in our marketplace. So the total tariff will be higher for these retailers and for China direct sellers.”
Amazon’s online stores revenue grew 5% to $57.41 billion, while physical stores revenue grew 6% to $5.53 billion and third-party sellers revenue grew 6% to $36.5 billion. Jassy noted that everyday essentials grew more than twice as fast as the rest of its business in the first quarter, representing one out of every three units sold in the U.S.
“When there are uncertain environments, customers tend to choose the provider they trust most. Given our really broad selection, low pricing and speedy delivery, we have emerged from these uncertain areas with more relative market segment share than we started and better set up for the future. I’m optimistic this could happen again,” Jassy concluded.
Amazon’s entertainment highlights during its first quarter included a joint venture to create the next generation of the James Bond film franchise, which will be produced by Amy Pascal and David Heyman.
“Reacher” Season 3 also became Amazon’s biggest returning season ever with 54.6 million viewers in its first 19 days and the second season of LeBron James’s “Mind the Game” podcast, co-hosted by NBA Hall-of-Famer Steve Nash and distributed by Wondery, premiered.
In January, Prime Video celebrated the one-year anniversary of launching its ad-supported tier, which is the default for all subscribers. The service has an average monthly ad-supported reach of more than 115 million customers in the U.S., and more than 200 million globally.
Amazon plans to expand its Prime Video ad tier to new markets in 2025 — including Brazil, India, Japan, the Netherlands and New Zealand. The ad-supported tier is already available in the U.S., Australia, Austria, Canada, France, Germany, Italy, Mexico, Spain and the U.K.
Currently, Amazon Prime, which includes Prime Video, costs $14.99 per month or $139 a year. A membership that only includes Prime Video and none of the company’s shipping benefits costs $8.99 a month. Those who want an ad-free streaming experience will be charged an additional $2.99 per month.
The company will hold its upfront presentation to advertisers on May 12 at 6:30 p.m. ET at the Beacon Theater in New York City.
