Sector: Consumer Discretionary|Industry: E-commerce|Market Cap: $2.22T|Employees: 1.5M
Amazon.com, Inc. is a global technology company focused on e-commerce, cloud computing, digital streaming, and artificial intelligence. It generates revenue primarily through online and physical retail sales, third-party seller services, Amazon Web Services (AWS), subscription services (like Amazon Prime), and advertising. Amazon competes on selection, price, and convenience, leveraging its extensive fulfillment network and technological innovation.
The 11% increase in net sales, from $574.785 billion in 2023 to $637.959 billion in 2024, indicates continued revenue growth. However, changes in foreign exchange rates reduced net sales by $2.3 billion in 2024.
Operating income increased from $36.852 billion in 2023 to $68.593 billion in 2024. This significant increase suggests improved profitability and operational efficiency.
The company reported a net income of $59.248 billion in 2024, a significant turnaround from the net income of $30.425 billion in 2023 and a net loss of $2.722 billion in 2022, indicating improved overall financial health.
AWS net sales increased by 19%, from $90.757 billion in 2023 to $107.556 billion in 2024, indicating continued strong demand for cloud services. This growth contributes significantly to the company's overall revenue.
Net sales in North America increased by 10%, from $352.828 billion in 2023 to $387.497 billion in 2024, reflecting sustained demand in the region. The growth primarily reflects increased unit sales, advertising sales, and subscription services.
International net sales increased by 9%, from $131.200 billion in 2023 to $142.906 billion in 2024, despite a $1.8 billion reduction due to foreign exchange rates. This indicates underlying strength in international markets.
Operating expenses increased by 6% from $537.933 billion to $569.366 billion, while net sales increased by 11%. This suggests effective cost management relative to revenue growth.
The company expects cash capital expenditures to increase in 2025, primarily driven by investments in technology infrastructure. This indicates a continued focus on innovation and expansion of technological capabilities.
The company continues to add computer scientists, designers, software and hardware engineers, and merchandising employees, indicating a commitment to innovation and growth.
The 10-K filing highlights the intense and evolving competition across various sectors, including physical, e-commerce, and cloud services. This competition could lead to decreased revenue or increased spending to maintain market share.
The filing outlines numerous risks associated with international operations, including local economic and political conditions, government regulations, and restrictions on sales and distribution. These risks could impact revenue and profitability in international markets.
The risk factor section emphasizes the potential harm from data loss, theft, misuse, or unauthorized access to sensitive information. Such incidents could lead to financial losses, legal repercussions, and reputational damage.
The company's current and potential competitors include physical, e-commerce, and omnichannel retailers; publishers; web search engines; and companies that provide information technology services or products, including on-premises or cloud-based infrastructure, tools and services relating to artificial intelligence, and other services.
The principal competitive factors in the company's retail businesses include selection, price, and convenience, including fast and reliable fulfillment. Additional competitive factors for the company's seller and enterprise services include the quality, speed, and reliability of its services and tools, as well as customers' ability and willingness to change business practices.
Some of the company's current and potential competitors have greater resources, longer histories, more customers, greater brand recognition, and greater control over inputs critical to its various businesses. They may secure better terms from suppliers, adopt more aggressive pricing, pursue restrictive distribution agreements, direct consumers to their own offerings instead of ours, lock-in potential customers with restrictive terms, and devote more resources to technology, infrastructure, fulfillment, and marketing.
The increase in cost of sales in 2024 was partially offset by fulfillment network efficiencies, including lower transportation costs, indicating some success in optimizing logistics.
The company seeks to reduce its variable costs on a per unit basis and enable it to lower prices for customers, it seeks to increase its direct sourcing, increase discounts from suppliers, and reduce defects in its processes.
Productivity across the fulfillment network is affected by regional labor market constraints, which increase payroll costs and make it difficult to hire, train, and deploy a sufficient number of people to operate the fulfillment network as efficiently as desired.
The company expects spending in technology and infrastructure to increase over time as it adds computer scientists, designers, software and hardware engineers, and merchandising employees.
The company is investing in AWS, which offers a broad set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services to developers and enterprises of all sizes. It is also investing in initiatives to build and deploy innovative and efficient software and electronic devices as well as other initiatives including the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services.
The company completed its most recent servers and networking equipment useful life study in Q4 2024, and are changing the useful lives of a subset of its servers and networking equipment, effective January 1, 2025, from six years to five years. In 2024, the company also determined, primarily in the fourth quarter, to retire early certain of its servers and networking equipment. These two changes are due to an increased pace of technology development, particularly in the area of artificial intelligence and machine learning.
Cash capital expenditures were $48.1 billion and $77.7 billion in 2023 and 2024, which primarily reflect investments in technology infrastructure (the majority of which is to support AWS business growth) and in additional capacity to support our fulfillment network.
In Q3 2023, the company invested $1.25 billion in a convertible note from Anthropic, PBC. In Q1 2024, the company invested $2.75 billion in a second convertible note. In Q4 2024, the company entered into an agreement and invested $1.3 billion in a third convertible note, and will invest an additional $2.7 billion by Q4 2025.
The company had no borrowings outstanding under the two unsecured revolving credit facilities or the commercial paper programs as of December 31, 2024.
The company mentions factors affecting its reputation or brand image (including any actual or perceived inability to achieve its goals or commitments, whether related to sustainability, customers, employees, or other topics), and public perceptions regarding its positions on social or ethical issues and its development and use of artificial intelligence, machine learning, and automation technologies, products, and services.
The company mentions potential negative impacts of climate change, including: increased operating costs due to more frequent extreme weather events or climate-related changes, such as rising temperatures and water scarcity; increased investment requirements associated with the transition to a low-carbon economy; decreased demand for its products and services as a result of changes in customer behavior; increased compliance costs due to more extensive and global regulations and third-party requirements; and reputational damage resulting from perceptions of its environmental impact.
The company continues to invest in safety improvements such as capital improvements, new safety technology, vehicle safety controls, and engineering ergonomic solutions. Its safety team is dedicated to using the science of safety to solve complex problems and establish new industry best practices.
The company's revenue and operating profit growth depend on the continued growth of demand for the products and services offered by the company or its sellers, and its business is affected by, among other things, general economic, business, and geopolitical conditions worldwide.
The company's sales and operating results will also fluctuate for many other reasons, including disruptions from natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues (including terrorist attacks, armed hostilities, and political conflicts, including those involving China), labor or trade disputes (including restrictive governmental actions impacting the company, its customers, and its third-party sellers and suppliers in China or other foreign countries), tariff policy changes, and similar events.
The company is subject to general business regulations and laws, as well as regulations and laws specifically governing the internet, physical, e-commerce, and omnichannel retail, digital content, web services, electronic devices, advertising, artificial intelligence technologies and services, satellite communications services, healthcare, and other products and services that the company offers or sells.