Amazon exceeded expectations for its first quarter earnings, reporting $143.3 billion in revenue, up 13% year-over-year, and earnings per share of $0.98. This surpassed analyst estimates of Q1 revenue of $142.7 billion and earnings per share of $0.83. The two primary profit drivers for Amazon, Amazon Web Services and advertising, experienced revenue growth of 17% and 24% respectively, contributing to an overall operating income of $15.3 billion in the first quarter, compared to $4.8 billion in the previous year. In after-hours trading on Tuesday, Amazon’s shares were up 5%.
Amazon’s first quarter revenue has shown consistent growth over the years, reaching $143.3 billion in 2024 compared to $127.4 billion in 2023. The breakdown of Amazon’s financials for the first quarter includes online stores revenue up 7% year-over-year at $54.6 billion, Amazon Web Services revenue up 17% at $25 billion with $9.4 billion in operating income, and advertising revenue reaching $11.8 billion, a 24% increase from the previous year. Additionally, third-party seller services revenue saw a 16% increase to $34.6 billion.
AWS continues to drive revenue growth for Amazon, with a 17% increase in the first quarter and officially becoming a $100 billion annual revenue run rate business. The demand for generative AI tools and services is boosting business for cloud providers, with Microsoft and Google also reporting growth in their cloud revenue. Amazon’s efforts to appeal to AI application developers include offering access to AI models through its Bedrock managed services and announcing the general availability of its AI assistant for developers, Amazon Q.
Amazon’s advertising business has been a significant revenue driver for the company, bringing in $11.8 billion in revenue in the first quarter, up 24% year-over-year. This growth in the digital ad market is evident in the results from Meta, Alphabet, and Snap, indicating a bounce back after a challenging 2022. Amazon’s retail media advertising spend is benefiting from growth, as it sells advertising space to sellers on its marketplace. The company has also launched new advertisements within its Prime Video platform.
In terms of physical stores, Amazon’s revenue from this category, which includes Whole Foods and Amazon Go stores, reached $5.2 billion, up 6%. While closing two clothing-focused stores in November, Amazon continues to invest in physical grocery stores but is shifting away from the “Just Walk Out” technology in its larger grocery stores. Amazon employs 1.52 million people, a 4% increase year-over-year, excluding seasonal and contract workers. The company continues to adjust its workforce after laying off 27,000 employees last year following a hiring spree during the pandemic. Subscriptions services revenue, including Prime memberships, reached $10.7 billion, up 11%, with guidance forecasting Q2 sales of $144 to $149 billion and operating income ranging between $10 billion and $14 billion.
