Amazon Reports Robust Q1 Results and Plans Major Expansions in KSA and Mexico

Amazon.com Inc. announced first-quarter results that exceeded market expectations, driven by strong performance in cloud computing, spurred by the excitement surrounding Artificial Intelligence (AI), and an increase in advertising revenue.

In the first quarter, sales rose by 13% to $143.3 billion from $127.4 billion the previous year, surpassing the London Stock Exchange Group‘s forecast of $142.5 billion. Net income saw a significant surge, tripling to $10.4 billion from $3.2 billion a year earlier.

The company also outlined its expansion plans, including the development of new infrastructure regions in Saudi Arabia and Mexico. This expansion is aimed at providing a broader range of options for developers, startups, entrepreneurs, and enterprises in running their applications and serving customers.

Amazon plans to invest over $5.3 billion in Saudi Arabia as part of AWS’s long-term commitment to the region, along with more than $5 billion in Mexico over the coming years.

Sales in North America grew by 12% year-over-year to $86.3 billion, while international sales increased by 10% to $31.9 billion. AWS sales rose by 17% to $25.0 billion. Operating income for the quarter was $15.3 billion, up from $4.8 billion in the first quarter of 2023.

Operating cash flow also showed a robust increase of 82%, reaching $99.1 billion over the trailing twelve months, compared to $54.3 billion in the previous year. Moreover, free cash flow significantly improved to an inflow of $50.1 billion for the trailing twelve months from an outflow of $3.3 billion as of March 31, 2023.

Andy Jassy, President and CEO of Amazon, commented on the results, stating, “It was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results.

“The combination of companies renewing their infrastructure modernisation efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate; our Stores business continues to expand selection, provide everyday low prices, and accelerate delivery speed, 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.”

For the second quarter, Amazon expects net sales to be between $144 billion and $149 billion, representing a growth of 7-11% compared to the second quarter of 2023. This forecast includes an unfavorable impact of about 60 basis points from foreign exchange rates. Operating income is anticipated to be between $10 billion and $14 billion, up from $7.7 billion in the second quarter of 2023.