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Amazon.com, Inc. (AMZN) Q1 2020 Results - Earnings Call Transcript

Apr. 30, 2020 10:46 PM ETAmazon.com, Inc. (AMZN)10 Comments
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Amazon.com, Inc. (NASDAQ:AMZN) Q1 2020 Earnings Conference Call April 30, 2020 5:30 PM ET

Company Participants

Shelly Kay Pfeiffer - Director, IR

Brian Olsavsky - CFO

Dave Fildes - Director, IR

Conference Call Participants

Douglas Anmuth - JPMorgan

Brian Nowak - Morgan Stanley

Mark Mahaney - RBC

Heath Terry - Goldman Sachs

Eric Sheridan - UBS

Justin Post - Bank of America

Stephen Ju - Credit Suisse

John Blackledge - Cowen


Good day everyone and welcome to the Amazon.com Q1 2020 financial results teleconference. At this time, all participants are in a listen-only mode. After the presentation we will conduct a question and answer session. Today's call is being recorded.

For opening remarks, I will be turning the call over to Director of Investor Relations, Shelly Kay Pfeiffer. Please go ahead.

Shelly Kay Pfeiffer

Hello and welcome to our Q1 2020 financial results conference call. Joining us today to answer your questions are Brian Olsavsky, our CFO, Dave Fildes, Director of Investor Relations. As you listen to today's conference call, we encourage you to have our press release in front of you. It includes our financial results as well as metrics and commentary on the quarter.

Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2019. Our comments and responses to your questions reflect management's views as of today, April 30, 2020 only, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC. Including our most recent annual report on Form 10-K and subsequent filings. During this call, we may discuss certain non-GAAP financial measures. In our press release slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website, you

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Comments (10)

I am somewhat concerned that the increase in useful life of AWS servers, while well telegraphed on the call and in the 10-K/10-Q filings, is masking a structural decline in profitability of AWS.

AWS generated a 30.1% operating margin this quarter, 121 bps above the same period last year. However, excluding the $786m benefit of reduced D&A expense from the change, AWS margins actually fell 649bps. That is following y/y declines of 159bps in Q2'19, 596bps in Q3'19, and 322bps in Q4'19. Not exactly tiny amounts.

Management's explanation behind the increase in useful life makes sense, so I doubt they're trying to juice the numbers. But it would have been helpful if the analysts would have asked the CFO how much of the underlying decline stems from temporary factors (increased infrastructure spend, expanded sales & marketing efforts), vs. structural factors (longer term contracts signed at lower prices, or increased competition).

Hopefully there's a perfectly reasonable explanation. But it's never encouraging to see an accounting change that accounts for almost 100% of the y/y growth in EBIT in a business that is seeing both slowing growth and margin compression.
I am not that impressed. low margin retail business growing and high margin AWS slowing down quickly.

Online shopping is more competitive in rest of the world. Their international business is not doing that well
Amazon knows what they are doing... and only they do it best. This past Q proves that. The $4b cost was and is called an "investment" by amazon. So nothing to worry about here. The market will appreciate Amazon's extended efforts in helping the world contain the virus while providing a source to order daily goods and necessities along with other goods and valuables.
Dixie Hummer profile picture
Prob 99,99% of All the corporations in the world would gladly take on A
Amazon’s problems
Prob 99,99% of All the corporations in the world would gladly Pay the level of taxes that Amazon pays
NilSatis profile picture
They can afford the best tax consultants.
They invest in our country's future with R&D instead of giving it to wasteful politicians. The reason I support allowing corporations to invest their profits instead of handing it to the government. The only reason they are relevant, Is because we vote them relevant with our wallet.
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