Amazon.com, Inc.

Thank you for standing by. Good day, everyone, and welcome to the Amazon.com first quarter 2026 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, and for opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Dave Files. Thank you, sir. Please go ahead.

Hello, and welcome to our Q1 2026 Financial Results Conference Call. Joining us today to answer your questions is Andy Jassy, our CEO, and Brian Olsowski, our CFO. As you listen to today's conference call, we encourage you to have our press release in front of you, which 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 2025. Our comments and responses to your questions reflect management's views as of today, April 29, 2026 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 will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Our guidance incorporates the order trends that we've seen to date and what we believe today to be appropriate assumptions. Our results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates and energy prices, changes in global economic and geopolitical conditions, tariff and trade policies, resource and supply volatility, including for memory chips, and customer demand and spending, including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, and the various factors detailed in our filings with the SEC. Our guidance assumes, among other things, that we don't conclude any additional business acquisitions or structurings or legal settlements. It's not possible to accurately predict demand for our goods and services, and therefore our actual results could differ materially from our guidance. And now I'll turn the call over to Andy.

Thanks, Dave. We're reporting $181.5 billion in revenue, up 17% year over year. Excluding the $2.9 billion favorable impact from foreign exchange, net sales increased 15%. Operating income was $23.9 billion. Q1 was a strong quarter for Amazon. Starting with AWS, growth continued to accelerate, up 28% year over year, the fastest growth rate in 15 quarters, up $2 billion quarter over quarter, the largest Q4 to Q1 AWS revenue increase ever. AWS is now a $150 billion annualized revenue run rate business. It's very unusual for a business to grow this fast on a base this large. And the last time we saw growth at this clip, AWS was roughly half the size. We've never seen a technology grow as rapidly as AI. Amazon is already a leader and companies continue to choose AWS for AI. To put our growth in perspective, three years after AWS launched, it had a $58 million revenue run rate. In the first three years of this AI wave, AWS's AI revenue run rate is over $15 billion, nearly 260 times larger. There are several reasons customers are choosing AWS for AI. First, we've built broader capabilities than others. That includes model building with SageMaker, which reduces training time by up to 40%, high-performance inference with the leading selection of frontier models in Bedrock, which saw 170% growth in customer spend quarter over quarter, and processed more tokens in Q1 than all prior years combined. We're excited to make OpenAI's models available in Bedrock. Yesterday, we added OpenAI's GPT 5.4 model with 5.5 coming soon. Yesterday, we also started the preview of Amazon Bedrock Managed Agents powered by OpenAI, the stateful runtime environment that enables any organization to build generative AI applications and agents at production scale. We believe that modern agentic applications will be stateful, and this new technology will rapidly accelerate agentic AI adoption. OpenAI has said they're already seeing unprecedented demand for this new product, and we're seeing heavy customer interest as well. Most of the value companies derive from AI will be through agents, and AWS customers can build agents with their proprietary data in strands, which has been downloaded more than 25 million times and saw 3x more downloads quarter over quarter. Customers can deploy agents with enterprise scale, security, and reliability with AgentCore, which is being used to deploy an agent as frequently as every 10 seconds. We also offer turnkey agents for coding, software migrations, business operations, and knowledge workers in Curo, Transform, Connect, and Quick, and they continue to resonate with customers. The number of developers using Curo more than doubled quarter over quarter, and enterprise customer usage increased nearly 10x. Customers have used Transform to save over 1.56 million hours of manual effort when migrating and modernizing their workloads. The number of new customers using Quick has grown more than four times quarter over quarter, and we just announced V1 of our Quick desktop app yesterday. It's very compelling, as it can query your email, calendar, Slack, local files, and several other applications you use every day, to flag important communications, retrieve and summarize information, make recommendations, compose and send communications to others, and create agents that highlight or automatically do work that you used to have to do yourself. You can easily keep refining your preferences, and QUIC's advanced knowledge graph enables its AI agents to automatically learn from your interactions to become more personalized over time. One of our enterprise customers just told us, QUIC isn't just improving how we work, It's letting us reimagine it. Second, and another reason customers continue choosing AWS is that as they expand their use of AI, they want their inference to reside near their other applications and data, and much more of it resides in AWS than any place else. Third, as customers expand their AI usage, they also want to consume additional non-AI services, and they're choosing AWS because we've built the broadest and most capable core offerings by a wide margin. We offer thousands of features across compute, storage, databases, analytics, security, and more. And Gartner consistently recognizes AWS's leadership across their major cloud evaluation areas. Fourth, AWS is the strongest security and operational performance of any AI and infrastructure provider. And startups, enterprises, and governments continue to choose AWS as the foundation for their most critical workloads. These are some of the reasons even more customers are choosing AWS. And just since last quarter's call, we've announced new agreements with OpenAI, Anthropic, Meta, Nvidia, Uber, U.S. Bank, Fox, Southwest Airlines, U.S. Army, Bloomberg, Cerebrus, AT&T, Nokia, Fundamental, the National Geographic Society, PGA Tour, and many more. Our chips business continues to grow rapidly and is larger than what a lot of folks thought. We saw nearly 40% quarter over quarter growth in Q1 and our annual revenue run rate is now over $20 billion and growing triple digit percentages year over year. But this somewhat masks the size. If our chips business was a standalone business and sold chips produced this year to AWS and other third parties as other leading chip companies do, our annual revenue run rate would be $50 billion. As best as we can tell, our custom silicon business is now one of the top three data center chip businesses in the world. The speed at which we've gotten here is extraordinary. And we have momentum. For our custom AI silicon, we've recently shared very large multi-year, multi-gigawatt tranium commitments from the two leading AI labs in the world, Anthropic and OpenAI, as well as an increasing number of companies like Uber betting on tranium. And we now have over $225 billion in revenue commitments for Tranium. Our Tranium 2 chip has about 30% better price performance than comparable GPUs and is largely sold out. Tranium 3, which just started shipping at the start of 2026 and is 30% to 40% more price performance than Tranium 2, is nearly fully subscribed. And much of Tranium 4, which is still about 18 months from broad availability, has already been reserved. Amazon Bedrock, which is used expansively by over 125,000 customers, runs most of its inference on Tranium, and almost 80% of the Fortune 100 companies are using Bedrock. We also just announced that Meta is committed to using tens of millions of Graviton cores. Graviton is our industry-leading CPU chip, which allows Meta to run the CPU-intensive workloads behind agentic AI with the performance and efficiency they need at their scale. AI is commonly seen as a GPU story, but the rise of agentic workloads, real-time reasoning, code generation, reinforcement learning, and multi-step task orchestration is driving massive CPU demand as well. As AI systems shift from answering questions to taking actions, and as post-training and inference scale up, the compute required pulls heavily on CPUs. That's why Meta chose Graviton, which delivers up to 40% better price performance than any other x86 processors, and now used by 98% of the top 1000 EC2 customers. Nobody has a better set of chips across AI and CPU workloads than AWS with Tranium and Graviton, and we're unusually well positioned for this AI inflection we're in the early stages of experiencing. While the largest number of AI chips we're bringing in are Tranium, we continue to have a deep partnership with NVIDIA. We have immense respect for them, continue to order substantial quantities, we'll be partners for as long as I can foresee, and we'll always have customers who want to run NVIDIA on AWS. And we will also have a very large chips business ourselves. Customers always want choice. It's always been true and always will be true. Different companies will offer different benefits for customers. And the uniquely strong price performance that Tranium offers is compelling to our external and internal customers. For perspective, it's scale. We expect Tranium will save us tens of billions of dollars of CapEx each year and provide several hundred basis points of operating margin advantage versus relying on others' chips for inference. Finally, we continue to be confident in the long-term CapEx investments we're making. Of the AWS CapEx we intend to spend in 2026, much of which will be installed in future years. We have high confidence this will be monetized well, as we already have customer commitments for a substantial portion of it and that it will yield compelling operating margins in ROIC. As we've been sharing, the faster AWS grows, the more short-term CapEx we'll spend. AWS has to lay out cash for land, power, buildings, chips, servers, and networking gear in advance of when we can monetize it, typically six to 24 months before we start billing customers, depending on the component. However, these CapEx investments fund assets with many-year useful lives, 30-plus years for data centers, five to six years for chips, servers, and networking gear. The free cash flow and ROIC for these investments are cumulatively quite attractive a couple years after being in service. However, in times of very high growth like now, where the CapEx growth meaningfully outpaces the revenue growth, the early years free cash flow is challenged until these initial tranches of capacity are being monetized and revenue growth outpaces CapEx growth. We've been through this cycle with the first big AWS growth wave and like the results. We expect to feel similarly about this next wave with much larger potential downstream revenue and free cash flow. I'll now turn to stores. Units grew 15% year over year, the highest we've seen since the tail end of COVID lockdowns. We continued expanding selection, including more than 600 new notable brands. Our grocery business continues to grow quickly across both perishables and non-perishables, and with more than $150 billion in gross sales in 2025, we're now the second largest grocer in the U.S. We offer perishables delivered same day alongside millions of other items in more than 2,300 cities and towns across the U.S. with more to come. Prime members are loving the convenience of getting fresh groceries alongside other products they're buying on Amazon. And perishable sales have grown over 40 times year over year and make up nine of the top 10 most ordered items for same-day delivery where the service is available. Customers shopping same-day perishables build larger baskets, adding nearly three times as many items to their order, and spend over 80% more than customers who don't. Whole Foods' market also continues to accelerate, with over 550 stores today and 100 more coming in the next few years. We remain committed to meeting or beating other retailers on price, and in Q1, the average prices of products offered on Amazon.com decreased compared to the same period last year. Prime Day will take place in most countries in June, which will bring Prime members even more savings across every category. We continue to find new ways to speed up delivery for customers in both cities and rural areas. We offer millions of items available for same-day delivery with Prime, up to 40 times the selection of a typical big-box retail store, and we've delivered more than 1 billion items same day or overnight so far this year. We're also making delivery even faster, recently announcing one- and three-hour delivery options on over 90,000 items, with one-hour delivery available in hundreds of cities and towns, three-hour delivery in 2,000 plus cities and towns and more on the way. And we continue to expand our ultra-fast delivery service, Amazon Now, which offers delivery in 30 minutes or less on thousands of items. It started last year in India where orders are increasing 25% month over month with Prime members tripling their shopping frequency once they start using it. The service is now available to tens of millions of customers across nine countries with more to come as well. The Storrs team also continues to innovate and deliver for customers with AI. We launched HealthAI, a 24 by 7 AI-powered personal health agent backed by One Medical clinicians that gives US customers instant clinical guidance and takes action with their permission, from booking appointments to managing prescriptions to facilitating medical treatment with a real One medical provider. Rufus, our agentic AI shopping assistant, continues to resonate with customers. Rufus can research products, track prices, and auto-buy products in our store when they reach a set price. Monthly active users are up over 115%, and engagement is up nearly 400% year over year. And we recently introduced a new AI experience for sellers in Seller Central that dynamically generates a custom personalized visualization of data, key insights, and scenarios tailored to the seller's goals. It's early, but the initial response and feedback are very strong. Moving on to Amazon ads. We continue working to be the best place for brands of all sizes to grow their businesses. And we're pleased with the continued strong growth across our full funnel offerings, generating $17.2 billion of revenue in the quarter and up 22% year over year. Forrester recently recognized Amazon ads as a leader in omni-channel advertising platforms with unmatched supply and insights for connected TV and commerce media. We deepened our Netflix partnership with Amazon Audiences, which enables advertisers to apply Amazon's exclusive signals from shopping, browsing, and streaming to Netflix's highly engaged viewers to reach the right audiences and drive even stronger performance. We also partnered with Comcast Advertising to expand local advertising to thousands of brands and expanded interactive video ad capabilities to partners starting with Samsung TVs. Our ads team also continues to invent and deliver for advertisers with AI. For example, we expanded Creative Agent, an agentic partner that plans and executes the entire ad creative process to Canada, France, Germany, India, Italy, Spain, and the UK. And we recently introduced sponsored product and brand prompts in Rufus that help brands showcase products and customers make more informed buying decisions. It's early. but we're seeing nearly 20% of shoppers who interact with a brand prompt in Rufus continue the conversation about that brand. We're also continuing to invent and see momentum in several other areas, and I'll mention a few. Starting with entertainment, moviegoers have flocked to Project Hail Mary, with nearly $615 million in global box office to date. Its opening weekend was the second biggest for any non-sequel, non-franchise film in the last decade. We also surpassed 100 million viewers globally for The Culpable's movie trilogy, with all three films reaching number one in more than 170 countries at launch. In live sports, we offered exclusive coverage of the NBA's SoFi Play-In tournament, with total viewership up 18% compared to last year on cable. Alexa Plus Early Access expanded to millions more Prime members in Mexico, the UK, Italy, and Spain. Customers are loving Alexa Plus, talking to Alexa twice as much and for longer durations across a wider breadth of topics, completing purchases on devices three times more, streaming music 25% more, and using smart home functionality 50% more than Alexa Classic. Zoox has now driven nearly 2 million miles and carried more than 350,000 riders, is available to the public in Las Vegas and San Francisco, and is testing in eight other cities. We recently announced that Zoox will be available through the Uber app in Las Vegas and in Los Angeles in the future. And finally, Amazon Leo continues gaining momentum with commercial service on track to launch in a few months. We already have meaningful revenue commitments from enterprises and governments, including Delta Airlines, JetBlue, AT&T, Vodafone, DirecTV Latin America, Australia's National Broadband Network, DP World Tour, NASA, and others. We also announced that we plan to acquire GlobalStar, which will expand Leo's satellite network with direct device capabilities, and we entered an agreement with Apple for Amazon Leo to power satellite services for iPhones and Apple Watches. We're in the middle of some of the biggest inflections of our lifetime, and Amazon has the culture, the know-how, and the resources to make so many customers' lives better and easier, and to build multiple new long-term businesses with substantial return on invested capital and free cash flow. We will continue investing and inventing to make it so. With that, I'll turn it over to Brian.