Amazon.com, Inc.

Thank you for standing by. Good day, everyone, and welcome to the Amazon.com Quarter 2 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 Fildes. Thank you, sir. Please go ahead.

Hello, and welcome to our Q2 2026 financial results conference call. Joining us today to answer your questions is Andy Jassy, our CEO, and Brian Olsavsky, 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, July 30th, 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, restructurings, 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 $200.6 billion in revenue, up 20% year over year. Operating income was $27.5 billion, up 43% year over year. Q2 was another very strong quarter for Amazon. I'll start with AWS, which is booming right now, and I'll share the numbers, what we think is going on, and why we're enthusiastic about the ROIC equation, even with heavy CapEx the next few years. First, the numbers. Revenue growth of 36.7% year-over-year, accelerating for the fifth straight quarter, our fastest growth in 18 quarters back when AWS was less than half its current revenue size. We added over $4.6 billion in revenue quarter over quarter, about 80% more than our largest increase ever. And our backlog stands at $496 billion, growing triple digits year over year. AWS is now a $169 billion annualized revenue run rate business, which for perspective would place it 24th in the Fortune 500 list if it was a standalone company. Our chips business now has an annual revenue run rate of over $25 billion, growing triple-digit percentages year over year. Our AI revenue run rate climbs significantly quarter over quarter, has now also over $25 billion, growing triple-digit percentages year over year. Customers choose AWS because we offer the broadest capabilities. They want their AI inference to reside near their other applications and data, and more of it resides in AWS than anywhere else. and because AWS is the strongest security and operational performance. We're seeing strong growth across both AI and non-AI, what we call core, and growth in one is driving growth in the other. Growth in AI drives core because post-training reinforcement learning and agent tool use is mostly done on CPUs versus AI accelerators. This is an advantage for AWS as our Graviton chip is the strongest CPU chip, offering up to 30% to 40% better price performance than other options. We have a unique offering that customers are excited about. As we've been saying for 18 months now, technically competent companies are going to build their own foundation models, not the really big frontier models, but smaller models that leverage their proprietary data. There is no easier service for this than our SageMaker AI service. Customers also need a high-performance, cost-effective inference service, and that's what Amazon Bedrock provides. Bedrock not only provides the best selection of leading models at superior performance and with the governance and security controls that companies need, it's also continuing to grow incredibly quickly. In addition to leading model building and inference services, customers need easier ways to build, run, and leverage agents. For example, even after you've built an agent, you have a lot of muck to worry about. A production agent needs somewhere secure to run, memory so it holds context. Anuradha Aggarwal Thank you for joining us. Coding agents are a good example, and there are several successful ones, including Cloud Code, Codex, and our own spec-driven Kiro, which is up to 50% more cost-effective than others and tripled in usage quarter over quarter. Another of these agentic services is Amazon Quick, an intelligent AI work companion that helps you manage, search, and automate your digital workload across email, calendar, local or cloud files, and custom workflows. Unlike other offerings in this space, Quick also lets you manage across leading SaaS tools like Slack, Salesforce, Jira, Teams, and ServiceNow. Quick enforces the company's existing access controls so each person sees only what they're cleared to see, and then it takes action, scheduling meetings, drafting and sending email, updating a CRM record, building a dashboard, and more. In Q2, we made Quick even more capable, adding autonomous agents that customers set up in plain language Quake has momentum. with 3M, Allianz, AstraZeneca, Autodesk, BMW, Exxon, FINRA, Hyundai, Intuit, Mondelez, Moody's, the NBA, the NFL, Life Insurance, and Southwest Airlines all using it. We also have services like Amazon Connect, our call center service, and AWS Transform, which automates software migration growing quickly. I'll mention one more that I'm excited about. As frontier models get increasingly powerful, they're making it easier to find security vulnerabilities in technical applications, many of which humans haven't found. This is obviously concerning for companies that protect important data. We recently released AWS Continuum, which discovers, prioritizes, validates, and remediates code vulnerabilities. It starts by ingesting the backlog of vulnerabilities a team already has and then leverages the new frontier models to run comprehensive scans. Continuum uses agents in each company's own business context to prioritize what matters, reasoning through questions like, is the effective component deployed? Is it reachable? Is it in a production path? And what's the impact if it's exploited? It then validates vulnerabilities in a sandbox so teams aren't chasing false positives. And finally, it recommends the six. It's hard to talk with enterprises about AI right now without their mentioning security, and we expect Continuum to grow quickly. I mentioned earlier that our chip's revenue run rate is now over $25 billion. We're unusually well positioned for this AI inflection, given our leading price performance chips in both AI with Tranium and CPU with Graviton. In addition to the two leading AI labs in the world, Anthropic and OpenAI, making multi-year, multi-gigawatt commitments to Tranium, an increasing number of AI startups are also adopting Tranium, including unicorns like Neuro Robotics and Odyssey, joining startups like 12 Labs, Descartes, Poolside, Karakuri, Metagenomy, Netto AI, and Splash Music, and larger companies like Uber and Pinterest all adopting Tradium. Graviton is used by 98% of our top 1,000 EC2 customers. Their revenue commitments have increased nearly three times quarter-over-quarter. and Graviton5 is growing nearly 2x faster as Graviton4 did. We also continue to have a deep partnership with NVIDIA and will continue making AWS the best place to run NVIDIA chips as we have customers who will run on NVIDIA for as long as we can foresee and we believe strongly that customers want choice. Choice is good for customers, competition and driving the cost of inference down, which customers care deeply about. Anuradha Aggarwal Data center capital is spent starting two years before we can put servers into them to start monetizing. Once a data center opens with servers plugged in, we start generating significant revenue right away and then get to monetize these data centers for 30-plus years without having to spend that startup capital again. Servers and networking equipment operate on a shorter cycle. We typically purchase these a few months before putting them into service, so we have strong visibility into customer demand before we trigger the spend. For servers and networking equipment, on average, it takes a little less than three years to break even on that investment. The servers currently have a useful life of at least five to six years, and most of our AI capacity these days is being contracted for at least five-year terms. That means that we're driving significant free cash flow on the servers and networking equipment in the two to three years after we break even. It's also worth noting that AWS has a strong track record of pulling forward break-evens on server equipment where we've already made meaningful progress and finding ways to extend the useful life of this equipment without sacrificing customer experience. So for our data centers, which have 30-plus year useful lives, we should get at least five to six generations of server economics like I explained earlier. with subsequent generations after the first having even better overall economics because we don't have to repeat that upfront data center investment I mentioned earlier. This means in the short term, when demand is necessitating so many data centers being built simultaneously in advance of when we can start monetizing them, we'll spend a lot of capex and encounter free cash flow headwinds until these data centers come online to be monetized and we get a few years into these servers being utilized. And as we get a few years out, Thank you for joining us. Anuradha Aggarwal, And remember, enterprises are still very early in using inference at scale in their current production applications. We long believed AWS could become a few hundred billion dollar revenue business and now believe it will be at least double that and very possibly be a trillion dollar annual revenue business for us in time with very appealing accompanying free cash flow and return on invested capital. I'll now turn to stores. We added millions of new products to our selection including over 700,000 from notable brands. We also expanded ultra-low price selection on Amazon Haul in the U.S. by nearly 20x since launch and now have over 6 million items priced under $10. We continue offering everyday low prices that meet or beat our competitors as well as deep discounts and savings during sales events. We're pleased with the customer response to Prime Day where customers shop millions of deals including more than 80% at our lowest price of the year and hundreds of thousands discounted by 40% or more. were the second largest grocer in the U.S., and our grocery business continues growing quickly across perishables and non-perishables. The number of monthly active perishables customers grew over 50% since the start of the year. Same-day orders with perishables averaged over 3x more units per order, and fresh groceries now make up six of the top 20 bestsellers on Amazon.com. We grew the number of new customers for Amazon Pharmacy by more than 2x in the first six months of the year. and same-day prescription deliveries nearly 5x. We also saved customers nearly $250 million so far this year in out-of-pocket costs, up more than 400% year-over-year. We continued speeding up overall delivery and once again achieved record delivery speeds for customers in the first half of the year. We offer millions of items for same-day delivery with Prime, up to 40 times more selection than a typical big-box retail store, and our same-day network continues to expand. Globally, we delivered over 40% more items same day or overnight in the first six months of the year than the same period last year. We also continued to expand our ultra-fast service, Amazon Now, which offers delivery in 30 minutes or less on thousands of everyday essentials. We added 80 new cities and towns across the U.S. and several major cities in Egypt in Q2. And Amazon Now is available in nine countries and over 250 cities and towns globally. We continue to see strong customer response with over 80% growth in gross sales and units sold quarter over quarter, and we serve over 60% more customers quarter over quarter. We recently launched Amazon Supply Chain Services so any business can move, store, and deliver everything from raw materials to finished products using the same supply chain that supports Amazon. And we already have several large customers including Procter & Gamble, 3M, Lands End, and American Eagle Outfitters. The stores team also continues to innovate and deliver for customers with AI. Customers love Alexa for Shopping, our agentic AI shopping assistant. It offers personalized recommendations, product comparisons, price history, and the ability to automate shopping through features like price alerts and auto-buy. Over 350 million customers have used it in the last 12 months, and engagement accelerated in Q2, with active users nearly doubling and interactions up over 5x year-over-year. We also expanded Amazon Lens, which lets customers take a photo of anything they see and instantly find the same or similar items on Amazon to 10 additional countries. It's now available in 21 countries around the world. Moving on to Amazon Ads, we saw strong growth across our offerings, generating $19.8 billion of revenue, up 26% year-over-year. Sponsored products continues to be our largest offering and a key driver of growth. Additionally, Increasingly, more shoppers are discovering products in our agentic and conversational experiences, including in Alexa Plus and Alexa for Shopping. Shoppers who click a sponsored prompt convert to a sale 48% more often and spend 21% more on average than those who don't. We see continued growth and engagement in Prime Video ads and live sports. We introduced more than 30 new advertisers to the NBA in our first year. and inventory on Thursday Night Football, NBA, WNBA and NASCAR all sold out. Advertisers are increasingly investing in multi-sport strategies with brands activating across multiple sports seeing 2.3 times higher unduplicated reach compared to single-sport advertisers and multi-sport viewers are driving 12% higher spend and 17% more orders on Amazon. And finally, we make it easy to create, launch, and optimize full funnel campaigns using AI-powered tools, including AdsAgent, which turns hours of setup and targeting into minutes. Advertisers using AdsAgent targeting see 8% lower cost per impression and 6% lower cost per acquisition, and we've expanded it to 11 new countries this year. We're also continuing to see momentum in several other areas, and I'll mention just a few. Starting with entertainment, the inaugural season of NBA on Prime Video delivered strong viewership for the peak of 6.5 million U.S. viewers for Game 7 of the Eastern Conference Semifinals, outperforming Game 7 on broadcast a year ago. In Europe, viewership in the NBA more than doubled year over year on Prime Video, with the highest average viewership on record. We also drew 36 million viewers globally for the series premiere of Off Campus on Prime Video in its first 12 days. becoming Prime Video's number three top viewed series debut ever. Alexa Plus expanded to Germany, Austria, France, and Brazil, and hundreds of millions of customers are using new Alexa experiences. We find that everywhere Alexa goes, it drives momentum for the business. For example, in the U.S., customers who use Alexa for shopping spend an average of over 40% more per order than those who don't. And customers who've tried Alexa Plus are signing up for Prime at nearly 25% higher rates. And finally, Amazon Leo has close to 400 satellites in orbit, enough to begin initial satellite internet service this year. We already have meaningful revenue commitments from enterprises and government customers, and we have more than 20 partners who will extend the reach of our network across the globe. We continue to be in the middle of some of the biggest inflections of our lifetime, and we're building multiple new long-term businesses that will make customers' lives better and easier and lead to substantial free cash flow and Return on Invested Capital for our shareholders and business. With that, I'll turn it over to Brian. Thanks, Andy.