The company's International segment saw a substantial reduction in operating loss, from $1.8 billion year-over-year to $419 million, due to efficiency improvements and strong growth in established countries like the UK, Germany, and Japan. AWS impressed with a 13% revenue increase to $24.2 billion, an operating income surge to $7.2 billion (up $2 billion), and operating margin growth over 500 basis points to 29.6%. Anticipation for generative AI is high among customers. Free cash flow soared by $48.3 billion year-over-year, thanks to increased operating income and working capital gains. Full year CapEx decreased by $10.2 billion due to less spending on fulfillment and transportation, setting a solid foundation for expected CapEx growth, infrastructure investments, and advanced AI initiatives in the coming year. There's also a projected $900 million positive impact on operating income in Q1 2024 from extended server lifespan accounting adjustments.
Amazon reported a stellar quarter with $170 billion in revenue, a notable 13% increase year-over-year, highlighted by strong customer experience improvements. The boost in revenue includes $13.2 billion in operating income, rocketing 383% compared to the previous year, and a remarkable jump in trailing 12-month free cash flow adjusted for equipment finance leases, up by $48.3 billion.
The company's focus on selection and convenience enticed customers, driving considerable growth in retail. This growth was aided by new items and partnerships across diverse categories and successful events like Prime Big Deal Days and extended Black Friday, which led to a 70% year-over-year increase in customer savings. Delivery speeds also reached new heights, with a 65% year-over-year increase in same-day and overnight deliveries. Importantly, regionalization drove down transportation distances, leading to a more than $0.45 per unit reduction in U.S. cost to serve.
Advertising revenue surged by 26%, bolstered by services like sponsored TV in the U.S. Additionally, AWS experienced a 13% revenue growth in Q4, thanks to new agreements with major corporations and steady customer renewals. The company’s investment in generative AI and a strong customer pipeline in AWS predict a promising future in the cloud segment.
The launch of Rufus, an AI shopping assistant, marks Amazon's foray into using generative AI to enhance the shopping journey by assisting with product discovery and recommendations. With several generative AI apps in development, Amazon anticipates this technology will generate tens of billions of dollars in revenue in the coming years.
Amazon has seen success with ventures like Thursday Night Football, observing a 24% year-over-year increase in viewership. Plans for satellite technology advancements are also underway, with the goal of initiating beta testing in the second half of the current year.
The company's financial milestones included the highest quarterly worldwide operating income ever, amounting to $13.2 billion. Full-year revenue hit $574.8 billion, aided by operational improvements like increased inventory efficiency. A decrease in full-year capital expenditures by $10.2 billion was also reported, alongside a positive forecast for increased infrastructure investments, particularly in AWS and AI technologies.
Amazon's emphasis on its international markets, specifically on customer acquisition and content investment, can lead to variable expenditures from quarter to quarter. The company remains focused on efficiency in operations and seeks to lower costs to serve while enhancing the customer experience.
The International segment is seeing improved profitability, specifically in major markets like the U.K., Germany, and Japan, due to better revenue growth and efficiency in operations. AWS continues to be a strong performer with a 13% increase in revenue and climbing operating margins, now at 29.6%, over 500 basis points higher year-over-year.
Amazon is innovating in its grocery business with three distinct segments and is testing a new Fresh format with promising early results. In healthcare, the ease of use and comprehensive nature of their app and services, such as Amazon Pharmacy, are attracting positive customer attention and could foreshadow further enhancements in wellness and dietary areas.
Amazon is integrating generative AI applications across all its consumer businesses, from retail to Alexa, aiming for increased customer engagement and improved conversion rates. These initiatives are part of a broader strategy to use AI to reinvent customer experiences comprehensively.