Call participants
Chief Executive Officer — Andrew Jassy
Chief Financial Officer — Brian Olsavsky
Director of Investor Relations — Dave Fildes
Need a quote from a Motley Fool analyst? Email [email protected]
Takeaways
Total revenue — $180.2 billion in revenue for the third quarter of 2025, representing 12% year-over-year growth, excluding foreign exchange impact.
Operating income — $17.4 billion in operating income for the third quarter, reduced by $2.5 billion from a Federal Trade Commission (FTC) settlement and $1.8 billion in estimated severance costs; operating income would have been $21.7 billion without these charges.
Trailing 12-month free cash flow — $14.8 billion, as directly reported.
North America revenue — $106.3 billion in revenue for the North America segment, up 11% year-over-year.
International revenue — International segment revenue was $40.9 billion, increasing 10% year-over-year, excluding foreign exchange effects.
AWS revenue — $33 billion in AWS revenue for the quarter; AWS annualized run rate reached $132 billion.
AWS backlog — Grew to $200 billion by the end of the quarter, with additional new deals in October 2025 exceeding total deal volume for the quarter.
AWS operating income — $11.4 billion in AWS operating income, with margins subject to variability due to increased data center depreciation for AI capacity.
Paid units growth — Worldwide paid units increased 11% year-over-year.
Third-party seller unit mix — Rose to 62% in the quarter, up 200 basis points from the prior year.
Advertising revenue — $17.7 billion in advertising revenue, growing 22% year-over-year, with three consecutive quarters of accelerating growth.
Cash CapEx — $34.2 billion in cash CapEx in the quarter. Cash CapEx has reached $89.9 billion so far this year; the full-year cash CapEx estimate for 2025 is approximately $125 billion, with an expected increase in 2026.
North America operating income — $4.8 billion in North America segment operating income, with a margin of 4.5%. Excluding the FTC charge, income was $7.3 billion and margin was 6.9% for the North America segment, excluding the $2.5 billion charge related to the legal settlement with the FTC.
International operating income — International segment operating income was $1.2 billion, with a margin of 2.9%. Margin expanded year-over-year, excluding severance expense.
Anthropic investment gain — Net income of $21.2 billion included a $9.5 billion pretax gain from Anthropic, classified under nonoperating income.
Trainium2 growth — Trainium2 is fully subscribed and has become a multibillion-dollar business, growing 150% quarter-over-quarter, according to Andrew Jassy.
AI-driven commerce features — Rufus saw 250 million active customers in 2025, monthly users up 140% year-over-year, and interactions up 210% year-over-year. Rufus is on track to deliver over $10 billion in incremental annualized sales.
Infrastructure expansion — More than 3.8 gigawatts of AWS power capacity were added in the past 12 months, with plans to double total capacity by 2027. Project Rainier, an AI cluster with nearly 500,000 Trainium2 chips, is currently in use by Anthropic.
Same-day perishables delivery — Reached over 1,000 U.S. cities, with plans to expand to 2,300 by the end of 2025, impacting the grocery business trajectory.
Prime Day event — Marked the largest ever, with customers saving “billions of dollars” according to Andrew Jassy, across 35 categories.
Amazon Connect — Exceeded $1 billion in annualized revenue run rate, handled 12 billion customer interaction minutes by AI in the last year, and serves major enterprise clients.
Robotics in fulfillment — Over 1 million robots deployed, with continued investment forecasted to drive safety, productivity, and speed in operations.
Summary
Amazon (AMZN 3.11%) reported third quarter results with material impacts from special charges related to regulatory settlements and severance. AWS delivered its highest growth in nearly three years, fueled by substantial momentum in AI-related demand, with AWS revenue growing 20.2% year-over-year, and continues aggressive capacity expansion with multibillion-dollar investments in infrastructure and custom silicon. Key AI-driven commerce enhancements, such as Rufus and other generative features, demonstrated substantial customer engagement and incremental sales. The company highlighted strategic advances in core retail operations, including expansion of same-day perishable grocery delivery and the Prime member offering. Significant capital expenditures were allocated to support ongoing AWS infrastructure and supply chain innovation, with cash CapEx expected to increase further in 2026.
Chief Executive Officer Jassy stated, “we’re bringing in quite a bit of capacity today, overall in the industry, maybe the bottleneck is power,” signaling no current constraint in key chip supply.
Jassy said, “Trainium3 should preview at the end of this year with much fuller volumes coming in the beginning of ’26,” referencing expected broadening customer adoption.
Jassy explained Project Rainier’s infrastructure scale: “it’s not simple to be able to build a cluster that has 500,000 plus chips going to 1 million. That’s an infrastructure feat that’s hard to do at scale.”
CFO Olsavsky reported, “AWS revenue increased $2.1 billion quarter-over-quarter,” highlighting sequential growth in the segment.
Olsavsky revealed operating efficiencies, noting, “reduction of U.S. inbound lead time by nearly 4 days compared to last year,” improving working capital management.
Management disclosed that paid units grew 11% year-over-year.
Jassy described the head count reduction as culturally driven, not “really financially driven and it’s not even really AI-driven, not right now, at least.”
Industry glossary
Trainium: Amazon’s custom-designed AI accelerator chip family, used for optimizing machine learning training and inference in AWS cloud environments.
AgentCore: AWS infrastructure suite for building, deploying, and managing secure, scalable AI agents and agentic workloads.
Rufus: Amazon’s AI-powered shopping assistant increasing conversion and engagement on the platform.
Amazon Bedrock: AWS-managed service providing access to foundation AI models and tools to build generative AI applications at scale.
Project Rainier: Large-scale AWS compute cluster featuring Trainium2 chips, supporting major AI training workloads for clients such as Anthropic.
Agentic commerce: Commerce enablement where automated AI agents assist customers in researching, selecting, and purchasing products.
Full Conference Call Transcript
Dave Fildes: Hello, and welcome to our Q3 2025 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 2024. Our comments and responses to your questions reflect management’s views as of today, October 30, 2025 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, changes in global economic and geopolitical conditions, tariff and trade policies 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.
Andrew Jassy: Thanks, Dave. We saw strong growth across our business in Q3, and we’re reporting $180.2 billion in revenue, up 12% year-over-year, excluding the impact from foreign exchange rates. Operating income was $17.4 billion, but would have been over $21 billion, if not for 2 special Q3 expenses, $2.5 billion for an FTC settlement and $1.8 billion for estimated severance costs. Trailing 12-month free cash flow was $14.8 billion. I’ll start with AWS. AWS is growing at a pace we haven’t seen since 2022, reaccelerating to 20.2% year-over-year, our largest growth rate in 11 quarters. It’s worth remembering that year-over-year percentage growth is a relative term.
It’s very different having 20% year-over-year growth on a $132 billion annualized run rate and to have a higher percentage growth rate on a meaningfully smaller annual revenue, which is the case with our competitors. Backlog grew to $200 billion by Q3 quarter end and doesn’t include several unannounced new deals in October, which together or more than our total deal volume for all of Q3. AWS is gaining momentum. Customers want to be running their core and AI workloads in AWS given its stronger functionality, security and operational performance and the scale I see in front of us gives me significant confidence in what lies ahead. I’ll share a little more detail on why.
It starts with AWS having much broader infrastructure functionality. Start-ups, enterprises and governments want to move their production workloads to the place that has the broadest and deepest array of capabilities. AWS has more services and deeper features within those services than anybody else and continues to innovate at a rapid clip. These are key building blocks for anything that customers want to create, and they’re a big part of why Gartner has named AWS leader in its strategic cloud platform services Magic Quadrant for 15 consecutive years. We’re bringing the same building block approach to AI. SageMaker makes it much simpler for companies to build and deploy their own foundation models.
Bedrock gives customers leading selection of foundation models and superior price performance to deploy inference into their next-generation applications. A lot of the future value companies will get from AI will be in the form of agents. AWS is heavily investing in this area and well positioned to be a leader. Companies will both create their own agents and use agents from other companies. For those building their own, it’s been harder to build than it should be. It’s why we launched strands to make it much easier to create agents from any foundation model that builders desire.
For companies who successfully built agents, they’ve hesitated putting them into production because they lack secure scalable runtime services or memory or observability built specifically for agents. It’s why we launched AgentCore, a set of infrastructure building blocks that allow builders to deploy secure, scalable agents. Ericsson used AgentCore to deliver AI agents across their workforce, Sony used it to build a agentic AI platform with enterprise-level security, observability and scalability. And Cohere Health is using AgentCore to deploy agents that will reduce medical review times by up to 30% to 40%. AgentCore’s SDK has already been downloaded over 1 million times, and our builders are excited about it. It’s an enabler.
Companies will also use other agents, and AWS continues to build many of the agents we believe builders will use in the future. For coding, we’ve recently opened up our agentic coding IDE called Kiro. More than 100,000 developers jumped into Kiro in just the first few days of preview and that number has more than doubled since. It’s processed trillions of tokens thus far, weekly actives are growing fast, and developers love its unique spec and tool call and capabilities. For migration and transformation, we offer an agent called Transform. Year-to-date, customers have already used it to save 700,000 hours of manual effort. The equivalent of 335 developer years of work.
For example, Thomson Reuters used it to transform 1.5 million lines of code per month, moving from Windows to open source alternatives and completing tasks or a times faster than with other migration tools. Customers have also already used Transform to analyze nearly 1 billion lines of mainframe code as they move mainframe applications to the cloud. For business customers, we’ve recently launched QuickSleep to bring a consumer AI-like experience to work, making it easy to find insights, conduct deep research, automate tasks, visualize data and take actions. We’ve already seen users churn months long projects in today’s get 80% plus time savings on complex tasks and realize 90% plus cost savings.
And for contact centers, we offer Amazon Connect which creates a more personalized and efficient experience for contact center agents, managers and their customers. Connect has recently crested $1 billion annualized revenue run rate with 12 billion minutes of customer interactions being handled by AI in the last year and is being used by large enterprises like Capital One, Toyota, American Airlines and Ryanair. These are real practical results for customers, and there are many more examples like them. Because of its advantaged capabilities, security, operational performance and customer focus, AWS continues to earn most of the big enterprise and government transformations to the cloud.
As a result, AWS is where the preponderance of company’s data and workloads reside and part of why most companies want to run AI and AWS. To enable customers to do so, we need to have the requisite capacity, and we’ve been focused on accelerating capacity the last several months, adding more than 3.8 gigawatts of power in the past 12 months, more than any other cloud provider. To put that into perspective, we’re now double the power capacity that AWS was in 2022, and we’re on track to double again by 2027. In the last quarter of this year alone, we expect to add at least another 1 gigawatt of power.
This capacity consists of power, data center and chips, primarily our custom silicon, Trainium and NVIDIA. We’ve recently brought Project Rainier Online, our massive AI compute cluster spanning multiple U.S. data centers and containing nearly 500,000 of our Trainium2 chips. Anthropic is using it now to build and deploy its industry-leading AI model, Claude, which we expect to be on more than 1 million Trainium2 chips by year-end. Trainium2 continues to see strong adoption, is fully subscribed is now a multibillion-dollar business that grew 150% quarter-over-quarter. Today, Trainium is being used by a small number of very large customers but we expect to accommodate more customers starting with Trainium3.
We’re building Bedrock to be the biggest inference engine in the world and in the long run, believe Bedrock could be as big a business for AWS as EC2, and the majority of token usage in Amazon Bedrock is already running on Trainium. We’re also continuing to work closely with chip partners like NVIDIA, with whom we continue to order very significant amounts as well as with AMD and Intel. These are very important partners with whom we expect to keep growing our relationships over time. You’re going to see us continue to be very aggressive in investing in capacity because we see the demand. As fast as we’re adding capacity right now, we’re monetizing it.
See More
