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Thomson Reuters StreetEvents Event Transcript
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E D I T E D V E R S I O N
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Q1 2013 Amazon.com Inc Earnings Conference Call
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04/25/2013 02:00 PM GMT
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Corporate Participants
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* Tom Szkutak
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Amazon.com, Inc. - SVP & CFO
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* Sean Boyle
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Amazon.com, Inc. - VP of IR
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Conference Call Participiants
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* Ken Sena
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Evercore Partners - Analyst
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* Jordan Rohan
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Stifel Nicolaus - Analyst
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* Stephen Ju
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Credit Suisse - Analyst
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* Scott Devitt
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Morgan Stanley - Analyst
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* Ben Schachter
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Macquarie Research - Analyst
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* Justin Post
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BofA Merrill Lynch - Analyst
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* Doug Anmuth
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JPMorgan - Analyst
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* Jason Helfstein
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Oppenheimer & Co. - Analyst
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* Brian Pitz
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Jefferies & Company - Analyst
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* John Blackledge
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Cowen and Company - Analyst
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* Youssef Squali
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Cantor Fitzgerald - Analyst
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* Colin Sebastian
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Robert W. Baird & Co. - Analyst
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* Mark Mahaney
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RBC Capital Markets - Analyst
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* Matt Nemer
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Wells Fargo Securities - Analyst
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* Ross Sandler
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Deutsche Bank - Analyst
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* Anthony DiClemente
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Barclays Capital - Analyst
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Presentation
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Operator [1]
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Good day, everyone; thank you for standing by. Welcome to the Amazon.com first-quarter 2013 financial results teleconference. At this time all participants are in a listen-only mode and after the presentation we will conduct a question-and-answer session. Today's call is being recorded. And for opening marks I will be turning the call over to the Vice President of Investor Relations, Mr. Sean Boyle. Mr. Boyle, please go ahead.
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Sean Boyle, Amazon.com, Inc. - VP of IR [2]
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Hello and welcome to or Q1 2013 financial results conference call. Joining us today is Tom Szkutak, our CFO. We will be available for questions after our prepared remarks. The following discussion and responses to your questions reflect management's views as of today, April 25, 2013 only and will include forward-looking statements. Actual results may differ materially.
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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. 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.
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During this call we will 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.
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Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2012. Now I will turn the call over to Tom.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [3]
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Thanks, Sean. I will begin with comments on our first-quarter financial results. Trailing 12-month operating cash flow increased 39% to $4.25 billion. Trailing 12-month free cash flow decreased 85% to $177 million. Trailing 12-month capital expenditures were $4.07 billion. This amount includes $1.4 billion in purchases of our previously leased corporate office space as well as property for development of additional corporate office space located in Seattle, Washington which we purchased in fourth quarter 2012.
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The increase in capital expenditures reflects additional investments in support of continued business growth consisting of investments in technology, infrastructure including Amazon Web Services and additional capacities to support our fulfillment operations.
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Return on invested capital was 1%, down from 12%. ROIC is TTM free cash flow divided by average total assets minus current liabilities excluding the current portion of long-term debt over five quarter ends.
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The combination of common stock and stock-based awards outstanding was 471 million shares compared with 464 million one year ago.
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Worldwide revenue grew 22% to $16.07 billion or 24% excluding the $302 million unfavorable impact from year-over-year changes in foreign exchange rates. We are grateful to our customers who continue to take advantage of our low prices, vast selection and shipping offers.
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Media revenue increased to $5.06 billion, up 7% or 10% excluding foreign exchange. EGM revenue increased to $10.21 billion, up 28% or 30% excluding foreign exchange. Worldwide EGM increased to 64% of worldwide sales up from 60%.
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Worldwide paid unit growth was 30%. Active customer accounts exceeded 209 million. Worldwide active seller accounts were more than 2 million. Seller units represented 40% of paid units.
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Now I will discuss operating expenses excluding stock-based compensation. Cost of sales was $11.8 billion or 73.4% of revenue compared with 76.1%. Fulfillment, marketing, technology and content and G&A combined was $3.83 billion or 23.8% of sales, up approximately 289 basis points year-over-year. Fulfillment was $1.74 billion or 10.8% of revenue compared with 9.5%. Tech and content was $1.26 billion or 7.9% of revenue compared with 6.5%. Marketing was $616 million or 3.8% of revenue compared with 3.6%.
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Now I will talk about our segment results and, consistent with prior periods, we do not allocate to segments our stock-based compensation or other operating expense line item. In the North America segment revenue grew 26% to $9.39 billion. Media revenue grew 14% to $2.51 billion. EGM revenue grew 28% to $6.13 billion representing 65% of North America revenues up from 64%.
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North America segment operating income increased 31% to $457 million, a 4.9% operating margin. In the international segment revenue grew 16% to $6.68 billion. Adjusting for the $301 million year-over-year unfavorable foreign exchange impact revenue growth was 21%.
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Media revenue grew 1% to $2.54 billion or 7% excluding foreign exchange and EGM revenue grew 28% to $4.09 billion or 32% excluding foreign exchange. EGM now represents 61% of international revenues up from 56%.
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International segment operating loss was $16 million, a 0.2% negative operating margin compared with income of $49 million. CSOI increased 11% to $441 million or 2.7% of revenue, down approximately 27 basis points year-over-year.
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Unlike CSOI, our GAAP operating income includes stock-based compensation expense and other operating expense. GAAP operating income decreased 6% to $181 million or 1.1% of net sales.
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Our income tax benefit was $18 million and includes $46 million of discrete tax benefits primarily resulting from the retroactive reinstatement of the federal research and development credit that was enacted in January 2013. GAAP net income was $82 million or $0.18 per diluted share compared with $130 million and $0.28 per diluted share.
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Turning to the balance sheet, cash and marketable securities increased $2.18 billion year-over-year to $7.89 billion. Inventory increased 27% to $5.4 billion and inventory turns were 9.5, down from 10.4 turns a year ago as we expanded selection, improved in-stock levels and introduced new product categories. Accounts Payable increased 29% to $8.92 billion and accounts payable days increased to 68 from 62 in the prior year.
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I will conclude my portion of today's call with guidance. Incorporated into our guidance are the order trends that we have seen to date and what believe today to be appropriately conservative assumptions. Our results are inherently unpredictable and may be materially affected by many factors including a high level of uncertainty surrounding exchange rate fluctuations as well as the global economy and consumer spending. It is not possible to accurately predict demand and therefore our actual results could differ materially from our guidance.
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As we describe in more detail in our public filings, issues such as -- settling intercompany balances and foreign currencies amongst our subsidiaries; unfavorable resolution of legal matters; and changes to our effective tax rates can all have a material effect on guidance. Our guidance further assumes that we don't conclude any additional business acquisitions, investments or settlements, record any further revisions to stock-based compensation estimates, and that foreign exchange rates remain approximately where they have been recently.
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For Q2 2013 we expect net sales of between $14.5 billion and $16.2 billion or growth of between 13% and 26%. This guidance anticipates approximately 275 basis points of unfavorable impact from foreign exchange rates, GAAP operating income or loss to be between a $340 million loss and $10 million income compared to $107 million income in the prior year period. This includes approximately $340 million for stock-based compensation amortization of intangible assets.
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We anticipate consolidated segment operating income which excludes stock-based compensation and other operating expense to be between zero and $350 million compared to $360 million in the prior year period. We remain heads down focused on driving a better customer experience through price, selection and convenience. We believe putting customers first is the only reliable way to create lasting value for shareholders. Thanks. With that, Sean, let's move to questions.
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Sean Boyle, Amazon.com, Inc. - VP of IR [4]
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Great. Thanks, Tom. Let's move on to the Q&A portion of the call. Operator, will you please remind our listeners how to initiate a question?
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Questions and Answers
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Operator [1]
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(Operator Instructions). Brian Pitz, Jefferies.
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Brian Pitz, Jefferies & Company - Analyst [2]
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Great, thanks. In February you changed your FBA fulfillment fees. Any comments on how this affected third party sales and what was the overall merchant response? And then just quickly, any update on your latest plans for new fulfillment centers in 2013? Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [3]
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I will take the second part of the question first. In terms of new fulfillment centers, we have announced three in the US right now and then a few outside of the US consistent with prior years. It is early; we really like the growth that we are experiencing. We will be adding more FCs through the course of the year. But stay tuned and we'll update you as we go.
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In terms of FBA, there's not a lot I can talk to there. We are very pleased with the FBA business. We think it is great for sellers, great for customers and we are pleased to offer that service.
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Brian Pitz, Jefferies & Company - Analyst [4]
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Great, thanks.
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Operator [5]
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Scott Devitt, Morgan Stanley.
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Scott Devitt, Morgan Stanley - Analyst [6]
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Thanks. Tom, the international segment sales growth of 21% (excluding foreign exchange rates) continues to show modest deceleration and I think with the exception of 4Q it has been trailing US growth. And I understand that AWS is mostly booked in the US so that is a piece of the delta. But you have talked in the past quarters about the investments in international driving margin to these breakeven levels in international. I was wondering if you could just talk through the deceleration in the revenue growth in those markets and whether that is comp related, Europe macro or otherwise?
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And then secondly, shipping cost on a net basis is again leveraging, I think that is the second consecutive quarter. I just wonder if you could refresh us in terms of when the accounting change occurred in terms of the shipping revenue calculation for FBA to just understand if that is an organic number now. Thank you.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [7]
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The second half of the question there's -- it is organic so there is no -- it is consistent year-over-year. So this is the first quarter that it will be consistent year-over-year.
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In terms of your question on international, we are seeing still very solid growth, 21% on a local currency basis. As you have read, certainly there is some softness from a macro standpoint that others are seeing. Hard to know whether that is impacting us and how much; we are not a bellwether for the economy. But we are very pleased with the growth that we are seeing; again 21% on a local currency basis, unit growth is actually growing substantially faster than that. So again, that is what we are seeing.
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In terms of investing, you're absolutely right; we are investing in a number of geographies including certainly China we have been investing for several years, we continue to invest in there. We think it is a great long-term opportunity, but we are in investment mode. And certainly some of the more recent additions that we have had with Italy and Spain, that's certainly in investment mode as well.
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Scott Devitt, Morgan Stanley - Analyst [8]
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Thank you.
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Operator [9]
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Mark Mahaney, RBC Capital Markets.
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Mark Mahaney, RBC Capital Markets - Analyst [10]
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Thanks. Just a broad question on demand, this kind of midteens at the low-end revenue growth that you have been kind of guiding to for a quarter or two now, that would seem well below the average that you've seen in the past. Are there any other factors you would want to call out or specifically not call out?
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Do you think that things like the imposition of state sales taxes are having a near-term drag on growth rates? Last quarter I think you talked about consumer electronics at the high-end. Are there any particular categories there you would want to call out as maybe driving that low that could produce the low-end of the range outside of negative FX? Thanks, Tom.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [11]
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Sure. As we've been consistently doing, we're giving a wide range. We think that's appropriate given all the factors. That is not something new that we are doing, that is something that we have been doing for some time. And you are right; the growth rate guidance for Q2 is 13% to 26%. Certainly foreign exchange is having an impact, that includes approximately 275 basis points of foreign exchange. So it is approximately 16% to 29% on a local currency basis.
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So again, it's a wide range. And there's probably not a lot to add there, but it takes into account all of the things that we think we need to take into account as we give guidance. And in terms of the absolute dollar range, it is very similar to what we would have -- in terms of the dollar range; we would have given for Q1. I think it is maybe a $100 million difference in terms of the absolute value of that range that we gave. So again, a wide range; we think that that is appropriate.
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Mark Mahaney, RBC Capital Markets - Analyst [12]
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Thank you, Tom.
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Operator [13]
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Ben Schachter, Macquarie.
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Ben Schachter, Macquarie Research - Analyst [14]
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Are there any factors that are impacting the unit growth, particularly the shift from physical to digital? For instance a rented video versus purchasing a video? Or are there any other factors that you would highlight that are impacting the unit growth?
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [15]
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The one factor I would call out -- first of all in terms of overall unit growth, our overall unit growth is 30% year over year, again very solid growth. It compares to approximately 49% in Q1 of last year. So we are certainly overlapping a pretty strong growth last Q1.
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In terms of the physical and digital, certainly one thing that we are seeing is certainly digital is growing at a much faster rate. And where you do see that a little bit is in our third-party units as a percentage of total units. You will see that that's approximately 40% this quarter. That compares to last year up about approximately 100 basis points.
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But what we are seeing is because the digital units are growing at a faster rate and they are mostly first party, you are seeing that number impacted where that percentage as a percentage of our total is not growing as fast as it has the last few quarters. And again, that is largely driven by the digital units growth that you are seeing.
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So again, that's -- if you were to back out, for example, and just look at our physical units, our third party physical units as a percentage of total physical units this year versus last year is up over 300 basis points. Again, that is 3P growth as a percentage of total physical units.
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Ben Schachter, Macquarie Research - Analyst [16]
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Thanks.
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Operator [17]
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Ross Sandler, Deutsche Bank.
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Ross Sandler, Deutsche Bank - Analyst [18]
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Thanks, guys. A question on the -- a follow-up question on the shipping. So just your shipping cost, not your net shipping margin, but just shipping cost relative to gross profit declined about 300 basis points, similar to what you have seen over the past four quarters. So as you start to comp some of these efficiency gains that you are seeing in shipping, do you think that line will continue to show leverage or is it going to start to level out from here? Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [19]
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We are not giving -- certainly not giving guidance on any specific line item, but certainly over a long period of time we think there is opportunity to be more productive there and there are certainly efficiency gains to be had there. And that's something that certainly the team will continuously work on.
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Operator [20]
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Colin Sebastian, Robert W. Baird & Co.
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Colin Sebastian, Robert W. Baird & Co. - Analyst [21]
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A question on Web services. I wonder if you can comment on enterprise-level adoption and whether there are any meaningful barriers to that happening over time. We noticed you have been pretty aggressive in hiring enterprise-level salespeople. Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [22]
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No, I don't think that there is. I think that the team is doing a fantastic job in terms of developing services that are great for many different customer types including enterprises. And the team is heads down focused on making sure we have a great operational -- these services are great from an operational standpoint and security standpoint and they are doing a terrific job.
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And so, it is a very great opportunity for enterprises to adopt our Web services and the team is certainly focused on that along with the other customers, and so -- other customer sets. So again, it is a great opportunity for those customers and for us.
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Colin Sebastian, Robert W. Baird & Co. - Analyst [23]
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Thank you.
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Operator [24]
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Douglas Anmuth, JPMorgan.
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Doug Anmuth, JPMorgan - Analyst [25]
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Thanks for taking the question. You have clearly been more aggressive in terms of video content recently and you are sort of leading with it more in the release tonight in terms of the business content. I was hoping you could just add some more color here on the value that you think that TV and movie content adds to consumers' overall purchase patterns? Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [26]
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Sure. It is certainly one of our digital offerings and we have a number of different -- a few different services. We have certainly content that we are using as part of our Prime offer that we have a lot of free content for customers. We think that is a great service to customers along with our express shipping offers, as well as other content that we have free, for example our Kindle owners lending library for books.
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So again, we think it is a great -- Prime is a great value for customers and it's part of that value proposition. We also have a very good transaction business for video as well that's growing very, very fast and certainly customers like it and we are seeing that reflected in the results that you see today.
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Doug Anmuth, JPMorgan - Analyst [27]
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Thank you.
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Operator [28]
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Justin Post, Merrill Lynch.
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Justin Post, BofA Merrill Lynch - Analyst [29]
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I was wondering if you could help us a little bit about the Kindle ecosystem. On prior calls a few years ago you singled it out as a fast growth area and you were very happy with the performance. We haven't heard as much about it lately. Kind of the impact part of how units are doing against your expectations and then the impact it is having on Prime subs and also your gross and operating margins? Thank you.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [30]
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We are very pleased with our Kindle and digital business and we are super excited. In terms of the ecosystem, you are certainly seeing that in our results that you see today. For example, if you look at our media growth we are certainly -- that ecosystem is more penetrated there than it is in international and you see that reflected in those associated growth rates.
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Another way you see it is if you take a look at our top 10 best-selling items worldwide in Q1, the top 10 are all either digital or Kindle related, Paperwhite is our best-selling product worldwide. But again, all 10 spots in the Q1 were either Kindle or digital items and I believe that that is the first time that we have seen that.
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We have been looking at that from a quarterly results standpoint for some period of time and we have had various levels of the top 10, but I think this may be the first quarter that we have had all top 10 being either or Kindle related or digital related. So again, we are very pleased with what we are doing there and we are going to continue to innovate on behalf of customers.
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Justin Post, BofA Merrill Lynch - Analyst [31]
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And any impact on your gross or operating margins that you want to call out?
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [32]
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The one thing I would say is we certainly are investing. It is certainly an area of investment and you are seeing that reflected. We are making a number of investments across the business and certainly we are investing in Kindle and our digital offerings, we are investing in some of the other things I mentioned earlier like China, some of the emerging geographies. So those are certainly some of the larger key investments we are making.
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Justin Post, BofA Merrill Lynch - Analyst [33]
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Thank you.
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Operator [34]
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Matt Nemer, Wells Fargo Securities.
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Matt Nemer, Wells Fargo Securities - Analyst [35]
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Good afternoon. We are hearing reports that there is refrigeration equipment going into some of your fulfillment centers outside of the Seattle area. Just wondering if you can update us on plans to expand AmazonFresh? Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [36]
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No, have nothing to announce. We are very pleased with what we have seen in the Seattle area, but again it has been a test and we continue to monitor that test carefully. It is certainly something that we see that customers love the experience. The challenge has always been making sure we can get the economics right and that is something we will continue to focus on.
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Operator [37]
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Stephen Ju, Credit Suisse.
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Stephen Ju, Credit Suisse - Analyst [38]
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Anything you can say in terms of how much Amazon is in video as well as potentially your own in-house produced content currently helps and should in the future help reduce churn in Amazon Prime? Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [39]
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Thanks for the question. Yes, it is something -- we haven't released any of the numbers, it is something that we are tracking very closely. It is something that we believe over time will reduce churn and is certainly helping today.
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What we are seeing is great traction. We see a lot of usage of the service. Customers love it and we think it is a very interesting part of Prime offering and that is why we have been expanding and why you see some of the more recent announcements including some of the stuff included in the earnings release today around original content. So again, it is something that we find very interesting and we are excited about it.
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Operator [40]
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Ken Sena, Evercore Partners.
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Ken Sena, Evercore Partners - Analyst [41]
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I was just hoping you could maybe provide a little bit more color on the unit growth deceleration. And looking back over the last four quarters it seems like about 500 basis points or so each quarter of deceleration. You had about 200 basis points here which is an improvement, but anything you would say just to any signs of maturity in some of the businesses and maybe where that deceleration is specifically coming from? Thank you.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [42]
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No, there is not a lot I can add. I think the -- 30% is still a very strong growth rate. Again, it is growing at a faster rate than revenue, revenue at 22%, revenue at a local currency growth of 24% very strong; third-party growth continues to be very strong. Retail growth is strong.
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So again, there's not a lot I can provide you there. But again, keep in mind that we are overlapping 49% growth last year Q1 which is certainly a little bit of a difficult compare. But again, pleased with the 30% growth rate.
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Operator [43]
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John Blackledge, Cowen and Company.
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John Blackledge, Cowen and Company - Analyst [44]
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Great, thanks. Just a question on the Amazon advertising platform. Given the immense amount of purchase data you have on Amazon customers, how is that being used as a competitive advantage and maybe just provide an overall view on the direction of the Amazon ad platform over time?
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [45]
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In terms of the platform itself, we think it is a very sizable, very good long-term opportunity for us and it is something that we've been working on for some time and we just think it is very interesting. One thing you will notice on our site, we're being obviously very -- making sure the customer experience is great.
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What we're really trying to do is we are trying to help customers find and discover what they want to buy online. So we are very -- again, it is very customer centric, but it is also from a business standpoint a very good long-term opportunity. We have a great team that is working on the opportunity and we are excited about the long-term potential of it.
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Operator [46]
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Anthony DiClemente, Barclays.
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Anthony DiClemente, Barclays Capital - Analyst [47]
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Thanks. I am just wondering what you are seeing in terms of the attach rate of your transactional video on demand business versus usage of Prime instant video. I am wondering just if your consumers tend to choose between the two when they are making a selection. Or does one sort of drive the other? Does a Prime subscriber have a higher transactional VOD attach rate than a non-Prime? So it would be helpful to hear what you are seeing there in terms of usage.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [48]
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I think the only thing I can help you with is we see -- I will take Prime customers for example. We certainly see adoption of the service in terms of free content, but those same customers are purchasing content as well. And so there is a good attachment to it which we like.
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And what we see Prime members doing not just within video content, but we see them doing a lot of cross shopping. So it is not surprising; we see them do -- maybe a customer comes and has been traditionally purchasing them pre-Prime in a few categories. We find that they do a lot more cross shopping.
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Same thing with digital content. As they use the service they might start with free content and then they will also continue to view and stream free content, but they will also purchase paid content. So it is a nice effect that we are seeing which is why we like Prime so much.
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Operator [49]
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Youssef Squali, Cantor Fitzgerald.
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Youssef Squali, Cantor Fitzgerald - Analyst [50]
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Okay, thank you very much. Two quick questions please. Going back to the international question, what it causing international media to decelerate? I think last year Q1 I think it was up 22%, FX adjusted this quarter it was up 7%. Is it all macro or are there any maybe other factors that you can talk about maybe specific to SKUs or something?
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And the other is more of a clarification. I know last quarter you gave the unit growth in aggregate versus the unit growth of 3P. I was wondering if you could give that to us as well.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [51]
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In terms of the international media growth, this quarter it was 1% on a dollar basis, 7% on a local currency basis. In terms of the overall growth rate, certainly what you are seeing is digital content as part of that is growing very fast, but it is not as large or as penetrated or ecosystem isn't as developed I would say as it is in the US.
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And so, when you compare the two geographies for a second, that is one of the more meaningful differences that you see between the two is you see that both are growing digital content very fast, it's just the ecosystem is more built out in North America.
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But again, certainly we see very positive signs in that given the growth we are experiencing in international; it's just on a lower base. So that is -- again, to be helpful there.
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In terms of the unit growth, we said that our overall unit growth was 30% for the quarter. Our 3P unit growth -- I don't have the overall growth rate but it is growing at a faster rate than the total.
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Operator [52]
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Jordan Rohan, Stifel.
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Jordan Rohan, Stifel Nicolaus - Analyst [53]
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I was hoping you could comment on the market entry and expansion strategy for Amazon in Brazil. There seemed to be a tremendous amount of press last year about it and it seems to have died down to some degree. I know the Company may already be there with Amazon Web Services and some Kindle offerings, but when do you think that might get a little bit broader?
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And secondly, there have been some stories recently about an Internet streaming device box, a set-top box, something of the sort. Can you comment on any new hardware form factors including that plus some sort of a cell phone or handset that might be coming down the pike? Anything to look forward to in the Kindle family or related? Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [54]
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In terms of geographic expansion, there is not a lot I can say specifically about Brazil. We think we are in the right geographies right now. We have expanded into a number of geographies over the past few years. That is certainly something we always look at and you should expect us to expand into additional geographies over time.
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In terms of any questions related to our product roadmap -- we have a long-standing practice of not talking about what we might or might not do there. But we are certainly excited about the product roadmap that we have for the future. And again, we have a long-standing practice of not giving details until closer at launch.
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Operator [55]
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Jason Helfstein, Oppenheimer & Co.
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Jason Helfstein, Oppenheimer & Co. - Analyst [56]
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Thanks. Can you give us a little more color around customer growth? I mean, that number has been slowing not dramatically, but that is a slowing trend? Are you focused more on higher value customers to drive the business and any color around the quarter would be helpful? Thanks.
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Tom Szkutak, Amazon.com, Inc. - SVP & CFO [57]
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We are actually pleased with the growth from a customer standpoint. We have seen very good growth and we continue to -- we have many, many teams across Amazon that are just heads down focused on trying to improve the customer experience and inventing on behalf of customers. So we couldn't be more pleased with what they are doing, and you see that reflected in our overall growth rate this quarter with revenue up 24% on a local currency basis and units growing at 30% on top of a strong growth quarter last year Q1.
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Jason Helfstein, Oppenheimer & Co. - Analyst [58]
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Thank you.
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Sean Boyle, Amazon.com, Inc. - VP of IR [59]
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Great. Thank you for joining us on the call today and for your questions. A replay will be available on our Investor Relations website at least through the end of the quarter. We appreciate your interest in Amazon.com and look forward to talking with you again next quarter.
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