Amazon.com Inc (AMZN) Q1 2021 Earnings Call Transcript

Amazon.com Inc (NASDAQ:AMZN) Q1 2021 earnings call dated Apr. 29, 2021.

Corporate Participants:

Dave Fildes — Director, Investor Relations

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Analysts:

Ross Sandler — Barclays — Analyst

Brent Thill — Jefferies — Analyst

Youssef Squali — Truist Securities — Analyst

Edward Yruma — KeyBanc Capital Markets — Analyst

John Blackledge — Cowen — Analyst

Doug Anmuth — JPMorgan — Analyst

Justin Post — Bank of America — Analyst

Brian Nowak — Morgan Stanley — Analyst

Presentation:

Operator

Thank you for standing by. Good day everyone and welcome to the Amazon.com Q1 2021 Financial Results Teleconference. [Operator Instructions]

For opening remarks, I will be turning the call over to Director of Investor Relations, Mr. Dave Fildes. Please go ahead.

Dave Fildes — Director, Investor Relations

Hello and welcome to our Q1 2021 Financial Results Conference Call. Joining us today to answer your questions is 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 2020.

Our comments and responses to your questions reflect the management’s views as of today, April 29, 2021 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 conditions and customer spending world events, the rate of growth of the Internet, online commerce and cloud services and the various factors detailed in our filings with the SEC.

This guidance also reflects our estimates to date regarding the impact of the COVID-19 pandemic on our operations, including those discussed in our filings with the SEC and is highly dependent on numerous factors that we may not be able to predict or control, including the duration and scope of the pandemic, including any recurrence, actions taken by governments, businesses and individuals in response to the pandemic, the impact of the pandemic on global and regional economies and economic activity, workforce staffing and productivity and our significant and continuing spending on employee safety measures, our ability to continue operations in affected areas and consumer demand and spending patterns as well as the effects on suppliers, creditors and third party sellers, all of which are uncertain. Our guidance also assumes among other things that we don’t conclude any additional business acquisitions, investments, 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 Brian.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Thank you for joining us today. Before we get to Q&A, I will touch upon a few highlights from the first quarter of the year. Let me start by highlighting the momentum we are seeing in AWS. In the first quarter, AWS revenue growth accelerated across a broad range of customers. During COVID we’ve seen many enterprises decide that they no longer want to manage their own technology infrastructure. They see the partnering with AWS and moving to the cloud gives them better cost, better capability and better speed of innovation. We expect this trend to continue as we move into the post-pandemic recovery. There’s significant momentum around the world, including broad and deep engagement across major industries. For example, last quarter we announced new commitments and migrations from some of the world’s most pronounced sports leagues. The National Hockey League. The PGA Tour, Formula One and the German Bundesliga. We continue to expand our AWS infrastructure footprint to support strong growth we’re seeing. AWS offers 80 availability zones across 25 geographic regions around the world. We’ve announced plans to launch 15 more Availability Zones in five more regions.

Turning to the Consumer business. We continue to see strong customer demand globally in the first quarter. Revenue growth in our international segment was 50% on an FX-neutral basis year-over-year in Q1 as restrictive regional and national lockdowns were in place throughout the quarter, particularly in the UK and Europe. In North America revenue growth of 39% largely reflects the continuation of demand trends that we have seen since the early months of the pandemic. Third-party sellers were largely comprised of small and medium-sized businesses, continue to see strong sales and serve more customers. Our 3P seller services revenue increased 60% on an FX-neutral basis year-over-year in the first quarter, growing significantly faster than online stores revenue. Third-party units represented 55% of our total paid units in Q1, up from 52% in Q1 of last year.

Prime members also continue to shop with greater frequency and across more categories than before the pandemic. These trends have also extended to Prime’s digital benefits. Over the past 12 months, Prime Video streaming hours were up over 70% year-over-year. Amazon Studio had its best award season yet and Prime members can look forward to a strong slate of upcoming original series and films featuring an impressive group of diverse talent and creators.

We’re also continuing to expand our roster of live sports content. We’re excited to partner with the NFL, with the exclusive home of NFL Thursday Night Football into the next decade. Twitch is also seeing great momentum. Hours watched on Twitch nearly doubled year-over-year in the first quarter and we now average more than 35 million daily visitors. Another popular benefit of Prime membership is Prime Day. We are excited to announce that we will hold the two day savings event during the second quarter. Prime Day is also a great opportunity for our selling partners to reach more customers and we’ll make supporting small businesses a big focus again this year. We’ll have more to share on Prime Day including event dates a bit later this quarter.

We continue to prioritize the safety and well-being of our employees. In the US, Amazon has held on-site vaccination events in 29 states reaching more than 300,000 frontline employees and contractors. We’re watching events closely in Europe, and in particular, India where we have put in place employee initiatives, medical help lines, toll consulting, hotel rooms for quarantining and financial support as well as donating 100 ICU ventilator units to local hospitals. We’ll continue to invest in the health and safety of our employees and delivery partners, particularly in our global fulfillment and logistics operations.

And finally, to summarize our financial results. Total revenue of $108.5 billion came in above the guidance range of $100 billion to $106 billion. In addition to our strong segment results, advertising revenue within the North America International segments also accelerated during the quarter. The leverage we are seeing on this higher revenue combined with strong operational performance with the higher operating income as well. Operating income of $8.9 billion in Q1 was above our guidance range of $3 billion to $6.5 billion. We incurred a little less than the $2 billion in COVID-19 related operating costs that we had projected in the first quarter. We continue to incur these costs across our global fulfillment network as we maintain social distancing measures which impacts our productivity and as we make direct investments in employee safety.

Looking ahead, we expect to incur approximately $1.5 billion in COVID-19 related operating costs in the second quarter. Lastly, I’d like to congratulate and thank our employees for making Amazon number one in the US, on LinkedIn’s 2021 Top Companies ranking. An annual list identifying most sought after places to work. We appreciate the customer obsession and passion for innovation from teams across the company that makes Amazons in Great Place to Work.

With that, let’s move on to Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is coming from Ross Sandler with Barclays. Please proceed with your question.

Ross Sandler — Barclays — Analyst

Thanks, Brian. Question on last mile delivery. So you guys are investing pretty aggressively to build out that Amazon Control last mile fulfillment we see the blue vans driving around everywhere in the Bay Area. So congrats on that. So I guess the question is how long until you feel like you’ve had it in the right place as far as all your major metros where you want to set that up. And at what stage is the unit cost of shipping start to improve from these initiatives. And I guess high level, is controlling the last mile allowing you to further penetrate or gain market share in certain categories where speedy delivery is of the essence? Can you talk about that, please. Thank you.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Ross, thanks for your questions. Yes, let me start with last mile in general. So we are investing heavily, talked about it last year, our fulfillment including Amazon Logistics investment, we increased our capacity by 50%. You can see from our capex numbers, the capex including infrastructure of course, increased 80% in the trailing 12 months, over the prior trailing 12 months. So certainly, a large area of investment, not only fulfillment centers but also two elements of transportation, what we call the middle mile or putting sort centers Amazon Air, line-haul trailers, think of all the intermediate movements between our warehouses and our final delivery stations. And then that last mile is just delivery stations, DSP, delivery service partners as well. So if you talk about cost. We actually think our cost right now is very competitive with our external options and we measure that very closely. Certainly it gets better with demand and amortization and route density, etc, but we see — which is very helpful is the ability to control the whole flow of products from the warehouse to the end customer. It’s churn would normally was a batch process where we would hand off a large batch of orders to our third-party today, let’s say to a continuous flow process where we continually have orders leaving our warehouses five to six times a day going through middle mile and then to final delivery through — either through our AMZL drivers for DSP partners.

So that gives us a lot of ability not only to control the flow of the product, but also flow of information we are seeing. A lot of progress in that area and I think you’ll see it to as a customer, where you’re starting to get more precise estimates of delivery. You’ll get notes to say hey, you’re age stops away from your delivery etc, because everyone’s busy, a big part of delivery is actually being there sometimes when you need to get — be there for the delivery. Other times, of course you can just have it put in your doorstep and get to it later, but that’s, we feel a lot of benefit from that.

We also see that there is a lot of cut-off times that we can extend again because we very much have perfect information between the order placement, allocation to warehouses where we’re going to pick and box at the product incentives on its way. So lots of damages. We are continuing to invest and we’ll see a large investment in this area through 2021 as well. We do think that it may also spill to 2022 that should set us up in really good stead with our capacity and already the majority of our units are going through AMZL today.

Dave Fildes — Director, Investor Relations

This is Dave. Hey Ross, just to add to that. Brian touched upon it, but there are an important part of this last mile effort has been the program we’ve had, the — Brian called it — mentioned the delivery services partner program or the DSP. It’s an important part of the last mile network and that — just as a reminder that employs more than 100,000 drivers and it’s been growing for the past few years and it’s really, it’s a program with an incentive for those folks to become small business owners and start their own package delivery business. So it’s a great way for those folks to access the delivery technology and the package volumes we have and tap into the network and we’ve got a lot of core elements as part of that program — grant programs to support entrepreneurs and minority groups and really help them build out and helps us support a diverse business community as well.

Operator

Your next question comes from the line of Brent Thill with Jefferies. Please proceed with your question.

Brent Thill — Jefferies — Analyst

Good afternoon. On AWS, I’m curious if you could give us the backlog number and there’s been a lot of questions about the incredible backlog strength you’ve seen in the last several quarters. And finally seems that you’re seeing the convergence between that backlog growth and now revenue growth accelerating. If you could just comment a little more on that conversions and how you expect that to trend? Thank you.

Dave Fildes — Director, Investor Relations

Yes. Hey, Brent, it’s Dave. I think it’s the backlog growth, just to give you the figures for March 31, it’s $52.9 billion. The weighted average life is about where we’ve been for the past several quarters. So about a little over three years in terms of the weighted average remaining life. So that’s up about 55% right now. So it really continues to be really strong and really pleased with that. I think that’s backlog figures, but also just the revenue growth and the momentum we’re seeing in here is a lot of hard work and innovation on the teams and growing teams and reaching out and working with those. And so you can expect to continue to see customers making these long-term commitments. We think it’s a representation when you think of a lot of companies that have worked with us, been engaged with us, been with us and if they get better comfort line of sight with what they want to do and as we are able to add even more value and services, it’s is a great partnership and relationship that they want to build with us over those multi-year periods.

Operator

Your next question comes from the line of Youssef Squali with Truist Securities. Please proceed with your question.

Youssef Squali — Truist Securities — Analyst

Thank you very much. Maybe just a two-part question. First, Brian, you touched upon this a little bit in your prepared remarks about the acceleration in international growth. Can you maybe just speak of the drivers there? And then particularly in markets where COVID is no longer a major issue, have you seen any particular declines or maybe just slow down in e-commerce demand or decline in growth. It seems like they’re going in different directions. In Europe, for instance, it seems like the — a lot of these markets are still very much under lockdown, yet your international business has grown pretty significantly. I don’t know if there is positive or negative correlation. Thanks.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Yes, thanks, Youssef. Yes, I would say we’re seeing strength pretty much across the board in International, and it does vary by country. But if you just step back a minute, even on an FX-neutral basis, we grew 50% in the quarter. We grew 50% last quarter, although that’s aided by the fact that Prime Day was in Q4 this year. But if you look at the growth rate prior COVID and post-COVID, the International segment on an — even on an FX-neutral basis has been tripling their prior growth rate in revenue anyway. So very strong and probably advancement of the model in a lot of countries by a year or more. And we’re really pleased that we’ve been able to show our value to those customers, not only with our shipments and our ability to deliver and get them what they need to survive in homes and in place during the pandemic.

But also the strength that we’ve seen in the digital offering and the adoption of Video, Music, our devices, so it’s really — and we are forward investing as you know in international with a lot of those Prime benefits. So it’s really, it’s good to see as the underlying consumer shipping business part of it grows that we’re still seeing healthy engagement and growing engagement. So I don’t have a downside case yet, in fact I was surprised a bit by the growth. I don’t think we would normally would have forecasted 50% growth in Q1 and certainly stressing our operations, but I would, my hats off to the operations team. They handled the volumes in Q1 very efficiently. Costs were very much under control and we start to see strong leverage of our fixed assets, especially our fulfillment center and transportation assets.

Dave Fildes — Director, Investor Relations

This is Dave. And just, these aren’t big contributors by any means to the growth numbers Brian was talking about, but I think along with those efforts and countries we’ve been in for some period of time, we’re continuing to open up new regions. If you look back, Poland recently opened up in March. Sweden opened up in the fourth quarter of last year and even in some regions that we’ve been in for a few years, places like Turkey, we launched Prime in the back half of last year. So there’s a lot of good effort and thought going into by the teams to continue kind of taking what we’re learning in each of these geographies and feeding it back into a local presence that takes advantage of everything we’ve learned with Prime and the broader consumer facing experience.

Operator

Your next question comes from the line of Ed Yruma with KeyBanc Capital Markets. Please proceed with your question.

Edward Yruma — KeyBanc Capital Markets — Analyst

Hey, good afternoon. Thanks for taking the question. You guys clearly took some market share with delivering grocery during the pandemic. Just wondering kind of what the consumer behavior has been post? Is it proving to be sticky and just kind of zooming out talking about grocery broadly, how has the fresh stores performed? Thank you.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Sure. Grocery has been great revelation during the post pandemic period here. I think people really value the ability to get home delivery and we’ve seen those numbers go up considerably pre and post-pandemic. So, but we’ve also worked very hard to increase our capacity during that time period. In United States, we’re delivering out of the — of our Whole Foods stores and we’ve engaged — we were allowed to pick up, greater expansion of pickup at Whole Foods stores. Amazon Fresh became free Prime benefit as you know, in the late part of 2019 and customers really adopted it and continue to see strong growth. So I think on the Fresh stores it’s a little too early, the stores themselves. We are confident that Just Walk Out technology that will be a benefit to customers and we’re very excited about what’s in the works, but that’s still really early in day one.

Dave Fildes — Director, Investor Relations

We’ve got — and this is Dave. We’ve got about 12 Fresh stores right now that are open we’ve confirmed. We’ve got some additional ones coming in Southern California and Illinois and New Jersey and then here with us in the Seattle area. So as Brian said really pleased with start — the technology and the feedback from the customers so far.

Operator

Your next question comes from the line of John Blackledge with Cowen. Please proceed with your question.

John Blackledge — Cowen — Analyst

Great, thanks. Two questions. The 2Q revenue guide range was strong despite the initial pandemic comps. Could you just discuss demand levels you’re seeing on the e-commerce side and just other kind of key drivers of strong expected revenue growth in the second quarter? And then on the advertising business, if you can just talk about some of the key drivers of the acceleration. I think it feels like it’s maybe the third quarter in a row of acceleration. So, what’s kind of driving that and how should we think about the trajectory for the business as we are around through the year? Thank you.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Sure, John. Thanks. Let me start with your second question on advertising. So certainly traffic has been a large driver of what we’re seeing in the advertising space, but it discounts kind of the improvement that we’re also seeing in relevancy and new products that the team is been rolling out that the customers also enjoy. So yes, I think the advertisement industry has done a great job of turning Clicks into productive sales and the advertising that results is valuable to us as well. We’re using new deep learning models to show more relevant sponsored products. We continue to improve the relevancy of the ads being shown on the product detail pages and we’ve seen rapid adoption of the video creative format for sponsored brands, among other things. So you’re seeing a little bit more than just traffic. And again, very pleased with the performance of that team and of the receptiveness of our customers, our vendors, our authors and sellers to advertising products. We think it’s also very valuable for consumers as well in helping them find things more easily and discover new brands.

On Q2 guidance, yes, I would say we are projecting again continued strength across all of our segments. We will remind you that Prime Day has been scheduled for later in Q2 and we’ll have more on that as the quarter unfolds. So that’s a consideration as well.

Operator

Your next question comes from the line of Doug Anmuth with JPMorgan. Please proceed with your question.

Doug Anmuth — JPMorgan — Analyst

Thanks for taking the questions. Just want to follow-up there on Prime Day, Brian. Can you help us at all, just in terms of quantifying or just how you’re thinking about the contribution within that 2Q guidance? And then also just on the rationale for timing given historically in 3Q has moved to 4Q last year and then now in 2Q? And then maybe if you could also just talk about the football deal of the strategy there, how that drives engagement and strengthens the ecosystem and also what it means for ad dollars for you? Thanks.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

First on Prime Day. The — we’re not quantifying the size of it. I think there is some pretty good estimates out there that you probably can leverage. But other than to say it’s contemplated in this guidance. On the timing, last year we had intended to hold Prime Day earlier. We — there are a number of factors, The Olympics, which are still out there this year factored in some — many areas. July is big vacation months. So it might be better to have for customers, sellers and vendors to experiment the different time period and experimented the other way. Obviously, in 2020 by moving it into October, but we believe it might be a better timing later in Q2. So that’s what we’re testing this year.

On Thursday Night Football, I would say just — I’m not sure I could size the advertising opportunity right now, but we’re very excited to have the exclusive content for Thursday Night Football, of course we’ve broadcast Thursday Night Football for a number of years now shared that responsibility with a lot of other partners. We think we can do some really new and innovative things with that — those games with the NFL and we’re looking forward to kicking that off in earnest.

Operator

Your next question comes from the line of Justin Post with Bank of America. Please proceed with your question.

Justin Post — Bank of America — Analyst

Great, thank you. Two questions. First on AWS acceleration. Was that at all related to transaction volumes coming back. So may be more cyclical sectors and could 2Q see even more of that? And then secondly, I think in your release you talked about 175 million Prime members watching video. There’s going to be users, so just wondering what you see as the effect on your retail business from that. Any update you can provide on content spending and how you think about Prime Video as a driver for overall Amazon? Thank you.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

I’m concerned about that dog. Are you being chased by it, or is that your dog. Maybe dropped off. So let me start on the AWS acceleration. We wouldn’t point to any particular customer group. We are seeing great usage and expansion across a number of industries and a number of types of customers from startups all the way to enterprises. To put it little bit in perspective for you, Q1 of 2019 we were at $31 billion run rate. By last year we’ve increased that to $41 billion revenue run rate, which is a 32% increase. This year, we’re up to a $54 billion annualized run rate, which is — while also 32% year-over-year growth. It added $13 billion of revenue in the last 12 months as opposed to 10 — prior $10 billion in the prior 12 months before that. So the percentages can be little deceiving. I would encourage you to look at the absolute dollar growth, although both were very strong this quarter. So we are seeing again strength across the board. We have — from confidence that we offer a lot of advantages to AWS customers, from functionality to a vibrant and robust partner ecosystem and then really we also have less downtime and better security, which I think is super important to all of our customers especially security nowadays. So that’s on AWS. On content, Dave, why don’t you pickup that.

Dave Fildes — Director, Investor Relations

Just in terms of strategy, I think there’s probably nothing new or surprising, but just to reiterate it. We look at Prime Video as a component of the broader Prime membership and making sure it’s driving adoption and retention as it is. It’s a significant acquisition channel in Prime countries and we look at it and see that members who watch video have higher free trial conversion rates, higher renewal rates, higher overall engagement and there’s great examples of places like Brazil where you launch a video only subscription for example that preceded the broader Prime membership with shipping components and that was as an example a great way to expose people to Amazon. And as we launched a broader Prime in Brazil, it was a great mechanism to get folks into that program. So a lot of kind of different experiences there, but as the — would indicate a lot more people are continuing to enjoy it and I think the Studios team has done a great job really striving to be the best home for talent, getting a lot of diverse artists and filmmakers, and I think folks are noticing that both critically, but of course, just in terms of viewership. A lot of good momentum there.

Just in terms of spend, we’d just say, we continue to expect to grow that on an absolute basis and invest in that beyond our original content Brian talked about Live Sports and a lot of the great opportunities to feed into that too. So a lot of continued excitement there.

Operator

Our final question comes from Brian Nowak with Morgan Stanley. Please proceed with your question.

Brian Nowak — Morgan Stanley — Analyst

Thanks for taking my questions. I have two. Brian, I wanted to ask you one high level one. You guys have done such a great job building out your network and sort of providing consumers with access to many categories of goods. Give us a couple of examples of areas where you see room for improvement or what areas are you most focused on when you look across all the categories, delivery experience, the countries to invest in and innovate to really improve the consumer offering. That’s one. And then secondly, can you just talk to us about sort of what you’ve learned about the Echo [Phonetic] journey, areas you’ve had success and still existing opportunities for Echo to have a larger installed base and is more of an impact on the ecosystem? Thanks.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Sure. Thanks, Brian for your questions. There is always a lot of areas we’re working to improve upon. I think generally the speed of innovation is very quick at Amazon. But we always wanted to be quicker and we always wanted to be globally consistent and we want to take the best practices from one country to make sure we’re doing at the same way everywhere. I think currently on our list right now is that we are in the process of re-getting our one day shipping percentages back up to where they were pre-pandemic. We are there in Europe and starting to see in Europe, not only strong one day, but also more broad same day selection, like it tend to go hand-in-hand.

In the US, we’ve made improvements to just consistently getting better. I would say the end delivery is really a function of everything before it and how well we can handle and process in a timely manner all the orders in North America. It’s been challenged by the volumes, but it’s also been challenged by the rapid expansion of space, but we’re making progress, nonetheless, and we hope to get that even higher in 2021. We’re very excited about the adoption of our Prime Benefits, pretty much across the board, especially with the digital benefits. We are looking forward to some new content, even though we’re very happy with the performance, the Studios business and the Content Awards that they were now made for and we’re able to garner this year with some big things on the horizon, including Lord of the Rings and we’re very excited about getting that type of content to our Prime members quicker.

Dave Fildes — Director, Investor Relations

Yes, Brian. And then just on your question on kind of Echo and if could take it up a level really broadly, Alexa and devices. Our goal with that has been and continues to make customers’ lives easier and really more convenient and we want to continue to bring more hardware choices in that case, but also make Alexa smarter with new features as we talked about before, advances in AI machine learning and really deliver tools that help developers and the makers of those devices built for and with Alexa, because in that community, it’s not just our Echo devices, but also a variety of third-party device manufacturers. We’ve seen a lot of momentum with smart home capabilities and working with them. And so, I think with us as with so many other areas, it’s about making sure we’re maintaining a really high bar in a lot of that with that type of technology is speech recognition capabilities, the intelligence behind it in getting smarter and some of that comes responsibility, the customers have higher and higher expectations for the capabilities something like Alexa and that’s great.

I mean, I think if we just look back over the last 12 months and what’s been going on. The role that customer usage has played with Alexa and the behavior there, you’ve seen as people have been isolated or unable to be as mobile, you see customers are using Alexa to help them stay connected with loved ones. We’re seeing customers using Alexa to stay healthy. So whether that’s interacting with health-related tips or fitness apps or increased usage with the Fire TV and they’re looking to Alexa for information and so using our devices and the services and the Alexa enabled services for things like educational apps. And then of course part of that too is making sure they stay entertained when they are trapped or couped up and don’t have other access. So I think you can just see in that example a lot of really good utility and it just I think encourages our teams to — harder to serve customers when you see those types of examples and how they resonate with customers.

Brian T. Olsavsky — Senior Vice President and Chief Financial Officer

Thanks for joining us today on the call and for your questions. A replay will be available on our Investor Relations website for at least three months. We appreciate your interest in Amazon and we look forward to talking with you again next quarter.