Amazon.com, Inc. (NASDAQ:AMZN) Q2 2019 Earnings Conference Call Transcript
Jul 25, 2019 • 05:30 pm ET
Thank you. [Operator Instructions] Our first question is coming from the line of Brian Nowak with Morgan Stanley. Please proceed.
Thanks for taking my question. I have two. It looks like the overall retail business decelerated pretty nicely in the quarter. Maybe could you just talk about whether 24-hour shipping is driving that and if so, which specific categories of consumption are you seeing really drive that acceleration? And then sort of the opposite question on AWS which has slowed down a little bit. Can you just talk about some of the puts and takes in the AWS revenue growth this quarter versus the prior Q? Thanks.
Brian T. Olsavsky
Sure, Brian. Thanks for your questions. Let me start with AWS. We feel it as a really strong quarter. We had a growth year-over-year on our run rate from $24 billion to $33 billion, so 37% growth. The $9 billion that we increased our run rate by was second only to Q4 of last year as far as our history. So if you can tell, we've been pretty transparent with our AWS revenue and income numbers, we've been breaking out since 2015. And we're very happy with the growth in absolute dollar terms that we're seeing the pick-up from customers and their usage, their increased pace of enterprise migrations, increased adoption of our services especially our machine learning services and continually -- again AWS has been chosen as a partner to many companies, because of our leadership position both in technology, our vibrant partner ecosystem and also the stronger security that we offer.
On your question about One-Day, let me update you on that because obviously that was a big topic of conversation last quarter and you can see that it's starting to show up in our results in Q2. So we are really pleased with the customer response into our growing One-Day offering. In Q2 we had a meaningful step up in the One-Day shipments, primarily in North America and One-Day volume was accelerating throughout the quarter. The ops team did a fantastic job here not only at being able to expand One-Day selection and delivery capacity, but also preparing for and handling some very high volumes on Prime Day earlier in the month.
So we're in the middle of a journey here, we expect to see a continued ramp of the One-Day selection and availability for the next few quarters, both in North America and International. International was up slightly in Q2, but for the most part, the improvement in delivery speeds will be in future quarters there. On the cost side, we talked last time about $800 million estimate of transportation cost to supply One-Day -- the additional One-Day in Q2. We were a little bit higher than that number in total costs. We saw some additional transition costs in our warehouses, we saw some lower productivity as we were expanding rather quickly both local capacity and the up-season [Phonetic] also in delivering networks.
We also saw some cost from buying