AMZN Cybersecurity

mechanisms, controls, technologies, methods, systems, and other processes that are designed to prevent, detect, or mitigate data loss, theft, misuse, unauthorized access, or other security incidents or vulnerabilities affecting the data. The data include confidential, proprietary, and business and personal information that we collect, process, store, and transmit as part of our business, including on behalf of third parties. We also use systems and processes designed to reduce the impact of a security incident at a third-party vendor or customer. Additionally, we use processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party technology and systems, including: technology and systems we use for encryption and authentication; employee email; content delivery to customers; back-office support; and other functions.


AMZN Cybersecurity

As part of our risk management process, we conduct application security assessments, vulnerability management, penetration testing, security audits, and ongoing risk assessments. We also maintain a variety of incident response plans that are utilized when incidents are detected. We require employees with access to information systems, including all corporate employees, to undertake data protection and cybersecurity training and compliance programs annually.


AMZN Cybersecurity

We have a unified and centrally-coordinated team, led by our chief security officer, that is responsible for implementing and maintaining centralized cybersecurity and data protection practices at Amazon in close coordination with senior leadership and other teams across Amazon. Reporting to our chief security officer are a number of experienced chief information security officers responsible for various parts of our business, including AWS, each of whom is supported by a team of trained cybersecurity professionals. In addition to our extensive in-house cybersecurity capabilities, at times we also engage assessors, consultants, auditors, or other third parties to assist with assessing, identifying, and managing cybersecurity risks.


AMZN Cybersecurity

Our cybersecurity risks and associated mitigations are evaluated by senior leadership, including as part of our enterprise risk assessments that are reviewed by the Audit Committee and our Board of Directors. Such risks and mitigations are also subject to oversight by the Security Committee of our Board of Directors. Additional information about cybersecurity risks we face is discussed in Item 1A of Part I, “Risk Factors,” under the heading “We Could Be Harmed by Data Loss or Other Security Breaches,” which should be read in conjunction with the information above.


AMZN Cybersecurity

The Security Committee, which is comprised of independent directors, oversees our policies and procedures for protecting our cybersecurity infrastructure and for compliance with applicable data protection and security regulations, and related risks. The Security Committee receives reports regarding such risks from management, including our chief security officer, and reports to the Board at least annually. The Security Committee also oversees the Board’s response to any significant cybersecurity incidents.


AMZN Cybersecurity

Our chief security officer, who has extensive cybersecurity knowledge and skills gained from over 15 years of work experience on the security team at Amazon and an extensive career in the technology and cybersecurity industries as a senior executive in the federal government, heads the team responsible for implementing and maintaining cybersecurity and data protection practices at Amazon and reports directly to the Chief Executive Officer.


AMZN Properties

As of December 31, 2023, we operated the following facilities (in thousands): Description of Use##Leased Square Footage (1)##Owned Square Footage##Location Office space##29,655##9,222##North America Office space##24,528##1,802##International Physical stores (2)##22,871##707##North America Physical stores (2)##255##—##International Fulfillment, data centers, and other##413,017##25,630##North America Fulfillment, data centers, and other##173,765##14,802##International Total##664,091##52,163##


AMZN ___________________

(1)For leased properties, represents the total leased space excluding sub-leased space.


AMZN ___________________

(2)This includes 600 North America and 28 International stores as of December 31, 2023. Segment##Leased Square Footage (1)##Owned Square Footage (1) North America##424,145##15,438 International##165,329##7,931 AWS##20,434##17,770 Total##609,908##41,139


AMZN ___________________

(1)Segment amounts exclude corporate facilities. Shared facilities are allocated among the segments based on usage and primarily relate to facilities that hold our technology infrastructure. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment Information.”


AMZN ___________________

We own and lease our corporate headquarters in Washington’s Puget Sound region and Arlington, Virginia.


AMZN Legal Proceedings

See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings.”


AMZN Mine Safety Disclosures

Not applicable.


AMZN Mine Safety Disclosures

Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities


AMZN Market Information

Our common stock is traded on the Nasdaq Global Select Market under the symbol “AMZN.”


AMZN Holders

As of January 24, 2024, there were 11,656 shareholders of record of our common stock, although there is a much larger number of beneficial owners.


AMZN Recent Sales of Unregistered Securities

None.


AMZN Issuer Purchases of Equity Securities

None.


AMZN Reserved

Management’s Discussion and Analysis of Financial Condition and Results of Operations


AMZN Forward-Looking Statements

This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding guidance, industry prospects, or future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions and customer demand and spending, 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, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity. In addition, global economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of these risks. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results or outcomes to differ significantly from management’s expectations, are described in greater detail in Item 1A of Part I, “Risk Factors.”


AMZN Overview

Our primary source of revenue is the sale of a wide range of products and services to customers. The products offered through our stores include merchandise and content we have purchased for resale and products offered by third-party sellers, and we also manufacture and sell electronic devices and produce media content. Generally, we recognize gross revenue from items we sell from our inventory as product sales and recognize our net share of revenue of items sold by third-party sellers as service sales. We seek to increase unit sales across our stores, through increased product selection, across numerous product categories. We also offer other services such as compute, storage, and database offerings, fulfillment, advertising, publishing, and digital content subscriptions.


AMZN Overview

Our financial focus is on long-term, sustainable growth in free cash flows. Free cash flows are driven primarily by increasing operating income and efficiently managing accounts receivable, inventory, accounts payable, and cash capital expenditures, including our decision to purchase or lease property and equipment. Increases in operating income primarily result from increases in sales of products and services and efficiently managing our operating costs, partially offset by investments we make in longer-term strategic initiatives, including capital expenditures focused on improving the customer experience. To increase sales of products and services, we focus on improving all aspects of the customer experience, including lowering prices, improving availability, offering faster delivery and performance times, increasing selection, producing original content, increasing product categories and service offerings, expanding product information, improving ease of use, improving reliability, and earning customer trust. See “Results of Operations — Non-GAAP Financial Measures” below for additional information on our non-GAAP free cash flows financial measures.


AMZN Overview

We seek to reduce our variable costs per unit and work to leverage our fixed costs. Our variable costs include product and content costs, payment processing and related transaction costs, picking, packaging, and preparing orders for shipment, transportation, customer service support, costs necessary to run AWS, and a portion of our marketing costs. Our fixed costs include the costs necessary to build and run our technology infrastructure; to build, enhance, and add features to our online stores, web services, electronic devices, and digital offerings; and to build and optimize our fulfillment network. Variable costs generally change directly with sales volume, while fixed costs generally are dependent on the timing of capacity needs, geographic expansion, category expansion, and other factors. To decrease our variable costs on a per unit basis and enable us to lower prices for customers, we seek to increase our direct sourcing, increase discounts from suppliers, and reduce defects in our processes. To minimize unnecessary growth in fixed costs, we seek to improve process efficiencies and maintain a lean culture.


AMZN Overview

We seek to turn inventory quickly and collect from consumers before our payments to vendors and sellers become due. Because consumers primarily use credit cards in our stores, our receivables from consumers settle quickly. We expect variability in inventory turnover over time since it is affected by numerous factors, including our product mix, the mix of sales by us and by third-party sellers, our continuing focus on in-stock inventory availability and selection of product offerings, supply chain disruptions and resulting vendor lead times, our investment in new geographies and product lines, and the extent to which we choose to utilize third-party fulfillment providers. We also expect some variability in accounts payable days over time since they are affected by several factors, including the mix of product sales, the mix of sales by third-party sellers, the mix


AMZN Overview

of suppliers, seasonality, and changes in payment and other terms over time, including the effect of balancing pricing and timing of payment terms with suppliers.


AMZN Overview

We expect spending in technology and infrastructure will increase over time as we add computer scientists, designers, software and hardware engineers, and merchandising employees. Our technology and infrastructure investment and capital spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and operations. We seek to invest efficiently in several areas of technology and infrastructure, including AWS, and expansion of new and existing product categories and service offerings, as well as in infrastructure to enhance the customer experience and improve our process efficiencies. We believe that advances in technology, specifically the speed and reduced cost of processing power, data storage and analytics, improved wireless connectivity, and the practical applications of artificial intelligence and machine learning, will continue to improve users’ experience on the internet and increase its ubiquity in people’s lives. To best take advantage of these continued advances in technology, we are investing in AWS, which offers a broad set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services to developers and enterprises of all sizes. We are also investing in initiatives to build and deploy innovative and efficient software and electronic devices as well as other initiatives including the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services.


AMZN Overview

We seek to efficiently manage shareholder dilution while maintaining the flexibility to issue shares for strategic purposes, such as financings, acquisitions, and aligning employee compensation with shareholders’ interests. We utilize restricted stock units as our primary vehicle for equity compensation because we believe this compensation model aligns the long-term interests of our shareholders and employees. In measuring shareholder dilution, we include all vested and unvested stock awards outstanding, without regard to estimated forfeitures. Total shares outstanding plus outstanding stock awards were 10.6 billion and 10.8 billion as of December 31, 2022 and 2023.


AMZN Overview

Our financial reporting currency is the U.S. Dollar and changes in foreign exchange rates significantly affect our reported results and consolidated trends. For example, if the U.S. Dollar weakens year-over-year relative to currencies in our international locations, our consolidated net sales and operating expenses will be higher than if currencies had remained constant. Likewise, if the U.S. Dollar strengthens year-over-year relative to currencies in our international locations, our consolidated net sales and operating expenses will be lower than if currencies had remained constant. We believe that our increasing diversification beyond the U.S. economy through our growing international businesses benefits our shareholders over the long-term. We also believe it is useful to evaluate our operating results and growth rates before and after the effect of currency changes.


AMZN Overview

In addition, the remeasurement of our intercompany balances can result in significant gains and losses associated with the effect of movements in foreign exchange rates. Currency volatilities may continue, which may significantly impact (either positively or negatively) our reported results and consolidated trends and comparisons.


AMZN Overview

For additional information about each line item addressed above, refer to Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures.”


AMZN Overview

Our Annual Report on Form 10-K for the year ended December 31, 2022 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2021 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


AMZN Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“GAAP”) requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company. Based on this definition, we have identified the critical accounting estimates addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. For additional information, see Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures.” Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.


AMZN Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product


AMZN Inventories

vendors, or liquidations, and expected recoverable values of each disposition category. These assumptions about future disposition of inventory are inherently uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future. As a measure of sensitivity, for every 1% of additional inventory valuation allowance as of December 31, 2023, we would have recorded an additional cost of sales of approximately $355 million.


AMZN Inventories

In addition, we enter into supplier commitments for certain electronic device components and certain products. These commitments are based on forecasted customer demand. If we reduce these commitments, we may incur additional costs.


AMZN Income Taxes

We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. In addition, our actual and forecasted earnings are subject to change due to economic, political, and other conditions and significant judgment is required in determining our ability to use our deferred tax assets.


AMZN Income Taxes

Our effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special tax regimes, changes in foreign exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, changes in our deferred tax assets and liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions. In addition, a number of countries have enacted or are actively pursuing changes to their tax laws applicable to corporate multinationals.


AMZN Income Taxes

We are also currently subject to tax controversies in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us. Developments in an audit, investigation, or other tax controversy could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical income tax provisions and accruals.


AMZN Liquidity and Capital Resources

Cash flow information is as follows (in millions): ######Year Ended December 31,#### ####2022######2023 Cash provided by (used in):########## Operating activities##$##46,752####$##84,946 Investing activities####(37,601)######(49,833) Financing activities####9,718######(15,879)


AMZN Liquidity and Capital Resources

Our principal sources of liquidity are cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, which, at fair value, were $70.0 billion and $86.8 billion as of December 31, 2022 and 2023. Amounts held in foreign currencies were $18.3 billion and $23.5 billion as of December 31, 2022 and 2023. Our foreign currency balances include British Pounds, Canadian Dollars, Euros, Indian Rupees, and Japanese Yen.


AMZN Liquidity and Capital Resources

Cash provided by (used in) operating activities was $46.8 billion and $84.9 billion in 2022 and 2023. Our operating cash flows result primarily from cash received from our consumer, seller, developer, enterprise, and content creator customers, and advertisers, offset by cash payments we make for products and services, employee compensation, payment processing and related transaction costs, operating leases, and interest payments. Cash received from our customers and other activities generally corresponds to our net sales. The increase in operating cash flow in 2023, compared to the prior year, was due to an increase in net income (loss), excluding non-cash expenses, and changes in working capital. Working capital at any specific point in time is subject to many variables, including variability in demand, inventory management and category expansion, the timing of cash receipts and payments, customer and vendor payment terms, and fluctuations in foreign exchange rates.


AMZN Liquidity and Capital Resources

Cash provided by (used in) investing activities corresponds with cash capital expenditures, including leasehold improvements, incentives received from property and equipment vendors, proceeds from asset sales, cash outlays for


AMZN Liquidity and Capital Resources

acquisitions, investments in other companies and intellectual property rights, and purchases, sales, and maturities of marketable securities. Cash provided by (used in) investing activities was $(37.6) billion and $(49.8) billion in 2022 and 2023, with the variability caused primarily by purchases, sales, and maturities of marketable securities and cash capital expenditures. Cash capital expenditures were $58.3 billion, and $48.1 billion in 2022 and 2023, which primarily reflect investments in technology infrastructure (the majority of which is to support AWS business growth) and in additional capacity to support our fulfillment network, which investments we expect to increase in 2024. We made cash payments, net of acquired cash, related to acquisition and other investment activity of $8.3 billion and $5.8 billion in 2022 and 2023. We funded the acquisitions of MGM Holdings Inc. in 2022 and 1Life Healthcare, Inc. (One Medical) in 2023 with cash on hand. In 2023, we invested $1.25 billion in a note from Anthropic, PBC, which is convertible into equity. We have an agreement that expires in Q1 2024 to invest up to an additional $2.75 billion in a second convertible note.


AMZN Liquidity and Capital Resources

Cash provided by (used in) financing activities was $9.7 billion and $(15.9) billion in 2022 and 2023. Cash inflows from financing activities resulted from proceeds from short-term debt, and other and long-term-debt of $62.7 billion and $18.1 billion in 2022 and 2023. Cash outflows from financing activities resulted from repurchases of common stock in 2022, payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $53.0 billion and $34.0 billion in 2022 and 2023. Property and equipment acquired under finance leases was $675 million and $642 million in 2022 and 2023.


AMZN Liquidity and Capital Resources

We had no borrowings outstanding under the two unsecured revolving credit facilities or the commercial paper programs, we had $682 million of borrowings outstanding under the secured revolving credit facility, and the entire amount of the term loan has been repaid as of December 31, 2023. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” for additional information.


AMZN Liquidity and Capital Resources

As of December 31, 2023, cash, cash equivalents, and marketable securities held by foreign subsidiaries were $4.7 billion. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.


AMZN Liquidity and Capital Resources

Our U.S. taxable income is reduced by accelerated depreciation deductions and increased by the impact of capitalized research and development expenses. U.S. tax rules provide for enhanced accelerated depreciation deductions by allowing us to expense a portion of qualified property, primarily equipment. These enhanced deductions are scheduled to phase out annually from 2023 through 2026. Our federal tax provision included a partial accelerated depreciation deduction election for 2021, and a full election for 2022 and 2023. Additionally, effective January 1, 2022, research and development expenses are required to be capitalized and amortized for U.S. tax purposes, which delays the deductibility of these expenses. Cash paid for U.S. (federal and state) and foreign income taxes (net of refunds) totaled $6.0 billion and $11.2 billion for 2022 and 2023.


AMZN Liquidity and Capital Resources

As of December 31, 2022 and 2023, restricted cash, cash equivalents, and marketable securities were $365 million and $503 million. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” and “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies” for additional discussion of our principal contractual commitments, as well as our pledged assets. Additionally, we have purchase obligations and open purchase orders, including for inventory and capital expenditures, that support normal operations and are primarily due in the next twelve months. These purchase obligations and open purchase orders are generally cancellable in full or in part through the contractual provisions.


AMZN Liquidity and Capital Resources

We believe that cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, as well as our borrowing arrangements, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.” We continually evaluate opportunities to sell additional equity or debt securities, obtain credit facilities, obtain finance and operating lease arrangements, enter into financing obligations, repurchase common stock, pay dividends, or repurchase, refinance, or otherwise restructure our debt for strategic reasons or to further strengthen our financial position.


AMZN Liquidity and Capital Resources

The sale of additional equity or convertible debt securities would be dilutive to our shareholders. In addition, we will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services, capital infrastructure, and technologies, which might affect our liquidity requirements or cause us to secure additional financing, or issue additional equity or debt securities. There can be no assurance that additional credit lines or financing instruments will be available in amounts or on terms acceptable to us, if at all. In addition, economic conditions and actions by policymaking bodies are contributing to changing interest rates and significant capital market volatility, which, along with any increases in our borrowing levels, could increase our future borrowing costs.


AMZN Results of Operations

We have organized our operations into three segments: North America, International, and AWS. These segments reflect the way the Company evaluates its business performance and manages its operations. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment Information.”


AMZN Overview

Macroeconomic factors, including inflation, increased interest rates, significant capital market and supply chain volatility, and global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. In addition, changes in fuel, utility, and food costs, interest rates, and economic outlook may impact customer demand and our ability to forecast consumer spending patterns. We also expect the current macroeconomic environment and enterprise customer cost optimization efforts to impact our AWS revenue growth rates. We expect some or all of these factors to continue to impact our operations into Q1 2024.


AMZN Net Sales

Net sales include product and service sales. Product sales represent revenue from the sale of products and related shipping fees and digital media content where we record revenue gross. Service sales primarily represent third-party seller fees, which includes commissions and any related fulfillment and shipping fees, AWS sales, advertising services, Amazon Prime membership fees, and certain digital media content subscriptions. Net sales information is as follows (in millions): ########Year Ended December 31,###### ####2022########2023## Net Sales:############## North America##$##315,880######$##352,828## International####118,007########131,200## AWS####80,096########90,757## Consolidated##$##513,983######$##574,785## Year-over-year Percentage Growth (Decline):############## North America####13##%######12##% International####(8)########11## AWS####29########13## Consolidated####9########12## Year-over-year Percentage Growth, excluding the effect of foreign exchange rates:############## North America####13##%######12##% International####4########11## AWS####29########13## Consolidated####13########12## Net Sales Mix:############## North America####61##%######61##% International####23########23## AWS####16########16## Consolidated####100##%######100##%


AMZN Net Sales

Sales increased 12% in 2023, compared to the prior year. Changes in foreign exchange rates reduced net sales by $71 million in 2023. For a discussion of the effect of foreign exchange rates on sales growth, see “Effect of Foreign Exchange Rates” below.


AMZN Net Sales

North America sales increased 12% in 2023, compared to the prior year. The sales growth primarily reflects increased unit sales, primarily by third-party sellers, advertising sales, and subscription services. Increased unit sales were driven largely by our continued focus on price, selection, and convenience for our customers, including from our shipping offers.


AMZN Net Sales

International sales increased 11% in 2023, compared to the prior year. The sales growth primarily reflects increased unit sales, primarily by third-party sellers, advertising sales, and subscription services. Increased unit sales were driven largely by our continued focus on price, selection, and convenience for our customers, including from our shipping offers. Changes in foreign exchange rates increased International net sales by $88 million in 2023.


AMZN Net Sales

AWS sales increased 13% in 2023, compared to the prior year. The sales growth primarily reflects increased customer usage, partially offset by pricing changes, primarily driven by long-term customer contracts.


AMZN Operating Income (Loss)

Operating income (loss) by segment is as follows (in millions): ######Year Ended December 31,#### ####2022######2023 Operating Income (Loss)########## North America##$##(2,847)####$##14,877 International####(7,746)######(2,656) AWS####22,841######24,631 Consolidated##$##12,248####$##36,852


AMZN Operating Income (Loss)

Operating income was $12.2 billion and $36.9 billion for 2022 and 2023. We believe that operating income is a more meaningful measure than gross profit and gross margin due to the diversity of our product categories and services.


AMZN Operating Income (Loss)

The North America operating income in 2023, as compared to the operating loss in the prior year, is primarily due to increased unit sales and increased advertising sales, partially offset by increased shipping and fulfillment costs and increased technology and infrastructure costs.


AMZN Operating Income (Loss)

The decrease in International operating loss in absolute dollars in 2023, compared to the prior year, is primarily due to increased unit sales and increased advertising sales, partially offset by increased fulfillment and shipping costs and increased technology and infrastructure costs. Changes in foreign exchange rates positively impacted operating loss by $246 million in 2023.


AMZN Operating Income (Loss)

The increase in AWS operating income in absolute dollars in 2023, compared to the prior year, is primarily due to increased sales, partially offset by increased payroll and related expenses and spending on technology infrastructure, both of which were primarily driven by additional investments to support AWS business growth. Changes in foreign exchange rates positively impacted operating income by $220 million in 2023.


AMZN Operating Expenses

Information about operating expenses is as follows (in millions): ########Year Ended December 31,###### ####2022########2023## Operating Expenses:############## Cost of sales##$##288,831######$##304,739## Fulfillment####84,299########90,619## Technology and infrastructure####73,213########85,622## Sales and marketing####42,238########44,370## General and administrative####11,891########11,816## Other operating expense (income), net####1,263########767## Total operating expenses##$##501,735######$##537,933## Year-over-year Percentage Growth (Decline):############## Cost of sales####6##%######6##% Fulfillment####12########7## Technology and infrastructure####31########17## Sales and marketing####30########5## General and administrative####35########(1)## Other operating expense (income), net####1,936########(39)## Percent of Net Sales:############## Cost of sales####56.2##%######53.0##% Fulfillment####16.4########15.8## Technology and infrastructure####14.2########14.9## Sales and marketing####8.2########7.7## General and administrative####2.3########2.1## Other operating expense (income), net####0.2########0.1##


AMZN Cost of Sales

Cost of sales primarily consists of the purchase price of consumer products, inbound and outbound shipping costs, including costs related to sortation and delivery centers and where we are the transportation service provider, and digital media content costs where we record revenue gross, including video and music.


AMZN Cost of Sales

The increase in cost of sales in absolute dollars in 2023, compared to the prior year, is primarily due to increased product and shipping costs resulting from increased sales, partially offset by fulfillment network efficiencies and lower transportation rates. Changes in foreign exchange rates reduced cost of sales by $254 million in 2023.


AMZN Cost of Sales

Shipping costs were $83.5 billion and $89.5 billion in 2022 and 2023. Shipping costs to receive products from our suppliers are included in our inventory and recognized as cost of sales upon sale of products to our customers. We expect our cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate, we use more expensive shipping methods, and we offer additional services. We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies. We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.


AMZN Cost of Sales

Costs to operate our AWS segment are primarily classified as “Technology and infrastructure” as we leverage a shared infrastructure that supports both our internal technology requirements and external sales to AWS customers.


AMZN Fulfillment

Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International fulfillment centers, physical stores, and customer service centers and payment processing costs. While AWS payment processing and related transaction costs are included in “Fulfillment,” AWS costs are primarily classified as “Technology and infrastructure.” Fulfillment costs as a percentage of net sales may vary due to several factors, such as payment processing and related transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and


AMZN Fulfillment

fulfilled, the extent to which third-party sellers utilize Fulfillment by Amazon services, timing of fulfillment network and physical store expansion, the extent we utilize fulfillment services provided by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our customer self-service features. Additionally, sales by our sellers have higher payment processing and related transaction costs as a percentage of net sales compared to our retail sales because payment processing costs are based on the gross purchase price of underlying transactions.


AMZN Fulfillment

The increase in fulfillment costs in absolute dollars in 2023, compared to the prior year, is primarily due to increased sales and investments in our fulfillment network, partially offset by fulfillment network efficiencies. Changes in foreign exchange rates increased fulfillment costs by $52 million in 2023.


AMZN Fulfillment

We seek to expand our fulfillment network to accommodate a greater selection and in-stock inventory levels and to meet anticipated shipment volumes from sales of our own products as well as sales by third parties for which we provide the fulfillment services. We regularly evaluate our facility requirements.


AMZN Technology and Infrastructure

Technology and infrastructure costs include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and infrastructure costs. Infrastructure costs include servers, networking equipment, and data center related depreciation and amortization, rent, utilities, and other expenses necessary to support AWS and other Amazon businesses. Collectively, these costs reflect the investments we make in order to offer a wide variety of products and services to our customers, including expenditures related to initiatives to build and deploy innovative and efficient software and electronic devices and the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services.


AMZN Technology and Infrastructure

We seek to invest efficiently in numerous areas of technology and infrastructure so we may continue to enhance the customer experience and improve our process efficiency through rapid technology developments, while operating at an ever increasing scale. Our technology and infrastructure investment and capital spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and operations. We expect spending in technology and infrastructure to increase over time as we continue to add employees and infrastructure. These costs are allocated to segments based on usage. The increase in technology and infrastructure costs in absolute dollars in 2023, compared to the prior year, is primarily due to an increase in spending on infrastructure and increased payroll and related costs associated with technical teams responsible for expanding our existing products and services and initiatives to introduce new products and service offerings.


AMZN Sales and Marketing

Sales and marketing costs include advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales commissions related to AWS. We direct customers to our stores primarily through a number of marketing channels, such as our sponsored search, social and online advertising, third-party customer referrals, television advertising, and other initiatives. Our marketing costs are largely variable, based on growth in sales and changes in rates. To the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels shifts, we would expect to see a corresponding change in our marketing costs.


AMZN Sales and Marketing

The increase in sales and marketing costs in absolute dollars in 2023, compared to the prior year, is primarily due to increased payroll and related expenses for personnel engaged in marketing and selling activities.


AMZN Sales and Marketing

While costs associated with Amazon Prime membership benefits and other shipping offers are not included in sales and marketing expense, we view these offers as effective worldwide marketing tools, and intend to continue offering them indefinitely.


AMZN General and Administrative

General and administrative costs were $11.9 billion and $11.8 billion during 2022 and 2023, and were primarily related to payroll and related expenses and professional fees.


AMZN Other Operating Expense (Income), Net

Other operating expense (income), net was $1.3 billion and $767 million during 2022 and 2023, and was primarily related to asset impairments for physical store closures in 2022 and for fulfillment network facilities and physical store closures in 2023, and the amortization of intangible assets.


AMZN Interest Income and Expense

Our interest income was $989 million and $2.9 billion during 2022 and 2023, primarily due to an increase in prevailing rates. We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term marketable debt securities. Our interest income corresponds with the average balance of invested funds based on the prevailing rates, which vary depending on the geographies and currencies in which they are invested.


AMZN Interest Income and Expense

Interest expense was $2.4 billion and $3.2 billion in 2022 and 2023 and was primarily related to debt and finance leases. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for additional information.


AMZN Interest Income and Expense

Our long-term lease liabilities were $73.0 billion and $77.3 billion as of December 31, 2022 and 2023. Our long-term debt was $67.1 billion and $58.3 billion as of December 31, 2022 and 2023. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for additional information.


AMZN Other Income (Expense), Net

Other income (expense), net was $(16.8) billion and $938 million during 2022 and 2023. The primary components of other income (expense), net are related to equity securities valuations and adjustments, equity warrant valuations, and foreign currency. Included in other income (expense), net in 2022 and 2023 is a marketable equity securities valuation gain (loss) of $(12.7) billion and $797 million from our equity investment in Rivian.


AMZN Income Taxes

Our effective tax rate is subject to significant variation due to several factors, including variability in our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, intercompany transactions, the applicability of special tax regimes, changes in how we do business, acquisitions, investments, developments in tax controversies, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, foreign currency gains (losses), changes in statutes, regulations, case law, and administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax benefits are not recognized. Our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions.


AMZN Income Taxes

We recorded a provision (benefit) for income taxes of $(3.2) billion and $7.1 billion in 2022 and 2023. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 9 — Income Taxes” for additional information.


AMZN Non-GAAP Financial Measures

Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other SEC regulations define and prescribe the conditions for use of certain non-GAAP financial information. Our measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations meet the definition of non-GAAP financial measures.


AMZN Non-GAAP Financial Measures

We provide multiple measures of free cash flows because we believe these measures provide additional perspective on the impact of acquiring property and equipment with cash and through finance leases and financing obligations.


AMZN Free Cash Flow

Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, net of proceeds from sales and incentives.” The following is a reconciliation of free cash flow to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2022 and 2023 (in millions): ######Year Ended December 31,#### ####2022######2023 Net cash provided by (used in) operating activities##$##46,752####$##84,946 Purchases of property and equipment, net of proceeds from sales and incentives####(58,321)######(48,133) Free cash flow##$##(11,569)####$##36,813 Net cash provided by (used in) investing activities##$##(37,601)####$##(49,833) Net cash provided by (used in) financing activities##$##9,718####$##(15,879)


AMZN Free Cash Flow

Free Cash Flow Less Principal Repayments of Finance Leases and Financing Obligations


AMZN Free Cash Flow

Free cash flow less principal repayments of finance leases and financing obligations is free cash flow reduced by “Principal repayments of finance leases” and “Principal repayments of financing obligations.” Principal repayments of finance leases and financing obligations approximates the actual payments of cash for our finance leases and financing obligations. The following is a reconciliation of free cash flow less principal repayments of finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2022 and 2023 (in millions): ######Year Ended December 31,#### ####2022######2023 Net cash provided by (used in) operating activities##$##46,752####$##84,946 Purchases of property and equipment, net of proceeds from sales and incentives####(58,321)######(48,133) Free cash flow####(11,569)######36,813 Principal repayments of finance leases####(7,941)######(4,384) Principal repayments of financing obligations####(248)######(271) Free cash flow less principal repayments of finance leases and financing obligations##$##(19,758)####$##32,158 Net cash provided by (used in) investing activities##$##(37,601)####$##(49,833) Net cash provided by (used in) financing activities##$##9,718####$##(15,879)


AMZN Free Cash Flow

Free Cash Flow Less Equipment Finance Leases and Principal Repayments of All Other Finance Leases and Financing Obligations


AMZN Free Cash Flow

Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations is free cash flow reduced by equipment acquired under finance leases, which is included in “Property and equipment acquired under finance leases, net of remeasurements and modifications,” principal repayments of all other finance lease liabilities, which is included in “Principal repayments of finance leases,” and “Principal repayments of financing obligations.” All other finance lease liabilities and financing obligations consists of property. In this measure, equipment acquired under finance leases is reflected as if these assets had been purchased with cash, which is not the case as these assets have been leased. The following is a reconciliation of free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2022 and 2023 (in millions): ######Year Ended December 31,#### ####2022######2023 Net cash provided by (used in) operating activities##$##46,752####$##84,946 Purchases of property and equipment, net of proceeds from sales and incentives####(58,321)######(48,133) Free cash flow####(11,569)######36,813 Equipment acquired under finance leases (1)####(299)######(310) Principal repayments of all other finance leases (2)####(670)######(683) Principal repayments of financing obligations####(248)######(271) Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations##$##(12,786)####$##35,549 Net cash provided by (used in) investing activities##$##(37,601)####$##(49,833) Net cash provided by (used in) financing activities##$##9,718####$##(15,879)


AMZN ___________________

(1)For the year ended December 31, 2022 and 2023, this amount relates to equipment included in “Property and equipment acquired under finance leases, net of remeasurements and modifications” of $675 million and $642 million.


AMZN ___________________

(2)For the year ended December 31, 2022 and 2023, this amount relates to property included in “Principal repayments of finance leases” of $7,941 million and $4,384 million.


AMZN ___________________

All of these free cash flows measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures. For example, these measures of free cash flows do not incorporate the portion of payments representing principal reductions of debt or cash payments for business acquisitions. Additionally, our mix of property and equipment acquisitions with cash or other financing options may change over time. Therefore, we believe it is important to view free cash flows measures only as a complement to our entire consolidated statements of cash flows.


AMZN Effect of Foreign Exchange Rates

Information regarding the effect of foreign exchange rates, versus the U.S. Dollar, on our net sales, operating expenses, and operating income is provided to show reported period operating results had the foreign exchange rates remained the same as those in effect in the comparable prior year period. The effect on our net sales, operating expenses, and operating income from changes in our foreign exchange rates versus the U.S. Dollar is as follows (in millions): ########Year Ended December 31, 2022############Year Ended December 31, 2023#### ####As Reported####Exchange Rate Effect (1)####At Prior Year Rates (2)####As Reported####Exchange Rate Effect (1)####At Prior Year Rates (2) Net sales##$##513,983##$##15,495##$##529,478##$##574,785##$##71##$##574,856 Operating expenses####501,735####16,356####518,091####537,933####531####538,464 Operating income####12,248####(861)####11,387####36,852####(460)####36,392


AMZN ___________________

(1)Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year period for operating results.


AMZN ___________________

(2)Represents the outcome that would have resulted had foreign exchange rates in the reported period been the same as those in effect in the comparable prior year period for operating results.


AMZN Guidance

We provided guidance on February 1, 2024, in our earnings release furnished on Form 8-K as set forth below. These forward-looking statements reflect Amazon.com’s expectations as of February 1, 2024, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions 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, as well as those outlined in Item 1A of Part I, “Risk Factors.”


AMZN First Quarter 2024 Guidance

•Net sales are expected to be between $138.0 billion and $143.5 billion, or to grow between 8% and 13% compared with first quarter 2023. This guidance anticipates a favorable impact of approximately 40 basis points from foreign exchange rates. •Operating income is expected to be between $8.0 billion and $12.0 billion, compared with $4.8 billion in first quarter 2023. This guidance includes approximately $0.9 billion lower depreciation expense due to an increase in the estimated useful life of our servers beginning on January 1, 2024. •This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.


AMZN Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk for the effect of interest rate changes, foreign currency fluctuations, and changes in the market values of our investments. Information relating to quantitative and qualitative disclosures about market risk is set forth below and in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”


AMZN Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our debt. Our long-term debt is carried at amortized cost and fluctuations in interest rates do not impact our consolidated financial statements. However, the fair value of our long-term debt, which pays interest at a fixed rate, will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest.


AMZN Interest Rate Risk

We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term marketable debt securities. Marketable debt securities with fixed interest rates may have their fair market value adversely affected due to a rise in interest rates, and we may suffer losses in principal if forced to sell securities that have declined in market value due to changes in interest rates. The following table provides information about our cash equivalents and marketable debt securities, including principal cash flows by expected maturity and the related weighted-average interest rates as of December 31, 2023 (in millions, except percentages): ####2024######2025######2026######2027######2028######Thereafter######Total######Estimated Fair Value as of December 31, 2023 Money market funds##$##39,160####$##—####$##—####$##—####$##—####$##—####$##39,160####$##39,160 Weighted average interest rate####5.32##%####—##%####—##%####—##%####—##%####—##%####5.32##%#### Corporate debt securities####25,075######2,227######715######9######—######—######28,026######27,805 Weighted average interest rate####5.13##%####1.30##%####1.51##%####2.33##%####—##%####—##%####4.74##%#### U.S. government and agency securities####552######501######398######50######43######230######1,774######1,699 Weighted average interest rate####3.24##%####1.49##%####1.12##%####0.97##%####0.67##%####1.31##%####1.89##%#### Asset-backed securities####789######349######115######143######13######291######1,700######1,646 Weighted average interest rate####1.34##%####2.09##%####1.20##%####1.67##%####1.66##%####1.33##%####1.51##%#### Foreign government and agency securities####506######—######—######—######—######—######506######505 Weighted average interest rate####5.28##%####—##%####—##%####—##%####—##%####—##%####5.28##%#### Other debt securities####62######46######—######—######—######—######108######104 Weighted average interest rate####0.55##%####1.07##%####—##%####—##%####—##%####—##%####0.78##%#### ##$##66,144####$##3,123####$##1,228####$##202####$##56####$##521####$##71,274###### Cash equivalents and marketable debt securities############################################$##70,919


AMZN Interest Rate Risk

As of December 31, 2023, we had long-term debt with a face value of $67.2 billion, including the current portion, primarily consisting of fixed rate unsecured senior notes. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” for additional information.


AMZN Foreign Exchange Risk

During 2023, net sales from our International segment accounted for 23% of our consolidated revenues. Net sales and related expenses generated from our internationally-focused stores, including within Canada and Mexico (which are included in our North America segment), are primarily denominated in the functional currencies of the corresponding stores and primarily include Euros, British Pounds, and Japanese Yen. The results of operations of, and certain of our intercompany balances associated with, our internationally-focused stores and AWS are exposed to foreign exchange rate fluctuations. Upon consolidation, as foreign exchange rates vary, net sales and other operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances. For example, as a result of fluctuations in foreign exchange rates throughout the year compared to rates in effect the prior year, International segment net sales increased by $88 million in comparison with the prior year.


AMZN Foreign Exchange Risk

We have foreign exchange risk related to foreign-denominated cash, cash equivalents, and marketable securities (“foreign funds”). Based on the balance of foreign funds as of December 31, 2023, of $23.5 billion, an assumed 5%, 10%, and 20% adverse change to foreign exchange would result in declines of $1.2 billion, $2.3 billion, and $4.7 billion.


AMZN Foreign Exchange Risk

We also have foreign exchange risk related to our intercompany balances denominated in various currencies. Based on the intercompany balances as of December 31, 2023, an assumed 5%, 10%, and 20% adverse change to foreign exchange rates would result in losses of $320 million, $640 million, and $1.3 billion, recorded to “Other income (expense), net.”


AMZN Foreign Exchange Risk

See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Effect of Foreign Exchange Rates” for additional information on the effect on reported results of changes in foreign exchange rates.


AMZN Equity Investment Risk

As of December 31, 2023, our recorded value in equity, equity warrant, and convertible debt investments in public and private companies was $9.6 billion. Our equity and equity warrant investments in publicly traded companies, which include our equity investment in Rivian, represent $5.7 billion of our investments as of December 31, 2023, and are recorded at fair value, which is subject to market price volatility. We record our equity warrant investments in private companies at fair value and adjust our equity investments in private companies for observable price changes or impairments. Valuations of private companies are inherently more complex due to the lack of readily available market data. The current global economic conditions provide additional uncertainty. As such, we believe that market sensitivities are not practicable. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures” for additional information.


AMZN INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

##Page Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID: 42)##35 Consolidated Statements of Cash Flows##37 Consolidated Statements of Operations##38 Consolidated Statements of Comprehensive Income (Loss)##39 Consolidated Balance Sheets##40 Consolidated Statements of Stockholders’ Equity##41


AMZN The Board of Directors and Shareholders

Amazon.com, Inc.


AMZN Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Amazon.com, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 1, 2024 expressed an unqualified opinion thereon.


AMZN Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


AMZN Basis for Opinion

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.


AMZN Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


AMZN Uncertain Tax Positions

Description of the Matter As discussed in Notes 1 and 9 of the consolidated financial statements, the Company is subject to income taxes in the U.S. and numerous foreign jurisdictions and during the ordinary course of business, there are many tax positions for which the ultimate tax determination is uncertain. As a result, significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The Company uses significant judgment in (1) determining whether a tax position’s technical merits are more likely than not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition. As of December 31, 2023, the Company reported accrued liabilities of $5.2 billion for various tax contingencies. Auditing the recognition and measurement of the Company’s tax contingencies was challenging because the evaluation of whether a tax position is more likely than not to be sustained and the measurement of the benefit of various tax positions can be complex and involves significant auditor judgment. Management’s evaluation of tax positions is based on interpretations of tax laws and legal rulings, and may be impacted by regulatory changes and judicial and examination activity.


AMZN Uncertain Tax Positions

How We Addressed the Matter in Our Audit We tested controls over the Company’s process to assess the technical merits of its tax contingencies, including controls over: the assessment as to whether a tax position is more likely than not to be sustained; the measurement of the benefit of its tax positions, both initially and on an ongoing basis; and the development of the related disclosures.  We involved our international tax, transfer pricing, and research and development tax professionals in assessing the technical merits of certain of the Company’s tax positions. Depending on the nature of the specific tax position and, as applicable, developments with the relevant tax authorities relating thereto, our procedures included obtaining and examining the Company’s analysis including the Company’s correspondence with such tax authorities and evaluating the underlying facts upon which the tax positions are based. We used our knowledge of and experience with international, transfer pricing, and other income tax laws of the relevant taxing jurisdictions to evaluate the Company’s accounting for its tax contingencies. We evaluated developments in the applicable regulatory environments to assess potential effects on the Company’s positions, including recent decisions in relevant court cases. We analyzed the appropriateness of the Company’s assumptions and the accuracy of the Company’s calculations and data used to determine the amount of tax benefits to recognize. We evaluated the Company’s income tax disclosures in relation to these matters.


AMZN /s/ Ernst & Young LLP

We have served as the Company’s auditor since 1996.


AMZN February 1, 2024

AMAZON.COM, INC.


AMZN CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)

########Year Ended December 31,#### ####2021####2022####2023 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD##$##42,377##$##36,477##$##54,253 OPERATING ACTIVITIES:############ Net income (loss)####33,364####(2,722)####30,425 Adjustments to reconcile net income (loss) to net cash from operating activities:############ Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other####34,433####41,921####48,663 Stock-based compensation####12,757####19,621####24,023 Non-operating expense (income), net####(14,306)####16,966####(748) Deferred income taxes####(310)####(8,148)####(5,876) Changes in operating assets and liabilities:############ Inventories####(9,487)####(2,592)####1,449 Accounts receivable, net and other####(9,145)####(8,622)####(8,348) Other assets####(9,018)####(13,275)####(12,265) Accounts payable####3,602####2,945####5,473 Accrued expenses and other####2,123####(1,558)####(2,428) Unearned revenue####2,314####2,216####4,578 Net cash provided by (used in) operating activities####46,327####46,752####84,946 INVESTING ACTIVITIES:############ Purchases of property and equipment####(61,053)####(63,645)####(52,729) Proceeds from property and equipment sales and incentives####5,657####5,324####4,596 Acquisitions, net of cash acquired, non-marketable investments, and other####(1,985)####(8,316)####(5,839) Sales and maturities of marketable securities####59,384####31,601####5,627 Purchases of marketable securities####(60,157)####(2,565)####(1,488) Net cash provided by (used in) investing activities####(58,154)####(37,601)####(49,833) FINANCING ACTIVITIES:############ Common stock repurchased####—####(6,000)####— Proceeds from short-term debt, and other####7,956####41,553####18,129 Repayments of short-term debt, and other####(7,753)####(37,554)####(25,677) Proceeds from long-term debt####19,003####21,166####— Repayments of long-term debt####(1,590)####(1,258)####(3,676) Principal repayments of finance leases####(11,163)####(7,941)####(4,384) Principal repayments of financing obligations####(162)####(248)####(271) Net cash provided by (used in) financing activities####6,291####9,718####(15,879) Foreign currency effect on cash, cash equivalents, and restricted cash####(364)####(1,093)####403 Net increase (decrease) in cash, cash equivalents, and restricted cash####(5,900)####17,776####19,637 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD##$##36,477##$##54,253##$##73,890


See accompanying notes to consolidated financial statements.


AMAZON.COM, INC.


AMZN CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data)

########Year Ended December 31,#### ####2021####2022####2023 Net product sales##$##241,787##$##242,901##$##255,887 Net service sales####228,035####271,082####318,898 Total net sales####469,822####513,983####574,785 Operating expenses:############ Cost of sales####272,344####288,831####304,739 Fulfillment####75,111####84,299####90,619 Technology and infrastructure####56,052####73,213####85,622 Sales and marketing####32,551####42,238####44,370 General and administrative####8,823####11,891####11,816 Other operating expense (income), net####62####1,263####767 Total operating expenses####444,943####501,735####537,933 Operating income####24,879####12,248####36,852 Interest income####448####989####2,949 Interest expense####(1,809)####(2,367)####(3,182) Other income (expense), net####14,633####(16,806)####938 Total non-operating income (expense)####13,272####(18,184)####705 Income (loss) before income taxes####38,151####(5,936)####37,557 Benefit (provision) for income taxes####(4,791)####3,217####(7,120) Equity-method investment activity, net of tax####4####(3)####(12) Net income (loss)##$##33,364##$##(2,722)##$##30,425 Basic earnings per share##$##3.30##$##(0.27)##$##2.95 Diluted earnings per share##$##3.24##$##(0.27)##$##2.90 Weighted-average shares used in computation of earnings per share:############ Basic####10,117####10,189####10,304 Diluted####10,296####10,189####10,492


AMZN CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions)

########Year Ended December 31,#### ####2021####2022####2023 Net income (loss)##$##33,364##$##(2,722)##$##30,425 Other comprehensive income (loss):############ Foreign currency translation adjustments, net of tax of $47, $100, and $(55)####(819)####(2,586)####1,027 Available-for-sale debt securities:############ Change in net unrealized gains (losses), net of tax of $72, $159, and $(110)####(343)####(823)####366 Less: reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $13, $0, and $(15)####(34)####298####50 Net change####(377)####(525)####416 Other, net of tax of $0, $0, and $(1)####—####—####4 Total other comprehensive income (loss)####(1,196)####(3,111)####1,447 Comprehensive income (loss)##$##32,168##$##(5,833)##$##31,872


AMZN CONSOLIDATED BALANCE SHEETS (in millions, except per share data)

######December 31,#### ####2022######2023 ASSETS########## Current assets:########## Cash and cash equivalents##$##53,888####$##73,387 Marketable securities####16,138######13,393 Inventories####34,405######33,318 Accounts receivable, net and other####42,360######52,253 Total current assets####146,791######172,351 Property and equipment, net####186,715######204,177 Operating leases####66,123######72,513 Goodwill####20,288######22,789 Other assets####42,758######56,024 Total assets##$##462,675####$##527,854 LIABILITIES AND STOCKHOLDERS’ EQUITY########## Current liabilities:########## Accounts payable##$##79,600####$##84,981 Accrued expenses and other####62,566######64,709 Unearned revenue####13,227######15,227 Total current liabilities####155,393######164,917 Long-term lease liabilities####72,968######77,297 Long-term debt####67,150######58,314 Other long-term liabilities####21,121######25,451 Commitments and contingencies (Note 7)########## Stockholders’ equity:########## Preferred stock ($0.01 par value; 500 shares authorized; no shares issued or outstanding)####—######— Common stock ($0.01 par value; 100,000 shares authorized; 10,757 and 10,898 shares issued; 10,242 and 10,383 shares outstanding)####108######109 Treasury stock, at cost####(7,837)######(7,837) Additional paid-in capital####75,066######99,025 Accumulated other comprehensive income (loss)####(4,487)######(3,040) Retained earnings####83,193######113,618 Total stockholders’ equity####146,043######201,875 Total liabilities and stockholders’ equity##$##462,675####$##527,854


AMZN CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions)

######Common Stock#################### ##Shares####Amount####Treasury Stock####Additional Paid-In Capital####Accumulated Other Comprehensive Income (Loss)####Retained Earnings####Total Stockholders’ Equity Balance as of January 1, 2021##10,066##$##105##$##(1,837)##$##42,765##$##(180)##$##52,551##$##93,404 Net income##—####—####—####—####—####33,364####33,364 Other comprehensive income (loss)##—####—####—####—####(1,196)####—####(1,196) Stock-based compensation and issuance of employee benefit plan stock##109####1####—####12,672####—####—####12,673 Balance as of December 31, 2021##10,175####106####(1,837)####55,437####(1,376)####85,915####138,245 Net loss##—####—####—####—####—####(2,722)####(2,722) Other comprehensive income (loss)##—####—####—####—####(3,111)####—####(3,111) Stock-based compensation and issuance of employee benefit plan stock##113####2####—####19,629####—####—####19,631 Common stock repurchased##(46)####—####(6,000)####—####—####—####(6,000) Balance as of December 31, 2022##10,242####108####(7,837)####75,066####(4,487)####83,193####146,043 Net income##—####—####—####—####—####30,425####30,425 Other comprehensive income (loss)##—####—####—####—####1,447####—####1,447 Stock-based compensation and issuance of employee benefit plan stock##141####1####—####23,959####—####—####23,960 Balance as of December 31, 2023##10,383##$##109##$##(7,837)##$##99,025##$##(3,040)##$##113,618##$##201,875


AMZN Description of Business

We seek to be Earth’s most customer-centric company. In each of our segments, we serve our primary customer sets, consisting of consumers, sellers, developers, enterprises, content creators, advertisers, and employees. We serve consumers through our online and physical stores and focus on selection, price, and convenience. We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders using our services, and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. We serve developers and enterprises of all sizes through AWS, which offers a broad set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services. We also manufacture and sell electronic devices. In addition, we provide advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.


AMZN Description of Business

We have organized our operations into three segments: North America, International, and AWS. See “Note 10 — Segment Information.”


AMZN Common Stock Split

On May 27, 2022, we effected a 20-for-1 stock split of our common stock and proportionately increased the number of authorized shares of common stock. All share, restricted stock unit (“RSU”), and per share or per RSU information throughout this Annual Report on Form 10-K has been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common stock.”


AMZN Prior Period Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. “Other assets” were reclassified out of “Accounts receivable, net and other” on our consolidated statements of cash flows.


AMZN Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our health care services and seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.


AMZN Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, impairment of property and equipment and operating leases, valuation and impairment of investments, self-insurance liabilities, and viewing patterns of capitalized video content. Actual results could differ materially from these estimates. For example, in Q4 2023 we completed a useful life study for our servers and are increasing the useful life from five years to six years in January 2024, which, based on servers that are included in “Property and equipment, net” as of December 31, 2023, will have an anticipated impact to our 2024 operating income of $3.1 billion. We had previously increased the useful life of our servers from four years to five years in January 2022.


AMZN Use of Estimates

For the year ended December 31, 2022, we recorded approximately $1.1 billion, of which $720 million was recorded in the fourth quarter, of impairments of property and equipment and operating leases primarily related to physical stores. These charges were recorded in “Other operating expense (income), net” on our consolidated statements of operations and primarily impacted our North America segment. For the year ended December 31, 2022, we also recorded expenses of approximately $480 million, primarily in “Fulfillment”, on our consolidated statements of operations primarily relating to terminating contracts for certain leases not yet commenced as well as other purchase commitments, which primarily impacted our North America segment.


AMZN Use of Estimates

For the year ended December 31, 2022, we recorded approximately $720 million, of which $640 million was recorded in the fourth quarter, of estimated severance costs primarily related to planned role eliminations. These charges were recorded primarily in “Technology and infrastructure,” “Fulfillment,” and “General and administrative” on our consolidated statements of operations and primarily impacted our North America segment.


AMZN Use of Estimates

Charges for impairment, expenses for terminating contracts and other commitments, and severance costs were not material to our consolidated results of operations for the years ended December 31, 2021 and 2023.


AMZN Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions): ########Year Ended December 31,#### ####2021####2022####2023 SUPPLEMENTAL CASH FLOW INFORMATION:############ Cash paid for interest on debt, net of capitalized interest##$##1,098##$##1,561##$##2,608 Cash paid for operating leases##$##6,722##$##8,633##$##10,453 Cash paid for interest on finance leases##$##521##$##374##$##308 Cash paid for interest on financing obligations##$##153##$##207##$##196 Cash paid for income taxes, net of refunds##$##3,688##$##6,035##$##11,179 Assets acquired under operating leases##$##25,369##$##18,800##$##14,052 Property and equipment acquired under finance leases, net of remeasurements and modifications##$##7,061##$##675##$##642 Property and equipment recognized during the construction period of build-to-suit lease arrangements##$##5,846##$##3,187##$##357 Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating##$##230##$##5,158##$##1,374


AMZN Earnings Per Share

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.


AMZN Earnings Per Share

The following table shows the calculation of diluted shares (in millions): ####Year Ended December 31,## ##2021##2022##2023 Shares used in computation of basic earnings per share##10,117##10,189##10,304 Total dilutive effect of outstanding stock awards##179##—##188 Shares used in computation of diluted earnings per share##10,296##10,189##10,492


AMZN Revenue

Revenue is measured based on the amount of consideration that we expect to receive, reduced by estimates for return allowances, promotional discounts, and rebates. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes. In arrangements where we have multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price. We generally determine stand-alone selling prices based on the prices charged to customers or using expected cost plus a margin.


AMZN Revenue

A description of our principal revenue generating activities is as follows:


AMZN Revenue

Retail sales - We offer consumer products through our online and physical stores. Revenue is recognized when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or, in the case of an Amazon delivery, to the customer.


AMZN Revenue

Third-party seller services - We offer programs that enable sellers to sell their products in our stores, and fulfill orders using our services. We are not the seller of record in these transactions. The commissions and any related fulfillment and shipping fees we earn from these arrangements are recognized when the services are rendered, which generally occurs upon delivery of the related products to a third-party carrier or, in the case of an Amazon delivery, to the customer.


AMZN Revenue

Advertising services - We provide advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising. Revenue is recognized as ads are delivered based on the number of clicks or impressions.


AMZN Revenue

Subscription services - Our subscription sales include fees associated with Amazon Prime memberships and access to content including digital video, audiobooks, digital music, e-books, and other non-AWS subscription services. Prime memberships provide our customers with access to an evolving suite of benefits that represent a single stand-ready obligation. Subscriptions are paid for at the time of or in advance of delivering the services. Revenue from such arrangements is recognized over the subscription period.


AMZN Revenue

AWS - Our AWS arrangements include global sales of compute, storage, database, and other services. Revenue is allocated to services using stand-alone selling prices and is primarily recognized when the customer uses these services, based on the quantity of services rendered, such as compute or storage capacity delivered on-demand. Certain services, including compute and database, are also offered as a fixed quantity over a specified term, for which revenue is recognized ratably. Sales commissions we pay in connection with contracts that exceed one year are capitalized and amortized over the contract term.


AMZN Revenue

Other - Other revenue includes sales related to various other offerings, such as certain licensing and distribution of video content, health care services, and shipping services, and our co-branded credit card agreements. Revenue is recognized when content is licensed or distributed and as or when services are performed.


AMZN Return Allowances

Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in “Accrued expenses and other” and were $1.0 billion, $1.3 billion, and $1.4 billion as of December 31, 2021, 2022, and 2023. Additions to the allowance were $5.1 billion, $5.5 billion, and $5.2 billion and deductions from the allowance were $4.9 billion, $5.2 billion, and $5.1 billion in 2021, 2022, and 2023. Included in “Inventories” on our consolidated balance sheets are assets totaling $882 million, $948 million, and $992 million as of December 31, 2021, 2022, and 2023, for the rights to recover products from customers associated with our liabilities for return allowances.


AMZN Cost of Sales

Cost of sales primarily consists of the purchase price of consumer products, inbound and outbound shipping costs, including costs related to sortation and delivery centers and where we are the transportation service provider, and digital media content costs where we record revenue gross, including video and music. Shipping costs to receive products from our suppliers are included in our inventory, and recognized as cost of sales upon sale of products to our customers. Payment processing and related transaction costs, including those associated with seller transactions, are classified in “Fulfillment” on our consolidated statements of operations.


AMZN Vendor Agreements

We have agreements with our vendors to receive consideration primarily for cooperative marketing efforts, promotions, incentives, and volume rebates. We generally consider these amounts received from vendors to be a reduction of the prices we pay for their goods, including property and equipment, or services, and are recorded as a reduction of the cost of inventory, cost of services, or cost of property and equipment. Volume rebates typically depend on reaching minimum purchase thresholds. We evaluate the likelihood of reaching purchase thresholds using past experience and current year forecasts. When volume rebates can be reasonably estimated, we record a portion of the rebate as we make progress towards the purchase threshold.


AMZN Fulfillment

Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International segments’ fulfillment centers, physical stores, and customer service centers, including facilities and equipment expenses, such as depreciation and amortization, and rent; costs attributable to buying, receiving, inspecting, and warehousing inventories; picking, packaging, and preparing customer orders for shipment; payment processing and related transaction costs, including costs associated with our guarantee for certain seller transactions; responding to inquiries from customers; and supply chain management for our manufactured electronic devices. Fulfillment costs also include amounts paid to third parties that assist us in fulfillment and customer service operations.


AMZN Technology and Infrastructure

Technology and infrastructure costs include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and infrastructure costs. Infrastructure costs include servers, networking equipment, and data center related depreciation and amortization, rent, utilities, and other expenses necessary to support AWS and other Amazon businesses. Collectively, these costs reflect the investments we make in order to offer a wide variety of products and services to our customers, including expenditures related to initiatives to build and deploy innovative and efficient software and electronic devices and the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services. Technology and infrastructure costs are generally expensed as incurred.


AMZN Sales and Marketing

Sales and marketing costs include advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales commissions related to AWS. We pay commissions to third parties when their customer referrals result in sales. We also participate in cooperative advertising arrangements with certain of our vendors, and other third parties.


AMZN Sales and Marketing

Advertising and other promotional costs to market our products and services are expensed as incurred and were $16.9 billion, $20.6 billion, and $20.3 billion in 2021, 2022, and 2023.


AMZN General and Administrative

General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses; facilities and equipment expenses, such as depreciation and amortization expense and rent; and professional fees.


AMZN Stock-Based Compensation

Compensation cost for all equity-classified stock awards expected to vest is measured at fair value on the date of grant and recognized over the service period. The fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock. Such value is recognized as expense over the service period, net of estimated forfeitures, using the accelerated method. Under this method, approximately 50% of the grant date fair value is recognized as expense in the first year of grant for the majority of our stock-based compensation awards. The accelerated method also adds a higher level of sensitivity and complexity in estimating forfeitures. If an award is forfeited early in its life, the adjustment to compensation expense is much greater under an accelerated method than under a straight-line method. The estimated number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including historical forfeiture experience by grant year and employee level. Additionally, stock-based compensation includes stock appreciation rights that are expected to settle in cash. These liability-classified awards are remeasured to fair value at the end of each reporting period until settlement or expiration.


Other operating expense (income), net, consists primarily of the amortization of intangible assets, and asset impairments for physical store closures in 2022 and for fulfillment network facilities and physical store closures in 2023.


AMZN Other Income (Expense), Net

Other income (expense), net, is as follows (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Marketable equity securities valuation gains (losses)##$##11,526##$##(13,870)##$##984 Equity warrant valuation gains (losses)####1,315####(2,132)####26 Upward adjustments relating to equity investments in private companies####1,866####76####40 Foreign currency gains (losses)####(55)####(340)####65 Other, net####(19)####(540)####(177) Total other income (expense), net##$##14,633##$##(16,806)##$##938


AMZN Other Income (Expense), Net

Included in other income (expense), net in 2022 and 2023 is a marketable equity securities valuation gain (loss) of $(12.7) billion and $797 million from our equity investment in Rivian Automotive, Inc. (“Rivian”). Our investment in Rivian’s preferred stock was accounted for at cost, with adjustments for observable changes in prices or impairments, prior to Rivian’s initial public offering in November 2021, which resulted in the conversion of our preferred stock to Class A common stock. As of December 31, 2023, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 16% ownership interest, and an approximate 15% voting interest. We determined that we have the ability to exercise significant influence over Rivian through our equity investment, our commercial arrangement for the purchase of electric vehicles and jointly-owned intellectual property, and one of our employees serving on Rivian’s board of directors. We elected the fair value option to account for our equity investment in Rivian, which is included in “Marketable securities” on our consolidated balance sheets, and had a fair value of $2.9 billion and $3.7 billion as of December 31, 2022 and December 31, 2023. The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $800 million as of December 31, 2021, which expired in Q1 2022.


AMZN Other Income (Expense), Net

Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions): ####Year Ended December 31, 2021####Year Ended December 31, 2022####Nine Months Ended September 30, 2023 Revenues##$##55##$##1,658##$##3,119 Gross profit####(465)####(3,123)####(1,424) Loss from operations####(4,220)####(6,856)####(4,158) Net loss####(4,688)####(6,752)####(3,911) ####December 31, 2022####September 30, 2023 Total current assets##$##13,130##$##12,086 Total assets####17,876####16,456 Total current liabilities####2,424####2,624 Total liabilities####4,077####5,904


AMZN Income Taxes

Income tax expense includes U.S. (federal and state) and foreign income taxes. Certain foreign subsidiary earnings and losses are subject to current U.S. taxation and the subsequent repatriation of those earnings is not subject to tax in the U.S. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.


AMZN Income Taxes

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as net operating loss and tax credit carryforwards, and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.


AMZN Income Taxes

Deferred tax assets represent amounts available to reduce income taxes payable in future periods. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe they will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including recent cumulative loss experience and expectations of future earnings, capital gains and investment in such jurisdiction, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.