What changed in this filing

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Item 1. Financial Statements

2022-10-28 compared with 2022-07-29 · 126 added, 104 removed, 499 unchanged (32% of the section changed)

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Three Months Ended

June 30, Six Months Ended

June 30, Twelve Months Ended

September 30, Nine Months Ended

September 30, Twelve Months Ended

September 30,

2021 2022 2021 2022 2021 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

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(in millions, except per share data)

December 31, 2021 June 30, 2022

December 31, 2021 September 30, 2022

Current assets:

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The longer useful lives are due to continuous improvements in our hardware, software, and data center designs.

The effect of this change in estimate for Q2 2022, based on servers and networking equipment that were included in “Property and equipment, net” as of March 31, 2022 and those acquired during the three months ended June 30, 2022, was a reduction in depreciation and amortization expense of $ 928 million and a benefit to net loss of $ 728 million, or $ 0.07 per basic share and $ 0.07 per diluted share.

The effect of this change in estimate for the six months ended June 30, 2022, based on servers and networking equipment that were included in “Property and equipment, net” as of December 31, 2021 and those acquired during the six months ended June 30, 2022, was a reduction in depreciation and amortization expense of $ 1.9 billion and a benefit to net loss of $ 1.5 billion, or $ 0.15 per basic share and $ 0.15 per diluted share.

The effect of this change in estimate for Q3 2022, based on servers and networking equipment that were included in “ Property and equipment, net ” as of June 30, 2022 and those acquired during the three months ended September 30, 2022, was a reduction in depreciation and amortization expense of $ 882 million and a benefit to net income of $ 665 million, or $ 0.07 per basic share and $ 0.06 per diluted share.

The effect of this change in estimate for the nine months ended September 30, 2022, based on servers and networking equipment that were included in “ Property and equipment, net ” as of December 31, 2021 and those acquired during the nine months ended September 30, 2022, was a reduction in depreciation and amortization expense of $ 2.8 billion and a benefit to net loss of $ 2.2 billion, or $ 0.21 per basic share and $ 0.21 per diluted share.

Supplemental Cash Flow Information

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Three Months Ended

June 30, Six Months Ended

June 30, Twelve Months Ended

September 30, Nine Months Ended

September 30, Twelve Months Ended

September 30,

2021 2022 2021 2022 2021 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

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Total other income (expense), net ( 163 ) 759 2,795 ( 13,356 )

Included in other income (expense), net is a marketable equity securities valuation loss of $ 3.9 billion in Q2 2022, and $ 11.5 billion for the six months ended June 30, 2022, from our equity investment in Rivian Automotive, Inc.

Included in other income (expense), net is a marketable equity securities valuation gain (loss) of $ 1.1 billion in Q3 2022, and $( 10.4 ) billion for the nine months ended September 30, 2022, from our equity investment in Rivian Automotive, Inc.

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 June 30, 2022, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 18 % ownership interest, and an approximate 16 % 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 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.

As of September 30, 2022, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 17 % ownership interest, and an approximate 16 % 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 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.

Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):

Three Months Ended March 31,

Six Months Ended June 30,

Revenues $ — $ 459

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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 vendors, or liquidations, and expected recoverable values of each disposition category.

The inventory valuation allowance, representing a write-down of inventory, was $ 2.6 billion and $ 2.4 billion as of December 31, 2021 and June 30, 2022.

The inventory valuation allowance, representing a write-down of inventory, was $ 2.6 billion and $ 2.3 billion as of December 31, 2021 and September 30, 2022.

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers.

As of December 31, 2021 and June 30, 2022, customer receivables, net, were $ 20.2 billion and $ 21.6 billion, vendor receivables, net, were $ 5.3 billion and $ 4.9 billion, and seller receivables, net, were $ 1.0 billion and $ 1.3 billion.

As of December 31, 2021 and September 30, 2022, customer receivables, net, were $ 20.2 billion and $ 22.8 billion, vendor receivables, net, were $ 5.3 billion and $ 4.9 billion, and seller receivables, net, were $ 1.0 billion and $ 1.4 billion.

Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our historical experience of actual losses.

The allowance for doubtful accounts was $ 1.1 billion and $ 1.2 billion as of December 31, 2021 and June 30, 2022.

The allowance for doubtful accounts was $ 1.1 billion and $ 1.3 billion as of December 31, 2021 and September 30, 2022.

Digital Video and Music Content

The total capitalized costs of video, which is primarily released content, and music as of December 31, 2021 and June 30, 2022 were $ 10.7 billion and $ 15.2 billion.

Total video and music expense was $ 3.1 billion and $ 3.7 billion in Q2 2021 and Q2 2022, and $ 6.2 billion and $ 7.3 billion for the six months ended June 30, 2021 and 2022.

The total capitalized costs of video, which is primarily released content, and music as of December 31, 2021 and September 30, 2022 were $ 10.7 billion and $ 16.3 billion.

Total video and music expense was $ 3.3 billion and $ 4.2 billion in Q3 2021 and Q3 2022, and $ 9.4 billion and $ 11.4 billion for the nine months ended September 30, 2021 and 2022.

Unearned Revenue

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Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships.

Our total unearned revenue as of December 31, 2021 was $ 14.0 billion, of which $ 8.1 billion was recognized as revenue during the six months ended June 30, 2022.

Included in “Other long-term liabilities” on our consolidated balance sheets was $ 2.2 billion and $ 2.6 billion of unearned revenue as of December 31, 2021 and June 30, 2022.

Our total unearned revenue as of December 31, 2021 was $ 14.0 billion, of which $ 10.1 billion was recognized as revenue during the nine months ended September 30, 2022.

Included in “Other long-term liabilities” on our consolidated balance sheets was $ 2.2 billion and $ 2.7 billion of unearned revenue as of December 31, 2021 and September 30, 2022.

Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements.

For contracts with original terms that exceed one year, those commitments not yet recognized were $ 100.1 billion as of June 30, 2022.

For contracts with original terms that exceed one year, those commitments not yet recognized were $ 104.3 billion as of September 30, 2022.

The weighted-average remaining life of our long-term contracts is 3.8 years.

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The acquired assets primarily consist of $ 3.4 billion of video content and $ 4.9 billion of goodwill, the majority of which is allocated to our North America segment.

The valuation of certain assets and liabilities is preliminary and subject to change.

Pro forma results of operations have not been presented because the effects of the MGM acquisition were not material to our consolidated results of operations.

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Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2021 and June 30, 2022, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money market funds, U.S.

As of December 31, 2021 and September 30, 2022, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money market funds, U.S.

and foreign government and agency securities, other investment grade securities, and marketable equity securities.

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Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

We did not hold significant amounts of marketable securities categorized as Level 3 assets as of December 31, 2021 and June 30, 2022.

We did not hold significant amounts of marketable securities categorized as Level 3 assets as of December 31, 2021 and September 30, 2022.

The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):

December 31, 2021 June 30, 2022

December 31, 2021 September 30, 2022

Fair Value Cost or

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___________________

(1) The related unrealized gain (loss) recorded in “Other income (expense), net” was $ 119 million and $( 4.2 ) billion in Q2 2021 and Q2 2022, and $ 122 million and $( 12.3 ) billion for the six months ended June 30, 2021 and 2022.

(1) The related unrealized gain (loss) recorded in “Other income (expense), net” was $( 116 ) million and $ 1.0 billion in Q3 2021 and Q3 2022, and $ 6 million and $( 11.3 ) billion for the nine months ended September 30, 2021 and 2022.

(2) We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit.

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See “Note 4 — Commitments and Contingencies.”

(3) Our equity investment in Rivian had a fair value of $ 15.6 billion and $ 4.1 billion as of December 31, 2021 and June 30, 2022, respectively.

(3) Our equity investment in Rivian had a fair value of $ 15.6 billion and $ 5.2 billion as of December 31, 2021 and September 30, 2022, respectively.

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.

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2022 (in millions):

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of September 30, 2022 (in millions):

Cost Estimated

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We hold equity warrants giving us the right to acquire stock of other companies.

As of December 31, 2021 and June 30, 2022, these warrants had a fair value of $ 3.4 billion and $ 2.4 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations.

As of December 31, 2021 and September 30, 2022, these warrants had a fair value of $ 3.4 billion and $ 2.5 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations.

These warrants are primarily classified as Level 2 assets.

As of December 31, 2021 and June 30, 2022, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $ 603 million and $ 768 million, and are recorded within “Other assets”

on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

As of December 31, 2021 and September 30, 2022, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $ 603 million and $ 831 million, and are recorded within “Other assets” on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

December 31, 2021 June 30, 2022

December 31, 2021 September 30, 2022

Cash and cash equivalents $ 36,220 $ 34,947

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We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, physical store, data center, and sortation facilities as well as server and networking equipment, vehicles, and aircraft.

Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “ Property and equipment, net ” and were $ 72.2 billion and $ 68.6 billion as of December 31, 2021 and June 30, 2022.

Accumulated amortization associated with finance leases was $ 43.4 billion and $ 43.5 billion as of December 31, 2021 and June 30, 2022.

Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “ Property and equipment, net ” and were $ 72.2 billion and $ 66.6 billion as of December 31, 2021 and September 30, 2022.

Accumulated amortization associated with finance leases was $ 43.4 billion as of December 31, 2021 and September 30, 2022.

Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2022 2021 2022

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Other information about lease amounts recognized in our consolidated financial statements is as follows:

December 31, 2021 June 30, 2022

December 31, 2021 September 30, 2022

Weighted-average remaining lease term – operating leases 11.3 years 11.4 years

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Total long-term lease liabilities $ 51,981 $ 15,670 $ 67,651

June 30, 2022

September 30, 2022

Operating Leases Finance Leases Total

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Note 4 — COMMITMENTS AND CONTINGENCIES

The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of June 30, 2022 (in millions):

Six Months Ended December 31, Year Ended December 31,

The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of September 30, 2022 (in millions):

Three Months Ended December 31, Year Ended December 31,

2022 2023 2024 2025 2026 Thereafter Total

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(1) Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities.

Excluding interest, current financing obligations of $ 196 million and $ 251 million are recorded within “Accrued expenses and other” and $ 6.2 billion and $ 6.8 billion are recorded within “Other long-term liabilities” as of December 31, 2021 and June 30, 2022.

The weighted-average remaining term of the financing obligations was 18.8 years and 18.4 years and the weighted-average imputed interest rate was 3.2 % as of December 31, 2021 and June 30, 2022.

Excluding interest, current financing obligations of $ 196 million and $ 254 million are recorded within “Accrued expenses and other” and $ 6.2 billion and $ 6.7 billion are recorded within “Other long-term liabilities” as of December 31, 2021 and September 30, 2022.

The weighted-average remaining term of the financing obligations was 18.8 years and 18.2 years and the weighted-average imputed interest rate was 3.2 % as of December 31, 2021 and September 30, 2022.

(2) Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets and certain products offered in our Whole Foods Market stores.

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Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.

(3) Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction, asset retirement obligations, and liabilities associated with digital media content agreements with initial terms greater than one year.

(3) Includes asset retirement obligations, the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction, and liabilities associated with digital media content agreements with initial terms greater than one year.

(4) Excludes approximately $ 3.4 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

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(One Medical) for approximately $ 3.9 billion, including its debt, subject to customary closing conditions.

We expect to fund this acquisition with cash on hand.

In August 2022, we entered into an agreement to acquire iRobot Corporation for approximately $ 1.7 billion, including its debt, subject to customary closing conditions.

We expect to fund these acquisitions with cash on hand.

Other Contingencies

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Legal Proceedings

The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2021 Annual Report on Form 10-K and in Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings” of our Quarterly Report on Form 10-Q for the period ended March 31, 2022, as supplemented by the following:

In November 2015, Eolas Technologies, Inc.

filed a complaint against Amazon.com, Inc.

in the United States District Court for the Eastern District of Texas.

The complaint alleges, among other things, that the use of “interactive features” on www.amazon.com, including “search suggestions and search results,” infringes U.S.

9,195,507, entitled “Distributed Hypermedia Method and System for Automatically Invoking External Application Providing Interaction and Display of Embedded Objects Within A Hypermedia Document.” The complaint sought a judgment of infringement together with costs and attorneys’ fees.

In February 2016, Eolas filed an amended complaint seeking, among other things, an unspecified amount of damages.

In February 2017, Eolas alleged in its damages report that in the event of a finding of liability Amazon could be subject to $ 130 -$ 250 million in damages.

In April 2017, the case was transferred to the United States District Court for the Northern District of California.

In May 2022, the district court granted summary judgment holding that the patent is invalid.

In June 2022, Eolas filed a notice of appeal.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2021 Annual Report on Form 10-K and in Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings” of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 2022, as supplemented by the following:

Beginning in March 2020, with Frame-Wilson v.

Amazon.com, Inc.

filed in the United States District Court for the Western District of Washington, private litigants have filed a number of cases in the U.S.

and Canada alleging, among other things, price fixing arrangements between Amazon.com, Inc.

and vendors and third-party sellers in Amazon’s stores, monopolization and attempted monopolization, and consumer protection and unjust enrichment claims.

Attorneys General for the District of Columbia and California brought similar suits in May 2021 and September 2022 in the Superior Court of the District of Columbia and the California Superior Court for the County of San Francisco, respectively.

Some of the private cases include allegations of several distinct purported classes, including consumers who purchased a product through Amazon’s stores and consumers who purchased a product offered by Amazon through another e-commerce retailer.

The complaints seek billions of dollars of alleged actual damages, treble damages, punitive damages, injunctive relief, civil penalties, attorneys’ fees, and costs.

In March 2022, the court in the Frame-Wilson case granted Amazon’s motion to dismiss claims alleging that Amazon’s pricing policies are inherently illegal under federal law and claims alleging competition and consumer protection violations under state law, and denied Amazon’s motion to dismiss claims alleging that Amazon’s pricing policies are an unlawful restraint of trade under federal law.

In the same month, the DC Superior Court dismissed the DC Attorney General’s lawsuit in its entirety;

the dismissal is subject to appeal.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.

In October 2020, BroadbandiTV, Inc.

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could be subject to $ 166 -$ 986 million in damages.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In July 2022, Acceleration Bay, LLC filed a complaint against Amazon Web Services, Inc.

in the United States District Court for the District of Delaware.

The complaint alleges, among other things, that Amazon EC2, Amazon CloudFront, AWS Lambda, Amazon Lumberyard, Luna, Amazon Prime Video, Twitch, Amazon GameLift, GridMate, Amazon EKS, AWS App Mesh, and Amazon VPC infringe U.S.

6,701,344, entitled “Distributed Game Environment”;

6,714,966, entitled “Information Delivery Service”;

6,732,147, entitled “Leaving A Broadcast Service”;

6,829,634, entitled “Broadcasting Network”;

and 6,910,069, entitled “Joining A Broadcast Channel.” The complaint seeks injunctive relief, an unspecified amount of damages, enhanced damages, interest, attorneys’ fees, and costs.

In September 2022, the court granted summary judgment, holding that the patents are invalid.

This decision is subject to appeal.

We dispute the allegations of wrongdoing and will continue to defend ourselves vigorously in this matter.

In January 2022, VideoLabs, Inc.

and VL Collective IP LLC filed a complaint against Amazon.com, Inc.

and Amazon Web Services, Inc.

in the United States District Court for the Western District of Texas.

The complaint alleges, among other things, that Amazon Prime Video, Amazon Glow, Amazon Echo Show, Fire TV, Fire TV Cube, Fire TV Stick, Fire Tablets, AWS Elemental MediaConvert, AWS Elemental Live, AWS Elemental Server, AWS Elemental MediaPackage, AWS Elemental MediaLive, and Amazon Elastic Transcoder infringe U.S.

7,769,238 and 8,139,878;

both entitled “Picture Coding Method and Picture Decoding Method”, and 7,970,059, entitled “Variable Length Coding Method and Variable Length Decoding Method”;

that Amazon Prime Video, AWS Elemental MediaConvert, AWS Elemental Live, AWS Elemental Server, AWS Elemental MediaPackage, AWS Elemental MediaLive, Amazon Elastic Transcoder, and Amazon Kinesis Video Streams infringe U.S.

8,605,794, entitled “Method for Synchronizing Content-Dependent Data Segments of Files”;

that Amazon Echo Show, Amazon Echo Spot, Amazon Connect, Amazon Chime, and Amazon Kinesis Video Streams infringe U.S.

7,266,682, entitled “Method and System for Transmitting Data from a Transmitter to a Receiver and Transmitter and Receiver Therefore”;

that AWS Auto Scaling and Amazon EC2 Auto Scaling infringe U.S.

6,880,156, entitled “Demand Responsive Method and Apparatus to Automatically Activate Spare Servers”;

and that Amazon Prime Video infringes U.S.

7,440,559, entitled “System and Associated Terminal, Method and Computer Program Product for Controlling the Flow of Content.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief.

In October 2022, the case was transferred to the United States District Court for the Western District of Washington.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

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The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period.

We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate.

We evaluate, on a regular

basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate.

For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.

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Note 5 — DEBT

As of June 30, 2022, we had $ 62.5 billion of unsecured senior notes outstanding (the “Notes”), including $ 12.8 billion issued in April 2022 for general corporate purposes, and $ 935 million of borrowings under our credit facility.

As of September 30, 2022, we had $ 62.5 billion of unsecured senior notes outstanding (the “Notes”), including $ 12.8 billion issued in April 2022 for general corporate purposes, and $ 1.0 billion of borrowings under our credit facility.

Our total long-term debt obligations are as follows (in millions):

Maturities (1) Stated Interest Rates Effective Interest Rates December 31, 2021 June 30, 2022

Maturities (1) Stated Interest Rates Effective Interest Rates December 31, 2021 September 30, 2022

2012 Notes issuance of $ 3.0 billion

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___________________

(1) The weighted-average remaining lives of the 2012, 2014, 2017, 2020, 2021, and 2022 Notes were 0.4 , 13.1 , 14.7 , 17.2 , 13.8 , and 13.8 years as of June 30, 2022.

The combined weighted-average remaining life of the Notes was 14.3 years as of June 30, 2022.

(1) The weighted-average remaining lives of the 2012, 2014, 2017, 2020, 2021, and 2022 Notes were 0.2 , 12.8 , 14.5 , 17.0 , 13.6 , and 13.5 years as of September 30, 2022.

The combined weighted-average remaining life of the Notes was 14.0 years as of September 30, 2022.

Interest on the Notes is payable semi-annually in arrears.

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We are not subject to any financial covenants under the Notes.

The estimated fair value of the Notes was approximately $ 53.3 billion and $ 57.1 billion as of December 31, 2021 and June 30, 2022, which is based on quoted prices for our debt as of those dates.

We have a $ 1.0 billion secured revolving credit facility with a lender that is secured by certain seller receivables, which we may from time to time increase in the future subject to lender approval (the “Credit Facility”).

The Credit Facility is available until October 2022, bears interest at the London interbank offered rate (“LIBOR”) plus 1.40 %, and has a commitment fee of 0.50 % on the undrawn portion.

There were $ 803 million and $ 935 million of borrowings outstanding under the Credit Facility as of December 31, 2021 and June 30, 2022, which had a weighted-average interest rate of 2.7 %.

As of December 31, 2021 and June 30, 2022, we have pledged $ 918 million and $ 1.1 billion of our cash and seller receivables as collateral for debt related to our Credit Facility.

The estimated fair value of the Credit Facility, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2021 and June 30, 2022.

The estimated fair value of the Notes was approximately $ 53.3 billion and $ 53.7 billion as of December 31, 2021 and September 30, 2022, which is based on quoted prices for our debt as of those dates.

We have a $ 1.5 billion secured revolving credit facility with a lender that is secured by certain seller receivables, which we increased from $ 1.0 billion to $ 1.5 billion in August 2022 and we may from time to time increase in the future subject to lender approval (the “Credit Facility”).

The Credit Facility is available until August 2025, bears interest based on the daily Secured Overnight Financing Rate plus 1.25 %, and has a commitment fee of up to 0.45 % on the undrawn portion.

There were $ 803 million and $ 1.0 billion of borrowings outstanding under the Credit Facility as of December 31, 2021 and September 30, 2022, which had a weighted-average interest rate of 2.7 %.

As of December 31, 2021 and September 30, 2022, we have pledged $ 918 million and $ 1.2 billion of our cash and seller receivables as collateral for debt related to our Credit Facility.

The estimated fair value of the Credit Facility, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2021 and September 30, 2022.

Dollar and Euro commercial paper programs (the “Commercial Paper Programs”) under which we may from time to time issue unsecured commercial paper up to a total of $ 20.0 billion (including up to € 3.0 billion) at the date of issue, with individual maturities that may vary but will not exceed 397 days from the date of issue.

In March 2022, we increased the size of the Commercial Paper Programs from $ 10.0 billion to $ 20.0 billion.

There were $ 725 million and $ 8.2 billion of borrowings outstanding under the Commercial Paper Programs as of December 31, 2021 and June 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets and had a weighted-average effective

interest rate, including issuance costs, of 0.08 % and 0.99 %, respectively.

There were $ 725 million and $ 11.7 billion of borrowings outstanding under the Commercial Paper Programs as of December 31, 2021 and September 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets and had a weighted-average effective interest rate, including issuance costs, of 0.08 % and 2.54 %, respectively.

We use the net proceeds from the issuance of commercial paper for general corporate purposes.

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The interest rate applicable to outstanding balances under the Credit Agreement is the applicable benchmark rate specified in the Credit Agreement plus 0.45 %, with a commitment fee of 0.03 % on the undrawn portion of the credit facility.

There were no borrowings outstanding under the Credit Agreement as of December 31, 2021 and June 30, 2022.

There were no borrowings outstanding under the Credit Agreement as of December 31, 2021 and September 30, 2022.

We also utilize other short-term credit facilities for working capital purposes.

There were $ 318 million and $ 235 million of borrowings outstanding under these facilities as of December 31, 2021 and June 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets.

In addition, we had $ 10.0 billion of unused letters of credit as of June 30, 2022.

There were $ 318 million and $ 1.1 billion of borrowings outstanding under these facilities as of December 31, 2021 and September 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets.

In addition, we had $ 10.0 billion of unused letters of credit as of September 30, 2022.

Note 6 — STOCKHOLDERS’ EQUITY

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In March 2022, the Board of Directors authorized a program to repurchase up to $ 10.0 billion of our common stock, with no fixed expiration, which replaced the previous $ 5.0 billion stock repurchase authorization, approved by the Board of Directors in February 2016.

We repurchased 46.2 million shares of our common stock for $ 6.0 billion during the six months ended June 30, 2022 under these programs.

As of June 30, 2022, we have $ 6.1 billion remaining under the repurchase program.

We repurchased 46.2 million shares of our common stock for $ 6.0 billion during the nine months ended September 30, 2022 under these programs.

As of September 30, 2022, we have $ 6.1 billion remaining under the repurchase program.

Stock Award Activity

Common shares outstanding plus shares underlying outstanding stock awards totaled 10.5 billion and 10.6 billion as of December 31, 2021 and June 30, 2022.

Common shares outstanding plus shares underlying outstanding stock awards totaled 10.5 billion and 10.6 billion as of December 31, 2021 and September 30, 2022.

These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

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Total stock-based compensation expense $ 3,180 $ 5,556 $ 9,077 $ 14,015

The following table summarizes our restricted stock unit activity for the six months ended June 30, 2022 (in millions):

The following table summarizes our restricted stock unit activity for the nine months ended September 30, 2022 (in millions):

Number of Units Weighted-Average

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Units forfeited ( 35.6 ) 143

Outstanding as of June 30, 2022 367.5 149

Scheduled vesting for outstanding restricted stock units as of June 30, 2022, is as follows (in millions):

Six Months Ended December 31, Year Ended December 31,

Outstanding as of September 30, 2022 399.3 147

Scheduled vesting for outstanding restricted stock units as of September 30, 2022, is as follows (in millions):

Three Months Ended December 31, Year Ended December 31,

2022 2023 2024 2025 2026 Thereafter Total

Scheduled vesting — restricted stock units 44.0 137.2 133.0 56.5 24.7 3.9 399.3

As of June 30, 2022, there was $ 26.9 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements.

This compensation is recognized on an accelerated basis with approximately half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of

The estimated forfeiture rate as of December 31, 2021 and June 30, 2022 was 27 %.

As of September 30, 2022, there was $ 26.9 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements.

This compensation is recognized on an accelerated basis with more than half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of 1.1 years.

estimated forfeiture rate as of December 31, 2021 and September 30, 2022 was 27 % and 26 %.

Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the future.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

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In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions.

For 2022, we estimate that our effective tax rate will be reduced by the U.S.

federal research and development credit and increased by state income taxes.

For 2022, we estimate that our effective tax rate will be favorably impacted by the U.S.

federal research and development credit.

In addition, valuation gains and losses from our equity investment in Rivian impact our pre-tax income and may cause variability in our effective tax rate.

Our income tax provision for the six months ended June 30, 2021 was $ 3.0 billion, which included $ 1.4 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation and audit-related developments.

Our income tax benefit for the six months ended June 30, 2022 was $ 2.1 billion, which included $ 3.2 billion of net discrete tax benefits primarily attributable to a valuation loss related to our equity investment in Rivian.

Cash paid for income taxes, net of refunds was $ 1.8 billion and $ 3.1 billion in Q2 2021 and Q2 2022, and $ 2.6 billion and $ 3.6 billion for the six months ended June 30, 2021 and 2022.

As of December 31, 2021 and June 30, 2022, tax contingencies were approximately $ 3.2 billion and $ 3.3 billion.

Our income tax provision for the nine months ended September 30, 2021 was $ 4.2 billion, which included $ 1.7 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation and audit-related developments.

Our income tax benefit for the nine months ended September 30, 2022 was $ 2.0 billion, which included $ 3.3 billion of net discrete tax benefits primarily attributable to a valuation loss related to our equity investment in Rivian.

Cash paid for income taxes, net of refunds was $ 750 million and $ 742 million in Q3 2021 and Q3 2022, and $ 3.4 billion and $ 4.3 billion for the nine months ended September 30, 2021 and 2022.

As of December 31, 2021 and September 30, 2022, tax contingencies were approximately $ 3.2 billion and $ 3.4 billion.

Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies.

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We are currently disputing tax assessments in multiple jurisdictions, including with respect to the allocation and characterization of income.

In September 2022, the Luxembourg Tax Authority (“LTA”) denied the tax basis of certain intangible assets that we distributed from Luxembourg to the U.S.

We believe the LTA’s position is without merit and intend to defend ourselves vigorously in this matter.

In October 2014, the European Commission opened a formal investigation to examine whether decisions by the tax authorities in Luxembourg with regard to the corporate income tax paid by certain of our subsidiaries comply with European Union rules on state aid.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2022 2021 2022

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements