AMAZON COM INC 10-Q

Item 1. Financial Statements AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) Three Months Ended March 31, Twelve Months Ended March 31, 2023 2024 2023 2024 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD $ 54,253 $ 73,890 $ 36,599 $ 49,734 OPERATING ACTIVITIES: Net income 3,172 10,431 4,294 37,684 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other 11,123 11,684 43,851 49,224 Stock-based compensation 4,748 4,961 21,119 24,236 Non-operating expense (income), net 534 2,734 8,811 1,452 Deferred income taxes ( 472 ) ( 938 ) ( 6,619 ) ( 6,342 ) Changes in operating assets and liabilities: Inventories 371 1,776 393 2,854 Accounts receivable, net and other 4,724 3,684 ( 4,361 ) ( 9,388 ) Other assets ( 3,203 ) ( 2,701 ) ( 14,499 ) ( 11,763 ) Accounts payable ( 11,264 ) ( 11,282 ) 1,061 5,455 Accrued expenses and other ( 5,763 ) ( 2,928 ) ( 1,418 ) 407 Unearned revenue 818 1,568 1,698 5,328 Net cash provided by (used in) operating activities 4,788 18,989 54,330 99,147 INVESTING ACTIVITIES: Purchases of property and equipment ( 14,207 ) ( 14,925 ) ( 62,901 ) ( 53,447 ) Proceeds from property and equipment sales and incentives 1,137 990 5,252 4,449 Acquisitions, net of cash acquired, non-marketable investments, and other ( 3,513 ) ( 3,354 ) ( 5,488 ) ( 5,680 ) Sales and maturities of marketable securities 1,115 1,392 9,963 5,904 Purchases of marketable securities ( 338 ) ( 1,965 ) ( 1,139 ) ( 3,115 ) Net cash provided by (used in) investing activities ( 15,806 ) ( 17,862 ) ( 54,313 ) ( 51,889 ) FINANCING ACTIVITIES: Common stock repurchased — — ( 3,334 ) — Proceeds from short-term debt, and other 12,780 338 40,590 5,687 Repayments of short-term debt, and other ( 3,603 ) ( 404 ) ( 34,926 ) ( 22,478 ) Proceeds from long-term debt — — 21,166 — Repayments of long-term debt ( 1,386 ) ( 330 ) ( 2,644 ) ( 2,620 ) Principal repayments of finance leases ( 1,380 ) ( 770 ) ( 6,544 ) ( 3,774 ) Principal repayments of financing obligations ( 57 ) ( 90 ) ( 226 ) ( 304 ) Net cash provided by (used in) financing activities 6,354 ( 1,256 ) 14,082 ( 23,489 ) Foreign currency effect on cash, cash equivalents, and restricted cash 145 ( 429 ) ( 964 ) ( 171 ) Net increase (decrease) in cash, cash equivalents, and restricted cash ( 4,519 ) ( 558 ) 13,135 23,598 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD $ 49,734 $ 73,332 $ 49,734 $ 73,332 See accompanying notes to consolidated financial statements. 3 Table of Contents AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (unaudited) Three Months Ended March 31, 2023 2024 Net product sales $ 56,981 $ 60,915 Net service sales 70,377 82,398 Total net sales 127,358 143,313 Operating expenses: Cost of sales 67,791 72,633 Fulfillment 20,905 22,317 Technology and infrastructure 20,450 20,424 Sales and marketing 10,172 9,662 General and administrative 3,043 2,742 Other operating expense (income), net 223 228 Total operating expenses 122,584 128,006 Operating income 4,774 15,307 Interest income 611 993 Interest expense ( 823 ) ( 644 ) Other income (expense), net ( 443 ) ( 2,673 ) Total non-operating expense ( 655 ) ( 2,324 ) Income before income taxes 4,119 12,983 Provision for income taxes ( 948 ) ( 2,467 ) Equity-method investment activity, net of tax 1 ( 85 ) Net income $ 3,172 $ 10,431 Basic earnings per share $ 0.31 $ 1.00 Diluted earnings per share $ 0.31 $ 0.98 Weighted-average shares used in computation of earnings per share: Basic 10,250 10,393 Diluted 10,347 10,670 See accompanying notes to consolidated financial statements. 4 Table of Contents AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited) Three Months Ended March 31, 2023 2024 Net income $ 3,172 $ 10,431 Other comprehensive income (loss): Foreign currency translation adjustments, net of tax of $( 10 ) and $ 30 386 ( 1,096 ) Available-for-sale debt securities: Change in net unrealized gains (losses), net of tax of $( 29 ) and $( 158 ) 95 536 Less: reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $( 10 ) and $ 0 33 1 Net change 128 537 Other, net of tax of $ 0 and $( 1 ) — 1 Total other comprehensive income (loss) 514 ( 558 ) Comprehensive income $ 3,686 $ 9,873 See accompanying notes to consolidated financial statements. 5 Table of Contents AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31, 2023 March 31, 2024 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 73,387 $ 72,852 Marketable securities 13,393 12,222 Inventories 33,318 31,147 Accounts receivable, net and other 52,253 47,768 Total current assets 172,351 163,989 Property and equipment, net 204,177 209,950 Operating leases 72,513 73,313 Goodwill 22,789 22,770 Other assets 56,024 60,947 Total assets $ 527,854 $ 530,969 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 84,981 $ 73,068 Accrued expenses and other 64,709 63,970 Unearned revenue 15,227 15,927 Total current liabilities 164,917 152,965 Long-term lease liabilities 77,297 77,052 Long-term debt 58,314 57,634 Other long-term liabilities 25,451 26,657 Commitments and contingencies (Note 4) 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; 10,898 and 10,918 shares issued; 10,383 and 10,403 shares outstanding) 109 109 Treasury stock, at cost ( 7,837 ) ( 7,837 ) Additional paid-in capital 99,025 103,938 Accumulated other comprehensive income (loss) ( 3,040 ) ( 3,598 ) Retained earnings 113,618 124,049 Total stockholders’ equity 201,875 216,661 Total liabilities and stockholders’ equity $ 527,854 $ 530,969 See accompanying notes to consolidated financial statements. 6 Table of Contents AMAZON.COM, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1 — ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES Unaudited Interim Financial Information We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2024 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2023 Annual Report on Form 10-K. 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. 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. 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. We review the useful lives of equipment on an ongoing basis, and effective January 1, 2024 we changed our estimate of the useful lives for our servers from five to six years . 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 Q1 2024, based on servers that were included in “Property and equipment, net” as of December 31, 2023 and those acquired during the three months ended March 31, 2024, was a reduction in depreciation and amortization expense of $ 897 million and a benefit to net income of $ 695 million, or $ 0.07 per basic share and $ 0.07 per diluted share. 7 Table of Contents Supplemental Cash Flow Information The following table shows supplemental cash flow information (in millions): Three Months Ended March 31, Twelve Months Ended March 31, 2023 2024 2023 2024 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on debt, net of capitalized interest $ 402 $ 269 $ 1,684 $ 2,475 Cash paid for operating leases 2,467 3,332 8,733 11,318 Cash paid for interest on finance leases 81 74 348 301 Cash paid for interest on financing obligations 59 64 208 201 Cash paid for income taxes, net of refunds 619 458 6,201 11,018 Assets acquired under operating leases 3,626 3,753 20,251 14,179 Property and equipment acquired under finance leases, net of remeasurements and modifications 8 42 517 676 Property and equipment recognized during the construction period of build-to-suit lease arrangements 131 37 1,953 263 Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating 720 — 5,845 654 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. The following table shows the calculation of diluted shares (in millions): Three Months Ended March 31, 2023 2024 Shares used in computation of basic earnings per share 10,250 10,393 Total dilutive effect of outstanding stock awards 97 277 Shares used in computation of diluted earnings per share 10,347 10,670 Other Income (Expense), Net “ Other income (expense), net” is as follows (in millions): Three Months Ended March 31, 2023 2024 Marketable equity securities valuation gains (losses) $ ( 480 ) $ ( 2,126 ) Equity warrant valuation gains (losses) 59 ( 230 ) Upward adjustments relating to equity investments in private companies 16 5 Foreign currency gains (losses) 70 ( 74 ) Other, net ( 108 ) ( 248 ) Total other income (expense), net ( 443 ) ( 2,673 ) Included in “Other income (expense), net” is a marketable equity securities valuation gain (loss) of $( 467 ) million and $( 2.0 ) billion in Q1 2023 and Q1 2024, from our equity investment in Rivian Automotive, Inc. (“Rivian”). As of March 31, 2024, 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 $ 3.7 billion and $ 1.7 billion as of December 31, 2023 and March 31, 2024. 8 Table of Contents Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions): Twelve Months Ended December 31, 2022 2023 Revenues $ 1,658 $ 4,434 Gross profit ( 3,123 ) ( 2,030 ) Loss from operations ( 6,856 ) ( 5,739 ) Net loss ( 6,752 ) ( 5,432 ) 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 vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $ 3.0 billion and $ 2.6 billion as of December 31, 2023 and March 31, 2024. Accounts Receivable, Net and Other Included in “Accounts receivable, net and other” on our consolidated balance sheets are receivables primarily related to customers, vendors, and sellers, as well as prepaid expenses and other current assets. As of December 31, 2023 and March 31, 2024, customer receivables, net, were $ 34.1 billion and $ 31.8 billion, vendor receivables, net, were $ 8.5 billion and $ 6.7 billion, seller receivables, net, were $ 1.0 billion and $ 0.6 billion, and other receivables, net, were $ 3.3 billion and $ 3.1 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory. Prepaid expenses and other current assets were $ 5.4 billion and $ 5.6 billion as of December 31, 2023 and March 31, 2024. We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $ 1.7 billion as of December 31, 2023 and March 31, 2024. Digital Video and Music Content The total capitalized costs of video, which is primarily released content, and music as of December 31, 2023 and March 31, 2024 were $ 17.4 billion and $ 17.9 billion. Total video and music expense was $ 4.0 billion and $ 4.6 billion in Q1 2023 and Q1 2024 . Unearned Revenue Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2023 was $ 20.9 billion, of which $ 6.1 billion was recognized as revenue during the three months ended March 31, 2024. Included in “Other long-term liabilities” on our consolidated balance sheets was $ 5.7 billion and $ 6.4 billion of unearned revenue as of December 31, 2023 and March 31, 2024. 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 $ 157.7 billion as of March 31, 2024. The weighted-average remaining life of our long-term contracts is 4.1 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term. Accounting Pronouncements Not Yet Adopted In December 2023, the Financial Accounting Standards Board issued an Accounting Standards Update (“ASU”) amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted, and can be applied on either a prospective or retroactive basis. We are currently evaluating the ASU to determine its impact on our income tax disclosures. 9 Table of Contents Note 2 — FINANCIAL INSTRUMENTS Cash, Cash Equivalents, Restricted Cash, and Marketable Securities As of December 31, 2023 and March 31, 2024, 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. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1— Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2— Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3— Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or liabilities. 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. 10 Table of Contents 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, 2023 March 31, 2024 Total Estimated Fair Value Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Total Estimated Fair Value Cash $ 11,706 $ 11,633 $ — $ — $ 11,633 Level 1 securities: Money market funds 39,160 28,676 — — 28,676 Equity securities (1) 4,658 2,575 Level 2 securities: Foreign government and agency securities 505 19 — — 19 U.S. government and agency securities 1,699 2,641 1 ( 89 ) 2,553 Corporate debt securities 27,805 38,636 — ( 146 ) 38,490 Asset-backed securities 1,646 1,554 — ( 45 ) 1,509 Other debt securities 104 102 — ( 3 ) 99 $ 87,283 $ 83,261 $ 1 $ ( 283 ) $ 85,554 Less: Restricted cash, cash equivalents, and marketable securities (2) ( 503 ) ( 480 ) Total cash, cash equivalents, and marketable securities $ 86,780 $ 85,074 ___________________ (1) The related unrealized gain (loss) recorded in “Other income (expense), net” was $( 479 ) million and $( 2.1 ) billion in Q1 2023 and Q1 2024. (2) We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable debt securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable debt securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.” The following table summarizes the remaining contractual maturities of our cash equivalents and marketable debt securities as of March 31, 2024 (in millions): Amortized Cost Estimated Fair Value Due within one year $ 66,539 $ 66,481 Due after one year through five years 3,810 3,652 Due after five years through ten years 404 389 Due after ten years 875 824 Total $ 71,628 $ 71,346 Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions. Non-Marketable Investments We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2023 and March 31, 2024, these warrants had a fair value of $ 2.2 billion and $ 2.1 billion, with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are classified as Level 2 and 3 assets. As of December 31, 2023 and March 31, 2024, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $ 754 million and $ 801 million, with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations. In Q3 2023, we invested in a $ 1.25 billion note from Anthropic, PBC, which is convertible to equity. In Q1 2024, we invested $ 2.75 billion in a second convertible note. The notes are classified as available for sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss).” The notes are classified as Level 3 assets. We also have a commercial arrangement primarily for the provision of AWS cloud services, which includes the use of AWS chips. 11 Table of Contents All non-marketable investments are recorded within “Other assets” on our consolidated balance sheets. 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, 2023 March 31, 2024 Cash and cash equivalents $ 73,387 $ 72,852 Restricted cash included in accounts receivable, net and other 497 474 Restricted cash included in other assets 6 6 Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 73,890 $ 73,332 Note 3 — LEASES We have entered into non-cancellable operating and finance leases for fulfillment network, data center, office, and physical store facilities as well as server and networking equipment, aircraft, and vehicles. Gross assets acquired under finance leases, including those where title transfers at the end of the lease, are recorded in “ Property and equipment, net ” and were $ 62.5 billion and $ 60.9 billion as of December 31, 2023 and March 31, 2024. Accumulated amortization associated with finance leases was $ 44.7 billion and $ 44.0 billion as of December 31, 2023 and March 31, 2024. Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions): Three Months Ended March 31, 2023 2024 Operating lease cost $ 2,512 $ 2,829 Finance lease cost: Amortization of lease assets 1,546 941 Interest on lease liabilities 80 73 Finance lease cost 1,626 1,014 Variable lease cost 518 635 Total lease cost $ 4,656 $ 4,478 Other information about lease amounts recognized in our consolidated financial statements is as follows: December 31, 2023 March 31, 2024 Weighted-average remaining lease term – operating leases 11.3 years 11.2 years Weighted-average remaining lease term – finance leases 11.9 years 12.0 years Weighted-average discount rate – operating leases 3.3 % 3.3 % Weighted-average discount rate – finance leases 2.7 % 2.8 % 12 Table of Contents Our lease liabilities were as follows (in millions): December 31, 2023 Operating Leases Finance Leases Total Gross lease liabilities $ 90,777 $ 14,106 $ 104,883 Less: imputed interest ( 15,138 ) ( 1,997 ) ( 17,135 ) Present value of lease liabilities 75,639 12,109 87,748 Less: current portion of lease liabilities ( 8,419 ) ( 2,032 ) ( 10,451 ) Total long-term lease liabilities $ 67,220 $ 10,077 $ 77,297 March 31, 2024 Operating Leases Finance Leases Total Gross lease liabilities $ 91,419 $ 13,262 $ 104,681 Less: imputed interest ( 15,400 ) ( 2,022 ) ( 17,422 ) Present value of lease liabilities 76,019 11,240 87,259 Less: current portion of lease liabilities ( 8,581 ) ( 1,626 ) ( 10,207 ) Total long-term lease liabilities $ 67,438 $ 9,614 $ 77,052 13 Table of Contents Note 4 — COMMITMENTS AND CONTINGENCIES Commitments The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of March 31, 2024 (in millions): Nine Months Ended December 31, Year Ended December 31, 2024 2025 2026 2027 2028 Thereafter Total Long-term debt principal and interest $ 10,335 $ 7,011 $ 4,679 $ 10,403 $ 3,644 $ 60,176 $ 96,248 Operating lease liabilities 8,202 10,276 9,531 8,708 7,908 46,794 91,419 Finance lease liabilities, including interest 1,478 1,460 1,376 1,156 1,024 6,768 13,262 Financing obligations, including interest (1) 319 466 473 481 488 6,330 8,557 Leases not yet commenced 1,692 2,579 2,712 2,759 2,893 24,187 36,822 Unconditional purchase obligations (2) 7,322 8,278 6,336 4,862 2,341 10,730 39,869 Other commitments (3) 2,690 1,634 1,168 767 689 9,436 16,384 Total commitments $ 32,038 $ 31,704 $ 26,275 $ 29,136 $ 18,987 $ 164,421 $ 302,561 ___________________ (1) Includes non-cancellable financing obligations for fulfillment network and data center facilities. Excluding interest, current financing obligations of $ 271 million and $ 269 million are recorded within “Accrued expenses and other” and $ 6.6 billion and $ 6.5 billion are recorded within “Other long-term liabilities” as of December 31, 2023 and March 31, 2024. The weighted-average remaining term of the financing obligations was 17.0 years and 16.7 years and the weighted-average imputed interest rate was 3.1 % as of December 31, 2023 and March 31, 2024. (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. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. 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. Renewable energy agreements based on actual generation without a fixed or minimum volume commitment are not included. These agreements also provide the right to receive renewable energy certificates for no additional consideration. (3) Includes asset retirement obligations, liabilities associated with digital media content agreements with initial terms greater than one year, and the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction. Excludes approximately $ 5.5 billion of income tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any. Other Contingencies We are disputing claims and denials of refunds or credits, and monitoring or evaluating potential claims, related to various non-income taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes. These non-income tax controversies typically include (i) the taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, including as a result of evolving requirements imposed on marketplaces with respect to third-party sellers, and (iii) the adequacy of compliance with reporting obligations, including evolving documentation requirements. Due to the inherent complexity and uncertainty of these matters and the judicial and regulatory processes in certain jurisdictions, the final outcome of any such controversies may be materially different from our expectations. 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 2023 Annual Report on Form 10-K, as supplemented by the following: In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC filed a complaint against Amazon.com, Inc. in the United States District Court for the Northern District of New York. The complaint alleged, among other things, that “Alexa Voice Software and Alexa enabled devices” infringe U.S. Patent No. 7,177,798, entitled “Natural Language Interface Using Constrained Intermediate Dictionary of Results.” The complaint sought an injunction, an unspecified amount of damages, enhanced damages , an ongoing royalty, interest, attorneys’ fees, and costs. In March 2023, the plaintiffs alleged in 14 Table of Contents their damages report that in the event of a finding of liability Amazon could be subject to $ 140 million to $ 267 million in damages. In March 2024, the district court granted summary judgment ruling that the patent is invalid and dismissed the case. In April 2024, the plaintiffs filed a notice of appeal. We dispute the allegations of wrongdoing and will continue to defend ourselves vigorously in this matter. In December 2018, Kove IO, Inc. filed a complaint against Amazon Web Services, Inc. in the United States District Court for the Northern District of Illinois. The complaint alleged, among other things, that Amazon S3 and DynamoDB infringe U.S. Patent Nos. 7,814,170 and 7,103,640, each entitled “Network Distributed Tracking Wire Transfer Protocol”; and 7,233,978, entitled “Method and Apparatus for Managing Location Information in a Network Separate from the Data to Which the Location Information Pertains.” The complaint sought an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief. In April 2024, a jury found that Amazon infringed the asserted patents and awarded Kove $ 525 million in damages. We disagree with the jury’s findings, intend to appeal the jury verdict, and will continue to defend ourselves vigorously in this matter. In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters. 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. 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. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows. See also “Note 7 — Income Taxes.” Note 5 — DEBT As of March 31, 2024, we had $ 66.5 billion of unsecured senior notes outstanding (the “Notes”) and $ 352 million of borrowings under our secured revolving credit facility. Our total long-term debt obligations are as follows (in millions): Maturities (1) Stated Interest Rates Effective Interest Rates December 31, 2023 March 31, 2024 2014 Notes issuance of $ 6.0 billion 2024 - 2044 3.80 % - 4.95 % 3.90 % - 5.12 % 4,000 4,000 2017 Notes issuance of $ 17.0 billion 2024 - 2057 2.80 % - 5.20 % 2.95 % - 4.33 % 15,000 15,000 2020 Notes issuance of $ 10.0 billion 2025 - 2060 0.80 % - 2.70 % 0.88 % - 2.77 % 9,000 9,000 2021 Notes issuance of $ 18.5 billion 2024 - 2061 0.45 % - 3.25 % 0.57 % - 3.31 % 17,500 17,500 April 2022 Notes issuance of $ 12.8 billion 2024 - 2062 2.73 % - 4.10 % 2.83 % - 4.15 % 12,750 12,750 December 2022 Notes issuance of $ 8.3 billion 2024 - 2032 4.55 % - 4.70 % 4.61 % - 4.83 % 8,250 8,250 Credit Facility 682 352 Total face value of long-term debt 67,182 66,852 Unamortized discount and issuance costs, net ( 374 ) ( 370 ) Less: current portion of long-term debt ( 8,494 ) ( 8,848 ) Long-term debt $ 58,314 $ 57,634 ___________________ (1) The weighted-average remaining lives of the 2014, 2017, 2020, 2021, April 2022, and December 2022 Notes were 11.3 , 13.9 , 17.3 , 12.8 , 12.0 , and 4.6 years as of March 31, 2024. The combined weighted-average remaining life of the Notes was 12.4 years as of March 31, 2024. 15 Table of Contents Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time in whole, or from time to time, in part at specified redemption prices. We are not subject to any financial covenants under the Notes. The estimated fair value of the Notes was approximately $ 60.6 billion and $ 59.4 billion as of December 31, 2023 and March 31, 2024, which is based on quoted prices for our debt as of those dates. We have a $ 352 million secured revolving credit facility with a lender that is secured by certain seller receivables, which we decreased from $ 1.5 billion to $ 352 million in March 2024 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 $ 682 million and $ 352 million of borrowings outstanding under the Credit Facility as of December 31, 2023 and March 31, 2024, which had an interest rate of 6.6 %. We reclassified all of the $ 352 million outstanding as of March 31, 2024 to be included with the current portion of long-term debt within “Accrued expenses and other” on our consolidated balance sheets. As of December 31, 2023 and March 31, 2024, we have pledged $ 806 million and $ 466 million 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, 2023 and March 31, 2024. In January 2023, we entered into an $ 8.0 billion unsecured 364-day term loan with a syndicate of lenders (the “Term Loan”), maturing in January 2024 and bearing interest at the Secured Overnight Financing Rate specified in the Term Loan plus 0.75 %. The Term Loan was classified as short-term debt and included within “Accrued expenses and other” on our consolidated balance sheets. As of December 31, 2023, the entire amount of the Term Loan had been repaid. We have U.S. 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. There were no borrowings outstanding under the Commercial Paper Programs as of December 31, 2023 and March 31, 2024. We use the net proceeds from the issuance of commercial paper for general corporate purposes. We have a $ 15.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), with a term that extends to November 2028 and may be extended for one or more additional one-year terms if approved by the lenders. 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, 2023 and March 31, 2024. We have a $ 5.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders (the “Short-Term Credit Agreement”), which matures in October 2024 and may be extended for one additional period of 364 days if approved by the lenders. The interest rate applicable to outstanding balances under the Short-Term Credit Agreement is the Secured Overnight Financing Rate specified in the Short-Term Credit Agreement plus 0.45 %, with a commitment fee of 0.03 % on the undrawn portion. There were no borrowings outstanding under the Short-Term Credit Agreement as of December 31, 2023 and March 31, 2024. We also utilize other short-term credit facilities for working capital purposes. There were $ 147 million and $ 50 million of borrowings outstanding under these facilities as of December 31, 2023 and March 31, 2024, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $ 8.5 billion of unused letters of credit as of March 31, 2024. Note 6 — STOCKHOLDERS’ EQUITY Stock Repurchase Activity 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. There were no repurchases of our common stock during the three months ended March 31, 2023 or 2024. As of March 31, 2024, we have $ 6.1 billion remaining under the repurchase program. Stock Award Plans Employees vest in restricted stock unit awards over the corresponding service term, generally between two and five years . The majority of restricted stock unit awards are granted at the date of hire or in Q2 as part of the annual compensation review and primarily vest semi-annually in Q2 and Q4 of the relevant compensation year. 16 Table of Contents Stock Award Activity Common shares outstanding plus shares underlying outstanding stock awards totaled 10.8 billion as of December 31, 2023 and March 31, 2024. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited. Stock-based compensation expense is as follows (in millions): Three Months Ended March 31, 2023 2024 Cost of sales $ 165 $ 174 Fulfillment 603 636 Technology and infrastructure 2,574 2,772 Sales and marketing 993 932 General and administrative 413 447 Total stock-based compensation expense $ 4,748 $ 4,961 The following table summarizes our restricted stock unit activity for the three months ended March 31, 2024 (in millions): Number of Units Weighted-Average Grant-Date Fair Value Outstanding as of December 31, 2023 405.8 $ 125 Units granted 10.7 166 Units vested ( 20.0 ) 140 Units forfeited ( 11.6 ) 126 Outstanding as of March 31, 2024 384.9 126 Scheduled vesting for outstanding restricted stock units as of March 31, 2024, is as follows (in millions): Nine Months Ended December 31, Year Ended December 31, 2024 2025 2026 2027 2028 Thereafter Total Scheduled vesting — restricted stock units 195.0 122.0 50.1 14.0 2.1 1.7 384.9 As of March 31, 2024, there was $ 14.7 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 0.9 years. The estimated forfeiture rate as of December 31, 2023 and March 31, 2024 was 26.1 %. 17 Table of Contents Changes in Stockholders’ Equity The following table shows changes in stockholders’ equity (in millions): Three Months Ended March 31, 2023 2024 Total beginning stockholders’ equity $ 146,043 $ 201,875 Beginning and ending common stock 108 109 Beginning and ending treasury stock ( 7,837 ) ( 7,837 ) Beginning additional paid-in capital 75,066 99,025 Stock-based compensation and issuance of employee benefit plan stock 4,797 4,913 Ending additional paid-in capital 79,863 103,938 Beginning accumulated other comprehensive income (loss) ( 4,487 ) ( 3,040 ) Other comprehensive income (loss) 514 ( 558 ) Ending accumulated other comprehensive income (loss) ( 3,973 ) ( 3,598 ) Beginning retained earnings 83,193 113,618 Net income 3,172 10,431 Ending retained earnings 86,365 124,049 Total ending stockholders’ equity $ 154,526 $ 216,661 Note 7 — INCOME TAXES Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, is subject to significant variation due to several factors, including variability in accurately predicting 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. For 2024, we estimate that our effective tax rate will be favorably impacted by the U.S. federal research and development credit and foreign income deduction and adversely affected by state income taxes. 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 three months ended March 31, 2023 was $ 948 million, which included $ 48 million of net discrete tax expense. Our income tax provision for the three months ended March 31, 2024 was $ 2.5 billion, which included $ 558 million of net discrete tax benefits. Cash paid for income taxes, net of refunds was $ 619 million and $ 458 million in Q1 2023 and Q1 2024. As of December 31, 2023 and March 31, 2024, income tax contingencies were approximately $ 5.2 billion and $ 5.5 billion. Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts 18 Table of Contents accrued. It is reasonably possible that within the next twelve months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to our contingencies related to positions on prior years’ tax filings. We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2016 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods. We are also subject to taxation in various states and other foreign jurisdictions including China, France, Germany, India, Japan, Luxembourg, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2011 and thereafter. 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. in 2021. When we are assessed by the LTA, we will need to remit taxes related to this matter. We believe the LTA’s position is without merit, we intend to defend ourselves vigorously in this matter, and we expect to recoup taxes paid. The Indian tax authority (“ITA”) has asserted that tax applies to cloud services fees paid to Amazon in the U.S. We will need to remit taxes related to this matter until it is resolved, which payments could be significant in the aggregate. We believe the ITA’s position is without merit, we are defending our position vigorously, and we expect to recoup taxes paid. If this matter is adversely resolved, we could recognize significant additional tax expense, including for taxes previously paid. Note 8 — SEGMENT INFORMATION We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Technology and infrastructure,” “Sales and marketing,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. The majority of technology costs recorded in “Technology and infrastructure” are incurred in the U.S. and are included in our North America and AWS segments. The majority of infrastructure costs recorded in “Technology and infrastructure” are allocated to the AWS segment based on usage. There are no internal revenue transactions between our reportable segments. Our chief operating decision maker (“CODM”) regularly reviews consolidated net sales, consolidated operating expenses, and consolidated operating income (loss) by segment. Amounts included in consolidated operating expenses include “Cost of sales,” “Fulfillment,” “Technology and infrastructure,” “Sales and marketing,” “General and administrative,” and “Other operating expense (income), net.” Our CODM manages our business by reviewing annual forecasts and consolidated results by segment on a quarterly basis. North America The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services through North America-focused online and physical stores. This segment includes export sales from these online stores. International The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services through internationally-focused online stores. This segment includes export sales from these internationally-focused online stores (including export sales from these online stores to customers in the U.S., Mexico, and Canada), but excludes export sales from our North America-focused online stores. AWS The AWS segment consists of amounts earned from global sales of compute, storage, database, and other services for start-ups, enterprises, government agencies, and academic institutions. 19 Table of Contents Information on reportable segments and reconciliation to consolidated net income is as follows (in millions): Three Months Ended March 31, 2023 2024 North America Net sales $ 76,881 $ 86,341 Operating expenses 75,983 81,358 Operating income $ 898 $ 4,983 International Net sales $ 29,123 $ 31,935 Operating expenses 30,370 31,032 Operating income (loss) $ ( 1,247 ) $ 903 AWS Net sales $ 21,354 $ 25,037 Operating expenses 16,231 15,616 Operating income $ 5,123 $ 9,421 Consolidated Net sales $ 127,358 $ 143,313 Operating expenses 122,584 128,006 Operating income 4,774 15,307 Total non-operating expense ( 655 ) ( 2,324 ) Provision for income taxes ( 948 ) ( 2,467 ) Equity-method investment activity, net of tax 1 ( 85 ) Net income $ 3,172 $ 10,431 20 Table of Contents Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions): Three Months Ended March 31, 2023 2024 Net Sales: Online stores (1) $ 51,096 $ 54,670 Physical stores (2) 4,895 5,202 Third-party seller services (3) 29,820 34,596 Advertising services (4) 9,509 11,824 Subscription services (5) 9,657 10,722 AWS 21,354 25,037 Other (6) 1,027 1,262 Consolidated $ 127,358 $ 143,313 ____________________________ (1) Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, videos, games, music, and software. These product sales include digital products sold on a transactional basis. Digital media content subscriptions that provide unlimited viewing or usage rights are included in “Subscription services.” (2) Includes product sales where our customers physically select items in a store. Sales to customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.” (3) Includes commissions and any related fulfillment and shipping fees, and other third-party seller services. (4) Includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising. (5) Includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book, and other non-AWS subscription services. (6) Includes sales related to various other offerings, such as health care services, certain licensing and distribution of video content, and shipping services, and our co-branded credit card agreements. 21 Table of Contents