What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2024-11-01 · 84 added, 135 removed, 188 unchanged (54% of the section changed)

5 unchanged sentences

Forward-looking statements reflect management’s current expectations and are inherently uncertain.

Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions and customer demand and spending, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity.

Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions, tariff and trade policies, and customer demand and spending, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity.

In addition, global economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of these risks.

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These assumptions about future disposition of inventory are inherently uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future.

As a measure of sensitivity, for every 1% of additional inventory valuation allowance as of September 30, 2024, we would have recorded an additional cost of sales of approximately $380 million.

As a measure of sensitivity, for every 1% of additional inventory valuation allowance as of March 31, 2025, we would have recorded an additional cost of sales of approximately $380 million.

In addition, we enter into supplier commitments for certain electronic device components and certain products.

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Three Months Ended

September 30, Nine Months Ended

September 30, Twelve Months Ended

September 30,

March 31, Twelve Months Ended

2024 2025 2024 2025

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Financing activities (1,256) (47) (23,489) (10,603)

Our principal sources of liquidity are cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, which, at fair value, were $86.8 billion and $88.1 billion as of December 31, 2023 and September 30, 2024.

Amounts held in foreign currencies were $23.5 billion and $19.5 billion as of December 31, 2023 and September 30, 2024.

Our principal sources of liquidity are cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, which, at fair value, were $101.2 billion and $94.6 billion as of December 31, 2024 and March 31, 2025.

Amounts held in foreign currencies were $25.5 billion and $18.6 billion as of December 31, 2024 and March 31, 2025.

Our foreign currency balances include British Pounds, Canadian Dollars, Euros, Indian Rupees, and Japanese Yen.

Cash provided by (used in) operating activities was $21.2 billion and $26.0 billion for Q3 2023 and Q3 2024, and $42.5 billion and $70.2 billion for the nine months ended September 30, 2023 and 2024.

Cash provided by (used in) operating activities was $19.0 billion and $17.0 billion for Q1 2024 and Q1 2025.

Our operating cash flows result primarily from cash received from our consumer, seller, developer, enterprise, and content creator customers, and advertisers, offset by cash payments we make for products and services, employee compensation, payment processing and related transaction costs, operating leases, and interest payments.

Cash received from our customers and other activities generally corresponds to our net sales.

The increase in operating cash flow for the trailing twelve months ended September 30, 2024, compared to the comparable prior year period, was due to an increase in net income, excluding non-cash expenses, and changes in working capital.

The increase in operating cash flow for the trailing twelve months ended March 31, 2025, compared to the comparable prior year period, was due to an increase in net income, excluding non-cash expenses, and changes in working capital.

Working capital at any specific point in time is subject to many variables, including variability in demand, inventory management and category expansion, the timing of cash receipts and payments, customer and vendor payment terms, and fluctuations in foreign exchange rates.

Cash provided by (used in) investing activities corresponds with cash capital expenditures, including leasehold improvements, incentives received from property and equipment vendors, proceeds from asset sales, cash outlays for acquisitions, investments in other companies and intellectual property rights, and purchases, sales, and maturities of marketable securities.

Cash provided by (used in) investing activities was $(11.8) billion and $(16.9) billion for Q3 2023 and Q3 2024, and $(37.2) billion and $(56.9) billion for the nine months ended September 30, 2023 and 2024, with the variability caused primarily by purchases, sales, and maturities of marketable securities and cash capital expenditures.

Cash capital expenditures were $11.3 billion and $21.3 billion during Q3 2023 and Q3 2024, and $34.8 billion and $51.6 billion for the nine months ended September 30, 2023 and 2024, which primarily reflect investments in technology infrastructure (the majority of which is to support AWS business growth) and in additional capacity to support our fulfillment network.

We expect cash capital expenditures to meaningfully increase in 2024, primarily driven by investments in technology infrastructure.

We made cash payments, net of acquired cash, related to acquisition and other investment activity of $1.6 billion and $622 million during Q3 2023 and Q3 2024, and $5.5 billion and $4.5 billion for the nine months ended September 30, 2023 and 2024.

We funded the

acquisition of 1Life Healthcare, Inc.

(One Medical) in 2023 with cash on hand.

In Q3 2023, we invested $1.25 billion in a convertible note from Anthropic.

Cash provided by (used in) investing activities was $(17.9) billion and $(29.8) billion for Q1 2024 and Q1 2025, with the variability caused primarily by purchases, sales, and maturities of marketable securities and cash capital expenditures.

Cash capital expenditures were $13.9 billion and $24.3 billion during Q1 2024 and Q1 2025, which primarily reflect investments in technology infrastructure (the majority of which is to support AWS business growth) and in additional capacity to support our fulfillment network.

We expect cash capital expenditures to increase in 2025, primarily driven by investments in technology infrastructure.

We made cash payments, net of acquired cash, related to acquisition and other investment activity of $3.4 billion during Q1 2024.

We did not have significant acquisition and other investment activity during Q1 2025.

In Q3 2023, we invested $1.25 billion in a convertible note from Anthropic, PBC.

In Q1 2024, we invested $2.75 billion in a second convertible note.

Cash provided by (used in) financing activities was $(8.9) billion and $(2.8) billion for Q3 2023 and Q3 2024, and $(9.1) billion and $(8.5) billion for the nine months ended September 30, 2023 and 2024.

Cash inflows from financing activities resulted from proceeds from short-term debt, and other and long-term debt of $216 million and $1.7 billion for Q3 2023 and Q3 2024, and $17.4 billion and $2.6 billion for the nine months ended September 30, 2023 and 2024.

Cash outflows from financing activities resulted from payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $9.2 billion and $4.5 billion in Q3 2023 and Q3 2024, and $26.5 billion and $11.1 billion for the nine months ended September 30, 2023 and 2024.

Property and equipment acquired under finance leases was $183 million and $186 million during Q3 2023 and Q3 2024, and $431 million and $409 million for the nine months ended September 30, 2023 and 2024.

We had no borrowings outstanding under the two unsecured revolving credit facilities or the commercial paper programs as of September 30, 2024.

In Q4 2024, we entered into an agreement and invested $1.3 billion in a third convertible note, and will invest an additional $2.7 billion by Q4 2025.

Cash provided by (used in) financing activities was $(1.3) billion and $(47) million for Q1 2024 and Q1 2025.

Cash inflows from financing activities resulted from proceeds from short-term debt, and other and long-term debt of $338 million and $2.6 billion for Q1 2024 and Q1 2025.

Cash outflows from financing activities resulted from payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $1.6 billion and $2.6 billion in Q1 2024 and Q1 2025.

Property and equipment acquired under finance leases was $42 million and $54 million during Q1 2024 and Q1 2025.

We had no borrowings outstanding under the two unsecured revolving credit facilities or the commercial paper programs as of March 31, 2025.

See Item 1 of Part I, “Financial Statements — Note 5 — Debt” for additional information.

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Cash paid for U.S.

(federal and state) and foreign income taxes (net of refunds) totaled $2.6 billion and $2.0 billion for Q3 2023 and Q3 2024, and $7.0 billion and $8.2 billion for the nine months ended September 30, 2023 and 2024.

As of December 31, 2023 and September 30, 2024, restricted cash, cash equivalents, and marketable securities were $503 million and $3.6 billion.

(federal and state) and foreign income taxes (net of refunds) totaled $458 million and $877 million for Q1 2024 and Q1 2025.

As of December 31, 2024 and March 31, 2025, restricted cash, cash equivalents, and marketable securities were $3.5 billion and $3.7 billion.

See Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies” and “Financial Statements — Note 5 — Debt” for additional discussion of our principal contractual commitments, as well as our pledged assets.

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See Item 1 of Part I, “Financial Statements — Note 8 — Segment Information.”

Macroeconomic factors, including changes in inflation and interest rates, as well as global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify.

These may impact customer demand for our products and services and our ability to forecast spending patterns.

We expect some or all of these factors to continue to impact our operations into Q4 2024.

Macroeconomic factors, including changes in inflation and interest rates, global economic and geopolitical developments, including unpredictable shifts in global tariff and trade policies, and the development and adoption of technologies and services, including artificial intelligence, have direct and indirect impacts on our results of operations that are difficult to predict, isolate, and quantify.

These could affect customer demand for our products and services, our ability to forecast growth needs, expenses, and benefits from new technologies.

We expect some or all of them to continue to impact our operations into Q2 2025.

Net sales include product and service sales.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2024 2023 2024

North America $ 86,341 $ 92,887

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International 10 5

AWS 12 19 13 18

Consolidated 13 9

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International 11 8

AWS 12 19 13 18

Consolidated 13 10

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International 22 21

AWS 16 17 16 18

Consolidated 100 % 100 %

Sales increased 11% in Q3 2024, and 11% for the nine months ended September 30, 2024 compared to the comparable prior year periods.

Changes in foreign exchange rates reduced net sales by $233 million for Q3 2024, and by $1.4 billion for the nine months ended September 30, 2024.

Sales increased 9% in Q1 2025 compared to the comparable prior year period.

Changes in foreign exchange rates reduced net sales by $1.4 billion for Q1 2025.

For a discussion of the effect of foreign exchange rates on sales growth, see “Effect of Foreign Exchange Rates” below.

North America sales increased 9% in Q3 2024, and 10% for the nine months ended September 30, 2024 compared to the comparable prior year periods.

North America sales increased 8% in Q1 2025 compared to the comparable prior year period.

The sales growth primarily reflects increased unit sales, including sales by third-party sellers, advertising sales, and subscription services.

Increased unit sales were driven largely by our continued focus on price, selection, and convenience for our customers, including from our fast shipping offers.

Changes in foreign exchanges rates reduced North America net sales by $168 million for Q3 2024, and by $143 million for the nine months ended September 30, 2024.

International sales increased 12% in Q3 2024, and 9% for the nine months ended September 30, 2024 compared to the comparable prior year periods.

Changes in foreign exchange rates reduced North America net sales by $413 million for Q1 2025.

International sales increased 5% in Q1 2025 compared to the comparable prior year period.

The sales growth primarily reflects increased unit sales, including sales by third-party sellers, advertising sales, and subscription services.

Increased unit sales were driven largely by our continued focus on price, selection, and convenience for our customers, including from our fast shipping offers.

Changes in foreign exchange rates did not significantly impact International net sales for Q3 2024, but reduced International net sales by $1.3 billion for the nine months ended September 30, 2024 .

AWS sales increased 19% in Q3 2024, and 18% for the nine months ended September 30, 2024 compared to the comparable prior year periods.

Increased unit sales

were driven largely by our continued focus on price, selection, and convenience for our customers, including from our fast shipping offers.

Changes in foreign exchange rates reduced International net sales by $1.0 billion for Q1 2025.

AWS sales increased 17% in Q1 2025 compared to the comparable prior year period.

The sales growth primarily reflects increased customer usage, partially offset by pricing changes primarily driven by long-term customer contracts.

Operating Income (Loss)

Operating income (loss) by segment is as follows (in millions):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2024 2023 2024

Operating Income (Loss)

North America $ 4,307 $ 5,663 $ 8,416 $ 15,711

International (95) 1,301 (2,237) 2,477

AWS 6,976 10,447 17,464 29,202

Consolidated $ 11,188 $ 17,411 $ 23,643 $ 47,390

Operating income increased from $11.2 billion in Q3 2023 to $17.4 billion in Q3 2024, and increased from $23.6 billion for the nine months ended September 30, 2023 to $47.4 billion for the nine months ended September 30, 2024.

We believe that operating income is a more meaningful measure than gross profit and gross margin due to the diversity of our product categories and services.

The increase in North America operating income in Q3 2024 and for the nine months ended September 30, 2024, compared to the comparable prior year periods, is primarily due to increased unit sales and increased advertising sales, partially offset by increased fulfillment and shipping costs.

The International operating income in Q3 2024 and for the nine months ended September 30, 2024, as compared to the operating loss in the comparable prior year periods, is primarily due to increased unit sales and increased advertising sales, partially offset by increased shipping and fulfillment costs.

Changes in foreign exchange rates did not significantly impact operating income for Q3 2024 or for the nine months ended September 30, 2024.

The increase in AWS operating income in Q3 2024 and for the nine months ended September 30, 2024, compared to the comparable prior year periods, is primarily due to increased sales, decreased payroll and related expenses, and a reduction in depreciation and amortization expense from our change in the estimated useful lives of our servers, partially offset by spending on technology infrastructure that was primarily driven by additional investments to support AWS business growth.

Changes in foreign exchange rates did not significantly impact operating income for Q3 2024, but positively impacted operating income by $183 million for the nine months ended September 30, 2024.

Operating Expenses

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2024 2023 2024

Operating Expenses:

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

The increase in cost of sales in Q3 2024 and for the nine months ended September 30, 2024, compared to the comparable prior year periods, is primarily due to increased product and shipping costs resulting from increased sales, partially offset by fulfillment network efficiencies, including lower transportation costs.

Changes in foreign exchange rates reduced cost of sales by $196 million for Q3 2024, and by $1.1 billion for the nine months ended September 30, 2024.

Shipping costs were $21.8 billion and $23.5 billion in Q3 2023 and Q3 2024, and $62.2 billion and $67.3 billion for the nine months ended September 30, 2023 and 2024.

The increase in cost of sales in Q1 2025, compared to the comparable prior year period, is primarily due to increased product and shipping costs resulting from increased sales, partially offset by fulfillment network efficiencies, including lower transportation costs.

Changes in foreign exchange rates reduced cost of sales by $910 million for Q1 2025.

Shipping costs were $21.8 billion and $22.5 billion in Q1 2024 and Q1 2025.

Shipping costs to receive products from our suppliers are included in our inventory and recognized as cost of sales upon sale of products to our customers.

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Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International fulfillment centers, physical stores, and customer service centers and payment processing costs.

While AWS payment processing

and related transaction costs are included in “Fulfillment,” AWS costs are primarily classified as “Technology and infrastructure.” Fulfillment costs as a percentage of net sales may vary due to several factors, such as payment processing and related transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and fulfilled, the extent to which third-party sellers utilize Fulfillment by Amazon services, timing of fulfillment network and physical store expansion, the extent we utilize fulfillment services provided by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our customer self-service features.

While AWS payment processing and related transaction costs are included in “Fulfillment,” AWS costs are primarily classified as “Technology and infrastructure.” Fulfillment costs as a percentage of net sales may vary due to several factors, such as payment processing and related transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and fulfilled, the extent to which third-party sellers utilize Fulfillment by Amazon services, timing of fulfillment network and physical store expansion, the extent we utilize fulfillment services provided by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our customer self-service features.

Additionally, sales by our sellers have higher payment processing and related transaction costs as a percentage of net sales compared to our retail sales because payment processing costs are based on the gross purchase price of underlying transactions.

The increase in fulfillment costs in Q3 2024 and for the nine months ended September 30, 2024 compared to the comparable prior year periods, is primarily due to increased sales and investments in our fulfillment network, partially offset by fulfillment network efficiencies.

Changes in foreign exchange rates did not significantly impact fulfillment costs for Q3 2024, but reduced fulfillment costs by $127 million for the nine months ended September 30, 2024.

The increase in fulfillment costs in Q1 2025, compared to the comparable prior year period, is primarily due to increased sales and investments in our fulfillment network, partially offset by fulfillment network efficiencies.

Changes in foreign exchange rates reduced fulfillment costs by $232 million for Q1 2025.

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

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These costs are allocated to segments based on usage.

The increase in technology and infrastructure costs in Q3 2024 and for the nine months ended September 30, 2024, compared to the comparable prior year periods, is primarily due to an increase in spending on infrastructure, partially offset by a reduction in depreciation and amortization expense from our change in the estimated useful life of our servers and decreased payroll and related costs associated with technical teams responsible for expanding our existing products and services and initiatives to introduce new products and service offerings.

Changes in foreign exchange rates did not significantly impact technology and infrastructure costs for Q3 2024, but reduced technology and infrastructure costs by $166 million for the nine months ended September 30, 2024.

The increase in technology and infrastructure costs in Q1 2025, compared to the comparable prior year period, is primarily due to an increase in spending on infrastructure, partially offset by decreased payroll and related costs associated with technical teams responsible for expanding our existing products and services and initiatives to introduce new products and service offerings.

Changes in foreign exchange rates reduced technology and infrastructure costs by $190 million for Q1 2025.

We currently expense the majority of the costs associated with the development of our satellite network for global broadband service (including production, launch, and payroll costs, and launch services deposits upon launch).

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To the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels shifts, we would expect to see a corresponding change in our marketing costs.

Sales and marketing costs in Q3 2024 did not significantly change compared to the comparable prior year period.

The decrease in sales and marketing costs for the nine months ended September 30, 2024, compared to the comparable prior year period, is primarily due to decreased payroll and related expenses for personnel engaged in marketing and selling activities, partially offset by increased advertising expenses.

Changes in foreign exchange rates did not significantly impact sales and marketing costs for Q3 2024, but reduced sales and marketing costs by $161 million for the nine months ended September 30, 2024.

The increase in sales and marketing costs in Q1 2025 compared to the comparable prior year period, is primarily due to increased advertising expenses, partially offset by decreased payroll and related expenses for personnel engaged in marketing and selling activities.

Changes in foreign exchange rates reduced sales and marketing costs by $134 million for Q1 2025.

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

General and Administrative

General and administrative costs in Q3 2024 did not significantly change compared to the comparable prior year period.

The decrease in general and administrative costs for the nine months ended September 30, 2024, compared to the comparable prior year period, is primarily due to a decrease in payroll and related expenses.

The decrease in general and administrative costs in Q1 2025, compared to the comparable prior year period, is primarily due to a decrease in payroll and related expenses.

Other Operating Expense (Income), Net

Other operating expense (income), net was $244 million and $262 million for Q3 2023 and Q3 2024, and $613 million and $587 million for the nine months ended September 30, 2023 and 2024, and was primarily related to asset impairments and the amortization of intangible assets.

Other operating expense (income), net was $228 million and $308 million for Q1 2024 and Q1 2025, and was primarily related to asset impairments and the amortization of intangible assets.

Operating Income

Operating income by segment is as follows (in millions):

Three Months Ended

Operating Income

North America $ 4,983 $ 5,841

International 903 1,017

AWS 9,421 11,547

Consolidated $ 15,307 $ 18,405

Operating income increased from $15.3 billion in Q1 2024 to $18.4 billion in Q1 2025.

We believe that operating income is a more meaningful measure than gross profit and gross margin due to the diversity of our product categories and services.

For more information on the operating expenses that impact segment operating income, see “Operating Expenses” and the descriptions of operating expense line item changes on pages 26 to 28, and “Note 8 — Segment Information” on page 18.

The increase in North America operating income in Q1 2025, compared to the comparable prior year period, is primarily due to increased unit sales and increased advertising sales, partially offset by increased fulfillment and shipping costs.

The increase in International operating income in Q1 2025, compared to the comparable prior year period, is primarily due to increased unit sales and increased advertising sales, partially offset by increased fulfillment and shipping costs.

Changes in foreign exchange rates did not significantly impact operating income for Q1 2025.

The increase in AWS operating income in Q1 2025, compared to the comparable prior year period, is primarily due to increased sales and decreased payroll and related expenses, partially offset by spending on technology infrastructure that was primarily driven by additional investments to support AWS business growth.

Changes in foreign exchange rates positively impacted operating income by $141 million for Q1 2025.

Interest Income and Expense

Our interest income was $776 million and $1.3 billion during Q3 2023 and Q3 2024, and $2.0 billion and $3.4 billion for the nine months ended September 30, 2023 and 2024, primarily due to an increase in prevailing rates.

We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term marketable debt securities.

Our interest income was $993 million and $1.1 billion during Q1 2024 and Q1 2025, primarily due to a higher average balance of invested funds at prevailing rates.

We generally invest our excess cash in investment grade short- to intermediate-term marketable debt securities and AAA-rated money market funds.

Our interest income corresponds with the average balance of invested funds based on the prevailing rates, which vary depending on the geographies and currencies in which they are invested.

Interest expense was $806 million and $603 million during Q3 2023 and Q3 2024, and $2.5 billion and $1.8 billion for the nine months ended September 30, 2023 and 2024, and was primarily related to debt and finance leases.

Interest expense was $644 million and $541 million during Q1 2024 and Q1 2025, and was primarily related to debt and finance leases.

See Item 1 of Part I, “Financial Statements — Note 3 — Leases and Note 5 — Debt” for additional information.

Other Income (Expense), Net

Other income (expense), net was $1.0 billion and $(27) million during Q3 2023 and Q3 2024, and $649 million and $(2.7) billion for the nine months ended September 30, 2023 and 2024.

The primary components of other income (expense), net are related to equity securities valuations and adjustments, equity warrant valuations, and foreign currency.

Included in other income (expense), net is a marketable equity securities valuation gain (loss) of $1.2 billion and $(348) million in Q3 2023 and Q3 2024, and $926 million and $(1.9) billion for the nine months ended September 30, 2023 and 2024, from our equity investment in Rivian.

Our income tax provision for the nine months ended September 30, 2023 was $4.1 billion, which included $175 million of net discrete tax expense.

Our income tax provision for the nine months ended September 30, 2024 was $6.9 billion, which included $2.4 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation.

Other income (expense), net was $(2.7) billion and $2.7 billion during Q1 2024 and Q1 2025.

The primary components of other income (expense), net are related to equity securities valuations and adjustments, equity warrant valuations, foreign currency, and reclassification adjustments for gains (losses) on available-for-sale debt securities.

The net loss of $(2.7) billion in Q1 2024 is primarily from the marketable securities loss from our equity investment in Rivian.

The net gain of $2.7 billion in Q1 2025 is primarily from the reclassification adjustment for the gain on available-for-sale debt securities from the portion of our convertible notes investments in Anthropic, PBC that were converted to nonvoting preferred stock during the three months ended March 31, 2025, partially offset by the marketable securities loss from our equity investment in Rivian.

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.

Our income tax provision for the three months ended March 31, 2025 was $4.6 billion, which included $559 million of net discrete tax expense.

See Item 1 of Part I, “Financial Statements — Note 7 — Income Taxes” for additional information.

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Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other SEC regulations define and prescribe the conditions for use of certain non-GAAP financial information.

Our measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations meet the definition of non-GAAP financial measures.

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

Free Cash Flow

Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, net of proceeds from sales and incentives.” The following is a reconciliation of free cash flow to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for the trailing twelve months ended September 30, 2023 and 2024 (in millions):

Twelve Months Ended

September 30,

Net cash provided by (used in) operating activities $ 71,654 $ 112,706

Purchases of property and equipment, net of proceeds from sales and incentives (50,220) (64,959)

Free cash flow $ 21,434 $ 47,747

Net cash provided by (used in) investing activities $ (48,053) $ (69,500)

Net cash provided by (used in) financing activities $ (9,047) $ (15,250)

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

Free cash flow less principal repayments of finance leases and financing obligations is free cash flow reduced by “Principal repayments of finance leases” and “Principal repayments of financing obligations.” Principal repayments of finance leases and financing obligations approximates the actual payments of cash for our finance leases and financing obligations.

The following is a reconciliation of free cash flow less principal repayments of finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for the trailing twelve months ended September 30, 2023 and 2024 (in millions):

Twelve Months Ended

September 30,

Net cash provided by (used in) operating activities $ 71,654 $ 112,706

Purchases of property and equipment, net of proceeds from sales and incentives (50,220) (64,959)

Free cash flow and the effect of foreign exchange rates on our consolidated statements of operations meet the definition of non-GAAP financial measures.

Free Cash Flow

Principal repayments of finance leases (5,245) (2,489)

Principal repayments of financing obligations (260) (320)

Free cash flow less principal repayments of finance leases and financing obligations $ 15,929 44,938

Net cash provided by (used in) investing activities $ (48,053) $ (69,500)

Net cash provided by (used in) financing activities $ (9,047) $ (15,250)

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

Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations is free cash flow reduced by equipment acquired under finance leases, which is included in “Property and equipment acquired under finance leases, net of remeasurements and modifications,” principal repayments of all other finance lease liabilities, which is included in “Principal repayments of finance leases,” and “Principal repayments of financing obligations.” All other finance lease liabilities and financing obligations consists of property.

In this measure, equipment acquired under finance leases is reflected as if these assets had been purchased with cash, which is not the case as these assets have been leased.

The following is a reconciliation of free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for the trailing twelve months ended September 30, 2023 and 2024 (in millions):

Our financial focus is on long-term, sustainable growth in free cash flow.

We provide a free cash flow measure because we believe it provides additional perspective on the impact of acquiring property and equipment with cash.

Twelve Months Ended

September 30,

Net cash provided by (used in) operating activities $ 99,147 $ 113,903

1 unchanged sentence

Free cash flow $ 50,149 $ 25,925

Equipment acquired under finance leases (1) (239) (492)

Principal repayments of all other finance leases (2) (694) (785)

Principal repayments of financing obligations (260) (320)

Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations $ 20,241 $ 46,150

Net cash provided by (used in) investing activities $ (51,889) $ (106,283)

Net cash provided by (used in) financing activities $ (23,489) $ (10,603)

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(1) For the twelve months ended September 30, 2023 and 2024, this amount relates to equipment included in “Property and equipment acquired under finance leases, net of remeasurements and modifications” of $748 million and $620 million.

(2) For the twelve months ended September 30, 2023 and 2024, this amount relates to property included in “Principal repayments of finance leases” of $5,245 million and $2,489 million.

All of these free cash flows measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures.

For example, these measures of free cash flows do not incorporate the portion of payments representing principal reductions of debt or cash payments for business acquisitions.

Free cash flow has limitations as it omits certain components of the overall cash flow statement and does not represent the residual cash flow available for discretionary expenditures.

For example, free cash flow does not incorporate the portion of payments representing principal reductions of debt or cash payments for business acquisitions.

Additionally, our mix of property and equipment acquisitions with cash or other financing options may change over time.

Therefore, we believe it is important to view free cash flows measures only as a complement to our entire consolidated statements of cash flows.

Therefore, we believe it is important to view free cash flow only as a complement to our entire consolidated statements of cash flows.

Effect of Foreign Exchange Rates

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Dollar is as follows (in millions):

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

2023 2024 2023 2024

Reported Exchange

Effect (1) At Prior

Rates (2) As Reported Exchange

Effect (1) At Prior

Three Months Ended March 31,

Reported Exchange

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

We provided guidance on October 31, 2024, in our earnings release furnished on Form 8-K as set forth below.

These forward-looking statements reflect Amazon.com’s expectations as of October 31, 2024, and are subject to substantial uncertainty.

Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions and customer demand and spending (including the impact of recessionary fears), inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, as well as those outlined in Item 1A of Part II, “Risk Factors.”

Fourth Quarter 2024 Guidance

• Net sales are expected to be between $181.5 billion and $188.5 billion, or to grow between 7% and 11% compared with fourth quarter 2023.

We provided guidance on May 1, 2025, in our earnings release furnished on Form 8-K as set forth below.

These forward-looking statements reflect Amazon.com’s expectations as of May 1, 2025, and are subject to substantial uncertainty.

Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions, tariff and trade policies, and customer demand and spending (including the impact of recessionary fears), inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, as well as those outlined in Item 1A of Part II, “Risk Factors.”

Second Quarter 2025 Guidance

• Net sales are expected to be between $159.0 billion and $164.0 billion, or to grow between 7% and 11% compared with second quarter 2024.

This guidance anticipates an unfavorable impact of approximately 10 basis points from foreign exchange rates.

• Operating income is expected to be between $16.0 billion and $20.0 billion, compared with $13.2 billion in fourth quarter 2023.

• Operating income is expected to be between $13.0 billion and $17.5 billion, compared with $14.7 billion in second quarter 2024.

• This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis