What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-01 compared with 2025-05-02 · 83 added, 68 removed, 204 unchanged (43% of the section changed)

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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 March 31, 2025, 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 June 30, 2025, we would have recorded an additional cost of sales of approximately $430 million.

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

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Three Months Ended

March 31, Twelve Months Ended

June 30, Six Months Ended

June 30, Twelve Months Ended

2024 2025 2024 2025 2024 2025

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Financing activities (4,490) (2,539) (5,746) (2,586) (21,440) (8,652)

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 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 $93.2 billion as of December 31, 2024 and June 30, 2025.

Amounts held in foreign currencies were $25.5 billion and $19.9 billion as of December 31, 2024 and June 30, 2025.

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

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

Cash provided by (used in) operating activities was $25.3 billion and $32.5 billion for Q2 2024 and Q2 2025, and $44.3 billion and $49.5 billion for the six months ended June 30, 2024 and 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 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.

The increase in operating cash flow for the trailing twelve months ended June 30, 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 $(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.

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.

Cash provided by (used in) investing activities was $(22.1) billion and $(39.4) billion for Q2 2024 and Q2 2025, and $(40.0) billion and $(69.2) billion for the six months ended June 30, 2024 and 2025, with the variability caused primarily by purchases, sales, and maturities of marketable securities and cash capital expenditures.

Cash capital expenditures were $16.4 billion and $31.4 billion during Q2 2024 and Q2 2025, and $30.3 billion and $55.6 billion for the six months ended June 30, 2024 and 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, both of which we expect to increase in 2025.

We made cash payments, net of acquired cash, related to acquisition and other investment activity of $571 million and $1.7 billion during Q2 2024 and Q2 2025, and $3.9 billion and $1.7 billion for the six months ended June 30, 2024 and 2025, which primarily reflect investments in convertible notes from Anthropic, including $1.3 billion we invested in Q2 2025.

Furthermore, we will invest an additional $1.4 billion in another convertible note by Q4 2025.

Cash provided by (used in) financing activities was $(4.5) billion and $(2.5) billion for Q2 2024 and Q2 2025, and $(5.7) billion and $(2.6) billion for the six months ended June 30, 2024 and 2025.

Cash inflows from financing activities resulted from proceeds from short-term debt, and other and long-term debt of $525 million and $2.1 billion for Q2 2024 and Q2 2025, and $863 million and $4.7 billion for the six months ended June 30, 2024 and 2025.

Cash outflows from financing activities resulted from payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $5.0 billion and $4.6 billion for Q2 2024 and Q2 2025, and $6.6 billion and $7.2 billion for the six months ended June 30, 2024 and 2025.

Property and equipment acquired under finance leases was $181 million and $937 million during Q2 2024 and Q2 2025, and $223 million and $991 million for the six months ended June 30, 2024 and 2025.

We had no borrowings outstanding under the two unsecured revolving credit facilities or the commercial paper programs as of June 30, 2025.

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

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in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.

taxable income is reduced by accelerated depreciation deductions and increased by the impact of capitalized research and development expenses.

tax rules provide for enhanced accelerated depreciation deductions by allowing us to expense a portion of qualified property, primarily equipment.

These enhanced deductions are scheduled to phase out annually from 2023 through 2026.

Additionally, effective January 1, 2022, research and development expenses are required to be capitalized and amortized for U.S.

tax purposes, which delays the deductibility of these expenses.

taxable income is reduced by accelerated depreciation deductions and the resulting U.S.

tax liability is reduced by tax credits, primarily related to the U.S.

federal research and development credit.

The 2025 Tax Act makes changes to the U.S.

corporate income tax, including reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025 and immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025.

While we are still evaluating the full extent of the 2025 Tax Act’s impact, we expect these changes to significantly reduce U.S.

cash taxes we pay in 2025.

Cash paid for U.S.

(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.

(federal and state) and foreign income taxes (net of refunds) totaled $5.7 billion and $4.8 billion for Q2 2024 and Q2 2025, and $6.2 billion and $5.6 billion for the six months ended June 30, 2024 and 2025.

As of December 31, 2024 and June 30, 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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Three Months Ended

June 30, Six Months Ended

2024 2025 2024 2025

North America $ 90,033 $ 100,068 $ 176,374 $ 192,955

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International 7 16 8 10

AWS 19 17 18 17

Consolidated 10 13 11 11

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International 10 11 10 9

AWS 19 17 18 17

Consolidated 11 12 12 11

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International 21 22 22 22

AWS 18 18 18 18

Consolidated 100 % 100 % 100 % 100 %

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.

Sales increased 13% in Q2 2025, and 11% for the six months ended June 30, 2025 compared to the comparable prior year periods.

Changes in foreign exchange rates increased net sales by $1.5 billion for Q2 2025, but did not significantly impact net sales for the six months ended June 30, 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 8% in Q1 2025 compared to the comparable prior year period.

North America sales increased 11% in Q2 2025, and 9% for the six months ended June 30, 2025 compared to the comparable prior year periods.

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 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.

Changes in foreign exchange rates reduced North America net sales by $169 million for Q2 2025, and by $582 million for the six months ended June 30, 2025.

International sales increased 16% in Q2 2025, and 10% for the six months ended June 30, 2025 compared to the comparable prior year periods.

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 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.

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 increased International net sales by $1.7 billion for Q2 2025, and by $696 million for the six months ended June 30, 2025 .

AWS sales increased 17% in Q2 2025, and 17% for the six months ended June 30, 2025 compared to the comparable prior year periods.

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

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Three Months Ended

June 30, Six Months Ended

2024 2025 2024 2025

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 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.

The increase in cost of sales in Q2 2025 and for the six months ended June 30, 2025, 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 increased cost of sales by $898 million for Q2 2025, but did not significantly impact cost of sales for the six months ended June 30, 2025.

Shipping costs were $22.0 billion and $23.4 billion in Q2 2024 and Q2 2025, and $43.8 billion and $45.9 billion for the six months ended June 30, 2024 and 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.

We expect our cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate, we use more expensive shipping methods, and we offer additional services.

We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies.

We seek to mitigate costs of shipping over time in part through achieving higher sales volumes,

optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies.

We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.

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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 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.

The increase in fulfillment costs in Q2 2025 and for the six months ended June 30, 2025, 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 increased fulfillment costs by $227 million for Q2 2025, but did not significantly impact fulfillment costs for the six months ended June 30, 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 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.

The increase in technology and infrastructure costs in Q2 2025, compared to the comparable prior year period, is primarily due to an increase in spending on infrastructure, including depreciation and amortization, and increased payroll and related costs associated with technical teams responsible for expanding our existing products and services and initiatives to introduce new products and service offerings.

The increase in technology and infrastructure costs for the six months ended June 30, 2025, compared to the comparable prior year period, is primarily due to an increase in spending on infrastructure, including depreciation and amortization, 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 increased technology and infrastructure costs by $138 million for Q2 2025, but did not significantly impact technology and infrastructure costs for the six months ended June 30, 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.

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.

The increase in sales and marketing costs in Q2 2025 and for the six months ended June 30, 2025, compared to the comparable prior year periods, is primarily due to increased advertising expenses, partially offset by decreased payroll and related expenses for personnel engaged in marketing and selling activities.

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

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.

The decrease in general and administrative costs in Q2 2025 and for the six months ended June 30, 2025, compared to the comparable prior year periods, is primarily due to a decrease in payroll and related expenses.

Other Operating Expense (Income), Net

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.

Other operating expense (income), net was $97 million and $199 million for Q2 2024 and Q2 2025, and $325 million and $507 million for the six months ended June 30, 2024 and 2025, and was primarily related to asset impairments and the amortization of intangible assets.

Operating Income

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Three Months Ended

June 30, Six Months Ended

2024 2025 2024 2025

Operating Income

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Consolidated $ 14,672 $ 19,171 $ 29,979 $ 37,576

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

Operating income increased from $14.7 billion in Q2 2024 to $19.2 billion in Q2 2025, and increased from $30.0 billion for the six months ended June 30, 2024 to $37.6 billion for the six months ended June 30, 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.

The increase in North America operating income in Q2 2025 and for the six months ended June 30, 2025, compared to the comparable prior year periods, is primarily due to increased unit sales and increased advertising sales, partially offset by increased fulfillment, technology and infrastructure, and shipping costs.

The increase in International operating income in Q2 2025 and for the six months ended June 30, 2025, 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.

Changes in foreign exchange rates positively impacted operating income by $338 million for Q2 2025, and by $282 million for six months ended June 30, 2025.

The increase in AWS operating income in Q2 2025, compared to the comparable prior year period, is primarily due to increased sales, partially offset by spending on technology infrastructure that was primarily driven by additional investments to support AWS business growth.

The increase in AWS operating income for the six months ended June 30, 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 negatively impacted operating income by $139 million for Q2 2025, but did not significantly impact operating income for the six months ended June 30, 2025.

Interest Income and Expense

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.

Our interest income was $1.2 billion and $1.1 billion during Q2 2024 and Q2 2025, and $2.2 billion for the six months ended June 30, 2024 and 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 $644 million and $541 million during Q1 2024 and Q1 2025, and was primarily related to debt and finance leases.

Interest expense was $589 million and $516 million during Q2 2024 and Q2 2025, and $1.2 billion and $1.1 billion for the six months ended June 30, 2024 and 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 $(2.7) billion and $2.7 billion during Q1 2024 and Q1 2025.

Other income (expense), net was $(18) million and $1.1 billion during Q2 2024 and Q2 2025, and $(2.7) billion and $3.9 billion for the six months ended June 30, 2024 and 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.

The net gain of $1.1 billion in Q2 2025 is primarily from equity warrant valuations.

The net loss of $(2.7) billion for the six months ended June 30, 2024 is primarily from the marketable securities loss from our equity investment in Rivian.

The net gain of $3.9 billion for the six months ended June 30, 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 that were converted to nonvoting preferred stock during the three months ended March 31, 2025.

Our income tax provision for the six months ended June 30, 2024 was $4.2 billion, which included $1.9 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation.

Our income tax provision for the six months ended June 30, 2025 was $7.2 billion, which included $753 million of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation.

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

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

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 March 31, 2024 and 2025 (in millions):

Twelve Months Ended

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Dollar is as follows (in millions):

Three Months Ended March 31,

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

2024 2025 2024 2025

Reported Exchange

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Effect (1) At Prior

Reported Exchange

Effect (1) At Prior

Rates (2) As Reported Exchange

Effect (1) At Prior

Net sales $ 147,977 $ 1,041 $ 149,018 $ 167,702 $ (1,515) $ 166,187 $ 291,290 $ 1,205 $ 292,495 $ 323,369 $ (75) $ 323,294

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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 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.

We provided guidance on July 31, 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 July 31, 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 $13.0 billion and $17.5 billion, compared with $14.7 billion in second quarter 2024.

Third Quarter 2025 Guidance

• Net sales are expected to be between $174.0 billion and $179.5 billion, or to grow between 10% and 13% compared with third quarter 2024.

This guidance anticipates a favorable impact of approximately 130 basis points from foreign exchange rates.

• Operating income is expected to be between $15.5 billion and $20.5 billion, compared with $17.4 billion in third quarter 2024.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis