AMAZON COM INC 10-Q

Item 1. Financial Statements AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, Twelve Months Ended September 30, 2024 2025 2024 2025 2024 2025 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD $ 71,673 $ 61,453 $ 73,890 $ 82,312 $ 50,081 $ 78,677 OPERATING ACTIVITIES: Net income 15,328 21,187 39,244 56,478 49,868 76,482 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 13,442 16,796 37,164 46,285 50,984 61,916 Stock-based compensation 5,333 4,847 17,016 15,070 23,335 20,065 Non-operating expense (income), net ( 141 ) ( 10,112 ) 2,498 ( 14,187 ) 2,159 ( 14,673 ) Deferred income taxes ( 1,317 ) 10,130 ( 3,040 ) 10,648 ( 4,504 ) 9,040 Changes in operating assets and liabilities: Inventories ( 1,509 ) ( 827 ) ( 2,818 ) ( 6,103 ) ( 175 ) ( 5,169 ) Accounts receivable, net and other ( 701 ) ( 1,977 ) 774 ( 1,855 ) ( 6,673 ) ( 5,878 ) Other assets ( 4,537 ) ( 4,039 ) ( 10,293 ) ( 10,412 ) ( 13,095 ) ( 14,602 ) Accounts payable ( 477 ) 2,151 ( 5,754 ) 166 5,134 8,892 Accrued expenses and other 129 ( 1,999 ) ( 6,946 ) ( 11,012 ) ( 352 ) ( 6,970 ) Unearned revenue 421 ( 632 ) 2,396 ( 23 ) 6,025 1,588 Net cash provided by (used in) operating activities 25,971 35,525 70,241 85,055 112,706 130,691 INVESTING ACTIVITIES: Purchases of property and equipment ( 22,620 ) ( 35,095 ) ( 55,165 ) ( 92,297 ) ( 69,753 ) ( 120,131 ) Proceeds from property and equipment sales and incentives 1,342 867 3,559 2,446 4,794 4,228 Acquisitions, net of cash acquired, non-marketable investments, and other, net ( 622 ) ( 786 ) ( 4,547 ) ( 2,438 ) ( 4,928 ) ( 4,973 ) Sales and maturities of marketable securities 8,069 16,367 12,726 35,545 14,294 39,222 Purchases of marketable securities ( 3,068 ) ( 7,426 ) ( 13,472 ) ( 38,556 ) ( 13,907 ) ( 51,089 ) Net cash provided by (used in) investing activities ( 16,899 ) ( 26,073 ) ( 56,899 ) ( 95,300 ) ( 69,500 ) ( 132,743 ) FINANCING ACTIVITIES: Proceeds from short-term debt, and other 1,725 3,223 2,588 7,131 3,322 9,685 Repayments of short-term debt, and other ( 1,820 ) ( 1,826 ) ( 2,453 ) ( 5,300 ) ( 8,791 ) ( 7,907 ) Proceeds from long-term debt — — — 746 — 746 Repayments of long-term debt ( 2,183 ) ( 1,008 ) ( 6,682 ) ( 3,759 ) ( 6,972 ) ( 6,259 ) Principal repayments of finance leases ( 402 ) ( 351 ) ( 1,710 ) ( 1,172 ) ( 2,489 ) ( 1,505 ) Principal repayments of financing obligations ( 78 ) ( 82 ) ( 247 ) ( 276 ) ( 320 ) ( 698 ) Net cash provided by (used in) financing activities ( 2,758 ) ( 44 ) ( 8,504 ) ( 2,630 ) ( 15,250 ) ( 5,938 ) Foreign currency effect on cash, cash equivalents, and restricted cash 690 ( 397 ) ( 51 ) 1,027 640 ( 223 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 7,004 9,011 4,787 ( 11,848 ) 28,596 ( 8,213 ) CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD $ 78,677 $ 70,464 $ 78,677 $ 70,464 $ 78,677 $ 70,464 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 September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Net product sales $ 67,601 $ 74,058 $ 190,085 $ 206,274 Net service sales 91,276 106,111 260,082 297,264 Total net sales 158,877 180,169 450,167 503,538 Operating expenses: Cost of sales 80,977 88,670 227,395 246,455 Fulfillment 24,660 27,679 70,543 78,248 Technology and infrastructure 22,245 28,962 64,973 79,122 Sales and marketing 10,609 11,686 30,783 32,865 General and administrative 2,713 2,875 8,496 8,468 Other operating expense (income), net 262 2,875 587 3,382 Total operating expenses 141,466 162,747 402,777 448,540 Operating income 17,411 17,422 47,390 54,998 Interest income 1,256 1,100 3,429 3,251 Interest expense ( 603 ) ( 538 ) ( 1,836 ) ( 1,595 ) Other income (expense), net ( 27 ) 10,186 ( 2,718 ) 14,052 Total non-operating income (expense) 626 10,748 ( 1,125 ) 15,708 Income before income taxes 18,037 28,170 46,265 70,706 Provision for income taxes ( 2,706 ) ( 6,910 ) ( 6,940 ) ( 14,141 ) Equity-method investment activity, net of tax ( 3 ) ( 73 ) ( 81 ) ( 87 ) Net income $ 15,328 $ 21,187 $ 39,244 $ 56,478 Basic earnings per share $ 1.46 $ 1.98 $ 3.76 $ 5.31 Diluted earnings per share $ 1.43 $ 1.95 $ 3.67 $ 5.22 Weighted-average shares used in computation of earnings per share: Basic 10,501 10,674 10,447 10,638 Diluted 10,735 10,845 10,705 10,815 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 September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Net income $ 15,328 $ 21,187 $ 39,244 $ 56,478 Other comprehensive income (loss): Foreign currency translation adjustments, net of tax of $( 45 ), $ 27 , $ 43 , and $( 181 ) 1,911 ( 690 ) 178 4,159 Available-for-sale debt securities: Change in net unrealized gains (losses), net of tax of $( 55 ), $( 3,797 ), $( 282 ), and $( 3,820 ) 167 12,397 944 12,474 Less: reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $ 0 , $ 512 , $( 1 ), and $ 1,326 — ( 1,795 ) 4 ( 4,266 ) Net change 167 10,602 948 8,208 Other, net of tax of $ 3 , $ 0 , $ 1 , and $ 0 ( 3 ) 1 ( 4 ) — Total other comprehensive income (loss) 2,075 9,913 1,122 12,367 Comprehensive income $ 17,403 $ 31,100 $ 40,366 $ 68,845 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, 2024 September 30, 2025 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 78,779 $ 66,922 Marketable securities 22,423 27,275 Inventories 34,214 41,494 Accounts receivable, net and other 55,451 61,175 Total current assets 190,867 196,866 Property and equipment, net 252,665 324,435 Operating leases 76,141 83,456 Goodwill 23,074 23,260 Other assets 82,147 99,904 Total assets $ 624,894 $ 727,921 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 94,363 $ 106,032 Accrued expenses and other 66,965 68,051 Unearned revenue 18,103 21,113 Total current liabilities 179,431 195,196 Long-term lease liabilities 78,277 84,677 Long-term debt 52,623 50,742 Other long-term liabilities 28,593 27,675 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; 11,108 and 11,202 shares issued; 10,593 and 10,687 shares outstanding) 111 112 Treasury stock, at cost ( 7,837 ) ( 7,837 ) Additional paid-in capital 120,864 135,679 Accumulated other comprehensive income (loss) ( 34 ) 12,333 Retained earnings 172,866 229,344 Total stockholders’ equity 285,970 369,631 Total liabilities and stockholders’ equity $ 624,894 $ 727,921 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 2025 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 2024 Annual Report on Form 10-K. 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 healthcare services and production and distribution of video content. 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, viewing patterns of capitalized video content, valuation of derivative instruments, and the determination of when to capitalize certain costs relating to new products or service offerings. Actual results could differ materially from these estimates. We review the useful lives of equipment on an ongoing basis. Effective January 1, 2025 we changed our estimate of the useful lives of a subset of our servers and networking equipment from six years to five years . The shorter useful lives are due to the increased pace of technology development, particularly in the area of artificial intelligence and machine learning. The effect of this change in estimate for Q3 2025, based on servers and networking equipment that were included in “Property and equipment, net” as of June 30, 2025 and those acquired during the three months ended September 30, 2025, was an increase in depreciation and amortization expense of $ 392 million and a reduction in net income of $ 298 million, or $ 0.03 per basic share and $ 0.03 per diluted share, which primarily impacted our AWS segment. The effect of this change in estimate for the nine months ended September 30, 2025, based on servers and networking equipment that were included in “Property and equipment, net” as of December 31, 2024 and those acquired during the nine months ended September 30, 2025, was an increase in depreciation and amortization expense of $ 889 million and a reduction in net income of $ 677 million, or $ 0.06 per basic share and $ 0.06 per diluted share, which primarily impacted our AWS segment. During Q3 2025, we recorded $ 2.5 billion of expense related to the settlement of a lawsuit with the Federal Trade Commission (FTC). This charge was recorded in “Other operating expense (income), net” and impacted our North America segment. For the three and nine months ended September 30, 2025, we recorded approximately $ 1.8 billion and $ 2.0 billion of estimated severance costs primarily related to planned role eliminations. These charges increased our payroll and related expenses and were recorded primarily in “Technology and infrastructure,” “Sales and marketing,” and “General and administrative” and impacted all of our segments. 7 Table of Contents Supplemental Cash Flow Information The following table shows supplemental cash flow information (in millions): Three Months Ended September 30, Nine Months Ended September 30, Twelve Months Ended September 30, 2024 2025 2024 2025 2024 2025 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on debt, net of capitalized interest $ 266 $ 249 $ 1,215 $ 1,008 $ 2,002 $ 1,651 Cash paid for operating leases 2,940 4,155 9,116 11,475 11,882 14,700 Cash paid for interest on finance leases 71 76 217 219 291 289 Cash paid for interest on financing obligations 47 52 161 159 207 217 Cash paid for income taxes, net of refunds 2,004 1,136 8,162 6,774 12,359 10,920 Assets acquired under operating leases 3,571 5,057 11,235 13,999 14,212 18,188 Property and equipment acquired under finance leases, net of remeasurements and modifications 186 977 409 1,968 620 2,413 Increase (decrease) in property and equipment acquired but not yet paid 1,622 3,341 4,793 4,849 4,769 7,095 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 September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Shares used in computation of basic earnings per share 10,501 10,674 10,447 10,638 Total dilutive effect of outstanding stock awards 234 171 258 177 Shares used in computation of diluted earnings per share 10,735 10,845 10,705 10,815 Other Income (Expense), Net Other income (expense), net is as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Marketable equity securities valuation gains (losses) $ ( 117 ) $ 220 $ ( 1,800 ) $ 470 Equity warrant valuation gains (losses) 80 441 ( 421 ) 653 Reclassification adjustments for gains (losses) on available-for-sale debt securities — 2,307 ( 5 ) 5,592 Upward adjustments relating to equity investments in private companies 2 7,226 13 7,312 Foreign currency gains (losses) 17 1 ( 195 ) 69 Other, net ( 9 ) ( 9 ) ( 310 ) ( 44 ) Total other income (expense), net $ ( 27 ) $ 10,186 $ ( 2,718 ) $ 14,052 The marketable equity securities valuation gain (loss) of $( 117 ) million and $ 220 million in Q3 2024 and Q3 2025, and $( 1.8 ) billion and $ 470 million for the nine months ended September 30, 2024 and 2025 is primarily from our equity investment in Rivian Automotive, Inc. (“Rivian”). The reclassification adjustments for the gains on available-for-sale debt securities of $ 2.3 billion in Q3 2025 and $ 5.6 billion for the nine months ended September 30, 2025 is primarily from the portions of our convertible notes investments in Anthropic, PBC (“Anthropic”) that were converted to nonvoting preferred stock during Q3 2025 and the nine months ended September 30, 2025. The upward adjustments relating to equity investments in private companies of $ 7.2 billion in Q3 2025 and $ 7.3 billion for the nine months ended September 30, 2025 reflect observable changes in prices, primarily from our nonvoting preferred stock in Anthropic. 8 Table of Contents 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 $ 2.9 billion as of December 31, 2024 and September 30, 2025. 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 prepaid expenses and other current assets. As of December 31, 2024 and September 30, 2025, customer receivables, net, were $ 34.3 billion and $ 38.0 billion, vendor receivables, net, were $ 11.6 billion and $ 12.5 billion, and other receivables, net, were $ 3.4 billion and $ 3.8 billion. Prepaid expenses and other current assets, which include amounts related to non-income taxes and satellite network launch services deposits, were $ 6.3 billion and $ 6.8 billion as of December 31, 2024 and September 30, 2025. We currently expense satellite network launch services deposits upon launch to “Technology and infrastructure.” We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $ 2.0 billion and $ 2.3 billion as of December 31, 2024 and September 30, 2025. Digital Video and Music Content Included in “Other assets” on our consolidated balance sheets are the total capitalized costs of video, which is primarily released content, and music, which as of December 31, 2024 and September 30, 2025 were $ 19.6 billion and $ 21.5 billion. Total video and music expense was $ 5.0 billion and $ 5.5 billion in Q3 2024 and Q3 2025, and $ 14.2 billion and $ 15.7 billion for the nine months ended September 30, 2024 and 2025. 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, 2024 was $ 24.6 billion, of which $ 15.0 billion was recognized as revenue during the nine months ended September 30, 2025. Included in “Other long-term liabilities” on our consolidated balance sheets was $ 6.5 billion and $ 4.1 billion of unearned revenue as of December 31, 2024 and September 30, 2025. 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 approximately $ 200 billion as of September 30, 2025. The weighted-average remaining life of our long-term contracts is 3.8 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 (“FASB”) 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 expect to adopt the ASU on a retroactive basis. In November 2024, the FASB issued an ASU amending existing income statement disclosure guidance, primarily requiring more detailed disclosure for expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments can be applied on either a prospective or retroactive basis. We are currently evaluating the ASU to determine its impact on our disclosures. 9 Table of Contents Note 2 — FINANCIAL INSTRUMENTS Cash, Cash Equivalents, Restricted Cash, and Marketable Securities As of December 31, 2024 and September 30, 2025, 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, 2024 September 30, 2025 Total Estimated Fair Value Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Total Estimated Fair Value Cash $ 17,055 $ 15,977 $ — $ — $ 15,977 Level 1 securities: Money market funds 28,282 32,317 — — 32,317 Equity securities (1) 3,318 3,220 Level 2 securities: Foreign government and agency securities 177 74 — — 74 U.S. government and agency securities 3,401 5,400 7 ( 23 ) 5,384 Corporate debt securities 50,912 38,810 49 ( 11 ) 38,848 Asset-backed securities 1,523 1,893 8 ( 10 ) 1,891 Other debt securities 67 28 — — 28 $ 104,735 $ 94,499 $ 64 $ ( 44 ) $ 97,739 Less: Restricted cash, cash equivalents, and marketable securities (2) ( 3,533 ) ( 3,542 ) Total cash, cash equivalents, and marketable securities $ 101,202 $ 94,197 ___________________ (1) The related unrealized gain (loss) recorded in “Other income (expense), net” was $( 145 ) million and $ 153 million in Q3 2024 and Q3 2025, and $( 1.8 ) billion and $ 341 million for the nine months ended September 30, 2024 and 2025. (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, standby and trade letters of credit, and licenses of digital media content. 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 September 30, 2025 (in millions): Amortized Cost Estimated Fair Value Due within one year $ 68,867 $ 68,860 Due after one year through five years 8,051 8,098 Due after five years through ten years 600 599 Due after ten years 1,004 985 Total $ 78,522 $ 78,542 Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions. Non-Marketable Investments From Q3 2023 to Q4 2024, we invested $ 5.3 billion in convertible notes from Anthropic, which are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss)” and as Level 3 assets, and as of December 31, 2024 had an estimated fair value of approximately $ 13.8 billion. In making these estimates, we utilized valuation methods based on information available, including the rights and obligations of the convertible notes, other outstanding classes of securities, observable transactions such as new securities offerings, estimates of expected time to and type of liquidity events and anticipated securities offerings, and discounts for lack of marketability. Some of these notes converted to nonvoting preferred stock in Q1 2025. As a result of conversions, a significant portion of the unrealized gain associated with the notes as of December 31, 2024 was reclassified and a gain of approximately $ 3.3 billion was recorded in “Other income (expense), net” in our consolidated statement of operations. The investment in nonvoting preferred stock was initially recorded at its estimated fair value at the time of the conversion and will be accounted for as a component of our equity investments in private companies not accounted for under the equity-method, with future adjustments for observable changes in prices or impairments representing Level 3 fair value measurements recognized in “Other income 11 Table of Contents (expense), net” on our consolidated statements of operations. In Q2 2025, we invested $ 1.3 billion in a new convertible note from Anthropic, and will invest an additional $ 1.4 billion in Q4 2025. In Q3 2025, an additional portion of our notes was converted to nonvoting preferred stock, and as a result of the conversion a portion of the unrealized gain associated with the notes was reclassified and a gain of approximately $ 2.3 billion was recorded in “Other income (expense), net.” We also recorded an upward adjustment of $ 7.2 billion to our nonvoting preferred stock in “Other income (expense), net” to reflect observable changes in price. As of September 30, 2025, the amount recorded on our consolidated balance sheet for nonvoting preferred stock was approximately $ 14.8 billion. As of September 30, 2025, the estimated fair value of our convertible notes recorded on our consolidated balance sheet was approximately $ 23.7 billion, and the associated unrealized gain included in “Accumulated other comprehensive income (loss)” was $ 18.8 billion. We also have a commercial arrangement primarily for the provision of AWS cloud services, which includes the use of AWS chips. As of December 31, 2024 and September 30, 2025, equity investments in private companies not accounted for under the equity-method, which primarily relate to nonvoting preferred stock in Anthropic, had a carrying value of $ 989 million and $ 16.0 billion, with adjustments for observable changes in prices or impairments representing Level 3 fair value measurements recognized in “Other income (expense), net” on our consolidated statements of operations. As of December 31, 2024 and September 30, 2025, equity investments accounted for under the equity-method of accounting, including investments for which we have elected the fair value option, had a carrying value of $ 1.2 billion and $ 1.1 billion. We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2024 and September 30, 2025, these warrants had a fair value of $ 2.7 billion and $ 2.9 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. These non-marketable investments are included within “Other assets” on our consolidated balance sheets. Certain of our investments represent a variable interest in an entity for which we do not consolidate because we are not the primary beneficiary. 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, 2024 September 30, 2025 Cash and cash equivalents $ 78,779 $ 66,922 Restricted cash included in accounts receivable, net and other 247 302 Restricted cash included in other assets 3,286 3,240 Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 82,312 $ 70,464 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 $ 56.5 billion and $ 56.0 billion as of December 31, 2024 and September 30, 2025. Accumulated amortization associated with finance leases was $ 41.8 billion and $ 41.1 billion as of December 31, 2024 and September 30, 2025. Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Operating lease cost $ 3,057 $ 3,593 $ 8,807 $ 10,259 Finance lease cost: Amortization of lease assets 1,040 813 2,929 2,513 Interest on lease liabilities 70 81 215 224 Finance lease cost 1,110 894 3,144 2,737 Variable lease cost 605 637 1,832 1,992 Total lease cost $ 4,772 $ 5,124 $ 13,783 $ 14,988 12 Table of Contents Other information about lease amounts recognized in our consolidated financial statements is as follows: December 31, 2024 September 30, 2025 Weighted-average remaining lease term – operating leases 10.6 years 10.0 years Weighted-average remaining lease term – finance leases 11.9 years 12.1 years Weighted-average discount rate – operating leases 3.5 % 3.6 % Weighted-average discount rate – finance leases 3.0 % 3.2 % Our lease liabilities were as follows (in millions): December 31, 2024 Operating Leases Finance Leases Total Gross lease liabilities $ 95,294 $ 12,520 $ 107,814 Less: imputed interest ( 15,698 ) ( 1,918 ) ( 17,616 ) Present value of lease liabilities 79,596 10,602 90,198 Less: current portion of lease liabilities ( 10,546 ) ( 1,375 ) ( 11,921 ) Total long-term lease liabilities $ 69,050 $ 9,227 $ 78,277 September 30, 2025 Operating Leases Finance Leases Total Gross lease liabilities $ 103,025 $ 14,052 $ 117,077 Less: imputed interest ( 16,792 ) ( 2,287 ) ( 19,079 ) Present value of lease liabilities 86,233 11,765 97,998 Less: current portion of lease liabilities ( 11,873 ) ( 1,448 ) ( 13,321 ) Total long-term lease liabilities $ 74,360 $ 10,317 $ 84,677 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 September 30, 2025 (in millions): Three Months Ended December 31, Year Ended December 31, 2025 2026 2027 2028 2029 Thereafter Total Long-term debt principal and interest $ 1,914 $ 4,518 $ 10,548 $ 3,688 $ 4,388 $ 57,813 $ 82,869 Operating lease liabilities 4,347 13,414 12,434 11,312 10,207 51,311 103,025 Finance lease liabilities, including interest 458 1,665 1,524 1,521 1,187 7,697 14,052 Financing obligations, including interest (1) 91 532 540 548 557 6,556 8,824 Leases not yet commenced 996 4,856 5,868 5,089 4,995 53,217 75,021 Unconditional purchase obligations (2) 5,897 14,864 8,697 6,288 5,722 31,465 72,933 Other commitments (3) 1,259 2,292 1,330 1,079 1,005 12,313 19,278 Total commitments $ 14,962 $ 42,141 $ 40,941 $ 29,525 $ 28,061 $ 220,372 $ 376,002 ___________________ (1) Includes non-cancellable financing obligations for fulfillment network and data center facilities. Excluding interest, current financing obligations of $ 312 million and $ 281 million are recorded within “Accrued expenses and other” and $ 7.1 billion and $ 7.2 billion are recorded within “Other long-term liabilities” as of December 31, 2024 and September 30, 2025. The weighted-average remaining term of the financing obligations was 16.1 years and 15.3 years and the weighted-average imputed interest rate was 3.1 % as of December 31, 2024 and September 30, 2025. (2) Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content, procure energy, acquire property and equipment, and license software that are not reflected on the consolidated balance sheets. For those agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing, or termination penalties, 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. Energy agreements based on actual generation without a fixed or minimum volume commitment are not included. Certain of our energy agreements also provide the right to receive energy certificates. (3) Includes asset retirement obligations, the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction, and liabilities associated with digital media content agreements with initial terms greater than one year. Excludes approximately $ 5.9 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 2024 Annual Report on Form 10-K and in Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings” of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2025 and June 30, 2025, as supplemented by the following: Since March 2020, private litigants, state Attorneys General, and the Federal Trade Commission have filed cases in the U.S., Canada, and the United Kingdom alleging, among other things: price fixing arrangements between each of Amazon and its vendors and Amazon and its third-party sellers; abuse of dominance, monopolization, and attempted monopolization; and consumer protection and unjust enrichment claims, in violation of federal and state antitrust, state consumer protection, and 14 Table of Contents Canadian and U.K. antitrust laws. The first of these complaints was Frame-Wilson v. Amazon.com, Inc., which was filed in the United States District Court for the Western District of Washington (“W.D. Wash.”). These complaints seek billions of dollars of alleged damages, treble damages, punitive damages, injunctive relief, structural relief, civil penalties, attorneys’ fees, and costs. Some of the private plaintiff cases include allegations of distinct purported classes, including consumers who purchased a product through Amazon’s stores and consumers who purchased a product offered by Amazon through another e-commerce retailer. Some of the cases include allegations that Amazon has a monopoly in markets for online superstores, marketplace services, or intermediation services and that we unlawfully engage in anticompetitive practices relating to our pricing policies, selection of the Featured Offers, use of seller data, advertising practices, the structure of Prime, and promotion of our own products on our website. In the U.S., most of Amazon’s motions to dismiss were granted in part, but in each case, at least some of the claims survived. In Canada, class certification was denied in a case before the Federal Court of Canada, finding that plaintiffs had not stated a viable claim, and plaintiffs’ appeal of that ruling is pending. Two Canadian class actions before other courts are pre-certification. In the United Kingdom, two class actions have been certified and a third is pre-certification. In the U.S., one class action has been certified, and three others are pre-certification. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters. In December 2021, the Italian Competition Authority (the “ICA”) issued a decision against Amazon Services Europe S.à r.l., Amazon Europe Core S.à r.l., Amazon EU S.à r.l., Amazon Italia Services S.r.l., and Amazon Italia Logistica S.r.l. claiming that certain of our marketplace and logistics practices in Italy infringe EU competition rules. The decision imposes remedial actions and a fine of € 1.13 billion, which we have paid and will seek to recover pending conclusion of all appeals. In September 2025, the Italian Administrative Tribunal (the “TAR”) affirmed the ICA’s decision but reduced the fine to € 752 million. We believe the TAR’s ruling affirming the ICA’s decision to be without merit 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.” 15 Table of Contents Note 5 — DEBT As of September 30, 2025, we had $ 54.3 billion of unsecured senior notes outstanding (the “Notes”). Our total long-term debt obligations are as follows (in millions): Maturities (1) Stated Interest Rates Effective Interest Rates December 31, 2024 September 30, 2025 2014 Notes issuance of $ 6.0 billion 2034 - 2044 4.80 % - 4.95 % 4.93 % - 5.12 % 2,750 2,750 2017 Notes issuance of $ 17.0 billion 2027 - 2057 3.15 % - 4.25 % 3.25 % - 4.33 % 13,000 12,000 2020 Notes issuance of $ 10.0 billion 2027 - 2060 1.20 % - 2.70 % 1.26 % - 2.77 % 9,000 7,750 2021 Notes issuance of $ 18.5 billion 2026 - 2061 1.00 % - 3.25 % 1.14 % - 3.31 % 15,000 15,000 April 2022 Notes issuance of $ 12.8 billion 2027 - 2062 3.30 % - 4.10 % 3.40 % - 4.15 % 11,250 9,750 December 2022 Notes issuance of $ 8.3 billion 2025 - 2032 4.55 % - 4.70 % 4.61 % - 4.74 % 7,000 7,000 Other long-term debt — 847 Total face value of long-term debt 58,000 55,097 Unamortized discount and issuance costs, net ( 360 ) ( 358 ) Less: current portion of long-term debt ( 5,017 ) ( 3,997 ) Long-term debt $ 52,623 $ 50,742 ___________________ (1) The weighted-average remaining lives of the 2014, 2017, 2020, 2021, April 2022, and December 2022 Notes were 14.6 , 15.7 , 18.4 , 13.4 , 14.0 , and 3.9 years as of September 30, 2025. The combined weighted-average remaining life of the Notes was 13.6 years as of September 30, 2025. 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 $ 50.2 billion and $ 47.9 billion as of December 31, 2024 and September 30, 2025, which is based on quoted prices for our debt as of those dates. As of September 30, 2024, we had repaid outstanding borrowings and terminated the secured revolving credit facility with a lender that was secured by certain seller receivables (the “Credit Facility”). The Credit Facility bore interest based on the daily Secured Overnight Financing Rate plus 1.25 %, and had a commitment fee of up to 0.45 % on the undrawn portion. 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 $ 30.0 billion (including up to € 3.0 billion) at the date of issue, with individual maturities that may vary but will not exceed 397 days from the date of issue. In April 2025, we increased the size of the Commercial Paper Programs from $ 20.0 billion to $ 30.0 billion. There were no borrowings outstanding under the Commercial Paper Programs as of December 31, 2024 and September 30, 2025. 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 subject to approval 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, 2024 and September 30, 2025. As of September 30, 2025, we had a $ 5.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders (the “2024 Short-Term Credit Agreement”). The interest rate applicable to outstanding balances under the 2024 Short-Term Credit Agreement is the Secured Overnight Financing Rate specified in the 2024 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 2024 Short-Term Credit Agreement as of December 31, 2024 and September 30, 2025. In October 2025, we replaced the 2024 Short-Term Credit Agreement with a new $ 5.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders on substantially the same terms, which matures in October 2026 and may be extended for one additional period of 364 days subject to approval by the lenders. 16 Table of Contents We also utilize other short-term credit facilities for working capital purposes. There were $ 151 million and $ 220 million of borrowings outstanding under these facilities as of December 31, 2024 and September 30, 2025, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $ 10.6 billion of unused letters of credit as of September 30, 2025. 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 nine months ended September 30, 2024 or 2025. As of September 30, 2025, 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 quarterly in the relevant compensation year. Stock Award Activity Common shares outstanding plus shares underlying outstanding stock awards totaled 10.9 billion and 11.0 billion as of December 31, 2024 and September 30, 2025. 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 September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Cost of sales $ 193 $ 197 $ 633 $ 595 Fulfillment 696 685 2,276 2,062 Technology and infrastructure 2,961 2,697 9,403 8,412 Sales and marketing 1,012 832 3,168 2,692 General and administrative 471 436 1,536 1,309 Total stock-based compensation expense $ 5,333 $ 4,847 $ 17,016 $ 15,070 The following table summarizes our restricted stock unit activity for the nine months ended September 30, 2025 (in millions): Number of Units Weighted-Average Grant-Date Fair Value Outstanding as of December 31, 2024 283.1 $ 145 Units granted 106.6 198 Units vested ( 93.9 ) 137 Units forfeited ( 27.7 ) 153 Outstanding as of September 30, 2025 268.1 168 Scheduled vesting for outstanding restricted stock units as of September 30, 2025, is as follows (in millions): Three Months Ended December 31, Year Ended December 31, 2025 2026 2027 2028 2029 Thereafter Total Scheduled vesting — restricted stock units 44.5 112.8 70.9 29.7 8.3 1.9 268.1 As of September 30, 2025, there was $ 20.1 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation is recognized on an accelerated basis with more than half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of 1.0 year. 17 Table of Contents Changes in Stockholders’ Equity The following table shows changes in stockholders’ equity (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Total beginning stockholders’ equity $ 236,447 $ 333,775 $ 201,875 $ 285,970 Beginning common stock 110 112 109 111 Stock-based compensation and issuance of employee benefit plan stock — — 1 1 Ending common stock 110 112 110 112 Beginning and ending treasury stock ( 7,837 ) ( 7,837 ) ( 7,837 ) ( 7,837 ) Beginning additional paid-in capital 110,633 130,923 99,025 120,864 Stock-based compensation and issuance of employee benefit plan stock 5,301 4,756 16,909 14,815 Ending additional paid-in capital 115,934 135,679 115,934 135,679 Beginning accumulated other comprehensive income (loss) ( 3,993 ) 2,420 ( 3,040 ) ( 34 ) Other comprehensive income (loss) 2,075 9,913 1,122 12,367 Ending accumulated other comprehensive income (loss) ( 1,918 ) 12,333 ( 1,918 ) 12,333 Beginning retained earnings 137,534 208,157 113,618 172,866 Net income 15,328 21,187 39,244 56,478 Ending retained earnings 152,862 229,344 152,862 229,344 Total ending stockholders’ equity $ 259,151 $ 369,631 $ 259,151 $ 369,631 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. The One Big Beautiful Bill Act of 2025 (the “2025 Tax Act”) was signed into law on July 4, 2025. 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. The 2025 Tax Act increased our income tax provision for the nine months ended September 30, 2025, primarily due to a decrease in the foreign income deduction, and will significantly decrease our cash taxes in 2025. For 2025, we estimate that our effective tax rate will be favorably impacted by the U.S. federal research and development credit and adversely affected by state income taxes. 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. Our income tax provision 18 Table of Contents for the nine months ended September 30, 2025 was $ 14.1 billion, which included $ 354 million of net discrete tax expense primarily attributable to the net gains from our investments in Anthropic, partially offset by excess tax benefits from stock-based compensation. Cash paid for income taxes, net of refunds was $ 2.0 billion and $ 1.1 billion in Q3 2024 and Q3 2025, and $ 8.2 billion and $ 6.8 billion for the nine months ended September 30, 2024 and 2025. As of December 31, 2024 and September 30, 2025, income tax contingencies were approximately $ 6.5 billion and $ 5.9 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 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 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”) is our President and Chief Executive Officer. Our 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 primarily by reviewing consolidated results by segment on a quarterly basis, and using those results along with forecasts and other non-financial information in our annual budgeting process. 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. 19 Table of Contents 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. Information on reportable segments and reconciliation to consolidated net income is as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2024 2025 2024 2025 North America Net sales $ 95,537 $ 106,267 $ 271,911 $ 299,222 Operating expenses 89,874 101,478 256,200 281,075 Operating income $ 5,663 $ 4,789 $ 15,711 $ 18,147 International Net sales $ 35,888 $ 40,896 $ 99,486 $ 111,170 Operating expenses 34,587 39,697 97,009 107,460 Operating income $ 1,301 $ 1,199 $ 2,477 $ 3,710 AWS Net sales $ 27,452 $ 33,006 $ 78,770 $ 93,146 Operating expenses 17,005 21,572 49,568 60,005 Operating income $ 10,447 $ 11,434 $ 29,202 $ 33,141 Consolidated Net sales $ 158,877 $ 180,169 $ 450,167 $ 503,538 Operating expenses 141,466 162,747 402,777 448,540 Operating income 17,411 17,422 47,390 54,998 Total non-operating income (expense) 626 10,748 ( 1,125 ) 15,708 Provision for income taxes ( 2,706 ) ( 6,910 ) ( 6,940 ) ( 14,141 ) Equity-method investment activity, net of tax ( 3 ) ( 73 ) ( 81 ) ( 87 ) Net income $ 15,328 $ 21,187 $ 39,244 $ 56,478 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 September 30, Nine Months Ended September 30, 2024 2025 2024 2025 Net Sales: Online stores (1) $ 61,411 $ 67,407 $ 171,473 $ 186,299 Physical stores (2) 5,228 5,578 15,636 16,706 Third-party seller services (3) 37,864 42,486 108,661 119,346 Advertising services (4) 14,331 17,703 38,926 47,318 Subscription services (5) 11,278 12,574 32,866 36,497 AWS 27,452 33,006 78,770 93,146 Other (6) 1,313 1,415 3,835 4,226 Consolidated $ 158,877 $ 180,169 $ 450,167 $ 503,538 ____________________________ (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 shipping services, healthcare services, and certain licensing and distribution of video content) and our co-branded credit card agreements. Total segment assets exclude corporate assets, such as cash and cash equivalents, marketable securities, other long-term investments, corporate facilities, goodwill and other acquired intangible assets, and tax assets. Technology infrastructure assets, which are included in property and equipment, net, net additions, and the depreciation and amortization expense on these assets, are allocated among the segments based on usage, with the majority allocated to the AWS segment. Usage of technology infrastructure assets by the North America and International segments, and the related allocation of total net additions, can fluctuate on a quarter-to-quarter basis, and is affected by seasonality, peak periods, new product or service offerings, and other factors. Total segment assets reconciled to consolidated amounts are as follows (in millions): December 31, 2024 September 30, 2025 North America (1) $ 210,120 $ 227,984 International (1) 69,487 79,221 AWS (2) 155,953 223,729 Corporate 189,334 196,987 Consolidated $ 624,894 $ 727,921 ___________________ (1) North America and International segment assets primarily consist of property and equipment, operating leases, inventory, accounts receivable, and digital video and music content. (2) AWS segment assets primarily consist of property and equipment, accounts receivable, and operating leases. 21 Table of Contents Property and equipment, net by segment is as follows (in millions): December 31, 2024 September 30, 2025 North America $ 103,041 $ 115,661 International 25,618 29,488 AWS 110,683 165,106 Corporate 13,323 14,180 Consolidated $ 252,665 $ 324,435 Total net additions to property and equipment include technology infrastructure assets and the effect of non-cash activity such as property and equipment acquired but not yet paid. Total net additions to property and equipment are as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2024 2025 2024 2025 North America (1) $ 6,522 $ 8,638 $ 16,602 $ 25,006 International (1) 2,185 1,439 4,422 5,476 AWS (2) 14,341 28,301 35,023 64,808 Corporate 349 507 1,101 1,805 Consolidated $ 23,397 $ 38,885 $ 57,148 $ 97,095 ___________________ (1) Includes property and equipment added under finance leases of $ 182 million and $ 432 million in Q3 2024 and Q3 2025, and $ 324 million and $ 507 million for the nine months ended September 30, 2024 and 2025. (2) Includes property and equipment added under finance leases of $ 4 million and $ 545 million in Q3 2024 and Q3 2025, and $ 85 million and $ 1.5 billion for the nine months ended September 30, 2024 and 2025. Depreciation and amortization expense on property and equipment, including corporate property and equipment, are allocated to all segments based on usage. Total depreciation and amortization expense, by segment, is as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2024 2025 2024 2025 North America $ 3,611 $ 4,001 $ 10,501 $ 11,273 International 1,164 1,276 3,267 3,592 AWS 3,541 5,648 9,458 14,882 Consolidated $ 8,316 $ 10,925 $ 23,226 $ 29,747 22 Table of Contents