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What changed in Amazon's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Amazon's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+142 added−135 removedSource: 10-K (2024-02-02) vs 10-K (2023-02-03)

Top changes in Amazon's 2023 10-K

142 paragraphs added · 135 removed · 126 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

11 edited+1 added−0 removed27 unchanged
Biggest changeMcGrath 70 Former Chair and CEO, MTV Networks Indra K. Nooyi 67 Former Chief Executive Officer, PepsiCo, Inc. Jonathan J. Rubinstein 66 Former co-CEO, Bridgewater Associates, LP Patricia Q. Stonesifer 66 Former President and Chief Executive Officer, Martha’s Table Wendell P. Weeks 63 Chief Executive Officer, Corning Incorporated
Biggest changeMcGrath 71 Former Chair and CEO, MTV Networks Indra K. Nooyi 68 Former Chair and CEO, PepsiCo, Inc. Jonathan J. Rubinstein 67 Former co-CEO, Bridgewater Associates, LP Brad D. Smith 59 President, Marshall University Patricia Q. Stonesifer 67 Former President and Chief Executive Officer, Martha’s Table Wendell P. Weeks 64 Chairman and CEO, Corning Incorporated
In addition, we offer subscription services such as Amazon Prime, a membership program that includes fast, free shipping on millions of items, access to award-winning movies and series, and other benefits.
In addition, we offer subscription services such as Amazon Prime, a membership program that includes fast, free shipping on tens of millions of items, access to award-winning movies and series, and other benefits.
Over 100,000 Amazon employees around the world have participated in Career Choice. We also continue to inspect and refine the mechanisms we use to hire, develop, evaluate, and retain our employees to promote equity for all candidates and employees.
Over 175,000 Amazon employees around the world have participated in Career Choice. We also continue to inspect and refine the mechanisms we use to hire, develop, evaluate, and retain our employees to promote equity for all candidates and employees.
Herrington has served as CEO Worldwide Amazon Stores since July 2022, Senior Vice President, North America Consumer from January 2015 to July 2022, and Senior Vice President, Consumables from May 2014 to December 2014. Brian T. Olsavsky. Mr.
Herrington has served as CEO Worldwide Amazon Stores since July 2022, Senior Vice President, North America Consumer from January 2015 to July 2022, Senior Vice President, Consumables from May 2014 to December 2014, and Vice President, Consumables from May 2005 to April 2014. Brian T. Olsavsky. Mr.
See Item 2 of Part I, “Properties.” Sellers We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders through us. We are not the seller of record in these transactions. We earn fixed fees, a percentage of sales, per-unit activity fees, interest, or some combination thereof, for our seller programs.
See Item 2 of Part I, “Properties.” Sellers We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders using our services. We are not the seller of record in these transactions. We earn fixed fees, a percentage of sales, per-unit activity fees, interest, or some combination thereof, for our seller programs.
We rely on numerous and evolving initiatives to implement these objectives and invent mechanisms for talent development, including competitive pay and benefits, flexible work arrangements, and skills training and educational programs such as Amazon Career Choice (funded education for hourly employees) and the Amazon Technical Academy (software development engineer training).
We rely on numerous and evolving initiatives to implement these objectives and invent mechanisms for talent development, including competitive pay and benefits, flexible work arrangements, and skills training and educational programs such as Amazon Career Choice (education funding for eligible employees) and the Amazon Technical Academy (software development engineer training).
Human Capital Our employees are critical to our mission of being Earth’s most customer-centric company. As of December 31, 2022, we employed approximately 1,541,000 full-time and part-time employees. Additionally, we use independent contractors and temporary personnel to supplement our workforce.
Human Capital Our employees are critical to our mission of being Earth’s most customer-centric company. As of December 31, 2023, we employed approximately 1,525,000 full-time and part-time employees. Additionally, we use independent contractors and temporary personnel to supplement our workforce.
Olsavsky 59 Senior Vice President and Chief Financial Officer Shelley L. Reynolds 58 Vice President, Worldwide Controller, and Principal Accounting Officer Adam N. Selipsky 56 CEO Amazon Web Services David A. Zapolsky 59 Senior Vice President, General Counsel, and Secretary Jeffrey P. Bezos. Mr. Bezos founded Amazon.com in 1994 and has served as Executive Chair since July 2021.
Olsavsky 60 Senior Vice President and Chief Financial Officer Shelley L. Reynolds 59 Vice President, Worldwide Controller, and Principal Accounting Officer Adam N. Selipsky 57 CEO Amazon Web Services David A. Zapolsky 60 Senior Vice President, Global Public Policy and General Counsel Jeffrey P. Bezos. Mr. Bezos founded Amazon.com in 1994 and has served as Executive Chair since July 2021.
Zapolsky has served as Senior Vice President, General Counsel, and Secretary since May 2014, Vice President, General Counsel, and Secretary from September 2012 to May 2014, and as Vice President and Associate General Counsel for Litigation and Regulatory matters from April 2002 until September 2012. 5 Table of Contents Board of Directors Name Age Position Jeffrey P.
He served as Senior Vice President and General Counsel from May 2014 to May 2023, Vice President and General Counsel from September 2012 to May 2014, and as Vice President and Associate General Counsel for Litigation and Regulatory matters from April 2002 until September 2012. 5 Table of Contents Board of Directors Name Age Position Jeffrey P.
Executive Officers and Directors The following tables set forth certain information regarding our Executive Officers and Directors as of January 25, 2023: Information About Our Executive Officers Name Age Position Jeffrey P. Bezos 59 Executive Chair Andrew R. Jassy 55 President and Chief Executive Officer Douglas J. Herrington 56 CEO Worldwide Amazon Stores Brian T.
Executive Officers and Directors The following tables set forth certain information regarding our Executive Officers and Directors as of January 24, 2024: Information About Our Executive Officers Name Age Position Jeffrey P. Bezos 60 Executive Chair Andrew R. Jassy 56 President and Chief Executive Officer Douglas J. Herrington 57 CEO Worldwide Amazon Stores Brian T.
Bezos 59 Executive Chair Andrew R. Jassy 55 President and Chief Executive Officer Keith B. Alexander 71 CEO, President, and Chair of IronNet, Inc. Edith W. Cooper 61 Former Executive Vice President, Goldman Sachs Group, Inc. Jamie S. Gorelick 72 Partner, Wilmer Cutler Pickering Hale and Dorr LLP Daniel P. Huttenlocher 64 Dean, MIT Schwarzman College of Computing Judith A.
Bezos 60 Executive Chair Andrew R. Jassy 56 President and Chief Executive Officer Keith B. Alexander 72 Chair of IronNet, Inc. Edith W. Cooper 62 Former Executive Vice President, Goldman Sachs Group, Inc. Jamie S. Gorelick 73 Partner, Wilmer Cutler Pickering Hale and Dorr LLP Daniel P. Huttenlocher 65 Dean, MIT Schwarzman College of Computing Judith A.
Added
Zapolsky has served as Senior Vice President, Global Public Policy and General Counsel since May 2023 and has served as our Secretary since September 2012.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur sales and operating results will also fluctuate for many other reasons, including due to factors described elsewhere in this section and the following: • our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands; • our ability to retain and expand our network of sellers; • our ability to offer products on favorable terms, manage inventory, and fulfill orders; • the introduction of competitive stores, websites, products, services, price decreases, or improvements; • changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.; • timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; • the success of our geographic, service, and product line expansions; • the extent to which we finance, and the terms of any such financing for, our current operations and future growth; 9 Table of Contents • the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results; • variations in the mix of products and services we sell; • variations in our level of merchandise and vendor returns; • the extent to which we offer fast and free delivery, continue to reduce prices worldwide, and provide additional benefits to our customers; • factors affecting our reputation or brand image (including any actual or perceived inability to achieve our goals or commitments, whether related to sustainability, customers, employees, or other topics); • the extent to which we invest in technology and content, fulfillment, and other expense categories; • increases in the prices of transportation (including fuel), energy products, commodities like paper and packing supplies and hardware products, and technology infrastructure products, including as a result of inflationary pressures; • constrained labor markets, which increase our payroll costs; • the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and unconstrained access to our online services; • our ability to collect amounts owed to us when they become due; • the extent to which new and existing technologies, or industry trends, restrict online advertising or affect our ability to customize advertising or otherwise tailor our product and service offerings; • the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and • disruptions from natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes (including restrictive governmental actions impacting us and our third-party sellers in China or other foreign countries), and similar events.
Biggest changeOur sales and operating results will also fluctuate for many other reasons, including due to factors described elsewhere in this section and the following: • our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands; • our ability to retain and expand our network of sellers; • our ability to offer products on favorable terms, manage inventory, and fulfill orders; • the introduction of competitive stores, websites, products, services, price decreases, or improvements; 9 Table of Contents • changes in usage or adoption rates of the internet, e-commerce, electronic devices, and web services, including outside the U.S.; • timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; • the success of our geographic, service, and product line expansions; • the extent to which we finance, and the terms of any such financing for, our current operations and future growth; • the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results; • variations in the mix of products and services we sell; • variations in our level of merchandise and vendor returns; • the extent to which we offer fast and free delivery, continue to reduce prices worldwide, and provide additional benefits to our customers; • factors affecting our reputation or brand image (including any actual or perceived inability to achieve our goals or commitments, whether related to sustainability, customers, employees, or other topics), and public perceptions regarding social or ethical issues related to our development and use of artificial intelligence and machine learning technologies, products, and services; • the extent to which we invest in technology and infrastructure, fulfillment, and other expense categories; • availability of and increases in the prices of transportation (including fuel), resources such as land, water, and energy, commodities like paper and packing supplies and hardware products, and technology infrastructure products, including as a result of inflationary pressures; • constrained labor markets, which increase our payroll costs; • the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and unconstrained access to our online services; • our ability to collect amounts owed to us when they become due; • the extent to which new and existing technologies, or industry trends, restrict online advertising or affect our ability to customize advertising or otherwise tailor our product and service offerings; • the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; • the extent to which we fail to maintain our unique culture of innovation, customer obsession, and long-term thinking, which has been critical to our growth and success; • disruptions from natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues (including terrorist attacks, armed hostilities, and political conflicts, including those involving China), labor or trade disputes (including restrictive governmental actions impacting us, our customers, and our third-party sellers and suppliers in China or other foreign countries), and similar events; and • potential negative impacts of climate change, including: increased operating costs due to more frequent extreme weather events or climate-related changes, such as rising temperatures and water scarcity; increased investment requirements associated with the transition to a low-carbon economy; decreased demand for our products and services as a result of changes in customer behavior; increased compliance costs due to more extensive and global regulations and third-party requirements; and reputational damage resulting from perceptions of our environmental impact.
These transactions involve risks such as: • disruption of our ongoing business, including loss of management focus on existing businesses; • problems retaining key personnel; • additional operating losses and expenses of the businesses we acquired or in which we invested; • the potential impairment of tangible and intangible assets and goodwill, including as a result of acquisitions; • the potential impairment of customer and other relationships of the company we acquired or in which we invested or our own customers as a result of any integration of operations; • the difficulty of completing such transactions, including obtaining regulatory approvals or satisfying other closing conditions, and achieving anticipated benefits within expected timeframes, or at all; • the difficulty of incorporating acquired operations, technology, and rights into our offerings, and unanticipated expenses related to such integration; • the difficulty of integrating a new company’s accounting, financial reporting, management, information and data security, human resource, and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not successfully implemented; • losses we may incur as a result of declines in the value of an investment or as a result of incorporating an investee’s financial performance into our financial results; 12 Table of Contents • for investments in which an investee’s financial performance is incorporated into our financial results, either in full or in part, or investments for which we are required to file financial statements or provide financial information, the dependence on the investee’s accounting, financial reporting, and similar systems, controls, and processes; • the difficulty of implementing at companies we acquire the controls, procedures, and policies appropriate for a larger public company; • the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face; • potential unknown liabilities associated with a company we acquire or in which we invest; and • for foreign transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political, and regulatory risks associated with specific countries.
These transactions involve risks such as: • disruption of our ongoing business, including loss of management focus on existing businesses; • problems retaining key personnel; • additional operating losses and expenses of the businesses we acquired or in which we invested; • the potential impairment of tangible and intangible assets and goodwill, including as a result of acquisitions; • the potential impairment of customer and other relationships of the company we acquired or in which we invested or our own customers as a result of any integration of operations; • the difficulty of completing such transactions, including obtaining regulatory approvals or satisfying other closing conditions, and achieving anticipated benefits within expected timeframes, or at all; • the difficulty of incorporating acquired operations, technology, and rights into our offerings, and unanticipated expenses related to such integration; • the difficulty of integrating a new company’s accounting, financial reporting, management, information and data security, human resource, and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not successfully implemented; • losses we may incur as a result of declines in the value of an investment or as a result of incorporating an investee’s financial performance into our financial results; • for investments in which an investee’s financial performance is incorporated into our financial results, either in full or in part, or investments for which we are required to file financial statements or provide financial information, the dependence on the investee’s accounting, financial reporting, and similar systems, controls, and processes; • the difficulty of implementing at companies we acquire the controls, procedures, and policies appropriate for a larger public company; • the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face; • potential unknown liabilities associated with a company we acquire or in which we invest; and • for foreign transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political, and regulatory risks associated with specific countries.
In addition to the factors discussed in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview,” and in the risk factors below, global economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of the risks discussed below.
In addition to the factors discussed in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in the risk factors below, global economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of the risks discussed below.
In addition to risks described elsewhere in this section, our international sales and operations are subject to a number of risks, including: • local economic and political conditions; • government regulation (such as regulation of our product and service offerings and of competition); restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs); nationalization; and restrictions on foreign ownership; • restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights; • business licensing or certification requirements, such as for imports, exports, web services, and electronic devices; • limitations on the repatriation and investment of funds and foreign currency exchange restrictions; • limited fulfillment and technology infrastructure; • shorter payable and longer receivable cycles and the resultant negative impact on cash flow; • laws and regulations regarding privacy, data use, data protection, data security, data localization, network security, consumer protection, payments, advertising, and restrictions on pricing or discounts; • lower levels of use of the Internet; • lower levels of consumer spending and fewer opportunities for growth compared to the U.S.; • lower levels of credit card usage and increased payment risk; • difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences; • different employee/employer relationships and the existence of works councils and labor unions; • compliance with the U.S.
In addition to risks described elsewhere in this section, our international sales and operations are subject to a number of risks, including: • local economic and political conditions; • government regulation (such as regulation of our product and service offerings and of competition); restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs, and restrictions around the import and export of certain products, technologies, and components); nationalization; and restrictions on foreign ownership; • restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights; • business licensing or certification requirements, such as for imports, exports, web services, and electronic devices; • limitations on the repatriation and investment of funds and foreign currency exchange restrictions; • limited fulfillment and technology infrastructure; • shorter payable and longer receivable cycles and the resultant negative impact on cash flow; • laws and regulations regarding privacy, data use, data protection, data security, data localization, network security, consumer protection, payments, advertising, and restrictions on pricing or discounts; • lower levels of use of the internet; • lower levels of consumer spending and fewer opportunities for growth compared to the U.S.; • lower levels of credit card usage and increased payment risk; • difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences; • different employee/employer relationships and the existence of works councils and labor unions; • compliance with the U.S.
These regulations and laws cover taxation, privacy, data use, data protection, data security, data localization, network security, consumer protection, pricing, content, copyrights, distribution, transportation, mobile communications, electronic device certification, electronic waste, energy consumption, environmental regulation, electronic contracts and other communications, competition, employment, trade and protectionist measures, web services, the provision of online payment services, registration, licensing, and information reporting requirements, unencumbered Internet access to our services or access to our facilities, the design and operation of websites, health, safety, and sanitation standards, the characteristics, legality, and quality of products and services, product labeling, the commercial operation of unmanned aircraft systems, healthcare, and other matters.
These regulations and laws cover taxation, privacy, data use, data protection, data security, data localization, network security, consumer protection, pricing, content, copyrights, distribution, transportation, mobile communications, electronic device certification, electronic waste, energy consumption, environmental and climate-related regulation, electronic contracts and other communications, competition, employment, trade and protectionist measures, web services, the provision of online payment services, registration, licensing, and information reporting requirements, unencumbered internet access to our services or access to our facilities, the design and operation of websites, health, safety, and sanitation standards, the characteristics, legality, and quality of products and services, product labeling, the commercial operation of unmanned aircraft systems, healthcare, and other matters.
Decisions by our current suppliers to limit or stop selling or licensing merchandise, content, components, or services to us on acceptable terms, or delay delivery, including as a result of one or more supplier bankruptcies due to poor economic conditions, as a result of natural or human-caused disasters (including public health crises), or for other reasons, may result in our being unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all.
Decisions by our current suppliers to limit or stop selling or licensing merchandise, content, components, or services to us on acceptable terms, or delay delivery, including as a result of one or more supplier bankruptcies due to poor economic conditions, as a result of natural or human-caused disasters (including public health crises) or geopolitical events, or for other reasons, may result in our being unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all.
In addition, when we begin selling or manufacturing a new product, it may be difficult to establish vendor relationships, determine appropriate product or component selection, and accurately forecast demand. The acquisition of certain types of inventory or components requires significant lead-time and prepayment and they may not be returnable.
In addition, when we begin selling or manufacturing a new product or offering a new service, it may be difficult to establish vendor relationships, determine appropriate product or component selection, and accurately forecast demand. The acquisition of certain types of inventory or components requires significant lead-time and prepayment and they may not be returnable.
Our tax expense and liabilities are also affected by other factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special or extraterritorial tax regimes, changes in foreign currency exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, and changes in our tax assets and liabilities and their 15 Table of Contents valuation.
Our tax expense and liabilities are also affected by other factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special or extraterritorial tax regimes, changes in foreign exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, and changes in our tax assets and liabilities and their valuation.
We Face Risks Related to Successfully Optimizing and Operating Our Fulfillment Network and Data Centers Failures to adequately predict customer demand or otherwise optimize and operate our fulfillment network and data centers successfully from time to time result in excess or insufficient fulfillment or data center capacity, service interruptions, increased costs, and impairment charges, any of which could materially harm our business.
We Face Risks Related to Successfully Optimizing and Operating Our Fulfillment Network and Data Centers Failures to adequately predict customer demand and consumer spending patterns or otherwise optimize and operate our fulfillment network and data centers successfully from time to time result in excess or insufficient fulfillment or data center capacity, service interruptions, increased costs, and impairment charges, any of which could materially harm our business.
Although we impose contractual terms on sellers that are intended to prohibit sales of certain type of products, we may not be able to detect, enforce, or collect sufficient damages for breaches of such agreements. In addition, some of our agreements with our vendors and sellers do not indemnify us from product liability.
Although we impose contractual terms on sellers that are intended to prohibit sales of certain type of products, we may not be able to detect, enforce, or collect sufficient damages for 15 Table of Contents breaches of such agreements. In addition, some of our agreements with our vendors and sellers do not indemnify us from product liability.
It is not clear how existing laws governing issues such as property ownership, libel, privacy, data use, data protection, data security, data localization, network security, and consumer protection apply to aspects of our operations such as the Internet, e-commerce, digital content, web services, electronic devices, advertising, and artificial intelligence technologies and services.
It is not clear how 14 Table of Contents existing laws governing issues such as property ownership, libel, privacy, data use, data protection, data security, data localization, network security, and consumer protection apply to aspects of our operations such as the internet, e-commerce, digital content, web services, electronic devices, advertising, and artificial intelligence technologies and services.
In addition, our sustainability initiatives may be unsuccessful for a variety of 6 Table of Contents reasons, including if we are unable to realize the expected benefits of new technologies or if we do not successfully plan or execute new strategies, which could harm our business or damage our reputation.
In addition, our sustainability initiatives may be unsuccessful for a variety of reasons, including if we are unable to realize the expected benefits of new technologies or if we do not successfully plan or execute new strategies, which could harm our business or damage our reputation.
We may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights. We are not always able to discover or determine the extent of any unauthorized use of our proprietary rights.
We may be 8 Table of Contents unable to prevent third parties from acquiring domain names that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights. We are not always able to discover or determine the extent of any unauthorized use of our proprietary rights.
For example, we are litigating a number of matters alleging price fixing, monopolization, and consumer protection claims, including those brought by state attorneys general. Any of these types of proceedings can have an adverse effect on us because of legal costs, disruption of our operations, diversion of management resources, negative publicity, and other factors.
For example, we are litigating a number of matters alleging price fixing, monopolization, and consumer protection claims, including those brought by state attorneys general and the Federal Trade Commission. Any of these types of proceedings can have an adverse effect on us because of legal costs, disruption of our operations, diversion of management resources, negative publicity, and other factors.
We Are Subject to Payments-Related Risks We accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift cards, direct debit from a customer’s bank account, consumer invoicing, physical bank check, and payment upon delivery.
We Are Subject to Payments-Related Risks We accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift cards, direct debit from a customer’s bank account, consumer invoicing, physical bank check, and payment 13 Table of Contents upon delivery.
Our failure to properly handle such inventory or the inability of the other businesses on whose behalf we perform inventory fulfillment services to accurately forecast product demand may result in us being unable to secure sufficient storage space or to optimize our fulfillment network or cause other unexpected costs and other harm to our business and reputation.
Our failure to adequately predict seller demand for storage or to properly handle such inventory or the inability of the other businesses on whose behalf we perform inventory fulfillment services to accurately forecast product demand may result in us being unable to secure sufficient storage space or to optimize our fulfillment network or cause other unexpected costs and other harm to our business and reputation.
We are also subject to or voluntarily comply with a number of other laws and regulations relating to payments, money laundering, international money transfers, privacy, data use, data protection, data security, data localization, network security, consumer 13 Table of Contents protection, and electronic fund transfers.
We are also subject to or voluntarily comply with a number of other laws and regulations relating to payments, money laundering, international money transfers, privacy, data use, data protection, data security, data localization, network security, consumer protection, and electronic fund transfers.
Moreover, the steps we take to protect our intellectual property do not always adequately protect our rights or prevent third 8 Table of Contents parties from infringing or misappropriating our proprietary rights. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights.
Moreover, the steps we take to protect our intellectual property do not always adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights.
Our revenue and operating profit growth depends on the continued growth of demand for the products and services offered by us or our sellers, and our business is affected by general economic, business, and geopolitical conditions worldwide.
Our revenue and operating profit growth depends on the continued growth of demand for the products and services offered by us or our sellers, and our business is affected by, among other things, general economic, business, and geopolitical conditions worldwide.
Although we believe these structures and activities comply with existing laws, they involve unique risks, and the PRC and India may from time to time consider and implement additional changes in their regulatory, licensing, or other requirements that could impact these structures and activities.
Although we believe these structures and activities comply with existing laws, they involve unique risks, and the PRC and India may from time to time consider and implement additional changes in 7 Table of Contents their regulatory, licensing, or other requirements that could impact these structures and activities.
There are substantial uncertainties regarding the interpretation of PRC and Indian laws and regulations, and it is possible that these governments will 7 Table of Contents ultimately take a view contrary to ours.
There are substantial uncertainties regarding the interpretation of PRC and Indian laws and regulations, and it is possible that these governments will ultimately take a view contrary to ours.
We do not have long-term arrangements with most of our suppliers to guarantee availability of merchandise, content, 11 Table of Contents components, or services, particular payment terms, or the extension of credit limits.
We do not have long-term arrangements with most of our suppliers to guarantee availability of merchandise, content, components, or services, particular payment terms, or the extension of credit limits.
Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off.
Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the 6 Table of Contents value of those investments being written down or written off.
Competition for qualified personnel in the industries in which we operate, as well as senior management, has historically been intense. For example, we experience significant competition in the technology industry, particularly for software engineers, computer scientists, and other technical staff.
Competition for qualified personnel in the industries in which we operate, as well as senior management, has historically been intense. For example, we experience 11 Table of Contents significant competition in the technology industry, particularly for software engineers, computer scientists, and other technical staff.
In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices continue to increase our competition. The Internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller, or lesser known businesses to compete against us.
In addition, new and enhanced technologies, including search, web and infrastructure computing services, practical applications of artificial intelligence and machine learning, digital content, and electronic devices continue to increase our competition. The internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller, or lesser known businesses to compete against us.
In addition, profitability, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments in them, which investments are often significant.
In addition, profitability or other intended benefits, if any, in our newer activities may not meet our expectations, and we may not be successful enough in these newer activities to recoup our investments in them, which investments are often significant.
For example, in February 2023, the Indian Tax Authority determined that tax applies to cloud services fees paid to the U.S. We are contesting this determination; however, if this matter is adversely resolved, we may be required to pay additional amounts with respect to current and prior periods and our taxes in the future could increase.
For example, the Indian tax authority has asserted that tax applies to cloud services fees paid to Amazon in the U.S. We are contesting this position; however, if this matter is adversely resolved, we may be required to pay additional amounts with respect to current and prior periods and our taxes in the future could increase.
In addition, some of these contracts are subject to periodic funding approval and/or provide for termination by the government at any time, without cause.
In addition, some of these contracts are subject to periodic funding approval and/or provide for termination by the government at any time, without cause. Item 1B. Unresolved Staff Comments None.
The media, political, and regulatory scrutiny we face, which may continue to increase, amplifies these risks. 14 Table of Contents Claims, Litigation, Government Investigations, and Other Proceedings May Adversely Affect Our Business and Results of Operations As an innovative company offering a wide range of consumer and business products and services around the world, we are regularly subject to actual and threatened claims, litigation, reviews, investigations, and other proceedings, including proceedings by governments and regulatory authorities, involving a wide range of issues, including patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy, data use, data protection, data security, data localization, network security, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters.
Claims, Litigation, Government Investigations, and Other Proceedings May Adversely Affect Our Business and Results of Operations As an innovative company offering a wide range of consumer and business products and services around the world, we are regularly subject to actual and threatened claims, litigation, reviews, investigations, and other proceedings, including proceedings by governments and regulatory authorities, involving a wide range of issues, including patent and other intellectual property matters, taxes, labor and employment (including the characterization of delivery drivers), competition and antitrust, privacy, data use, data protection, data security, data localization, network security, consumer protection, commercial disputes, goods and services offered by us and by third parties (including artificial intelligence technologies and services), and other matters.
For www.amazon.in, we provide certain marketing tools and logistics services to third-party sellers to enable them to sell online and deliver to customers, and we hold indirect minority interests in entities that are third-party sellers on the www.amazon.in marketplace.
For www.amazon.in, we provide certain marketing tools and logistics services to third-party sellers to enable them to sell online and deliver to customers, and we hold an indirect minority interest in an entity that is a third-party seller on the www.amazon.in marketplace.
Such licenses may not be available on terms acceptable to us or at all. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims. Our digital content offerings depend in part on effective digital rights management technology to control access to digital content.
Such licenses may not be available on terms acceptable to us or at all. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.
As we continue to add fulfillment and data center capability or add new businesses with different requirements, our fulfillment and data center networks become increasingly complex and operating them becomes more challenging. There can be no assurance that we will be able to operate our networks effectively.
As we continue to add fulfillment and data center capability or add new businesses with different requirements, our fulfillment and data center networks become increasingly complex and operating them becomes more challenging.
For example, productivity across our fulfillment network currently is being affected by regional labor market and global supply chain constraints, which increase payroll costs and make it difficult to hire, train, and deploy a sufficient number of people to operate our fulfillment network as efficiently as we would like.
We and our co-sourcers may be unable to adequately staff our fulfillment network and customer service centers. For example, productivity across our fulfillment network is affected by regional labor market constraints, which increase payroll costs and make it difficult to hire, train, and deploy a sufficient number of people to operate our fulfillment network as efficiently as we would like.
In addition, our ability to receive inbound inventory efficiently and ship completed orders to customers also may be negatively affected by natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues, labor or trade disputes, and similar events. 10 Table of Contents We Could Be Harmed by Data Loss or Other Security Breaches Because we collect, process, store, and transmit large amounts of data, including confidential, sensitive, proprietary, and business and personal information, failure to prevent or mitigate data loss, theft, misuse, or other security breaches or vulnerabilities affecting our or our vendors’ or customers’ technology, products, and systems, could: expose us or our customers to a risk of loss, disclosure, or misuse of such information; adversely affect our operating results; result in litigation, liability, or regulatory action (including under laws related to privacy, data use, data protection, data security, network security, and consumer protection); deter customers or sellers from using our stores, products, and services; and otherwise harm our business and reputation.
We Could Be Harmed by Data Loss or Other Security Breaches Because we collect, process, store, and transmit large amounts of data, including confidential, classified, sensitive, proprietary, and business and personal information, failure to prevent or mitigate data loss, theft, misuse, unauthorized access, or other security breaches or vulnerabilities affecting our or our vendors’ or customers’ technology, products, and systems, could: expose us or our customers to a risk of loss, disclosure, or misuse of such information; adversely affect our operating results; result in litigation, liability, or regulatory action (including under laws related to privacy, data use, data protection, data security, network security, and consumer protection); deter customers or sellers from using our stores, products, and services; and otherwise harm our business and reputation.
Our present and future commercial agreements, strategic alliances, and business relationships create additional risks such as: • disruption of our ongoing business, including loss of management focus on existing businesses; • impairment of other relationships; • variability in revenue and income from entering into, amending, or terminating such agreements or relationships; and • difficulty integrating under the commercial agreements.
Our present and future commercial agreements, strategic alliances, and business relationships create additional risks such as: • disruption of our ongoing business, including loss of management focus on existing businesses; • impairment of other relationships; • variability in revenue and income from entering into, amending, or terminating such agreements or relationships; and • difficulty integrating under the commercial agreements. 12 Table of Contents Our Business Suffers When We Are Unsuccessful in Making, Integrating, and Maintaining Acquisitions and Investments We have acquired and invested in a number of companies, and we may in the future acquire or invest in or enter into joint ventures with additional companies.
Proliferation of these or similar unilateral tax measures may continue unless broader international tax reform is implemented.
Proliferation of these or similar unilateral tax measures may continue unless broader international tax reform is implemented. In addition, the European Union and other countries (including those in which we operate) have enacted or have committed to enact global minimum taxes, which may increase our tax expense in future years.
Removed
In addition, failure to optimize inventory or staffing in our fulfillment network increases our net shipping cost by requiring long-zone or partial shipments. We and our co-sourcers may be unable to adequately staff our fulfillment network and customer service centers.
Added
In addition, because China-based sellers account for significant portions of our third-party seller services and advertising revenues, and China-based suppliers provide significant portions of our components and finished goods, regulatory and trade restrictions, data protection and cybersecurity laws, economic factors, geopolitical events, security issues, or other factors negatively impacting China-based sellers and suppliers could adversely affect our operating results.
Removed
Our Business Suffers When We Are Unsuccessful in Making, Integrating, and Maintaining Acquisitions and Investments We have acquired and invested in a number of companies, and we may in the future acquire or invest in or enter into joint ventures with additional companies.
Added
In addition, our and our customers’ use of artificial intelligence may result in increased claims of infringement or other claims, including those based on unauthorized use of third-party technology or content. Our digital content offerings depend in part on effective digital rights management technology to control access to digital content.
Removed
For example, we face a number of open investigations based on claims that aspects of our operations violate competition rules, including aspects of Amazon’s U.S. and European marketplace for sellers, particularly with respect to use of data, fulfillment services, and featured offers, and legislative and regulatory initiatives in Europe and elsewhere allow authorities to restrict or prohibit certain operations or actions pre-emptively without the need to assess specific competitive effects.
Added
There can be no assurance that we will be able to operate our networks effectively. 10 Table of Contents In addition, failure to optimize inventory management or staffing in our fulfillment network increases our net shipping cost by increasing the distance products are shipped and reducing the number of units per shipment or delivery.
Added
In addition, our ability to receive inbound inventory efficiently and ship completed orders to customers also may be negatively affected by natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues, labor or trade disputes, and similar events.
Added
For example, we rely on a limited group of suppliers for semiconductor products, including products related to artificial intelligence infrastructure such as graphics processing units. Constraints on the availability of these products could adversely affect our ability to develop and operate artificial intelligence technologies, products, or services.
Added
For example, we face a number of open investigations based on claims that aspects of our operations infringe competition rules, including aspects of Amazon’s operation of its stores including its fulfillment network, Amazon’s acquisitions, and certain aspects of AWS’s offering of cloud services. We strongly dispute these claims and intend to defend ourselves vigorously in these investigations.
Added
Similarly, we face investigations under a growing patchwork of laws and regulations governing the collection, use, and disclosure of data, the interpretation of which continues to evolve, leading to uncertainty about how regulators will view our privacy practices.
Added
In addition, regulators and lawmakers are increasingly focused on controlling additional aspects of the operations of technology companies and companies they have characterized to be online “gatekeepers” through the application of existing regulations and laws and the adoption of new regulations and laws, which increases our compliance costs and limits the operation of our business.
Added
The media, political, and regulatory scrutiny we face, which may continue to increase, amplifies these risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties As of December 31, 2022, we operated the following facilities (in thousands): Description of Use Leased Square Footage (1) Owned Square Footage Location Office space 30,611 6,792 North America Office space 23,956 1,802 International Physical stores (2) 22,881 662 North America Physical stores (2) 291 — International Fulfillment, data centers, and other 391,598 22,058 North America Fulfillment, data centers, and other 148,146 12,613 International Total 617,483 43,927 ___________________ (1) For leased properties, represents the total leased space excluding sub-leased space.
Biggest changeProperties As of December 31, 2023, we operated the following facilities (in thousands): Description of Use Leased Square Footage (1) Owned Square Footage Location Office space 29,655 9,222 North America Office space 24,528 1,802 International Physical stores (2) 22,871 707 North America Physical stores (2) 255 — International Fulfillment, data centers, and other 413,017 25,630 North America Fulfillment, data centers, and other 173,765 14,802 International Total 664,091 52,163 ___________________ (1) For leased properties, represents the total leased space excluding sub-leased space.
(2) This includes 611 North America and 32 International stores as of December 31, 2022. Segment Leased Square Footage (1) Owned Square Footage (1) North America 403,984 13,595 International 140,898 6,292 AWS 18,034 15,446 Total 562,916 35,333 ___________________ (1) Segment amounts exclude corporate facilities.
(2) This includes 600 North America and 28 International stores as of December 31, 2023. Segment Leased Square Footage (1) Owned Square Footage (1) North America 424,145 15,438 International 165,329 7,931 AWS 20,434 17,770 Total 609,908 41,139 ___________________ (1) Segment amounts exclude corporate facilities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “AMZN.” Holders As of January 25, 2023, there were 10,845 shareholders of record of our common stock, although there is a much larger number of beneficial owners.
Biggest changeItem 5. Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “AMZN.” Holders As of January 24, 2024, there were 11,656 shareholders of record of our common stock, although there is a much larger number of beneficial owners.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

66 edited+6 added−6 removed59 unchanged
Biggest changeGeneral and Administrative The increase in general and administrative costs in absolute dollars in 2022, compared to the prior year, is primarily due to increases in payroll and related expenses and professional fees. 26 Table of Contents Other Operating Expense (Income), Net Other operating expense (income), net was $62 million and $1.3 billion during 2021 and 2022, and was primarily related to the amortization of intangible assets and, for 2022, $1.1 billion of impairments of property and equipment and operating leases.
Biggest changeOther Operating Expense (Income), Net Other operating expense (income), net was $1.3 billion and $767 million during 2022 and 2023, and was primarily related to asset impairments for physical store closures in 2022 and for fulfillment network facilities and physical store closures in 2023, and the amortization of intangible assets. 27 Table of Contents Interest Income and Expense Our interest income was $989 million and $2.9 billion during 2022 and 2023, primarily due to an increase in prevailing rates.
We also believe it is useful to evaluate our operating results and growth rates before and after the effect of currency changes. In addition, the remeasurement of our intercompany balances can result in significant gains and losses associated with the effect of movements in foreign currency exchange rates.
We also believe it is useful to evaluate our operating results and growth rates before and after the effect of currency changes. In addition, the remeasurement of our intercompany balances can result in significant gains and losses associated with the effect of movements in foreign exchange rates.
Our effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special tax regimes, changes in foreign currency exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, changes in our deferred tax assets and liabilities and their valuation, changes in the laws, regulations, 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.
Our effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special tax regimes, changes in foreign exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, changes in our deferred tax assets and liabilities and their valuation, changes in the laws, regulations, 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.
Our technology and content investment and capital spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and operations. We expect spending in technology and content to increase over time as we continue to add employees and technology infrastructure. These costs are allocated to segments based on usage.
Our technology and infrastructure investment and capital spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and operations. We expect spending in technology and infrastructure to increase over time as we continue to add employees and infrastructure. These costs are allocated to segments based on usage.
For additional information about each line item addressed above, refer to Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures.” Our Annual Report on Form 10-K for the year ended December 31, 2021 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2020 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Critical Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“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.
For additional information about each line item addressed above, refer to Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures.” Our Annual Report on Form 10-K for the year ended December 31, 2022 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2021 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Critical Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“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.
We seek to invest efficiently in several areas of technology and content, including AWS, and expansion of new and existing product categories and service offerings, as well as in technology infrastructure to enhance the customer experience and improve our process efficiencies.
We seek to invest efficiently in several areas of technology and infrastructure, including AWS, and expansion of new and existing product categories and service offerings, as well as in infrastructure to enhance the customer experience and improve our process efficiencies.
Technology and Content Technology and content costs include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and infrastructure costs.
Technology and Infrastructure Technology and infrastructure costs include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and infrastructure costs.
Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions and customer demand and spending, inflation, interest rates, regional labor market and global supply chain constraints, world events, the rate of growth of the Internet, online commerce, and cloud services, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity.
Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions and customer demand and spending, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity.
Service sales primarily represent third-party seller fees, which includes commissions and any related fulfillment and shipping fees, AWS sales, advertising services, Amazon Prime membership fees, and certain digital content subscriptions.
Service sales primarily represent third-party seller fees, which includes commissions and any related fulfillment and shipping fees, AWS sales, advertising services, Amazon Prime membership fees, and certain digital media content subscriptions.
We also expect some variability in accounts payable days over time since they are affected by several factors, including the mix of product sales, the mix of sales by third-party sellers, the mix 19 Table of Contents of suppliers, seasonality, and changes in payment and other terms over time, including the effect of balancing pricing and timing of payment terms with suppliers.
We also expect some variability in accounts payable days over time since they are affected by several factors, including the mix of product sales, the mix of sales by third-party sellers, the mix 20 Table of Contents of suppliers, seasonality, and changes in payment and other terms over time, including the effect of balancing pricing and timing of payment terms with suppliers.
We expect spending in technology and content will increase over time as we add computer scientists, designers, software and hardware engineers, and merchandising employees. Our technology and content investment and capital spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and operations.
We expect spending in technology and infrastructure will increase over time as we add computer scientists, designers, software and hardware engineers, and merchandising employees. Our technology and infrastructure investment and capital spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and operations.
While AWS payment processing and related transaction costs are included in “Fulfillment,” AWS costs are primarily classified as “Technology and content.” Fulfillment costs as a percentage of net sales may vary due to several factors, such as payment processing and related 25 Table of Contents transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and fulfilled, the extent to which third-party sellers utilize Fulfillment by Amazon services, timing of fulfillment network and physical store expansion, the extent we utilize fulfillment services provided by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our customer self-service features.
While AWS payment processing and related transaction costs are included in “Fulfillment,” AWS costs are primarily classified as “Technology and infrastructure.” Fulfillment costs as a percentage of net sales may vary due to several factors, such as payment processing and related transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and 26 Table of Contents fulfilled, the extent to which third-party sellers utilize Fulfillment by Amazon services, timing of fulfillment network and physical store expansion, the extent we utilize fulfillment services provided by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our customer self-service features.
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 20 Table of Contents vendors, or liquidations, and expected recoverable values of each disposition category.
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 21 Table of Contents vendors, or liquidations, and expected recoverable values of each disposition category.
We expect some or all of these factors to continue to impact our operations into Q1 2023. Net Sales Net sales include product and service sales. Product sales represent revenue from the sale of products and related shipping fees and digital media content where we record revenue gross.
We expect some or all of these factors to continue to impact our operations into Q1 2024. Net Sales Net sales include product and service sales. Product sales represent revenue from the sale of products and related shipping fees and digital media content where we record revenue gross.
We seek to invest efficiently in numerous areas of technology and content so we may continue to enhance the customer experience and improve our process efficiency through rapid technology developments, while operating at an ever increasing scale.
We seek to invest efficiently in numerous areas of technology and infrastructure so we may continue to enhance the customer experience and improve our process efficiency through rapid technology developments, while operating at an ever increasing scale.
Costs to operate our AWS segment are primarily classified as “Technology and content” as we leverage a shared infrastructure that supports both our internal technology requirements and external sales to AWS customers.
Costs to operate our AWS segment are primarily classified as “Technology and infrastructure” as we leverage a shared infrastructure that supports both our internal technology requirements and external sales to AWS customers.
In measuring shareholder dilution, we include all vested and unvested stock awards outstanding, without regard to estimated forfeitures. Total shares outstanding plus outstanding stock awards were 10.5 billion and 10.6 billion as of December 31, 2021 and 2022. Our financial reporting currency is the U.S. Dollar and changes in foreign exchange rates significantly affect our reported results and consolidated trends.
In measuring shareholder dilution, we include all vested and unvested stock awards outstanding, without regard to estimated forfeitures. Total shares outstanding plus outstanding stock awards were 10.6 billion and 10.8 billion as of December 31, 2022 and 2023. Our financial reporting currency is the U.S. Dollar and changes in foreign exchange rates significantly affect our reported results and consolidated trends.
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 December 31, 2022, we would have recorded an additional cost of sales of approximately $390 million.
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 December 31, 2023, we would have recorded an additional cost of sales of approximately $355 million.
In addition, economic conditions and actions by policymaking bodies are contributing to rising interest rates and significant capital market volatility, which, along with increases in our borrowing levels, could increase our future borrowing costs. 22 Table of Contents Results of Operations We have organized our operations into three segments: North America, International, and AWS.
In addition, economic conditions and actions by policymaking bodies are contributing to changing interest rates and significant capital market volatility, which, along with any increases in our borrowing levels, could increase our future borrowing costs. 23 Table of Contents Results of Operations We have organized our operations into three segments: North America, International, and AWS.
(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. 29 Table of Contents Guidance We provided guidance on February 2, 2023, in our earnings release furnished on Form 8-K as set forth below.
(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. 30 Table of Contents Guidance We provided guidance on February 1, 2024, in our earnings release furnished on Form 8-K as set forth below.
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, including faster delivery, and we offer additional services.
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.
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment Information.” Overview Macroeconomic factors, including inflation, increased interest rates, significant capital market volatility, the prolonged COVID-19 pandemic, global supply chain constraints, and global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify.
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment Information.” Overview Macroeconomic factors, including inflation, increased interest rates, significant capital market and supply chain volatility, and global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify.
The increase in sales and marketing costs in absolute dollars in 2022, compared to the prior year, is primarily due to increased payroll and related expenses for personnel engaged in marketing and selling activities and higher marketing spend.
The increase in sales and marketing costs in absolute dollars in 2023, compared to the prior year, is primarily due to increased payroll and related expenses for personnel engaged in marketing and selling activities.
In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions. We recorded a provision (benefit) for income taxes of $4.8 billion and $(3.2) billion in 2021 and 2022.
In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions. We recorded a provision (benefit) for income taxes of $(3.2) billion and $7.1 billion in 2022 and 2023.
In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand and our ability to forecast consumer spending patterns. We also expect the current macroeconomic environment and enterprise customer cost optimization efforts to impact our AWS revenue growth rates.
In addition, changes in fuel, utility, and food costs, interest rates, and economic outlook may impact customer demand and our ability to forecast consumer spending patterns. We also expect the current macroeconomic environment and enterprise customer cost optimization efforts to impact our AWS revenue growth rates.
(2) For the year ended December 31, 2021 and 2022, this amount relates to property included in “Principal repayments of finance leases” of $11,163 million and $7,941 million. All of these free cash flows measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures.
(2) For the year ended December 31, 2022 and 2023, this amount relates to property included in “Principal repayments of finance leases” of $7,941 million and $4,384 million. 29 Table of Contents All of these free cash flows measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures.
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for additional information. Our long-term lease liabilities were $67.7 billion and $73.0 billion as of December 31, 2021 and 2022. Our long-term debt was $48.7 billion and $67.1 billion as of December 31, 2021 and 2022.
Our long-term lease liabilities were $73.0 billion and $77.3 billion as of December 31, 2022 and 2023. Our long-term debt was $67.1 billion and $58.3 billion as of December 31, 2022 and 2023. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for additional information.
Cash outflows from financing activities resulted from repurchases of common stock, payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $20.7 billion and $53.0 billion in 2021 and 2022. Property and equipment acquired under finance leases was $7.1 billion and $675 million in 2021 and 2022.
Cash outflows from financing activities resulted from repurchases of common stock in 2022, payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $53.0 billion and $34.0 billion in 2022 and 2023. Property and equipment acquired under finance leases was $675 million and $642 million in 2022 and 2023.
These forward-looking statements reflect Amazon.com’s expectations as of February 2, 2023, and are subject to substantial uncertainty.
These forward-looking statements reflect Amazon.com’s expectations as of February 1, 2024, and are subject to substantial uncertainty.
Our results are inherently unpredictable and may be materially affected by many factors, such as uncertainty regarding the impacts of the COVID-19 pandemic, fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions and customer demand and spending (including the impact of recessionary fears), inflation, interest rates, regional labor market and global supply chain constraints, world events, the rate of growth of the Internet, online commerce, and cloud services, as well as those outlined in Item 1A of Part I, “Risk Factors.” First Quarter 2023 Guidance • Net sales are expected to be between $121.0 billion and $126.0 billion, or to grow between 4% and 8% compared with first quarter 2022.
Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions and customer demand and spending (including the impact of recessionary fears), inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, as well as those outlined in Item 1A of Part I, “Risk Factors.” First Quarter 2024 Guidance • Net sales are expected to be between $138.0 billion and $143.5 billion, or to grow between 8% and 13% compared with first quarter 2023.
We made cash payments, net of acquired cash, related to acquisition and other investment activity of $2.0 billion and $8.3 billion in 2021 and 2022. We funded the acquisition of MGM Holdings Inc. with cash on hand. We expect to fund the acquisitions of 1Life Healthcare, Inc. (One Medical) and iRobot Corporation with cash on hand.
We made cash payments, net of acquired cash, related to acquisition and other investment activity of $8.3 billion and $5.8 billion in 2022 and 2023. We funded the acquisitions of MGM Holdings Inc. in 2022 and 1Life Healthcare, Inc. (One Medical) in 2023 with cash on hand.
Amounts held in foreign currencies were $22.7 billion and $18.3 billion as of December 31, 2021 and 2022. Our foreign currency balances include British Pounds, Canadian Dollars, Euros, and Japanese Yen. Cash provided by (used in) operating activities was $46.3 billion and $46.8 billion in 2021 and 2022.
Amounts held in foreign currencies were $18.3 billion and $23.5 billion as of December 31, 2022 and 2023. Our foreign currency balances include British Pounds, Canadian Dollars, Euros, Indian Rupees, and Japanese Yen. Cash provided by (used in) operating activities was $46.8 billion and $84.9 billion in 2022 and 2023.
Liquidity and Capital Resources Cash flow information is as follows (in millions): Year Ended December 31, 2021 2022 Cash provided by (used in): Operating activities $ 46,327 $ 46,752 Investing activities (58,154) (37,601) Financing activities 6,291 9,718 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 $96.0 billion and $70.0 billion as of December 31, 2021 and 2022.
Liquidity and Capital Resources Cash flow information is as follows (in millions): Year Ended December 31, 2022 2023 Cash provided by (used in): Operating activities $ 46,752 $ 84,946 Investing activities (37,601) (49,833) Financing activities 9,718 (15,879) 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 $70.0 billion and $86.8 billion as of December 31, 2022 and 2023.
Cash provided by (used in) investing activities was $(58.2) billion and $(37.6) billion in 2021 and 2022, with the variability caused primarily by purchases, sales, and maturities of marketable securities.
Cash provided by (used in) investing activities was $(37.6) billion and $(49.8) billion in 2022 and 2023, with the variability caused primarily by purchases, sales, and maturities of marketable securities and cash capital expenditures.
Changes in foreign currency exchange rates reduced net sales by $15.5 billion in 2022. For a discussion of the effect of foreign exchange rates on sales growth, see “Effect of Foreign Exchange Rates” below. North America sales increased 13% in 2022, compared to the prior year.
Changes in foreign exchange rates reduced net sales by $71 million in 2023. For a discussion of the effect of foreign exchange rates on sales growth, see “Effect of Foreign Exchange Rates” below. North America sales increased 12% in 2023, compared to the prior year.
Operating Income (Loss) Operating income (loss) by segment is as follows (in millions): Year Ended December 31, 2021 2022 Operating Income (Loss) North America $ 7,271 $ (2,847) International (924) (7,746) AWS 18,532 22,841 Consolidated $ 24,879 $ 12,248 Operating income was $24.9 billion and $12.2 billion for 2021 and 2022.
Operating Income (Loss) Operating income (loss) by segment is as follows (in millions): Year Ended December 31, 2022 2023 Operating Income (Loss) North America $ (2,847) $ 14,877 International (7,746) (2,656) AWS 22,841 24,631 Consolidated $ 12,248 $ 36,852 Operating income was $12.2 billion and $36.9 billion for 2022 and 2023.
Changes in foreign currency exchange rates positively impacted operating income by $1.4 billion in 2022. 24 Table of Contents Operating Expenses Information about operating expenses is as follows (in millions): Year Ended December 31, 2021 2022 Operating expenses: Cost of sales $ 272,344 $ 288,831 Fulfillment 75,111 84,299 Technology and content 56,052 73,213 Sales and marketing 32,551 42,238 General and administrative 8,823 11,891 Other operating expense (income), net 62 1,263 Total operating expenses $ 444,943 $ 501,735 Year-over-year Percentage Growth (Decline): Cost of sales 17 % 6 % Fulfillment 28 12 Technology and content 31 31 Sales and marketing 48 30 General and administrative 32 35 Other operating expense (income), net (183) 1,936 Percent of Net Sales: Cost of sales 58.0 % 56.2 % Fulfillment 16.0 16.4 Technology and content 11.9 14.2 Sales and marketing 6.9 8.2 General and administrative 1.9 2.3 Other operating expense (income), net 0.0 0.2 Cost of Sales 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.
Changes in foreign exchange rates positively impacted operating income by $220 million in 2023. 25 Table of Contents Operating Expenses Information about operating expenses is as follows (in millions): Year Ended December 31, 2022 2023 Operating Expenses: Cost of sales $ 288,831 $ 304,739 Fulfillment 84,299 90,619 Technology and infrastructure 73,213 85,622 Sales and marketing 42,238 44,370 General and administrative 11,891 11,816 Other operating expense (income), net 1,263 767 Total operating expenses $ 501,735 $ 537,933 Year-over-year Percentage Growth (Decline): Cost of sales 6 % 6 % Fulfillment 12 7 Technology and infrastructure 31 17 Sales and marketing 30 5 General and administrative 35 (1) Other operating expense (income), net 1,936 (39) Percent of Net Sales: Cost of sales 56.2 % 53.0 % Fulfillment 16.4 15.8 Technology and infrastructure 14.2 14.9 Sales and marketing 8.2 7.7 General and administrative 2.3 2.1 Other operating expense (income), net 0.2 0.1 Cost of Sales 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 following is a reconciliation of free cash flow less principal repayments of finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2021 and 2022 (in millions): Year Ended December 31, 2021 2022 Net cash provided by (used in) operating activities $ 46,327 $ 46,752 Purchases of property and equipment, net of proceeds from sales and incentives (55,396) (58,321) Free cash flow (9,069) (11,569) Principal repayments of finance leases (11,163) (7,941) Principal repayments of financing obligations (162) (248) Free cash flow less principal repayments of finance leases and financing obligations $ (20,394) $ (19,758) Net cash provided by (used in) investing activities $ (58,154) $ (37,601) Net cash provided by (used in) financing activities $ 6,291 $ 9,718 28 Table of Contents Free Cash Flow Less Equipment Finance Leases and Principal Repayments of All Other Finance Leases and Financing Obligations Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations is free cash flow reduced by equipment acquired under finance leases, which is included in “Property and equipment acquired under finance leases, net of remeasurements and modifications,” principal repayments of all other finance lease liabilities, which is included in “Principal repayments of finance leases,” and “Principal repayments of financing obligations.” All other finance lease liabilities and financing obligations consists of property.
The following is a reconciliation of free cash flow less principal repayments of finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2022 and 2023 (in millions): Year Ended December 31, 2022 2023 Net cash provided by (used in) operating activities $ 46,752 $ 84,946 Purchases of property and equipment, net of proceeds from sales and incentives (58,321) (48,133) Free cash flow (11,569) 36,813 Principal repayments of finance leases (7,941) (4,384) Principal repayments of financing obligations (248) (271) Free cash flow less principal repayments of finance leases and financing obligations $ (19,758) $ 32,158 Net cash provided by (used in) investing activities $ (37,601) $ (49,833) Net cash provided by (used in) financing activities $ 9,718 $ (15,879) Free Cash Flow Less Equipment Finance Leases and Principal Repayments of All Other Finance Leases and Financing Obligations Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations is free cash flow reduced by equipment acquired under finance leases, which is included in “Property and equipment acquired under finance leases, net of remeasurements and modifications,” principal repayments of all other finance lease liabilities, which is included in “Principal repayments of finance leases,” and “Principal repayments of financing obligations.” All other finance lease liabilities and financing obligations consists of property.
Our federal tax provision included a partial election for 2020 and 2021, and a full election for 2022. 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. Cash taxes paid (net of refunds) were $3.7 billion and $6.0 billion for 2021 and 2022.
Our federal tax provision included a partial accelerated depreciation deduction election for 2021, and a full election for 2022 and 2023. 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. Cash paid for U.S.
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. Shipping costs, which include sortation and delivery centers and transportation costs, were $76.7 billion and $83.5 billion in 2021 and 2022.
Shipping costs were $83.5 billion and $89.5 billion in 2022 and 2023. 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.
As of December 31, 2022, cash, cash equivalents, and marketable securities held by foreign subsidiaries were $4.7 billion. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.
We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.
The following is a reconciliation of free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2021 and 2022 (in millions): Year Ended December 31, 2021 2022 Net cash provided by (used in) operating activities $ 46,327 $ 46,752 Purchases of property and equipment, net of proceeds from sales and incentives (55,396) (58,321) Free cash flow (9,069) (11,569) Equipment acquired under finance leases (1) (4,422) (299) Principal repayments of all other finance leases (2) (687) (670) Principal repayments of financing obligations (162) (248) Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations $ (14,340) $ (12,786) Net cash provided by (used in) investing activities $ (58,154) $ (37,601) Net cash provided by (used in) financing activities $ 6,291 $ 9,718 ___________________ (1) For the year ended December 31, 2021 and 2022, this amount relates to equipment included in “Property and equipment acquired under finance leases, net of remeasurements and modifications” of $7,061 million and $675 million.
The following is a reconciliation of free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2022 and 2023 (in millions): Year Ended December 31, 2022 2023 Net cash provided by (used in) operating activities $ 46,752 $ 84,946 Purchases of property and equipment, net of proceeds from sales and incentives (58,321) (48,133) Free cash flow (11,569) 36,813 Equipment acquired under finance leases (1) (299) (310) Principal repayments of all other finance leases (2) (670) (683) Principal repayments of financing obligations (248) (271) Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations $ (12,786) $ 35,549 Net cash provided by (used in) investing activities $ (37,601) $ (49,833) Net cash provided by (used in) financing activities $ 9,718 $ (15,879) ___________________ (1) For the year ended December 31, 2022 and 2023, this amount relates to equipment included in “Property and equipment acquired under finance leases, net of remeasurements and modifications” of $675 million and $642 million.
The increase in operating cash flow in 2022, compared to the prior year, was primarily due to the increase in net income, excluding non-cash expenses, partially offset by changes in working capital.
The increase in operating cash flow in 2023, compared to the prior year, was due to an increase in net income (loss), excluding non-cash expenses, and changes in working capital.
Cash capital expenditures were $55.4 billion, and $58.3 billion in 2021 and 2022, 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 to continue these investments over time, with increased spending on technology infrastructure.
Cash capital expenditures were $58.3 billion, and $48.1 billion in 2022 and 2023, 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, which investments we expect to increase in 2024.
The increase in cost of sales in absolute dollars in 2022, compared to the prior year, is primarily due to increased shipping and product costs resulting from increased sales and increases in investments in our fulfillment network, transportation costs, and wage rates and incentives. Changes in foreign exchange rates reduced cost of sales by $10.8 billion in 2022.
The increase in cost of sales in absolute dollars in 2023, compared to the prior year, is primarily due to increased product and shipping costs resulting from increased sales, partially offset by fulfillment network efficiencies and lower transportation rates. Changes in foreign exchange rates reduced cost of sales by $254 million in 2023.
The increase in technology and content costs in absolute dollars in 2022, compared to the prior year, is primarily due to 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, and an increase in spending on technology infrastructure, partially offset by a reduction in depreciation and amortization expense from our change in the estimated useful lives of our servers and networking equipment.
The increase in technology and infrastructure costs in absolute dollars in 2023, compared to the prior year, is primarily due to an increase in spending on infrastructure 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.
Net sales information is as follows (in millions): Year Ended December 31, 2021 2022 Net Sales: North America $ 279,833 $ 315,880 International 127,787 118,007 AWS 62,202 80,096 Consolidated $ 469,822 $ 513,983 Year-over-year Percentage Growth (Decline): North America 18 % 13 % International 22 (8) AWS 37 29 Consolidated 22 9 Year-over-year Percentage Growth, excluding the effect of foreign exchange rates: North America 18 % 13 % International 20 4 AWS 37 29 Consolidated 21 13 Net sales mix: North America 60 % 61 % International 27 23 AWS 13 16 Consolidated 100 % 100 % Sales increased 9% in 2022, compared to the prior year.
Net sales information is as follows (in millions): Year Ended December 31, 2022 2023 Net Sales: North America $ 315,880 $ 352,828 International 118,007 131,200 AWS 80,096 90,757 Consolidated $ 513,983 $ 574,785 Year-over-year Percentage Growth (Decline): North America 13 % 12 % International (8) 11 AWS 29 13 Consolidated 9 12 Year-over-year Percentage Growth, excluding the effect of foreign exchange rates: North America 13 % 12 % International 4 11 AWS 29 13 Consolidated 13 12 Net Sales Mix: North America 61 % 61 % International 23 23 AWS 16 16 Consolidated 100 % 100 % Sales increased 12% in 2023, compared to the prior year.
We provide multiple measures of free cash flows because we believe these measures provide additional perspective on the impact of acquiring property and equipment with cash and through finance leases and financing obligations. 27 Table of Contents Free Cash Flow Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, net of proceeds from sales and incentives.” The following is a reconciliation of free cash flow to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2021 and 2022 (in millions): Year Ended December 31, 2021 2022 Net cash provided by (used in) operating activities $ 46,327 $ 46,752 Purchases of property and equipment, net of proceeds from sales and incentives (55,396) (58,321) Free cash flow $ (9,069) $ (11,569) Net cash provided by (used in) investing activities $ (58,154) $ (37,601) Net cash provided by (used in) financing activities $ 6,291 $ 9,718 Free Cash Flow Less Principal Repayments of Finance Leases and Financing Obligations Free cash flow less principal repayments of finance leases and financing obligations is free cash flow reduced by “Principal repayments of finance leases” and “Principal repayments of financing obligations.” Principal repayments of finance leases and financing obligations approximates the actual payments of cash for our finance leases and financing obligations.
Free Cash Flow Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, net of proceeds from sales and incentives.” The following is a reconciliation of free cash flow to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2022 and 2023 (in millions): Year Ended December 31, 2022 2023 Net cash provided by (used in) operating activities $ 46,752 $ 84,946 Purchases of property and equipment, net of proceeds from sales and incentives (58,321) (48,133) Free cash flow $ (11,569) $ 36,813 Net cash provided by (used in) investing activities $ (37,601) $ (49,833) Net cash provided by (used in) financing activities $ 9,718 $ (15,879) 28 Table of Contents Free Cash Flow Less Principal Repayments of Finance Leases and Financing Obligations Free cash flow less principal repayments of finance leases and financing obligations is free cash flow reduced by “Principal repayments of finance leases” and “Principal repayments of financing obligations.” Principal repayments of finance leases and financing obligations approximates the actual payments of cash for our finance leases and financing obligations.
Dollar is as follows (in millions): Year Ended December 31, 2021 Year Ended December 31, 2022 As Reported Exchange Rate Effect (1) At Prior Year Rates (2) As Reported Exchange Rate Effect (1) At Prior Year Rates (2) Net sales $ 469,822 $ (3,804) $ 466,018 $ 513,983 $ 15,495 $ 529,478 Operating expenses 444,943 (3,653) 441,290 501,735 16,356 518,091 Operating income 24,879 (151) 24,728 12,248 (861) 11,387 ___________________ (1) Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year period for operating results.
Dollar is as follows (in millions): Year Ended December 31, 2022 Year Ended December 31, 2023 As Reported Exchange Rate Effect (1) At Prior Year Rates (2) As Reported Exchange Rate Effect (1) At Prior Year Rates (2) Net sales $ 513,983 $ 15,495 $ 529,478 $ 574,785 $ 71 $ 574,856 Operating expenses 501,735 16,356 518,091 537,933 531 538,464 Operating income 12,248 (861) 11,387 36,852 (460) 36,392 ___________________ (1) Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year period for operating results.
Increased unit sales were driven largely by our continued focus on price, selection, and convenience for our customers, including from our shipping offers. 23 Table of Contents International sales decreased 8% in 2022, compared to the prior year, primarily due to the impact of changes in foreign currency exchange rates, partially offset by increased unit sales, including sales by third-party sellers, advertising sales, and subscription services.
The sales growth primarily reflects increased unit sales, primarily 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 shipping offers. International sales increased 11% in 2023, compared to the prior year.
Our U.S. taxable income is reduced by accelerated depreciation deductions and increased by the impact of capitalized research and development expenses. U.S. tax rules provide for enhanced accelerated depreciation deductions by allowing the election of full expensing of qualified property, primarily equipment, through 2022.
Our U.S. taxable income is reduced by accelerated depreciation deductions and increased by the impact of capitalized research and development expenses. U.S. 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.
The increase in AWS operating income in absolute dollars in 2022, compared to the prior year, is primarily due to increased sales and cost structure productivity, including a reduction in depreciation and amortization expense from our change in the estimated useful lives of our servers and networking equipment, partially offset by increased payroll and related expenses and spending on technology infrastructure, all of which were primarily driven by additional investments to support AWS business growth.
The increase in AWS operating income in absolute dollars in 2023, compared to the prior year, is primarily due to increased sales, partially offset by increased payroll and related expenses and spending on technology infrastructure, both of which were primarily driven by additional investments to support AWS business growth.
Cash provided by (used in) financing activities was $6.3 billion and $9.7 billion in 2021 and 2022. Cash inflows from financing activities resulted from proceeds from short-term debt, and other and long-term-debt of $27.0 billion and $62.7 billion in 2021 and 2022.
Cash inflows from financing activities resulted from proceeds from short-term debt, and other and long-term-debt of $62.7 billion and $18.1 billion in 2022 and 2023.
The primary components of other income (expense), net are related to equity securities valuations and adjustments, equity warrant valuations, and foreign currency. Included in other income (expense), net in 2021 and 2022 is a marketable equity securities valuation gain (loss) of $11.8 billion and $(12.7) billion from our equity investment in Rivian.
Included in other income (expense), net in 2022 and 2023 is a marketable equity securities valuation gain (loss) of $(12.7) billion and $797 million from our equity investment in Rivian.
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for additional information. Other Income (Expense), Net Other income (expense), net was $14.6 billion and $(16.8) billion during 2021 and 2022.
Interest expense was $2.4 billion and $3.2 billion in 2022 and 2023 and was primarily related to debt and finance leases. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for additional information.
The North America operating loss in 2022, as compared to the operating income in the prior year, is primarily due to increased fulfillment and shipping costs, due in part to increases in investments in our fulfillment network, transportation costs, and wage rates and incentives, increased technology and content costs, and growth in certain operating expenses, partially offset by increased unit sales, including sales by third-party sellers, and advertising sales.
The North America operating income in 2023, as compared to the operating loss in the prior year, is primarily due to increased unit sales and increased advertising sales, partially offset by increased shipping and fulfillment costs and increased technology and infrastructure costs.
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. 21 Table of Contents 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 corresponds with cash capital expenditures, including leasehold improvements, incentives received from property and equipment vendors, proceeds from asset sales, cash outlays for 22 Table of Contents acquisitions, investments in other companies and intellectual property rights, and purchases, sales, and maturities of marketable securities.
The increase in fulfillment costs in absolute dollars in 2022, compared to the prior year, is primarily due to increased investments in our fulfillment network and variable costs corresponding with increased product and service sales volume and inventory levels, and increased wage rates and incentives. Changes in foreign exchange rates reduced fulfillment costs by $2.5 billion in 2022.
The increase in fulfillment costs in absolute dollars in 2023, compared to the prior year, 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 $52 million in 2023.
Our measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations meet the definition of non-GAAP financial measures.
Our measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations meet the definition of non-GAAP financial measures. We provide multiple measures of free cash flows because we believe these measures provide additional perspective on the impact of acquiring property and equipment with cash and through finance leases and financing obligations.
The sales growth primarily reflects increased unit sales, including sales by third-party sellers, advertising sales, and subscription services.
The sales growth primarily reflects increased unit sales, primarily 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 shipping offers.
The increase in International operating loss in absolute dollars in 2022, compared to the prior year, is primarily due to increased fulfillment and shipping costs, due in part to increases in investments in our fulfillment network, transportation costs, and wage rates and incentives, increased technology and content costs, and growth in certain operating expenses, partially offset by increased advertising sales and increased unit sales, including sales by third-party sellers.
The decrease in International operating loss in absolute dollars in 2023, compared to the prior year, is primarily due to increased unit sales and increased advertising sales, partially offset by increased fulfillment and shipping costs and increased technology and infrastructure costs. Changes in foreign exchange rates positively impacted operating loss by $246 million in 2023.
This guidance anticipates an unfavorable impact of approximately 210 basis points from foreign exchange rates. • Operating income is expected to be between $0 and $4.0 billion, compared with $3.7 billion in first quarter 2022. • This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded. 30 Table of Contents
This guidance anticipates a favorable impact of approximately 40 basis points from foreign exchange rates. • Operating income is expected to be between $8.0 billion and $12.0 billion, compared with $4.8 billion in first quarter 2023.
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 $1.8 billion and $2.4 billion in 2021 and 2022 and was primarily related to debt and finance leases.
We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term marketable debt securities. Our interest income 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.
The sales growth primarily reflects increased customer usage, partially offset by pricing changes, primarily driven by long-term customer contracts.
Changes in foreign exchange rates increased International net sales by $88 million in 2023. 24 Table of Contents AWS sales increased 13% in 2023, compared to the prior year. The sales growth primarily reflects increased customer usage, partially offset by pricing changes, primarily driven by long-term customer contracts.
As of December 31, 2021 and 2022, restricted cash, cash equivalents, and marketable securities were $260 million and $365 million.
(federal and state) and foreign income taxes (net of refunds) totaled $6.0 billion and $11.2 billion for 2022 and 2023. As of December 31, 2022 and 2023, restricted cash, cash equivalents, and marketable securities were $365 million and $503 million.
We had no borrowings outstanding under the two unsecured revolving credit facilities, $6.8 billion of borrowings outstanding under the commercial paper programs, and $1.0 billion of borrowings outstanding under the secured revolving credit facility as of December 31, 2022. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” for additional information.
We had no borrowings outstanding under the two unsecured revolving credit facilities or the commercial paper programs, we had $682 million of borrowings outstanding under the secured revolving credit facility, and the entire amount of the term loan has been repaid as of December 31, 2023.
Removed
These factors contributed to increases in our operating costs during 2022, particularly across our North America and International segments, primarily due to a return to more normal, seasonal demand volumes in relation to our fulfillment network fixed costs, increased transportation and utility costs, and increased wage rates.
Added
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.
Removed
Increased unit sales were driven largely by our continued focus on price, selection, and convenience for our customers, including from our shipping offers. Changes in foreign currency exchange rates reduced International net sales by $15.0 billion in 2022. AWS sales increased 29% in 2022, compared to the prior year.
Added
In 2023, we invested $1.25 billion in a note from Anthropic, PBC, which is convertible into equity. We have an agreement that expires in Q1 2024 to invest up to an additional $2.75 billion in a second convertible note. Cash provided by (used in) financing activities was $9.7 billion and $(15.9) billion in 2022 and 2023.
Removed
Changes in foreign currency exchange rates positively impacted operating loss by $274 million in 2022.
Added
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” for additional information. As of December 31, 2023, cash, cash equivalents, and marketable securities held by foreign subsidiaries were $4.7 billion.
Removed
Changes in foreign currency exchange rates negatively impacted operating loss by $857 million in 2022.
Added
General and Administrative General and administrative costs were $11.9 billion and $11.8 billion during 2022 and 2023, and were primarily related to payroll and related expenses and professional fees.
Removed
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures — Use of Estimates” for additional information on the change in estimated useful lives of our servers and networking equipment.
Added
Other Income (Expense), Net Other income (expense), net was $(16.8) billion and $938 million during 2022 and 2023. The primary components of other income (expense), net are related to equity securities valuations and adjustments, equity warrant valuations, and foreign currency.
Removed
Interest Income and Expense Our interest income was $448 million and $989 million during 2021 and 2022, primarily due to an increase in prevailing rates. We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities.
Added
This guidance includes approximately $0.9 billion lower depreciation expense due to an increase in the estimated useful life of our servers beginning on January 1, 2024. • This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded. 31 Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+0 added−0 removed6 unchanged
Biggest changeThe following table provides information about our cash equivalents and marketable fixed income securities, including principal cash flows by expected maturity and the related weighted-average interest rates as of December 31, 2022 (in millions, except percentages): 2023 2024 2025 2026 2027 Thereafter Total Estimated Fair Value as of December 31, 2022 Money market funds $ 27,899 $ — $ — $ — $ — $ — $ 27,899 $ 27,899 Weighted average interest rate 4.18 % — % — % — % — % — % 4.18 % Corporate debt securities 17,500 2,486 2,332 748 9 — 23,075 22,627 Weighted average interest rate 4.06 % 0.97 % 1.23 % 1.45 % 2.33 % — % 3.35 % U.S. government and agency securities 819 358 554 396 80 75 2,282 2,146 Weighted average interest rate 1.05 % 0.98 % 0.81 % 0.83 % 1.24 % 1.83 % 0.98 % Asset-backed securities 1,059 872 413 146 128 72 2,690 2,572 Weighted average interest rate 0.99 % 1.30 % 1.37 % 1.39 % 1.41 % 1.06 % 1.19 % Foreign government and agency securities 519 19 — — — — 538 535 Weighted average interest rate 4.24 % 0.60 % — % — % — % — % 4.11 % Other fixed income securities 138 61 48 — — — 247 237 Weighted average interest rate 0.40 % 0.56 % 1.15 % — % — % — % 0.58 % $ 47,934 $ 3,796 $ 3,347 $ 1,290 $ 217 $ 147 $ 56,731 Cash equivalents and marketable fixed income securities $ 56,016 As of December 31, 2022, we had long-term debt with a face value of $70.5 billion, including the current portion, primarily consisting of fixed rate unsecured senior notes.
Biggest changeThe following table provides information about our cash equivalents and marketable debt securities, including principal cash flows by expected maturity and the related weighted-average interest rates as of December 31, 2023 (in millions, except percentages): 2024 2025 2026 2027 2028 Thereafter Total Estimated Fair Value as of December 31, 2023 Money market funds $ 39,160 $ — $ — $ — $ — $ — $ 39,160 $ 39,160 Weighted average interest rate 5.32 % — % — % — % — % — % 5.32 % Corporate debt securities 25,075 2,227 715 9 — — 28,026 27,805 Weighted average interest rate 5.13 % 1.30 % 1.51 % 2.33 % — % — % 4.74 % U.S. government and agency securities 552 501 398 50 43 230 1,774 1,699 Weighted average interest rate 3.24 % 1.49 % 1.12 % 0.97 % 0.67 % 1.31 % 1.89 % Asset-backed securities 789 349 115 143 13 291 1,700 1,646 Weighted average interest rate 1.34 % 2.09 % 1.20 % 1.67 % 1.66 % 1.33 % 1.51 % Foreign government and agency securities 506 — — — — — 506 505 Weighted average interest rate 5.28 % — % — % — % — % — % 5.28 % Other debt securities 62 46 — — — — 108 104 Weighted average interest rate 0.55 % 1.07 % — % — % — % — % 0.78 % $ 66,144 $ 3,123 $ 1,228 $ 202 $ 56 $ 521 $ 71,274 Cash equivalents and marketable debt securities $ 70,919 As of December 31, 2023, we had long-term debt with a face value of $67.2 billion, including the current portion, primarily consisting of fixed rate unsecured senior notes.
As such, we believe that market sensitivities are not practicable. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures” for additional information. 32 Table of Contents
As such, we believe that market sensitivities are not practicable. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures” for additional information. 33 Table of Contents
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” for additional information. 31 Table of Contents Foreign Exchange Risk During 2022, net sales from our International segment accounted for 23% of our consolidated revenues.
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” for additional information. 32 Table of Contents Foreign Exchange Risk During 2023, net sales from our International segment accounted for 23% of our consolidated revenues.
Based on the intercompany balances as of December 31, 2022, an assumed 5%, 10%, and 20% adverse change to foreign exchange rates would result in losses of $275 million, $555 million, and $1.1 billion, recorded to “Other income (expense), net.” See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Effect of Foreign Exchange Rates” for additional information on the effect on reported results of changes in foreign exchange rates.
Based on the intercompany balances as of December 31, 2023, an assumed 5%, 10%, and 20% adverse change to foreign exchange rates would result in losses of $320 million, $640 million, and $1.3 billion, recorded to “Other income (expense), net.” See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Effect of Foreign Exchange Rates” for additional information on the effect on reported results of changes in foreign exchange rates.
Fixed income securities may have their fair market value adversely affected due to a rise in interest rates, and we may suffer losses in principal if forced to sell securities that have declined in market value due to changes in interest rates.
Marketable debt securities with fixed interest rates may have their fair market value adversely affected due to a rise in interest rates, and we may suffer losses in principal if forced to sell securities that have declined in market value due to changes in interest rates.
For example, as a result of fluctuations in foreign exchange rates throughout the year compared to rates in effect the prior year, International segment net sales decreased by $15.0 billion in comparison with the prior year. We have foreign exchange risk related to foreign-denominated cash, cash equivalents, and marketable securities (“foreign funds”).
For example, as a result of fluctuations in foreign exchange rates throughout the year compared to rates in effect the prior year, International segment net sales increased by $88 million in comparison with the prior year. We have foreign exchange risk related to foreign-denominated cash, cash equivalents, and marketable securities (“foreign funds”).
We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities.
We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term marketable debt securities.
Based on the balance of foreign funds as of December 31, 2022, of $18.3 billion, an assumed 5%, 10%, and 20% adverse change to foreign exchange would result in declines of $915 million, $1.8 billion, and $3.7 billion. We also have foreign exchange risk related to our intercompany balances denominated in various foreign currencies.
Based on the balance of foreign funds as of December 31, 2023, of $23.5 billion, an assumed 5%, 10%, and 20% adverse change to foreign exchange would result in declines of $1.2 billion, $2.3 billion, and $4.7 billion. We also have foreign exchange risk related to our intercompany balances denominated in various currencies.
Our equity and equity warrant investments in publicly traded companies, which primarily relate to Rivian, represent $5.0 billion of our investments as of December 31, 2022, and are recorded at fair value, which is subject to market price volatility.
Our equity and equity warrant investments in publicly traded companies, which include our equity investment in Rivian, represent $5.7 billion of our investments as of December 31, 2023, and are recorded at fair value, which is subject to market price volatility.
Equity Investment Risk As of December 31, 2022, our recorded value in equity and equity warrant investments in public and private companies was $7.2 billion.
Equity Investment Risk As of December 31, 2023, our recorded value in equity, equity warrant, and convertible debt investments in public and private companies was $9.6 billion.

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