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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 _FORM 10-Q_(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934For the quarterly period ended June 30,2023orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITI
2、ES EXCHANGE ACT OF1934For the transition period from to .Commission File No.000-22513_AMAZON.COM,INC.(Exact name of registrant as specified in its charter)_Delaware 91-1646860(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)410 Terry Avenue North,Seattle
3、,Washington 98109-5210(206)266-1000(Address and telephone number,including area code,of registrants principal executive offices)Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which RegisteredCommon Stock,par value$.01 per shareA
4、MZNNasdaq Global Select Market_Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during thepreceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2
5、)has been subject to such filing requirements for the past90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-Tduring the preceding 12 months(or for such shorter period tha
6、t the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growthcompany.See the definitions of“large accelerated filer,”“accelerated fil
7、er,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the
8、 extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No 10,317,750,796 shares of common
9、stock,par value$0.01 per share,outstanding as of July 21,2023Table of ContentsAMAZON.COM,INC.FORM 10-QFor the Quarterly Period Ended June 30,2023INDEX PagePART I.FINANCIAL INFORMATIONItem 1.Financial Statements3Consolidated Statements of Cash Flows3Consolidated Statements of Operations4Consolidated
10、Statements of Comprehensive Income(Loss)5Consolidated Balance Sheets6Notes to Consolidated Financial Statements7Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations21Item 3.Quantitative and Qualitative Disclosures About Market Risk32Item 4.Controls and Procedur
11、es33PART II.OTHER INFORMATIONItem 1.Legal Proceedings34Item 1A.Risk Factors34Item 2.Unregistered Sales of Equity Securities and Use of Proceeds45Item 3.Defaults Upon Senior Securities45Item 4.Mine Safety Disclosures45Item 5.Other Information45Item 6.Exhibits46Signatures472Table of ContentsPART I.FIN
12、ANCIAL INFORMATIONItem 1.Financial StatementsAMAZON.COM,INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)(unaudited)Three Months EndedJune 30,Six Months EndedJune 30,Twelve Months EndedJune 30,202220232022202320222023CASH,CASH EQUIVALENTS,AND RESTRICTED CASH,BEGINNING OF PERIOD$36,599$49,734$36
13、,477$54,253$40,667$37,700 OPERATING ACTIVITIES:Net income(loss)(2,028)6,750(5,872)9,922 11,607 13,072 Adjustments to reconcile net income(loss)to net cash from operating activities:Depreciation and amortization of property and equipment and capitalized content costs,operating leaseassets,and other9,
14、716 11,589 18,909 22,712 37,748 45,724 Stock-based compensation5,209 7,127 8,459 11,875 15,319 23,037 Non-operating expense(income),net6,104 47 14,793 581 3,201 2,754 Deferred income taxes(1,955)(2,744)(3,956)(3,216)(6,670)(7,408)Changes in operating assets and liabilities:Inventories(3,890)(2,373)(
15、6,504)(2,002)(15,478)1,910 Accounts receivable,net and other(6,799)(5,167)(8,315)(3,646)(19,761)(17,228)Accounts payable3,699 3,029(5,681)(8,235)6,140 391 Accrued expenses and other(1,412)(1,938)(7,315)(7,701)553(1,944)Unearned revenue321 156 1,657 974 2,915 1,533 Net cash provided by(used in)operat
16、ing activities8,965 16,476 6,175 21,264 35,574 61,841 INVESTING ACTIVITIES:Purchases of property and equipment(15,724)(11,455)(30,675)(25,662)(65,358)(58,632)Proceeds from property and equipment sales and incentives1,626 1,043 2,835 2,180 6,297 4,669 Acquisitions,net of cash acquired,and other(259)(
17、316)(6,600)(3,829)(7,635)(5,545)Sales and maturities of marketable securities2,608 1,551 25,361 2,666 53,706 8,906 Purchases of marketable securities(329)(496)(2,093)(834)(25,590)(1,306)Net cash provided by(used in)investing activities(12,078)(9,673)(11,172)(25,479)(38,580)(51,908)FINANCING ACTIVITI
18、ES:Common stock repurchased(3,334)(6,000)(6,000)Proceeds from short-term debt,and other4,865 4,399 18,608 17,179 23,462 40,124 Repayments of short-term debt,and other(7,610)(7,641)(13,841)(11,244)(18,417)(34,957)Proceeds from long-term debt12,824 12,824 13,200 8,342 Repayments of long-term debt(1)(2
19、,000)(1)(3,386)(1,511)(4,643)Principal repayments of finance leases(2,059)(1,220)(4,836)(2,600)(9,789)(5,705)Principal repayments of financing obligations(59)(77)(138)(134)(205)(244)Net cash provided by(used in)financing activities4,626(6,539)6,616(185)740 2,917 Foreign currency effect on cash,cash
20、equivalents,and restricted cash(412)69(396)214(701)(483)Net increase(decrease)in cash,cash equivalents,and restricted cash1,101 333 1,223(4,186)(2,967)12,367 CASH,CASH EQUIVALENTS,AND RESTRICTED CASH,END OF PERIOD$37,700$50,067$37,700$50,067$37,700$50,067 See accompanying notes to consolidated finan
21、cial statements.3Table of ContentsAMAZON.COM,INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in millions,except per share data)(unaudited)Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Net product sales$56,575$59,032$113,030$116,013 Net service sales64,659 75,351 124,648 145,728 Total n
22、et sales121,234 134,383 237,678 261,741 Operating expenses:Cost of sales66,424 69,373 132,923 137,164 Fulfillment20,342 21,305 40,613 42,210 Technology and infrastructure18,072 21,931 32,914 42,381 Sales and marketing10,086 10,745 18,406 20,917 General and administrative2,903 3,202 5,497 6,245 Other
23、 operating expense(income),net90 146 339 369 Total operating expenses117,917 126,702 230,692 249,286 Operating income3,317 7,681 6,986 12,455 Interest income159 661 267 1,272 Interest expense(584)(840)(1,056)(1,663)Other income(expense),net(5,545)61(14,115)(382)Total non-operating expense(5,970)(118
24、)(14,904)(773)Income(loss)before income taxes(2,653)7,563(7,918)11,682 Benefit(provision)for income taxes637(804)2,059(1,752)Equity-method investment activity,net of tax(12)(9)(13)(8)Net income(loss)$(2,028)$6,750$(5,872)$9,922 Basic earnings per share$(0.20)$0.66$(0.58)$0.97 Diluted earnings per sh
25、are$(0.20)$0.65$(0.58)$0.95 Weighted-average shares used in computation of earnings per share:Basic10,175 10,285 10,173 10,268 Diluted10,175 10,449 10,173 10,398 See accompanying notes to consolidated financial statements.4Table of ContentsAMAZON.COM,INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCO
26、ME(LOSS)(in millions)(unaudited)Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Net income(loss)$(2,028)$6,750$(5,872)$9,922 Other comprehensive income(loss):Foreign currency translation adjustments,net of tax of$76,$(22),$60,and$(32)(2,186)264(2,519)650 Net change in unrealized ga
27、ins(losses)on available-for-sale debtsecurities:Unrealized gains(losses),net of tax of$0,$(5),$1,and$(34)(238)17(900)112 Reclassification adjustment for losses(gains)included in“Otherincome(expense),net,”net of tax of$0,$(5),$0,and$(15)7 12 13 45 Net unrealized gains(losses)on available-for-sale deb
28、t securities(231)29(887)157 Total other comprehensive income(loss)(2,417)293(3,406)807 Comprehensive income(loss)$(4,445)$7,043$(9,278)$10,729 See accompanying notes to consolidated financial statements.5Table of ContentsAMAZON.COM,INC.CONSOLIDATED BALANCE SHEETS(in millions,except per share data)De
29、cember 31,2022June 30,2023(unaudited)ASSETSCurrent assets:Cash and cash equivalents$53,888$49,529 Marketable securities16,138 14,441 Inventories34,405 36,587 Accounts receivable,net and other42,360 39,925 Total current assets146,791 140,482 Property and equipment,net186,715 193,784 Operating leases6
30、6,123 70,332 Goodwill20,288 22,785 Other assets42,758 50,224 Total assets$462,675$477,607 LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable$79,600$69,481 Accrued expenses and other62,566 64,235 Unearned revenue13,227 14,522 Total current liabilities155,393 148,238 Long-term lea
31、se liabilities72,968 75,822 Long-term debt67,150 63,092 Other long-term liabilities21,121 21,853 Commitments and contingencies(Note 4)Stockholders equity:Preferred stock($0.01 par value;500 shares authorized;no shares issued or outstanding)Common stock($0.01 par value;100,000 shares authorized;10,75
32、7 and 10,828 shares issued;10,242 and10,313 shares outstanding)108 108 Treasury stock,at cost(7,837)(7,837)Additional paid-in capital75,066 86,896 Accumulated other comprehensive income(loss)(4,487)(3,680)Retained earnings83,193 93,115 Total stockholders equity146,043 168,602 Total liabilities and s
33、tockholders equity$462,675$477,607 See accompanying notes to consolidated financial statements.6Table of ContentsAMAZON.COM,INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(unaudited)Note 1 ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURESUnaudited Interim Financial InformationWe have prepared the acco
34、mpanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission(the“SEC”)for interim financial reporting.These consolidated financial statements are unaudited and,in our opinion,include all adjustments,consisting ofnormal recurring adjustmen
35、ts and accruals necessary for a fair presentation of our consolidated cash flows,operating results,and balance sheets for the periodspresented.Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2023 due to seasonal and otherfactors.Cert
36、ain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generallyaccepted in the United States(“GAAP”)have been omitted in accordance with the rules and regulations of the SEC.These consolidated financial statementsshould b
37、e read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II,“Financial Statements andSupplementary Data,”of our 2022 Annual Report on Form 10-K.Prior Period ReclassificationsCertain prior period amounts have been reclassified to conform to the
38、 current period presentation.“Other operating expense(income),net”wasreclassified into“Depreciation and amortization of property and equipment and capitalized content costs,operating lease assets,and other”on our consolidatedstatements of cash flows.Principles of ConsolidationThe consolidated financ
39、ial statements include the accounts of A,Inc.and its consolidated entities(collectively,the“Company”),consisting ofits wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary,including certain entities inIndia and certain entities
40、 that support our health care services and seller lending financing activities.Intercompany balances and transactions betweenconsolidated entities are eliminated.Use of EstimatesThe preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reporte
41、d amounts of assets andliabilities,revenues and expenses,and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes.Estimatesare used for,but not limited to,income taxes,useful lives of equipment,commitments and contingencies,valuation of acquir
42、ed intangibles and goodwill,stock-based compensation forfeiture rates,vendor funding,inventory valuation,collectability of receivables,impairment of property and equipment and operatingleases,valuation and impairment of investments,self-insurance liabilities,and viewing patterns of capitalized video
43、 content.Actual results could differmaterially from these estimates.For the six months ended June 30,2023,we recorded approximately$510 million of estimated severance costs primarily related to planned roleeliminations.These charges were recorded primarily in“Sales and marketing,”“Technology and inf
44、rastructure,”and“General and administrative”on ourconsolidated statements of operations and included approximately$320 million recorded within our AWS segment.For the six months ended June 30,2022 and 2023,we recorded approximately$260 million and$250 million of impairments of property and equipment
45、and operating leases primarily related to physical stores in 2022 and fulfillment network facilities in 2023.These charges were recorded in“Other operatingexpense(income),net”on our consolidated statements of operations and primarily impacted our North America segment.For the six months ended June 3
46、0,2022 and 2023,we also recorded expenses of approximately$230 million and$180 million primarily in“Fulfillment”in 2022 and“Cost of sales”and“Fulfillment”in 2023,on our consolidated statements of operations primarily relating to terminating contracts for certain leases not yet commenced as well asot
47、her purchase commitments,which primarily impacted our North America segment.7Table of ContentsSupplemental Cash Flow InformationThe following table shows supplemental cash flow information(in millions):Three Months EndedJune 30,Six Months EndedJune 30,Twelve Months EndedJune 30,202220232022202320222
48、023SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest on debt,net of capitalized interest$349$954$628$1,356$1,271$2,289 Cash paid for operating leases2,088 2,528 4,455 4,995 7,960 9,173 Cash paid for interest on finance leases95 77 202 158 437 330 Cash paid for interest on financing obligatio
49、ns55 41 113 100 198 194 Cash paid for income taxes,net of refunds3,145 3,735 3,598 4,354 4,682 6,791 Assets acquired under operating leases5,101 4,104 7,276 7,730 23,531 19,254 Property and equipment acquired under finance leases,net of remeasurements andmodifications61 240 227 248 3,579 696 Propert
50、y and equipment recognized during the construction period of build-to-suitlease arrangements986 84 2,351 215 6,117 1,051 Property and equipment derecognized after the construction period of build-to-suitlease arrangements,with the associated leases recognized as operating1,079 1,112 720 1,243 4,766
51、Earnings Per ShareBasic earnings per share is calculated using our weighted-average outstanding common shares.Diluted earnings per share is calculated using ourweighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.In pe
52、riods when wehave a net loss,stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.The following table shows the calculation of diluted shares(in millions):Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Shares use
53、d in computation of basic earnings per share10,175 10,285 10,173 10,268 Total dilutive effect of outstanding stock awards 164 130 Shares used in computation of diluted earnings per share10,175 10,449 10,173 10,398 Other Income(Expense),NetOther income(expense),net,is as follows(in millions):Three Mo
54、nths EndedJune 30,Six Months EndedJune 30,2022202320222023Marketable equity securities valuation gains(losses)$(4,322)$299$(12,567)$(181)Equity warrant valuation gains(losses)(1,124)(220)(1,436)(161)Upward adjustments relating to equity investments in private companies58 10 65 26 Foreign currency ga
55、ins(losses)(117)9(103)79 Other,net(40)(37)(74)(145)Total other income(expense),net(5,545)61(14,115)(382)Included in other income(expense),net is a marketable equity securities valuation gain(loss)of$(3.9)billion and$187 million in Q2 2022 and Q2 2023,and$(11.5)billion and$(280)million for the six mo
56、nths ended June 30,2022 and 2023,from our equity investment in Rivian Automotive,Inc.(“Rivian”).Ourinvestment in Rivians preferred stock was accounted for at cost,with adjustments for observable changes in prices or impairments,prior to Rivians initialpublic offering in November 2021,which resulted
57、in the conversion of our preferred stock to Class A common stock.As of June 30,2023,we held 158 millionshares of Rivians Class A common stock,representing an approximate 17%ownership interest,and an approximate 16%voting interest.We determined thatwe have the ability to exercise significant influenc
58、e over Rivian through our equity investment,our commercial arrangement for the purchase of electricvehicles,and one of our employees serving on Rivians8Table of Contentsboard of directors.We elected the fair value option to account for our equity investment in Rivian,which is included in“Marketable
59、securities”on ourconsolidated balance sheets,and had a fair value of$2.9 billion and$2.6 billion as of December 31,2022 and June 30,2023.The investment was subject toregulatory sales restrictions resulting in a discount for lack of marketability of approximately$800 million as of December 31,2021,wh
60、ich expired in Q12022.Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows(in millions):Three Months Ended March 31,20222023Revenues$95$661 Gross profit(502)(535)Loss from operations(1,579)(1,433)Net loss(1,593)(1,349)InventoriesInventories,co
61、nsisting of products available for sale,are primarily accounted for using the first-in,first-out method,and are valued at the lower of costand net realizable value.This valuation requires us to make judgments,based on currently available information,about the likely method of disposition,suchas thro
62、ugh sales to individual customers,returns to product vendors,or liquidations,and expected recoverable values of each disposition category.Theinventory valuation allowance,representing a write-down of inventory,was$2.8 billion and$2.7 billion as of December 31,2022 and June 30,2023.Accounts Receivabl
63、e,Net and OtherIncluded in“Accounts receivable,net and other”on our consolidated balance sheets are receivables primarily related to customers,vendors,and sellers,as well as prepaid expenses and other current assets.As of December 31,2022 and June 30,2023,customer receivables,net,were$26.6 billion a
64、nd$25.3billion,vendor receivables,net,were$6.9 billion and$5.6 billion,seller receivables,net,were$1.3 billion and$1.3 billion,and other receivables,net,were$3.1 billion and$2.7 billion.Seller receivables are amounts due from sellers related to our seller lending program,which provides funding to se
65、llers primarilyto procure inventory.Prepaid expenses and other current assets were$4.5 billion and$5.0 billion as of December 31,2022 and June 30,2023.We estimate losses on receivables based on expected losses,including our historical experience of actual losses.The allowance for doubtful accounts w
66、as$1.4 billion and$1.5 billion as of December 31,2022 and June 30,2023.Digital Video and Music ContentThe total capitalized costs of video,which is primarily released content,and music as of December 31,2022 and June 30,2023 were$16.7 billion and$17.8 billion.The weighted average remaining life of o
67、ur capitalized video content is 3.6 years.Total video and music expense was$3.7 billion and$4.4billion in Q2 2022 and Q2 2023,and$7.3 billion and$8.4 billion for the six months ended June 30,2022 and 2023.Unearned RevenueUnearned revenue is recorded when payments are received or due in advance of pe
68、rforming our service obligations and is recognized over the serviceperiod.Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships.Our total unearned revenue as of December 31,2022 was$16.1 billion,of which$8.6 billion was recognized as revenue during the six mo
69、nths ended June 30,2023.Included in“Other long-term liabilities”on our consolidated balance sheets was$2.9 billion and$2.7 billion of unearned revenue as of December 31,2022 and June 30,2023.Additionally,we have performance obligations,primarily related to AWS,associated with commitments in customer
70、 contracts for future services thathave not yet been recognized in our consolidated financial statements.For contracts with original terms that exceed one year,those commitments not yetrecognized were$132.1 billion as of June 30,2023.The weighted-average remaining life of our long-term contracts is
71、3.6 years.However,the amount andtiming of revenue recognition is largely driven by customer usage,which can extend beyond the original contractual term.Acquisition ActivityOn February 22,2023,we acquired 1Life Healthcare,Inc.(“One Medical”),for cash consideration of approximately$3.5 billion,net of
72、cash acquired,toprovide health care options for customers.The acquired assets primarily consist of$1.3 billion9Table of Contentsof intangible assets and$2.5 billion of goodwill,which is allocated to our North America segment.The valuation of certain assets and liabilities is preliminaryand subject t
73、o change.Pro forma results of operations have not been presented because the effects of the One Medical acquisition were not material to our consolidated resultsof operations.Acquisition-related costs were expensed as incurred and were not significant.Note 2 FINANCIAL INSTRUMENTSCash,Cash Equivalent
74、s,Restricted Cash,and Marketable SecuritiesAs of December 31,2022 and June 30,2023,our cash,cash equivalents,restricted cash,and marketable securities primarily consisted of cash,AAA-rated money market funds,U.S.and foreign government and agency securities,other investment grade securities,and marke
75、table equity securities.Cashequivalents and marketable securities are recorded at fair value.Fair value is defined as the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date.To increase the compara
76、bility of fair value measures,the followinghierarchy prioritizes the inputs to valuation methodologies used to measure fair value:Level 1Valuations based on quoted prices for identical assets and liabilities in active markets.Level 2Valuations based on observable inputs other than quoted prices incl
77、uded in Level 1,such as quoted prices for similar assets and liabilities inactive markets,quoted prices for identical or similar assets and liabilities in markets that are not active,or other inputs that are observable or can becorroborated by observable market data.Level 3Valuations based on unobse
78、rvable inputs reflecting our own assumptions,consistent with reasonably available assumptions made by othermarket participants.These valuations require significant judgment.We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active marke
79、ts for identical assets orliabilities.Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similarinstruments and other significant inputs derived from or corroborated by observable market data.We did not hold sig
80、nificant amounts of marketable securitiescategorized as Level 3 assets as of December 31,2022 and June 30,2023.10Table of ContentsThe following table summarizes,by major security type,our cash,cash equivalents,restricted cash,and marketable securities that are measured at fairvalue on a recurring ba
81、sis and are categorized using the fair value hierarchy(in millions):December 31,2022June 30,2023 TotalEstimatedFair ValueCost orAmortizedCostGrossUnrealizedGainsGrossUnrealizedLossesTotalEstimatedFair ValueCash$10,666$11,142$11,142 Level 1 securities:Money market funds27,899 29,095 29,095 Equity sec
82、urities(1)3,709 3,515 Level 2 securities:Foreign government and agency securities535 273 (1)272 U.S.government and agency securities2,146 2,304 (133)2,171 Corporate debt securities22,627 16,469 (351)16,118 Asset-backed securities2,572 2,103 (101)2,002 Other debt securities237 201 (8)193$70,391$61,58
83、7$(594)$64,508 Less:Restricted cash,cash equivalents,and marketablesecurities(2)(365)(538)Total cash,cash equivalents,and marketable securities$70,026$63,970 _(1)The related unrealized gains(losses)recorded in“Other income(expense),net”were$(4.2)billion and$284 million in Q2 2022 and Q2 2023,and$(12
84、.3)billion and$(195)million for the six months ended June 30,2022 and 2023.(2)We are required to pledge or otherwise restrict a portion of our cash,cash equivalents,and marketable debt securities primarily as collateral for real estate,amounts due to third-party sellers in certain jurisdictions,debt
85、,and standby and trade letters of credit.We classify cash,cash equivalents,and marketabledebt securities with use restrictions of less than twelve months as“Accounts receivable,net and other”and of twelve months or longer as non-current“Other assets”on our consolidated balance sheets.See“Note 4 Comm
86、itments and Contingencies.”The following table summarizes the remaining contractual maturities of our cash equivalents and marketable debt securities as of June 30,2023(inmillions):AmortizedCostEstimatedFair ValueDue within one year$42,208$42,148 Due after one year through five years6,404 5,983 Due
87、after five years through ten years565 534 Due after ten years1,268 1,186 Total$50,445$49,851 Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.Equity Warrants and Non-Marketable Equity InvestmentsWe hold equity warrants giving us th
88、e right to acquire stock of other companies.As of December 31,2022 and June 30,2023,these warrants had a fairvalue of$2.1 billion and$1.8 billion,and are recorded within“Other assets”on our consolidated balance sheets with gains and losses recognized in“Otherincome(expense),net”on our consolidated s
89、tatements of operations.These warrants are classified as Level 2 and 3 assets.As of December 31,2022 and June 30,2023,equity investments not accounted for under the equity-method and without readily determinable fair valueshad a carrying value of$715 million and$733 million,and are recorded within“O
90、ther assets”on our consolidated balance sheets with adjustments recognizedin“Other income(expense),net”on our consolidated statements of operations.11Table of ContentsConsolidated Statements of Cash Flows ReconciliationThe following table provides a reconciliation of the amount of cash,cash equivale
91、nts,and restricted cash reported within the consolidated balance sheetsto the total of the same such amounts shown in the consolidated statements of cash flows(in millions):December 31,2022June 30,2023Cash and cash equivalents$53,888$49,529 Restricted cash included in accounts receivable,net and oth
92、er358 523 Restricted cash included in other assets7 15 Total cash,cash equivalents,and restricted cash shown in the consolidated statements of cash flows$54,253$50,067 Note 3 LEASESWe have entered into non-cancellable operating and finance leases for fulfillment network,office,data center,and physic
93、al store facilities as well asserver and networking equipment,aircraft,and vehicles.Gross assets acquired under finance leases,including those where title transfers at the end of the lease,are recorded in“Property and equipment,net”and were$68.0 billion and$64.6 billion as of December 31,2022 and Ju
94、ne 30,2023.Accumulated amortizationassociated with finance leases was$45.2 billion and$44.6 billion as of December 31,2022 and June 30,2023.Lease cost recognized in our consolidated statements of operations is summarized as follows(in millions):Three Months Ended June 30,Six Months Ended June 30,202
95、2202320222023Operating lease cost$2,133$2,608$4,236$5,120 Finance lease cost:Amortization of lease assets1,530 1,539 3,090 3,085 Interest on lease liabilities92 76 195 156 Finance lease cost1,622 1,615 3,285 3,241 Variable lease cost471 494 940 1,012 Total lease cost$4,226$4,717$8,461$9,373 Other in
96、formation about lease amounts recognized in our consolidated financial statements is as follows:December 31,2022June 30,2023Weighted-average remaining lease term operating leases11.6 years11.5 yearsWeighted-average remaining lease term finance leases10.3 years11.3 yearsWeighted-average discount rate
97、 operating leases2.8%3.1%Weighted-average discount rate finance leases2.3%2.5%12Table of ContentsOur lease liabilities were as follows(in millions):December 31,2022 Operating LeasesFinance LeasesTotalGross lease liabilities$81,273$18,019$99,292 Less:imputed interest(12,233)(2,236)(14,469)Present val
98、ue of lease liabilities69,040 15,783 84,823 Less:current portion of lease liabilities(7,458)(4,397)(11,855)Total long-term lease liabilities$61,582$11,386$72,968 June 30,2023 Operating LeasesFinance LeasesTotalGross lease liabilities$87,753$15,533$103,286 Less:imputed interest(14,383)(2,075)(16,458)
99、Present value of lease liabilities73,370 13,458 86,828 Less:current portion of lease liabilities(7,982)(3,024)(11,006)Total long-term lease liabilities$65,388$10,434$75,822 Note 4 COMMITMENTS AND CONTINGENCIESCommitmentsThe following summarizes our principal contractual commitments,excluding open or
100、ders for purchases that support normal operations and are generallycancellable,as of June 30,2023(in millions):Six Months EndedDecember 31,Year Ended December 31,20232024202520262027ThereafterTotalLong-term debt principal and interest$1,082$10,626$7,293$5,034$10,399$63,814$98,248 Operating lease lia
101、bilities5,624 9,649 9,024 8,334 7,602 47,520 87,753 Finance lease liabilities,including interest1,917 2,245 1,433 1,269 1,077 7,592 15,533 Financing obligations,including interest(1)234 464 457 464 471 6,712 8,802 Leases not yet commenced558 2,009 1,887 1,897 1,926 15,712 23,989 Unconditional purcha
102、se obligations(2)4,274 8,032 6,151 5,029 3,560 6,090 33,136 Other commitments(3)(4)2,153 2,247 1,246 1,102 895 8,497 16,140 Total commitments$15,842$35,272$27,491$23,129$25,930$155,937$283,601 _(1)Includes non-cancellable financing obligations for fulfillment network and data center facilities.Exclu
103、ding interest,current financing obligations of$266million and$269 million are recorded within“Accrued expenses and other”and$6.7 billion and$6.6 billion are recorded within“Other long-termliabilities”as of December 31,2022 and June 30,2023.The weighted-average remaining term of the financing obligat
104、ions was 17.9 years and 17.5 yearsand the weighted-average imputed interest rate was 3.1%as of December 31,2022 and June 30,2023.(2)Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on theconsolidated balan
105、ce sheets and certain products offered in our Whole Foods Market stores.For those digital media content agreements with variableterms,we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date.Purchase obligations associated withrenewal provisions s
106、olely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.(3)Includes asset retirement obligations,liabilities associated with digital media content agreements with initial terms greater than one year,and the estimatedtiming an
107、d amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction.(4)Excludes approximately$5.0 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period ofpayment,if any.13T
108、able of ContentsIn August 2022,we entered into an agreement to acquire iRobot Corporation,as amended in July 2023,for approximately$1.7 billion,including its debt,subject to customary closing conditions.We expect to fund this acquisition with cash on hand.Other ContingenciesWe are disputing claims a
109、nd denials of refunds or credits,and monitoring or evaluating potential claims,related to various non-income taxes(such assales,value added,consumption,service,and similar taxes),including in jurisdictions in which we already collect and remit these taxes.These non-income taxcontroversies typically
110、relate to(i)the taxability of products and services,including cross-border intercompany transactions,(ii)collection and withholding ontransactions with third parties,and(iii)the adequacy of compliance with reporting obligations,including evolving documentation requirements.Due to theinherent complex
111、ity and uncertainty of these matters and the judicial and regulatory processes in certain jurisdictions,the final outcome of any suchcontroversies may be materially different from our expectations.Legal ProceedingsThe Company is involved from time to time in claims,proceedings,and litigation,includi
112、ng the matters described in Item 8 of Part II,“FinancialStatements and Supplementary Data Note 7 Commitments and Contingencies Legal Proceedings”of our 2022 Annual Report on Form 10-K and inItem 1 of Part I,“Financial Statements Note 4 Commitments and Contingencies Legal Proceedings”of our Quarterly
113、 Report on Form 10-Q for theperiod ended March 31,2023,as supplemented by the following:In December 2018,Kove IO,Inc.filed a complaint against Amazon Web Services,Inc.in the United States District Court for the Northern District ofIllinois.The complaint alleges,among other things,that Amazon S3 and
114、DynamoDB infringe U.S.Patent Nos.7,814,170 and 7,103,640,both entitled“Network Distributed Tracking Wire Transfer Protocol”;and 7,233,978,entitled“Method and Apparatus for Managing Location Information in a NetworkSeparate from the Data to Which the Location Information Pertains.”The complaint seeks
115、 an unspecified amount of damages,enhanced damages,attorneysfees,costs,interest,and injunctive relief.In March 2022,the case was stayed pending resolution of review petitions we filed with the United States Patent andTrademark Office.In November 2022,the stay was lifted.In July 2023,Kove alleged in
116、its damages report that in the event of a finding of liability AmazonWeb Services could be subject to$517 million to$1.03 billion in damages.We dispute the allegations of wrongdoing and intend to defend ourselves vigorouslyin this matter.In May 2023,Dialect,LLC filed a complaint against A,Inc.and Am
117、azon Web Services,Inc.in the United States District Court for theEastern District for Virginia.The complaint alleges,among other things,that Amazons Alexa-enabled products and services,such as Echo devices,Firetablets,Fire TV sticks,Fire TVs,Alexa,and Alexa Voice Services,infringe U.S.Patent Nos.7,6
118、93,720 and 9,031,845,each entitled“Mobile Systems andMethods for Responding to Natural Language Speech Utterance”;8,015,006,entitled“Systems and Methods for Processing Natural Language SpeechUtterances with Context-Specific Domain Agents”;8,140,327,entitled“System and Method for Filtering and Elimin
119、ating Noise from Natural LanguageUtterances to Improve Speech Recognition and Parsing”;8,195,468 and 9,495,957,each entitled“Mobile Systems and Methods of Supporting NaturalLanguage Human-Machine Interactions”;and 9,263,039,entitled“Systems and Methods for Responding to Natural Language Speech Utter
120、ance.”Thecomplaint seeks an unspecified amount of damages,enhanced damages,attorneys fees,costs,interest,and injunctive relief.We dispute the allegations ofwrongdoing and intend to defend ourselves vigorously in this matter.In addition,we are regularly subject to claims,litigation,and other proceedi
121、ngs,including potential regulatory proceedings,involving patent and otherintellectual property matters,taxes,labor and employment,competition and antitrust,privacy and data protection,consumer protection,commercial disputes,goods and services offered by us and by third parties,and other matters.The
122、outcomes of our legal proceedings and other contingencies are inherently unpredictable,subject to significant uncertainties,and could be material toour operating results and cash flows for a particular period.We evaluate,on a regular basis,developments in our legal proceedings and other contingencie
123、s thatcould affect the amount of liability,including amounts in excess of any previous accruals and reasonably possible losses disclosed,and make adjustments andchanges to our accruals and disclosures as appropriate.For the matters we disclose that do not include an estimate of the amount of loss or
124、 range of losses,suchan estimate is not possible or is immaterial,and we may be unable to estimate the possible loss or range of losses that could potentially result from theapplication of non-monetary remedies.Until the final resolution of such matters,if any of our estimates and assumptions change
125、 or prove to have beenincorrect,we may experience losses in excess of the amounts recorded,which could have a material effect on our business,consolidated financial position,results of operations,or cash flows.See also“Note 7 Income Taxes.”14Table of ContentsNote 5 DEBTAs of June 30,2023,we had$66.5
126、 billion of unsecured senior notes outstanding(the“Notes”)and$972 million of borrowings under our credit facility.Our total long-term debt obligations are as follows(in millions):Maturities(1)Stated Interest RatesEffective Interest RatesDecember 31,2022June 30,20232014 Notes issuance of$6.0 billion2
127、024-20443.80%-4.95%3.90%-5.12%4,000 4,000 2017 Notes issuance of$17.0 billion2024-20572.80%-5.20%2.95%-4.33%16,000 15,000 2020 Notes issuance of$10.0 billion2025-20600.80%-2.70%0.88%-2.77%10,000 9,000 2021 Notes issuance of$18.5 billion2024-20610.45%-3.25%0.57%-3.31%18,500 17,500 April 2022 Notes is
128、suance of$12.8 billion2024-20622.73%-4.10%2.83%-4.15%12,750 12,750 December 2022 Notes issuance of$8.3 billion2024-20324.55%-4.70%4.61%-4.83%8,250 8,250 Credit Facility1,042 972 Total face value of long-term debt70,542 67,472 Unamortized discount and issuance costs,net(393)(383)Less:current portion
129、of long-term debt(2,999)(3,997)Long-term debt$67,150$63,092 _(1)The weighted-average remaining lives of the 2014,2017,2020,2021,April 2022,and December 2022 Notes were 12.1,14.6,18.1,13.6,12.8,and 5.4years as of June 30,2023.The combined weighted-average remaining life of the Notes was 13.2 years as
130、 of June 30,2023.Interest on the Notes is payable semi-annually in arrears.We may redeem the Notes at any time in whole,or from time to time,in part at specifiedredemption prices.We are not subject to any financial covenants under the Notes.The estimated fair value of the Notes was approximately$61.
131、4 billion and$59.5 billion as of December 31,2022 and June 30,2023,which is based on quoted prices for our debt as of those dates.In January 2023,we entered into an$8.0 billion unsecured 364-day term loan with a syndicate of lenders(the“Term Loan”),which matures in January2024 and bears interest at
132、the Secured Overnight Financing Rate specified in the Term Loan plus 0.75%.If we exercise our option to extend the Term Loansmaturity to January 2025,the interest rate spread will increase from 0.75%to 1.05%.As of June 30,2023,$8.0 billion of the Term Loan was outstanding,which was included in“Accru
133、ed expenses and other”on our consolidated balance sheets and had an interest rate of 5.9%.We have a$1.5 billion secured revolving credit facility with a lender that is secured by certain seller receivables,which we may from time to timeincrease in the future subject to lender approval(the“Credit Fac
134、ility”).The Credit Facility is available until August 2025,bears interest based on the dailySecured Overnight Financing Rate plus 1.25%,and has a commitment fee of up to 0.45%on the undrawn portion.There were$1.0 billion and$972 million ofborrowings outstanding under the Credit Facility as of Decemb
135、er 31,2022 and June 30,2023,which had an interest rate of 5.6%and 6.3%,respectively.As ofDecember 31,2022 and June 30,2023,we have pledged$1.2 billion and$1.1 billion of our cash and seller receivables as collateral for debt related to ourCredit Facility.The estimated fair value of the Credit Facili
136、ty,which is based on Level 2 inputs,approximated its carrying value as of December 31,2022 andJune 30,2023.We have U.S.Dollar and Euro commercial paper programs(the“Commercial Paper Programs”)under which we may from time to time issue unsecuredcommercial paper up to a total of$20.0 billion(including
137、 up to 3.0 billion)at the date of issue,with individual maturities that may vary but will not exceed397 days from the date of issue.There were$6.8 billion and$4.4 billion of borrowings outstanding under the Commercial Paper Programs as of December 31,2022 and June 30,2023,which were included in“Accr
138、ued expenses and other”on our consolidated balance sheets and had a weighted-average effectiveinterest rate,including issuance costs,of 4.5%and 5.0%,respectively.We use the net proceeds from the issuance of commercial paper for general corporatepurposes.We have a$10.0 billion unsecured revolving cre
139、dit facility with a syndicate of lenders(the“Credit Agreement”),with a term that extends to March 2025.It may be extended for up to three additional one-year terms if approved by the lenders.The interest rate applicable to outstanding balances under the CreditAgreement is the applicable benchmark ra
140、te specified in the Credit Agreement plus 0.45%,with a commitment fee of 0.03%on the undrawn portion of thecredit facility.There were no borrowings outstanding under the Credit Agreement as of December 31,2022 and June 30,2023.15Table of ContentsWe have a$10.0 billion unsecured 364-day revolving cre
141、dit facility with a syndicate of lenders(the“Short-Term Credit Agreement”),which matures inNovember 2023 and may be extended for one additional period of 364 days if approved by the lenders.The interest rate applicable to outstanding balancesunder the Short-Term Credit Agreement is the Secured Overn
142、ight Financing Rate specified in the Short-Term Credit Agreement plus 0.45%,with acommitment fee of 0.05%on the undrawn portion.There were no borrowings outstanding under the Short-Term Credit Agreement as of December 31,2022and June 30,2023.We also utilize other short-term credit facilities for wor
143、king capital purposes.There were$1.2 billion and$1.1 billion of borrowings outstanding underthese facilities as of December 31,2022 and June 30,2023,which were included in“Accrued expenses and other”on our consolidated balance sheets.Inaddition,we had$7.5 billion of unused letters of credit as of Ju
144、ne 30,2023.Note 6 STOCKHOLDERS EQUITYStock Repurchase ActivityIn March 2022,the Board of Directors authorized a program to repurchase up to$10.0 billion of our common stock,with no fixed expiration,whichreplaced the previous$5.0 billion stock repurchase authorization,approved by the Board of Directo
145、rs in February 2016.We repurchased 46.2 million shares ofour common stock for$6.0 billion during the six months ended June 30,2022 under these programs.There were no repurchases of our common stock duringthe six months ended June 30,2023.As of June 30,2023,we have$6.1 billion remaining under the rep
146、urchase program.Stock Award ActivityCommon shares outstanding plus shares underlying outstanding stock awards totaled 10.6 billion and 10.8 billion as of December 31,2022 and June 30,2023.These totals include all vested and unvested stock awards outstanding,including those awards we estimate will be
147、 forfeited.Stock-based compensationexpense is as follows(in millions):Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Cost of sales$213$251$359$416 Fulfillment763 932 1,261 1,535 Technology and infrastructure2,814 4,043 4,459 6,617 Sales and marketing990 1,303 1,655 2,296 General a
148、nd administrative429 598 725 1,011 Total stock-based compensation expense$5,209$7,127$8,459$11,875 The following table summarizes our restricted stock unit activity for the six months ended June 30,2023(in millions):Number of UnitsWeighted-AverageGrant-DateFair ValueOutstanding as of December 31,202
149、2384.4$144 Units granted200.3 103 Units vested(70.1)143 Units forfeited(33.1)138 Outstanding as of June 30,2023481.5 128 Scheduled vesting for outstanding restricted stock units as of June 30,2023,is as follows(in millions):Six Months EndedDecember 31,Year Ended December 31,20232024202520262027There
150、afterTotalScheduled vesting restricted stock units70.7 224.5 128.6 47.0 7.4 3.3 481.5 As of June 30,2023,there was$28.0 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements.Thiscompensation is recognized on an accelerated basis with more than half o
151、f the compensation expected to be expensed in the next twelve months,and has aremaining weighted-average recognition period of 1.0 year.The estimated forfeiture rate as of December 31,2022 and June 30,2023 was 26.5%and 26.3%.Changes in our estimates and assumptions relating to forfeitures may cause
152、us to realize material changes in stock-based compensation expense in the future.16Table of ContentsChanges in Stockholders EquityThe following table shows changes in stockholders equity(in millions):Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Total beginning stockholders equit
153、y$134,001$154,526$138,245$146,043 Beginning common stock107 108 106 108 Stock-based compensation and issuance of employee benefit plan stock 1 Ending common stock107 108 107 108 Beginning treasury stock(4,503)(7,837)(1,837)(7,837)Common stock repurchased(3,334)(6,000)Ending treasury stock(7,837)(7,8
154、37)(7,837)(7,837)Beginning additional paid-in capital58,691 79,863 55,437 75,066 Stock-based compensation and issuance of employee benefit plan stock5,180 7,033 8,434 11,830 Ending additional paid-in capital63,871 86,896 63,871 86,896 Beginning accumulated other comprehensive income(loss)(2,365)(3,9
155、73)(1,376)(4,487)Other comprehensive income(loss)(2,417)293(3,406)807 Ending accumulated other comprehensive income(loss)(4,782)(3,680)(4,782)(3,680)Beginning retained earnings82,071 86,365 85,915 83,193 Net income(loss)(2,028)6,750(5,872)9,922 Ending retained earnings80,043 93,115 80,043 93,115 Tot
156、al ending stockholders equity$131,402$168,602$131,402$168,602 Note 7 INCOME TAXESOur tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate,adjusted for discreteitems,if any,that are taken into account in the relevant period.Ea
157、ch quarter we update our estimate of the annual effective tax rate,and if our estimated tax ratechanges,we make a cumulative adjustment.Our quarterly tax provision,and our quarterly estimate of our annual effective tax rate,is subject to significant variation due to several factors,includingvariabil
158、ity in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate,intercompany transactions,theapplicability of special tax regimes,changes in how we do business,acquisitions,investments,developments in tax controversies,changes in our stock price
159、,changes in our deferred tax assets and liabilities and their valuation,foreign currency gains(losses),changes in statutes,regulations,case law,andadministrative practices,principles,and interpretations related to tax,including changes to the global tax framework,competition,and other laws andaccoun
160、ting rules in various jurisdictions,and relative changes of expenses or losses for which tax benefits are not recognized.Our effective tax rate can bemore or less volatile based on the amount of pre-tax income or loss.For example,the impact of discrete items and non-deductible expenses on our effect
161、ive taxrate is greater when our pre-tax income is lower.In addition,we record valuation allowances against deferred tax assets when there is uncertainty about ourability to generate future income in relevant jurisdictions.For 2023,we estimate that our effective tax rate will be favorably impacted by
162、 the foreign income deduction and U.S.federal research and developmentcredit and adversely affected by state income taxes.In addition,valuation gains and losses from our equity investment in Rivian impact our pre-tax income andmay cause variability in our effective tax rate.Our income tax benefit fo
163、r the six months ended June 30,2022 was$2.1 billion,which included$3.2 billion of net discrete tax benefits primarilyattributable to a valuation loss related to our equity investment in Rivian.Our income tax provision for the six months ended June 30,2023 was$1.8 billion,which included$306 million o
164、f net discrete tax benefits,consisting of$805 million resulting from a change in the estimated qualifying expenditures associatedwith our 2022 U.S.17Table of Contentsfederal R&D credit and a related increase in our foreign income deduction tax benefit,partially offset by discrete tax expense related
165、 to shortfalls from stock-based compensation.Cash paid for income taxes,net of refunds was$3.1 billion and$3.7 billion in Q2 2022 and Q2 2023,and$3.6 billion and$4.4 billion for the six monthsended June 30,2022 and 2023.As of December 31,2022 and June 30,2023,tax contingencies were approximately$4.0
166、 billion and$5.0 billion.Changes in tax laws,regulations,administrative practices,principles,and interpretations may impact our tax contingencies.Due to various factors,including the inherent complexities anduncertainties of the judicial,administrative,and regulatory processes in certain jurisdictio
167、ns,the timing of the resolution of income tax controversies is highlyuncertain,and the amounts ultimately paid,if any,upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued.It isreasonably possible that within the next twelve months we will receive additio
168、nal assessments by various tax authorities or possibly reach resolution of incometax controversies in one or more jurisdictions.These assessments or settlements could result in changes to our contingencies related to positions on prior yearstax filings.We are under examination,or may be subject to e
169、xamination,by the Internal Revenue Service for the calendar year 2016 and thereafter.Theseexaminations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examinationas well as subsequent periods.We are also subject to
170、taxation in various states and other foreign jurisdictions including China,France,Germany,India,Japan,Luxembourg,and theUnited Kingdom.We are under,or may be subject to,audit or examination and additional assessments by the relevant authorities in respect of these particularjurisdictions primarily f
171、or 2011 and thereafter.We are currently disputing tax assessments in multiple jurisdictions,including with respect to the allocation andcharacterization of income.In September 2022,the Luxembourg tax authority(“LTA”)denied the tax basis of certain intangible assets that we distributed from Luxembour
172、g to theU.S.in 2021.We believe the LTAs position is without merit and intend to defend ourselves vigorously in this matter.In February 2023,we received a decision by the Indian tax authority(“ITA”)that tax applies to cloud services fees paid to Amazon in the U.S.We willneed to remit taxes on the ser
173、vices in question,including for a portion of prior years,until this matter is resolved,which payments could be significant in theaggregate.We believe the ITAs decision is without merit,we are defending our position vigorously in the Indian courts,and we expect to recoup taxes paid.Ifthis matter is a
174、dversely resolved,we could recognize significant additional tax expense,including for taxes previously paid.In October 2014,the European Commission opened a formal investigation to examine whether decisions by the tax authorities in Luxembourg withregard to the corporate income tax paid by certain o
175、f our subsidiaries comply with European Union rules on state aid.On October 4,2017,the EuropeanCommission announced its decision that determinations by the tax authorities in Luxembourg did not comply with European Union rules on state aid.Based onthat decision,the European Commission announced an e
176、stimated recovery amount of approximately 250 million,plus interest,for the period May 2006through June 2014,and ordered Luxembourg tax authorities to calculate the actual amount of additional taxes subject to recovery.Luxembourg computed aninitial recovery amount,consistent with the European Commis
177、sions decision,which we deposited into escrow in March 2018,subject to adjustment pendingconclusion of all appeals.In December 2017,Luxembourg appealed the European Commissions decision.In May 2018,we appealed.On May 12,2021,theEuropean Union General Court annulled the European Commissions state aid
178、 decision.In July 2021,the European Commission appealed the decision to theEuropean Court of Justice.We will continue to defend ourselves vigorously in this matter.Note 8 SEGMENT INFORMATIONWe have organized our operations into three segments:North America,International,and AWS.We allocate to segmen
179、t results the operating expenses“Fulfillment,”“Technology and infrastructure,”“Sales and marketing,”and“General and administrative”based on usage,which is generally reflected in thesegment in which the costs are incurred.The majority of technology costs recorded in“Technology and infrastructure”are
180、incurred in the U.S.and are includedin our North America and AWS segments.The majority of infrastructure costs recorded in“Technology and infrastructure”are allocated to the AWS segmentbased on usage.There are no internal revenue transactions between our reportable segments.These segments reflect th
181、e way our chief operating decisionmaker evaluates the Companys business performance and manages its operations.North AmericaThe North America segment primarily consists of amounts earned from retail sales of consumer products(including from sellers)and advertising andsubscription services through No
182、rth America-focused online and physical stores.This segment includes export sales from these online stores.18Table of ContentsInternationalThe International segment primarily consists of amounts earned from retail sales of consumer products(including from sellers)and advertising andsubscription serv
183、ices through internationally-focused online stores.This segment includes export sales from these internationally-focused online stores(including export sales from these online stores to customers in the U.S.,Mexico,and Canada),but excludes export sales from our North America-focusedonline stores.AWS
184、The AWS segment consists of amounts earned from global sales of compute,storage,database,and other services for start-ups,enterprises,governmentagencies,and academic institutions.Information on reportable segments and reconciliation to consolidated net income(loss)is as follows(in millions):Three Mo
185、nths EndedJune 30,Six Months EndedJune 30,2022202320222023North AmericaNet sales$74,430$82,546$143,674$159,427 Operating expenses75,057 79,335 145,869 155,318 Operating income(loss)$(627)$3,211$(2,195)$4,109 InternationalNet sales$27,065$29,697$55,824$58,820 Operating expenses28,836 30,592 58,876 60
186、,962 Operating loss$(1,771)$(895)$(3,052)$(2,142)AWSNet sales$19,739$22,140$38,180$43,494 Operating expenses14,024 16,775 25,947 33,006 Operating income$5,715$5,365$12,233$10,488 ConsolidatedNet sales$121,234$134,383$237,678$261,741 Operating expenses117,917 126,702 230,692 249,286 Operating income3
187、,317 7,681 6,986 12,455 Total non-operating expense(5,970)(118)(14,904)(773)Benefit(provision)for income taxes637(804)2,059(1,752)Equity-method investment activity,net of tax(12)(9)(13)(8)Net income(loss)$(2,028)$6,750$(5,872)$9,922 19Table of ContentsNet sales by groups of similar products and serv
188、ices,which also have similar economic characteristics,is as follows(in millions):Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Net Sales:Online stores(1)$50,855$52,966$101,984$104,062 Physical stores(2)4,721 5,024 9,312 9,919 Third-party seller services(3)27,376 32,332 52,711 62,
189、152 Subscription services(4)8,716 9,894 17,126 19,551 Advertising services(5)8,757 10,683 16,634 20,192 AWS19,739 22,140 38,180 43,494 Other(6)1,070 1,344 1,731 2,371 Consolidated$121,234$134,383$237,678$261,741 _(1)Includes product sales and digital media content where we record revenue gross.We le
190、verage our retail infrastructure to offer a wide selection ofconsumable and durable goods that includes media products available in both a physical and digital format,such as books,videos,games,music,andsoftware.These product sales include digital products sold on a transactional basis.Digital media
191、 content subscriptions that provide unlimited viewing orusage rights are included in“Subscription services.”(2)Includes product sales where our customers physically select items in a store.Sales to customers who order goods online for delivery or pickup at ourphysical stores are included in“Online s
192、tores.”(3)Includes commissions and any related fulfillment and shipping fees,and other third-party seller services.(4)Includes annual and monthly fees associated with Amazon Prime memberships,as well as digital video,audiobook,digital music,e-book,and other non-AWS subscription services.(5)Includes
193、sales of advertising services to sellers,vendors,publishers,authors,and others,through programs such as sponsored ads,display,and videoadvertising.(6)Includes sales related to various other offerings,such as certain licensing and distribution of video content,health care services,and shipping servic
194、es,andour co-branded credit card agreements.20Table of ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking StatementsThis Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Liti
195、gation Reform Act of 1995.Allstatements other than statements of historical fact,including statements regarding guidance,industry prospects,or future results of operations or financialposition,made in this Quarterly Report on Form 10-Q are forward-looking.We use words such as anticipates,believes,ex
196、pects,future,intends,and similarexpressions to identify forward-looking statements.Forward-looking statements reflect managements current expectations and are inherently uncertain.Actualresults and outcomes could differ materially for a variety of reasons,including,among others,fluctuations in forei
197、gn exchange rates,changes in globaleconomic conditions and customer demand and spending,inflation,interest rates,regional labor market constraints,world events,the rate of growth of theInternet,online commerce,and cloud services,the amount that A invests in new business opportunities and the timing
198、of those investments,the mixof 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 othertaxes,competition,management of growth,potential fluctuations in operating results,international growth and expansion,
199、the outcomes of claims,litigation,government investigations,and other proceedings,fulfillment,sortation,delivery,and data center optimization,risks of inventory management,variability indemand,the degree to which we enter into,maintain,and develop commercial agreements,proposed and completed acquisi
200、tions and strategic transactions,payments risks,and risks of fulfillment throughput and productivity.In addition,global economic and geopolitical conditions and additional or unforeseencircumstances,developments,or events may give rise to or amplify many of these risks.These risks and uncertainties,
201、as well as other risks and uncertaintiesthat could cause our actual results or outcomes to differ significantly from managements expectations,are described in greater detail in Item 1A of Part II,“Risk Factors.”For additional information,see Item 7 of Part II,“Managements Discussion and Analysis of
202、Financial Condition and Results of Operations Overview”of our 2022 Annual Report on Form 10-K.Critical Accounting EstimatesThe preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets andliabilities,revenues and expense
203、s,and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes.Criticalaccounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or arereasonably likely to have a
204、material impact on the financial condition or results of operations of the Company.Based on this definition,we have identified thecritical accounting estimates addressed below.We also have other key accounting policies,which involve the use of estimates,judgments,and assumptions thatare significant
205、to understanding our results.For additional information,see Item 8 of Part II,“Financial Statements and Supplementary Data Note 1 Description of Business,Accounting Policies,and Supplemental Disclosures”of our 2022 Annual Report on Form 10-K and Item 1 of Part I,“FinancialStatements Note 1 Accountin
206、g Policies and Supplemental Disclosures,”of this Form 10-Q.Although we believe that our estimates,assumptions,andjudgments are reasonable,they are based upon information presently available.Actual results may differ significantly from these estimates under differentassumptions,judgments,or condition
207、s.InventoriesInventories,consisting of products available for sale,are primarily accounted for using the first-in first-out method,and are valued at the lower of costand net realizable value.This valuation requires us to make judgments,based on currently available information,about the likely method
208、 of disposition,suchas through sales to individual customers,returns to product vendors,or liquidations,and expected recoverable values of each disposition category.Theseassumptions about future disposition of inventory are inherently uncertain and changes in our estimates and assumptions may cause
209、us to realize material write-downs in the future.As a measure of sensitivity,for every 1%of additional inventory valuation allowance as of June 30,2023,we would have recorded anadditional cost of sales of approximately$385 million.In addition,we enter into supplier commitments for certain electronic
210、 device components and certain products.These commitments are based onforecasted customer demand.If we reduce these commitments,we may incur additional costs.Income TaxesWe are subject to income taxes in the U.S.(federal and state)and numerous foreign jurisdictions.Tax laws,regulations,administrativ
211、e practices,principles,and interpretations in various jurisdictions may be subject to significant change,with or without notice,due to economic,political,and otherconditions,and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.There are many tr
212、ansactions that occurduring the ordinary course of business for which the ultimate tax determination is uncertain.In addition,our actual and forecasted earnings are subject to21Table of Contentschange due to economic,political,and other conditions and significant judgment is required in determining
213、our ability to use our deferred tax assets.Our effective tax rates could be affected by numerous factors,such as changes in our business operations,acquisitions,investments,entry into newbusinesses and geographies,intercompany transactions,the relative amount of our foreign earnings,including earnin
214、gs being lower than anticipated injurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates,losses incurred injurisdictions for which we are not able to realize related tax benefits,the applicability of special tax regimes,cha
215、nges in foreign exchange rates,changes in ourstock 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 andtheir valuation,changes in the laws,regulations,administrative practices,principles,and interpr
216、etations related to tax,including changes to the global taxframework,competition,and other laws and accounting rules in various jurisdictions.In addition,a number of countries have enacted or are actively pursuingchanges to their tax laws applicable to corporate multinationals.We are also currently
217、subject to tax controversies in various jurisdictions,and these jurisdictions may assess additional income tax liabilities against us.Developments in an audit,investigation,or other tax controversy could have a material effect on our operating results or cash flows in the period or periods forwhich
218、that development occurs,as well as for prior and subsequent periods.We regularly assess the likelihood of an adverse outcome resulting from theseproceedings to determine the adequacy of our tax accruals.Although we believe our tax estimates are reasonable,the final outcome of audits,investigations,a
219、nd any other tax controversies could be materially different from our historical income tax provisions and accruals.Liquidity and Capital ResourcesCash flow information is as follows(in millions):Three Months EndedJune 30,Six Months EndedJune 30,Twelve Months EndedJune 30,202220232022202320222023Cas
220、h provided by(used in):Operating activities$8,965$16,476$6,175$21,264$35,574$61,841 Investing activities(12,078)(9,673)(11,172)(25,479)(38,580)(51,908)Financing activities4,626(6,539)6,616(185)740 2,917 Our principal sources of liquidity are cash flows generated from operations and our cash,cash equ
221、ivalents,and marketable securities balances,which,atfair value,were$70.0 billion and$64.0 billion as of December 31,2022 and June 30,2023.Amounts held in foreign currencies were$18.3 billion and$14.8billion as of December 31,2022 and June 30,2023.Our foreign currency balances include British Pounds,
222、Canadian Dollars,Euros,Indian Rupee,andJapanese Yen.Cash provided by(used in)operating activities was$9.0 billion and$16.5 billion for Q2 2022 and Q2 2023,and$6.2 billion and$21.3 billion for the sixmonths ended June 30,2022 and 2023.Our operating cash flows result primarily from cash received from
223、our consumer,seller,developer,enterprise,andcontent creator customers,and advertisers,offset by cash payments we make for products and services,employee compensation,payment processing andrelated transaction costs,operating leases,and interest payments.Cash received from our customers and other acti
224、vities generally corresponds to our net sales.The increase in operating cash flow for the trailing twelve months ended June 30,2023,compared to the comparable prior year period,was due to changes innet income(loss),excluding non-cash expenses,and changes in working capital.Working capital at any spe
225、cific point in time is subject to many variables,including variability in demand,inventory management and category expansion,the timing of cash receipts and payments,customer and vendor paymentterms,and fluctuations in foreign exchange rates.Cash provided by(used in)investing activities corresponds
226、with cash capital expenditures,including leasehold improvements,incentives received fromproperty and equipment vendors,proceeds from asset sales,cash outlays for acquisitions,investments in other companies and intellectual property rights,andpurchases,sales,and maturities of marketable securities.Ca
227、sh provided by(used in)investing activities was$(12.1)billion and$(9.7)billion for Q2 2022 andQ2 2023,and$(11.2)billion and$(25.5)billion for the six months ended June 30,2022 and 2023,with the variability caused primarily by purchases,sales,andmaturities of marketable securities.Cash capital expend
228、itures were$14.1 billion and$10.4 billion during Q2 2022 and Q2 2023,and$27.8 billion and$23.5billion for the six months ended June 30,2022 and 2023,which primarily reflect investments in technology infrastructure(the majority of which is to supportAWS business growth)and in additional capacity to s
229、upport our fulfillment network.We expect cash capital expenditures to decrease in 2023,primarily due tolower spending on our fulfillment network.We made cash payments,net of acquired cash,related to acquisition and other investment activity of$259 millionand$316 million during Q2 2022 and Q2 2023,an
230、d$6.6 billion and$3.8 billion for the six months ended June 30,2022 and 2023.We funded the acquisitionsof MGM Holdings Inc.in 2022 and One Medical in 2023 with cash on hand.We expect to fund the acquisition of iRobot Corporation with cash on hand.22Table of ContentsCash provided by(used in)financing
231、 activities was$4.6 billion and$(6.5)billion for Q2 2022 and Q2 2023,and$6.6 billion and$(185)million for thesix months ended June 30,2022 and 2023.Cash inflows from financing activities resulted from proceeds from short-term debt,and other and long-term debt of$17.7 billion and$4.4 billion for Q2 2
232、022 and Q2 2023,and$31.4 billion and$17.2 billion for the six months ended June 30,2022 and 2023.Cash outflowsfrom financing activities resulted from repurchases of common stock in 2022,payments of short-term debt,and other,long-term debt,finance leases,andfinancing obligations of$13.1 billion and$1
233、0.9 billion in Q2 2022 and Q2 2023,and$24.8 billion and$17.4 billion for the six months ended June 30,2022and 2023.Property and equipment acquired under finance leases was$61 million and$240 million during Q2 2022 and Q2 2023,and$227 million and$248million for the six months ended June 30,2022 and 2
234、023.We had no borrowings outstanding under the two unsecured revolving credit facilities,$4.4 billion of borrowings outstanding under the commercialpaper programs,$972 million of borrowings outstanding under our Credit Facility,and$8.0 billion of borrowings outstanding under the Term Loan as ofJune
235、30,2023.See Item 1 of Part I,“Financial Statements Note 5 Debt”for additional information.Certain foreign subsidiary earnings and losses are subject to current U.S.taxation and the subsequent repatriation of those earnings is not subject to tax inthe U.S.We intend to invest substantially all of our
236、foreign subsidiary earnings,as well as our capital in our foreign subsidiaries,indefinitely outside of theU.S.in those jurisdictions in which we would incur significant,additional costs upon repatriation of such amounts.Our U.S.taxable income is reduced by accelerated depreciation deductions and inc
237、reased by the impact of capitalized research and developmentexpenses.U.S.tax rules provide for enhanced accelerated depreciation deductions by allowing us to expense a portion of qualified property,primarilyequipment.These enhanced deductions are scheduled to phase out annually from 2023 through 202
238、6.Additionally,effective January 1,2022,research anddevelopment expenses are required to be capitalized and amortized for U.S.tax purposes,which delays the deductibility of these expenses.As a result,weexpect the cash taxes we pay in 2023 to increase significantly.Cash taxes paid(net of refunds)were
239、$3.1 billion and$3.7 billion for Q2 2022 and Q2 2023,and$3.6 billion and$4.4 billion for the six months ended June 30,2022 and 2023.As of December 31,2022 and June 30,2023,restricted cash,cash equivalents,and marketable securities were$365 million and$538 million.See Item 1of Part I,“Financial State
240、ments Note 4 Commitments and Contingencies”and“Financial Statements Note 5 Debt”for additional discussion of ourprincipal contractual commitments,as well as our pledged assets.Additionally,we have purchase obligations and open purchase orders,including for inventoryand capital expenditures,that supp
241、ort normal operations and are primarily due in the next twelve months.These purchase obligations and open purchase ordersare generally cancellable in full or in part through the contractual provisions.We believe that cash flows generated from operations and our cash,cash equivalents,and marketable s
242、ecurities balances,as well as our borrowingarrangements,will be sufficient to meet our anticipated operating cash needs for at least the next twelve months.However,any projections of future cash needsand cash flows are subject to substantial uncertainty.See Item 1A of Part II,“Risk Factors.”We conti
243、nually evaluate opportunities to sell additional equity ordebt securities,obtain credit facilities,obtain finance and operating lease arrangements,enter into financing obligations,repurchase common stock,paydividends,or repurchase,refinance,or otherwise restructure our debt for strategic reasons or
244、to further strengthen our financial position.The sale of additional equity or convertible debt securities would be dilutive to our shareholders.In addition,we will,from time to time,consider theacquisition of,or investment in,complementary businesses,products,services,capital infrastructure,and tech
245、nologies,which might affect our liquidityrequirements or cause us to secure additional financing,or issue additional equity or debt securities.There can be no assurance that additional credit lines orfinancing instruments will be available in amounts or on terms acceptable to us,if at all.In additio
246、n,economic conditions and actions by policymaking bodiesare contributing to rising interest rates and significant capital market volatility,which,along with increases in our borrowing levels,could increase our futureborrowing costs.23Table of ContentsResults of OperationsWe have organized our operat
247、ions into three segments:North America,International,and AWS.These segments reflect the way the Company evaluatesits business performance and manages its operations.See Item 1 of Part I,“Financial Statements Note 8 Segment Information.”OverviewMacroeconomic factors,including inflation,increased inte
248、rest rates,significant capital market and supply chain volatility,and global economic andgeopolitical developments,have direct and indirect impacts on our results of operations that are difficult to isolate and quantify.In addition,changes in fuel,utility,and food costs,rising interest rates,and rec
249、essionary fears may impact customer demand and our ability to forecast consumer spending patterns.We alsoexpect the current macroeconomic environment and enterprise customer cost optimization efforts to impact our AWS revenue growth rates.We expect some orall of these factors to continue to impact o
250、ur operations into Q3 2023.Net SalesNet sales include product and service sales.Product sales represent revenue from the sale of products and related shipping fees and digital media contentwhere we record revenue gross.Service sales primarily represent third-party seller fees,which includes commissi
251、ons and any related fulfillment and shippingfees,AWS sales,advertising services,Amazon Prime membership fees,and certain digital media content subscriptions.Net sales information is as follows(inmillions):Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Net Sales:North America$74,43
252、0$82,546$143,674$159,427 International27,065 29,697 55,824 58,820 AWS19,739 22,140 38,180 43,494 Consolidated$121,234$134,383$237,678$261,741 Year-over-year Percentage Growth(Decline):North America10%11%9%11%International(12)10(9)5 AWS33 12 35 14 Consolidated7 11 7 10 Year-over-year Percentage Growt
253、h(Decline),excluding the effect of foreignexchange rates:North America10%11%9%11%International(1)10 0 10 AWS33 12 35 14 Consolidated10 11 10 11 Net sales mix:North America62%61%60%61%International22 22 24 22 AWS16 17 16 17 Consolidated100%100%100%100%Sales increased 11%in Q2 2023,and 10%for the six
254、months ended June 30,2023 compared to the comparable prior year periods.Changes in foreignexchange rates reduced net sales by$285 million for Q2 2023,and by$2.7 billion for the six months ended June 30,2023.For a discussion of the effect offoreign exchange rates on sales growth,see“Effect of Foreign
255、 Exchange Rates”below.North America sales increased 11%in Q2 2023,and 11%for the six months ended June 30,2023 compared to the comparable prior year periods.Thesales growth primarily reflects increased unit sales,primarily by third-party sellers,advertising sales,and subscription services.Increased
256、unit sales weredriven largely by our continued focus on price,selection,and convenience for our customers,including from our shipping offers.24Table of ContentsInternational sales increased 10%in Q2 2023,and 5%for the six months ended June 30,2023 compared to the comparable prior year periods,primar
257、ilydue to increased unit sales,primarily by third-party sellers,advertising sales,and subscription services,partially offset by the impact of changes in foreignexchange rates.Increased unit sales were driven largely by our continued focus on price,selection,and convenience for our customers,includin
258、g from ourshipping offers.Changes in foreign exchange rates reduced International net sales by$180 million for Q2 2023,and by$2.4 billion for the six months endedJune 30,2023.AWS sales increased 12%in Q2 2023,and 14%for the six months ended June 30,2023 compared to the comparable prior year periods.
259、The sales growthprimarily reflects increased customer usage,partially offset by pricing changes,primarily driven by long-term customer contracts.Operating Income(Loss)Operating income(loss)by segment is as follows(in millions):Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Operati
260、ng Income(Loss)North America$(627)$3,211$(2,195)$4,109 International(1,771)(895)(3,052)(2,142)AWS5,715 5,365 12,233 10,488 Consolidated$3,317$7,681$6,986$12,455 Operating income increased from$3.3 billion in Q2 2022 to$7.7 billion in Q2 2023,and increased from$7.0 billion for the six months ended Ju
261、ne 30,2022 to$12.5 billion for the six months ended June 30,2023.We believe that operating income is a more meaningful measure than gross profit and grossmargin due to the diversity of our product categories and services.The North America operating income in Q2 2023 and for the six months ended June
262、 30,2023,as compared to the operating loss in the comparable prioryear periods,is primarily due to increased unit sales and increased advertising sales,partially offset by increased technology and infrastructure costs,increasedshipping and fulfillment costs,and growth in certain operating expenses.C
263、hanges in foreign exchange rates negatively impacted operating income by$7million for Q2 2023,and positively impacted operating income by$34 million for the six months ended June 30,2023.The decrease in International operating loss in absolute dollars in Q2 2023 and for the six months ended June 30,
264、2023,compared to the comparable prioryear periods,is primarily due to increased unit sales and increased advertising sales,partially offset by increased fulfillment and shipping costs,increasedtechnology and infrastructure costs,and growth in certain operating expenses.Changes in foreign exchange ra
265、tes positively impacted operating loss by$32 million for Q2 2023,and negatively impacted operating loss by$142 million for the six months ended June 30,2023.The decrease in AWS operating income in absolute dollars in Q2 2023 and for the six months ended June 30,2023,compared to the comparable priory
266、ear periods,is primarily due to increased payroll and related expenses and spending on technology infrastructure,both of which were primarily driven byadditional investments to support AWS business growth,partially offset by increased sales.Changes in foreign exchange rates positively impacted opera
267、tingincome by$79 million for Q2 2023,and by$351 million for the six months ended June 30,2023.25Table of ContentsOperating ExpensesInformation about operating expenses is as follows(in millions):Three Months EndedJune 30,Six Months EndedJune 30,2022202320222023Operating expenses:Cost of sales$66,424
268、$69,373$132,923$137,164 Fulfillment20,342 21,305 40,613 42,210 Technology and infrastructure18,072 21,931 32,914 42,381 Sales and marketing10,086 10,745 18,406 20,917 General and administrative2,903 3,202 5,497 6,245 Other operating expense(income),net90 146 339 369 Total operating expenses$117,917$
269、126,702$230,692$249,286 Year-over-year Percentage Growth:Cost of sales4%4%5%3%Fulfillment15 5 19 4 Technology and infrastructure30 21 25 29 Sales and marketing34 7 34 14 General and administrative35 10 33 14 Other operating expense(income),net673 63 588 9 Percent of Net Sales:Cost of sales54.8%51.6%
270、55.9%52.4%Fulfillment16.8 15.9 17.1 16.1 Technology and infrastructure14.9 16.3 13.8 16.2 Sales and marketing8.3 8.0 7.7 8.0 General and administrative2.4 2.4 2.3 2.4 Other operating expense(income),net0.1 0.1 0.1 0.1 Cost of SalesCost of sales primarily consists of the purchase price of consumer pr
271、oducts,inbound and outbound shipping costs,including costs related to sortation anddelivery centers and where we are the transportation service provider,and digital media content costs where we record revenue gross,including video andmusic.The increase in cost of sales in absolute dollars in Q2 2023
272、 and for the six months ended June 30,2023,compared to the comparable prior year periods,is primarily due to increased product and shipping costs resulting from increased sales,partially offset by fulfillment network efficiencies.Changes in foreignexchange rates reduced cost of sales by$208 million
273、for Q2 2023,and by$1.8 billion for the six months ended June 30,2023.Shipping costs to receive products from our suppliers are included in our inventory and recognized as cost of sales upon sale of products to ourcustomers.Shipping costs,which include sortation and delivery centers and transportatio
274、n costs,were$19.3 billion and$20.5 billion in Q2 2022 and Q2 2023,and$38.9 billion and$40.4 billion for the six months ended June 30,2022 and 2023.We expect our cost of shipping to continue to increase to the extent ourcustomers accept and use our shipping offers at an increasing rate,we use more ex
275、pensive shipping methods,and we offer additional services.We seek tomitigate costs of shipping over time in part through achieving higher sales volumes,optimizing our fulfillment network,negotiating better terms with oursuppliers,and achieving better operating efficiencies.We believe that offering l
276、ow prices to our customers is fundamental to our future success,and one waywe offer lower prices is through shipping offers.Costs to operate our AWS segment are primarily classified as“Technology and infrastructure”as we leverage a shared infrastructure that supports bothour internal technology requ
277、irements and external sales to AWS customers.FulfillmentFulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International fulfillment centers,physicalstores,and customer service centers and payment processing costs.While AWS payment processing2
278、6Table of Contentsand related transaction costs are included in“Fulfillment,”AWS costs are primarily classified as“Technology and infrastructure.”Fulfillment costs as apercentage of net sales may vary due to several factors,such as payment processing and related transaction costs,our level of produc
279、tivity 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 offulfillment network and physical store expansion,the extent we utilize fulfillment services provided by third parties,mix of p
280、roducts and services sold,and ourability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our customer self-service features.Additionally,sales by our sellers have higher payment processing and related transaction costs as a percentage o
281、f net sales compared to our retail sales becausepayment processing costs are based on the gross purchase price of underlying transactions.The increase in fulfillment costs in absolute dollars in Q2 2023 and for the six months ended June 30,2023,compared to the comparable prior yearperiods,is primari
282、ly due to increased sales,partially offset by fulfillment network efficiencies.Changes in foreign exchange rates reduced fulfillment costs by$35 million for Q2 2023,and by$431 million for the six months ended June 30,2023.We seek to expand our fulfillment network to accommodate a greater selection a
283、nd in-stock inventory levels and to meet anticipated shipment volumesfrom sales of our own products as well as sales by third parties for which we provide the fulfillment services.We regularly evaluate our facility requirements.Technology and InfrastructureTechnology and infrastructure costs include
284、 payroll and related expenses for employees involved in the research and development of new and existingproducts 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.Infrastructure cos
285、ts include servers,networking equipment,and data center related depreciation and amortization,rent,utilities,andother expenses necessary to support AWS and other Amazon businesses.Collectively,these costs reflect the investments we make in order to offer a widevariety of products and services to our
286、 customers,including expenditures related to initiatives to build and deploy innovative and efficient software andelectronic devices and the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services.We seek to invest efficiently in numerous are
287、as of technology and infrastructure so we may continue to enhance the customer experience and improveour process efficiency through rapid technology developments,while operating at an ever increasing scale.Our technology and infrastructure investment andcapital spending projects often support a vari
288、ety of product and service offerings due to geographic expansion and the cross-functionality of our systems andoperations.We expect spending in technology and infrastructure to increase over time as we continue to add employees and infrastructure.These costs areallocated to segments based on usage.T
289、he increase in technology and infrastructure costs in absolute dollars in Q2 2023 and for the six months ended June 30,2023,compared to the comparable prior year periods,is primarily due to increased payroll and related costs associated with technical teams responsible forexpanding our existing prod
290、ucts and services and initiatives to introduce new products and service offerings,and an increase in spending on infrastructure.Changes in foreign exchange rates reduced technology and infrastructure costs by$95 million for Q2 2023,and by$399 million for the six months ended June30,2023.See Item 7 o
291、f Part II,“Managements Discussion and Analysis of Financial Condition and Results of Operations Overview”of our 2022 AnnualReport on Form 10-K for a discussion of how management views advances in technology and the importance of innovation.Sales and MarketingSales and marketing costs include adverti
292、sing and payroll and related expenses for personnel engaged in marketing and selling activities,including salescommissions related to AWS.We direct customers to our stores primarily through a number of marketing channels,such as our sponsored search,social andonline advertising,third-party customer
293、referrals,television advertising,and other initiatives.Our marketing costs are largely variable,based on growth in salesand changes in rates.To the extent there is increased or decreased competition for these traffic sources,or to the extent our mix of these channels shifts,wewould expect to see a c
294、orresponding change in our marketing costs.The increase in sales and marketing costs in absolute dollars in Q2 2023 and for the six months ended June 30,2023,compared to the comparable prioryear periods,is primarily due to increased payroll and related expenses for personnel engaged in marketing and
295、 selling activities.While costs associated with Amazon Prime membership benefits and other shipping offers are not included in sales and marketing expense,we viewthese offers as effective worldwide marketing tools,and intend to continue offering them indefinitely.General and AdministrativeThe increa
296、se in general and administrative costs in absolute dollars in Q2 2023 and for the six months ended June 30,2023,compared to the comparableprior year periods,is primarily due to an increase in payroll and related expenses.27Table of ContentsOther Operating Expense(Income),NetOther operating expense(i
297、ncome),net was$90 million and$146 million for Q2 2022 and Q2 2023,and$339 million and$369 million for the sixmonths ended June 30,2022 and 2023,and was primarily related to asset impairments for physical store closures in 2022 and for fulfillment network facilitiesin 2023,and the amortization of int
298、angible assets.Interest Income and ExpenseOur interest income was$159 million and$661 million during Q2 2022 and Q2 2023,and$267 million and$1.3 billion for the six months ended June30,2022 and 2023,primarily due to an increase in prevailing rates.We generally invest our excess cash in AAA-rated mon
299、ey market funds and investmentgrade short-to intermediate-term marketable debt securities.Our interest income corresponds with the average balance of invested funds based on theprevailing rates,which vary depending on the geographies and currencies in which they are invested.Interest expense was$584
300、 million and$840 million during Q2 2022 and Q2 2023,and$1.1 billion and$1.7 billion for the six months ended June 30,2022 and 2023,and was primarily related to debt and finance leases.See Item 1 of Part I,“Financial Statements Note 3 Leases and Note 5 Debt”foradditional information.Other Income(Expe
301、nse),NetOther income(expense),net was$(5.5)billion and$61 million during Q2 2022 and Q2 2023,and$(14.1)billion and$(382)million for the six monthsended June 30,2022 and 2023.The primary components of other income(expense),net are related to equity securities valuations and adjustments,equitywarrant
302、valuations,and foreign currency.Included in other income(expense),net is a marketable equity securities valuation gain(loss)of$(3.9)billion and$187 million in Q2 2022 and Q2 2023,and$(11.5)billion and$(280)million for the six months ended June 30,2022 and 2023,from our equity investment inRivian.Inc
303、ome TaxesOur income tax benefit for the six months ended June 30,2022 was$2.1 billion,which included$3.2 billion of net discrete tax benefits primarilyattributable to a valuation loss related to our equity investment in Rivian.Our income tax provision for the six months ended June 30,2023 was$1.8 bi
304、llion,which included$306 million of net discrete tax benefits.See Item 1 of Part I,“Financial Statements Note 7 Income Taxes”for additional information.Non-GAAP Financial MeasuresRegulation G,Conditions for Use of Non-GAAP Financial Measures,and other SEC regulations define and prescribe the conditi
305、ons for use of certainnon-GAAP financial information.Our measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations meetthe definition of non-GAAP financial measures.We provide multiple measures of free cash flows because we believe these measur
306、es provide additional perspective on the impact of acquiring propertyand equipment with cash and through finance leases and financing obligations.Free Cash FlowFree cash flow is cash flow from operations reduced by“Purchases of property and equipment,net of proceeds from sales and incentives.”The fo
307、llowingis a reconciliation of free cash flow to the most comparable GAAP cash flow measure,“Net cash provided by(used in)operating activities,”for the trailingtwelve months ended June 30,2022 and 2023(in millions):Twelve Months EndedJune 30,20222023Net cash provided by(used in)operating activities$3
308、5,574$61,841 Purchases of property and equipment,net of proceeds from sales and incentives(59,061)(53,963)Free cash flow$(23,487)$7,878 Net cash provided by(used in)investing activities$(38,580)$(51,908)Net cash provided by(used in)financing activities$740$2,917 28Table of ContentsFree Cash Flow Les
309、s Principal Repayments of Finance Leases and Financing ObligationsFree cash flow less principal repayments of finance leases and financing obligations is free cash flow reduced by“Principal repayments of financeleases”and“Principal repayments of financing obligations.”Principal repayments of finance
310、 leases and financing obligations approximates the actualpayments of cash for our finance leases and financing obligations.The following is a reconciliation of free cash flow less principal repayments of financeleases and financing obligations to the most comparable GAAP cash flow measure,“Net cash
311、provided by(used in)operating activities,”for the trailing twelvemonths ended June 30,2022 and 2023(in millions):Twelve Months EndedJune 30,20222023Net cash provided by(used in)operating activities$35,574$61,841 Purchases of property and equipment,net of proceeds from sales and incentives(59,061)(53
312、,963)Free cash flow(23,487)7,878 Principal repayments of finance leases(9,789)(5,705)Principal repayments of financing obligations(205)(244)Free cash flow less principal repayments of finance leases and financing obligations$(33,481)1,929 Net cash provided by(used in)investing activities$(38,580)$(5
313、1,908)Net cash provided by(used in)financing activities$740$2,917 Free Cash Flow Less Equipment Finance Leases and Principal Repayments of All Other Finance Leases and Financing ObligationsFree cash flow less equipment finance leases and principal repayments of all other finance leases and financing
314、 obligations is free cash flow reduced byequipment acquired under finance leases,which is included in“Property and equipment acquired under finance leases,net of remeasurements andmodifications,”principal repayments of all other finance lease liabilities,which is included in“Principal repayments of
315、finance leases,”and“Principalrepayments of financing obligations.”All other finance lease liabilities and financing obligations consists of property.In this measure,equipment acquiredunder finance leases is reflected as if these assets had been purchased with cash,which is not the case as these asse
316、ts have been leased.The following is areconciliation of free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations to the mostcomparable GAAP cash flow measure,“Net cash provided by(used in)operating activities,”for the trailing twelve
317、 months ended June 30,2022 and 2023(inmillions):Twelve Months EndedJune 30,20222023Net cash provided by(used in)operating activities$35,574$61,841 Purchases of property and equipment,net of proceeds from sales and incentives(59,061)(53,963)Free cash flow(23,487)7,878 Equipment acquired under finance
318、 leases(1)(1,621)(269)Principal repayments of all other finance leases(2)(751)(631)Principal repayments of financing obligations(205)(244)Free cash flow less equipment finance leases and principal repayments of all other finance leases and financingobligations$(26,064)$6,734 Net cash provided by(use
319、d in)investing activities$(38,580)$(51,908)Net cash provided by(used in)financing activities$740$2,917 _(1)For the twelve months ended June 30,2022 and 2023,this amount relates to equipment included in“Property and equipment acquired under financeleases,net of remeasurements and modifications”of$3,5
320、79 million and$696 million.(2)For the twelve months ended June 30,2022 and 2023,this amount relates to property included in“Principal repayments of finance leases”of$9,789million and$5,705 million.29Table of ContentsAll of these free cash flows measures have limitations as they omit certain componen
321、ts of the overall cash flow statement and do not represent theresidual cash flow available for discretionary expenditures.For example,these measures of free cash flows do not incorporate the portion of paymentsrepresenting principal reductions of debt or cash payments for business acquisitions.Addit
322、ionally,our mix of property and equipment acquisitions with cash orother financing options may change over time.Therefore,we believe it is important to view free cash flows measures only as a complement to our entireconsolidated statements of cash flows.Effect of Foreign Exchange RatesInformation re
323、garding the effect of foreign exchange rates,versus the U.S.Dollar,on our net sales,operating expenses,and operating income is providedto show reported period operating results had the foreign exchange rates remained the same as those in effect in the comparable prior year period.The effect onour ne
324、t sales,operating expenses,and operating income from changes in our foreign exchange rates versus the U.S.Dollar is as follows(in millions):Three Months Ended June 30,Six Months Ended June 30,2022202320222023AsReportedExchangeRateEffect(1)At PriorYearRates(2)As ReportedExchangeRateEffect(1)At PriorY
325、earRates(2)AsReportedExchangeRateEffect(1)At PriorYearRates(2)As ReportedExchangeRateEffect(1)At PriorYearRates(2)Net sales$121,234$3,599$124,833$134,383$285$134,668$237,678$5,440$243,118$261,741$2,721$264,462 Operating expenses117,917 3,764 121,681 126,702 389 127,091 230,692 5,731 236,423 249,286
326、2,964 252,250 Operating income3,317(165)3,152 7,681(104)7,577 6,986(291)6,695 12,455(243)12,212 _(1)Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year period foroperating results.(2)Represents the outcome that
327、would have resulted had foreign exchange rates in the reported period been the same as those in effect in the comparable prioryear period for operating results.30Table of ContentsGuidanceWe provided guidance on August 3,2023,in our earnings release furnished on Form 8-K as set forth below.These forw
328、ard-looking statements reflectAs expectations as of August 3,2023,and are subject to substantial uncertainty.Our results are inherently unpredictable and may be materiallyaffected by many factors,such as fluctuations in foreign exchange rates,changes in global economic and geopolitical conditions an
329、d customer demand andspending(including the impact of recessionary fears),inflation,interest rates,regional labor market 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 II,“Risk Factors.”Third Quarter 2023 Gu
330、idanceNet sales are expected to be between$138.0 billion and$143.0 billion,or to grow between 9%and 13%compared with third quarter 2022.Thisguidance anticipates a favorable impact of approximately 120 basis points from foreign exchange rates.Operating income is expected to be between$5.5 billion and
331、$8.5 billion,compared with$2.5 billion in third quarter 2022.This guidance assumes,among other things,that no additional business acquisitions,restructurings,or legal settlements are concluded.31Table of ContentsItem 3.Quantitative and Qualitative Disclosures About Market RiskWe are exposed to marke
332、t risk for the effect of interest rate changes,foreign currency fluctuations,and changes in the market values of our investments.Information relating to quantitative and qualitative disclosures about market risk is set forth below and in Item 2 of Part I,“Managements Discussion andAnalysis of Financ
333、ial Condition and Results of Operations Liquidity and Capital Resources.”Interest Rate RiskOur exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our debt.Our long-term debt is carried atamortized cost and fluctuations in interest rates do not impact our consolidated financial statements.However,the fair value of our long-term debt,which paysint