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Amazon.com Announces Second Quarter Sales up 39% to $52.9 Billion

July 26, 2018 4:01 PM

SEATTLE--(BUSINESS WIRE)-- Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its second quarter ended June 30, 2018.

Operating cash flow increased 22% to $21.8 billion for the trailing twelve months, compared with $17.8 billion for the trailing twelve months ended June 30, 2017. Free cash flow increased to $10.4 billion for the trailing twelve months, compared with $9.6 billion for the trailing twelve months ended June 30, 2017. Free cash flow less lease principal repayments decreased to $4.1 billion for the trailing twelve months, compared with $5.4 billion for the trailing twelve months ended June 30, 2017. Free cash flow less finance lease principal repayments and assets acquired under capital leases decreased to $546 million for the trailing twelve months, compared with $1.4 billion for the trailing twelve months ended June 30, 2017.

Common shares outstanding plus shares underlying stock-based awards totaled 506 million on June 30, 2018, compared with 502 million one year ago.

Net sales increased 39% to $52.9 billion in the second quarter, compared with $38.0 billion in second quarter 2017. Excluding the $760 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 37% compared with second quarter 2017.

Operating income increased to $3.0 billion in the second quarter, compared with operating income of $628 million in second quarter 2017.

Net income increased to $2.5 billion in the second quarter, or $5.07 per diluted share, compared with net income of $197 million, or $0.40 per diluted share, in second quarter 2017.

“We want customers to be able to use Alexa wherever they are,” said Jeff Bezos, Amazon founder and CEO. “There are now tens of thousands of developers across more than 150 countries building new devices using the Alexa Voice Service, and the number of Alexa-enabled devices has more than tripled in the past year. Our partners are creating a wide variety of new Alexa-enabled devices and experiences, including soundbars from Polk and Sonos; headphones from Jabra; smart home devices from ecobee and First Alert; Windows 10 PCs from Acer, HP, and Lenovo; and cars from automakers including BMW, Ford, and Toyota.”

Highlights

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of July 26, 2018, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and customer spending, world events, the rate of growth of the Internet, online commerce, and cloud services, and the various factors detailed below.

Third Quarter 2018 Guidance

A conference call will be webcast live today at 2:30 p.m. PT/5:30 p.m. ET, and will be available for at least three months at amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains, and develops commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services, and technologies, system interruptions, government regulation and taxation, and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission (“SEC”), including its most recent Annual Report on Form 10-K and subsequent filings.

Our investor relations website is amazon.com/ir and we encourage investors to use it as a way of easily finding information about us. We promptly make available on this website, free of charge, the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics), and select press releases and social media postings, which may contain material information about us, and you may subscribe to be notified of new information posted to this site.

About Amazon

Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon. For more information, visit amazon.com/about and follow @AmazonNews.

AMAZON.COM, INC.
Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30, Twelve Months Ended June 30,
2017 2018 2017 2018 2017 2018
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD $ 16,301 $ 17,616 $ 19,934 $ 21,856 $ 12,977 $ 13,851
OPERATING ACTIVITIES:
Net income 197 2,534 921 4,163 1,922 6,275
Adjustments to reconcile net income to net cash from operating activities:
Depreciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs 2,633 3,630 5,068 7,301 9,448 13,711
Stock-based compensation 1,158 1,468 1,952 2,651 3,615 4,914
Other operating expense, net 60 85 102 141 164 240
Other expense (income), net (120 ) 110 (160 ) (75 ) (162 ) (207 )
Deferred income taxes 376 (139 ) 354 3 (8 ) (380 )
Changes in operating assets and liabilities:
Inventories (682 ) (1,090 ) 265 1,130 (1,874 ) (2,717 )
Accounts receivable, net and other (1,221 ) (1,364 ) (257 ) (336 ) (2,925 ) (4,859 )
Accounts payable 2,088 2,703 (4,777 ) (7,513 ) 5,046 4,364
Accrued expenses and other (252 )

(205

) (1,657 )

(2,430

) 1,039

(491

)
Unearned revenue (387 )

(283

)

419

623

1,537

943

Net cash provided by (used in) operating activities 3,850 7,449 2,230 5,658 17,802 21,793
INVESTING ACTIVITIES:
Purchases of property and equipment, including internal-use software and website development (3,113 ) (3,243 ) (5,261 ) (6,341 ) (9,763 ) (13,035 )
Proceeds from property and equipment incentives 612 294 899 665 1,556 1,663
Acquisitions, net of cash acquired, and other (633 ) (866 ) (678 ) (879 ) (765 ) (14,173 )
Sales and maturities of marketable securities 2,070 1,660 3,980 4,337 6,530 10,034
Purchases of marketable securities (4,210 ) (537 ) (5,564 ) (1,007 ) (10,731 ) (8,173 )
Net cash provided by (used in) investing activities (5,274 ) (2,692 ) (6,624 ) (3,225 ) (13,173 ) (23,684 )
FINANCING ACTIVITIES:
Proceeds from long-term debt and other 49 96 70 221 612 16,380
Repayments of long-term debt and other (48 ) (149 ) (88 ) (351 ) (170 ) (1,564 )
Principal repayments of capital lease obligations (1,228 ) (1,284 ) (2,060 ) (3,297 ) (4,003 ) (6,037 )
Principal repayments of finance lease obligations (47 ) (57 ) (85 ) (129 ) (170 ) (244 )
Net cash provided by (used in) financing activities (1,274 ) (1,394 ) (2,163 ) (3,556 ) (3,731 ) 8,535
Foreign currency effect on cash, cash equivalents, and restricted cash 248 (443 ) 474 (197 ) (24 ) 41
Net increase (decrease) in cash, cash equivalents, and restricted cash (2,450 ) 2,920 (6,083 ) (1,320 ) 874 6,685
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD $ 13,851 $ 20,536 $ 13,851 $ 20,536 $ 13,851 $ 20,536
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on long-term debt $ 146 $ 168 $ 150 $ 450 $ 295 $ 628
Cash paid for interest on capital and finance lease obligations 62 125 123 254 234 449
Cash paid for income taxes, net of refunds 447 300 693 813 879 1,077
Property and equipment acquired under capital leases 2,724 2,335 4,612 4,605 8,019 9,631
Property and equipment acquired under build-to-suit leases 748 795 1,948 1,536 2,575 3,128

______________________________

As a result of the adoption of new accounting guidance, we retrospectively adjusted our consolidated statements of cash flows to add restricted cash to cash and cash equivalents.
AMAZON.COM, INC.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2017 2018 2017 2018
Net product sales $ 24,745 $ 31,864 $ 48,479 $ 63,468
Net service sales 13,210 21,022 25,190 40,460
Total net sales 37,955 52,886 73,669 103,928
Operating expenses:
Cost of sales 23,451 30,632 45,891 61,367
Fulfillment 5,158 7,932 9,855 15,724
Marketing 2,229 2,901 4,150 5,600
Technology and content 5,549 7,247 10,363 14,006
General and administrative 874 1,111 1,669 2,177
Other operating expense, net 66 80 109 143
Total operating expenses 37,327 49,903 72,037 99,017
Operating income 628 2,983 1,632 4,911
Interest income 44 94 83 173
Interest expense (143 ) (343 ) (282 ) (673 )
Other income (expense), net 137 (129 ) 185 109
Total non-operating income (expense) 38 (378 ) (14 ) (391 )
Income before income taxes 666 2,605 1,618 4,520
Provision for income taxes (467 ) (74 ) (695 ) (361 )
Equity-method investment activity, net of tax (2 ) 3 (2 ) 4
Net income $ 197 $ 2,534 $ 921 $ 4,163
Basic earnings per share $ 0.41 $ 5.21 $ 1.93 $ 8.58
Diluted earnings per share $ 0.40 $ 5.07 $ 1.87 $ 8.34
Weighted-average shares used in computation of earnings per share:
Basic 479 486 478 485
Diluted 492 500 491 499
AMAZON.COM, INC.
Consolidated Statements of Comprehensive Income
(in millions)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2017 2018 2017 2018
Net income $ 197 $ 2,534 $ 921 $ 4,163
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $(2), $(1), $(15), and $17 194 (466 ) 381 (411 )
Net change in unrealized gains (losses) on available-for-sale debt securities:
Unrealized gains (losses), net of tax of $3, $0, $2, and $9 (6 ) 1 (8 ) (40 )
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $0, $0, and $0 2 1 5 1
Net unrealized gains (losses) on available-for-sale debt securities (4 ) 2 (3 ) (39 )
Total other comprehensive income (loss) 190 (464 ) 378 (450 )
Comprehensive income $ 387 $ 2,070 $ 1,299 $ 3,713
AMAZON.COM, INC.
Segment Information
(in millions)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2017 2018 2017 2018
North America
Net sales $ 22,370 $ 32,169 $ 43,362 $ 62,894
Operating expenses 21,934 30,334 42,330 59,910
Operating income $ 436 $ 1,835 $ 1,032 $ 2,984
International
Net sales $ 11,485 $ 14,612 $ 22,546 $ 29,487
Operating expenses 12,209 15,106 23,752 30,603
Operating income (loss) $ (724 ) $ (494 ) $ (1,206 ) $ (1,116 )
AWS
Net sales $ 4,100 $ 6,105 $ 7,761 $ 11,547
Operating expenses 3,184 4,463 5,955 8,504
Operating income $ 916 $ 1,642 $ 1,806 $ 3,043
Consolidated
Net sales $ 37,955 $ 52,886 $ 73,669 $ 103,928
Operating expenses 37,327 49,903 72,037 99,017
Operating income 628 2,983 1,632 4,911
Total non-operating income (expense) 38 (378 ) (14 ) (391 )
Provision for income taxes (467 ) (74 ) (695 ) (361 )
Equity-method investment activity, net of tax (2 ) 3 (2 ) 4
Net income $ 197 $ 2,534 $ 921 $ 4,163
Segment Highlights:
Y/Y net sales growth:
North America 27 % 44 % 25 % 45 %
International 17 27 16 31
AWS 42 49 42 49
Consolidated 25 39 24 41
Net sales mix:
North America 59 % 61 % 59 % 61 %
International 30 28 31 28
AWS 11 11 10 11
Consolidated 100 % 100 % 100 % 100 %
AMAZON.COM, INC.
Consolidated Balance Sheets
(in millions, except per share data)
December 31, 2017 June 30, 2018
(unaudited)

ASSETS

Current assets:
Cash and cash equivalents $ 20,522 $ 19,823
Marketable securities 10,464 7,227
Inventories 16,047 14,824
Accounts receivable, net and other 13,164 12,607
Total current assets 60,197 54,481
Property and equipment, net 48,866 54,768
Goodwill 13,350 13,944
Other assets 8,897 10,907
Total assets $ 131,310 $ 134,100

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable $ 34,616 $ 27,657
Accrued expenses and other 18,170 17,140
Unearned revenue 5,097 6,004
Total current liabilities 57,883 50,801
Long-term debt 24,743 24,638
Other long-term liabilities 20,975 23,666
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value:
Authorized shares — 500
Issued and outstanding shares — none — —
Common stock, $0.01 par value:
Authorized shares — 5,000
Issued shares — 507 and 511
Outstanding shares — 484 and 487 5 5
Treasury stock, at cost (1,837 ) (1,837 )
Additional paid-in capital 21,389 24,028
Accumulated other comprehensive loss (484 ) (934 )
Retained earnings 8,636 13,733
Total stockholders’ equity 27,709 34,995
Total liabilities and stockholders’ equity $ 131,310 $ 134,100
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions, except per share data)
(unaudited)
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Y/Y %

Change

Cash Flows and Shares
Operating cash flow -- trailing twelve months (TTM) (1) $ 17,547 $ 17,802 $ 16,996 $ 18,365 $ 18,194 $ 21,793 22 %
Operating cash flow -- TTM Y/Y growth 52 % 36 % 13 % 7 % 4 % 22 % N/A
Purchases of property and equipment, including internal-use software and website development, net of proceeds from property and equipment incentives -- TTM $ 7,417 $ 8,207 $ 9,027 $ 10,058 $ 10,924 $ 11,372 39 %
Principal repayments of capital lease obligations -- TTM $ 3,891 $ 4,003 $ 4,331 $ 4,799 $ 5,981 $ 6,037 51 %
Principal repayments of finance lease obligations -- TTM $ 155 $ 170 $ 175 $ 200 $ 235 $ 244 44 %
Property and equipment acquired under capital leases -- TTM $ 6,717 $ 8,019 $ 8,905 $ 9,637 $ 10,020 $ 9,631 20 %
Free cash flow -- TTM (1) (2) $ 10,130 $ 9,595 $ 7,969 $ 8,307 $ 7,270 $ 10,421 9 %
Free cash flow less lease principal repayments -- TTM (1) (3) $ 6,084 $ 5,422 $ 3,463 $ 3,308 $ 1,054 $ 4,140 (24 )%
Free cash flow less finance lease principal repayments and assets acquired under capital leases -- TTM (1) (4) $ 3,258 $ 1,406 $ (1,111 ) $ (1,530 ) $ (2,985 ) $ 546 (61 )%
Invested capital (5) $ 42,114 $ 45,537 $ 52,690 $ 60,368 $ 68,377 $ 76,600 68 %
Common shares and stock-based awards outstanding 497 502 503 504 504 506 1 %
Common shares outstanding 478 480 482 484 485 487 1 %
Stock-based awards outstanding 20 22 21 20 19 19 (12 )%
Stock-based awards outstanding -- % of common shares outstanding 4.1 % 4.5 % 4.4 % 4.2 % 3.9 % 3.9 % N/A
Results of Operations
Worldwide (WW) net sales $ 35,714 $ 37,955 $ 43,744 $ 60,453 $ 51,042 $ 52,886 39 %
WW net sales -- Y/Y growth, excluding F/X 24 % 26 % 33 % 36 % 39 % 37 % N/A
WW net sales -- TTM $ 142,572 $ 150,123 $ 161,154 $ 177,866 $ 193,194 $ 208,125 39 %
WW net sales -- TTM Y/Y growth, excluding F/X 26 % 26 % 27 % 31 % 34 % 36 % N/A
Operating income $ 1,005 $ 628 $ 347 $ 2,127 $ 1,927 $ 2,983 375 %
F/X impact -- favorable (unfavorable) $ (31 ) $ (38 ) $ (39 ) $ (33 ) $ (29 ) $ 42 N/A
Operating income -- Y/Y growth (decline), excluding F/X (3 )% (48 )% (33 )% 72 % 95 % 369 % N/A
Operating margin -- % of WW net sales 2.8 % 1.7 % 0.8 % 3.5 % 3.8 % 5.6 % N/A
Operating income -- TTM $ 4,120 $ 3,462 $ 3,234 $ 4,106 $ 5,028 $ 7,384 113 %
Operating income -- TTM Y/Y growth (decline), excluding F/X 34 % (9 )% (17 )% 1 % 25 % 115 % N/A
Operating margin -- TTM % of WW net sales 2.9 % 2.3 % 2.0 % 2.3 % 2.6 % 3.5 % N/A
Net income $ 724 $ 197 $ 256 $ 1,856 $ 1,629 $ 2,534 N/A
Net income per diluted share $ 1.48 $ 0.40 $ 0.52 $ 3.75 $ 3.27 $ 5.07 N/A
Net income -- TTM $ 2,583 $ 1,922 $ 1,926 $ 3,033 $ 3,938 $ 6,275 226 %
Net income per diluted share -- TTM $ 5.31 $ 3.94 $ 3.94 $ 6.15 $ 7.90 $ 12.63 221 %

______________________________

(1) As a result of the adoption of new accounting guidance, we retrospectively adjusted our consolidated statements of cash flows to add restricted cash to cash and cash equivalents.
(2) Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, including internal-use software and website development, net of proceeds from property and equipment incentives,” which both are included in cash flow from investing activities.
(3) Free cash flow less lease principal repayments is free cash flow reduced by “Principal repayments of capital lease obligations,” and “Principal repayments of finance lease obligations,” which are included in cash flow from financing activities.
(4) Free cash flow less finance lease principal repayments and assets acquired under capital leases is free cash flow reduced by “Principal repayments of finance lease obligations,” which is included in cash flow from financing activities, and property and equipment acquired under capital leases. In this measure, property and equipment acquired under capital leases is reflected as if these assets had been purchased with cash, which is not the case as these assets have been leased.
(5) Average Total Assets minus Current Liabilities (excluding current portion of Long-Term Debt and current portion of capital lease obligations and finance lease obligations) over five quarter ends.
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions)
(unaudited)
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Y/Y %

Change

Segments
North America Segment:
Net sales $ 20,992 $ 22,370 $ 25,446 $ 37,302 $ 30,725 $ 32,169 44 %
Net sales -- Y/Y growth, excluding F/X 23 % 27 % 35 % 42 % 46 % 44 % N/A
Net sales -- TTM $ 83,781 $ 88,476 $ 95,048 $ 106,110 $ 115,843 $ 125,642 42 %
Operating Income:
Operating income $ 596 $ 436 $ 112 $ 1,692 $ 1,149 $ 1,835 321 %
F/X impact -- favorable (unfavorable) $ 4 $ 11 $ (12 ) $ (8 ) $ (10 ) $ 1 N/A
Operating income -- Y/Y growth (decline), excluding F/X 1 % (40 )% (51 )% 108 % 95 % 321 % N/A
Operating margin -- % of North America net sales 2.8 % 1.9 % 0.4 % 4.5 % 3.7 % 5.7 % N/A
Operating income -- TTM $ 2,369 $ 2,102 $ 1,960 $ 2,837 $ 3,390 $ 4,788 128 %
Operating margin -- TTM % of North America net sales 2.8 % 2.4 % 2.1 % 2.7 % 2.9 % 3.8 % N/A
International Segment:
Net sales $ 11,061 $ 11,485 $ 13,714 $ 18,038 $ 14,875 $ 14,612 27 %
Net sales -- Y/Y growth, excluding F/X 21 % 22 % 28 % 22 % 21 % 21 % N/A
Net sales -- TTM $ 45,477 $ 47,119 $ 50,224 $ 54,297 $ 58,111 $ 61,239 30 %
Operating income (loss):
Operating income (loss) $ (481 ) $ (724 ) $ (936 ) $ (919 ) $ (622 ) $ (494 ) 32 %
F/X impact -- favorable (unfavorable) $ (32 ) $ (59 ) $ (13 ) $ 20 $ 70 $ 86 N/A
Operating income/loss -- Y/Y growth (decline), excluding F/X 272 % 393 % 71 % 93 % 44 % 20 % N/A
Operating margin -- % of International net sales (4.4 )% (6.3 )% (6.8 )% (5.1 )% (4.2 )% (3.4 )% N/A
Operating income (loss) -- TTM $ (1,644 ) $ (2,233 ) $ (2,629 ) $ (3,062 ) $ (3,202 ) $ (2,971 ) 33 %
Operating margin -- TTM % of International net sales (3.6 )% (4.7 )% (5.2 )% (5.6 )% (5.5 )% (4.9 )% N/A
AWS Segment:
Net sales $ 3,661 $ 4,100 $ 4,584 $ 5,113 $ 5,442 $ 6,105 49 %
Net sales -- Y/Y growth, excluding F/X 43 % 42 % 42 % 44 % 48 % 49 % N/A
Net sales -- TTM $ 13,314 $ 14,529 $ 15,882 $ 17,459 $ 19,240 $ 21,244 46 %
Operating income:
Operating income $ 890 $ 916 $ 1,171 $ 1,354 $ 1,400 $ 1,642 79 %
F/X impact -- favorable (unfavorable) $ (3 ) $ 10 $ (14 ) $ (45 ) $ (89 ) $ (45 ) N/A
Operating income -- Y/Y growth, excluding F/X 48 % 26 % 38 % 51 % 67 % 84 % N/A
Operating margin -- % of AWS net sales 24.3 % 22.3 % 25.5 % 26.5 % 25.7 % 26.9 % N/A
Operating income -- TTM $ 3,395 $ 3,593 $ 3,903 $ 4,331 $ 4,840 $ 5,567 55 %
Operating margin -- TTM % of AWS net sales 25.5 % 24.7 % 24.6 % 24.8 % 25.2 % 26.2 % N/A
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions, except employee data)
(unaudited)
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Y/Y %

Change

Net Sales:
Online stores (1) $ 22,826 $ 23,754 $ 26,392 $ 35,383 $ 26,939 $ 27,165 14 %
Online stores - Y/Y growth, excluding F/X 16 % 18 % 22 % 17 % 13 % 12 % N/A
Physical stores (2) $ 1,276 $ 4,522 $ 4,263 $ 4,312 N/A
Third-party seller services (3) $ 6,438 $ 6,991 $ 7,928 $ 10,523 $ 9,265 $ 9,702 39 %
Third-party seller services - Y/Y growth, excluding F/X 36 % 40 % 40 % 38 % 39 % 36 % N/A
Subscription services (4) $ 1,939 $ 2,165 $ 2,441 $ 3,177 $ 3,102 $ 3,408 57 %
Subscription services - Y/Y growth, excluding F/X 52 % 53 % 59 % 47 % 56 % 55 % N/A
AWS $ 3,661 $ 4,100 $ 4,584 $ 5,113 $ 5,442 $ 6,105 49 %
AWS - Y/Y growth, excluding F/X 43 % 42 % 42 % 44 % 48 % 49 % N/A
Other (5) $ 850 $ 945 $ 1,123 $ 1,735 $ 2,031 $ 2,194 132 %
Other - Y/Y growth, excluding F/X 58 % 53 % 58 % 60 % 132 % 129 % N/A
Stock-based Compensation Expense
Cost of sales $ 8 $ 12 $ 13 $ 14 $ 15 $ 19 55 %
Fulfillment $ 163 $ 261 $ 230 $ 256 $ 244 $ 320 22 %
Marketing $ 94 $ 133 $ 135 $ 148 $ 161 $ 190 42 %
Technology and content $ 441 $ 633 $ 595 $ 637 $ 631 $ 788 25 %
General and administrative $ 86 $ 119 $ 112 $ 124 $ 132 $ 151 27 %
Total stock-based compensation expense $ 792 $ 1,158 $ 1,085 $ 1,179 $ 1,183 $ 1,468 27 %
Other
WW shipping costs $ 4,383 $ 4,568 $ 5,401 $ 7,368 $ 6,069 $ 5,990 31 %
WW shipping costs -- Y/Y growth 34 % 36 % 39 % 31 % 38 % 31 % N/A
WW paid units -- Y/Y growth (6) 24 % 27 % 25 % 23 % 22 % 17 % N/A
WW seller unit mix -- % of WW paid units (6) 50 % 51 % 50 % 51 % 52 % 53 % N/A
Employees (full-time and part-time; excludes contractors & temporary personnel) 351,000 382,400 541,900 566,000 563,100 575,700 51 %
Employees (full-time and part-time; excludes contractors & temporary personnel) -- Y/Y growth 43 % 42 % 77 % 66 % 60 % 51 % N/A

________________________

(1) Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, music, videos, games, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in Subscription services.
(2) Includes product sales where our customers physically select items in a store.
(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 membership, as well as audiobook, e-book, digital video, digital music, and other non-AWS subscription services.
(5) Primarily includes sales of advertising services, as well as sales related to our other service offerings.
(6) Excludes the impact of Whole Foods Market.

Amazon.com, Inc.Certain Definitions

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Seller Accounts

AWS Customers

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Amazon.com Investor Relations

Dave Fildes, [email protected]

amazon.com/ir

or

Amazon.com Public Relations

Dan Perlet, [email protected]

amazon.com/about

Source: Amazon.com, Inc.

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