Segment Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Marketing,” “Technology and content,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. The majority of technology infrastructure expenses are allocated to the AWS segment based on usage. The majority of the remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. In Q1 2016, we began allocating stock-based compensation and “Other operating expense, net” to our segment results. In our segment results, these amounts are combined and titled “Stock-based compensation and other.” There are no internal revenue transactions between our reportable segments. These segments reflect the way the Company evaluates its business performance and manages its operations.

North America

The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused websites such as www.amazon.com, www.amazon.ca, and www.amazon.com.mx. This segment includes export sales from these websites.

International

The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused websites such as www.amazon.com.au, www.amazon.com.br, www.amazon.cn, www.amazon.fr, www.amazon.de, www.amazon.in, www.amazon.it, www.amazon.co.jp, www.amazon.nl, www.amazon.es, and www.amazon.co.uk. This segment includes export sales from these internationally-focused websites (including export sales from these sites to customers in the U.S., Mexico, and Canada), but excludes export sales from our North American websites.

AWS

The AWS segment consists of amounts earned from global sales of compute, storage, database, and other AWS service offerings for start-ups, enterprises, government agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net income is as follows (in millions):

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2016			2015			2016			2015
North America
Net sales	$	18,874		$	15,006		$	53,544		$	42,208
Operating expenses	18,180			14,478			50,769			40,461
Operating income before stock-based compensation and other	694			528			$	2,775		$	1,747
Stock-based compensation and other	439			342			1,230			959
Operating income	$	255		$	186		$	1,545		$	788
International
Net sales	$	10,609		$	8,267		$	30,019		$	23,577
Operating expenses	10,941			8,323			30,242			23,728
Operating income (loss) before stock-based compensation and other	(332		)	(56		)	$	(223	)	$	(151	)
Stock-based compensation and other	209			152			573			440
Operating income (loss)	$	(541	)	$	(208	)	$	(796	)	$	(591	)
AWS
Net sales	$	3,231		$	2,085		$	8,683		$	5,474
Operating expenses	2,210			1,564			6,083			4,297
Operating income before stock-based compensation and other	1,021			521			$	2,600		$	1,177
Stock-based compensation and other	160			93			418			250
Operating income	$	861		$	428		$	2,182		$	927
Consolidated
Net sales	$	32,714		$	25,358		$	92,246		$	71,259
Operating expenses	31,331			24,365			87,094			68,486
Operating income before stock-based compensation and other	1,383			993			5,152			2,773
Stock-based compensation and other	808			587			2,221			1,649
Operating income	575			406			2,931			1,124
Total non-operating income (expense)	(84		)	(159		)	(205		)	(494		)
Provision for income taxes	(229		)	(161		)	(1,012		)	(498		)
Equity-method investment activity, net of tax	(10		)	(7		)	(92		)	(18		)
Net income	$	252		$	79		$	1,622		$	114

We have aggregated our products and services into groups of similar products and services and provided the supplemental disclosure of net sales (in millions) below. We evaluate whether additional disclosure is appropriate when a product or service category begins to approach a significant level of net sales. For the periods presented, no individual product or service represented more than 10% of net sales.

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2016		2015		2016		2015
Net Sales:
Media	$	5,728	$	5,283	$	16,626	$	15,286
Electronics and other general merchandise	23,383		17,741		65,890		49,782
AWS	3,231		2,085		8,683		5,474
Other (1)	372		249		1,047		717
Consolidated	$	32,714	$	25,358	$	92,246	$	71,259

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(1) Includes sales from non-retail activities, such as certain advertising services and our co-branded credit card agreements.