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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ____________________________________

FORM 10-Q

____________________________________ 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For 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 of incorporation or organization)	(I.R.S. Employer Identification No.)

410 Terry Avenue North, Seattle, Washington 98109-5210

(206) 266-1000

(Address and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	AMZN	Nasdaq 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 the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 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-T during the preceding 12 months (or for such shorter period that 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 growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial 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  ☒

10,260,353,688 shares of common stock, par value $0.01 per share, outstanding as of April 19, 2023

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AMAZON.COM, INC.

FORM 10-Q

For the Quarterly Period Ended March 31, 2023

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Statements of Cash Flows	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Balance Sheets	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
Signatures		48

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Three Months Ended March 31,				Twelve Months Ended March 31,
	2022		2023		2022		2023
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	$	36,477	$	54,253	$	34,155	$	36,599
OPERATING ACTIVITIES:
Net income (loss)	(3,844)		3,172		21,413		4,294
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other	9,193		11,123		36,088		43,851
Stock-based compensation	3,250		4,748		13,701		21,119
Other expense (income), net	8,689		534		(4,161)		8,811
Deferred income taxes	(2,001)		(472)		(4,014)		(6,619)
Changes in operating assets and liabilities:
Inventories	(2,614)		371		(11,797)		393
Accounts receivable, net and other	(1,516)		1,521		(17,424)		(18,860)
Accounts payable	(9,380)		(11,264)		2,488		1,061
Accrued expenses and other	(5,903)		(5,763)		280		(1,418)
Unearned revenue	1,336		818		2,750		1,698
Net cash provided by (used in) operating activities	(2,790)		4,788		39,324		54,330
INVESTING ACTIVITIES:
Purchases of property and equipment	(14,951)		(14,207)		(63,922)		(62,901)
Proceeds from property and equipment sales and incentives	1,209		1,137		5,971		5,252
Acquisitions, net of cash acquired, and other	(6,341)		(3,513)		(7,696)		(5,488)
Sales and maturities of marketable securities	22,753		1,115		64,311		9,963
Purchases of marketable securities	(1,764)		(338)		(47,246)		(1,139)
Net cash provided by (used in) investing activities	906		(15,806)		(48,582)		(54,313)
FINANCING ACTIVITIES:
Common stock repurchased	(2,666)		—		(2,666)		(3,334)
Proceeds from short-term debt, and other	13,743		12,780		19,773		40,590
Repayments of short-term debt, and other	(6,231)		(3,603)		(11,983)		(34,926)
Proceeds from long-term debt	—		—		18,892		21,166
Repayments of long-term debt	—		(1,386)		(1,551)		(2,644)
Principal repayments of finance leases	(2,777)		(1,380)		(10,534)		(6,544)
Principal repayments of financing obligations	(79)		(57)		(174)		(226)
Net cash provided by (used in) financing activities	1,990		6,354		11,757		14,082
Foreign currency effect on cash, cash equivalents, and restricted cash	16		145		(55)		(964)
Net increase (decrease) in cash, cash equivalents, and restricted cash	122		(4,519)		2,444		13,135
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	36,599	$	49,734	$	36,599	$	49,734

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

	Three Months Ended March 31,
	2022		2023
Net product sales	$	56,455	$	56,981
Net service sales	59,989		70,377
Total net sales	116,444		127,358
Operating expenses:
Cost of sales	66,499		67,791
Fulfillment	20,271		20,905
Technology and content	14,842		20,450
Sales and marketing	8,320		10,172
General and administrative	2,594		3,043
Other operating expense (income), net	249		223
Total operating expenses	112,775		122,584
Operating income	3,669		4,774
Interest income	108		611
Interest expense	(472)		(823)
Other income (expense), net	(8,570)		(443)
Total non-operating expense	(8,934)		(655)
Income (loss) before income taxes	(5,265)		4,119
Benefit (provision) for income taxes	1,422		(948)
Equity-method investment activity, net of tax	(1)		1
Net income (loss)	$	(3,844)	$	3,172
Basic earnings per share	$	(0.38)	$	0.31
Diluted earnings per share	$	(0.38)	$	0.31
Weighted-average shares used in computation of earnings per share:
Basic	10,171		10,250
Diluted	10,171		10,347

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(unaudited) 

	Three Months Ended March 31,
	2022		2023
Net income (loss)	$	(3,844)	$	3,172
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $(16) and $(10)	(333)		386
Net change in unrealized gains (losses) on available-for-sale debt securities:
Unrealized gains (losses), net of tax of $1 and $(29)	(662)		95
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0 and $(10)	6		33
Net unrealized gains (losses) on available-for-sale debt securities	(656)		128
Total other comprehensive income (loss)	(989)		514
Comprehensive income (loss)	$	(4,833)	$	3,686

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data) 

	December 31, 2022		March 31, 2023
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	53,888	$	49,343
Marketable securities	16,138		15,062
Inventories	34,405		34,170
Accounts receivable, net and other	42,360		37,646
Total current assets	146,791		136,221
Property and equipment, net	186,715		190,754
Operating leases	66,123		68,262
Goodwill	20,288		22,749
Other assets	42,758		46,392
Total assets	$	462,675	$	464,378
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	79,600	$	66,907
Accrued expenses and other	62,566		66,382
Unearned revenue	13,227		14,281
Total current liabilities	155,393		147,570
Long-term lease liabilities	72,968		74,267
Long-term debt	67,150		67,084
Other long-term liabilities	21,121		20,931
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; 10,757 and 10,773 shares issued; 10,242 and 10,258 shares outstanding)	108		108
Treasury stock, at cost	(7,837)		(7,837)
Additional paid-in capital	75,066		79,863
Accumulated other comprehensive income (loss)	(4,487)		(3,973)
Retained earnings	83,193		86,365
Total stockholders’ equity	146,043		154,526
Total liabilities and stockholders’ equity	$	462,675	$	464,378

See accompanying notes to consolidated financial statements.

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AMAZON.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 — ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

Unaudited Interim Financial Information

We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2023 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2022 Annual Report on Form 10-K.

Common Stock Split

On May 27, 2022, we effected a 20-for-1 stock split of our common stock and proportionately increased the number of authorized shares of common stock. All share, restricted stock unit (“RSU”), and per share or per RSU information throughout this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common stock.”

Prior Period Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. “Other operating expense (income), net” was reclassified into “Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other” on our consolidated statements of cash flows.

Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, impairment of property and equipment and operating leases, valuation and impairment of investments, self-insurance liabilities, and viewing patterns of capitalized video content. Actual results could differ materially from these estimates.

For the three months ended March 31, 2023, we recorded approximately $470 million of estimated severance costs primarily related to planned role eliminations. These charges were recorded primarily in “Sales and marketing,” “Technology and content,” and “General and administrative” on our consolidated statements of operations and included approximately $270 million recorded within our AWS segment.

For the three months ended March 31, 2022 and 2023, we recorded approximately $190 million and $180 million of impairments of property and equipment and operating leases primarily related to physical stores in Q1 2022 and fulfillment network facilities in Q1 2023. These charges were recorded in “Other operating expense (income), net” on our consolidated statements of operations and primarily impacted our North America segment.

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Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions):

	Three Months Ended March 31,				Twelve Months Ended March 31,
	2022		2023		2022		2023
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on debt	$	279	$	402	$	1,101	$	1,684
Cash paid for operating leases	2,367		2,467		7,449		8,733
Cash paid for interest on finance leases	107		81		471		348
Cash paid for interest on financing obligations	58		59		178		208
Cash paid for income taxes, net of refunds	453		619		3,340		6,201
Assets acquired under operating leases	2,175		3,626		24,008		20,251
Property and equipment acquired under finance leases, net of remeasurements and modifications	166		8		5,160		517
Property and equipment recognized during the construction period of build-to-suit lease arrangements	1,365		131		6,324		1,953
Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating	33		720		263		5,845

Earnings Per Share

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

The following table shows the calculation of diluted shares (in millions):

	Three Months Ended March 31,
	2022	2023
Shares used in computation of basic earnings per share	10,171	10,250
Total dilutive effect of outstanding stock awards	—	97
Shares used in computation of diluted earnings per share	10,171	10,347

Other Income (Expense), Net

Other income (expense), net, is as follows (in millions):

	Three Months Ended March 31,
	2022		2023
Marketable equity securities valuation gains (losses)	$	(8,245)	$	(480)
Equity warrant valuation gains (losses)	(312)		59
Upward adjustments relating to equity investments in private companies	7		16
Foreign currency gains (losses)	14		70
Other, net	(34)		(108)
Total other income (expense), net	(8,570)		(443)

Included in other income (expense), net is a marketable equity securities valuation gain (loss) of $(7.6) billion and $(467) million in Q1 2022 and Q1 2023, from our equity investment in Rivian Automotive, Inc. (“Rivian”). Our investment in Rivian’s preferred stock was accounted for at cost, with adjustments for observable changes in prices or impairments, prior to Rivian’s initial public offering in November 2021, which resulted in the conversion of our preferred stock to Class A common stock. As of March 31, 2023, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 17% ownership interest, and an approximate 16% voting interest. We determined that we have the ability to exercise significant influence over Rivian through our equity investment, our commercial arrangement for the purchase of electric vehicles, and one of our employees serving on Rivian’s board of directors. We elected the fair value option to account for our equity investment in Rivian, which is included in “Marketable securities” on our consolidated balance sheets, and had a fair value of $2.9 billion and

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$2.5 billion as of December 31, 2022 and March 31, 2023. The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $800 million as of December 31, 2021, which expired in Q1 2022.

Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):

	Year Ended December 31, 2021		Year Ended December 31, 2022
Revenues	$	55	$	1,658
Gross profit	(465)		(3,123)
Loss from operations	(4,220)		(6,856)
Net loss	(4,688)		(6,752)

Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $2.8 billion as of December 31, 2022 and March 31, 2023.

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As of December 31, 2022 and March 31, 2023, customer receivables, net, were $26.6 billion and $24.3 billion, vendor receivables, net, were $6.9 billion and $5.0 billion, and seller receivables, net, were $1.3 billion and $1.2 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.4 billion as of December 31, 2022 and March 31, 2023.

Digital Video and Music Content

The total capitalized costs of video, which is primarily released content, and music as of December 31, 2022 and March 31, 2023 were $16.7 billion and $17.4 billion. The weighted average remaining life of our capitalized video content is 3.5 years. Total video and music expense was $3.5 billion and $4.0 billion in Q1 2022 and Q1 2023.

Unearned Revenue

Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2022 was $16.1 billion, of which $5.3 billion was recognized as revenue during the three months ended March 31, 2023. Included in “Other long-term liabilities” on our consolidated balance sheets was $2.9 billion and $2.8 billion of unearned revenue as of December 31, 2022 and March 31, 2023.

Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $122.0 billion as of March 31, 2023. The weighted-average remaining life of our long-term contracts is 3.9 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.

Acquisition Activity

On February 22, 2023, we acquired 1Life Healthcare, Inc. (“One Medical”), for cash consideration of approximately $3.5 billion, net of cash acquired, to provide health care options for customers. The acquired assets primarily consist of $1.3 billion of intangible assets and $2.5 billion of goodwill, which is allocated to our North America segment. The valuation of certain assets and liabilities is preliminary and subject to change.

Pro forma results of operations have not been presented because the effects of the One Medical acquisition were not material to our consolidated results of operations. Acquisition-related costs were expensed as incurred and were not significant.

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Note 2 — FINANCIAL INSTRUMENTS

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2022 and March 31, 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 marketable equity securities. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or liabilities. Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold significant amounts of marketable securities categorized as Level 3 assets as of December 31, 2022 and March 31, 2023.

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The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):

	December 31, 2022		March 31, 2023
	Total Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
Cash	$	10,666	$	10,968	$	—	$	—	$	10,968
Level 1 securities:
Money market funds	27,899		35,861		—		—		35,861
Equity securities (1)	3,709								3,231
Level 2 securities:
Foreign government and agency securities	535		28		—		(1)		27
U.S. government and agency securities	2,146		2,341		1		(124)		2,218
Corporate debt securities	22,627		10,193		—		(384)		9,809
Asset-backed securities	2,572		2,572		—		(118)		2,454
Other fixed income securities	237		237		—		(9)		228
	$	70,391	$	62,200	$	1	$	(636)	$	64,796
Less: Restricted cash, cash equivalents, and marketable securities (2)	(365)								(391)
Total cash, cash equivalents, and marketable securities	$	70,026							$	64,405

___________________

(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $(8.1) billion and $(479) million in Q1 2022 and Q1 2023.

(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable fixed income securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of March 31, 2023 (in millions):

	Amortized Cost		Estimated Fair Value
Due within one year	$	41,857	$	41,801
Due after one year through five years	7,130		6,675
Due after five years through ten years	594		562
Due after ten years	1,651		1,559
Total	$	51,232	$	50,597

Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.

Equity Warrants and Non-Marketable Equity Investments

We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2022 and March 31, 2023, these warrants had a fair value of $2.1 billion and $2.0 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are primarily classified as Level 2 assets.

As of December 31, 2022 and March 31, 2023, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $715 million and $707 million, and are recorded within “Other assets” on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

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Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

	December 31, 2022		March 31, 2023
Cash and cash equivalents	$	53,888	$	49,343
Restricted cash included in accounts receivable, net and other	358		377
Restricted cash included in other assets	7		14
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	54,253	$	49,734

Note 3 — LEASES

We have entered into non-cancellable operating and finance leases for fulfillment network, office, data center, and physical store facilities as well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “Property and equipment, net” and were $68.0 billion and $66.5 billion as of December 31, 2022 and March 31, 2023. Accumulated amortization associated with finance leases was $45.2 billion as of December 31, 2022 and March 31, 2023.

Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):

	Three Months Ended March 31,
	2022		2023
Operating lease cost	$	2,103	$	2,512
Finance lease cost:
Amortization of lease assets	1,560		1,546
Interest on lease liabilities	103		80
Finance lease cost	1,663		1,626
Variable lease cost	469		518
Total lease cost	$	4,235	$	4,656

Other information about lease amounts recognized in our consolidated financial statements is as follows:

	December 31, 2022		March 31, 2023
Weighted-average remaining lease term – operating leases	11.6 years		11.5 years
Weighted-average remaining lease term – finance leases	10.3 years		10.8 years
Weighted-average discount rate – operating leases	2.8	%	3.0	%
Weighted-average discount rate – finance leases	2.3	%	2.4	%

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Our lease liabilities were as follows (in millions):

	December 31, 2022
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	81,273	$	18,019	$	99,292
Less: imputed interest	(12,233)		(2,236)		(14,469)
Present value of lease liabilities	69,040		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

	March 31, 2023
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	84,468	$	16,511	$	100,979
Less: imputed interest	(13,220)		(2,064)		(15,284)
Present value of lease liabilities	71,248		14,447		85,695
Less: current portion of lease liabilities	(7,752)		(3,676)		(11,428)
Total long-term lease liabilities	$	63,496	$	10,771	$	74,267

Note 4 — COMMITMENTS AND CONTINGENCIES

Commitments

The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of March 31, 2023 (in millions): 

	Nine Months Ended December 31,		Year Ended December 31,
	2023		2024		2025		2026		2027		Thereafter		Total
Long-term debt principal and interest	$	3,882	$	10,615	$	7,203	$	5,123	$	10,399	$	63,814	$	101,036
Operating lease liabilities	7,604		9,207		8,560		7,878		7,148		44,071		84,468
Finance lease liabilities, including interest	3,073		2,230		1,425		1,284		1,101		7,398		16,511
Financing obligations, including interest (1)	349		464		457		464		471		6,712		8,917
Leases not yet commenced	1,025		2,048		2,048		2,019		2,056		17,173		26,369
Unconditional purchase obligations (2)	6,300		7,392		5,603		4,738		3,530		6,098		33,661
Other commitments (3)(4)	2,827		1,930		1,199		1,062		854		8,136		16,008
Total commitments	$	25,060	$	33,886	$	26,495	$	22,568	$	25,559	$	153,402	$	286,970

___________________

(1)Includes non-cancellable financing obligations for fulfillment network and data center facilities. Excluding interest, current financing obligations of $266 million and $268 million are recorded within “Accrued expenses and other” and $6.7 billion and $6.6 billion are recorded within “Other long-term liabilities” as of December 31, 2022 and March 31, 2023. The weighted-average remaining term of the financing obligations was 17.9 years and 17.7 years and the weighted-average imputed interest rate was 3.1% as of December 31, 2022 and March 31, 2023.

(2)Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets and certain products offered in our Whole Foods Market stores. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.

(3)Includes asset retirement obligations, liabilities associated with digital media content agreements with initial terms greater than one year, and the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction.

(4)Excludes approximately $4.2 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

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In August 2022, we entered into an agreement to acquire iRobot Corporation for approximately $1.7 billion, including its debt, subject to customary closing conditions. We expect to fund this acquisition with cash on hand.

Other Contingencies

We are disputing claims and denials of refunds or credits related to various non-income taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes. These non-income tax controversies typically relate to (i) the taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, and (iii) the adequacy of compliance with reporting obligations, including evolving documentation requirements. Due to the inherent complexity and uncertainty of these matters and the judicial and regulatory processes in certain jurisdictions, the final outcome of any such controversies may be materially different from our expectations.

Legal Proceedings

The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2022 Annual Report on Form 10-K, as supplemented by the following:

In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC filed a complaint against Amazon.com, Inc. in the United States District Court for the Northern District of New York. The complaint alleges, among other things, that “Alexa Voice Software and Alexa enabled devices” infringe U.S. Patent No. 7,177,798, entitled “Natural Language Interface Using Constrained Intermediate Dictionary of Results.” The complaint seeks an injunction, an unspecified amount of damages, enhanced damages, an ongoing royalty, interest, attorneys’ fees, and costs. In March 2023, the plaintiffs alleged in their damages report that in the event of a finding of liability Amazon could be subject to $140 million to $267 million in damages. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

Beginning in March 2020, with Frame-Wilson v. Amazon.com, Inc. filed in the United States District Court for the Western District of Washington (“W.D. Wash.”), private litigants have filed a number of cases in the U.S. and Canada alleging, among other things, price fixing arrangements between Amazon.com, Inc. and vendors and third-party sellers in Amazon’s stores, monopolization and attempted monopolization, and consumer protection and unjust enrichment claims. Attorneys General for the District of Columbia and California brought similar suits in May 2021 and September 2022 in the Superior Court of the District of Columbia and the California Superior Court for the County of San Francisco, respectively. Some of the private cases include allegations of several distinct purported classes, including consumers who purchased a product through Amazon’s stores and consumers who purchased a product offered by Amazon through another e-commerce retailer. The complaints seek billions of dollars of alleged actual damages, treble damages, punitive damages, injunctive relief, civil penalties, attorneys’ fees, and costs. Amazon’s motions to dismiss were granted in part and denied in part in Frame-Wilson in March 2022 and March 2023, De Coster v. Amazon.com, Inc. (W.D. Wash.) in January 2023, and the California Attorney General’s lawsuit in March 2023. All three courts dismissed claims alleging that Amazon’s pricing policies are inherently illegal and denied dismissal of claims alleging that Amazon’s pricing policies are an unlawful restraint of trade. In March 2022, the DC Superior Court dismissed the DC Attorney General’s lawsuit in its entirety; the dismissal is under appeal as of January 2023. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.

Beginning in May 2021, Angela Hogan and her minor child filed purported class-action complaints against Amazon.com, Inc. in the Circuit Court of Cook County, Illinois, and against Amazon.com, Inc. and Amazon.com Services LLC in the United States District Court for the Northern District of Illinois. The complaints allege, among other things, that Amazon’s collection, storage, use, retention, and protection of biometric identifiers violated the Illinois Biometric Information Privacy Act. The complaints allege similar purported classes of Illinois residents who allegedly had biometric identifiers collected from photographs stored in an Amazon Photos account. The complaints seek certification as class actions, an unspecified amount of damages, injunctive relief, attorneys’ fees, costs, and interest. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.

In December 2021, the Italian Competition Authority (the “ICA”) issued a decision against Amazon Services Europe S.à r.l., Amazon Europe Core S.à r.l., Amazon EU S.à r.l., Amazon Italia Services S.r.l., and Amazon Italia Logistica S.r.l. claiming that certain of our marketplace and logistics practices in Italy infringe EU competition rules. The decision imposes remedial actions and a fine of €1.13 billion, which we have paid and will seek to recover pending conclusion of all appeals. We believe the ICA’s decision to be without merit and intend to defend ourselves vigorously in this matter.

In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters.

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The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

See also “Note 7 — Income Taxes.”

Note 5 — DEBT

As of March 31, 2023, we had $68.5 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 Rates	Effective Interest Rates	December 31, 2022		March 31, 2023
2014 Notes issuance of $6.0 billion	2024 - 2044	3.80% - 4.95%	3.90% - 5.12%	4,000		4,000
2017 Notes issuance of $17.0 billion	2024 - 2057	2.80% - 5.20%	2.95% - 4.33%	16,000		15,000
2020 Notes issuance of $10.0 billion	2023 - 2060	0.40% - 2.70%	0.56% - 2.77%	10,000		10,000
2021 Notes issuance of $18.5 billion	2023 - 2061	0.25% - 3.25%	0.35% - 3.31%	18,500		18,500
April 2022 Notes issuance of $12.8 billion	2024 - 2062	2.73% - 4.10%	2.83% - 4.15%	12,750		12,750
December 2022 Notes issuance of $8.3 billion	2024 - 2032	4.55% - 4.70%	4.61% - 4.83%	8,250		8,250
Credit Facility				1,042		972
Total face value of long-term debt				70,542		69,472
Unamortized discount and issuance costs, net				(393)		(388)
Less: current portion of long-term debt				(2,999)		(2,000)
Long-term debt				$	67,150	$	67,084

___________________

(1) The weighted-average remaining lives of the 2014, 2017, 2020, 2021, April 2022, and December 2022 Notes were 12.3, 14.9, 16.5, 13.1, 13.0, and 5.6 years as of March 31, 2023. The combined weighted-average remaining life of the Notes was 13.0 years as of March 31, 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 specified redemption prices. We are not subject to any financial covenants under the Notes. The estimated fair value of the Notes was approximately $61.4 billion and $62.4 billion as of December 31, 2022 and March 31, 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 January 2024 and bears interest at the Secured Overnight Financing Rate specified in the Term Loan plus 0.75%. If we exercise our option to extend the Term Loan’s maturity to January 2025, the interest rate spread will increase from 0.75% to 1.05%. As of March 31, 2023, $8.0 billion of the Term Loan was outstanding, which was included in “Accrued expenses and other” on our consolidated balance sheets and had an interest rate of 5.7%.

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 time increase in the future subject to lender approval (the “Credit Facility”). The Credit Facility is available until August 2025, bears interest based on the daily Secured 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 of borrowings outstanding under the Credit Facility as of December 31, 2022 and March 31, 2023, which had an interest rate of 5.6% and 6.1%, respectively. As of December 31, 2022 and March 31, 2023, we have pledged $1.2 billion and $1.1 billion of our cash and seller receivables as collateral for debt related to our Credit Facility. The estimated fair value of the Credit Facility, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2022 and March 31, 2023.

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We have U.S. Dollar and Euro commercial paper programs (the “Commercial Paper Programs”) under which we may from time to time issue unsecured commercial paper up to a total of $20.0 billion (including up to €3.0 billion) at the date of issue, with individual maturities that may vary but will not exceed 397 days from the date of issue. There were $6.8 billion and $7.8 billion of borrowings outstanding under the Commercial Paper Programs as of December 31, 2022 and March 31, 2023, which were included in “Accrued expenses and other” on our consolidated balance sheets and had a weighted-average effective interest rate, including issuance costs, of 4.5% and 4.7%, respectively. We use the net proceeds from the issuance of commercial paper for general corporate purposes.

We have a $10.0 billion unsecured revolving credit 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 Credit Agreement is the applicable benchmark rate specified in the Credit Agreement plus 0.45%, with a commitment fee of 0.03% on the undrawn portion of the credit facility. There were no borrowings outstanding under the Credit Agreement as of December 31, 2022 and March 31, 2023.

We have a $10.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders (the “Short-Term Credit Agreement”), which matures in November 2023 and may be extended for one additional period of 364 days if approved by the lenders. The interest rate applicable to outstanding balances under the Short-Term Credit Agreement is the Secured Overnight Financing Rate specified in the Short-Term Credit Agreement plus 0.45%, with a commitment fee of 0.05% on the undrawn portion. There were no borrowings outstanding under the Short-Term Credit Agreement as of December 31, 2022 and March 31, 2023.

We also utilize other short-term credit facilities for working capital purposes. There were $1.2 billion and $1.1 billion of borrowings outstanding under these facilities as of December 31, 2022 and March 31, 2023, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $8.5 billion of unused letters of credit as of March 31, 2023.

Note 6 — STOCKHOLDERS’ EQUITY

Stock Repurchase Activity

In March 2022, the Board of Directors authorized a program to repurchase up to $10.0 billion of our common stock, with no fixed expiration, which replaced the previous $5.0 billion stock repurchase authorization, approved by the Board of Directors in February 2016. We repurchased 18.6 million shares of our common stock for $2.7 billion during the three months ended March 31, 2022 under these programs. There were no repurchases of our common stock during the three months ended March 31, 2023. As of March 31, 2023, we have $6.1 billion remaining under the repurchase program.

Stock Award Activity

Common shares outstanding plus shares underlying outstanding stock awards totaled 10.6 billion as of December 31, 2022 and March 31, 2023. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited. Stock-based compensation expense is as follows (in millions):

	Three Months Ended March 31,
	2022		2023
Cost of sales	$	146	$	165
Fulfillment	498		603
Technology and content	1,645		2,574
Sales and marketing	665		993
General and administrative	296		413
Total stock-based compensation expense	$	3,250	$	4,748

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The following table summarizes our restricted stock unit activity for the three months ended March 31, 2023 (in millions):

	Number of Units	Weighted-Average Grant-Date Fair Value
Outstanding as of December 31, 2022	384.4	$	144
Units granted	13.4	99
Units vested	(15.6)	120
Units forfeited	(15.5)	144
Outstanding as of March 31, 2023	366.7	144

Scheduled vesting for outstanding restricted stock units as of March 31, 2023, is as follows (in millions):

	Nine Months Ended December 31,	Year Ended December 31,
	2023	2024	2025	2026	2027	Thereafter	Total
Scheduled vesting — restricted stock units	124.5	133.6	67.0	37.2	2.5	1.9	366.7

As of March 31, 2023, there was $19.9 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation is recognized on an accelerated basis with more than half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of 1.0 year. The estimated forfeiture rate as of December 31, 2022 and March 31, 2023 was 26.5%. Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the future.

Changes in Stockholders’ Equity

The following table shows changes in stockholders’ equity (in millions):

	Three Months Ended March 31,
	2022		2023
Total beginning stockholders’ equity	$	138,245	$	146,043
Beginning common stock	106		108
Stock-based compensation and issuance of employee benefit plan stock	1		—
Ending common stock	107		108
Beginning treasury stock	(1,837)		(7,837)
Common stock repurchased	(2,666)		—
Ending treasury stock	(4,503)		(7,837)
Beginning additional paid-in capital	55,437		75,066
Stock-based compensation and issuance of employee benefit plan stock	3,254		4,797
Ending additional paid-in capital	58,691		79,863
Beginning accumulated other comprehensive income (loss)	(1,376)		(4,487)
Other comprehensive income (loss)	(989)		514
Ending accumulated other comprehensive income (loss)	(2,365)		(3,973)
Beginning retained earnings	85,915		83,193
Net income (loss)	(3,844)