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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 September 30, 2024
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 ☒
10,515,011,008 shares of common stock, par value $0.01 per share, outstanding as of October 18, 2024
AMAZON.COM, INC.
FORM 10-Q
For the Quarterly Period Ended September 30, 2024
INDEX
| | | | | | | | |
| | Page |
PART I. FINANCIAL INFORMATION | |
Item 1. | | |
| | |
| | |
| | |
| | |
| | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
| |
PART II. OTHER INFORMATION | |
Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
| |
PART I. FINANCIAL INFORMATION
| | | | | |
Item 1. | Financial Statements |
AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | Twelve Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD | $ | 50,067 | | | $ | 71,673 | | | $ | 54,253 | | | $ | 73,890 | | | $ | 35,178 | | | $ | 50,081 | |
OPERATING ACTIVITIES: | | | | | | | | | | | |
Net income | 9,879 | | | 15,328 | | | 19,801 | | | 39,244 | | | 20,079 | | | 49,868 | |
Adjustments to reconcile net income to net cash from operating activities: | | | | | | | | | | | |
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other | 12,131 | | | 13,442 | | | 34,843 | | | 37,164 | | | 47,528 | | | 50,984 | |
Stock-based compensation | 5,829 | | | 5,333 | | | 17,704 | | | 17,016 | | | 23,310 | | | 23,335 | |
| | | | | | | | | | | |
Non-operating expense (income), net | (990) | | | (141) | | | (409) | | | 2,498 | | | 3,036 | | | 2,159 | |
Deferred income taxes | (1,196) | | | (1,317) | | | (4,412) | | | (3,040) | | | (7,779) | | | (4,504) | |
Changes in operating assets and liabilities: | | | | | | | | | | | |
Inventories | 808 | | | (1,509) | | | (1,194) | | | (2,818) | | | 1,986 | | | (175) | |
Accounts receivable, net and other | (3,584) | | | (701) | | | (901) | | | 774 | | | (5,641) | | | (6,673) | |
Other assets | (3,134) | | | (4,537) | | | (9,463) | | | (10,293) | | | (13,511) | | | (13,095) | |
Accounts payable | 2,820 | | | (477) | | | (5,415) | | | (5,754) | | | 4,437 | | | 5,134 | |
Accrued expenses and other | (1,321) | | | 129 | | | (9,022) | | | (6,946) | | | (3,245) | | | (352) | |
Unearned revenue | (25) | | | 421 | | | 949 | | | 2,396 | | | 1,454 | | | 6,025 | |
Net cash provided by (used in) operating activities | 21,217 | | | 25,971 | | | 42,481 | | | 70,241 | | | 71,654 | | | 112,706 | |
INVESTING ACTIVITIES: | | | | | | | | | | | |
Purchases of property and equipment | (12,479) | | | (22,620) | | | (38,141) | | | (55,165) | | | (54,733) | | | (69,753) | |
Proceeds from property and equipment sales and incentives | 1,181 | | | 1,342 | | | 3,361 | | | 3,559 | | | 4,513 | | | 4,794 | |
Acquisitions, net of cash acquired, non-marketable investments, and other | (1,629) | | | (622) | | | (5,458) | | | (4,547) | | | (6,289) | | | (4,928) | |
Sales and maturities of marketable securities | 1,393 | | | 8,069 | | | 4,059 | | | 12,726 | | | 9,742 | | | 14,294 | |
Purchases of marketable securities | (219) | | | (3,068) | | | (1,053) | | | (13,472) | | | (1,286) | | | (13,907) | |
Net cash provided by (used in) investing activities | (11,753) | | | (16,899) | | | (37,232) | | | (56,899) | | | (48,053) | | | (69,500) | |
FINANCING ACTIVITIES: | | | | | | | | | | | |
| | | | | | | | | | | |
Proceeds from short-term debt, and other | 216 | | | 1,725 | | | 17,395 | | | 2,588 | | | 28,002 | | | 3,322 | |
Repayments of short-term debt, and other | (8,095) | | | (1,820) | | | (19,339) | | | (2,453) | | | (35,136) | | | (8,791) | |
Proceeds from long-term debt | — | | | — | | | — | | | — | | | 8,235 | | | — | |
Repayments of long-term debt | — | | | (2,183) | | | (3,386) | | | (6,682) | | | (4,643) | | | (6,972) | |
Principal repayments of finance leases | (1,005) | | | (402) | | | (3,605) | | | (1,710) | | | (5,245) | | | (2,489) | |
Principal repayments of financing obligations | (64) | | | (78) | | | (198) | | | (247) | | | (260) | | | (320) | |
Net cash provided by (used in) financing activities | (8,948) | | | (2,758) | | | (9,133) | | | (8,504) | | | (9,047) | | | (15,250) | |
Foreign currency effect on cash, cash equivalents, and restricted cash | (502) | | | 690 | | | (288) | | | (51) | | | 349 | | | 640 | |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 14 | | | 7,004 | | | (4,172) | | | 4,787 | | | 14,903 | | | 28,596 | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | $ | 50,081 | | | $ | 78,677 | | | $ | 50,081 | | | $ | 78,677 | | | $ | 50,081 | | | $ | 78,677 | |
See accompanying notes to consolidated financial statements.
AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Net product sales | $ | 63,171 | | | $ | 67,601 | | | $ | 179,184 | | | $ | 190,085 | |
Net service sales | 79,912 | | | 91,276 | | | 225,640 | | | 260,082 | |
Total net sales | 143,083 | | | 158,877 | | | 404,824 | | | 450,167 | |
Operating expenses: | | | | | | | |
Cost of sales | 75,022 | | | 80,977 | | | 212,186 | | | 227,395 | |
Fulfillment | 22,314 | | | 24,660 | | | 64,524 | | | 70,543 | |
Technology and infrastructure | 21,203 | | | 22,245 | | | 63,584 | | | 64,973 | |
Sales and marketing | 10,551 | | | 10,609 | | | 31,468 | | | 30,783 | |
General and administrative | 2,561 | | | 2,713 | | | 8,806 | | | 8,496 | |
Other operating expense (income), net | 244 | | | 262 | | | 613 | | | 587 | |
Total operating expenses | 131,895 | | | 141,466 | | | 381,181 | | | 402,777 | |
Operating income | 11,188 | | | 17,411 | | | 23,643 | | | 47,390 | |
Interest income | 776 | | | 1,256 | | | 2,048 | | | 3,429 | |
Interest expense | (806) | | | (603) | | | (2,469) | | | (1,836) | |
Other income (expense), net | 1,031 | | | (27) | | | 649 | | | (2,718) | |
Total non-operating income (expense) | 1,001 | | | 626 | | | 228 | | | (1,125) | |
Income before income taxes | 12,189 | | | 18,037 | | | 23,871 | | | 46,265 | |
Provision for income taxes | (2,306) | | | (2,706) | | | (4,058) | | | (6,940) | |
Equity-method investment activity, net of tax | (4) | | | (3) | | | (12) | | | (81) | |
Net income | $ | 9,879 | | | $ | 15,328 | | | $ | 19,801 | | | $ | 39,244 | |
Basic earnings per share | $ | 0.96 | | | $ | 1.46 | | | $ | 1.93 | | | $ | 3.76 | |
Diluted earnings per share | $ | 0.94 | | | $ | 1.43 | | | $ | 1.89 | | | $ | 3.67 | |
Weighted-average shares used in computation of earnings per share: | | | | | | | |
Basic | 10,322 | | | 10,501 | | | 10,286 | | | 10,447 | |
Diluted | 10,558 | | | 10,735 | | | 10,452 | | | 10,705 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to consolidated financial statements.
AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Net income | $ | 9,879 | | | $ | 15,328 | | | $ | 19,801 | | | $ | 39,244 | |
Other comprehensive income (loss): | | | | | | | |
| | | | | | | |
Foreign currency translation adjustments, net of tax of $36, $(45), $4, and $43 | (1,388) | | | 1,911 | | | (738) | | | 178 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Available-for-sale debt securities: | | | | | | | |
Change in net unrealized gains (losses), net of tax of $(18), $(55), $(52), and $(282) | 62 | | | 167 | | | 174 | | | 944 | |
| | | | | | | |
Less: reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $0, $(15), and $(1) | 3 | | | — | | | 48 | | | 4 | |
| | | | | | | |
Net change | 65 | | | 167 | | | 222 | | | 948 | |
Other, net of tax of $0, $3, $0, and $1 | — | | | (3) | | | — | | | (4) | |
Total other comprehensive income (loss) | (1,323) | | | 2,075 | | | (516) | | | 1,122 | |
Comprehensive income | $ | 8,556 | | | $ | 17,403 | | | $ | 19,285 | | | $ | 40,366 | |
See accompanying notes to consolidated financial statements.
AMAZON.COM, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
| | | | | | | | | | | |
| December 31, 2023 | | September 30, 2024 |
| | | (unaudited) |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 73,387 | | | $ | 75,091 | |
Marketable securities | 13,393 | | | 12,960 | |
Inventories | 33,318 | | | 36,103 | |
Accounts receivable, net and other | 52,253 | | | 51,638 | |
Total current assets | 172,351 | | | 175,792 | |
Property and equipment, net | 204,177 | | | 237,917 | |
Operating leases | 72,513 | | | 76,527 | |
Goodwill | 22,789 | | | 23,081 | |
Other assets | 56,024 | | | 71,309 | |
Total assets | $ | 527,854 | | | $ | 584,626 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Accounts payable | $ | 84,981 | | | $ | 84,570 | |
Accrued expenses and other | 64,709 | | | 60,602 | |
Unearned revenue | 15,227 | | | 16,305 | |
Total current liabilities | 164,917 | | | 161,477 | |
Long-term lease liabilities | 77,297 | | | 79,802 | |
Long-term debt | 58,314 | | | 54,890 | |
Other long-term liabilities | 25,451 | | | 29,306 | |
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; 10,898 and 11,026 shares issued; 10,383 and 10,511 shares outstanding) | 109 | | | 110 | |
Treasury stock, at cost | (7,837) | | | (7,837) | |
Additional paid-in capital | 99,025 | | | 115,934 | |
Accumulated other comprehensive income (loss) | (3,040) | | | (1,918) | |
Retained earnings | 113,618 | | | 152,862 | |
Total stockholders’ equity | 201,875 | | | 259,151 | |
Total liabilities and stockholders’ equity | $ | 527,854 | | | $ | 584,626 | |
See accompanying notes to consolidated financial statements.
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 2024 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 2023 Annual Report on Form 10-K.
Prior Period Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. “Other assets” were reclassified out of “Accounts receivable, net 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 health care services. 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.
We review the useful lives of equipment on an ongoing basis, and effective January 1, 2024 we changed our estimate of the useful lives for our servers from five to six years. The longer useful lives are due to continuous improvements in our hardware, software, and data center designs. The effect of this change in estimate for Q3 2024, based on servers that were included in “Property and equipment, net” as of June 30, 2024 and those acquired during the three months ended September 30, 2024, was a reduction in depreciation and amortization expense of $760 million and a benefit to net income of $598 million, or $0.06 per basic share and $0.06 per diluted share. The effect of this change in estimate for the nine months ended September 30, 2024, based on servers that were included in “Property and equipment, net” as of December 31, 2023 and those acquired during the nine months ended September 30, 2024, was a reduction in depreciation and amortization expense of $2.4 billion and a benefit to net income of $1.9 billion, or $0.18 per basic share and $0.18 per diluted share.
Supplemental Cash Flow Information
The following table shows supplemental cash flow information (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | Twelve Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 |
SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | | | | | |
Cash paid for interest on debt, net of capitalized interest | $ | 465 | | | $ | 266 | | | $ | 1,821 | | | $ | 1,215 | | | $ | 2,450 | | | $ | 2,002 | |
Cash paid for operating leases | 2,692 | | | 2,940 | | | 7,687 | | | 9,116 | | | 10,052 | | | 11,882 | |
Cash paid for interest on finance leases | 76 | | | 71 | | | 234 | | | 217 | | | 318 | | | 291 | |
Cash paid for interest on financing obligations | 50 | | | 47 | | | 150 | | | 161 | | | 205 | | | 207 | |
Cash paid for income taxes, net of refunds | 2,628 | | | 2,004 | | | 6,982 | | | 8,162 | | | 8,677 | | | 12,359 | |
Assets acquired under operating leases | 3,345 | | | 3,571 | | | 11,075 | | | 11,235 | | | 15,844 | | | 14,212 | |
Property and equipment acquired under finance leases, net of remeasurements and modifications | 183 | | | 186 | | | 431 | | | 409 | | | 748 | | | 620 | |
Property and equipment recognized during the construction period of build-to-suit lease arrangements | 93 | | | 21 | | | 308 | | | 89 | | | 618 | | | 138 | |
Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with the associated leases recognized as operating | 492 | | | — | | | 1,212 | | | — | | | 3,063 | | | 162 | |
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 September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Shares used in computation of basic earnings per share | 10,322 | | | 10,501 | | | 10,286 | | | 10,447 | |
Total dilutive effect of outstanding stock awards | 236 | | | 234 | | | 166 | | | 258 | |
Shares used in computation of diluted earnings per share | 10,558 | | | 10,735 | | | 10,452 | | | 10,705 | |
Other Income (Expense), Net
“Other income (expense), net” is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Marketable equity securities valuation gains (losses) | $ | 1,196 | | | $ | (117) | | | $ | 1,015 | | | $ | (1,800) | |
Equity warrant valuation gains (losses) | (27) | | | 80 | | | (188) | | | (421) | |
Upward adjustments relating to equity investments in private companies | 7 | | | 2 | | | 33 | | | 13 | |
Foreign currency gains (losses) | (94) | | | 17 | | | (15) | | | (195) | |
Other, net | (51) | | | (9) | | | (196) | | | (315) | |
Total other income (expense), net | 1,031 | | | (27) | | | 649 | | | (2,718) | |
Included in “Other income (expense), net” is a marketable equity securities valuation gain (loss) of $1.2 billion and $(348) million in Q3 2023 and Q3 2024, and $926 million and $(1.9) billion for the nine months ended September 30, 2023 and 2024, from our equity investment in Rivian Automotive, Inc. (“Rivian”). As of September 30, 2024, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 16% ownership interest, and an approximate 15% 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 jointly-owned intellectual property, 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 $3.7 billion and $1.8 billion as of December 31, 2023 and September 30, 2024.
Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):
| | | | | | | | | | | | | | | |
| | | | | Six Months Ended June 30, |
| | | | | 2023 | | 2024 |
Revenues | | | | | $ | 1,782 | | | $ | 2,362 | |
Gross profit (loss) | | | | | (947) | | | (978) | |
Loss from operations | | | | | (2,718) | | | (2,859) | |
Net loss | | | | | (2,544) | | | (2,903) | |
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 $3.0 billion and $2.7 billion as of December 31, 2023 and September 30, 2024.
Accounts Receivable, Net and Other
Included 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, 2023 and September 30, 2024, customer receivables, net, were $34.1 billion and $34.6 billion, vendor receivables, net, were $8.5 billion and $8.3 billion, seller receivables, net, were $1.0 billion and $60 million, and other receivables, net, were $3.3 billion and $3.0 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provided funding to sellers primarily to procure inventory. Prepaid expenses and other current assets were $5.4 billion and $5.8 billion as of December 31, 2023 and September 30, 2024.
We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.7 billion and $1.9 billion as of December 31, 2023 and September 30, 2024.
Digital Video and Music Content
Included in “Other assets” on our consolidated balance sheets are the total capitalized costs of video, which is primarily released content, and music, which as of December 31, 2023 and September 30, 2024 were $17.4 billion and $19.8 billion. Total video and music expense was $4.6 billion and $5.0 billion in Q3 2023 and Q3 2024, and $13.0 billion and $14.2 billion for the nine months ended September 30, 2023 and 2024.
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, 2023 was $20.9 billion, of which $12.5 billion was recognized as revenue during the nine months ended September 30, 2024. Included in “Other long-term liabilities” on our consolidated balance sheets was $5.7 billion and $7.0 billion of unearned revenue as of December 31, 2023 and September 30, 2024.
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 approximately $164 billion as of September 30, 2024. 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.
Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board issued an Accounting Standards Update (“ASU”) amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. The ASU is effective for annual reporting periods beginning after December 15, 2024, with
early adoption permitted, and can be applied on either a prospective or retroactive basis. We are currently evaluating the ASU to determine its impact on our income tax disclosures.
Note 2 — FINANCIAL INSTRUMENTS
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities
As of December 31, 2023 and September 30, 2024, 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.
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, 2023 | | September 30, 2024 |
| Total Estimated Fair Value | | Cost or Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Total Estimated Fair Value |
Cash | $ | 11,706 | | | $ | 15,401 | | | $ | — | | | $ | — | | | $ | 15,401 | |
Level 1 securities: | | | | | | | | | |
Money market funds | 39,160 | | | 28,793 | | | — | | | — | | | 28,793 | |
Equity securities (1) | 4,658 | | | | | | | | | 2,864 | |
Level 2 securities: | | | | | | | | | |
Foreign government and agency securities | 505 | | | 302 | | | — | | | — | | | 302 | |
U.S. government and agency securities | 1,699 | | | 2,309 | | | 1 | | | (51) | | | 2,259 | |
Corporate debt securities | 27,805 | | | 41,001 | | | 7 | | | (52) | | | 40,956 | |
Asset-backed securities | 1,646 | | | 1,018 | | | 1 | | | (20) | | | 999 | |
Other debt securities | 104 | | | 64 | | | — | | | (1) | | | 63 | |
| | | | | | | | | |
| $ | 87,283 | | | $ | 88,888 | | | $ | 9 | | | $ | (124) | | | $ | 91,637 | |
Less: Restricted cash, cash equivalents, and marketable securities (2) | (503) | | | | | | | | | (3,586) | |
Total cash, cash equivalents, and marketable securities | $ | 86,780 | | | | | | | | | $ | 88,051 | |
___________________
(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $1.2 billion and $(145) million in Q3 2023 and Q3 2024, and $1.0 billion and $(1.8) billion for the nine months ended September 30, 2023 and 2024.
(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, standby and trade letters of credit, and licenses of digital media content. We classify cash, cash equivalents, and marketable debt 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 debt securities as of September 30, 2024 (in millions):
| | | | | | | | | | | |
| Amortized Cost | | Estimated Fair Value |
Due within one year | $ | 69,997 | | | $ | 69,976 | |
Due after one year through five years | 2,536 | | | 2,481 | |
Due after five years through ten years | 352 | | | 345 | |
Due after ten years | 602 | | | 570 | |
Total | $ | 73,487 | | | $ | 73,372 | |
Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.
Non-Marketable Investments
We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2023 and September 30, 2024, these warrants had a fair value of $2.2 billion and $2.4 billion, with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are classified as Level 2 and 3 assets.
As of December 31, 2023 and September 30, 2024, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $754 million and $886 million, with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.
In Q3 2023, we invested in a $1.25 billion note from Anthropic, PBC, which is convertible to equity. In Q1 2024, we invested $2.75 billion in a second convertible note. The notes are classified as available for sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss).” The notes are classified as Level 3 assets. We also have a commercial arrangement primarily for the provision of AWS cloud services, which includes the use of AWS chips.
All non-marketable investments are recorded within “Other assets” on our consolidated balance sheets.
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, 2023 | | September 30, 2024 |
Cash and cash equivalents | $ | 73,387 | | | $ | 75,091 | |
Restricted cash included in accounts receivable, net and other | 497 | | | 333 | |
Restricted cash included in other assets | 6 | | | 3,253 | |
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows | $ | 73,890 | | | $ | 78,677 | |
Note 3 — LEASES
We have entered into non-cancellable operating and finance leases for fulfillment network, data center, office, and physical store facilities as well as server 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 $62.5 billion and $59.2 billion as of December 31, 2023 and September 30, 2024. Accumulated amortization associated with finance leases was $44.7 billion and $43.7 billion as of December 31, 2023 and September 30, 2024.
Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Operating lease cost | $ | 2,679 | | | $ | 3,057 | | | $ | 7,799 | | | $ | 8,807 | |
Finance lease cost: | | | | | | | |
Amortization of lease assets | 1,439 | | | 1,040 | | | 4,524 | | | 2,929 | |
Interest on lease liabilities | 74 | | | 70 | | | 230 | | | 215 | |
Finance lease cost | 1,513 | | | 1,110 | | | 4,754 | | | 3,144 | |
| | | | | | | |
Variable lease cost | 567 | | | 605 | | | 1,579 | | | 1,832 | |
Total lease cost | $ | 4,759 | | | $ | 4,772 | | | $ | 14,132 | | | $ | 13,783 | |
| | | | | | | |
| | | | | | | |
Other information about lease amounts recognized in our consolidated financial statements is as follows:
| | | | | | | | | | | |
| December 31, 2023 | | September 30, 2024 |
Weighted-average remaining lease term – operating leases | 11.3 years | | 10.7 years |
Weighted-average remaining lease term – finance leases | 11.9 years | | 12.0 years |
Weighted-average discount rate – operating leases | 3.3 | % | | 3.4 | % |
Weighted-average discount rate – finance leases | 2.7 | % | | 2.9 | % |
Our lease liabilities were as follows (in millions):
| | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Operating Leases | | Finance Leases | | Total |
Gross lease liabilities | $ | 90,777 | | | $ | 14,106 | | | $ | 104,883 | |
Less: imputed interest | (15,138) | | | (1,997) | | | (17,135) | |
Present value of lease liabilities | 75,639 | | | 12,109 | | | 87,748 | |
Less: current portion of lease liabilities | (8,419) | | | (2,032) | | | (10,451) | |
Total long-term lease liabilities | $ | 67,220 | | | $ | 10,077 | | | $ | 77,297 | |
| | | | | | | | | | | | | | | | | |
| September 30, 2024 |
| Operating Leases | | Finance Leases | | Total |
Gross lease liabilities | $ | 95,609 | | | $ | 12,794 | | | $ | 108,403 | |
Less: imputed interest | (15,932) | | | (1,975) | | | (17,907) | |
Present value of lease liabilities | 79,677 | | | 10,819 | | | 90,496 | |
Less: current portion of lease liabilities | (9,301) | | | (1,393) | | | (10,694) | |
Total long-term lease liabilities | $ | 70,376 | | | $ | 9,426 | | | $ | 79,802 | |
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 September 30, 2024 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Year Ended December 31, | | | | |
| 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total |
Long-term debt principal and interest | $ | 3,268 | | | $ | 6,858 | | | $ | 4,458 | | | $ | 10,403 | | | $ | 3,644 | | | $ | 60,176 | | | $ | 88,807 | |
Operating lease liabilities | 3,758 | | | 11,434 | | | 10,686 | | | 9,755 | | | 8,874 | | | 51,102 | | | 95,609 | |
Finance lease liabilities, including interest | 456 | | | 1,545 | | | 1,428 | | | 1,247 | | | 1,083 | | | 7,035 | | | 12,794 | |
Financing obligations, including interest (1) | 95 | | | 526 | | | 534 | | | 543 | | | 551 | | | 7,247 | | | 9,496 | |
Leases not yet commenced | 621 | | | 2,919 | | | 3,262 | | | 3,779 | | | 3,627 | | | 36,127 | | | 50,335 | |
Unconditional purchase obligations (2) | 2,782 | | | 7,302 | | | 5,546 | | | 4,705 | | | 4,097 | | | 27,092 | | | 51,524 | |
Other commitments (3) | 1,302 | | | 2,398 | | | 1,315 | | | 855 | | | 792 | | | 11,116 | | | 17,778 | |
Total commitments | $ | 12,282 | | | $ | 32,982 | | | $ | 27,229 | | | $ | 31,287 | | | $ | 22,668 | | | $ | 199,895 | | | $ | 326,343 | |
___________________
(1)Includes non-cancellable financing obligations for fulfillment network and data center facilities. Excluding interest, current financing obligations of $271 million and $313 million are recorded within “Accrued expenses and other” and $6.6 billion and $7.5 billion are recorded within “Other long-term liabilities” as of December 31, 2023 and September 30, 2024. The weighted-average remaining term of the financing obligations was 17.0 years and 16.4 years and the weighted-average imputed interest rate was 3.1% and 2.9% as of December 31, 2023 and September 30, 2024.
(2)Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content, procure energy, and license software that are not reflected on the consolidated balance sheets. For those 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. Renewable energy agreements based on actual generation without a fixed or minimum volume commitment are not included. These agreements also provide the right to receive renewable energy certificates for no additional consideration.
(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. Excludes approximately $6.3 billion of income tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.
Other Contingencies
We are disputing claims and denials of refunds or credits, and monitoring or evaluating potential claims, 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 include (i) the taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, including as a result of evolving requirements imposed on marketplaces with respect to third-party sellers, 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 2023 Annual Report on Form 10-K and in Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings” of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024, 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 of Illinois. The complaint alleged, among other things, that Amazon S3 and DynamoDB infringe U.S. Patent Nos. 7,814,170 and 7,103,640, each entitled “Network Distributed Tracking Wire Transfer Protocol”; and 7,233,978, entitled “Method and Apparatus for Managing Location Information in a Network Separate from the Data to Which the Location Information Pertains.” The complaint sought an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief. In April 2024, a jury found that Amazon infringed the asserted patents and awarded Kove $525 million in damages. In August 2024, the court awarded Kove $148 million in pre-judgment interest. In September 2024, we filed a notice of appeal. We disagree with the jury’s findings and will continue 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 damages, treble damages, punitive damages, injunctive relief, civil penalties, attorneys’ fees, and costs. The Federal Trade Commission and a number of state Attorneys General filed a similar lawsuit in September 2023 in the W.D. Wash. alleging violations of federal antitrust and state antitrust and consumer protection laws. That complaint alleges, among other things, that Amazon has a monopoly in markets for online superstores and marketplace services, and unlawfully maintains those monopolies through anticompetitive practices relating to our pricing policies, advertising practices, the structure of Prime, and promotion of our own products on our website. The complaint seeks injunctive and structural relief, an unspecified amount of damages, and costs. In May 2024, the Attorney General of Arizona filed a complaint in the Superior Court of Arizona in Maricopa County alleging that Amazon’s practices related to pricing and the Featured Offers in its stores violate state antitrust and consumer protection laws. That complaint also seeks injunctive relief, an unspecified amount of damages, civil penalties, 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 August 2024, the DC Court of Appeals overturned a prior decision by the DC Superior Court dismissing the DC Attorney General’s lawsuit and that case is now proceeding. In September 2024, the United States District Court for the W.D. Wash. granted in part Amazon’s motion to dismiss the suit brought by the FTC and certain state Attorneys General with respect to five state law claims and denied the motion with respect to the remaining claims. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.
In October 2020, Broadband iTV, Inc. filed a complaint against Amazon.com, Inc., Amazon.com Services LLC, and Amazon Web Services, Inc. in the United States District Court for the Western District of Texas. The complaint alleges, among other things, that certain Amazon Prime Video features and services infringe U.S. Patent Nos. 9,648,388, 10,546,750, and 10,536,751, each entitled “Video-On-Demand Content Delivery System for Providing Video-On-Demand Services to TV Services Subscribers”; 10,028,026, entitled “System for Addressing On-Demand TV Program Content on TV Services Platform
of a Digital TV Services Provider”; and 9,973,825, entitled “Dynamic Adjustment of Electronic Program Guide Displays Based on Viewer Preferences for Minimizing Navigation in VOD Program Selection.” The complaint seeks an unspecified amount of damages. In April 2022, Broadband iTV alleged in its damages report that in the event of a finding of liability Amazon could be subject to $166 million to $986 million in damages. In September 2022, the district court granted summary judgment, holding that the patents are invalid. In October 2022, Broadband iTV filed a notice of appeal. In September 2024, the United States Court of Appeals for the Federal Circuit affirmed the district court’s judgment. This decision is subject to appeal. We dispute the allegations of wrongdoing and will continue to defend ourselves vigorously in this matter.
In May 2023, Dialect, LLC filed a complaint against Amazon.com, Inc. and Amazon Web Services, Inc. in the United States District Court for the Eastern District for Virginia. The complaint alleges, among other things, that Amazon’s Alexa-enabled products and services, such as Echo devices, Fire tablets, Fire TV sticks, Fire TVs, Alexa, and Alexa Voice Services, infringe U.S. Patent Nos. 7,693,720 and 9,031,845, each entitled “Mobile Systems and Methods for Responding to Natural Language Speech Utterance”; 8,015,006, entitled “Systems and Methods for Processing Natural Language Speech Utterances with Context-Specific Domain Agents”; 8,140,327, entitled “System and Method for Filtering and Eliminating Noise from Natural Language Utterances to Improve Speech Recognition and Parsing”; 8,195,468 and 9,495,957, each entitled “Mobile Systems and Methods of Supporting Natural Language Human-Machine Interactions”; and 9,263,039, entitled “Systems and Methods for Responding to Natural Language Speech Utterance.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief. In November 2023, the court granted in part Amazon’s motion to dismiss Dialect’s complaint and dismissed the ‘845 patent from the case. In July and August 2024, the court granted in part Amazon’s motions for summary judgment, holding that Amazon does not infringe the ‘327 patent or two claims of the ‘006 patent and that Dialect cannot recover certain alleged damages. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
Beginning in October 2023, Nokia Technologies Oy and related entities filed complaints alleging infringement of patents related to video-related technologies against Amazon.com, Inc. and related entities in multiple courts in the United States, India, the United Kingdom, Germany, and Brazil, the Unified Patent Court of the European Union, and the United States International Trade Commission. The complaints allege, among other things, that certain Amazon Prime Video services and features of Amazon devices carrying the Prime Video app infringe Nokia’s patents; some of the complaints additionally allege infringement by Freevee, Twitch, and Amazon voice assistants. The complaints seek, among other things, injunctive relief and, in some cases, unspecified money damages, enhanced damages, attorneys’ fees, costs, interest, and declaratory relief. These matters are at various procedural stages, with preliminary and final injunctions issued in certain instances. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.
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.
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 September 30, 2024, we had $60.5 billion of unsecured senior notes outstanding (the “Notes”). Our total long-term debt obligations are as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maturities (1) | | Stated Interest Rates | | Effective Interest Rates | | December 31, 2023 | | September 30, 2024 |
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 | 2025 - 2057 | | 3.15% - 5.20% | | 3.02% - 4.33% | | 15,000 | | | 13,000 | |
2020 Notes issuance of $10.0 billion | 2025 - 2060 | | 0.80% - 2.70% | | 0.88% - 2.77% | | 9,000 | | | 9,000 | |
2021 Notes issuance of $18.5 billion | 2026 - 2061 | | 1.00% - 3.25% | | 1.14% - 3.31% | | 17,500 | | | 15,000 | |
April 2022 Notes issuance of $12.8 billion | 2025 - 2062 | | 3.00% - 4.10% | | 3.13% - 4.15% | | 12,750 | | | 11,250 | |
December 2022 Notes issuance of $8.3 billion | 2024 - 2032 | | 4.55% - 4.70% | | 4.61% - 4.83% | | 8,250 | | | 8,250 | |
Credit Facility | | | | | | | 682 | | | — | |
| | | | | | | | | |
Total face value of long-term debt | | | | | | | 67,182 | | | 60,500 | |
Unamortized discount and issuance costs, net | | | | | | | (374) | | | (362) | |
Less: current portion of long-term debt | | | | | | | (8,494) | | | (5,248) | |
Long-term debt | | | | | | | $ | 58,314 | | | $ | 54,890 | |
___________________
(1) The weighted-average remaining lives of the 2014, 2017, 2020, 2021, April 2022, and December 2022 Notes were 10.8, 15.5, 16.8, 14.4, 13.1, and 4.1 years as of September 30, 2024. The combined weighted-average remaining life of the Notes was 13.1 years as of September 30, 2024.
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 $60.6 billion and $55.1 billion as of December 31, 2023 and September 30, 2024, which is based on quoted prices for our debt as of those dates.
As of September 30, 2024, we have repaid outstanding borrowings and terminated the secured revolving credit facility with a lender that was secured by certain seller receivables (the “Credit Facility”). The Credit Facility bore interest based on the daily Secured Overnight Financing Rate plus 1.25%, and had a commitment fee of up to 0.45% on the undrawn portion. There were $682 million of borrowings outstanding under the Credit Facility as of December 31, 2023, which had an interest rate of 6.6%. As of December 31, 2023, we had pledged $806 million of our cash and seller receivables as collateral for debt related to our Credit Facility. The estimated fair value of the Credit Facility, which was based on Level 2 inputs, approximated its carrying value as of December 31, 2023.
In January 2023, we entered into an $8.0 billion unsecured 364-day term loan with a syndicate of lenders (the “Term Loan”), maturing in January 2024 and bearing interest at the Secured Overnight Financing Rate specified in the Term Loan plus 0.75%. The Term Loan was classified as short-term debt and included within “Accrued expenses and other” on our consolidated balance sheets. As of December 31, 2023, the entire amount of the Term Loan had been repaid.
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 no borrowings outstanding under the Commercial Paper Programs as of December 31, 2023 and September 30, 2024. We use the net proceeds from the issuance of commercial paper for general corporate purposes.
We have a $15.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), with a term that extends to November 2028 and may be extended for one or more additional one-year terms subject to approval 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, 2023 and September 30, 2024.
As of September 30, 2024, we had a $5.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders (the “2023 Short-Term Credit Agreement”). The interest rate applicable to outstanding balances under the 2023 Short-Term Credit Agreement is the Secured Overnight Financing Rate specified in the 2023 Short-Term Credit Agreement plus 0.45%, with a commitment fee of 0.03% on the undrawn portion. There were no borrowings outstanding under the 2023 Short-Term Credit Agreement as of December 31, 2023 and September 30, 2024. In October 2024, we replaced the 2023 Short-Term Credit
Agreement with a new $5.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders on substantially the same terms, which matures in October 2025 and may be extended for one additional period of 364 days subject to approval by the lenders.
We also utilize other short-term credit facilities for working capital purposes. There were $147 million and $88 million of borrowings outstanding under these facilities as of December 31, 2023 and September 30, 2024, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $8.4 billion of unused letters of credit as of September 30, 2024.
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. There were no repurchases of our common stock during the nine months ended September 30, 2023 or 2024. As of September 30, 2024, we have $6.1 billion remaining under the repurchase program.
Stock Award Plans
Employees vest in restricted stock unit awards over the corresponding service term, generally between two and five years. The majority of restricted stock unit awards are granted at the date of hire or in Q2 as part of the annual compensation review and primarily vest semi-annually in Q2 and Q4 of the relevant compensation year.
Stock Award Activity
Common shares outstanding plus shares underlying outstanding stock awards totaled 10.8 billion and 10.9 billion as of December 31, 2023 and September 30, 2024. 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 September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Cost of sales | $ | 193 | | | $ | 193 | | | $ | 609 | | | $ | 633 | |
Fulfillment | 732 | | | 696 | | | 2,267 | | | 2,276 | |
Technology and infrastructure | 3,284 | | | 2,961 | | | 9,901 | | | 9,403 | |
Sales and marketing | 1,111 | | | 1,012 | | | 3,407 | | | 3,168 | |
General and administrative | 509 | | | 471 | | | 1,520 | | | 1,536 | |
Total stock-based compensation expense | $ | 5,829 | | | $ | 5,333 | | | $ | 17,704 | | | $ | 17,016 | |
The following table summarizes our restricted stock unit activity for the nine months ended September 30, 2024 (in millions):
| | | | | | | | | | | |
| Number of Units | | Weighted-Average Grant-Date Fair Value |
Outstanding as of December 31, 2023 | 405.8 | | | $ | 125 | |
Units granted | 115.4 | | | 180 | |
Units vested | (127.8) | | | 133 | |
Units forfeited | (31.9) | | | 131 | |
Outstanding as of September 30, 2024 | 361.5 | | | 139 | |
Scheduled vesting for outstanding restricted stock units as of September 30, 2024, is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Year Ended December 31, | | | | |
| 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total |
Scheduled vesting — restricted stock units | 82.2 | | | 147.8 | | | 88.8 | | | 31.3 | | | 8.4 | | | 3.0 | | | 361.5 | |
As of September 30, 2024, there was $18.9 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, 2023 and September 30, 2024 was 26.1% and 25.7%.
Changes in Stockholders’ Equity
The following table shows changes in stockholders’ equity (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Total beginning stockholders’ equity | $ | 168,602 | | | $ | 236,447 | | | $ | 146,043 | | | $ | 201,875 | |
| | | | | | | |
Beginning common stock | 108 | | | 110 | | | 108 | | | 109 | |
Stock-based compensation and issuance of employee benefit plan stock | — | | | — | | | — | | | 1 | |
Ending common stock | 108 | | | 110 | | | 108 | | | 110 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Beginning and ending treasury stock | (7,837) | | | (7,837) | | | (7,837) | | | (7,837) | |
| | | | | | | |
Beginning additional paid-in capital | 86,896 | | | 110,633 | | | 75,066 | | | 99,025 | |
Stock-based compensation and issuance of employee benefit plan stock | 5,815 | | | 5,301 | | | 17,645 | | | 16,909 | |
Ending additional paid-in capital | 92,711 | | | 115,934 | | | 92,711 | | | 115,934 | |
| | | | | | | |
Beginning accumulated other comprehensive income (loss) | (3,680) | | | (3,993) | | | (4,487) | | | (3,040) | |
Other comprehensive income (loss) | (1,323) | | | 2,075 | | | (516) | | | 1,122 | |
Ending accumulated other comprehensive income (loss) | (5,003) | | | (1,918) | | | (5,003) | | | (1,918) | |
| | | | | | | |
Beginning retained earnings | 93,115 | | | 137,534 | | | 83,193 | | | 113,618 | |
| | | | | | | |
Net income | 9,879 | | | 15,328 | | | 19,801 | | | 39,244 | |
Ending retained earnings | 102,994 | | | 152,862 | | | 102,994 | | | 152,862 | |
| | | | | | | |
Total ending stockholders’ equity | $ | 182,973 | | | $ | 259,151 | | | $ | 182,973 | | | $ | 259,151 | |
Note 7 — INCOME TAXES
Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, 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, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, intercompany transactions, the applicability of special tax regimes, changes in how we do business, acquisitions, investments, developments in tax controversies, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, foreign currency gains (losses), changes in statutes, regulations, case law, and administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax benefits are not recognized. Our effective tax rate can be more 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 effective tax rate is greater when our pre-tax income is lower. In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions.
For 2024, we estimate that our effective tax rate will be favorably impacted by the U.S. federal research and development credit and foreign income deduction and adversely affected by state income taxes. In addition, valuation gains and losses from our equity investment in Rivian impact our pre-tax income and may cause variability in our effective tax rate.
Our income tax provision for the nine months ended September 30, 2023 was $4.1 billion, which included $175 million of net discrete tax expense, primarily consisting of discrete tax expense related to shortfalls from stock-based compensation and approximately $600 million of tax benefit resulting from a change in the estimated qualifying expenditures associated with our
2022 U.S. federal R&D credit. Our income tax provision for the nine months ended September 30, 2024 was $6.9 billion, which included $2.4 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation.
Cash paid for income taxes, net of refunds was $2.6 billion and $2.0 billion in Q3 2023 and Q3 2024, and $7.0 billion and $8.2 billion for the nine months ended September 30, 2023 and 2024.
As of December 31, 2023 and September 30, 2024, income tax contingencies were approximately $5.2 billion and $6.3 billion. Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next twelve months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to our contingencies related to positions on prior years’ tax filings.
We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2016 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods.
We are also subject to taxation in various states and other foreign jurisdictions including China, France, Germany, India, Japan, Luxembourg, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2011 and thereafter. We are currently disputing tax assessments in multiple jurisdictions, including with respect to the allocation and characterization of income.
In September 2022, the Luxembourg tax authority (“LTA”) denied the tax basis of certain intangible assets that we distributed from Luxembourg to the U.S. in 2021. When we are assessed by the LTA, we will need to remit taxes related to this matter. We believe the LTA’s position is without merit, we intend to defend ourselves vigorously in this matter, and we expect to recoup taxes paid.
The Indian tax authority (“ITA”) has asserted that tax applies to cloud services fees paid to Amazon in the U.S. We will need to remit taxes related to this matter until it is resolved, which payments could be significant in the aggregate. We believe the ITA’s position is without merit, we are defending our position vigorously, and we expect to recoup taxes paid. If this matter is adversely resolved, we could recognize significant additional tax expense, including for taxes previously paid.
Note 8 — SEGMENT INFORMATION
We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Technology and infrastructure,” “Sales and marketing,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. The majority of technology costs recorded in “Technology and infrastructure” are incurred in the U.S. and are included in our North America and AWS segments. The majority of infrastructure costs recorded in “Technology and infrastructure” are allocated to the AWS segment based on usage. There are no internal revenue transactions between our reportable segments. Our chief operating decision maker (“CODM”) regularly reviews consolidated net sales, consolidated operating expenses, and consolidated operating income (loss) by segment. Amounts included in consolidated operating expenses include “Cost of sales,” “Fulfillment,” “Technology and infrastructure,” “Sales and marketing,” “General and administrative,” and “Other operating expense (income), net.” Our CODM manages our business by reviewing annual forecasts and consolidated results by segment on a quarterly basis.
North America
The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services through North America-focused online and physical stores. This segment includes export sales from these online stores.
International
The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services 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-focused online stores.
AWS
The AWS segment consists of amounts earned from global sales of compute, storage, database, and other services 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, |
| 2023 | | 2024 | | 2023 | | 2024 |
North America | | | | | | | |
Net sales | $ | 87,887 | | | $ | 95,537 | | | $ | 247,314 | | | $ | 271,911 | |
Operating expenses | 83,580 | | | 89,874 | | | 238,898 | | | 256,200 | |
Operating income | $ | 4,307 | | | $ | 5,663 | | | $ | 8,416 | | | $ | 15,711 | |
| | | | | | | |
International | | | | | | | |
Net sales | $ | 32,137 | | | $ | 35,888 | | | $ | 90,957 | | | $ | 99,486 | |
Operating expenses | 32,232 | | | 34,587 | | | 93,194 | | | 97,009 | |
Operating income (loss) | $ | (95) | | | $ | 1,301 | | | $ | (2,237) | | | $ | 2,477 | |
| | | | | | | |
AWS | | | | | | | |
Net sales | $ | 23,059 | | | $ | 27,452 | | | $ | 66,553 | | | $ | 78,770 | |
Operating expenses | 16,083 | | | 17,005 | | | 49,089 | | | 49,568 | |
Operating income | $ | 6,976 | | | $ | 10,447 | | | $ | 17,464 | | | $ | 29,202 | |
| | | | | | | |
Consolidated | | | | | | | |
Net sales | $ | 143,083 | | | $ | 158,877 | | | $ | 404,824 | | | $ | 450,167 | |
Operating expenses | 131,895 | | | 141,466 | | | 381,181 | | | 402,777 | |
Operating income | 11,188 | | | 17,411 | | | 23,643 | | | 47,390 | |
Total non-operating income (expense) | 1,001 | | | 626 | | | 228 | | | (1,125) | |
Provision for income taxes | (2,306) | | | (2,706) | | | (4,058) | | | (6,940) | |
Equity-method investment activity, net of tax | (4) | | | (3) | | | (12) | | | (81) | |
Net income | $ | 9,879 | | | $ | 15,328 | | | $ | 19,801 | | | $ | 39,244 | |
Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 |
Net Sales: | | | |
Online stores (1) | $ | 57,267 | | | $ | 61,411 | | | $ | 161,329 | | | $ | 171,473 | |
Physical stores (2) | 4,959 | | | 5,228 | | | 14,878 | | | 15,636 | |
Third-party seller services (3) | 34,342 | | | 37,864 | | | 96,494 | | | 108,661 | |
Advertising services (4) | 12,060 | | | 14,331 | | | 32,252 | | | 38,926 | |
Subscription services (5) | 10,170 | | | 11,278 | | | 29,721 | | | 32,866 | |
AWS | 23,059 | | | 27,452 | | | 66,553 | | | 78,770 | |
Other (6) | 1,226 | | | 1,313 | | | 3,597 | | | 3,835 | |
Consolidated | $ | 143,083 | | | $ | 158,877 | | | $ | 404,824 | | | $ | 450,167 | |
____________________________
(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, videos, games, music, and software. These product sales include digital products sold on a transactional basis. Digital media content 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. Sales to customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”
(3)Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.
(4)Includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.
(5)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.
(6)Includes sales related to various other offerings, such as health care services, certain licensing and distribution of video content, and shipping services, and our co-branded credit card agreements.
| | | | | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding guidance, industry prospects, or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions and customer demand and spending, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity. In addition, global economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of these risks. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results or outcomes to differ significantly from management’s expectations, are described in greater detail in Item 1A of Part II, “Risk Factors.”
For additional information, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview” of our 2023 Annual Report on Form 10-K.
Critical Accounting 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. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company. Based on this definition, we have identified the critical accounting estimates addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant 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 2023 Annual Report on Form 10-K and Item 1 of Part I, “Financial Statements — Note 1 — Accounting Policies and Supplemental Disclosures,” of this Form 10-Q. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
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. These assumptions about future disposition of inventory are inherently uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future. As a measure of sensitivity, for every 1% of additional inventory valuation allowance as of September 30, 2024, we would have recorded an additional cost of sales of approximately $380 million.
In addition, we enter into supplier commitments for certain electronic device components and certain products. These commitments are based on forecasted customer demand. If we reduce these commitments, we may incur additional costs.
Income Taxes
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. In addition, our actual and forecasted earnings are subject to
change due to economic, political, and other conditions and significant judgment is required in determining 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 new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special tax regimes, changes in foreign exchange rates, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, changes in our deferred tax assets and liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions. In addition, a number of countries have enacted or are actively pursuing changes to their tax laws applicable to corporate multinationals.
We are also currently 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 for which that development occurs, as well as for prior and subsequent periods. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical income tax provisions and accruals.
Liquidity and Capital Resources
Cash flow information is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | Twelve Months Ended September 30, |
| 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 |
Cash provided by (used in): | | | | | | | | | | | |
Operating activities | $ | 21,217 | | | $ | 25,971 | | | $ | 42,481 | | | $ | 70,241 | | | $ | 71,654 | | | $ | 112,706 | |
Investing activities | (11,753) | | | (16,899) | | | (37,232) | | | (56,899) | | | (48,053) | | | (69,500) | |
Financing activities | (8,948) | | | (2,758) | | | (9,133) | | | (8,504) | | | (9,047) | | | (15,250) | |
Our principal sources of liquidity are cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, which, at fair value, were $86.8 billion and $88.1 billion as of December 31, 2023 and September 30, 2024. Amounts held in foreign currencies were $23.5 billion and $19.5 billion as of December 31, 2023 and September 30, 2024. Our foreign currency balances include British Pounds, Canadian Dollars, Euros, Indian Rupees, and Japanese Yen.
Cash provided by (used in) operating activities was $21.2 billion and $26.0 billion for Q3 2023 and Q3 2024, and $42.5 billion and $70.2 billion for the nine months ended September 30, 2023 and 2024. Our operating cash flows result primarily from cash received from our consumer, seller, developer, enterprise, and content creator customers, and advertisers, offset by cash payments we make for products and services, employee compensation, payment processing and related transaction costs, operating leases, and interest payments. Cash received from our customers and other activities generally corresponds to our net sales. The increase in operating cash flow for the trailing twelve months ended September 30, 2024, compared to the comparable prior year period, was due to an increase in net income, excluding non-cash expenses, and changes in working capital. Working capital at any specific point in time is subject to many variables, including variability in demand, inventory management and category expansion, the timing of cash receipts and payments, customer and vendor payment terms, and fluctuations in foreign exchange rates.
Cash provided by (used in) investing activities corresponds with cash capital expenditures, including leasehold improvements, incentives received from property and equipment vendors, proceeds from asset sales, cash outlays for acquisitions, investments in other companies and intellectual property rights, and purchases, sales, and maturities of marketable securities. Cash provided by (used in) investing activities was $(11.8) billion and $(16.9) billion for Q3 2023 and Q3 2024, and $(37.2) billion and $(56.9) billion for the nine months ended September 30, 2023 and 2024, with the variability caused primarily by purchases, sales, and maturities of marketable securities and cash capital expenditures. Cash capital expenditures were $11.3 billion and $21.3 billion during Q3 2023 and Q3 2024, and $34.8 billion and $51.6 billion for the nine months ended September 30, 2023 and 2024, which primarily reflect investments in technology infrastructure (the majority of which is to support AWS business growth) and in additional capacity to support our fulfillment network. We expect cash capital expenditures to meaningfully increase in 2024, primarily driven by investments in technology infrastructure. We made cash payments, net of acquired cash, related to acquisition and other investment activity of $1.6 billion and $622 million during Q3 2023 and Q3 2024, and $5.5 billion and $4.5 billion for the nine months ended September 30, 2023 and 2024. We funded the
acquisition of 1Life Healthcare, Inc. (One Medical) in 2023 with cash on hand. In Q3 2023, we invested $1.25 billion in a convertible note from Anthropic. In Q1 2024, we invested $2.75 billion in a second convertible note.