10-KPeriod: FY2016

AMAZON COM INC Annual Report, Year Ended Dec 31, 2016

Filed February 10, 2017For Securities:AMZN

Summary

Amazon.com, Inc.'s 2016 10-K filing reveals a company demonstrating robust top-line growth and expanding profitability, signaling strong operational execution. The company reported significant increases in net sales across its segments, with North America and AWS showing particularly strong performance. AWS, in particular, continues to be a major driver of operating income, showcasing its strategic importance. Financially, Amazon has seen a substantial improvement in its bottom line, with net income growing significantly compared to the previous year. The company's focus on long-term, sustainable growth in free cash flows is evident, with substantial increases in operating cash flow supporting significant investments in property and equipment, primarily for fulfillment and technology infrastructure. Investors should note the continued aggressive investment in technology and content, alongside a growing fulfillment network, which are critical for maintaining competitive advantage and supporting future growth. Despite substantial investments, the company's financial position remains strong, with growing cash and cash equivalents.

Financial Highlights

55 data points
Beta

Revenue

$135.99B

35.1% Gross Margin

Net Income

$2.37B

1.7% Net Margin

EPS (Diluted)

$0.24

Total Assets

$83.40B

Cash & Equivalents

$19.33B

Free Cash Flow

$12.31B

Financial Statements
Beta
Revenue$135.99B
Cost of Revenue$88.27B
Gross Profit$47.72B
Operating Expenses$131.80B
Operating Income$4.19B
Interest Expense$484.00M
Net Income$2.37B
EPS (Basic)$0.25
EPS (Diluted)$0.24
Shares Outstanding (Basic)9.48B
Shares Outstanding (Diluted)9.68B

Key Highlights

  • 1Significant year-over-year net sales growth of 27% to $135.99 billion.
  • 2Operating income grew substantially to $4.19 billion, up from $2.23 billion in the prior year.
  • 3Net income surged to $2.37 billion, a dramatic increase from $596 million in 2015.
  • 4AWS segment continues to be a key profit driver, with operating income increasing to $3.11 billion.
  • 5North America segment shows strong sales growth (25%) and profitability, with operating income reaching $2.36 billion.
  • 6Free cash flow increased significantly to $9.71 billion, indicating strong operational cash generation.
  • 7Continued substantial investment in technology and content ($16.09 billion) and fulfillment ($17.62 billion) to support long-term growth.

Frequently Asked Questions

Amazon's growth in 2016 was driven by a combination of factors across its segments. The North America segment saw strong unit sales growth fueled by price reductions, expanded selection, and improved inventory availability. The International segment also experienced a significant rebound in growth, partly due to favorable currency exchange rates and continued efforts to enhance selection and pricing. Crucially, Amazon Web Services (AWS) continued its impressive growth trajectory, driven by increased customer usage, underscoring its role as a major growth engine and profit contributor.

Amazon demonstrated significant profitability improvements in 2016. Operating income more than doubled year-over-year to $4.19 billion, driven by increased sales and operational efficiencies. Net income saw a substantial surge, reaching $2.37 billion, up from $596 million in 2015. This improved profitability reflects the company's ability to leverage its scale and effectively manage costs while continuing to invest heavily in its diverse business operations.

Amazon Web Services (AWS) is strategically vital and a key driver of Amazon's overall financial performance. In 2016, AWS generated $12.22 billion in net sales and contributed $3.11 billion in operating income. This segment's high operating margins significantly bolster Amazon's overall profitability, allowing the company to reinvest profits into other growth initiatives across its retail and device businesses. The continued strong growth in AWS highlights its position as a market leader in cloud computing services.

Amazon's substantial investments in property and equipment, technology, and content are primarily funded through robust operating cash flows, which saw a significant increase to $16.44 billion in 2016. The company also maintains substantial cash, cash equivalents, and marketable securities balances, which stood at $26.0 billion as of December 31, 2016. While Amazon has long-term debt obligations, its strong operational cash generation and liquidity position provide ample resources to support its ongoing expansion and strategic investments.