01—Abstract
Summary
Summary of the 10-K filed February 2, 2018. Cited figures are marked; the original filing is the authoritative source.
Amazon.com Inc.'s 2017 10-K filing highlights a period of significant growth and strategic expansion, marked by the notable acquisition of Whole Foods Market in August 2017.
The company continued its customer-centric approach, focusing on selection, price, and convenience across its diverse business segments: North America, International, and Amazon Web Services (AWS). Revenue saw a substantial increase of 31% year-over-year, reaching $177.866 billiona, driven by strong performance in all segments. AWS, in particular, demonstrated robust growth at 43%, underscoring its importance as a high-margin business.
Despite strong revenue growth, operating income remained relatively flat at $4.106 billionb, impacted by increased operating expenses related to expansion, technology and content investments, and fulfillment network scaling. The company's financial position remains solid, with substantial cash and cash equivalents and continued investment in long-term strategic initiatives. The filing also addresses significant market risks, including intense competition, operational scaling challenges, and evolving regulatory environments, alongside the positive impact of the recent U.S. tax reform legislation.
02—Key points
Key Highlights
- Net sales grew by 31% to $177.866 billion in 2017, demonstrating strong top-line expansion.
- The acquisition of Whole Foods Market in August 2017 significantly expanded Amazon's physical retail presence and was a major strategic move.
- Amazon Web Services (AWS) continued its strong growth trajectory, with sales increasing by 43% year-over-year, reinforcing its role as a key profit driver.
- Operating income remained relatively stable at $4.106 billion, indicating increased investment in growth initiatives and operational scaling that offset revenue gains.
- The company maintained a strong liquidity position with $31.0 billion in cash, cash equivalents, and marketable securities as of December 31, 2017.
- Significant investments were made in technology and content, and fulfillment, reflecting ongoing efforts to enhance customer experience and operational efficiency.
- The filing details extensive risk factors, including intense competition, global economic conditions, and regulatory uncertainties, which investors should closely monitor.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Amazon.com Inc kept $0.02.
- Revenue$177.87B100.0%
- Cost of revenue−$111.93B62.9%
- Gross profit$65.93B37.1%
- Operating costs−$61.83B34.8%
- Operating income$4.11B2.3%
- Interest, other & tax−$1.07B0.6%
- Net income$3.03B1.7%
Where FY2017 revenue went
$177.87B- Cost of revenue: $111.93B, 63% of revenue
- Operating costs: $61.83B, 35% of revenue
- Net income: $3.03B, 1.7% of revenue
- Interest, other & tax: $1.07B, 0.6% of revenue
Kept 1.7% as net incomeNet income $3.03B · 1.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 2, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $177.87B$135.99B | +30.8% |
| Cost of Revenue | $111.93B$88.27B | +26.8% |
| Gross Profit | $65.93B$47.72B | +38.2% |
| Operating Expenses | $173.76B$131.80B | +31.8% |
| Operating Income | $4.11B$4.19B | −1.9% |
| Interest Expense | $848.00M$484.00M | +75.2% |
| Net Income | $3.03B$2.37B | +27.9% |
| EPS (Basic) | $0.32$0.25 | +26.1% |
| EPS (Diluted) | $0.31$0.24 | +25.5% |
| Shares Outstanding (Basic) | 9.60B9.48B | +1.3% |
| Shares Outstanding (Diluted) | 9.86B9.68B | +1.9% |
05—Questions
Frequently Asked Questions
What was Amazon's revenue growth in 2017, and what were the key drivers?
Amazon's net sales grew by 31% to $177.866 billion in 2017. Key drivers included increased unit sales across its North America and International segments, boosted by efforts to reduce prices, improve inventory availability, and expand selection. The acquisition of Whole Foods Market also contributed significantly to the reported revenue growth.
How did the Whole Foods Market acquisition impact Amazon's financials in 2017?
The acquisition of Whole Foods Market, completed on August 28, 2017, contributed $5.8 billion in net sales and an operating loss of $24 million to Amazon's results for the portion of the year after acquisition. It also led to a significant increase in goodwill and acquired intangible assets on the balance sheet.
What is the outlook for AWS, and how is it performing relative to other segments?
Amazon Web Services (AWS) showed robust growth in 2017, with net sales increasing by 43% year-over-year to $17.459 billion. It also generated the highest operating income among the segments ($4.331 billion), significantly contributing to overall profitability and demonstrating its strategic importance and strong market position.
What were the main factors affecting Amazon's operating income in 2017?
While net sales saw substantial growth, Amazon's operating income remained relatively flat at $4.106 billion. This was primarily due to increased operating expenses, including significant investments in expanding its fulfillment network, technology and content development, marketing efforts, and scaling its infrastructure to support growth across all segments. The international segment, in particular, reported a substantial operating loss of $3.062 billion, reflecting ongoing investments in those markets.
06—Continue