10-KPeriod: FY2017

AMAZON COM INC Annual Report, Year Ended Dec 31, 2017

Filed February 2, 2018For Securities:AMZN

Summary

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 billion, 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 billion, 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.

Financial Highlights

54 data points
Beta

Revenue

$177.87B

37.1% Gross Margin

Net Income

$3.03B

1.7% Net Margin

EPS (Diluted)

$0.31

Total Assets

$131.31B

Cash & Equivalents

$20.52B

Free Cash Flow

$10.95B

Financial Statements
Beta
Revenue$177.87B
Cost of Revenue$111.93B
Gross Profit$65.93B
Operating Expenses$173.76B
Operating Income$4.11B
Interest Expense$848.00M
Net Income$3.03B
EPS (Basic)$0.32
EPS (Diluted)$0.31
Shares Outstanding (Basic)9.60B
Shares Outstanding (Diluted)9.86B

Key Highlights

  • 1Net sales grew by 31% to $177.866 billion in 2017, demonstrating strong top-line expansion.
  • 2The acquisition of Whole Foods Market in August 2017 significantly expanded Amazon's physical retail presence and was a major strategic move.
  • 3Amazon Web Services (AWS) continued its strong growth trajectory, with sales increasing by 43% year-over-year, reinforcing its role as a key profit driver.
  • 4Operating income remained relatively stable at $4.106 billion, indicating increased investment in growth initiatives and operational scaling that offset revenue gains.
  • 5The company maintained a strong liquidity position with $31.0 billion in cash, cash equivalents, and marketable securities as of December 31, 2017.
  • 6Significant investments were made in technology and content, and fulfillment, reflecting ongoing efforts to enhance customer experience and operational efficiency.
  • 7The filing details extensive risk factors, including intense competition, global economic conditions, and regulatory uncertainties, which investors should closely monitor.

Frequently Asked Questions

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.

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.

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.

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.