01—Abstract
Summary
Summary of the 10-K filed February 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Amazon.com, Inc. (AMZN) filed its 2018 10-K report on February 1, 2019, showcasing robust growth across its diversified business segments.
The company reported significant increases in net sales, driven by strong performance in North America and the continued expansion of Amazon Web Services (AWS). This growth was accompanied by a substantial rise in operating income, demonstrating improved profitability and operational efficiency. Key drivers for this performance include the company's relentless focus on customer obsession, invention, and operational excellence.
The ongoing expansion of its fulfillment network, investments in technology and content, and the sustained growth of AWS are critical to its strategy. While competition remains intense across all sectors, Amazon's integrated business model, leveraging its e-commerce platform, cloud services, and diverse product offerings, positions it for continued market leadership and value creation for shareholders.
02—Key points
Key Highlights
- Net sales grew by 31% year-over-year in both 2017 and 2018, reaching $232.887 billion in 2018.
- Operating income significantly increased to $12.421 billion in 2018, up from $4.106 billion in 2017, indicating improved profitability.
- Amazon Web Services (AWS) demonstrated strong growth, with net sales increasing by 47% in 2018 to $25.655 billion, contributing significantly to operating income.
- The North America segment showed robust growth, with net sales up 33% in 2018 to $141.366 billion, and operating income reaching $7.267 billion.
- Net income more than tripled from $3.033 billion in 2017 to $10.073 billion in 2018, reflecting strong financial performance.
- The company continued to invest heavily in technology and content and fulfillment, with these expenses growing to support business expansion and innovation.
- Amazon's free cash flow showed a strong rebound, reaching $19.400 billion in 2018, demonstrating robust cash generation capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Amazon.com Inc kept $0.04.
- Revenue$232.89B100.0%
- Cost of revenue−$139.16B59.8%
- Gross profit$93.73B40.2%
- Operating costs−$81.31B34.9%
- Operating income$12.42B5.3%
- Interest, other & tax−$2.35B1.0%
- Net income$10.07B4.3%
Where FY2018 revenue went
$232.89B- Cost of revenue: $139.16B, 60% of revenue
- Operating costs: $81.31B, 35% of revenue
- Net income: $10.07B, 4.3% of revenue
- Interest, other & tax: $2.35B, 1.0% of revenue
Kept 4.3% as net incomeNet income $10.07B · 4.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 1, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $232.89B$177.87B | +30.9% |
| Cost of Revenue | $139.16B$111.93B | +24.3% |
| Gross Profit | $93.73B$65.93B | +42.2% |
| Operating Expenses | $220.47B$173.76B | +26.9% |
| Operating Income | $12.42B$4.11B | +202.5% |
| Interest Expense | $1.42B$848.00M | +67.1% |
| Net Income | $10.07B$3.03B | +232.1% |
| EPS (Basic) | $1.03$0.32 | +227.2% |
| EPS (Diluted) | $1.01$0.31 | +227.5% |
| Shares Outstanding (Basic) | 9.74B9.60B | +1.5% |
| Shares Outstanding (Diluted) | 10.00B9.86B | +1.4% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Amazon's net sales growth in 2018?
Amazon's net sales growth in 2018 was primarily driven by increased unit sales across its North America and International segments, fueled by efforts to reduce prices, enhance product selection, and improve inventory availability. The strong performance of Amazon Web Services (AWS) due to increased customer usage also significantly contributed to the overall net sales growth.
How did AWS perform in 2018, and what is its significance to Amazon's overall results?
AWS experienced substantial growth in 2018, with net sales increasing by 47% year-over-year to $25.655 billion. AWS is a highly profitable segment and a key contributor to Amazon's overall operating income, demonstrating its strategic importance and ability to generate significant earnings.
What are the major risks and challenges highlighted by Amazon in its 2018 10-K filing?
Amazon highlighted several key risks, including intense competition across its diverse business lines, the strain of rapid global expansion on its resources, potential fluctuations in operating results, risks associated with international operations, and the need to successfully optimize its fulfillment network and data centers. Cybersecurity threats and the company's evolving business model also present ongoing challenges.
How is Amazon managing its inventory and fulfillment operations to meet customer demand, especially during peak seasons?
Amazon manages inventory and fulfillment through extensive fulfillment networks and advanced logistics. The company emphasizes optimizing inventory placement to reduce shipping costs and meet demand. However, it acknowledges risks related to predicting customer demand, stocking popular products sufficiently, and the potential strain on operations during peak seasons like the fourth quarter, which historically sees higher sales volume.
06—Continue