10-KPeriod: FY2018

AMAZON COM INC Annual Report, Year Ended Dec 31, 2018

Filed February 1, 2019For Securities:AMZN

Summary

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.

Financial Highlights

53 data points
Beta

Revenue

$232.89B

40.2% Gross Margin

Net Income

$10.07B

4.3% Net Margin

EPS (Diluted)

$1.01

Total Assets

$162.65B

Cash & Equivalents

$32.17B

Free Cash Flow

$30.72B

Financial Statements
Beta
Revenue$232.89B
Cost of Revenue$139.16B
Gross Profit$93.73B
Operating Expenses$220.47B
Operating Income$12.42B
Interest Expense$1.42B
Net Income$10.07B
EPS (Basic)$1.03
EPS (Diluted)$1.01
Shares Outstanding (Basic)9.74B
Shares Outstanding (Diluted)10.00B

Key Highlights

  • 1Net sales grew by 31% year-over-year in both 2017 and 2018, reaching $232.887 billion in 2018.
  • 2Operating income significantly increased to $12.421 billion in 2018, up from $4.106 billion in 2017, indicating improved profitability.
  • 3Amazon Web Services (AWS) demonstrated strong growth, with net sales increasing by 47% in 2018 to $25.655 billion, contributing significantly to operating income.
  • 4The North America segment showed robust growth, with net sales up 33% in 2018 to $141.366 billion, and operating income reaching $7.267 billion.
  • 5Net income more than tripled from $3.033 billion in 2017 to $10.073 billion in 2018, reflecting strong financial performance.
  • 6The company continued to invest heavily in technology and content and fulfillment, with these expenses growing to support business expansion and innovation.
  • 7Amazon's free cash flow showed a strong rebound, reaching $19.400 billion in 2018, demonstrating robust cash generation capabilities.

Frequently Asked Questions

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.

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.

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.

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.