01—Abstract
Summary
Summary of the 10-K filed February 3, 2023. Cited figures are marked; the original filing is the authoritative source.
Amazon.com, Inc. (AMZN) reported its full-year 2022 results, indicating a period of adjustment following rapid growth.
While consolidated net sales increased by 9% year-over-year to $514 billiona, this growth was primarily driven by the North America and AWS segments, with the International segment experiencing a decline, partly due to foreign exchange headwinds. The company navigated a challenging macroeconomic environment characterized by inflation, rising interest rates, and global supply chain constraints. These factors led to increased operating costs, particularly in the North America and International segments, resulting in a significant operating loss for these segments.
Conversely, Amazon Web Services (AWS) demonstrated robust growth, with sales up 29%b and operating income increasing substantially, highlighting its continued strength as a key profit driver for the company. Despite the overall mixed financial performance, Amazon remains focused on long-term, sustainable growth in free cash flows and strategic investments in technology and infrastructure.
02—Key points
Key Highlights
- Consolidated net sales grew 9% year-over-year to $513.98 billion, driven by an increase in both product and service sales.
- Amazon Web Services (AWS) continued its strong performance with net sales increasing 29% to $80.1 billion and operating income rising to $22.8 billion.
- The North America segment saw net sales grow 13% to $315.9 billion, but reported an operating loss of $2.8 billion, impacted by increased fulfillment, shipping, and labor costs.
- The International segment experienced a net sales decline of 8% to $118.0 billion, heavily influenced by foreign exchange rate fluctuations, and reported an operating loss of $7.7 billion.
- Total operating expenses increased by 13% year-over-year, outpacing net sales growth, with significant increases in Fulfillment, Technology and content, and Sales and marketing costs.
- The company reported a net loss of $2.7 billion for the year, a significant decrease from a net income of $33.4 billion in 2021, impacted by a substantial net loss on marketable equity securities ($12.7 billion, primarily from its investment in Rivian) and other operating expenses, partially offset by a tax benefit.
- Free cash flow was negative for the year at $(11.6) billion, reflecting continued significant investments in property and equipment, particularly for technology infrastructure supporting AWS.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, Amazon.com Inc lost $0.01.
- Revenue$513.98B100.0%
- Cost of revenue−$288.83B56.2%
- Gross profit$225.15B43.8%
- Operating costs−$212.90B41.4%
- Operating income$12.25B2.4%
- Interest, other & tax−$14.97B2.9%
- Net income−$2.72B0.5%
Where FY2022 revenue went
$513.98B- Cost of revenue: $288.83B, 56% of revenue
- Operating costs: $212.90B, 41% of revenue
- Operating income: $12.25B, 2.4% of revenue
Kept 2.4% as operating incomeOperating income $12.25B · 2.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 3, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $513.98B$469.82B | +9.4% |
| Cost of Revenue | $288.83B$272.34B | +6.1% |
| Gross Profit | $225.15B$197.48B | +14.0% |
| Operating Expenses | $501.74B$444.94B | +12.8% |
| Operating Income | $12.25B$24.88B | −50.8% |
| Interest Expense | $2.37B$1.81B | +30.8% |
| Net Income | -$2.72B$33.36B | −108.2% |
| EPS (Basic) | $-0.27$3.30 | −108.2% |
| EPS (Diluted) | $-0.27$3.24 | −108.3% |
| Shares Outstanding (Basic) | 10.19B10.12B | +0.7% |
| Shares Outstanding (Diluted) | 10.19B10.30B | −1.0% |
05—Questions
Frequently Asked Questions
What was Amazon's overall financial performance in 2022?
In 2022, Amazon reported a consolidated net sales increase of 9% to $513.98 billion. However, the company incurred a net loss of $2.7 billion, a significant reversal from the $33.4 billion net income in 2021. This was largely due to a substantial negative valuation adjustment on its investment in Rivian ($12.7 billion loss) and increased operating expenses impacting profitability in the retail segments.
How did the different business segments perform?
Amazon's three main segments showed varied performance. North America net sales grew 13% but reported an operating loss due to higher costs. The International segment saw net sales decline 8% (impacted by foreign exchange) and also reported an operating loss. Amazon Web Services (AWS) was the standout performer, with net sales up 29% and operating income significantly increasing, demonstrating its continued importance as a profit driver.
What are the main factors contributing to the increased operating expenses?
Increased operating expenses were driven by higher fulfillment and shipping costs, increased transportation and utility costs, and higher wage rates and incentives. Technology and content costs also rose significantly due to increased investment in technical teams and infrastructure. The company cited macroeconomic factors like inflation, interest rates, and global supply chain constraints as contributing to these cost pressures.
What is the outlook for Amazon's free cash flow?
Amazon's free cash flow was negative at $(11.6) billion in 2022, down from $(9.1) billion in 2021. This reflects continued substantial capital expenditures, particularly in technology infrastructure to support AWS growth and the expansion of its fulfillment network. Management stated it expects cash flows generated from operations and its existing cash reserves to be sufficient for at least the next twelve months, but ongoing investments will continue to impact free cash flow in the short to medium term.
06—Continue