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and depreciated or amortized over the revised estimated useful life.
Servers and network assets include property and equipment mostly in our data centers, which is used to support production traffic. Land and assets held
within CIP are not depreciated. CIP is related to the construction or development of property and equipment that have not yet been placed in service for their
intended use. We capitalize interest on our debt related to certain eligible CIP assets and depreciate over the useful life of the related assets.
The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from their respective accounts, and gain or loss on such sale or disposal is reflected in income from operations.
Lease Obligations
Our operating leases mostly comprise of certain offices, data centers, and colocations. We also have finance leases for certain network infrastructure. We
determine if an arrangement is a lease at inception. Most of our leases contain lease and non-lease components. Non-lease components include fixed payments
for maintenance, utilities, real estate taxes, and management fees. We combine fixed lease and non-lease components and account for them as a single lease
component. Our lease agreements may contain variable costs such as contingent rent escalations, common area maintenance, insurance, real estate taxes, or
other costs. These amounts are affected by the Consumer Price Index, payments contingent on energy production for renewable energy purchase arrangements,
and maintenance and utilities. Such variable lease costs are
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expensed as incurred on our consolidated statements of income. For certain colocation and equipment leases, we apply a portfolio approach to effectively
account for the operating lease ROU assets and lease liabilities.
For leases with a lease term greater than 12 months, ROU assets and lease liabilities are recognized on our consolidated balance sheets at the
commencement date based on the present value of the remaining fixed lease payments and includes only payments that are fixed and determinable at the time
of commencement.
Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. When determining
the probability of exercising such options, we consider contract-based, asset-based, entity-based, and market-based factors. We do not assume renewals in our
determination of the lease term unless the renewals are deemed to be reasonably assured. Our lease agreements generally do not contain any material residual
value guarantees or material restrictive covenants.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement
date in determining the present value of lease payments. Our incremental borrowing rate is based on our understanding of what our credit rating would be in a
similar economic environment.
Operating leases are included in operating lease ROU assets, operating lease liabilities, current, and operating lease liabilities, non-current on our
consolidated balance sheets. Finance leases are included in property and equipment, net, accrued expenses and other current liabilities, and other liabilities on
our consolidated balance sheets.
Operating lease costs are recognized on a straight-line basis over the lease terms. Finance lease assets are amortized on a straight-line basis over the
shorter of the estimated useful lives of the assets or the lease terms.
During the year ended December 31, 2023 and 2022, we recorded net impairment losses of $2.43 billion and $2.22 billion in aggregate for operating
lease ROU assets and leasehold improvements under ASC Topic 360 as a part of our facilities consolidation restructuring efforts. The fair values of the
impaired assets were estimated using discounted cash flow models (income approach) based on market participant assumptions with Level 3 inputs. The
assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the


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remaining lease periods, and discount rates that reflect the level of risk associated with receiving future cash flows. For additional information regarding our
restructuring efforts, see Note 3 — Restructuring.
Loss Contingencies
We are involved in legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business.
Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. Additionally, we are required to comply with various
legal and regulatory obligations around the world, and we regularly become subject to new laws and regulations in the jurisdictions in which we operate. The
requirements for complying with these obligations may be uncertain and subject to interpretation and enforcement by regulatory and other authorities, and any
failure to comply with such obligations could eventually lead to asserted legal or regulatory action. With respect to these matters, asserted and unasserted, we
evaluate the associated developments on a regular basis and accrue a liability when we believe that it is both probable that a loss has been incurred and the
amount can be reasonably estimated. If we determine there is a reasonable possibility that we may incur a loss and the loss or range of loss can be reasonably
estimated, we record such losses as general and administrative expenses on our consolidated statements of income and disclose the possible loss in the
accompanying notes to the consolidated financial statements to the extent material.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their
estimated fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and
liabilities is recorded as goodwill to reporting units based on the expected benefit from the business combination. Allocation of purchase consideration to
identifiable assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any
indefinite-lived intangible assets, including goodwill, are not amortized. During the measurement period, which is not to exceed one year from the acquisition
date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement
period, any subsequent adjustments are recorded to earnings. Acquisition-related expenses are recognized separately from business combinations and are
expensed as incurred.
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Goodwill and Intangibles Assets
We allocate goodwill to reporting units based on the expected benefit from business combinations. We evaluate our reporting units annually, as well as
when changes in our operating segments occur. For changes in reporting units, we reassign goodwill using a relative fair value allocation approach. Goodwill is
tested for impairment at the reporting unit level annually or more frequently if events or changes in circumstances would more likely than not reduce the fair
value of a reporting unit below its carrying value. We have two reporting units subject to goodwill impairment testing. As of December 31, 2023, no
impairment of goodwill has been identified.
We evaluate the recoverability of finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying
amount of such assets may not be recoverable. The evaluation of these intangible assets are performed at the lowest level for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the
future undiscounted cash flows the assets are expected to generate from the use and eventual disposition. If such review indicates that the carrying amount of
finite-lived intangible assets is not recoverable, and the assets fair value is less than the carrying amount, an impairment charge is recognized. We have not
recorded any material impairment charges during the years presented.
Our finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. Indefinite-lived intangible assets are
not amortized. If an indefinite-lived intangible asset is subsequently determined to have a finite useful life, the asset will be tested for impairment and
accounted for as a finite-lived intangible asset prospectively over its estimated remaining useful life. We routinely review the remaining estimated useful lives
of finite-lived intangible assets. If we change the estimated useful life assumption for any asset, the remaining unamortized balance is amortized over the
revised estimated useful life.
Foreign Currency
Generally, the functional currency of our international subsidiaries is the local currency. We translate the financial statements of these subsidiaries to
U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue, costs, and expenses. Translation gains and


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losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders' equity. As of December 31, 2023 and 2022, we had
cumulative translation losses, net of tax of $1.24 billion and $1.86 billion, respectively.
Foreign currency transaction gains and losses from transactions denominated in a currency other than the functional currency of the subsidiary involved
are recorded within interest and other income (expense), net on our consolidated statements of income. Net losses resulting from foreign currency transactions
were $366 million, $81 million, and $140 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Credit Risk and Concentration
Our financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash,
marketable securities, and accounts receivable. Cash equivalents consists mostly of money market funds, that primarily invest in U.S. government and agency
securities. Marketable securities consist of investments in U.S. government securities, U.S. government agency securities, and investment grade corporate debt
securities. As part of our cash management strategy, we concentrate cash deposits with large financial institutions and our marketable securities are held in
diversified highly rated securities. Our investment portfolio in corporate debt securities is highly liquid and diversified among individual issuers. The amount
of credit losses recorded for the year ended December 31, 2023 was not material.
Accounts receivable are typically unsecured and are derived from revenue earned from customers across different industries and countries. We generated
37%, 40%, and 41% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively, from marketers and developers based in the United
States, with a majority of the revenue outside of the United States in 2023 coming from customers located in western Europe, China, Brazil, Australia, Canada
and Japan.
We perform ongoing credit evaluations of our customers and generally do not require collateral. We maintain an allowance for estimated credit losses,
and bad debt expense on these losses was not material during the years ended
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December 31, 2023, 2022, or 2021. In the event that accounts receivable collection cycles deteriorate, our operating results and financial position could be
adversely affected.
No customer represented 10% or more of total revenue during the years ended December 31, 2023, 2022, and 2021.
Recently Adopted Accounting Pronouncements
On April 1, 2023 we early adopted Accounting Standards Update (ASU) No. 2023-01, Leases (Topic 842): Common Control Arrangements (ASU 2023-
01), which requires leasehold improvements associated with common control leases to be amortized over the useful life to the common control group. The
adoption of this new standard did not have a material impact on our consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This
guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early
adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. We do not expect
the adoption of this guidance to have a material impact on our consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which
improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate
reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax
disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption,
the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated
financial statements.
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Note 2. Revenue
Revenue disaggregated by revenue source and by segment consists of the following (in millions):
Year Ended December 31, 
2023 2022 2021
Advertising $ 131,948 $ 113,642 $ 114,934 
Other revenue 1,058 808 721 
Family of Apps 133,006 114,450 115,655 
Reality Labs 1,896 2,159 2,274 
Total revenue $ 134,902 $ 116,609 $ 117,929 
Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions):
 Year Ended December 31, 
 2023 2022 2021
United States and Canada $ 52,888 $ 50,150 $ 51,541 
Europe 31,210 26,681 29,057 
Asia-Pacific 36,154 27,760 26,739 
Rest of World 14,650 12,018 10,592 
Total revenue $ 134,902 $ 116,609 $ 117,929 
_________________________
(1) United States revenue was $49.78 billion, $47.20 billion, and $48.38 billion for the years ended December 31, 2023, 2022, and 2021, respectively .
(2) China revenue was $13.69 billion, $7.40 billion, and $7.59 billion for the years ended December 31, 2023, 2022, and 2021, respectively .
(3) Europe includes Russia and Turkey , and Rest of World includes Africa, Latin America, and the Middle East.
Our total deferred revenue was $675 million and $526 million as of December 31, 2023 and 2022, respectively. As of December 31, 2023, we expect
$626 million of our deferred revenue to be realized in less than a year.(1)
(3)
 (2)
(3)
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Note 3. Restructuring
2023 Restructuring
In March 2023, we announced three rounds of planned layoffs to further reduce our company size by approximately 10,000 employees across the Family
of Apps (FoA) and Reality Labs (RL) segments (the 2023 Restructuring). Impacted employees in our recruiting, technology, and business groups were notified
during March 2023 to May 2023. As of December 31, 2023, we have completed these employee layoffs. In certain regions, a small portion of the impacted
employees continue to be included in our reported headcount through 2024. We recognized $1.20 billion pre-tax severance and related personnel costs across
the FoA and RL segments during the year ended December 31, 2023 in accordance with ASC Topic 420, Exit or Disposal Cost Obligations, where applicable.
A summary of our 2023 Restructuring pre-tax charges, including subsequent adjustments, recorded for severance and related personnel costs during the
year ended December 31, 2023 is as follows (in millions):
Year Ended December 31,
2023
Research and development $ 422 
Marketing and sales 308 
General and administrative 467 
Total $ 1,197 
____________________________
(1)    Includes $101 million of share-based compensation expense recognized for the 2023 layof fs during the year ended December 31, 2023.
The 2023 Restructuring charges recorded under our FoA segment were $1.10 billion and RL segment were $96 million during the year ended
December 31, 2023.
The following is a summary of changes in the accrued severance and other personnel liabilities related to the 2023 layoff activities, included within
accrued expenses and other current liabilities on our consolidated balance sheets (in millions):
Severance Liabilities
Balance as of January 1, 2023 $ — 
Severance and other personnel costs 1,097 
Cash payments (1,021)
Balance as of December 31, 2023 $ 76 
2022 Restructuring
In 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities. These measures included a


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facilities consolidation strategy to sublease, early terminate, or abandon several office buildings under operating leases, a layoff of approximately 11,000
employees across the FoA and RL segments, and a pivot towards a next generation data center design, including cancellation of multiple data center projects
(the 2022 Restructuring). As of December 31, 2023, we have completed the data center initiatives and the 2022 employee layoffs, and substantially completed
the facilities consolidation initiatives.(1)
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A summary of our 2022 Restructuring pre-tax charges for the years ended December 31, 2023 and 2022, including subsequent adjustments, is as follows
(in millions):
Year Ended December 31, 2023 Year Ended December 31, 2022
Facilities
ConsolidationSeverance and
Other Personnel
CostsData Center
Assets TotalFacilities
ConsolidationSeverance and
Other Personnel
CostsData Center
Assets Total
Cost of revenue $ 177 $ — $ (224)$ (47)$ 154 $ — $ 1,341 $ 1,495 
Research and development 1,581 (9) — 1,572 1,311 408 — 1,719 
Marketing and sales 396 (1) — 395 404 234 — 638 
General and administrative 352 (17) — 335 426 333 — 759 
Total $ 2,506 $ (27)$ (224)$ 2,255 $ 2,295 $ 975 $ 1,341 $ 4,611 
____________________________________
(1) Relates to changes in estimates in our data center restructuring char ges recorded during 2022.
Total restructuring charges recorded under our FoA segment were $1.74 billion and $4.10 billion, and RL segment were $516 million and $515 million
for the years ended December 31, 2023 and 2022, respectively.
The following is a summary of changes in the severance and other personnel liabilities related to the 2022 layoff activities, included within accrued
expenses and other current liabilities on our consolidated balance sheets (in millions):
Severance Liabilities
Balance as of January 1, 2022 $ — 
Severance and other personnel costs 975 
Cash payments (203)
Balance as of December 31, 2022 772 
Adjustments and foreign exchange (35)
Cash payments (737)
Balance as of December 31, 2023 $ — (1)
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Note 4. Earnings per Share
We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method. As the liquidation and dividend rights for both
Class A and Class B common stock are identical, the undistributed earnings are allocated on a proportionate basis to the weighted-average number of common
shares outstanding for the period.
Basic EPS is computed by dividing net income by the weighted-average number of shares of our Class A and Class B common stock outstanding. For
the calculation of diluted EPS, net income for basic EPS is adjusted by the effect of dilutive securities, including restricted stock units (RSUs) awards under our
Equity Incentive Plan.
In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B common stock to Class A common
stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS is computed by
dividing the resulting net income by the weighted-average number of fully diluted common shares outstanding.
For the years ended December 31, 2023 and 2022, approximately 16 million and 95 million shares of Class A common stock equivalents of RSUs were
excluded from the diluted EPS calculation, respectively, as including them would have an anti-dilutive effect. RSUs with anti-dilutive effect were not material
for the year ended December 31, 2021.
Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.
The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per
share amounts):
 Year Ended December 31,
 2023 2022 2021
 Class
AClass
BClass
AClass
BClass
AClass
B 
Basic EPS:       
Numerator       
Net income $33,722 $ 5,376 $19,729 $ 3,471 $33,328 $ 6,042 
Denominator       
Shares used in computation of basic earnings per share 2,220 354 2,285 402 2,383 432


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Basic EPS $ 15.19 $ 15.19 $ 8.63 $ 8.63 $ 13.99 $ 13.99 
Diluted EPS:     
Numerator       
Net income $33,722 $ 5,376 $19,729 $ 3,471 $33,328 $ 6,042 
Reallocation of net income as a result of conversion of Class B to
Class A common stock 5,376 — 3,471 — 6,042 — 
Reallocation of net income to Class B common stock — (112) — (19) — (93)
Net income for diluted EPS $39,098 $ 5,264 $23,200 $ 3,452 $39,370 $ 5,949 
Denominator       
Shares used in computation of basic earnings per share 2,220 354 2,285 402 2,383 432 
Conversion of Class B to Class A common stock 354 — 402 — 432 — 
Weighted-average effect of dilutive RSUs 55 — 15 — 44 — 
Shares used in computation of diluted earnings per share 2,629 354 2,702 402 2,859 432 
Diluted EPS $ 14.87 $ 14.87 $ 8.59 $ 8.59 $ 13.77 $ 13.77 
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Note 5. Financial Instruments
Instruments Measured at Fair Value
We classify our cash equivalents and marketable debt securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing
sources and models utilizing market observable inputs to determine their fair value. Certain other assets are classified within Level 3 because factors used to
develop the estimated fair value are unobservable inputs that are not supported by market activity.
The following tables summarize our assets measured at fair value on a recurring basis and the classification by level of input within the fair value
hierarchy (in millions):
  Fair Value Measurement at Reporting Date Using
Description December 31, 2023Quoted Prices in Active
Markets for
Identical Assets
(Level 1)Significant Other
Observable Inputs
(Level 2)Significant Unobservable
Inputs
(Level 3)
Cash $ 6,265 
Cash equivalents:
Money market funds 32,910 $ 32,910 $ — $ — 
U.S. government and agency securities 2,206 2,206 — — 
Time deposits 261 — 261 — 
Corporate debt securities 220 — 220 — 
Total cash and cash equivalents 41,862 35,116 481 — 
Marketable securities:
U.S. government securities 8,439 8,439 — — 
U.S. government agency securities 3,498 3,498 — — 
Corporate debt securities 11,604 — 11,604 — 
Total marketable securities 23,541 11,937 11,604 — 
Restricted cash equivalents 857 857 — — 
Other assets 101 — — 101 
Total $ 66,361 $ 47,910 $ 12,085 $ 101 
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  Fair Value Measurement at Reporting Date Using
Description December 31, 2022Quoted Prices in Active
Markets for
Identical Assets
(Level 1)Significant Other
Observable Inputs
(Level 2)Significant Unobservable
Inputs
(Level 3)
Cash $ 6,176 
Cash equivalents:
Money market funds 8,305 $ 8,305 $ — $ — 
U.S. government and agency securities 16 16 — — 
Time deposits 156 — 156 — 
Corporate debt securities 28 — 28 — 
Total cash and cash equivalents 14,681 8,321 184 — 
Marketable securities:
U.S. government securities 8,708 8,708 — — 
U.S. government agency securities 4,989 4,989 — — 
Corporate debt securities 12,335 — 12,335 — 
Marketable equity securities 25 25 — — 
Total marketable securities 26,057 13,722 12,335 — 
Restricted cash equivalents 583 583 — — 
Other assets 157 — — 157 
Total $ 41,478 $ 22,626 $ 12,519 $ 157 
Unrealized Losses
The following tables summarize our available-for-sale marketable debt securities and cash equivalents with unrealized losses as of December 31, 2023
and 2022, aggregated by major security type and the length of time that individual securities have been in a continuous loss position (in millions):
December 31, 2023
Less than 12 months 12 months or greater Total
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. government securities $ 336 $ (1)$ 7,041 $ (275)$ 7,377 $ (276)
U.S. government agency securities 71 — 3,225 (164) 3,296 (164)
Corporate debt securities 647 (3) 10,125 (491) 10,772 (494)
Total $ 1,054 $ (4)$ 20,391 $ (930)$ 21,445 $ (934)
December 31, 2022
Less than 12 months 12 months or greater Total


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Less than 12 months 12 months or greater Total
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
U.S. government securities $ 5,008 $ (234)$ 3,499 $ (247)$ 8,507 $ (481)
U.S. government agency securities 524 (17) 4,415 (308) 4,939 (325)
Corporate debt securities 4,555 (249) 7,256 (634) 11,811 (883)
Total $ 10,087 $ (500)$ 15,170 $ (1,189)$ 25,257 $ (1,689)
The decrease in the gross unrealized losses for the year ended December 31, 2023 is mostly due to a shorter average portfolio duration. The allowance
for credit losses and the gross unrealized gains on our marketable debt securities were not material as of December 31, 2023 and 2022.
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Contractual Maturities
The following table classifies our marketable debt securities by contractual maturities (in millions):
December 31, 2023
Due within one year $ 7,120 
Due after one year to five years 16,421 
Total $ 23,541 
Instruments Measured at Fair Value on Non-recurring Basis
Our non-marketable equity securities accounted for using the measurement alternative are measured at fair value on a non-recurring basis and are
classified within Level 3 of the fair value hierarchy because we use significant unobservable inputs to estimate their fair value. Assets remeasured at fair value
on a non-recurring basis within Level 3 during the years ended December 31, 2023 and 2022 were $53 million and $198 million, respectively. For additional
information, see Note 6 — Non-marketable Equity Securities.
Note 6. Non-marketable Equity Securities
Our non-marketable equity securities are investments in privately-held companies without readily determinable fair values. The following table
summarizes our non-marketable equity securities that were measured using measurement alternative and equity method (in millions):
December 31,
2023 2022
Non-marketable equity securities under measurement alternative:
Initial cost $ 6,389 $ 6,388
Cumulative upward adjustments 293 293
Cumulative impairment/downward adjustments (599) (497)
Carrying value 6,083 6,184
Non-marketable equity securities under equity method 58 17
Total $ 6,141 $ 6,201
During the years ended December 31, 2023, 2022 and 2021, impairment and downward adjustments recorded for our non-marketable equity securities
that were measured using measurement alternative was $101 million, $447 million, and immaterial, respectively.
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Note 7. Property and Equipment
Property and equipment, net consists of the following (in millions):
 December 31,
 2023 2022
Land $ 2,080 $ 1,874 
Servers and network assets 46,838 34,330 
Buildings 37,961 27,720 
Leasehold improvements 6,972 6,522 
Equipment and other 7,416 5,642 
Finance lease right-of-use assets 4,185 3,353 
Construction in progress 24,269 25,052 
Property and equipment, gross 129,721 104,493 
Less: Accumulated depreciation (33,134) (24,975)
Property and equipment, net $ 96,587 $ 79,518 
Construction in progress includes costs mostly related to construction of data centers, network infrastructure and servers. As of December 31, 2023, and
2022, construction in progress also included $1.40 billion and $2.18 billion of servers and network assets components stored by our suppliers until required by
our design manufacturers to fulfill certain purchase orders, respectively.
Depreciation expense on property and equipment was $11.02 billion, $8.50 billion, and $7.56 billion for the years ended December 31, 2023, 2022, and
2021, respectively. Within property and equipment, our servers and network assets depreciation expenses were $7.32 billion, $5.29 billion, and $4.94 billion for
the years ended December 31, 2023, 2022, and 2021, respectively. During the year ended December 31, 2023, we capitalized $283 million of interest expense
related to certain eligible construction in progress assets.
During the years ended December 31, 2023, and 2022, we recorded $671 million and $508 million of impairment losses mostly for leasehold
improvements assets as part of our facilities consolidation restructuring efforts, respectively. For additional information, see Note 3 — Restructuring.
Note 8. Leases
We have entered into various non-cancelable operating lease agreements mostly for our offices, data centers, and colocations. We have also entered into


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various non-cancelable finance lease agreements for certain network infrastructure. Our leases have original lease periods expiring between 2024 and 2093.
Many leases include one or more options to renew.
The components of lease costs are as follows (in millions):
Year Ended December 31,
2023 2022 2021
Finance lease cost:
Amortization of right-of-use assets $ 349 $ 380 $ 344 
Interest 20 16 15 
Operating lease cost 2,091 1,857 1,540 
Variable lease cost and other, net 580 363 272 
Total lease cost $ 3,040 $ 2,616 $ 2,171 
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We also recorded $1.76 billion and $1.71 billion net impairment losses for operating lease right-of-use assets as a part of our facilities consolidation
restructuring efforts for the years ended December 31, 2023, and 2022, respectively. For additional information, see Note 3 — Restructuring.
Supplemental balance sheet information related to lease liabilities is as follows:
December 31,
2023 2022
Weighted-average remaining lease term:
Finance leases 14.0 years 14.4 years
Operating leases 11.6 years 12.5 years
Weighted-average discount rate:
Finance leases 3.4 % 3.1 %
Operating leases 3.7 % 3.2 %
The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2023 (in millions):
Operating Leases Finance Leases
2024 $ 2,219 $ 111 
2025 2,330 64 
2026 2,264 64 
2027 2,233 60 
2028 2,112 60 
Thereafter 12,491 492 
Total undiscounted cash flows 23,649 851 
Less: Imputed interest (4,800) (161)
Present value of lease liabilities $ 18,849 $ 690 
Lease liabilities, current $ 1,623 $ 90 
Lease liabilities, non-current 17,226 600 
Present value of lease liabilities $ 18,849 $ 690 
_________________
(1)    Lease liabilities include operating leases under restructuring as a part of our facilities consolidation ef forts. For additional information, see Note 3 — Restructuring.
The table above does not include lease payments that were not fixed at commencement or lease modification. As of December 31, 2023, we have
additional operating and finance leases, that have not yet commenced, with lease obligations of approximately $7.07 billion and $1.37 billion, respectively,
mostly for data centers, colocations, and network infrastructure. These operating and finance leases will commence between 2024 and 2028 with lease terms of
greater than one year to 30 years.(1)
(1)
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Supplemental cash flow information related to leases is as follows (in millions):
Year Ended December 31,
2023 2022 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 2,233 $ 1,654 $ 1,406 
Operating cash flows for finance leases $ 20 $ 16 $ 15 
Financing cash flows for finance leases $ 1,058 $ 850 $ 677 
Lease liabilities arising from obtaining right-of-use assets:
Operating leases $ 4,370 $ 4,366 $ 4,466 
Finance leases $ 588 $ 223 $ 160 
_________________
(1)    Cash flows for operating leases during the year ended December 31, 2023 include cash paid for terminations of certain operating leases .
Note 9. Acquisitions, Goodwill, and Intangible Assets
During the year ended December 31, 2023, we completed business acquisitions with total purchase consideration of $467 million in cash, including
$88 million and $352 million allocated to intangible assets and goodwill, respectively. Goodwill generated from these business acquisitions was primarily
attributable to expected synergies and potential monetization opportunities. The amount of goodwill generated that was deductible for tax purposes was not
material. Acquisition-related costs were immaterial and were expensed as incurred. Pro forma historical results of operations related to these business
acquisitions have not been presented because they are not significant to our consolidated financial statements, either individually or in aggregate. We have
included the financial results of these acquired businesses in our consolidated financial statements from their respective dates of acquisition.
Changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2023 and 2022 are as follows (in millions):
Family of Apps Reality Labs Total
Goodwill at December 31, 2021 $ 18,458 $ 739 $ 19,197 
Acquisitions 773 364 1,137 
Adjustments 19 (47) (28)
Goodwill at December 31, 2022 19,250 1,056 20,306 
Acquisitions — 357 357 
Adjustments (4) (5) (9)


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The following table sets forth the major categories of the intangible assets and their weighted-average remaining useful lives (in millions):
December 31, 2023 December 31, 2022
Weighted-
Average
Remaining
Useful Lives
 (in years)Gross Carrying
AmountAccumulated
AmortizationNet Carrying
AmountGross Carrying
AmountAccumulated
AmortizationNet Carrying
Amount
Acquired technology 4.7 $ 478 $ (182)$ 296 $ 507 $ (144)$ 363 
Acquired patents 2.4 287 (233) 54 380 (289) 91 
Other 2.3 28 (15) 13 86 (25) 61 
Total finite-lived assets 793 (430) 363 973 (458) 515 
Total indefinite-lived assets N/A 425 — 425 382 — 382 
Total intangible assets $ 1,218 $ (430)$ 788 $ 1,355 $ (458)$ 897 
Amortization expense of intangible assets for the years ended December 31, 2023, 2022, and 2021 was $161 million, $185 million, and $407 million,
respectively.
As of December 31, 2023, expected amortization expense for the unamortized finite-lived intangible assets for the next five years and thereafter is as
follows (in millions):
2024 $ 136 
2025 97 
2026 46 
2027 24 
2028 15 
Thereafter 45 
Total $ 363 
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Note 10. Long-term Debt
As of December 31, 2023, we had $18.50 billion of fixed-rate senior unsecured notes (the Notes), including $10.0 billion issued in August 2022 and
$8.50 billion issued in May 2023. The following table summarizes the Notes and the carrying amount of our debt (in millions, except percentages):
Maturity Stated Interest RateEffective Interest
Rate December 31, 2023 December 31, 2022
August 2022 debt:
2027 Notes 2027 3.50% 3.63% $ 2,750 $ 2,750 
2032 Notes 2032 3.85% 3.92% 3,000 3,000 
2052 Notes 2052 4.45% 4.51% 2,750 2,750 
2062 Notes 2062 4.65% 4.71% 1,500 1,500 
May 2023 debt:
2028 Notes 2028 4.60% 4.68% 1,500 
2030 Notes 2030 4.80% 4.90% 1,000 
2033 Notes 2033 4.95% 5.00% 1,750 
2053 Notes 2053 5.60% 5.64% 2,500 
2063 Notes 2063 5.75% 5.79% 1,750 
Total face amount of long-term debt 18,500 10,000 
Unamortized discount and issuance costs, net (115) (77)
Long-term debt $ 18,385 $ 9,923 
Each series of the Notes in the table above rank equally with each other. Interest on the Notes is payable semi-annually in arrears. We may redeem the
Notes at any time, in whole or in part, at specified redemption prices. We are not subject to any financial covenants under the Notes. Interest expense, net of
capitalized interest, recognized on the debt was $420 million and $160 million for the years ended December 31, 2023 and 2022, respectively.


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The total estimated fair value of our outstanding debt was $18.48 billion and $8.63 billion as of December 31, 2023 and 2022, respectively. The fair
value was determined based on the closing trading price per $100 of the Notes and is categorized accordingly as Level 2 in the fair value hierarchy.
As of December 31, 2023, future principal payments for the Notes, by year, are as follows (in millions):
2024 through 2026 $ — 
2027 2,750 
2028 1,500 
Thereafter 14,250 
Total outstanding debt $ 18,500 
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Note 11. Liabilities
The components of accrued expenses and other current liabilities are as follows (in millions):
December 31,
2023 2022
Legal-related accruals $ 6,592 $ 4,795 
Accrued compensation and benefits 6,659 4,591 
Accrued property and equipment 2,213 2,921 
Accrued taxes 3,655 2,339 
Other current liabilities 5,506 4,906 
Accrued expenses and other current liabilities $ 24,625 $ 19,552 
_________________________
(1) Includes accruals for estim ated fines, settlements, or other losses in connection with legal and related matters, as well as other legal fees. For further information, see Legal
and Related Matters  in Note 12 — Commitments and Contingencies.
The components of other liabilities are as follows (in millions):
December 31,
2023 2022
Income tax payable, non-current $ 7,514 $ 6,645 
Other non-current liabilities 1,370 1,119 
Other liabilities $ 8,884 $ 7,764 
Note 12. Commitments and Contingencies
Contractual Commitments
We have $16.49 billion of non-cancelable contractual commitments as of December 31, 2023, which are primarily related to our investments in servers,
network infrastructure, and consumer hardware products in Reality Labs. The following is a schedule, by years, of non-cancelable contractual commitments as
of December 31, 2023 (in millions):
2024 $ 12,105 
2025 1,152 
2026 417 
2027 218 
2028 127 
Thereafter 2,470 
Total $ 16,489 
Additionally, as part of the normal course of business, we have entered into multi-year agreements to purchase renewable energy that do not specify a
fixed or minimum volume commitment or to purchase certain server components that do not specify a fixed or minimum price commitment. We enter into
these agreements in order to secure either volume or price. Using the expected volume consumption, the total estimated spend related to our renewable energy


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agreements as of December 31, 2023 is approximately $15.12 billion, a majority of which is due beyond five years. The ultimate spend under these agreements
may vary and will be based on actual volume purchased.(1)
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Legal and Related Matters
With respect to the cases, actions, and inquiries described below, we evaluate the associated developments on a regular basis and accrue a liability when
we believe a loss is probable and the amount can be reasonably estimated. In addition, we believe there is a reasonable possibility that we may incur a loss in
some of these matters. With respect to the matters described below that do not include an estimate of the amount of loss or range of possible loss, such losses or
range of possible losses either cannot be estimated or are not individually material, but we believe there is a reasonable possibility that they may be material in
the aggregate.
We are also party to various other legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary
course of business. Additionally, we are required to comply with various legal and regulatory obligations around the world. The requirements for complying
with these obligations may be uncertain and subject to interpretation and enforcement by regulatory and other authorities, and any failure to comply with such
obligations could eventually lead to asserted legal or regulatory action. With respect to these other legal proceedings, claims, regulatory, tax, or government
inquiries and investigations, and other matters, asserted and unasserted, we evaluate the associated developments on a regular basis and accrue a liability when
we believe a loss is probable and the amount can be reasonably estimated. In addition, we believe there is a reasonable possibility that we may incur a loss in
some of these other matters. We believe that the amount of losses or any estimable range of possible losses with respect to these other matters will not, either
individually or in the aggregate, have a material adverse effect on our business and consolidated financial statements.
The ultimate outcome of the legal and related matters described in this section, such as whether the likelihood of loss is remote, reasonably possible, or
probable, or if and when the reasonably possible range of loss is estimable, is inherently uncertain. Therefore, if one or more of these matters were resolved
against us for amounts in excess of management's estimates of loss, our results of operations and financial condition, including in a particular reporting period
in which any such outcome becomes probable and estimable, could be materially adversely affected.
For information regarding income tax contingencies, see Note 15 — Income Taxes.
Privacy and Related Matters


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Privacy and Related Matters
Beginning on March 20, 2018, multiple putative class actions were filed in state and federal courts in the United States and elsewhere against us and
certain of our directors and officers alleging various causes of action in connection with our platform and user data practices as well as the misuse of certain
data by a developer that shared such data with third parties in violation of our terms and policies, and seeking unspecified damages and injunctive relief. With
respect to the putative class actions alleging fraud and violations of consumer protection, privacy, and other laws in connection with the same matters, several
of the cases brought on behalf of consumers in the United States were consolidated in the U.S. District Court for the Northern District of California (In re
Facebook, Inc., Consumer Privacy User Profile Litigation). On September 9, 2019, the court granted, in part, and denied, in part, our motion to dismiss the
consolidated putative consumer class action. On December 22, 2022, the parties entered into a settlement agreement to resolve the lawsuit, which provides for
a payment of $725 million by us. The settlement was approved by the court on October 10, 2023, and the payment was made in November 2023. In addition,
our platform and user data practices, as well as the events surrounding the misuse of certain data by a developer, became the subject of U.S. Federal Trade
Commission (FTC), state attorneys general, and other government inquiries in the United States, Europe, and other jurisdictions. We entered into a settlement
and modified consent order to resolve the FTC inquiry, which took effect in April 2020. Among other matters, our settlement with the FTC required us to pay a
penalty of $5.0 billion which was paid in April 2020 upon the effectiveness of the modified consent order. The state attorneys general inquiry and certain
government inquiries in other jurisdictions remain ongoing. On July 16, 2021, a stockholder derivative action was filed in Delaware Court of Chancery against
certain of our directors and officers asserting breach of fiduciary duty and related claims relating to our historical platform and user data practices, as well as
our settlement with the FTC. On July 20, 2021, other stockholders filed an amended derivative complaint in a related Delaware Chancery Court action,


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asserting breach of fiduciary duty and related claims against certain of our current and former directors and officers in connection with our historical platform
and user data practices. On November 4, 2021, the lead plaintiffs filed a second amended and consolidated complaint in the stockholder derivative action. The
pending consolidated matter is In re Facebook Inc. Derivative Litigation. On January 19, 2022, we filed a motion to dismiss, which was denied in part on May
10, 2023. The insider trading claim was dismissed as to all defendants except Mark Zuckerberg, and the motion was denied as to the breach of fiduciary duty
claims.
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On May 3, 2023, the FTC filed a public administrative proceeding (In the Matter of Facebook, Inc.) seeking substantial changes to the modified consent
order, which took effect in April 2020 after its entry by the U.S. District Court for the District of Columbia. The changes sought by the FTC are set forth in a
proposed order and include, among others, a prohibition on our use of minors' data for any commercial purposes, changes to the composition of our board of
directors, and significant limitations on our ability to modify and launch new products. On May 31, 2023, we filed a motion before the U.S. District Court for
the District of Columbia (USA v. Facebook, Inc.) seeking to enjoin the FTC from further pursuing its agency process to modify the modified consent order. On
November 27, 2023, the district court denied our motion, and we have appealed to the U.S. Court of Appeals for the District of Columbia Circuit (U.S. v.
Facebook, Inc.) and sought to stay the FTC proceeding pending resolution of the appeal. On January 12, 2024, the district court denied our motion for a stay
pending appeal and, on January 25, 2024, we filed a motion for a stay pending appeal before the Court of Appeals. On November 29, 2023, we separately filed
a complaint, also in the U.S. District Court for the District of Columbia (Meta Platforms, Inc. v. FTC), asserting constitutional challenges to the structure of the
FTC, and seeking to preliminarily enjoin the FTC proceeding during the pendency of the litigation. On December 13, 2023, the FTC filed an opposition to our
motion for preliminary injunction and a motion to dismiss the complaint. Oral argument on our motion to enjoin and the FTC’s motion to dismiss is scheduled
for March 1, 2024. If the FTC proceeding is not enjoined or stayed, our response in the proceeding will be due on March 15, 2024, after which time the FTC
could amend the order to impose these additional requirements set forth in the proposed order. We should have the opportunity to appeal an FTC decision
modifying the order and could request the appellate court to stay the enforcement of the modifications to the order while the appeal is pending. It is unclear
whether the appeal or the request for a stay would be successful.


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whether the appeal or the request for a stay would be successful.
We also notify the Irish Data Protection Commission (IDPC), our lead European Union privacy regulator under the General Data Protection Regulation
(GDPR), of certain other personal data breaches and privacy issues, and are subject to inquiries and investigations by the IDPC and other European regulators
regarding various aspects of our regulatory compliance. For example, on May 12, 2023, the IDPC issued a Final Decision concluding that Meta Platforms
Ireland's reliance on Standard Contractual Clauses in respect of certain transfers of European Economic Area (EEA) Facebook user data was not in compliance
with the GDPR. The IDPC issued an administrative fine of EUR €1.2 billion as well as corrective orders, which is described further in "Legal Proceedings"
contained in Part I, Item 3 of this Annual Report on Form 10-K. The interpretation of the GDPR is still evolving, including through decisions of the Court of
Justice of the European Union, and draft decisions in investigations by the IDPC are subject to review by other European privacy regulators as part of the
GDPR's cooperation and consistency mechanisms, which may lead to significant changes in the final outcome of such investigations. As a result, the
interpretation and enforcement of the GDPR, as well as the imposition and amount of penalties for non-compliance, are subject to significant uncertainty.
Although we are vigorously defending our regulatory compliance, we have accrued significant amounts for loss contingencies related to these inquiries and
investigations in Europe, and we believe there is a reasonable possibility that additional accruals for losses related to these matters could be material
individually or in the aggregate.
On February 14, 2022, the State of Texas filed a lawsuit against us in Texas state court (Texas v. Meta Platforms, Inc.) alleging that "tag suggestions" and
other uses of facial recognition technology violated the Texas Capture or Use of Biometric Identifiers Act and the Texas Deceptive Trade Practices-Consumer
Protection Act, and seeking statutory damages and injunctive relief. The case is currently scheduled for trial in June 2024.
Beginning on June 7, 2021, multiple putative class actions were filed against us alleging that we improperly received individuals' information from
third-party websites or apps via our business tools in violation of our terms and various state and federal laws and seeking unspecified damages and injunctive


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relief (for example, In re Meta Pixel Healthcare Litigation; In re Meta Pixel Tax Filing Cases; Frasco v. Flo Health, Inc.; Doe v. Hey Favor, Inc. et al.; Doe v.
GoodRx Holdings, Inc. et al. in the U.S. District Court for the Northern District of California; and Rickwalder, et al. v. Meta Platforms, Inc. in the California
Supreme Court).
Competition
We are subject to various litigation and government inquiries and investigations, formal or informal, by competition authorities in the United States,
Europe, and other jurisdictions. Such investigations, inquiries, and lawsuits concern, among other things, our business practices in the areas of social
networking or social media services, digital advertising, and/or mobile or online applications, as well as our acquisitions. For example, in 2019 we became the
subject of antitrust investigations by the FTC, and U.S. Department of Justice. On December 9, 2020, the FTC filed a complaint (FTC v. Meta Platforms, Inc.)
against us in the U.S. District Court for the District of Columbia alleging that we engaged in anticompetitive conduct and unfair methods of competition in
violation of Section 5 of the Federal Trade Commission Act and Section 2 of
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the Sherman Act, including by acquiring Instagram in 2012 and WhatsApp in 2014 and by maintaining conditions on access to our platform. The FTC sought a
permanent injunction against our company's alleged violations of the antitrust laws, and other equitable relief, including divestiture or reconstruction of
Instagram and WhatsApp. On June 28, 2021, the court granted our motion to dismiss the complaint filed by the FTC with leave to amend. On August 19, 2021,
the FTC filed an amended complaint, and on October 4, 2021, we filed a motion to dismiss this amended complaint. On January 11, 2022, the court denied our
motion to dismiss the FTC's amended complaint. Multiple putative class actions have also been filed in state and federal courts in the United States and in the
United Kingdom against us alleging violations of antitrust laws and other causes of action in connection with these acquisitions and/or other alleged
anticompetitive conduct, and seeking damages and injunctive relief. Several of the cases brought on behalf of certain advertisers and users in the United States
were consolidated in the U.S. District Court for the Northern District of California (Klein et al., v. Meta Platforms, Inc.). On January 14, 2022, the court
granted, in part, and denied, in part, our motion to dismiss the consolidated actions. On March 1, 2022, a first amended consolidated complaint was filed in the
putative class action brought on behalf of certain advertisers. On December 6, 2022, the court denied our motion to dismiss the first amended consolidated
complaint filed in the putative class action brought on behalf of certain advertisers. In December 2022, the European Commission issued a Statement of
Objections alleging that we tie Facebook Marketplace to Facebook and use data in a manner that infringes European Union competition rules.
Securities and Other Actions
Beginning on March 20, 2018, multiple putative class actions and derivative actions were filed in state and federal courts in the United States and
elsewhere against us and certain of our directors and officers alleging violations of securities laws, breach of fiduciary duties, and other causes of action in
connection with our platform and user data practices as well as the misuse of certain data by a developer that shared such data with third parties in violation of


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our terms and policies, and seeking unspecified damages and injunctive relief. Beginning on July 27, 2018, two putative class actions were filed in federal court
in the United States against us and certain of our directors and officers alleging violations of securities laws in connection with the disclosure of our earnings
results for the second quarter of 2018 and seeking unspecified damages. These two actions subsequently were transferred and consolidated in the U.S. District
Court for the Northern District of California (In Re Facebook, Inc. Securities Litigation) with the putative securities class action described above relating to our
platform and user data practices. In a series of orders in 2019 and 2020, the district court granted our motions to dismiss the plaintiffs' claims. On January 17,
2022, the plaintiffs filed a notice of appeal of the order dismissing their case, and on October 18, 2023, the U.S. Court of Appeals for the Ninth Circuit issued
its decision affirming in part and reversing in part the district court's order dismissing the plaintiffs' case.
We are also subject to other government inquiries and investigations relating to our business activities and disclosure practices. For example, beginning
in September 2021, we became subject to government investigations and requests relating to a former employee's allegations and release of internal company
documents concerning, among other things, our algorithms, advertising and user metrics, and content enforcement practices, as well as misinformation and
other undesirable activity on our platform, and user well-being. We have since received additional requests relating to these and other topics. Beginning on
October 27, 2021, multiple putative class actions and derivative actions were filed in the U.S. District Court for the Northern District of California against us
and certain of our directors and officers alleging violations of securities laws, breach of fiduciary duties, and other causes of action in connection with the same
matters, and seeking unspecified damages. Ohio Pub. Empl. Ret. Sys. v. Meta Platforms, Inc.
On March 8, 2022, a putative class action was filed in the U.S. District Court for the Northern District of California against us and certain of our
directors and officers alleging violations of securities laws in connection with the disclosure of our earnings results for the fourth quarter of 2021 and seeking


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unspecified damages (Plumbers & Steamfitters Local 60 Pension Trust v. Meta Platforms, Inc.). On July 18, 2023, the court dismissed the claims against Meta
and its officers with leave to amend. On September 18, 2023, the plaintiffs filed an amended complaint.
Youth-Related Actions
Beginning in January 2022, we became subject to litigation and other proceedings that were filed in various federal and state courts alleging that
Facebook and Instagram cause "social media addiction" in users, with most proceedings focused on those under 18 years old, resulting in various mental health
and other harms. Putative class actions have been filed in the United States and Canada on behalf of users in those jurisdictions, and numerous school districts,
municipalities, and one state in the United States have filed public nuisance claims based on similar allegations. On October 6, 2022, the federal cases were
centralized in the U.S. District Court for the Northern District of California (In re Social Media Adolescent
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Addiction Product Liability Personal Injury Litigation). On October 13, 2023, in In re Social Media Cases, the Los Angeles County Superior Court presiding
over the California state court proceedings sustained in part and overruled in part our demurrer as to the plaintiff's claims. Beginning in October 2023,
additional U.S. states have filed lawsuits on these topics in various federal and state courts. These additional lawsuits include allegations regarding violations of
the Children's Online Privacy Protection Act (COPPA) as well as violations of state laws concerning consumer protection, unfair business practices, and
products liability, with proceedings focused on our alleged business practices and harms to users under 18 years old. These lawsuits seek damages and
injunctive relief, and include cases filed by various state attorneys general in In re Social Media Adolescent Addiction Product Liability Personal Injury
Litigation in the U.S. District Court for the Northern District of California, as well as various state courts around the country. We are also subject to government
investigations and requests from multiple regulators concerning the use of our products, and the alleged mental and physical health and safety impacts on users,
particularly younger users.
Other Actions
Beginning on August 15, 2018, multiple putative class actions were filed against us alleging that we inflated our estimates of the potential audience size
for advertisements, resulting in artificially increased demand and higher prices. The cases were consolidated in the U.S. District Court for the Northern District
of California (DZ Reserve v. Facebook, Inc.) and seek unspecified damages and injunctive relief. In a series of rulings in 2019, 2021, and 2022, the court
dismissed certain of the plaintiffs' claims, but permitted their fraud and unfair competition claims to proceed. On March 29, 2022, the court granted the
plaintiffs' motion for class certification. On June 21, 2022, the U.S. Court of Appeals for the Ninth Circuit granted our petition for permission to appeal the
district court's class certification order, and the court heard argument on September 12, 2023. The case is stayed in the district court pending appeal.
Beginning on July 7, 2023, multiple putative class actions were filed against us in the U.S. District Court for the Northern District of California (Kadrey,


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et al. v. Meta Platforms, Inc. and Chabon, et al. v. Meta Platforms, Inc.) and U.S. District Court for the Southern District of New York (Huckabee, et al. v. Meta
Platforms, Inc. et al.), which was subsequently transferred to the U.S. District Court for the Northern District of California) alleging that we used various
copyrighted books and materials to train our artificial intelligence models, and seeking unspecified damages and injunctive relief.
In addition, we are subject to litigation and other proceedings involving law enforcement and other regulatory agencies, including in particular in Brazil,
Russia, and other countries in Europe, in order to ascertain the precise scope of our legal obligations to comply with the requests of those agencies, including
our obligation to disclose user information in particular circumstances. A number of such instances have resulted in the assessment of fines and penalties
against us. We believe we have multiple legal grounds to satisfy these requests or prevail against associated fines and penalties, and we intend to vigorously
defend such fines and penalties.
Indemnifications
In the normal course of business, to facilitate transactions of services and products, we have agreed to indemnify certain parties with respect to certain
matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property
infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of
the claim. In addition, we have entered into indemnification agreements with our officers, directors, and certain employees, and our certificate of incorporation
and bylaws contain similar indemnification obligations.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification
claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a
material impact on our consolidated financial statements. In our opinion, as of December 31, 2023, there was not a reasonable possibility we had incurred a
material loss with respect to indemnification of such parties. We have not recorded any liability for costs related to indemnification through December 31,
2023.
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Note 13. Stockholders' Equity
Common Stock
Our certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of December 31, 2023, we are
authorized to issue 5,000 million shares of Class A common stock and 4,141 million shares of Class B common stock, each with a par value of $0.000006 per
share. Holders of our Class A common stock and Class B common stock are entitled to dividends when, as, and if declared by our board of directors, subject to
the rights of the holders of all classes of stock outstanding having priority rights to dividends. The holder of each share of Class A common stock is entitled to
one vote, while the holder of each share of Class B common stock is entitled to ten votes. Shares of our Class B common stock are convertible into an
equivalent number of shares of our Class A common stock and generally convert into shares of our Class A common stock upon transfer. Class A common
stock and Class B common stock are collectively referred to as common stock throughout the notes to these financial statements, unless otherwise noted.
As of December 31, 2023, there were 2,211 million shares of Class A common stock and 350 million shares of Class B common stock issued and
outstanding.
Capital Return Program
Share Repurchase
Our board of directors has authorized a share repurchase program of our Class A common stock, which commenced in January 2017 and does not have
an expiration date. As of December 31, 2022, $10.87 billion remained available and authorized for repurchases under this program. In January 2023, an
additional $40 billion of repurchases was authorized under this program. In 2023, we repurchased and subsequently retired 92 million shares of our Class A
common stock for an aggregate amount of $20.03 billion, which includes the 1% excise tax accruals as a result of the Inflation Reduction Act of 2022. As of
December 31, 2023, $30.93 billion remained available and authorized for repurchases. In January 2024, an additional $50 billion of repurchases was authorized
under this program.
The timing and actual number of shares repurchased under the repurchase program depend on a variety of factors, including price, general business and


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market conditions, and other investment opportunities. Shares may be repurchased through open market purchases or privately negotiated transactions,
including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
Dividend
On February 1, 2024, we announced the initiation of our first ever cash dividend program. This cash dividend of $0.50 per share of common stock is
equivalent to $2.00 per share on an annual basis. The first cash dividend will be paid on March 26, 2024 to all holders of record of common stock at the close
of business on February 22, 2024.
Subject to legally available funds and future declaration by our board of directors, we currently intend to continue to pay a quarterly cash dividend on
our outstanding common stock. The declaration and payment of future dividends is at the sole discretion of our board of directors after taking into account
various factors, including our financial condition, operating results, available cash, and current and anticipated cash needs.
Share-based Compensation Plan
We have one active share-based employee compensation plan, the 2012 Equity Incentive Plan (Amended 2012 Plan), which was amended in each of
June 2016, February 2018, and December 2022. Our Amended 2012 Plan provides for the issuance of incentive and nonqualified stock options, restricted stock
awards, stock appreciation rights, RSUs, performance shares, and stock bonuses to qualified employees, directors, and consultants. Shares that are withheld in
connection with the net settlement of RSUs or forfeited are added to the reserves of the Amended 2012 Plan.
On March 1, 2023, the number of shares available for issuance under the Amended 2012 Plan increased by 425 million shares pursuant to the December
2022 amendment. As of December 31, 2023, there were 494 million shares of our Class A common stock reserved for future issuance under our Amended 2012
Plan.
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The following table summarizes our share-based compensation expense, which consists of the RSU expense, by line item in our consolidated statements
of income (in millions):
Year Ended December 31, 
2023 2022 2021
Cost of revenue $ 740 $ 768 $ 577 
Research and development 11,429 9,361 7,106 
Marketing and sales 952 1,004 837 
General and administrative 906 859 644 
Total share-based compensation expense $ 14,027 $ 11,992 $ 9,164 
The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2023:
Number of SharesWeighted-Average Grant
Date Fair Value Per
Share
(in thousands)
Unvested at December 31, 2022 127,110 $ 216.93 
Granted 112,066 $ 202.46 
Vested (65,402)$ 210.74 
Forfeited (24,712)$ 210.39 
Unvested at December 31, 2023 149,062 $ 209.85 
The weighted-average grant date fair value of RSUs granted in the years ended December 31, 2022 and 2021 was $195.66 and $305.40, respectively.
The fair value as of the respective vesting dates of RSUs that vested during the years ended December 31, 2023, 2022, and 2021 was $17.46 billion,
$9.44 billion, and $14.42 billion, respectively. The income tax benefit recognized related to awards vested during the years ended December 31, 2023, 2022,
and 2021 was $3.65 billion, $2.00 billion, and $3.08 billion, respectively.
As of December 31, 2023, there was $29.46 billion of unrecognized share-based compensation expense related to RSU awards. This unrecognized
compensation expense is expected to be recognized over a weighted-average period of approximately three years based on vesting under the award service
conditions.
Note 14. Interest and Other Income (Expense), Net
The following table presents the detail of interest and other income (expense), net (in millions):
Year Ended December 31,


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Year Ended December 31,
2023 2022 2021
Interest income $ 1,639 $ 461 $ 484 
Interest expense (446) (185) (23)
Foreign currency exchange losses, net (366) (81) (140)
Other income (expense), net (150) (320) 210 
Interest and other income (expense), net $ 677 $ (125)$ 531 
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Note 15. Income Taxes
The components of income before provision for income taxes are as follows (in millions):
 Year Ended December 31, 
 2023 2022 2021
Domestic $ 43,499 $ 25,025 $ 43,669 
Foreign 3,929 3,794 3,615 
Income before provision for income taxes $ 47,428 $ 28,819 $ 47,284 
The provision for income taxes consists of the following (in millions):
 Year Ended December 31, 
 2023 2022 2021
Current:    
Federal $ 4,934 $ 6,094 $ 4,971 
State 577 874 548 
Foreign 2,688 1,928 1,786 
Total current tax expense 8,199 8,896 7,305 
Deferred:    
Federal 67 (2,776) 585 
State 123 (405) 43 
Foreign (59) (96) (19)
Total deferred tax (benefits)/expense 131 (3,277) 609 
Provision for income taxes $ 8,330 $ 5,619 $ 7,914 
 
A reconciliation of the U.S. federal statutory income tax rates to our effective tax rate is as follows (in percentages):
 Year Ended December 31, 
 2023 2022 2021
U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 %
State income taxes, net of federal benefit 1.1 1.0 1.0 
Share-based compensation (0.6) 2.6 (1.7)
Research and development tax credits (1.5) (2.4) (1.3)
Foreign-derived intangible income deduction (4.3) (7.0) (3.5)
Effect of non-U.S. operations 0.9 3.0 0.9 
Other 1.0 1.3 0.3 
Effective tax rate 17.6 % 19.5 % 16.7 %
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Our deferred tax assets (liabilities) are as follows (in millions):
 December 31, 
 2023 2022
Deferred tax assets:   
Loss carryforwards $ 353 $ 234 
Tax credit carryforwards 2,028 1,576 
Share-based compensation 459 368 
Accrued expenses and other liabilities 2,168 1,627 
Lease liabilities 3,752 3,200 
Capitalized research and development 9,292 8,175 
Unrealized losses in securities and investments 232 489 
Other 487 621 
Total deferred tax assets 18,771 16,290 
Less: valuation allowance (2,879) (2,493)
Deferred tax assets, net of valuation allowance 15,892 13,797 
Deferred tax liabilities:   
Depreciation and amortization (8,320) (6,296)
Right-of-use assets (2,708) (2,555)
Total deferred tax liabilities (11,028) (8,851)
Net deferred tax assets $ 4,864 $ 4,946 
The valuation allowance was approximately $2.88 billion and $2.49 billion as of December 31, 2023 and 2022, respectively, primarily related to U.S.
state tax credit carryforwards, U.S. foreign tax credits, unrealized losses in marketable securities, and certain foreign tax attributes for which we do not believe
a tax benefit is more likely than not to be realized.
As of December 31, 2023, the U.S. federal and state net operating loss carryforwards were $200 million and $2.78 billion, which will begin to expire in
2035 and 2031, respectively, if not utilized. We have federal tax credit carryforwards of $490 million, which will begin to expire in 2029, if not utilized, and
state tax credit carryforwards of $4.08 billion, most of which do not expire.
Utilization of our net operating loss and tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations
provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating loss and tax


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credit carryforwards before their utilization. The events that may cause ownership changes include, but are not limited to, a cumulative stock ownership change
of greater than 50% over a three‑year period.
The following table reflects changes in the gross unrecognized tax benefits (in millions):
 Year Ended December 31, 
 2023 2022 2021
Gross unrecognized tax benefits ‑ beginning of period $ 10,757 $ 9,807 $ 8,692 
Increases related to prior year tax positions 168 210 328 
Decreases related to prior year tax positions (264) (172) (86)
Increases related to current year tax positions 1,204 1,166 963 
Decreases related to settlements of prior year tax positions (199) (254) (90)
Gross unrecognized tax benefits ‑ end of period $ 11,666 $ 10,757 $ 9,807 
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These unrecognized tax benefits were primarily accrued for the uncertainties related to transfer pricing with our foreign subsidiaries, which include
licensing of intellectual property, providing services and other transactions, as well as for the uncertainties with our research tax credits. During all years
presented, we recognized interest and penalties related to unrecognized tax benefits within the provision for income taxes on our consolidated statements of
income. The amount of interest and penalties accrued as of December 31, 2023, 2022, and 2021 were $1.48 billion, $1.07 billion, and $960 million
respectively.
If our gross unrecognized tax benefits of $11.67 billion as of December 31, 2023 were realized in a future period, this would result in a tax benefit of
$7.33 billion within our provision of income taxes at such time.
We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to
potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service (IRS) for our 2017 through 2019 tax
years. Our 2014 through 2016 tax years are with the IRS Independent Office of Appeals for certain unresolved issues. Our 2020 and subsequent tax years
remain open to examination by the IRS and the Irish Revenue Commissioners.
In July 2016, we received a Statutory Notice of Deficiency (Notice) from the IRS related to transfer pricing with our foreign subsidiaries in conjunction
with the examination of the 2010 tax year. While the Notice applies only to the 2010 tax year, the IRS stated that it will also apply its position for tax years
subsequent to 2010 and has done so in years covered by the second Notice described below. We do not agree with the position of the IRS and have filed a
petition in the Tax Court challenging the Notice. On January 15, 2020, the IRS's amendment to answer was filed stating that it planned to assert at trial an
adjustment that is higher than the adjustment stated in the Notice. The first session of the trial was completed in March 2020 and the final trial session was
completed in August 2022. We expect the Tax Court to issue an opinion in 2024. Based on the information provided, we believe that, if the IRS prevails in its


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updated position, this could result in an additional federal tax liability of an estimated, aggregate amount of up to approximately $9.0 billion in excess of the
amounts in our originally filed U.S. return, plus interest and any penalties asserted.
In March 2018, we received a second Notice from the IRS in conjunction with the examination of our 2011 through 2013 tax years. The IRS applied its
position from the 2010 tax year to each of these years and also proposed new adjustments related to other transfer pricing with our foreign subsidiaries and
certain tax credits that we claimed. If the IRS prevails in its position for these new adjustments, this could result in an additional federal tax liability of up to
approximately $680 million in excess of the amounts in our originally filed U.S. returns, plus interest and any penalties asserted. We do not agree with the
positions of the IRS in the second Notice and have filed a petition in the Tax Court challenging the second Notice.
We have previously accrued an estimated unrecognized tax benefit consistent with the guidance in ASC 740, Income Taxes (ASC 740), that is lower than
the potential additional federal tax liability from the positions taken by the IRS in the two Notices and its Pretrial Memorandum. In addition, if the IRS prevails
in its positions related to transfer pricing with our foreign subsidiaries, the additional tax that we would owe would be partially offset by a reduction in the tax
that we owe under the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act. As of December 31, 2023, we have not
resolved these matters and proceedings continue in the Tax Court.
We believe that adequate amounts have been reserved in accordance with ASC 740 for any adjustments to the provision for income taxes or other tax
items that may ultimately result from these examinations. The timing of the resolution, settlement, and closure of any audits is highly uncertain, and it is
reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. Given the number of years remaining
that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. If the tax
authorities prevail in the assessment of additional tax due, the assessed tax, interest, and penalties, if any, could have a material adverse impact on our financial
position, results of operations, and cash flows.
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Note 16. Segment and Geographical Information
We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram,
Messenger, WhatsApp, and other services. RL includes our augmented, mixed and virtual reality related consumer hardware, software, and content. Our
operating segments are the same as our reportable segments.
Our chief executive officer is our chief operating decision maker (CODM), who allocates resources to and assesses the performance of each operating
segment using information about the operating segment's revenue and income (loss) from operations. Our CODM does not evaluate operating segments using
asset or liability information.
Revenue and costs and expenses are generally directly attributed to our segments. These costs and expenses include certain product development related
operating expenses, costs associated with partnership arrangements, consumer hardware product costs, content costs, legal-related costs, and severance costs.
Indirect costs are allocated to segments based on a reasonable allocation methodology, when such costs are significant to the performance measures of the
operating segments. Indirect cost of revenue is allocated to our segments based on usage, such as costs related to the operation of our data centers and technical
infrastructure. Indirect operating expenses, such as facilities, information technology, certain shared research and development activities, recruiting, physical
security expenses, and certain restructuring costs, are mostly allocated based on headcount.
The following table sets forth our segment information of revenue and income (loss) from operations (in millions):
 Year Ended December 31, 
 2023 2022 2021
Revenue:
Family of Apps $ 133,006 $ 114,450 $ 115,655 
Reality Labs 1,896 2,159 2,274 
Total revenue $ 134,902 $ 116,609 $ 117,929 
Income (loss) from operations:
Family of Apps $ 62,871 $ 42,661 $ 56,946 
Reality Labs (16,120) (13,717) (10,193)
Total income from operations $ 46,751 $ 28,944 $ 46,753 
For information regarding revenue disaggregated by geography, see Note 2 — Revenue.
The following table sets forth our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use


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assets (in millions):
 December 31,
 2023 2022
United States $ 91,940 $ 76,334 
Rest of the world 17,941 15,857 
Total long-lived assets $ 109,881 $ 92,191 
_________________________
(1) No individual country , other than disclosed above, exceeded 10% of our total long-lived assets for any period presented.(1)
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Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer (CEO) and chief financial officer (CFO), has evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as
of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our CEO and CFO have concluded that as of December 31,
2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we
are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods
specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management,
including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the
assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2023 to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Our independent registered public
accounting firm, Ernst & Young LLP, has issued an audit report with respect to our internal control over financial reporting, which appears in Part II, Item 8 of
this Annual Report on Form 10-K.
Changes in Internal Control
There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of
the Exchange Act during the fourth quarter of 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial


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reporting.
Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In
addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints
and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Item 9B.Other Information
Rule 10b5-1 Trading Plans
On November 30, 2023, Jennifer Newstead, our Chief Legal Officer, entered into a trading plan intended to satisfy the affirmative defense conditions of
Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. The trading plan provides for the sale of an aggregate of 10,968 shares of our Class A
common stock and all shares received during the duration of the plan pursuant to Ms. Newstead's outstanding equity awards and any future equity award
grants, excluding any shares withheld by the company to satisfy its income tax withholding and remittance obligations in connection with the net settlement of
the equity awards. The plan will terminate on May 13, 2025, subject to early termination for certain specified events set forth in the plan.
Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
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PART III
Item 10.Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with
the SEC within 120 days of the fiscal year ended December 31, 2023.
Our board of directors has adopted a Code of Conduct applicable to all officers, directors, and employees, which is available on our website
(investor.fb.com) under "Leadership & Governance." We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or
waiver from, a provision of our Code of Conduct by posting such information on the website address and location specified above.
Item 11.Executive Compensation
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with
the SEC within 120 days of the fiscal year ended December 31, 2023.
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with
the SEC within 120 days of the fiscal year ended December 31, 2023.
Item 13.Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with
the SEC within 120 days of the fiscal year ended December 31, 2023.
Item 14.Principal Accountant Fees and Services
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with
the SEC within 120 days of the fiscal year ended December 31, 2023.
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PART IV
Item 15. Exhibit and Financial Statement Schedules
We have filed the following documents as part of this Form 10-K:
1. Consolidated Financial Statements:
Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 42) 85
Consolidated Balance Sheets 89
Consolidated Statements of Income 90
Consolidated Statements of Comprehensive Income 91
Consolidated Statements of Stockholders' Equity 92
Consolidated Statements of Cash Flows 93
Notes to Consolidated Financial Statements 95
    
2. Financial Statement Schedules
All schedules have been omitted because they are not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the
required information is otherwise included.
3. Exhibits
Exhibit Incorporated by ReferenceFiled
Herewith Number Exhibit Description Form File No. Exhibit Filing Date
3.1 Amended and Restated Certificate of Incorporation. 8-K 001-35551 3.1 October 28, 2021
3.2 Amended and Restated Bylaws. 8-K 001-35551 3.2 October 28, 2021
4.1 Form of Class A Common Stock Certificate. 10-K 001-35551 4.1 February 3, 2022
4.2 Form of Class B Common Stock Certificate. 10-K 001-35551 4.2 February 3, 2022
4.3 Indenture, dated as of August 9, 2022, between Meta
Platforms, Inc. and U.S. Bank Trust Company,
National Association, as trustee.8-K 001-35551 4.1 August 9, 2022
4.4 First Supplemental Indenture, dated as of August 9,
2022, between Meta Platforms, Inc. and U.S. Bank
Trust Company, National Association, as trustee.8-K 001-35551 4.2 August 9, 2022
4.5 Second Supplemental Indenture, dated as of May 3,
2023, by and between Meta Platforms, Inc. and U.S.
Bank Trust Company, National Association, as
trustee.8-K 001-35551 4.1 May 3, 2023


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4.6 Description of Registrant's Capital Stock. X
10.1+ Form of Indemnification Agreement. 8-K 001-35551 10.1 April 15, 2019
10.2(A)+ 2012 Equity Incentive Plan, as amended. 10-K 001-35551 10.2(A) February 2, 2023
10.2(B)+ Third Amendment to the 2012 Equity Incentive Plan.10-K 001-35551 10.2(B) February 2, 2023
10.2(C)+ 2012 Equity Incentive Plan forms of award
agreements.10-Q 001-35551 10.2 July 31, 2012
10.2(D)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.1 May 4, 2017
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Exhibit Incorporated by ReferenceFiled
Herewith Number Exhibit Description Form File No. Exhibit Filing Date
10.2(E)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.1 July 27, 2017
10.2(F)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.2 April 26, 2018
10.2(G)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-K 001-35551 10.3(G) January 31, 2019
10.2(H)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.2 April 25, 2019
10.2(I)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.2 April 30, 2020
10.2(J)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.2 July 29, 2021
10.2(K)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.3 April 28, 2022
10.2(L)+ 2012 Equity Incentive Plan forms of award
agreements (Additional Forms).10-Q 001-35551 10.1 April 27, 2023
10.3+ Amended and Restated Bonus Plan, effective January
1, 2023.10-Q 001-35551 10.1 October 26, 2023
10.4+ Amended and Restated Offer Letter, dated January
27, 2012, between Registrant and Mark Zuckerberg.S-1 333-179287 10.6 February 8, 2012
10.5+ Offer Letter, dated June 5, 2020, between Registrant
and Christopher K. Cox.10-Q 001-35551 10.1 April 29, 2021
10.6+ Offer Letter, dated December 22, 2022, between


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Registrant and Javier Olivan.10-K 001-35551 10.8 February 2, 2023
10.7+ Offer Letter, dated March 14, 2022, between
Registrant and Andrew Bosworth.10-Q 001-35551 10.3 April 27, 2023
10.8+ Offer Letter, dated November 1, 2022, between
Registrant and Susan Li.10-Q 001-35551 10.4 April 27, 2023
10.9+ Form of Executive Officer Offer Letter. 10-Q 001-35551 10.3 July 25, 2019
10.10+ Director Compensation Policy, as amended. 10-Q 001-35551 10.5 April 27, 2023
10.11+ Deferred Compensation Plan for Non-Employee
Directors.10-K 001-35551 10.12 February 2, 2023
10.12+ Indemnification Agreement Relating to Subsidiary
Operations, dated March 14, 2021, between
Registrant and Mark Zuckerberg.10-Q 001-35551 10.2 April 29, 2021
21.1 List of Subsidiaries. X
23.1 Consent of Independent Registered Public
Accounting Firm.X
31.1 Certification of Mark Zuckerberg, Chief Executive
Officer, pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.X
31.2 Certification of Susan Li, Chief Financial Officer,
pursuant to Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.X
32.1# Certification of Mark Zuckerberg, Chief Executive
Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.X
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Exhibit Incorporated by ReferenceFiled
Herewith Number Exhibit Description Form File No. Exhibit Filing Date
32.2# Certification of Susan Li, Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.X
97.1 Compensation Recoupment Policy. X
101.INS Inline XBRL Instance Document (the instance
document does not appear in the Interactive Data File
because its XBRL tags are embedded within the
Inline XBRL document).X
101.SCH Inline XBRL Taxonomy Extension Schema
Document.X
101.CAL Inline XBRL Taxonomy Extension Calculation
Linkbase Document.X
101.DEF Inline XBRL Taxonomy Extension Definition
Linkbase Document.X
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase
Document.X
101.PRE Inline XBRL Taxonomy Extension Presentation
Linkbase Document.X
104 Cover Page Interactive Data File (formatted as inline
XBRL and contained in Exhibit 101).X
+ Indicates a management contract or compensatory plan.    
# This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise
subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Exchange Act.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Menlo Park, State of California, on this 1st day of February 2024.
META PLATFORMS, INC.
Date: February 1, 2024 /s/ Susan Li 
Susan Li
Chief Financial Officer
 
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Susan Li and Katherine R.
Kelly, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their
or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated: 
Signatur e Title Date
/s/ Mark Zuckerberg Board Chair and Chief Executive Officer
(Principal Executive Officer)February 1, 2024
Mark Zuckerberg
/s/ Susan Li Chief Financial Officer
(Principal Financial Officer)February 1, 2024
Susan Li
/S/ Aaron Anderson Chief Accounting Officer
(Principal Accounting Officer)February 1, 2024
Aaron Anderson
/s/ Peggy Alford Director February 1, 2024
Peggy Alford
/s/ Marc L. Andreessen Director February 1, 2024
Marc L. Andreessen
/s/ Andrew W. Houston Director February 1, 2024
Andrew W. Houston
/s/ Nancy Killefer Director February 1, 2024
Nancy Killefer
/s/ Robert M. Kimmitt Director February 1, 2024
Robert M. Kimmitt
/s/ Sheryl K. Sandberg Director February 1, 2024
Sheryl K. Sandberg


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Sheryl K. Sandberg
/s/ Tracey T. Travis Director February 1, 2024
Tracey T. Travis
/s/ Tony Xu Director February 1, 2024
Tony Xu
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EXHIBIT 4.6
DESCRIPTION OF CAPITAL STOCK
The following description of capital stock of Meta Platforms, Inc. (the “company,” “we,” “us” and “our”) summarizes certain provisions of our amended
and restated certificate of incorporation and our amended and restated bylaws. The description is intended as a summary, and is qualified in its entirety by
reference to our amended and restated certificate of incorporation and our amended and restated bylaws, copies of which have been filed as exhibits to this
Annual Report on Form 10-K.
Our authorized capital stock consists of 9,241,000,000 shares, consisting of: (i) 5,000,000,000 shares of Class A common stock, $0.000006 par value per
share; (ii) 4,141,000,000 shares of Class B common stock, $0.000006 par value per share; and (iii) 100,000,000 shares of preferred stock, $0.000006 par value
per share.
Common Stock
Dividend Rights
Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are
entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and only then at the times
and in the amounts that our board of directors may determine.
Voting Rights
The holders of our Class B common stock are entitled to ten votes per share, and holders of our Class A common stock are entitled to one vote per share.
The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by law. Delaware law could
require either holders of our Class A common stock or our Class B common stock to vote separately as a single class in the following circumstances:
•if we were to seek to amend our amended and restated certificate of incorporation to increase the authorized number of shares of a class of stock, or to
increase or decrease the par value of a class of stock, then that class would be required to vote separately to approve the proposed amendment; and
•if we were to seek to amend our amended and restated certificate of incorporation in a manner that alters or changes the powers, preferences or special


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rights of a class of stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed
amendment.
Stockholders do not have the ability to cumulate votes for the election of directors. Our amended and restated certificate of incorporation and amended and
restated bylaws provide for a classified board of directors consisting of three classes of approximately equal size, each serving staggered three-year terms,
when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of common stock. Our directors will be
assigned by the then-current board of directors to a class when the outstanding shares of our Class B common stock represent less than a majority of the
combined voting power of common stock.
No Preemptive or Similar Rights
Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.
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Right to Receive Liquidation Distributions
Upon our dissolution, liquidation or winding-up, the assets legally available for distribution to our stockholders are distributable ratably among the holders
of our common stock, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights and payment of liquidation preferences, if
any, on any outstanding shares of preferred stock.
Conversion
The outstanding shares of Class B common stock are convertible at any time as follows: (1) at the option of the holder, a share of Class B common stock
may be converted at any time into one share of Class A common stock or (2) upon the election of the holders of a majority of the then outstanding shares of
Class B common stock, all outstanding shares of Class B common stock may be converted into shares of Class A common stock. In addition, each share of
Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain
transfers described in our amended and restated certificate of incorporation, including transfers to family members, trusts solely for the benefit of the
stockholder or their family members, and partnerships, corporations, and other entities exclusively owned by the stockholder or their family members. Once
converted or transferred and converted into Class A common stock, the Class B common stock will not be reissued.
Preferred Stock
Subject to limitations prescribed by Delaware law, our board of directors is authorized to issue preferred stock in one or more series, to establish from time
to time the number of shares to be included in each series and to fix the designation, powers, preferences and rights of the shares of each series and any of its
qualifications, limitations or restrictions. Our board of directors also can increase or decrease the number of shares of any series, but not below the number of
shares of that series then outstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred
stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of
preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of
delaying, deferring or preventing a change in control of our company.
Anti-Takeover Provisions


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Anti-Takeover Provisions
So long as the outstanding shares of our Class B common stock represent a majority of the combined voting power of common stock, Mark Zuckerberg
will effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company, which will have
the effect of delaying, deferring or discouraging another person from acquiring control of our company.
After such time as the shares of our Class B common stock no longer represent a majority of the combined voting power of our common stock, the
provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws may have the effect of delaying,
deferring or discouraging another person from acquiring control of our company.
Delaware Law
A Delaware corporation may “opt out” of these provisions with an express provision in its original certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from a stockholders’ amendment approved by at least a majority of the outstanding voting shares. We have
expressly elected not to be governed by the business combination provisions of Section 203 of the Delaware General Corporation Law.
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Amended and Restated Certificate of Incorporation and Bylaw Provisions
Our amended and restated certificate of incorporation and our amended and restated bylaws include a number of provisions that may have the effect of
deterring hostile takeovers or delaying or preventing changes in control of our company, even after such time as the shares of our Class B common stock no
longer represent a majority of the combined voting power of our common stock, including the following:
•Separate Class B Vote for Certain Transactions. Any transaction that would result in a change in control of our company requires the approval of a
majority of our outstanding Class B common stock voting as a separate class until such time as shares of our Class B common stock represent less than
thirty-five percent (35%) of the combined voting power of our common stock. This provision could delay or prevent the approval of a change in control
that might otherwise be approved by a majority of outstanding shares of our Class A and Class B common stock voting together on a combined basis.
•Dual Class Stock. Our amended and restated certificate of incorporation provides for a dual class common stock structure, which provides Mark
Zuckerberg, our founder, Chairman, and CEO, with the ability to control the outcome of matters requiring stockholder approval, even if he owns
significantly less than a majority of the shares of our outstanding Class A and Class B common stock, including the election of directors and significant
corporate transactions, such as a merger or other sale of our company or its assets.
•Supermajority Approvals. Our amended and restated certificate of incorporation and amended and restated bylaws do not provide that certain
amendments to our amended and restated certificate of incorporation or amended and restated bylaws by stockholders will require the approval of two-
thirds of the combined vote of our then-outstanding shares of Class A and Class B common stock. However, when the outstanding shares of our Class B
common stock represent less than a majority of the combined voting power of common stock, certain amendments to our amended and restated certificate
of incorporation or amended and restated bylaws by stockholders will require the approval of two-thirds of the combined vote of our then-outstanding
shares of Class A and Class B common stock. This will have the effect of making it more difficult to amend our amended and restated certificate of
incorporation or amended and restated bylaws to remove or modify certain provisions.


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•Board of Directors Vacancies. Our amended and restated certificate of incorporation and amended and restated bylaws provide that stockholders may
fill vacant directorships. When the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of
common stock, our amended and restated certificate of incorporation and amended and restated bylaws authorize only our board of directors to fill vacant
directorships. In addition, the number of directors constituting our board of directors is set only by resolution adopted by a majority vote of our entire
board of directors. These provisions restricting the filling of vacancies will prevent a stockholder from increasing the size of our board of directors and
gaining control of our board of directors by filling the resulting vacancies with its own nominees.
•Classified Board. Our board of directors is not classified. Our amended and restated certificate of incorporation and amended and restated bylaws
provide that when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of common stock, our
board of directors will be classified into three classes of directors each of which will hold office for a three-year term. In addition, thereafter, directors may
only be removed from the board of directors for cause. The existence of a classified board could delay a successful tender offeror from obtaining majority
control of our board of directors, and the prospect of that delay might deter a potential offeror.
•Stockholder Action; Special Meeting of Stockholders. Our amended and restated certificate of incorporation provides that stockholders will be able to
take action by written consent. When the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of
common stock, our stockholders will no longer be able to take action by written consent, and will only be able to take action at annual or special meetings
of our stockholders. Stockholders will not be permitted to cumulate their votes for the election of directors. Our amended and restated bylaws further
provide that special meetings of our
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stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our president.
•Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our amended and restated bylaws provide advance notice
procedures for stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at any
meeting of stockholders. Our amended and restated bylaws also specify certain requirements regarding the form and content of a stockholder’s notice.
These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for
directors at our meetings of stockholders.
•Issuance of Undesignated Preferred Stock. Our board of directors has the authority, without further action by the stockholders, to issue up to
100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the board of
directors. The existence of authorized but unissued shares of preferred stock enables our board of directors to render more difficult or to discourage an
attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise.
Choice of Forum
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any
derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant
to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or any action asserting a
claim against us that is governed by the internal affairs doctrine.
Listing
Our Class A common stock is listed on the Nasdaq Global Select Market under the symbol “META.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.
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EXHIBIT 21.1
LIST OF SUBSIDIARIES
META PLATFORMS, INC.
Cassin Networks ApS (Denmark)
Edge Network Services Limited (Ireland)
Facebook Circularity, LLC (Delaware)
Facebook Holdings, LLC (Delaware)
Facebook India Online Services Private Limited (India)
Facebook Operations, LLC (Delaware)
Facebook Procurement LLC (Delaware)
Facebook Serviços Online Do Brasil Ltda. (Brazil)
Facebook UK Limited (United Kingdom)
FCL Tech Limited (Ireland)
Goldframe LLC (Delaware)
Greater Kudu LLC (Delaware)
Hibiscus Properties, LLC (Delaware)
Instagram, LLC (Delaware)
Malkoha Pte. Ltd. (Singapore)
Meta Payments Inc. (Florida)
Meta Platforms Ireland Limited (Ireland)
Meta Platforms Technologies, LLC (Delaware)
Morning Hornet LLC (Delaware)
Pinnacle Sweden AB (Sweden)
Raven Northbrook LLC (Delaware)
Redale LLC (Delaware)
Runways Information Services Limited (Ireland)
Scout Development, LLC (Delaware)
Siculus, Inc. (Delaware)
Sidecat LLC (Delaware)
Stadion LLC (Delaware)
Starbelt LLC (Delaware)
Vitesse, LLC (Delaware)
WhatsApp LLC (Delaware)
Winner LLC (Delaware)
Woolhawk LLC (Delaware)


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EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1)Registration Statement (Form S-8 No. 333-270184) pertaining to the 2012 Equity Incentive Plan of Meta Platforms, Inc.,
(2)Registration Statement (Form S-8 No. 333-262508) pertaining to the 2012 Equity Incentive Plan of Meta Platforms, Inc.,
(3)Registration Statement (Form S-8 No. 333-252518) pertaining to the 2012 Equity Incentive Plan of Meta Platforms, Inc.,
(4)Registration Statement (Form S-8 No. 333-236161) pertaining to the 2012 Equity Incentive Plan of Meta Platforms, Inc.,
(5)Registration Statement (Form S-8 No. 333-229457) pertaining to the 2012 Equity Incentive Plan of Meta Platforms, Inc.,
(6)Registration Statement (Form S-8 No. 333-222823) pertaining to the 2012 Equity Incentive Plan of Meta Platforms, Inc.,
(7)Registration Statement (Form S-8 No. 333-186402) pertaining to the 2012 Equity Incentive Plan of Meta Platforms, Inc.,
(8)Registration Statement (Form S-8 No. 333-181566) pertaining to the 2005 Officers’ Stock Plan, 2005 Stock Plan, and 2012 Equity Incentive Plan of
Meta Platforms, Inc., and
(9)Registration Statement (Form S-3 No. 333-271535) of Meta Platforms, Inc.
of our reports dated February 1, 2024, with respect to the consolidated financial statements of Meta Platforms, Inc. and the effectiveness of internal control
over financial reporting of Meta Platforms, Inc. included in this Annual Report (Form 10-K) of Meta Platforms, Inc. for the year ended December 31, 2023.
/s/ Ernst & Young LLP
San Mateo, California
February 1, 2024


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EXHIBIT 31.1
CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Mark Zuckerberg, certify that:
1. I have reviewed this annual report on Form 10-K of Meta Platforms, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and


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registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: February 1, 2024
/s/ MARK ZUCKERBERG
Mark Zuckerberg
Board Chair and Chief Executive Officer
(Principal Executive Officer)


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EXHIBIT 31.2
CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Susan Li, certify that:
1. I have reviewed this annual report on Form 10-K of Meta Platforms, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and


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registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: February 1, 2024
/s/ SUSAN LI
Susan Li
Chief Financial Officer
(Principal Financial Officer)


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EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Mark Zuckerberg, Board Chair and Chief Executive Officer of Meta Platforms, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
•the Annual Report on Form 10-K of the Company for the year ended December 31, 2023 (Report) fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
•the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the
periods presented therein.
Date: February 1, 2024
/s/ MARK ZUCKERBERG
Mark Zuckerberg
Board Chair and Chief Executive Officer
(Principal Executive Officer)


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EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Susan Li, Chief Financial Officer of Meta Platforms, Inc. (Company), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
•the Annual Report on Form 10-K of the Company for the year ended December 31, 2023 (Report) fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
•the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the
periods presented therein.
Date: February 1, 2024
/s/ SUSAN LI
Susan Li
Chief Financial Officer
(Principal Financial Officer)


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EXHIBIT 97.1
META PLATFORMS, INC.
COMPENSATION RECOUPMENT POLICY
This Meta Platforms, Inc. Compensation Recoupment Policy (the “Policy”) has been adopted by the Compensation, Nominating & Governance
Committee of the Board of Directors (the “Board”) of Meta Platforms, Inc. (the “Company”) on June 1, 2023. This Policy provides for the recoupment of
certain executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under
U.S. federal securities laws in accordance with the terms and conditions set forth herein. This Policy is intended to comply with the requirements of Section
10D of the Exchange Act (as defined below) and Section 5608 of the Nasdaq Listing Rules.
1.Definitions. For the purposes of this Policy, the following terms shall have the meanings set forth below.
(a) “Committee” means the Compensation, Nominating & Governance Committee of the Board or any successor committee thereof. If there is no
Compensation, Nominating & Governance Committee of the Board, references herein to the “Committee” shall refer to the Company’s committee of
independent directors that is responsible for executive compensation decisions, or in the absence of such a compensation committee, the independent members
of the Board.
(b) “Covered Compensation” means any Incentive-based Compensation “received” by a Covered Executive during the applicable Recoupment
Period; provided that:
(i) such Covered Compensation was received by such Covered Executive (A) after the Effective Date, (B) after he or she commenced service as
an Executive Officer and (C) while the Company had a class of securities publicly listed on a United States national securities exchange; and
(ii) such Covered Executive served as an Executive Officer at any time during the performance period applicable to such Incentive-based
Compensation.
For purposes of this Policy, Incentive-based Compensation is “received” by a Covered Executive during the fiscal period in which the Financial Reporting
Measure applicable to such Incentive-based Compensation (or portion thereof) is attained, even if the payment or grant of such Incentive-based Compensation
is made thereafter.
(c) “Covered Executive” means any current or former Executive Officer.


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(c) “Covered Executive” means any current or former Executive Officer.
(d) “Effective Date” means the date on which Section 5608 of the Nasdaq Listing Rules becomes effective.
(e) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
(f) “Executive Officer” means, with respect to the Company, (i) its president, (ii) its principal financial officer, (iii) its principal accounting officer (or
if there is no such accounting officer, its controller), (iv) any vice-president in charge of a principal business unit, division or function (such as sales,
administration or finance), (v) any other officer who performs a policy-making function for the Company (including any officer of the Company’s parent(s) or
subsidiaries if they perform policy-making functions for the Company) and (vi) any other person who performs similar policy-making functions for the
Company. Policy-making function is not intended to include policy-making functions that are not significant. The determination as to an individual’s status as
an Executive Officer shall be made by the Committee and such determination shall be final, conclusive and binding on such individual and all other interested
persons.
(g) “Financial Reporting Measure” means any (i) measure that is determined and presented in accordance with the accounting principles used in
preparing the Company’s financial statements, (ii) stock price measure or (iii) total shareholder return measure (and any measures that are derived wholly or in
part from any measure referenced in clause (i), (ii) or (iii) above). For the avoidance of doubt, any such measure does not need to be presented within the
Company’s financial statements or included in a filing with the U.S. Securities and Exchange Commission to constitute a Financial Reporting Measure.


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(h) “Financial Restatement” means a restatement of the Company’s financial statements due to the Company’s material noncompliance with any
financial reporting requirement under U.S. federal securities laws that is required in order to correct:
(i) an error in previously issued financial statements that is material to the previously issued financial statements; or
(ii) an error that would result in a material misstatement if (A) the error were corrected in the current period or (B) left uncorrected in the current
period.
For purposes of this Policy, a Financial Restatement shall not be deemed to occur in the event of a revision of the Company’s financial statements due to an
out-of-period adjustment (i.e., when the error is immaterial to the previously issued financial statements and the correction of the error is also immaterial to the
current period) or a retrospective (1) application of a change in accounting principles; (2) revision to reportable segment information due to a change in the
structure of the Company’s internal organization; (3) reclassification due to a discontinued operation; (4) application of a change in reporting entity, such as
from a reorganization of entities under common control; or (5) revision for stock splits, reverse stock splits, stock dividends or other changes in capital
structure.
(j) “Incentive-based Compensation” means any compensation (including, for the avoidance of doubt, any cash or equity or equity-based
compensation, whether deferred or current) that is granted, earned and/or vested based wholly or in part upon the achievement of a Financial Reporting
Measure. For purposes of this Policy, “Incentive-based Compensation” shall also be deemed to include any amounts which were determined based on (or were
otherwise calculated by reference to) Incentive-based Compensation (including, without limitation, any amounts under any long-term disability, life insurance
or supplemental retirement or severance plan or agreement or any notional account that is based on Incentive-based Compensation, as well as any earnings
accrued thereon).
(k) “Nasdaq” means the NASDAQ Global Select Market, or any successor thereof.
(l) “Recoupment Period” means the three fiscal years completed immediately preceding the date of any applicable Recoupment Trigger Date.
Notwithstanding the foregoing, the Recoupment Period additionally includes any transition period (that results from a change in the Company’s fiscal year)


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within or immediately following those three completed fiscal years, provided that a transition period between the last day of the Company’s previous fiscal year
end and the first day of its new fiscal year that comprises a period of nine (9) to twelve (12) months would be deemed a completed fiscal year.
(m) “Recoupment Trigger Date” means the earlier of (i) the date that the Board (or a committee thereof or the officer(s) of the Company authorized
to take such action if Board action is not required) concludes, or reasonably should have concluded, that the Company is required to prepare a Financial
Restatement, and (ii) the date on which a court, regulator or other legally authorized body directs the Company to prepare a Financial Restatement.
2.Recoupment of Erroneously Awarded Compensation.
(a) In the event of a Financial Restatement, if the amount of any Covered Compensation received by a Covered Executive (the “Awarded
Compensation”) exceeds the amount of such Covered Compensation that would have otherwise been received by such Covered Executive if calculated based
on the Financial Restatement (the “Adjusted Compensation”), the Company shall reasonably promptly recover from such Covered Executive an amount equal
to the excess of the Awarded Compensation over the Adjusted Compensation, each calculated on a pre-tax basis (such excess amount, the “Erroneously
Awarded Compensation”).
(b) If (i) the Financial Reporting Measure applicable to the relevant Covered Compensation is stock price or total shareholder return (or any measure
derived wholly or in part from either of such measures) and (ii) the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation
directly from the information in the Financial Restatement, then the amount of Erroneously Awarded Compensation shall be determined (on a pre-tax basis)
based on the Company’s reasonable estimate of the effect of the Financial Restatement on the Company’s stock price or total shareholder return (or the
derivative measure thereof) upon which such Covered Compensation was received.


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(c) For the avoidance of doubt, the Company’s obligation to recover Erroneously Awarded Compensation is not dependent on (i) if or when the
restated financial statements are filed or (ii) any fault of any Covered Executive for the accounting errors or other actions leading to a Financial Restatement.
(d) Notwithstanding anything to the contrary in Sections 2(a) through (c) hereof, the Company shall not be required to recover any Erroneously
Awarded Compensation if both (x) the conditions set forth in either of the following clauses (i) or (ii) are satisfied and (y) the Committee (or a majority of the
independent directors serving on the Board) has determined that recovery of the Erroneously Awarded Compensation would be impracticable:
(i) the direct expense paid to a third party to assist in enforcing the recovery of the Erroneously Awarded Compensation under this Policy
would exceed the amount of such Erroneously Awarded Compensation to be recovered; provided that, before concluding that it would be
impracticable to recover any amount of Erroneously Awarded Compensation pursuant to this Section 2(d), the Company shall have first made a
reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to make such recovery and provide
that documentation to the Nasdaq;
(ii) recovery of the Erroneously Awarded Compensation would likely cause an otherwise tax-qualified retirement plan, under which
benefits are broadly available to employees of the Company, to fail to meet the requirements of Sections 401(a)(13) or 411(a) of the U.S. Internal
Revenue Code of 1986, as amended (the “Code”).
(e) The Company shall not indemnify any Covered Executive, directly or indirectly, for any losses that such Covered Executive may incur in
connection with the recovery of Erroneously Awarded Compensation pursuant to this Policy, including through the payment of insurance premiums or gross-up
payments.
(f) The Committee shall determine, in its sole discretion, the manner and timing in which any Erroneously Awarded Compensation shall be recovered
from a Covered Executive in accordance with applicable law, including, without limitation, by (i) requiring reimbursement of Covered Compensation
previously paid in cash; (ii) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition of any equity or equity-


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based awards; (iii) offsetting the Erroneously Awarded Compensation amount from any compensation otherwise owed by the Company or any of its affiliates
to the Covered Executive; (iv) cancelling outstanding vested or unvested equity or equity-based awards; and/or (v) taking any other remedial and recovery
action permitted by applicable law. For the avoidance of doubt, except as set forth in Section 2(d), in no event may the Company accept an amount that is less
than the amount of Erroneously Awarded Compensation; provided that, to the extent necessary to avoid any adverse tax consequences to the Covered Executive
pursuant to Section 409A of the Code, any offsets against amounts under any nonqualified deferred compensation plans (as defined under Section 409A of the
Code) shall be made in compliance with Section 409A of the Code.
3.Administration. This Policy shall be administered by the Committee. All decisions of the Committee shall be final, conclusive and binding upon the
Company and the Covered Executives, their beneficiaries, executors, administrators and any other legal representative. The Committee shall have full power
and authority to (i) administer and interpret this Policy; (ii) correct any defect, supply any omission and reconcile any inconsistency in this Policy; and (iii)
make any other determination and take any other action that the Committee deems necessary or desirable for the administration of this Policy and to comply
with applicable law (including Section 10D of the Exchange Act) and applicable stock market or exchange rules and regulations. Notwithstanding anything to
the contrary contained herein, to the extent permitted by Section 10D of the Exchange Act and Section 5608 of the Nasdaq Listing Rules, the Board may, in its
sole discretion, at any time and from time to time, administer this Policy in the same manner as the Committee.
4.Amendment/Termination. Subject to Section 10D of the Exchange Act and Section 5608 of the Nasdaq Listing Rules, this Policy may be amended or
terminated by the Committee at any time. To the extent that any applicable law, or stock market or exchange rules or regulations require recovery of
Erroneously Awarded Compensation in circumstances in addition to those specified herein, nothing in this Policy shall be deemed to limit or restrict the right or
obligation of the Company to recover Erroneously Awarded Compensation to the fullest extent required by such applicable law, stock market or exchange rules


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by applicable law, this Policy shall no longer be effective from and after the date that the Company no longer has a class of securities publicly listed on a
United States national securities exchange.
5.Interpretation. Notwithstanding anything to the contrary herein, this Policy is intended to comply with the requirements of Section 10D of the
Exchange Act and Section 5608 of the Nasdaq Listing Rules (and any applicable regulations, administrative interpretations or stock market or exchange rules
and regulations adopted in connection therewith). The provisions of this Policy shall be interpreted in a manner that satisfies such requirements and this Policy
shall be operated accordingly. If any provision of this Policy would otherwise frustrate or conflict with this intent, the provision shall be interpreted and deemed
amended so as to avoid such conflict.
6.Other Compensation Clawback/Recoupment Rights. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies,
rights or requirements with respect to the clawback or recoupment of any compensation that may be available to the Company pursuant to the terms of any
other recoupment or clawback policy of the Company (or any of its affiliates) that may be in effect from time to time, any provisions in any employment
agreement, offer letter, equity plan, equity award agreement or similar plan or agreement, and any other legal remedies available to the Company, as well as
applicable law, stock market or exchange rules, listing standards or regulations; provided, however, that any amounts recouped or clawed back under any other
policy that would be recoupable under this Policy shall count toward any required clawback or recoupment under this Policy and vice versa.
7.Exempt Compensation. Notwithstanding anything to the contrary herein, the Company has no obligation to seek recoupment of amounts paid to a
Covered Executive which are granted, vested or earned based solely upon the occurrence or non-occurrence of nonfinancial events. Such exempt compensation
includes, without limitation, base salary, time-vesting awards, compensation awarded on the basis of the achievement of metrics that are not Financial
Reporting Measures or compensation awarded solely at the discretion of the Committee or the Board, provided that such amounts are in no way contingent on,
and were not in any way granted on the basis of, the achievement of any Financial Reporting Measure.
8.Miscellaneous.


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8.Miscellaneous.
(a) Any applicable award agreement or other document setting forth the terms and conditions of any compensation covered by this Policy shall be
deemed to include the restrictions imposed herein and incorporate this Policy by reference and, in the event of any inconsistency, the terms of this Policy will
govern. For the avoidance of doubt, this Policy applies to all compensation that is received on or after the Effective Date, regardless of the date on which the
award agreement or other document setting forth the terms and conditions of the Covered Executive’s compensation became effective or was first granted or
awarded, including, without limitation, compensation received under the Meta Platforms, Inc. 2012 Equity Incentive Plan (as amended) and any successor plan
thereto.
(b) This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal
representatives.
(c) If any provision of this Policy is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the
maximum extent permitted by applicable law and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to
conform to any limitations required under applicable law.


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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ____________________________________
FORM 10-K
____________________________________ 
(Mark One)
☒ ANNUAL  REPOR T PURSUANT  TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT  OF 1934
For the fiscal year ended December 31, 2022
or
☐ TRANSITION REPOR T PURSUANT  TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT  OF 1934
For the transition period from            to             .
Commission File No. 000-22513
____________________________________
AMAZON .COM, INC.
(Exact name of registrant as specified in its charter)
Delaware  91-1646860
(State or other jurisdiction of
incorporation or organization)  (I.R.S. Employer
Identification No.)
410 Terry Avenue North
Seattle, Washington 98109-5210
(206) 266-1000
(Addr ess and telephone number , including ar ea code, of r egistrant’ s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share AMZN Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
 ____________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ☐    No  ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐


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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
Aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2022 $ 944,744,113,598 
Number of shares of common stock outstanding as of January 25, 2023 10,247,259,757 
____________________________________ 
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement relating to the Annual
Meeting of Shareholders to be held in 2023, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this
Report relates.


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Table of Contents
AMAZON.COM, INC.
FORM 10-K
For the Fiscal Year Ended December 31, 2022
INDEX
 
  Page
PART I
Item 1. Business 3
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 16
Item 2. Properties 17
Item 3. Legal Proceedings 17
Item 4. Mine Safety Disclosures 17
PART II
Item 5. Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities 18
Item 6. Reserved 18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 31
Item 8. Financial Statements and Supplementary Data 33
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 69
Item 9A. Controls and Procedures 69
Item 9B. Other Information 71
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 71
PART III
Item 10. Directors, Executive Officers, and Corporate Governance 71
Item 11. Executive Compensation 71
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 71
Item 13. Certain Relationships and Related Transactions, and Director Independence 71
Item 14. Principal Accountant Fees and Services 71
PART IV
Item 15. Exhibits, Financial Statement Schedules 72
Item 16. Form 10-K Summary 74
Signatures 75
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AMAZON.COM, INC.
PART I
Item 1. Business
This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements based on expectations,
estimates, and projections as of the date of this filing. Actual results and outcomes may differ materially from those expressed in forward-looking statements.
See Item 1A of Part I — “Risk Factors.” As used herein, “Amazon.com,” “we,” “our,” and similar terms include Amazon.com, Inc. and its subsidiaries, unless
the context indicates otherwise.
General
We seek to be Earth’s most customer-centric company. We are guided by four principles: customer obsession rather than competitor focus, passion for
invention, commitment to operational excellence, and long-term thinking. In each of our segments, we serve our primary customer sets, consisting of
consumers, sellers, developers, enterprises, content creators, advertisers, and employees.
We have organized our operations into three segments: North America, International, and Amazon Web Services (“AWS”). These segments reflect the
way the Company evaluates its business performance and manages its operations. Information on our net sales is contained in Item 8 of Part II, “Financial
Statements and Supplementary Data — Note 10 — Segment Information.”
Consumers
We serve consumers through our online and physical stores and focus on selection, price, and convenience. We design our stores to enable hundreds of
millions of unique products to be sold by us and by third parties across dozens of product categories. Customers access our offerings through our websites,
mobile apps, Alexa, devices, streaming, and physically visiting our stores. We also manufacture and sell electronic devices, including Kindle, Fire tablet, Fire
TV, Echo, Ring, Blink, and eero, and we develop and produce media content. We seek to offer our customers low prices, fast and free delivery, easy-to-use
functionality, and timely customer service. In addition, we offer subscription services such as Amazon Prime, a membership program that includes fast, free
shipping on millions of items, access to award-winning movies and series, and other benefits.
We fulfill customer orders in a number of ways, including through: North America and International fulfillment networks that we operate; co-sourced and
outsourced arrangements in certain countries; digital delivery; and through our physical stores. We operate customer service centers globally, which are


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supplemented by co-sourced arrangements. See Item 2 of Part I, “Properties.”
Sellers
We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders through us. We are not the seller of
record in these transactions. We earn fixed fees, a percentage of sales, per-unit activity fees, interest, or some combination thereof, for our seller programs.
Developers and Enterprises
We serve developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a broad
set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
Content Creators
We offer programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish
and sell content.
Advertisers
We provide advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video
advertising.
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Competition
Our businesses encompass a large variety of product types, service offerings, and delivery channels. The worldwide marketplace in which we compete is
evolving rapidly and intensely competitive, and we face a broad array of competitors from many different industry sectors around the world. Our current and
potential competitors include: (1) physical, e-commerce, and omnichannel retailers, publishers, vendors, distributors, manufacturers, and producers of the
products we offer and sell to consumers and businesses; (2) publishers, producers, and distributors of physical, digital, and interactive media of all types and all
distribution channels; (3) web search engines, comparison shopping websites, social networks, web portals, and other online and app-based means of
discovering, using, or acquiring goods and services, either directly or in collaboration with other retailers; (4) companies that provide e-commerce services,
including website development and hosting, omnichannel sales, inventory and supply chain management, advertising, fulfillment, customer service, and
payment processing; (5) companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline; (6) companies
that provide information technology services or products, including on-premises or cloud-based infrastructure and other services; (7) companies that design,
manufacture, market, or sell consumer electronics, telecommunication, and electronic devices; (8) companies that sell grocery products online and in physical
stores; and (9) companies that provide advertising services, whether in digital or other formats. We believe that the principal competitive factors in our retail
businesses include selection, price, and convenience, including fast and reliable fulfillment. Additional competitive factors for our seller and enterprise services
include the quality, speed, and reliability of our services and tools, as well as customers’ ability and willingness to change business practices. Some of our
current and potential competitors have greater resources, longer histories, more customers, greater brand recognition, and greater control over inputs critical to
our various businesses. They may secure better terms from suppliers, adopt more aggressive pricing, pursue restrictive distribution agreements that restrict our
access to supply, direct consumers to their own offerings instead of ours, lock-in potential customers with restrictive terms, and devote more resources to
technology, infrastructure, fulfillment, and marketing. The Internet facilitates competitive entry and comparison shopping, which enhances the ability of new,


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smaller, or lesser-known businesses to compete against us. Each of our businesses is also subject to rapid change and the development of new business models
and the entry of new and well-funded competitors. Other companies also may enter into business combinations or alliances that strengthen their competitive
positions.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies, and similar intellectual
property as critical to our success, and we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements
with our employees, customers, partners, and others to protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S.
and international domain names, trademarks, service marks, and copyrights. Additionally, we have filed U.S. and international patent applications covering
certain of our proprietary technology.
Seasonality
Our business is affected by seasonality, which historically has resulted in higher sales volume during our fourth quarter, which ends December 31.
Human Capital
Our employees are critical to our mission of being Earth’s most customer-centric company. As of December 31, 2022, we employed approximately
1,541,000 full-time and part-time employees. Additionally, we use independent contractors and temporary personnel to supplement our workforce. Competition
for qualified personnel is intense, particularly for software engineers, computer scientists, and other technical staff, and constrained labor markets have
increased competition for personnel across other parts of our business.
As we strive to be Earth’s best employer, we focus on investment and innovation, inclusion and diversity, safety, and engagement to hire and develop the
best talent. We rely on numerous and evolving initiatives to implement these objectives and invent mechanisms for talent development, including competitive
pay and benefits, flexible work arrangements, and skills training and educational programs such as Amazon Career Choice (funded education for hourly
employees) and the Amazon Technical Academy (software development engineer training). Over 100,000 Amazon employees around the world have
participated in Career Choice. We also continue to inspect and refine the mechanisms we use to hire, develop, evaluate, and retain our employees to promote
equity for all candidates and employees. In addition, safety is integral to everything we do at Amazon and we continue to invest in safety improvements such as


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capital improvements, new safety technology, vehicle safety controls, and engineering ergonomic solutions. Our safety team is dedicated to using the science of
safety to solve complex problems and establish new industry best practices. We also provide mentorship and support resources to our employees, and have
deployed numerous programs that advance employee engagement, communication, and feedback.
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Available Information
Our investor relations website is amazon.com/ir and we encourage investors to use it as a way of easily finding information about us. We promptly make
available on this website, free of charge, the reports that we file or furnish with the Securities and Exchange Commission (“SEC”), corporate governance
information (including our Code of Business Conduct and Ethics), and select press releases.
Executive Officers and Directors
The following tables set forth certain information regarding our Executive Officers and Directors as of January 25, 2023:
Information About Our Executive Officers
Name Age Position
Jeffrey P. Bezos 59 Executive Chair
Andrew R. Jassy 55 President and Chief Executive Officer
Douglas J. Herrington 56 CEO Worldwide Amazon Stores
Brian T. Olsavsky 59 Senior Vice President and Chief Financial Officer
Shelley L. Reynolds 58 Vice President, Worldwide Controller, and Principal Accounting Officer
Adam N. Selipsky 56 CEO Amazon Web Services
David A. Zapolsky 59 Senior Vice President, General Counsel, and Secretary
Jeffrey P. Bezos. Mr. Bezos founded Amazon.com in 1994 and has served as Executive Chair since July 2021. He has served as Chair of the Board since
1994 and served as Chief Executive Officer from May 1996 until July 2021, and as President from 1994 until June 1999 and again from October 2000 to July
2021.
Andrew R. Jassy. Mr. Jassy has served as President and Chief Executive Officer since July 2021, CEO Amazon Web Services from April 2016 until July
2021, and Senior Vice President, Amazon Web Services, from April 2006 until April 2016.
Douglas J. Herrington. Mr. Herrington has served as CEO Worldwide Amazon Stores since July 2022, Senior Vice President, North America Consumer
from January 2015 to July 2022, and Senior Vice President, Consumables from May 2014 to December 2014.
Brian T. Olsavsky. Mr. Olsavsky has served as Senior Vice President and Chief Financial Officer since June 2015, Vice President, Finance for the
Global Consumer Business from December 2011 to June 2015, and numerous financial leadership roles across Amazon with global responsibility since April
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2002.
Shelley L. Reynolds. Ms. Reynolds has served as Vice President, Worldwide Controller, and Principal Accounting Officer since April 2007.
Adam N. Selipsky. Mr. Selipsky has served as CEO Amazon Web Services since July 2021, Senior Vice President, Amazon Web Services from May
2021 until July 2021, President and CEO of Tableau Software from September 2016 until May 2021, and Vice President, Marketing, Sales and Support of
Amazon Web Services from May 2005 to September 2016.
David A. Zapolsky. Mr. Zapolsky has served as Senior Vice President, General Counsel, and Secretary since May 2014, Vice President, General
Counsel, and Secretary from September 2012 to May 2014, and as Vice President and Associate General Counsel for Litigation and Regulatory matters from
April 2002 until September 2012.
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Board of Directors
Name Age Position
Jeffrey P. Bezos 59 Executive Chair
Andrew R. Jassy 55 President and Chief Executive Officer
Keith B. Alexander 71 CEO, President, and Chair of IronNet, Inc.
Edith W. Cooper 61 Former Executive Vice President, Goldman Sachs Group, Inc.
Jamie S. Gorelick 72 Partner, Wilmer Cutler Pickering Hale and Dorr LLP
Daniel P. Huttenlocher 64 Dean, MIT Schwarzman College of Computing
Judith A. McGrath 70 Former Chair and CEO, MTV Networks
Indra K. Nooyi 67 Former Chief Executive Officer, PepsiCo, Inc.
Jonathan J. Rubinstein 66 Former co-CEO, Bridgewater Associates, LP
Patricia Q. Stonesifer 66 Former President and Chief Executive Officer, Martha’s Table
Wendell P. Weeks 63 Chief Executive Officer, Corning Incorporated
Item 1A. Risk Factors
Please carefully consider the following discussion of significant factors, events, and uncertainties that make an investment in our securities risky. The
events and consequences discussed in these risk factors could, in circumstances we may or may not be able to accurately predict, recognize, or control, have a
material adverse effect on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results),
cash flows, liquidity, and stock price. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or
uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. In addition to the factors
discussed in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview,” and in the risk factors
below, global economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of
the risks discussed below. Many of the risks discussed below also impact our customers, including third-party sellers, which could indirectly have a material
adverse effect on us.
Business and Industry Risks
We Face Intense Competition
Our businesses are rapidly evolving and intensely competitive, and we have many competitors across geographies, including cross-border competition,


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and in different industries, including physical, e-commerce, and omnichannel retail, e-commerce services, web and infrastructure computing services,
electronic devices, digital content, advertising, grocery, and transportation and logistics services. Some of our current and potential competitors have greater
resources, longer histories, more customers, and/or greater brand recognition, particularly with our newly-launched products and services and in our newer
geographic regions. They may secure better terms from vendors, adopt more aggressive pricing, and devote more resources to technology, infrastructure,
fulfillment, and marketing.
Competition continues to intensify, including with the development of new business models and the entry of new and well-funded competitors, and as
our competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive with our
business. In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices
continue to increase our competition. The Internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller, or lesser
known businesses to compete against us. As a result of competition, our product and service offerings may not be successful, we may fail to gain or may lose
business, and we may be required to increase our spending or lower prices, any of which could materially reduce our sales and profits.
Our Expansion into New Products, Services, Technologies, and Geographic Regions Subjects Us to Additional Risks
We may have limited or no experience in our newer market segments, and our customers may not adopt our product or service offerings. These offerings,
which can present new and difficult technology challenges, may subject us to claims if customers of these offerings experience, or are otherwise impacted by,
service disruptions, delays, setbacks, or failures or quality issues. In addition, profitability, if any, in our newer activities may not meet our expectations, and we
may not be successful enough in these newer activities to recoup our investments in them, which investments are often significant. Failure to realize the
benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off. In
addition, our sustainability initiatives may be unsuccessful for a variety of
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reasons, including if we are unable to realize the expected benefits of new technologies or if we do not successfully plan or execute new strategies, which could
harm our business or damage our reputation.
Our International Operations Expose Us to a Number of Risks
Our international activities are significant to our revenues and profits, and we plan to further expand internationally. In certain international market
segments, we have relatively little operating experience and may not benefit from any first-to-market advantages or otherwise succeed. It is costly to establish,
develop, and maintain international operations and stores, and promote our brand internationally. Our international operations may not become profitable on a
sustained basis.
In addition to risks described elsewhere in this section, our international sales and operations are subject to a number of risks, including:
•local economic and political conditions;
•government regulation (such as regulation of our product and service offerings and of competition); restrictive governmental actions (such as trade
protection measures, including export duties and quotas and custom duties and tariffs); nationalization; and restrictions on foreign ownership;
•restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including
uncertainty as a result of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices
regarding the physical and digital distribution of media products and enforcement of intellectual property rights;
•business licensing or certification requirements, such as for imports, exports, web services, and electronic devices;
•limitations on the repatriation and investment of funds and foreign currency exchange restrictions;
•limited fulfillment and technology infrastructure;
•shorter payable and longer receivable cycles and the resultant negative impact on cash flow;
•laws and regulations regarding privacy, data use, data protection, data security, data localization, network security, consumer protection, payments,
advertising, and restrictions on pricing or discounts;
•lower levels of use of the Internet;
•lower levels of consumer spending and fewer opportunities for growth compared to the U.S.;
•lower levels of credit card usage and increased payment risk;
•difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences;
•different employee/employer relationships and the existence of works councils and labor unions;


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•compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government
officials and other third parties;
•laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes; and
•geopolitical events, including war and terrorism.
As international physical, e-commerce, and omnichannel retail, cloud services, and other services grow, competition will intensify, including through
adoption of evolving business models. Local companies may have a substantial competitive advantage because of their greater understanding of, and focus on,
the local customer, as well as their more established local brand names. The inability to hire, train, retain, and manage sufficient required personnel may limit
our international growth.
The People’s Republic of China (“PRC”) and India regulate Amazon’s and its affiliates’ businesses and operations in country through regulations and
license requirements that may restrict (i) foreign investment in and operation of the Internet, IT infrastructure, data centers, retail, delivery, and other sectors,
(ii) Internet content, and (iii) the sale of media and other products and services. For example, in order to meet local ownership, regulatory licensing, and
cybersecurity requirements, we provide certain technology services in China through contractual relationships with third parties that hold PRC licenses to
provide services. In India, the government restricts the ownership or control of Indian companies by foreign entities involved in online multi-brand retail
trading activities. For www.amazon.in, we provide certain marketing tools and logistics services to third-party sellers to enable them to sell online and deliver
to customers, and we hold indirect minority interests in entities that are third-party sellers on the www.amazon.in marketplace. Although we believe these
structures and activities comply with existing laws, they involve unique risks, and the PRC and India may from time to time consider and implement additional
changes in their regulatory, licensing, or other requirements that could impact these structures and activities. There are substantial uncertainties regarding the
interpretation of PRC and Indian laws and regulations, and it is possible that these governments will
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ultimately take a view contrary to ours. In addition, our Chinese and Indian businesses and operations may be unable to continue to operate if we or our
affiliates are unable to access sufficient funding or, in China, enforce contractual relationships we or our affiliates have in place. Violation of any existing or
future PRC, Indian, or other laws or regulations or changes in the interpretations of those laws and regulations could result in our businesses in those countries
being subject to fines and other financial penalties, having licenses revoked, or being forced to restructure our operations or shut down entirely.
The Variability in Our Retail Business Places Increased Strain on Our Operations
Demand for our products and services can fluctuate significantly for many reasons, including as a result of seasonality, promotions, product launches, or
unforeseeable events, such as in response to global economic conditions such as recessionary fears or rising inflation, natural or human-caused disasters
(including public health crises) or extreme weather (including as a result of climate change), or geopolitical events. For example, we expect a disproportionate
amount of our retail sales to occur during our fourth quarter. Our failure to stock or restock popular products in sufficient amounts such that we fail to meet
customer demand could significantly affect our revenue and our future growth. When we overstock products, we may be required to take significant inventory
markdowns or write-offs and incur commitment costs, which could materially reduce profitability. We regularly experience increases in our net shipping cost
due to complimentary upgrades, split-shipments, and additional long-zone shipments necessary to ensure timely delivery for the holiday season. If too many
customers access our websites within a short period of time due to increased demand, we may experience system interruptions that make our websites
unavailable or prevent us from efficiently fulfilling orders, which may reduce the volume of goods we offer or sell and the attractiveness of our products and
services. In addition, we may be unable to adequately staff our fulfillment network and customer service centers during these peak periods and delivery and
other fulfillment companies and customer service co-sourcers may be unable to meet the seasonal demand. Risks described elsewhere in this Item 1A relating
to fulfillment network optimization and inventory are magnified during periods of high demand.
As a result of holiday sales, as of December 31 of each year, our cash, cash equivalents, and marketable securities balances typically reach their highest


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level (other than as a result of cash flows provided by or used in investing and financing activities) because consumers primarily use credit cards in our stores
and the related receivables settle quickly. Typically, there is also a corresponding increase in accounts payable as of December 31 due to inventory purchases
and third-party seller sales. Our accounts payable balance generally declines during the first three months of the year as vendors and sellers are paid, resulting
in a corresponding decline in our cash, cash equivalents, and marketable securities balances.
We Are Impacted by Fraudulent or Unlawful Activities of Sellers
The law relating to the liability of online service providers is currently unsettled. In addition, governmental agencies have in the past and could in the
future require changes in the way this business is conducted. Under our seller programs, we maintain policies and processes designed to prevent sellers from
collecting payments, fraudulently or otherwise, when buyers never receive the products they ordered or when the products received are materially different
from the sellers’ descriptions, and to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling
goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies. When these policies and processes are
circumvented or fail to operate sufficiently, it can harm our business or damage our reputation and we could face civil or criminal liability for unlawful
activities by our sellers. Under our A-to-z Guarantee, we may reimburse customers for payments up to certain limits in these situations, and as our third-party
seller sales grow, the cost of this program will increase and could negatively affect our operating results.
We Face Risks Related to Adequately Protecting Our Intellectual Property Rights and Being Accused of Infringing Intellectual Property Rights of Third
Parties
We regard our trademarks, service marks, copyrights, patents, trade dress, trade secrets, proprietary technology, and similar intellectual property as
critical to our success, and we rely on trademark, copyright, and patent law, trade secret protection, and confidentiality and/or license agreements with our
employees, customers, and others to protect our proprietary rights. Effective intellectual property protection is not available in every country in which our
products and services are made available. We also may not be able to acquire or maintain appropriate domain names in all countries in which we do business.


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Furthermore, regulations governing domain names may not protect our trademarks and similar proprietary rights. We may be unable to prevent third parties
from acquiring domain names that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights.
We are not always able to discover or determine the extent of any unauthorized use of our proprietary rights. Actions taken by third parties that license
our proprietary rights may materially diminish the value of our proprietary rights or reputation. The protection of our intellectual property requires the
expenditure of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property do not always adequately protect
our rights or prevent third
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parties from infringing or misappropriating our proprietary rights. We also cannot be certain that others will not independently develop or otherwise acquire
equivalent or superior technology or other intellectual property rights.
We have been subject to, and expect to continue to be subject to, claims and legal proceedings regarding alleged infringement by us of the intellectual
property rights of third parties. Such claims, whether or not meritorious, have in the past, and may in the future, result in the expenditure of significant financial
and managerial resources, injunctions against us, or significant payments for damages, including to satisfy indemnification obligations or to obtain licenses
from third parties who allege that we have infringed their rights. Such licenses may not be available on terms acceptable to us or at all. These risks have been
amplified by the increase in third parties whose sole or primary business is to assert such claims.
Our digital content offerings depend in part on effective digital rights management technology to control access to digital content. Breach or
malfunctioning of the digital rights management technology that we use could subject us to claims, and content providers may be unwilling to include their
content in our service.
We Have Foreign Exchange Risk
The results of operations of, and certain of our intercompany balances associated with, our international stores and product and service offerings are
exposed to foreign exchange rate fluctuations. Due to these fluctuations, operating results may differ materially from expectations, and we may record
significant gains or losses on the remeasurement of intercompany balances. As we have expanded our international operations, our exposure to exchange rate
fluctuations has increased. We also hold cash equivalents and/or marketable securities in foreign currencies such as British Pounds, Canadian Dollars, Euros,
and Japanese Yen. When the U.S. Dollar strengthens compared to these currencies, cash equivalents, and marketable securities balances, when translated, may
be materially less than expected and vice versa.
Operating Risks
Our Expansion Places a Significant Strain on our Management, Operational, Financial, and Other Resources
We are continuing to rapidly and significantly expand our global operations, including increasing our product and service offerings and scaling our
infrastructure to support our retail and services businesses. The complexity of the current scale of our business can place significant strain on our management,
personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions, and our expansion increases


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these factors. Failure to manage growth effectively could damage our reputation, limit our growth, and negatively affect our operating results.
We Experience Significant Fluctuations in Our Operating Results and Growth Rate
We are not always able to accurately forecast our growth rate. We base our expense levels and investment plans on sales estimates. A significant portion
of our expenses and investments is fixed, and we are not always able to adjust our spending quickly enough if our sales are less than expected.
Our revenue growth may not be sustainable, and our percentage growth rates may decrease. Our revenue and operating profit growth depends on the
continued growth of demand for the products and services offered by us or our sellers, and our business is affected by general economic, business, and
geopolitical conditions worldwide. A softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. or global
economies, may result in decreased revenue or growth.
Our sales and operating results will also fluctuate for many other reasons, including due to factors described elsewhere in this section and the following:
•our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands;
•our ability to retain and expand our network of sellers;
•our ability to offer products on favorable terms, manage inventory, and fulfill orders;
•the introduction of competitive stores, websites, products, services, price decreases, or improvements;
•changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.;
•timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure;
•the success of our geographic, service, and product line expansions;
•the extent to which we finance, and the terms of any such financing for, our current operations and future growth;
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•the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material
adverse impact on our operating results;
•variations in the mix of products and services we sell;
•variations in our level of merchandise and vendor returns;
•the extent to which we offer fast and free delivery, continue to reduce prices worldwide, and provide additional benefits to our customers;
•factors affecting our reputation or brand image (including any actual or perceived inability to achieve our goals or commitments, whether related to
sustainability, customers, employees, or other topics);
•the extent to which we invest in technology and content, fulfillment, and other expense categories;
•increases in the prices of transportation (including fuel), energy products, commodities like paper and packing supplies and hardware products, and
technology infrastructure products, including as a result of inflationary pressures;
•constrained labor markets, which increase our payroll costs;
•the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and
unconstrained access to our online services;
•our ability to collect amounts owed to us when they become due;
•the extent to which new and existing technologies, or industry trends, restrict online advertising or affect our ability to customize advertising or
otherwise tailor our product and service offerings;
•the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer
intrusions, outages, and similar events; and
•disruptions from natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change),
geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes (including restrictive governmental
actions impacting us and our third-party sellers in China or other foreign countries), and similar events.
We Face Risks Related to Successfully Optimizing and Operating Our Fulfillment Network and Data Centers
Failures to adequately predict customer demand or otherwise optimize and operate our fulfillment network and data centers successfully from time to
time result in excess or insufficient fulfillment or data center capacity, service interruptions, increased costs, and impairment charges, any of which could
materially harm our business. As we continue to add fulfillment and data center capability or add new businesses with different requirements, our fulfillment


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and data center networks become increasingly complex and operating them becomes more challenging. There can be no assurance that we will be able to
operate our networks effectively.
In addition, failure to optimize inventory or staffing in our fulfillment network increases our net shipping cost by requiring long-zone or partial
shipments. We and our co-sourcers may be unable to adequately staff our fulfillment network and customer service centers. For example, productivity across
our fulfillment network currently is being affected by regional labor market and global supply chain constraints, which increase payroll costs and make it
difficult to hire, train, and deploy a sufficient number of people to operate our fulfillment network as efficiently as we would like.
Under some of our commercial agreements, we maintain the inventory of other companies, thereby increasing the complexity of tracking inventory and
operating our fulfillment network. Our failure to properly handle such inventory or the inability of the other businesses on whose behalf we perform inventory
fulfillment services to accurately forecast product demand may result in us being unable to secure sufficient storage space or to optimize our fulfillment
network or cause other unexpected costs and other harm to our business and reputation.
We rely on a limited number of shipping companies to deliver inventory to us and completed orders to our customers. An inability to negotiate acceptable
terms with these companies or performance problems, staffing limitations, or other difficulties experienced by these companies or by our own transportation
systems, including as a result of labor market constraints and related costs, could negatively impact our operating results and customer experience. In addition,
our ability to receive inbound inventory efficiently and ship completed orders to customers also may be negatively affected by natural or human-caused
disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security issues, labor or trade
disputes, and similar events.
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We Could Be Harmed by Data Loss or Other Security Breaches
Because we collect, process, store, and transmit large amounts of data, including confidential, sensitive, proprietary, and business and personal
information, failure to prevent or mitigate data loss, theft, misuse, or other security breaches or vulnerabilities affecting our or our vendors’ or customers’
technology, products, and systems, could: expose us or our customers to a risk of loss, disclosure, or misuse of such information; adversely affect our operating
results; result in litigation, liability, or regulatory action (including under laws related to privacy, data use, data protection, data security, network security, and
consumer protection); deter customers or sellers from using our stores, products, and services; and otherwise harm our business and reputation. We use third-
party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content
delivery to customers, back-office support, and other functions. Some of our systems have experienced past security breaches, and, although they did not have
a material adverse effect on our operating results, there can be no assurance that future incidents will not have material adverse effects on our operations or
financial results. Although we have developed systems and processes that are designed to protect customer data and prevent such incidents, including systems
and processes designed to reduce the impact of a security breach at a third-party vendor or customer, such measures cannot provide absolute security and may
fail to operate as intended or be circumvented.
We Face Risks Related to System Interruption and Lack of Redundancy
We experience occasional system interruptions and delays that make our websites and services unavailable or slow to respond and prevent us from
efficiently accepting or fulfilling orders or providing services to customers and third parties, which may reduce our net sales and the attractiveness of our
products and services. Steps we take to add software and hardware, upgrade our systems and network infrastructure, and improve the stability and efficiency of
our systems may not be sufficient to avoid system interruptions or delays that could adversely affect our operating results.
Our computer and communications systems and operations in the past have been, or in the future could be, damaged or interrupted due to events such as
natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change), geopolitical events and security


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issues (including terrorist attacks and armed hostilities), computer viruses, physical or electronic break-ins, operational failures (including from energy
shortages), and similar events or disruptions. Any of these events could cause system interruption, delays, and loss of critical data, and could prevent us from
accepting and fulfilling customer orders and providing services, which could make our product and service offerings less attractive and subject us to liability.
Our systems are not fully redundant and our disaster recovery planning may not be sufficient. In addition, our insurance may not provide sufficient coverage to
compensate for related losses. Any of these events could damage our reputation and be expensive to remedy.
The Loss of Key Senior Management Personnel or the Failure to Hire and Retain Highly Skilled and Other Personnel Could Negatively Affect Our
Business
We depend on our senior management and other key personnel, including our President and CEO. We do not have “key person” life insurance policies.
We also rely on other highly skilled personnel. Competition for qualified personnel in the industries in which we operate, as well as senior management, has
historically been intense. For example, we experience significant competition in the technology industry, particularly for software engineers, computer
scientists, and other technical staff. In addition, changes we make to our current and future work environments may not meet the needs or expectations of our
employees or may be perceived as less favorable compared to other companies’ policies, which could negatively impact our ability to hire and retain qualified
personnel. The loss of any of our executive officers or other key employees, the failure to successfully transition key roles, or the inability to hire, train, retain,
and manage qualified personnel, could harm our business.
We also rely on a significant number of personnel to operate our stores, fulfillment network, and data centers and carry out our other operations. Failure
to successfully hire, train, manage, and retain sufficient personnel to meet our needs can strain our operations, increase payroll and other costs, and harm our
business and reputation. In addition, changes in laws and regulations applicable to employees, independent contractors, and temporary personnel could increase
our payroll costs, decrease our operational flexibility, and negatively impact how we are able to staff our operations and supplement our workforce.
We are also subject to labor union efforts to organize groups of our employees from time to time. These organizational efforts, if successful, decrease our


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operational flexibility, which could adversely affect our operating efficiency. In addition, our response to any organizational efforts could be perceived
negatively and harm our business and reputation.
Our Supplier Relationships Subject Us to a Number of Risks
We have significant suppliers, including content and technology licensors, and in some cases, limited or single-sources of supply, that are important to
our sourcing, services, manufacturing, and any related ongoing servicing of merchandise and content. We do not have long-term arrangements with most of our
suppliers to guarantee availability of merchandise, content,
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components, or services, particular payment terms, or the extension of credit limits. Decisions by our current suppliers to limit or stop selling or licensing
merchandise, content, components, or services to us on acceptable terms, or delay delivery, including as a result of one or more supplier bankruptcies due to
poor economic conditions, as a result of natural or human-caused disasters (including public health crises), or for other reasons, may result in our being unable
to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all. In addition, violations by our suppliers or other
vendors of applicable laws, regulations, contractual terms, intellectual property rights of others, or our Supply Chain Standards, as well as products or practices
regarded as unethical, unsafe, or hazardous, could expose us to claims, damage our reputation, limit our growth, and negatively affect our operating results.
Our Commercial Agreements, Strategic Alliances, and Other Business Relationships Expose Us to Risks
We provide physical, e-commerce, and omnichannel retail, cloud services, and other services to businesses through commercial agreements, strategic
alliances, and business relationships. Under these agreements, we provide web services, technology, fulfillment, computing, digital storage, and other services,
as well as enable sellers to offer products or services through our stores. These arrangements are complex and require substantial infrastructure capacity,
personnel, and other resource commitments, which may limit the amount of business we can service. We may not be able to implement, maintain, and develop
the components of these commercial relationships, which may include web services, fulfillment, customer service, inventory management, tax collection,
payment processing, hardware, content, and third-party software, and engaging third parties to perform services. The amount of compensation we receive under
certain of our commercial agreements is partially dependent on the volume of the other company’s sales. Therefore, when the other company’s offerings are not
successful, the compensation we receive may be lower than expected or the agreement may be terminated. Moreover, we may not be able to enter into
additional or alternative commercial relationships and strategic alliances on favorable terms. We also may be subject to claims from businesses to which we
provide these services if we are unsuccessful in implementing, maintaining, or developing these services.
As our agreements terminate, we may be unable to renew or replace these agreements on comparable terms, or at all. We may in the future enter into


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amendments on less favorable terms or encounter parties that have difficulty meeting their contractual obligations to us, which could adversely affect our
operating results.
Our present and future commercial agreements, strategic alliances, and business relationships create additional risks such as:
•disruption of our ongoing business, including loss of management focus on existing businesses;
•impairment of other relationships;
•variability in revenue and income from entering into, amending, or terminating such agreements or relationships; and
•difficulty integrating under the commercial agreements.
Our Business Suffers When We Are Unsuccessful in Making, Integrating, and Maintaining Acquisitions and Investments
We have acquired and invested in a number of companies, and we may in the future acquire or invest in or enter into joint ventures with additional
companies. These transactions involve risks such as:
•disruption of our ongoing business, including loss of management focus on existing businesses;
•problems retaining key personnel;
•additional operating losses and expenses of the businesses we acquired or in which we invested;
•the potential impairment of tangible and intangible assets and goodwill, including as a result of acquisitions;
•the potential impairment of customer and other relationships of the company we acquired or in which we invested or our own customers as a result of
any integration of operations;
•the difficulty of completing such transactions, including obtaining regulatory approvals or satisfying other closing conditions, and achieving
anticipated benefits within expected timeframes, or at all;
•the difficulty of incorporating acquired operations, technology, and rights into our offerings, and unanticipated expenses related to such integration;
•the difficulty of integrating a new company’s accounting, financial reporting, management, information and data security, human resource, and other
administrative systems to permit effective management, and the lack of control if such integration is delayed or not successfully implemented;
•losses we may incur as a result of declines in the value of an investment or as a result of incorporating an investee’s financial performance into our
financial results;
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•for investments in which an investee’s financial performance is incorporated into our financial results, either in full or in part, or investments for
which we are required to file financial statements or provide financial information, the dependence on the investee’s accounting, financial reporting,
and similar systems, controls, and processes;
•the difficulty of implementing at companies we acquire the controls, procedures, and policies appropriate for a larger public company;
•the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face;
•potential unknown liabilities associated with a company we acquire or in which we invest; and
•for foreign transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political,
and regulatory risks associated with specific countries.
As a result of future acquisitions or mergers, we might need to issue additional equity securities, spend our cash, or incur debt, contingent liabilities, or
amortization expenses related to intangible assets, any of which could reduce our profitability and harm our business or only be available on unfavorable terms,
if at all. In addition, valuations supporting our acquisitions and strategic investments could change rapidly. We could determine that such valuations have
experienced impairments or other-than-temporary declines in fair value which could adversely impact our financial results.
We Face Significant Inventory Risk
In addition to risks described elsewhere in this Item 1A relating to fulfillment network and inventory optimization by us and third parties, we are exposed
to significant inventory risks that may adversely affect our operating results as a result of seasonality, new product launches, rapid changes in product cycles
and pricing, defective merchandise, changes in customer demand and consumer spending patterns, changes in consumer tastes with respect to our products,
spoilage, and other factors. We endeavor to accurately predict these trends and avoid overstocking or understocking products we manufacture and/or sell.
Demand for products, however, can change significantly between the time inventory or components are ordered and the date of sale. In addition, when we
begin selling or manufacturing a new product, it may be difficult to establish vendor relationships, determine appropriate product or component selection, and
accurately forecast demand. The acquisition of certain types of inventory or components requires significant lead-time and prepayment and they may not be


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returnable. We carry a broad selection and significant inventory levels of certain products, such as consumer electronics, and at times we are unable to sell
products in sufficient quantities or to meet demand during the relevant selling seasons. Any one of the inventory risk factors set forth above may adversely
affect our operating results.
We Are Subject to Payments-Related Risks
We accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift cards, direct
debit from a customer’s bank account, consumer invoicing, physical bank check, and payment upon delivery. For existing and future payment options we offer
to our customers, we currently are subject to, and may become subject to additional, regulations and compliance requirements (including obligations to
implement enhanced authentication processes that could result in significant costs and reduce the ease of use of our payments products), as well as fraud. For
certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and
lower profitability. We rely on third parties to provide certain Amazon-branded payment methods and payment processing services, including the processing of
credit cards, debit cards, electronic checks, and promotional financing. In each case, it could disrupt our business if these companies become unwilling or
unable to provide these services to us. We also offer co-branded credit card programs, which could adversely affect our operating results if renewed on less
favorable terms or terminated. We are also subject to payment card association operating rules, including data security rules, certification requirements, and
rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. Failure to comply with
these rules or requirements, as well as any breach, compromise, or failure to otherwise detect or prevent fraudulent activity involving our data security systems,
could result in our being liable for card issuing banks’ costs, subject to fines and higher transaction fees, and loss of our ability to accept credit and debit card
payments from our customers, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be
adversely affected.
In addition, we provide regulated services in certain jurisdictions because we enable customers to keep account balances with us and transfer money to
third parties, and because we provide services to third parties to facilitate payments on their behalf. Jurisdictions subject us to requirements for licensing,


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regulatory inspection, bonding and capital maintenance, the use, handling, and segregation of transferred funds, consumer disclosures, maintaining or
processing data, and authentication. We are also subject to or voluntarily comply with a number of other laws and regulations relating to payments, money
laundering, international money transfers, privacy, data use, data protection, data security, data localization, network security, consumer
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protection, and electronic fund transfers. If we were found to be in violation of applicable laws or regulations, we could be subject to additional requirements
and civil and criminal penalties, or forced to cease providing certain services.
We Have a Rapidly Evolving Business Model and Our Stock Price Is Highly Volatile
We have a rapidly evolving business model. The trading price of our common stock fluctuates significantly in response to, among other risks, the risks
described elsewhere in this Item 1A, as well as:
•changes in interest rates;
•conditions or trends in the Internet and the industry segments we operate in;
•quarterly variations in operating results;
•fluctuations in the stock market in general and market prices for Internet-related companies in particular;
•changes in financial estimates by us or decisions to increase or decrease future spending or investment levels;
•changes in financial estimates and recommendations by securities analysts;
•changes in our capital structure, including issuance of additional debt or equity to the public;
•changes in the valuation methodology of, or performance by, other e-commerce or technology companies; and
•transactions in our common stock by major investors and certain analyst reports, news, and speculation.
Volatility in our stock price could adversely affect our business and financing opportunities and force us to increase our cash compensation to employees
or grant larger stock awards than we have historically, which could hurt our operating results or reduce the percentage ownership of our existing stockholders,
or both.
Legal and Regulatory Risks
Government Regulation Is Evolving and Unfavorable Changes Could Harm Our Business
We are subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet, physical, e-commerce, and
omnichannel retail, digital content, web services, electronic devices, advertising, artificial intelligence technologies and services, and other products and
services that we offer or sell. These regulations and laws cover taxation, privacy, data use, data protection, data security, data localization, network security,
consumer protection, pricing, content, copyrights, distribution, transportation, mobile communications, electronic device certification, electronic waste, energy
consumption, environmental regulation, electronic contracts and other communications, competition, employment, trade and protectionist measures, web
services, the provision of online payment services, registration, licensing, and information reporting requirements, unencumbered Internet access to our


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services or access to our facilities, the design and operation of websites, health, safety, and sanitation standards, the characteristics, legality, and quality of
products and services, product labeling, the commercial operation of unmanned aircraft systems, healthcare, and other matters. It is not clear how existing laws
governing issues such as property ownership, libel, privacy, data use, data protection, data security, data localization, network security, and consumer protection
apply to aspects of our operations such as the Internet, e-commerce, digital content, web services, electronic devices, advertising, and artificial intelligence
technologies and services. A large number of jurisdictions regulate our operations, and the extent, nature, and scope of such regulations is evolving and
expanding as the scope of our businesses expand. We are regularly subject to formal and informal reviews, investigations, and other proceedings by
governments and regulatory authorities under existing laws, regulations, or interpretations or pursuing new and novel approaches to regulate our operations.
For example, we face a number of open investigations based on claims that aspects of our operations violate competition rules, including aspects of Amazon’s
U.S. and European marketplace for sellers, particularly with respect to use of data, fulfillment services, and featured offers, and legislative and regulatory
initiatives in Europe and elsewhere allow authorities to restrict or prohibit certain operations or actions pre-emptively without the need to assess specific
competitive effects. Unfavorable regulations, laws, decisions, or interpretations by government or regulatory authorities applying those laws and regulations, or
inquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial costs, expose us to unanticipated civil and
criminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products and services, increase our cost of
doing business, require us to change our business practices in a manner materially adverse to our business, damage our reputation, impede our growth, or
otherwise have a material effect on our operations. The media, political, and regulatory scrutiny we face, which may continue to increase, amplifies these risks.
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Claims, Litigation, Government Investigations, and Other Proceedings May Adversely Affect Our Business and Results of Operations
As an innovative company offering a wide range of consumer and business products and services around the world, we are regularly subject to actual and
threatened claims, litigation, reviews, investigations, and other proceedings, including proceedings by governments and regulatory authorities, involving a wide
range of issues, including patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy, data use, data
protection, data security, data localization, network security, consumer protection, commercial disputes, goods and services offered by us and by third parties,
and other matters. The number and scale of these proceedings have increased over time as our businesses have expanded in scope and geographic reach, as our
products, services, and operations have become more complex and available to, and used by, more people, and as governments and regulatory authorities seek
to regulate us on a pre-emptive basis. For example, we are litigating a number of matters alleging price fixing, monopolization, and consumer protection
claims, including those brought by state attorneys general. Any of these types of proceedings can have an adverse effect on us because of legal costs, disruption
of our operations, diversion of management resources, negative publicity, and other factors. The outcomes of these matters are inherently unpredictable and
subject to significant uncertainties. Determining legal reserves or possible losses from such matters involves judgment and may not reflect the full range of
uncertainties and unpredictable outcomes. Until the final resolution of such matters, we may be exposed to losses in excess of the amount recorded, and such
amounts could be material. Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material effect on our
business, consolidated financial position, results of operations, or cash flows. In addition, it is possible that a resolution of one or more such proceedings,
including as a result of a settlement, could involve licenses, sanctions, consent decrees, or orders requiring us to make substantial future payments, preventing
us from offering certain products or services, requiring us to change our business practices in a manner materially adverse to our business, requiring
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We Are Subject to Product Liability Claims When People or Property Are Harmed by the Products We Sell or Manufacture
Some of the products we sell or manufacture expose us to product liability or food safety claims relating to personal injury or illness, death, or
environmental or property damage, and can require product recalls or other actions. Third parties who sell products using our services and stores also expose us
to product liability claims. Additionally, under our A-to-z Guarantee, we may reimburse customers for certain product liability claims up to certain limits in
these situations, and as our third-party seller sales grow, the cost of this program will increase and could negatively affect our operating results. Although we
maintain liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be
available to us on economically reasonable terms, or at all. Although we impose contractual terms on sellers that are intended to prohibit sales of certain type of
products, we may not be able to detect, enforce, or collect sufficient damages for breaches of such agreements. In addition, some of our agreements with our
vendors and sellers do not indemnify us from product liability.
We Face Additional Tax Liabilities and Collection Obligations
We are subject to a variety of taxes and tax collection obligations in the U.S. (federal and state) and numerous foreign jurisdictions. We may recognize
additional tax expense and be subject to additional tax liabilities, including other liabilities for tax collection obligations due to changes in laws, regulations,
administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and
accounting rules in various jurisdictions. Such changes could come about as a result of economic, political, and other conditions. An increasing number of
jurisdictions are considering or have adopted laws or administrative practices that impose new tax measures, including revenue-based taxes, targeting online
commerce and the remote selling of goods and services. These include new obligations to withhold or collect sales, consumption, value added, or other taxes
on online marketplaces and remote sellers, or other requirements that may result in liability for third party obligations. For example, non-U.S. jurisdictions
have proposed or enacted taxes on online advertising and marketplace service revenues. Proliferation of these or similar unilateral tax measures may continue
unless broader international tax reform is implemented. Our results of operations and cash flows could be adversely affected by additional taxes imposed on us


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prospectively or retroactively or additional taxes or penalties resulting from the failure to comply with any collection obligations or failure to provide
information about our customers, suppliers, and other third parties for tax reporting purposes to various government agencies. In some cases we also may not
have sufficient notice to enable us to build systems and adopt processes to properly comply with new reporting or collection obligations by the effective date.
Our tax expense and liabilities are also affected by other factors, such as changes in our business operations, acquisitions, investments, entry into new
businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, losses incurred in jurisdictions for which we are not able to
realize related tax benefits, the applicability of special or extraterritorial tax regimes, changes in foreign currency exchange rates, changes in our stock price,
changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, and changes in our tax assets and liabilities and their
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valuation. In the ordinary course of our business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Significant
judgment is required in evaluating and estimating our tax expense, assets, and liabilities.
We are also subject to tax controversies in various jurisdictions that can result in tax assessments against us. Developments in an audit, investigation, or
other tax controversy can have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for
prior and subsequent periods. Due to the inherent complexity and uncertainty of these matters, interpretations of certain tax laws by authorities, and judicial,
administrative, and regulatory processes in certain jurisdictions, the final outcome of any such controversy may be materially different from our expectations.
For example, in February 2023, the Indian Tax Authority determined that tax applies to cloud services fees paid to the U.S. We are contesting this
determination; however, if this matter is adversely resolved, we may be required to pay additional amounts with respect to current and prior periods and our
taxes in the future could increase. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our
tax accruals. Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be
materially different from our historical tax accruals.
We Are Subject to Risks Related to Government Contracts and Related Procurement Regulations
Our contracts with U.S., as well as state, local, and foreign, government entities are subject to various procurement regulations and other requirements
relating to their formation, administration, and performance. We are subject to audits and investigations relating to our government contracts, and any
violations could result in various civil and criminal penalties and administrative sanctions, including termination of contract, refunding or suspending of
payments, forfeiture of profits, payment of fines, and suspension or debarment from future government business. In addition, some of these contracts are
subject to periodic funding approval and/or provide for termination by the government at any time, without cause.
Item 1B. Unresolved Staff Comments
None.
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Item 2. Properties
As of December 31, 2022, we operated the following facilities (in thousands):
Description of UseLeased Square
Footage (1) Owned Square Footage Location
Office space 30,611 6,792North America
Office space 23,956 1,802International
Physical stores (2) 22,881 662North America
Physical stores (2) 291 —International
Fulfillment, data centers, and other 391,598 22,058North America
Fulfillment, data centers, and other 148,146 12,613International
Total 617,483 43,927
 ___________________
(1)For leased properties, represents the total leased space excluding sub-leased space.
(2)This includes 611 North America and 32 International stores as of December 31, 2022.
SegmentLeased Square Footage
(1)Owned Square Footage
(1)
North America 403,984 13,595
International 140,898 6,292
AWS 18,034 15,446
Total 562,916 35,333
 ___________________
(1)Segment amounts exclude corporate facilities. Shared facilities are allocated among the segments based on usage and primarily relate to facilities that hold
our technology infrastructure. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment Information.”
We own and lease our corporate headquarters in Washington’s Puget Sound region and Arlington, Virginia.
Item 3. Legal Proceedings
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings.”
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities
Market Information
Our common stock is traded on the Nasdaq Global Select Market under the symbol “AMZN.”
Holders
As of January 25, 2023, there were 10,845 shareholders of record of our common stock, although there is a much larger number of beneficial owners.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical fact, including statements regarding guidance, industry prospects, or future results of operations or financial
position, made in this Annual Report on Form 10-K are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar
expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual
results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global
economic conditions and customer demand and spending, inflation, interest rates, regional labor market and global supply chain constraints, world events, the
rate of growth of the Internet, online commerce, and cloud services, the amount that Amazon.com invests in new business opportunities and the timing of those
investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we
owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes
of claims, litigation, government investigations, and other proceedings, fulfillment, sortation, delivery, and data center optimization, risks of inventory
management, variability in demand, the degree to which we enter into, maintain, and develop commercial agreements, proposed and completed acquisitions
and strategic transactions, payments risks, and risks of fulfillment throughput and productivity. In addition, global economic and geopolitical conditions and
additional or unforeseen circumstances, developments, or events may give rise to or amplify many of these risks. These risks and uncertainties, as well as other
risks and uncertainties that could cause our actual results or outcomes to differ significantly from management’s expectations, are described in greater detail in
Item 1A of Part I, “Risk Factors.”
Overview
Our primary source of revenue is the sale of a wide range of products and services to customers. The products offered through our stores include
merchandise and content we have purchased for resale and products offered by third-party sellers, and we also manufacture and sell electronic devices and


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produce media content. Generally, we recognize gross revenue from items we sell from our inventory as product sales and recognize our net share of revenue
of items sold by third-party sellers as service sales. We seek to increase unit sales across our stores, through increased product selection, across numerous
product categories. We also offer other services such as compute, storage, and database offerings, fulfillment, advertising, publishing, and digital content
subscriptions.
Our financial focus is on long-term, sustainable growth in free cash flows. Free cash flows are driven primarily by increasing operating income and
efficiently managing accounts receivable, inventory, accounts payable, and cash capital expenditures, including our decision to purchase or lease property and
equipment. Increases in operating income primarily result from increases in sales of products and services and efficiently managing our operating costs,
partially offset by investments we make in longer-term strategic initiatives, including capital expenditures focused on improving the customer experience. To
increase sales of products and services, we focus on improving all aspects of the customer experience, including lowering prices, improving availability,
offering faster delivery and performance times, increasing selection, producing original content, increasing product categories and service offerings, expanding
product information, improving ease of use, improving reliability, and earning customer trust. See “Results of Operations — Non-GAAP Financial Measures”
below for additional information on our non-GAAP free cash flows financial measures.
We seek to reduce our variable costs per unit and work to leverage our fixed costs. Our variable costs include product and content costs, payment
processing and related transaction costs, picking, packaging, and preparing orders for shipment, transportation, customer service support, costs necessary to run
AWS, and a portion of our marketing costs. Our fixed costs include the costs necessary to build and run our technology infrastructure; to build, enhance, and
add features to our online stores, web services, electronic devices, and digital offerings; and to build and optimize our fulfillment network. Variable costs
generally change directly with sales volume, while fixed costs generally are dependent on the timing of capacity needs, geographic expansion, category
expansion, and other factors. To decrease our variable costs on a per unit basis and enable us to lower prices for customers, we seek to increase our direct
sourcing, increase discounts from suppliers, and reduce defects in our processes. To minimize unnecessary growth in fixed costs, we seek to improve process
efficiencies and maintain a lean culture.


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efficiencies and maintain a lean culture.
We seek to turn inventory quickly and collect from consumers before our payments to vendors and sellers become due. Because consumers primarily use
credit cards in our stores, our receivables from consumers settle quickly. We expect variability in inventory turnover over time since it is affected by numerous
factors, including our product mix, the mix of sales by us and by third-party sellers, our continuing focus on in-stock inventory availability and selection of
product offerings, supply chain disruptions and resulting vendor lead times, our investment in new geographies and product lines, and the extent to which we
choose to utilize third-party fulfillment providers. We also expect some variability in accounts payable days over time since they are affected by several factors,
including the mix of product sales, the mix of sales by third-party sellers, the mix
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of suppliers, seasonality, and changes in payment and other terms over time, including the effect of balancing pricing and timing of payment terms with
suppliers.
We expect spending in technology and content will increase over time as we add computer scientists, designers, software and hardware engineers, and
merchandising employees. Our technology and content investment and capital spending projects often support a variety of product and service offerings due to
geographic expansion and the cross-functionality of our systems and operations. We seek to invest efficiently in several areas of technology and content,
including AWS, and expansion of new and existing product categories and service offerings, as well as in technology infrastructure to enhance the customer
experience and improve our process efficiencies. We believe that advances in technology, specifically the speed and reduced cost of processing power, data
storage and analytics, improved wireless connectivity, and the practical applications of artificial intelligence and machine learning, will continue to improve
users’ experience on the Internet and increase its ubiquity in people’s lives. To best take advantage of these continued advances in technology, we are investing
in AWS, which offers a broad set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services,
to developers and enterprises of all sizes. We are also investing in initiatives to build and deploy innovative and efficient software and electronic devices as
well as other initiatives including the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services.
We seek to efficiently manage shareholder dilution while maintaining the flexibility to issue shares for strategic purposes, such as financings,
acquisitions, and aligning employee compensation with shareholders’ interests. We utilize restricted stock units as our primary vehicle for equity compensation
because we believe this compensation model aligns the long-term interests of our shareholders and employees. In measuring shareholder dilution, we include
all vested and unvested stock awards outstanding, without regard to estimated forfeitures. Total shares outstanding plus outstanding stock awards were 10.5
billion and 10.6 billion as of December 31, 2021 and 2022.
Our financial reporting currency is the U.S. Dollar and changes in foreign exchange rates significantly affect our reported results and consolidated
trends. For example, if the U.S. Dollar weakens year-over-year relative to currencies in our international locations, our consolidated net sales and operating


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expenses will be higher than if currencies had remained constant. Likewise, if the U.S. Dollar strengthens year-over-year relative to currencies in our
international locations, our consolidated net sales and operating expenses will be lower than if currencies had remained constant. We believe that our increasing
diversification beyond the U.S. economy through our growing international businesses benefits our shareholders over the long-term. We also believe it is useful
to evaluate our operating results and growth rates before and after the effect of currency changes.
In addition, the remeasurement of our intercompany balances can result in significant gains and losses associated with the effect of movements in foreign
currency exchange rates. Currency volatilities may continue, which may significantly impact (either positively or negatively) our reported results and
consolidated trends and comparisons.
For additional information about each line item addressed above, refer to Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 —
Description of Business, Accounting Policies, and Supplemental Disclosures.”
Our Annual Report on Form 10-K for the year ended December 31, 2021 includes a discussion and analysis of our financial condition and results of
operations for the year ended December 31, 2020 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
Critical Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“GAAP”) requires estimates
and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the
consolidated financial statements and accompanying notes. Critical accounting estimates are those estimates made in accordance with GAAP that involve a
significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of
the Company. Based on this definition, we have identified the critical accounting estimates addressed below. We also have other key accounting policies, which
involve the use of estimates, judgments, and assumptions that are significant to understanding our results. For additional information, see Item 8 of Part II,
“Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures.” Although we
believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ
significantly from these estimates under different assumptions, judgments, or conditions.


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significantly from these estimates under different assumptions, judgments, or conditions.
Inventories
Inventories, consisting of products available for sale, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost
and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such
as through sales to individual customers, returns to product
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vendors, or liquidations, and expected recoverable values of each disposition category. These assumptions about future disposition of inventory are inherently
uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future. As a measure of sensitivity, for every 1% of
additional inventory valuation allowance as of December 31, 2022, we would have recorded an additional cost of sales of approximately $390 million.
In addition, we enter into supplier commitments for certain electronic device components and certain products. These commitments are based on
forecasted customer demand. If we reduce these commitments, we may incur additional costs.
Income Taxes
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, administrative practices,
principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other
conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes. There are many transactions that occur
during the ordinary course of business for which the ultimate tax determination is uncertain. In addition, our actual and forecasted earnings are subject to
change due to economic, political, and other conditions and significant judgment is required in determining our ability to use our deferred tax assets.
Our effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new
businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in
jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in
jurisdictions for which we are not able to realize related tax benefits, the applicability of special tax regimes, changes in foreign currency exchange rates,
changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, changes in our deferred tax assets and
liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the
global tax framework, competition, and other laws and accounting rules in various jurisdictions. In addition, a number of countries have enacted or are actively
pursuing changes to their tax laws applicable to corporate multinationals.


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pursuing changes to their tax laws applicable to corporate multinationals.
We are also currently subject to tax controversies in various jurisdictions, and these jurisdictions may assess additional income tax liabilities against us.
Developments in an audit, investigation, or other tax controversy could have a material effect on our operating results or cash flows in the period or periods for
which that development occurs, as well as for prior and subsequent periods. We regularly assess the likelihood of an adverse outcome resulting from these
proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable, the final outcome of audits, investigations,
and any other tax controversies could be materially different from our historical income tax provisions and accruals.
Liquidity and Capital Resources
Cash flow information is as follows (in millions):
  Year Ended December 31,
 2021 2022
Cash provided by (used in):
Operating activities $ 46,327 $ 46,752 
Investing activities (58,154) (37,601)
Financing activities 6,291 9,718 
Our principal sources of liquidity are cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, which, at
fair value, were $96.0 billion and $70.0 billion as of December 31, 2021 and 2022. Amounts held in foreign currencies were $22.7 billion and $18.3 billion as
of December 31, 2021 and 2022. Our foreign currency balances include British Pounds, Canadian Dollars, Euros, and Japanese Yen.
Cash provided by (used in) operating activities was $46.3 billion and $46.8 billion in 2021 and 2022. Our operating cash flows result primarily from cash
received from our consumer, seller, developer, enterprise, and content creator customers, and advertisers, offset by cash payments we make for products and
services, employee compensation, payment processing and related transaction costs, operating leases, and interest payments. Cash received from our customers
and other activities generally corresponds to our net sales. The increase in operating cash flow in 2022, compared to the prior year, was primarily due to the
increase in net income, excluding non-cash expenses, partially offset by changes in working capital. Working capital at any specific point in time is subject to


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many variables, including variability in demand, inventory management and category expansion, the timing of cash receipts and payments, customer and
vendor payment terms, and fluctuations in foreign exchange rates.
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Cash provided by (used in) investing activities corresponds with cash capital expenditures, including leasehold improvements, incentives received from
property and equipment vendors, proceeds from asset sales, cash outlays for acquisitions, investments in other companies and intellectual property rights, and
purchases, sales, and maturities of marketable securities. Cash provided by (used in) investing activities was $(58.2) billion and $(37.6) billion in 2021 and
2022, with the variability caused primarily by purchases, sales, and maturities of marketable securities. Cash capital expenditures were $55.4 billion, and $58.3
billion in 2021 and 2022, which primarily reflect investments in technology infrastructure (the majority of which is to support AWS business growth) and in
additional capacity to support our fulfillment network. We expect to continue these investments over time, with increased spending on technology
infrastructure. We made cash payments, net of acquired cash, related to acquisition and other investment activity of $2.0 billion and $8.3 billion in 2021 and
2022. We funded the acquisition of MGM Holdings Inc. with cash on hand. We expect to fund the acquisitions of 1Life Healthcare, Inc. (One Medical) and
iRobot Corporation with cash on hand.
Cash provided by (used in) financing activities was $6.3 billion and $9.7 billion in 2021 and 2022. Cash inflows from financing activities resulted from
proceeds from short-term debt, and other and long-term-debt of $27.0 billion and $62.7 billion in 2021 and 2022. Cash outflows from financing activities
resulted from repurchases of common stock, payments of short-term debt, and other, long-term debt, finance leases, and financing obligations of $20.7 billion
and $53.0 billion in 2021 and 2022. Property and equipment acquired under finance leases was $7.1 billion and $675 million in 2021 and 2022.
We had no borrowings outstanding under the two unsecured revolving credit facilities, $6.8 billion of borrowings outstanding under the commercial
paper programs, and $1.0 billion of borrowings outstanding under the secured revolving credit facility as of December 31, 2022. See Item 8 of Part II,


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“Financial Statements and Supplementary Data — Note 6 — Debt” for additional information. 
As of December 31, 2022, cash, cash equivalents, and marketable securities held by foreign subsidiaries were $4.7 billion. We intend to invest
substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in
which we would incur significant, additional costs upon repatriation of such amounts.
Our U.S. taxable income is reduced by accelerated depreciation deductions and increased by the impact of capitalized research and development
expenses. U.S. tax rules provide for enhanced accelerated depreciation deductions by allowing the election of full expensing of qualified property, primarily
equipment, through 2022. Our federal tax provision included a partial election for 2020 and 2021, and a full election for 2022. Effective January 1, 2022,
research and development expenses are required to be capitalized and amortized for U.S. tax purposes, which delays the deductibility of these expenses. Cash
taxes paid (net of refunds) were $3.7 billion and $6.0 billion for 2021 and 2022.
As of December 31, 2021 and 2022, restricted cash, cash equivalents, and marketable securities were $260 million and $365 million. See Item 8 of Part
II, “Financial Statements and Supplementary Data — Note 6 — Debt” and “Financial Statements and Supplementary Data — Note 7 — Commitments and
Contingencies” for additional discussion of our principal contractual commitments, as well as our pledged assets. Additionally, we have purchase obligations
and open purchase orders, including for inventory and capital expenditures, that support normal operations and are primarily due in the next twelve months.
These purchase obligations and open purchase orders are generally cancellable in full or in part through the contractual provisions.
We believe that cash flows generated from operations and our cash, cash equivalents, and marketable securities balances, as well as our borrowing
arrangements, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months. However, any projections of future cash needs
and cash flows are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.” We continually evaluate opportunities to sell additional equity or


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debt securities, obtain credit facilities, obtain finance and operating lease arrangements, enter into financing obligations, repurchase common stock, pay
dividends, or repurchase, refinance, or otherwise restructure our debt for strategic reasons or to further strengthen our financial position.
The sale of additional equity or convertible debt securities would be dilutive to our shareholders. In addition, we will, from time to time, consider the
acquisition of, or investment in, complementary businesses, products, services, capital infrastructure, and technologies, which might affect our liquidity
requirements or cause us to secure additional financing, or issue additional equity or debt securities. There can be no assurance that additional credit lines or
financing instruments will be available in amounts or on terms acceptable to us, if at all. In addition, economic conditions and actions by policymaking bodies
are contributing to rising interest rates and significant capital market volatility, which, along with increases in our borrowing levels, could increase our future
borrowing costs.
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Results of Operations
We have organized our operations into three segments: North America, International, and AWS. These segments reflect the way the Company evaluates
its business performance and manages its operations. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment
Information.”
Overview
Macroeconomic factors, including inflation, increased interest rates, significant capital market volatility, the prolonged COVID-19 pandemic, global
supply chain constraints, and global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to
isolate and quantify. These factors contributed to increases in our operating costs during 2022, particularly across our North America and International
segments, primarily due to a return to more normal, seasonal demand volumes in relation to our fulfillment network fixed costs, increased transportation and
utility costs, and increased wage rates. In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand
and our ability to forecast consumer spending patterns. We also expect the current macroeconomic environment and enterprise customer cost optimization
efforts to impact our AWS revenue growth rates. We expect some or all of these factors to continue to impact our operations into Q1 2023.
Net Sales
Net sales include product and service sales. Product sales represent revenue from the sale of products and related shipping fees and digital media content
where we record revenue gross. Service sales primarily represent third-party seller fees, which includes commissions and any related fulfillment and shipping
fees, AWS sales, advertising services, Amazon Prime membership fees, and certain digital content subscriptions. Net sales information is as follows (in
millions):
  Year Ended December 31,
 2021 2022
Net Sales:
North America $ 279,833 $ 315,880 
International 127,787 118,007 
AWS 62,202 80,096 
Consolidated $ 469,822 $ 513,983 
Year-over-year Percentage Growth (Decline):
North America 18 % 13 %
International 22 (8)
AWS 37 29 
Consolidated 22 9 
Year-over-year Percentage Growth, excluding the effect of foreign exchange rates:
North America 18 % 13 %
International 20 4 
AWS 37 29 
Consolidated 21 13 
Net sales mix:


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Consolidated 21 13 
Net sales mix:
North America 60 % 61 %
International 27 23 
AWS 13 16 
Consolidated 100 % 100 %
Sales increased 9% in 2022, compared to the prior year. Changes in foreign currency exchange rates reduced net sales by $15.5 billion in 2022. For a
discussion of the effect of foreign exchange rates on sales growth, see “Effect of Foreign Exchange Rates” below.
North America sales increased 13% in 2022, compared to the prior year. The sales growth primarily reflects increased unit sales, including sales by third-
party sellers, advertising sales, and subscription services. Increased unit sales were driven largely by our continued focus on price, selection, and convenience
for our customers, including from our shipping offers.
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International sales decreased 8% in 2022, compared to the prior year, primarily due to the impact of changes in foreign currency exchange rates, partially
offset by increased unit sales, including sales by third-party sellers, advertising sales, and subscription services. Increased unit sales were driven largely by our
continued focus on price, selection, and convenience for our customers, including from our shipping offers. Changes in foreign currency exchange rates
reduced International net sales by $15.0 billion in 2022.
AWS sales increased 29% in 2022, compared to the prior year. The sales growth primarily reflects increased customer usage, partially offset by pricing
changes, primarily driven by long-term customer contracts.
Operating Income (Loss)
Operating income (loss) by segment is as follows (in millions):
Year Ended December 31,
2021 2022
Operating Income (Loss)
North America $ 7,271 $ (2,847)
International (924) (7,746)
AWS 18,532 22,841 
Consolidated $ 24,879 $ 12,248 
Operating income was $24.9 billion and $12.2 billion for 2021 and 2022. We believe that operating income is a more meaningful measure than gross
profit and gross margin due to the diversity of our product categories and services.
The North America operating loss in 2022, as compared to the operating income in the prior year, is primarily due to increased fulfillment and shipping
costs, due in part to increases in investments in our fulfillment network, transportation costs, and wage rates and incentives, increased technology and content
costs, and growth in certain operating expenses, partially offset by increased unit sales, including sales by third-party sellers, and advertising sales. Changes in
foreign currency exchange rates positively impacted operating loss by $274 million in 2022.
The increase in International operating loss in absolute dollars in 2022, compared to the prior year, is primarily due to increased fulfillment and shipping
costs, due in part to increases in investments in our fulfillment network, transportation costs, and wage rates and incentives, increased technology and content
costs, and growth in certain operating expenses, partially offset by increased advertising sales and increased unit sales, including sales by third-party sellers.
Changes in foreign currency exchange rates negatively impacted operating loss by $857 million in 2022.


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The increase in AWS operating income in absolute dollars in 2022, compared to the prior year, is primarily due to increased sales and cost structure
productivity, including a reduction in depreciation and amortization expense from our change in the estimated useful lives of our servers and networking
equipment, partially offset by increased payroll and related expenses and spending on technology infrastructure, all of which were primarily driven by
additional investments to support AWS business growth. Changes in foreign currency exchange rates positively impacted operating income by $1.4 billion in
2022.
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Operating Expenses
Information about operating expenses is as follows (in millions): 
 Year Ended December 31,
  2021 2022
Operating expenses:
Cost of sales $ 272,344 $ 288,831 
Fulfillment 75,111 84,299 
Technology and content 56,052 73,213 
Sales and marketing 32,551 42,238 
General and administrative 8,823 11,891 
Other operating expense (income), net 62 1,263 
Total operating expenses $ 444,943 $ 501,735 
Year-over-year Percentage Growth (Decline):
Cost of sales 17 % 6 %
Fulfillment 28 12 
Technology and content 31 31 
Sales and marketing 48 30 
General and administrative 32 35 
Other operating expense (income), net (183) 1,936 
Percent of Net Sales:
Cost of sales 58.0 % 56.2 %
Fulfillment 16.0 16.4 
Technology and content 11.9 14.2 
Sales and marketing 6.9 8.2 
General and administrative 1.9 2.3 
Other operating expense (income), net 0.0 0.2 
Cost of Sales
Cost of sales primarily consists of the purchase price of consumer products, inbound and outbound shipping costs, including costs related to sortation and
delivery centers and where we are the transportation service provider, and digital media content costs where we record revenue gross, including video and
music.
The increase in cost of sales in absolute dollars in 2022, compared to the prior year, is primarily due to increased shipping and product costs resulting
from increased sales and increases in investments in our fulfillment network, transportation costs, and wage rates and incentives. Changes in foreign exchange
rates reduced cost of sales by $10.8 billion in 2022.
Shipping costs to receive products from our suppliers are included in our inventory and recognized as cost of sales upon sale of products to our
customers. Shipping costs, which include sortation and delivery centers and transportation costs, were $76.7 billion and $83.5 billion in 2021 and 2022. We


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expect our cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate, we use more expensive
shipping methods, including faster delivery, and we offer additional services. We seek to mitigate costs of shipping over time in part through achieving higher
sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies. We believe that
offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.
Costs to operate our AWS segment are primarily classified as “Technology and content” as we leverage a shared infrastructure that supports both our
internal technology requirements and external sales to AWS customers.
Fulfillment
Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International fulfillment centers, physical
stores, and customer service centers and payment processing costs. While AWS payment processing and related transaction costs are included in “Fulfillment,”
AWS costs are primarily classified as “Technology and content.” Fulfillment costs as a percentage of net sales may vary due to several factors, such as payment
processing and related
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transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and fulfilled, the extent to which third-party
sellers utilize Fulfillment by Amazon services, timing of fulfillment network and physical store expansion, the extent we utilize fulfillment services provided
by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations
and enhancements to our customer self-service features. Additionally, sales by our sellers have higher payment processing and related transaction costs as a
percentage of net sales compared to our retail sales because payment processing costs are based on the gross purchase price of underlying transactions.
The increase in fulfillment costs in absolute dollars in 2022, compared to the prior year, is primarily due to increased investments in our fulfillment
network and variable costs corresponding with increased product and service sales volume and inventory levels, and increased wage rates and incentives.
Changes in foreign exchange rates reduced fulfillment costs by $2.5 billion in 2022.
We seek to expand our fulfillment network to accommodate a greater selection and in-stock inventory levels and to meet anticipated shipment volumes
from sales of our own products as well as sales by third parties for which we provide the fulfillment services. We regularly evaluate our facility requirements.
Technology and Content
Technology and content costs include payroll and related expenses for employees involved in the research and development of new and existing products
and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and
infrastructure costs. Infrastructure costs include servers, networking equipment, and data center related depreciation and amortization, rent, utilities, and other
expenses necessary to support AWS and other Amazon businesses. Collectively, these costs reflect the investments we make in order to offer a wide variety of
products and services to our customers, including expenditures related to initiatives to build and deploy innovative and efficient software and electronic devices
and the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services.
We seek to invest efficiently in numerous areas of technology and content so we may continue to enhance the customer experience and improve our
process efficiency through rapid technology developments, while operating at an ever increasing scale. Our technology and content investment and capital
spending projects often support a variety of product and service offerings due to geographic expansion and the cross-functionality of our systems and


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operations. We expect spending in technology and content to increase over time as we continue to add employees and technology infrastructure. These costs are
allocated to segments based on usage. The increase in technology and content costs in absolute dollars in 2022, compared to the prior year, is primarily due to
increased payroll and related costs associated with technical teams responsible for expanding our existing products and services and initiatives to introduce new
products and service offerings, and an increase in spending on technology infrastructure, partially offset by a reduction in depreciation and amortization
expense from our change in the estimated useful lives of our servers and networking equipment. See Item 8 of Part II, “Financial Statements and
Supplementary Data — Note 1 — Description of Business, Accounting Policies, and Supplemental Disclosures — Use of Estimates” for additional information
on the change in estimated useful lives of our servers and networking equipment.
Sales and Marketing
Sales and marketing costs include advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales
commissions related to AWS. We direct customers to our stores primarily through a number of marketing channels, such as our sponsored search, social and
online advertising, third party customer referrals, television advertising, and other initiatives. Our marketing costs are largely variable, based on growth in sales
and changes in rates. To the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels shifts, we
would expect to see a corresponding change in our marketing costs.
The increase in sales and marketing costs in absolute dollars in 2022, compared to the prior year, is primarily due to increased payroll and related
expenses for personnel engaged in marketing and selling activities and higher marketing spend.
While costs associated with Amazon Prime membership benefits and other shipping offers are not included in sales and marketing expense, we view
these offers as effective worldwide marketing tools, and intend to continue offering them indefinitely.
General and Administrative
The increase in general and administrative costs in absolute dollars in 2022, compared to the prior year, is primarily due to increases in payroll and
related expenses and professional fees.
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Other Operating Expense (Income), Net
Other operating expense (income), net was $62 million and $1.3 billion during 2021 and 2022, and was primarily related to the amortization of intangible
assets and, for 2022, $1.1 billion of impairments of property and equipment and operating leases.
Interest Income and Expense
Our interest income was $448 million and $989 million during 2021 and 2022, primarily due to an increase in prevailing rates. We generally invest our
excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities. Our interest income corresponds with
the average balance of invested funds based on the prevailing rates, which vary depending on the geographies and currencies in which they are invested.
Interest expense was $1.8 billion and $2.4 billion in 2021 and 2022 and was primarily related to debt and finance leases. See Item 8 of Part II, “Financial
Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for additional information.
Our long-term lease liabilities were $67.7 billion and $73.0 billion as of December 31, 2021 and 2022. Our long-term debt was $48.7 billion and $67.1
billion as of December 31, 2021 and 2022. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Leases and Note 6 — Debt” for
additional information.
Other Income (Expense), Net
Other income (expense), net was $14.6 billion and $(16.8) billion during 2021 and 2022. The primary components of other income (expense), net are
related to equity securities valuations and adjustments, equity warrant valuations, and foreign currency. Included in other income (expense), net in 2021 and
2022 is a marketable equity securities valuation gain (loss) of $11.8 billion and $(12.7) billion from our equity investment in Rivian.
Income Taxes
Our effective tax rate is subject to significant variation due to several factors, including variability in our pre-tax and taxable income and loss and the mix
of jurisdictions to which they relate, intercompany transactions, the applicability of special tax regimes, changes in how we do business, acquisitions,


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investments, developments in tax controversies, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, foreign
currency gains (losses), changes in statutes, regulations, case law, and administrative practices, principles, and interpretations related to tax, including changes
to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax
benefits are not recognized. Our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of
discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. In addition, we record valuation allowances
against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions.
We recorded a provision (benefit) for income taxes of $4.8 billion and $(3.2) billion in 2021 and 2022. See Item 8 of Part II, “Financial Statements and
Supplementary Data — Note 9 — Income Taxes” for additional information.
Non-GAAP Financial Measures
Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other SEC regulations define and prescribe the conditions for use of certain
non-GAAP financial information. Our measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations meet
the definition of non-GAAP financial measures.
We provide multiple measures of free cash flows because we believe these measures provide additional perspective on the impact of acquiring property
and equipment with cash and through finance leases and financing obligations.
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Free Cash Flow
Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, net of proceeds from sales and incentives.” The following
is a reconciliation of free cash flow to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2021 and 2022
(in millions):
 Year Ended December 31,
 2021 2022
Net cash provided by (used in) operating activities $ 46,327 $ 46,752 
Purchases of property and equipment, net of proceeds from sales and incentives (55,396) (58,321)
Free cash flow $ (9,069)$ (11,569)
Net cash provided by (used in) investing activities $ (58,154)$ (37,601)
Net cash provided by (used in) financing activities $ 6,291 $ 9,718 
Free Cash Flow Less Principal Repayments of Finance Leases and Financing Obligations
Free cash flow less principal repayments of finance leases and financing obligations is free cash flow reduced by “Principal repayments of finance
leases” and “Principal repayments of financing obligations.” Principal repayments of finance leases and financing obligations approximates the actual
payments of cash for our finance leases and financing obligations. The following is a reconciliation of free cash flow less principal repayments of finance
leases and financing obligations to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2021 and 2022 (in
millions):
 Year Ended December 31,
 2021 2022
Net cash provided by (used in) operating activities $ 46,327 $ 46,752 
Purchases of property and equipment, net of proceeds from sales and incentives (55,396) (58,321)
Free cash flow (9,069) (11,569)
Principal repayments of finance leases (11,163) (7,941)
Principal repayments of financing obligations (162) (248)
Free cash flow less principal repayments of finance leases and financing obligations $ (20,394)$ (19,758)
Net cash provided by (used in) investing activities $ (58,154)$ (37,601)
Net cash provided by (used in) financing activities $ 6,291 $ 9,718 
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Free Cash Flow Less Equipment Finance Leases and Principal Repayments of All Other Finance Leases and Financing Obligations
Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations is free cash flow reduced by
equipment acquired under finance leases, which is included in “Property and equipment acquired under finance leases, net of remeasurements and
modifications,” principal repayments of all other finance lease liabilities, which is included in “Principal repayments of finance leases,” and “Principal
repayments of financing obligations.” All other finance lease liabilities and financing obligations consists of property. In this measure, equipment acquired
under finance leases is reflected as if these assets had been purchased with cash, which is not the case as these assets have been leased. The following is a
reconciliation of free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations to the most
comparable GAAP cash flow measure, “Net cash provided by (used in) operating activities,” for 2021 and 2022 (in millions):
 Year Ended December 31,
 2021 2022
Net cash provided by (used in) operating activities $ 46,327 $ 46,752 
Purchases of property and equipment, net of proceeds from sales and incentives (55,396) (58,321)
Free cash flow (9,069) (11,569)
Equipment acquired under finance leases (1) (4,422) (299)
Principal repayments of all other finance leases (2) (687) (670)
Principal repayments of financing obligations (162) (248)
Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing
obligations $ (14,340)$ (12,786)
Net cash provided by (used in) investing activities $ (58,154)$ (37,601)
Net cash provided by (used in) financing activities $ 6,291 $ 9,718 
___________________
(1)For the year ended December 31, 2021 and 2022, this amount relates to equipment included in “Property and equipment acquired under finance leases, net
of remeasurements and modifications” of $7,061 million and $675 million.


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(2)For the year ended December 31, 2021 and 2022, this amount relates to property included in “Principal repayments of finance leases” of $11,163 million
and $7,941 million.
All of these free cash flows measures have limitations as they omit certain components of the overall cash flow statement and do not represent the
residual cash flow available for discretionary expenditures. For example, these measures of free cash flows do not incorporate the portion of payments
representing principal reductions of debt or cash payments for business acquisitions. Additionally, our mix of property and equipment acquisitions with cash or
other financing options may change over time. Therefore, we believe it is important to view free cash flows measures only as a complement to our entire
consolidated statements of cash flows.
Effect of Foreign Exchange Rates
Information regarding the effect of foreign exchange rates, versus the U.S. Dollar, on our net sales, operating expenses, and operating income is provided
to show reported period operating results had the foreign exchange rates remained the same as those in effect in the comparable prior year period. The effect on
our net sales, operating expenses, and operating income from changes in our foreign exchange rates versus the U.S. Dollar is as follows (in millions):
 Year Ended December 31, 2021 Year Ended December 31, 2022
  As
ReportedExchange
Rate
Effect (1)At Prior
Year
Rates (2)As
ReportedExchange
Rate
Effect (1)At Prior
Year
Rates (2)
Net sales $469,822 $ (3,804)$466,018 $513,983 $ 15,495 $529,478 
Operating expenses 444,943 (3,653) 441,290 501,735 16,356 518,091 
Operating income 24,879 (151) 24,728 12,248 (861) 11,387 
___________________
(1)Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year period for
operating results.
(2)Represents the outcome that would have resulted had foreign exchange rates in the reported period been the same as those in effect in the comparable prior
year period for operating results.
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Guidance
We provided guidance on February 2, 2023, in our earnings release furnished on Form 8-K as set forth below. These forward-looking statements reflect
Amazon.com’s expectations as of February 2, 2023, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially
affected by many factors, such as uncertainty regarding the impacts of the COVID-19 pandemic, fluctuations in foreign exchange rates, changes in global
economic and geopolitical conditions and customer demand and spending (including the impact of recessionary fears), inflation, interest rates, regional labor
market and global supply chain constraints, world events, the rate of growth of the Internet, online commerce, and cloud services, as well as those outlined in
Item 1A of Part I, “Risk Factors.”
First Quarter 2023 Guidance
•Net sales are expected to be between $121.0 billion and $126.0 billion, or to grow between 4% and 8% compared with first quarter 2022. This
guidance anticipates an unfavorable impact of approximately 210 basis points from foreign exchange rates.
•Operating income is expected to be between $0 and $4.0 billion, compared with $3.7 billion in first quarter 2022.
•This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk for the effect of interest rate changes, foreign currency fluctuations, and changes in the market values of our investments.
Information relating to quantitative and qualitative disclosures about market risk is set forth below and in Item 7 of Part II, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our debt. Our long-term debt is carried at
amortized cost and fluctuations in interest rates do not impact our consolidated financial statements. However, the fair value of our long-term debt, which pays
interest at a fixed rate, will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of
increasing rates of interest.
We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities. Fixed
income securities may have their fair market value adversely affected due to a rise in interest rates, and we may suffer losses in principal if forced to sell
securities that have declined in market value due to changes in interest rates. The following table provides information about our cash equivalents and
marketable fixed income securities, including principal cash flows by expected maturity and the related weighted-average interest rates as of December 31,
2022 (in millions, except percentages):
2023 2024 2025 2026 2027 Thereafter TotalEstimated Fair
Value as of
December 31,
2022
Money market funds $ 27,899 $ — $ — $ — $ — $ — $ 27,899 $ 27,899 
Weighted average interest rate 4.18 % — % — % — % — % — % 4.18 %
Corporate debt securities 17,500 2,486 2,332 748 9 — 23,075 22,627 
Weighted average interest rate 4.06 % 0.97 % 1.23 % 1.45 % 2.33 % — % 3.35 %
U.S. government and agency securities 819 358 554 396 80 75 2,282 2,146


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Weighted average interest rate 1.05 % 0.98 % 0.81 % 0.83 % 1.24 % 1.83 % 0.98 %
Asset-backed securities 1,059 872 413 146 128 72 2,690 2,572 
Weighted average interest rate 0.99 % 1.30 % 1.37 % 1.39 % 1.41 % 1.06 % 1.19 %
Foreign government and agency
securities 519 19 — — — — 538 535 
Weighted average interest rate 4.24 % 0.60 % — % — % — % — % 4.11 %
Other fixed income securities 138 61 48 — — — 247 237 
Weighted average interest rate 0.40 % 0.56 % 1.15 % — % — % — % 0.58 %
$ 47,934 $ 3,796 $ 3,347 $ 1,290 $ 217 $ 147 $ 56,731 
Cash equivalents and marketable
fixed income securities $ 56,016 
As of December 31, 2022, we had long-term debt with a face value of $70.5 billion, including the current portion, primarily consisting of fixed rate
unsecured senior notes. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 6 — Debt” for additional information.
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Foreign Exchange Risk
During 2022, net sales from our International segment accounted for 23% of our consolidated revenues. Net sales and related expenses generated from
our internationally-focused stores, including within Canada and Mexico (which are included in our North America segment), are primarily denominated in the
functional currencies of the corresponding stores and primarily include Euros, British Pounds, and Japanese Yen. The results of operations of, and certain of our
intercompany balances associated with, our internationally-focused stores and AWS are exposed to foreign exchange rate fluctuations. Upon consolidation, as
foreign exchange rates vary, net sales and other operating results may differ materially from expectations, and we may record significant gains or losses on the
remeasurement of intercompany balances. For example, as a result of fluctuations in foreign exchange rates throughout the year compared to rates in effect the
prior year, International segment net sales decreased by $15.0 billion in comparison with the prior year.
We have foreign exchange risk related to foreign-denominated cash, cash equivalents, and marketable securities (“foreign funds”). Based on the balance
of foreign funds as of December 31, 2022, of $18.3 billion, an assumed 5%, 10%, and 20% adverse change to foreign exchange would result in declines of
$915 million, $1.8 billion, and $3.7 billion.
We also have foreign exchange risk related to our intercompany balances denominated in various foreign currencies. Based on the intercompany balances
as of December 31, 2022, an assumed 5%, 10%, and 20% adverse change to foreign exchange rates would result in losses of $275 million, $555 million, and
$1.1 billion, recorded to “Other income (expense), net.”
See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Effect of
Foreign Exchange Rates” for additional information on the effect on reported results of changes in foreign exchange rates.
Equity Investment Risk
As of December 31, 2022, our recorded value in equity and equity warrant investments in public and private companies was $7.2 billion. Our equity and
equity warrant investments in publicly traded companies, which primarily relate to Rivian, represent $5.0 billion of our investments as of December 31, 2022,


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and are recorded at fair value, which is subject to market price volatility. We record our equity warrant investments in private companies at fair value and adjust
our equity investments in private companies for observable price changes or impairments. Valuations of private companies are inherently more complex due to
the lack of readily available market data. The current global economic conditions provide additional uncertainty. As such, we believe that market sensitivities
are not practicable. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business, Accounting Policies, and
Supplemental Disclosures” for additional information.
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Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Page
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID: 42) 34
Consolidated Statements of Cash Flows 36
Consolidated Statements of Operations 37
Consolidated Statements of Comprehensive Income (Loss) 38
Consolidated Balance Sheets 39
Consolidated Statements of Stockholders’ Equity 40
Notes to Consolidated Financial Statements 41
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Amazon.com, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Amazon.com, Inc. (the Company) as of December 31, 2022 and 2021, and the related
consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 2, 2023 expressed an unqualified
opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated


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financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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Uncertain Tax Positions
Description of
the MatterAs discussed in Notes 1 and 9 of the consolidated financial statements, the Company is subject to income taxes in the U.S. and
numerous foreign jurisdictions and during the ordinary course of business, there are many tax positions for which the ultimate tax
determination is uncertain. As a result, significant judgment is required in evaluating the Company’s tax positions and determining its
provision for income taxes. The Company uses significant judgment in (1) determining whether a tax position’s technical merits are
more likely than not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition. As of December 31,
2022, the Company reported accrued liabilities of $4.0 billion for various tax contingencies.
Auditing the recognition and measurement of the Company’s tax contingencies was challenging because the evaluation of whether a
tax position is more likely than not to be sustained and the measurement of the benefit of various tax positions can be complex and
involves significant auditor judgment. Management’s evaluation of tax positions is based on interpretations of tax laws and legal
rulings, and may be impacted by regulatory changes and judicial and examination activity.
How We Addressed the
Matter in Our AuditWe tested controls over the Company’s process to assess the technical merits of its tax contingencies, including controls over: the
assessment as to whether a tax position is more likely than not to be sustained; the measurement of the benefit of its tax positions,
both initially and on an ongoing basis; and the development of the related disclosures.
We involved our international tax, transfer pricing, and research and development tax professionals in assessing the technical merits
of certain of the Company’s tax positions. Depending on the nature of the specific tax position and, as applicable, developments with
the relevant tax authorities relating thereto, our procedures included obtaining and examining the Company’s analysis including the
Company’s correspondence with such tax authorities and evaluating the underlying facts upon which the tax positions are based. We
used our knowledge of and experience with international, transfer pricing, and other income tax laws of the relevant taxing
jurisdictions to evaluate the Company’s accounting for its tax contingencies. We evaluated developments in the applicable regulatory
environments to assess potential effects on the Company’s positions, including recent decisions in relevant court cases. We analyzed
the appropriateness of the Company’s assumptions and the accuracy of the Company’s calculations and data used to determine the


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amount of tax benefits to recognize. We evaluated the Company’s income tax disclosures in relation to these matters.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1996.
Seattle, Washington
February 2, 2023
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AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
  Year Ended December 31,
 2020 2021 2022
CASH, CASH EQUIV ALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD $ 36,410 $ 42,377 $ 36,477 
OPERA TING ACTIVITIES:
Net income (loss) 21,331 33,364 (2,722)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization of property and equipment and capitalized content costs, operating lease
assets, and other 25,180 34,433 41,921 
Stock-based compensation 9,208 12,757 19,621 
Other expense (income), net (2,582) (14,306) 16,966 
Deferred income taxes (554) (310) (8,148)
Changes in operating assets and liabilities:
Inventories (2,849) (9,487) (2,592)
Accounts receivable, net and other (8,169) (18,163) (21,897)
Accounts payable 17,480 3,602 2,945 
Accrued expenses and other 5,754 2,123 (1,558)
Unearned revenue 1,265 2,314 2,216 
Net cash provided by (used in) operating activities 66,064 46,327 46,752 
INVESTING ACTIVITIES:
Purchases of property and equipment (40,140) (61,053) (63,645)
Proceeds from property and equipment sales and incentives 5,096 5,657 5,324 
Acquisitions, net of cash acquired, and other (2,325) (1,985) (8,316)
Sales and maturities of marketable securities 50,237 59,384 31,601 
Purchases of marketable securities (72,479) (60,157) (2,565)
Net cash provided by (used in) investing activities (59,61 1) (58,154) (37,601)
FINANCING ACTIVITIES:


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FINANCING ACTIVITIES:
Common stock repurchased — — (6,000)
Proceeds from short-term debt, and other 6,796 7,956 41,553 
Repayments of short-term debt, and other (6,177) (7,753) (37,554)
Proceeds from long-term debt 10,525 19,003 21,166 
Repayments of long-term debt (1,553) (1,590) (1,258)
Principal repayments of finance leases (10,642) (11,163) (7,941)
Principal repayments of financing obligations (53) (162) (248)
Net cash provided by (used in) financing activities (1,104) 6,291 9,718 
Foreign currency ef fect on cash, cash equivalents, and restricted cash 618 (364) (1,093)
Net increase (decrease) in cash, cash equivalents, and restricted cash 5,967 (5,900) 17,776 
CASH, CASH EQUIV ALENTS, AND RESTRICTED CASH, END OF PERIOD $ 42,377 $ 36,477 $ 54,253 
See accompanying notes to consolidated financial statements.
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AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
  Year Ended December 31,
 2020 2021 2022
Net product sales $ 215,915 $ 241,787 $ 242,901 
Net service sales 170,149 228,035 271,082 
Total net sales 386,064 469,822 513,983 
Operating expenses:
Cost of sales 233,307 272,344 288,831 
Fulfillment 58,517 75,111 84,299 
Technology and content 42,740 56,052 73,213 
Sales and marketing 22,008 32,551 42,238 
General and administrative 6,668 8,823 11,891 
Other operating expense (income), net (75) 62 1,263 
Total operating expenses 363,165 444,943 501,735 
Operating income 22,899 24,879 12,248 
Interest income 555 448 989 
Interest expense (1,647) (1,809) (2,367)
Other income (expense), net 2,371 14,633 (16,806)
Total non-operating income (expense) 1,279 13,272 (18,184)
Income (loss) before income taxes 24,178 38,151 (5,936)
Benefit (provision) for income taxes (2,863) (4,791) 3,217 
Equity-method investment activity, net of tax 16 4 (3)
Net income (loss) $ 21,331 $ 33,364 $ (2,722)
Basic earnings per share $ 2.13 $ 3.30 $ (0.27)
Diluted earnings per share $ 2.09 $ 3.24 $ (0.27)
Weighted-average shares used in computation of earnings per share:
Basic 10,005 10,117 10,189 
Diluted 10,198 10,296 10,189 
See accompanying notes to consolidated financial statements.
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AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
  Year Ended December 31,
 2020 2021 2022
Net income (loss) $ 21,331 $ 33,364 $ (2,722)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $(36), $47, and $100 561 (819) (2,586)
Net change in unrealized gains (losses) on available-for-sale debt securities:
Unrealized gains (losses), net of tax of $(83), $72, and $159 273 (343) (823)
Reclassification adjustment for losses (gains) included in “Other income (expense),
net,” net of tax of $8, $13, and $0 (28) (34) 298 
Net unrealized gains (losses) on available-for-sale debt securities 245 (377) (525)
Total other comprehensive income (loss) 806 (1,196) (3,111)
Comprehensive income (loss) $ 22,137 $ 32,168 $ (5,833)
See accompanying notes to consolidated financial statements.
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AMAZON.COM, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
December 31,
 2021 2022
ASSETS
Current assets:
Cash and cash equivalents $ 36,220 $ 53,888 
Marketable securities 59,829 16,138 
Inventories 32,640 34,405 
Accounts receivable, net and other 32,891 42,360 
Total current assets 161,580 146,791 
Property and equipment, net 160,281 186,715 
Operating leases 56,082 66,123 
Goodwill 15,371 20,288 
Other assets 27,235 42,758 
Total assets $ 420,549 $ 462,675 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 78,664 $ 79,600 
Accrued expenses and other 51,775 62,566 
Unearned revenue 11,827 13,227 
Total current liabilities 142,266 155,393 
Long-term lease liabilities 67,651 72,968 
Long-term debt 48,744 67,150 
Other long-term liabilities 23,643 21,121 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock ($0.01 par value; 500 shares authorized; no shares issued or outstanding) — — 
Common stock ($0.01 par value; 100,000 shares authorized; 10,644 and 10,757 shares issued; 10,175 and
10,242 shares outstanding) 106 108 
Treasury stock, at cost (1,837) (7,837)
Additional paid-in capital 55,437 75,066 
Accumulated other comprehensive income (loss) (1,376) (4,487)
Retained earnings 85,915 83,193 
Total stockholders’ equity 138,245 146,043 
Total liabilities and stockholders’ equity $ 420,549 $ 462,675 
See accompanying notes to consolidated financial statements.
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AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
 Common Stock     
 Shares AmountTreasury
StockAdditional
Paid-In
CapitalAccumulated Other
Comprehensive
Income (Loss)Retained
EarningsTotal
Stockholders’
Equity
Balance as of January 1, 2020 9,950 $ 104 $ (1,837) $ 33,559 $ (986) $ 31,220 $ 62,060 
Net income — — — — — 21,331 21,331 
Other comprehensive income (loss) — — — — 806 — 806 
Stock-based compensation and issuance of employee
benefit plan stock 116 1 — 9,206 — — 9,207 
Balance as of December 31, 2020 10,066 105 (1,837) 42,765 (180) 52,551 93,404 
Net income — — — — — 33,364 33,364 
Other comprehensive income (loss) — — — — (1,196) — (1,196)
Stock-based compensation and issuance of employee
benefit plan stock 109 1 — 12,672 — — 12,673 
Balance as of December 31, 2021 10,175 106 (1,837) 55,437 (1,376) 85,915 138,245 
Net loss — — — — — (2,722) (2,722)
Other comprehensive income (loss) — — — — (3,111) — (3,111)
Stock-based compensation and issuance of employee
benefit plan stock 113 2 — 19,629 — — 19,631 
Common stock repurchased (46) — (6,000) — — — (6,000)
Balance as of December 31, 2022 10,242 $ 108 $ (7,837) $ 75,066 $ (4,487) $ 83,193 $ 146,043 
See accompanying notes to consolidated financial statements.
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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — DESCRIPTION OF BUSINESS, ACCOUNTING POLICIES, AND SUPPLEMENTAL DISCLOSURES
Description of Business
We seek to be Earth’s most customer-centric company. In each of our segments, we serve our primary customer sets, consisting of consumers, sellers,
developers, enterprises, content creators, advertisers, and employees. We serve consumers through our online and physical stores and focus on selection, price,
and convenience. We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders through us, and programs
that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. We serve
developers and enterprises of all sizes through AWS, which offers a broad set of on-demand technology services, including compute, storage, database,
analytics, and machine learning, and other services. We also manufacture and sell electronic devices. In addition, we provide advertising services to sellers,
vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.
We have organized our operations into three segments: North America, International, and AWS. See “Note 10 — Segment Information.”
Common Stock Split
On May 27, 2022, we effected a 20-for-1 stock split of our common stock and proportionately increased the number of authorized shares of common
stock. All share, restricted stock unit (“RSU”), and per share or per RSU information throughout this Annual Report on Form 10-K has been retroactively
adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the
increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common stock.”
Prior Period Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. “Other operating expense (income), net” was
reclassified into “Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other” on our consolidated
statements of cash flows.
Principles of Consolidation


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statements of cash flows.
Principles of Consolidation
The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of
its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in
India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are
eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates
are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-
based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, impairment of property and equipment and operating
leases, valuation and impairment of investments, self-insurance liabilities, and viewing patterns of capitalized video content. Actual results could differ
materially from these estimates. We review the useful lives of equipment on an ongoing basis, and effective January 1, 2022 we changed our estimate of the
useful lives for our servers from four years to five years and for our networking equipment from five years to six years. The longer useful lives are due to
continuous improvements in our hardware, software, and data center designs. The effect of this change in estimate for the year ended December 31, 2022,
based on servers and networking equipment that were included in “Property and equipment, net” as of December 31, 2021 and those acquired during the year
ended December 31, 2022, was a reduction in depreciation and amortization expense of $3.6 billion and a benefit to net loss of $2.8 billion, or $0.28 per basic
share and $0.28 per diluted share.
For the year ended December 31, 2022, we recorded approximately $1.1 billion, of which $720 million was recorded in the fourth quarter, of
impairments of property and equipment and operating leases primarily related to physical stores. These charges were recorded in “Other operating expense


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(income), net” on our consolidated statements of operations and primarily impacted our North America segment. For the year ended December 31, 2022, we
also recorded expenses of approximately
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$480 million primarily in “Fulfillment” on our consolidated statements of operations relating to terminating contracts for certain leases not yet commenced as
well as other purchase commitments, which primarily impacted our North America segment.
For the year ended December 31, 2022, we recorded approximately $720 million, of which $640 million was recorded in the fourth quarter, of estimated
severance costs primarily related to planned role eliminations. These charges were recorded primarily in “Technology and content,” “Fulfillment,” and
“General and administrative” on our consolidated statements of operations and primarily impacted our North America segment.
Supplemental Cash Flow Information
The following table shows supplemental cash flow information (in millions):
Year Ended December 31,
2020 2021 2022
SUPPLEMENT AL CASH FLOW  INFORMA TION:
Cash paid for interest on debt $ 916 $ 1,098 $ 1,561 
Cash paid for operating leases $ 4,475 $ 6,722 $ 8,633 
Cash paid for interest on finance leases $ 612 $ 521 $ 374 
Cash paid for interest on financing obligations $ 102 $ 153 $ 207 
Cash paid for income taxes, net of refunds $ 1,713 $ 3,688 $ 6,035 
Assets acquired under operating leases $ 16,217 $ 25,369 $ 18,800 
Property and equipment acquired under finance leases, net of remeasurements and modifications $ 11,588 $ 7,061 $ 675 
Property and equipment recognized during the construction period of build-to-suit lease arrangements $ 2,267 $ 5,846 $ 3,187 
Property and equipment derecognized after the construction period of build-to-suit lease arrangements, with
the associated leases recognized as operating $ — $ 230 $ 5,158 
Earnings Per Share
Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our
weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we
have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.
The following table shows the calculation of diluted shares (in millions):


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The following table shows the calculation of diluted shares (in millions):
  Year Ended December 31,
 2020 2021 2022
Shares used in computation of basic earnings per share 10,005 10,117 10,189 
Total dilutive effect of outstanding stock awards 193 179 — 
Shares used in computation of diluted earnings per share 10,198 10,296 10,189 
Revenue
Revenue is measured based on the amount of consideration that we expect to receive, reduced by estimates for return allowances, promotional discounts,
and rebates. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes. In arrangements where we have
multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price. We generally
determine stand-alone selling prices based on the prices charged to customers or using expected cost plus a margin.
A description of our principal revenue generating activities is as follows:
Retail sales - We offer consumer products through our online and physical stores. Revenue is recognized when control of the goods is transferred to the
customer, which generally occurs upon our delivery to a third-party carrier or, in the case of an Amazon delivery, to the customer.
Third-party seller services - We offer programs that enable sellers to sell their products in our stores, and fulfill orders through us. We are not the seller of
record in these transactions. The commissions and any related fulfillment and shipping fees we earn from these arrangements are recognized when the services
are rendered, which generally occurs upon delivery of the related products to a third-party carrier or, in the case of an Amazon delivery, to the customer.
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Subscription services - Our subscription sales include fees associated with Amazon Prime memberships and access to content including digital video,
audiobooks, digital music, e-books, and other non-AWS subscription services. Prime memberships provide our customers with access to an evolving suite of
benefits that represent a single stand-ready obligation. Subscriptions are paid for at the time of or in advance of delivering the services. Revenue from such
arrangements is recognized over the subscription period.
Advertising services - We provide advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads,
display, and video advertising. Revenue is recognized as ads are delivered based on the number of clicks or impressions.
AWS - Our AWS arrangements include global sales of compute, storage, database, and other services. Revenue is allocated to services using stand-alone
selling prices and is primarily recognized when the customer uses these services, based on the quantity of services rendered, such as compute or storage
capacity delivered on-demand. Certain services, including compute and database, are also offered as a fixed quantity over a specified term, for which revenue is
recognized ratably. Sales commissions we pay in connection with contracts that exceed one year are capitalized and amortized over the contract term.
Other - Other revenue includes sales related to various other offerings, such as certain licensing and distribution of video content and shipping services,
and our co-branded credit card agreements. Revenue is recognized when content is licensed or distributed and as or when services are performed.
Return Allowances
Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in
“Accrued expenses and other” and were $859 million, $1.0 billion, and $1.3 billion as of December 31, 2020, 2021, and 2022. Additions to the allowance were
$3.5 billion, $5.1 billion, and $5.5 billion and deductions from the allowance were $3.6 billion, $4.9 billion, and $5.2 billion in 2020, 2021, and 2022. Included
in “Inventories” on our consolidated balance sheets are assets totaling $852 million, $882 million, and $948 million as of December 31, 2020, 2021, and 2022,


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for the rights to recover products from customers associated with our liabilities for return allowances.
Cost of Sales
Cost of sales primarily consists of the purchase price of consumer products, inbound and outbound shipping costs, including costs related to sortation and
delivery centers and where we are the transportation service provider, and digital media content costs where we record revenue gross, including video and
music. Shipping costs to receive products from our suppliers are included in our inventory, and recognized as cost of sales upon sale of products to our
customers. Payment processing and related transaction costs, including those associated with seller transactions, are classified in “Fulfillment” on our
consolidated statements of operations.
Vendor Agreements
We have agreements with our vendors to receive consideration primarily for cooperative marketing efforts, promotions, incentives, and volume
rebates. We generally consider these amounts received from vendors to be a reduction of the prices we pay for their goods, including property and equipment,
or services, and are recorded as a reduction of the cost of inventory, cost of services, or cost of property and equipment. Volume rebates typically depend on
reaching minimum purchase thresholds. We evaluate the likelihood of reaching purchase thresholds using past experience and current year forecasts. When
volume rebates can be reasonably estimated, we record a portion of the rebate as we make progress towards the purchase threshold.
Fulfillment
Fulfillment costs primarily consist of those costs incurred in operating and staffing our North America and International segments’ fulfillment centers,
physical stores, and customer service centers, including facilities and equipment expenses, such as depreciation and amortization, and rent; costs attributable to
buying, receiving, inspecting, and warehousing inventories; picking, packaging, and preparing customer orders for shipment; payment processing and related
transaction costs, including costs associated with our guarantee for certain seller transactions; responding to inquiries from customers; and supply chain
management for our manufactured electronic devices. Fulfillment costs also include amounts paid to third parties that assist us in fulfillment and customer
service operations.
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Technology and Content
Technology and content costs include payroll and related expenses for employees involved in the research and development of new and existing products
and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and
infrastructure costs. Infrastructure costs include servers, networking equipment, and data center related depreciation and amortization, rent, utilities, and other
expenses necessary to support AWS and other Amazon businesses. Collectively, these costs reflect the investments we make in order to offer a wide variety of
products and services to our customers, including expenditures related to initiatives to build and deploy innovative and efficient software and electronic devices
and the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services. Technology and content costs are
generally expensed as incurred.
Sales and Marketing
Sales and marketing costs include advertising and payroll and related expenses for personnel engaged in marketing and selling activities, including sales
commissions related to AWS. We pay commissions to third parties when their customer referrals result in sales. We also participate in cooperative advertising
arrangements with certain of our vendors, and other third parties.
Advertising and other promotional costs to market our products and services are expensed as incurred and were $10.9 billion, $16.9 billion, and $20.6
billion in 2020, 2021, and 2022.
General and Administrative
General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses; facilities and equipment
expenses, such as depreciation and amortization expense and rent; and professional fees.
Stock-Based Compensation
Compensation cost for all equity-classified stock awards expected to vest is measured at fair value on the date of grant and recognized over the service
period. The fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock. Such value is
recognized as expense over the service period, net of estimated forfeitures, using the accelerated method. The estimated number of stock awards that will
ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a
cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including historical forfeiture
experience by grant year and employee level. Additionally, stock-based compensation includes stock appreciation rights that are expected to settle in cash.


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These liability-classified awards are remeasured to fair value at the end of each reporting period until settlement or expiration.
Other Operating Expense (Income), Net
Other operating expense (income), net, consists primarily of the amortization of intangible assets and, for 2020, a benefit from accelerated vesting of
warrants to acquire equity of a vendor partially offset by a lease impairment and, for 2022, $1.1 billion of impairments of property and equipment and
operating leases.
Other Income (Expense), Net
Other income (expense), net, is as follows (in millions):
Year Ended December 31,
2020 2021 2022
Marketable equity securities valuation gains (losses) $ 525 $ 11,526 $ (13,870)
Equity warrant valuation gains (losses) 1,527 1,315 (2,132)
Upward adjustments relating to equity investments in private companies 342 1,866 76 
Foreign currency gains (losses) 35 (55) (340)
Other, net (58) (19) (540)
Total other income (expense), net 2,371 14,633 (16,806)
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Included in other income (expense), net in 2021 and 2022 is a marketable equity securities valuation gain (loss) of $11.8 billion and $(12.7) billion from
our equity investment in Rivian Automotive, Inc. (“Rivian”). Our investment in Rivian’s preferred stock was accounted for at cost, with adjustments for
observable changes in prices or impairments, prior to Rivian’s initial public offering in November 2021, which resulted in the conversion of our preferred stock
to Class A common stock. As of December 31, 2022, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 17%
ownership interest, and an approximate 16% voting interest. We determined that we have the ability to exercise significant influence over Rivian through our
equity investment, our commercial arrangement for the purchase of electric vehicles, and one of our employees serving on Rivian’s board of directors. We
elected the fair value option to account for our equity investment in Rivian, which is included in “Marketable securities” on our consolidated balance sheets.
Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):
Year Ended
December 31, 2020Year Ended
December 31, 2021Nine Months Ended
September 30, 2022
Revenues $ — $ 55 $ 995 
Gross profit — (465) (2,123)
Loss from operations (1,021) (4,220) (5,061)
Net loss (1,018) (4,688) (5,029)
December 31, 2021 September 30, 2022
Total current assets $ 18,559 $ 14,424 
Total assets 22,294 19,023 
Total current liabilities 1,313 2,109 
Total liabilities 2,780 3,686 
Income Taxes
Income tax expense includes U.S. (federal and state) and foreign income taxes. Certain foreign subsidiary earnings and losses are subject to current U.S.
taxation and the subsequent repatriation of those earnings is not subject to tax in the U.S. We intend to invest substantially all of our foreign subsidiary


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earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional
costs upon repatriation of such amounts.
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as
well as net operating loss and tax credit carryforwards, and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.
Deferred tax assets represent amounts available to reduce income taxes payable in future periods. Deferred tax assets are evaluated for future realization
and reduced by a valuation allowance to the extent we believe they will not be realized. We consider many factors when assessing the likelihood of future
realization of our deferred tax assets, including recent cumulative loss experience and expectations of future earnings, capital gains and investment in such
jurisdiction, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.
We utilize a two-step approach to recognizing and measuring uncertain income tax positions (tax contingencies). The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including
resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being
realized upon ultimate settlement. We consider many factors when evaluating our tax positions and estimating our tax benefits, which may require periodic
adjustments and which may not accurately forecast actual outcomes. We include interest and penalties related to our tax contingencies in income tax expense.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to
measure fair value:
Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.
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Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are
observable or can be corroborated by observable market data.
Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by
other market participants. These valuations require significant judgment.
We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or
liabilities. Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar
instruments and other significant inputs derived from or corroborated by observable market data. We did not hold significant amounts of marketable securities
categorized as Level 3 assets as of December 31, 2021 and 2022.
We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2021 and 2022, these warrants had a fair value of
$3.4 billion and $2.1 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income
(expense), net” on our consolidated statements of operations. These warrants are primarily classified as Level 2 assets.
Cash and Cash Equivalents
We classify all highly liquid instruments with an original maturity of three months or less as cash equivalents.
Inventories
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost
and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such
as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The
inventory valuation allowance, representing a write-down of inventory, was $2.6 billion and $2.8 billion as of December 31, 2021 and 2022.
We provide Fulfillment by Amazon services in connection with certain of our sellers’ programs. Third-party sellers maintain ownership of their


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inventory, regardless of whether fulfillment is provided by us or the third-party sellers, and therefore these products are not included in our inventories.
We also purchase electronic device components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for
our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate supply, we enter into agreements
with contract manufacturers and suppliers for certain electronic device components. We have certain non-cancellable purchase commitments arising from these
agreements. These commitments are based on forecasted customer demand. If we reduce these commitments, we may incur additional costs. We also have
firm, non-cancellable commitments for certain products offered in our Whole Foods Market stores.
Accounts Receivable, Net and Other
Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As
of December 31, 2021 and 2022, customer receivables, net, were $20.2 billion and $26.6 billion, vendor receivables, net, were $5.3 billion and $6.9 billion, and
seller receivables, net, were $1.0 billion and $1.3 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provides
funding to sellers primarily to procure inventory.
We estimate losses on receivables based on expected losses, including our historical experience of actual losses. Receivables are considered impaired and
written-off when it is probable that all contractual payments due will not be collected in accordance with the terms of the agreement. The allowance for
doubtful accounts was $1.1 billion, $1.1 billion, and $1.4 billion as of December 31, 2020, 2021, and 2022. Additions to the allowance were $1.4 billion, $1.0
billion, and $1.6 billion, and deductions to the allowance were $1.0 billion, $1.1 billion, and $1.3 billion in 2020, 2021, and 2022.
Software Development Costs
We incur software development costs related to products to be sold, leased, or marketed to external users, internal-use software, and our websites.


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Software development costs capitalized were not significant for the years presented. All other costs, including those related to design or maintenance, are
expensed as incurred.
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Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Incentives that we receive from property and equipment
vendors are recorded as a reduction to our costs. Property includes buildings and land that we own, along with property we have acquired under build-to-suit
lease arrangements when we have control over the building during the construction period and finance lease arrangements. Equipment includes assets such as
servers and networking equipment, heavy equipment, and other fulfillment equipment. Depreciation and amortization is recorded on a straight-line basis over
the estimated useful lives of the assets (generally the lesser of 40 years or the remaining life of the underlying building, four years prior to January 1, 2022 and
five years subsequent to January 1, 2022 for our servers, five years prior to January 1, 2022 and six years subsequent to January 1, 2022 for our networking
equipment, ten years for heavy equipment, and three to ten years for other fulfillment equipment). Depreciation and amortization expense is classified within
the corresponding operating expense categories on our consolidated statements of operations.
Leases
We categorize leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow
us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in “Property and equipment, net.”
All other leases are categorized as operating leases. Our leases generally have terms that range from one to ten years for equipment and one to twenty years for
property.
Certain lease contracts include obligations to pay for other services, such as operations and maintenance. For leases of property, we account for these
other services as a component of the lease. For substantially all other leases, the services are accounted for separately and we allocate payments to the lease and
other services components based on estimated stand-alone prices.
Lease liabilities are recognized at the present value of the fixed lease payments, reduced by landlord incentives using a discount rate based on similarly
secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives,
plus any direct costs from executing the leases or lease prepayments reclassified from “Other assets” upon lease commencement. Leasehold improvements are
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When we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is
reasonably certain that we will exercise the option, we consider the option in determining the classification and measurement of the lease. Our leases may
include variable payments based on measures that include changes in price indices, market interest rates, or the level of sales at a physical store, which are
expensed as incurred.
Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease. Finance lease
assets are amortized within operating expenses on a straight-line basis over the shorter of the estimated useful lives of the assets or, in the instance where title
does not transfer at the end of the lease term, the lease term. The interest component of a finance lease is included in interest expense and recognized using the
effective interest method over the lease term.
We establish assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such
assets are amortized over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated retirement costs.
Financing Obligations
We record assets and liabilities for estimated construction costs under build-to-suit lease arrangements when we have control over the building during the
construction period. If we continue to control the building after the construction period, the arrangement is classified as a financing obligation instead of a
lease. The building is depreciated over the shorter of its useful life or the term of the obligation.
If we do not control the building after the construction period ends, the assets and liabilities for construction costs are derecognized, and we classify the
lease as operating.
Goodwill and Indefinite-Lived Intangible Assets
We evaluate goodwill and indefinite-lived intangible assets for impairment annually or more frequently when an event occurs or circumstances change
that indicate the carrying value may not be recoverable. We may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the
fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value and if so, we perform a quantitative test. We compare the carrying
value of each reporting unit and indefinite-lived intangible asset to its estimated fair value and if the fair value is determined to be less than the carrying value,


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we recognize an impairment loss for the difference. We estimate the fair value of the reporting units using discounted cash
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flows. Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primarily on expected category
expansion, pricing, market segment share, and general economic conditions.
We completed the required annual impairment test of goodwill for all reporting units and indefinite-lived intangible assets as of April 1, 2022, resulting
in no impairments. The fair value of our reporting units substantially exceeded their carrying value. There were no events that caused us to update our annual
impairment test. See “Note 5 — Acquisitions, Goodwill, and Acquired Intangible Assets.”
Other Assets
Included in “Other assets” on our consolidated balance sheets are amounts primarily related to video and music content, net of accumulated amortization;
long-term deferred tax assets; acquired intangible assets, net of accumulated amortization; equity warrant assets and certain equity investments; and satellite
network launch services deposits. We recognize certain transactions with governments when there is reasonable assurance that incentives included in the
agreements, such as cash or certain tax credits, will be received and we are able to comply with any related conditions. These incentives are recorded as
reductions to the cost of related assets or expenses.
Digital Video and Music Content
We obtain video content, inclusive of episodic television and movies, and music content for customers through licensing agreements that have a wide
range of licensing provisions including both fixed and variable payment schedules. When the license fee for a specific video or music title is determinable or
reasonably estimable and the content is available to us, we recognize an asset and a corresponding liability for the amounts owed. We reduce the liability as
payments are made and we amortize the asset to “Cost of sales” on an accelerated basis, based on estimated usage or viewing patterns, or on a straight-line
basis. If the licensing fee is not determinable or reasonably estimable, no asset or liability is recorded and licensing costs are expensed as incurred. We also
develop original video content for which the production costs are capitalized and amortized to “Cost of sales” predominantly on an accelerated basis that
follows the estimated viewing patterns associated with the content. The weighted average remaining life of our capitalized video content is 2.6 years. We
review usage and viewing patterns impacting the amortization of capitalized video content on an ongoing basis and reflect any changes prospectively. Changes


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in historical and anticipated viewing patterns are lengthening the weighted average life of our capitalized video content. We anticipate the changes in viewing
patterns will positively impact 2023 operating income by approximately $1.0 billion, generally ratably throughout the year.
Our produced and licensed video content is primarily monetized together as a unit, referred to as a film group, in each major geography where we offer
Amazon Prime memberships. These film groups are evaluated for impairment whenever an event occurs or circumstances change indicating the fair value is
less than the carrying value. The total capitalized costs of video, which is primarily released content, and music as of December 31, 2021 and 2022 were $10.7
billion and $16.7 billion. Total video and music expense was $13.0 billion and $16.6 billion for the year ended December 31, 2021 and 2022. Total video and
music expense includes licensing and production costs associated with content offered within Amazon Prime memberships, and costs associated with digital
subscriptions and sold or rented content.
Investments
We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities. Such
investments are included in “Cash and cash equivalents” or “Marketable securities” on the accompanying consolidated balance sheets.
Marketable fixed income securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in
“Accumulated other comprehensive income (loss).” Each reporting period, we evaluate whether declines in fair value below carrying value are due to expected
credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs. Expected credit losses are recorded as an allowance
through “Other income (expense), net” on our consolidated statements of operations.
Equity investments in private companies for which we do not have the ability to exercise significant influence are accounted for at cost, with adjustments
for observable changes in prices or impairments, and are classified as “Other assets” on our consolidated balance sheets with adjustments recognized in “Other
income (expense), net” on our consolidated statements of operations. Each reporting period, we perform a qualitative assessment to evaluate whether the
investment is impaired. Our assessment includes a review of recent operating results and trends, recent sales/acquisitions of the investee securities, and other


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publicly available data. If the investment is impaired, we write it down to its estimated fair value. As of December 31, 2021 and 2022, these investments had a
carrying value of $603 million and $715 million.
Equity investments are accounted for using the equity method of accounting, or at fair value if we elect the fair value option, if the investment gives us
the ability to exercise significant influence, but not control, over an investee. Equity-method
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investments are included within “Other assets” on our consolidated balance sheets. Our share of the earnings or losses as reported by equity-method investees,
amortization of basis differences, related gains or losses, and impairments, if any, are recognized in “Equity-method investment activity, net of tax” on our
consolidated statements of operations. Each reporting period, we evaluate whether declines in fair value below carrying value are other-than-temporary and if
so, we write down the investment to its estimated fair value.
Equity investments that have readily determinable fair values, including investments for which we have elected the fair value option, are included in
“Marketable securities” on our consolidated balance sheets and measured at fair value with changes recognized in “Other income (expense), net” on our
consolidated statements of operations.
Long-Lived Assets
Long-lived assets, other than goodwill and indefinite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant
decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse
change that would indicate that the carrying amount of an asset or group of assets may not be recoverable.
For long-lived assets used in operations, including lease assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable
through its undiscounted, probability-weighted future cash flows. We measure the impairment loss based on the difference between the carrying amount and
estimated fair value. Long-lived assets are considered held for sale when certain criteria are met, including when management has committed to a plan to sell
the asset, the asset is available for sale in its immediate condition, and the sale is probable within one year of the reporting date. Assets held for sale are
reported at the lower of cost or fair value less costs to sell. Assets held for sale were not significant as of December 31, 2021 and 2022.
Accrued Expenses and Other
Included in “Accrued expenses and other” on our consolidated balance sheets are liabilities primarily related to leases and asset retirement obligations,
tax-related liabilities, current debt, payroll and related expenses, unredeemed gift cards, self-insurance liabilities, customer liabilities, marketing liabilities,


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acquired digital media content, and other operating expenses.
As of December 31, 2021 and 2022, our liabilities for payroll related expenses were $7.4 billion and $7.7 billion and our liabilities for unredeemed gift
cards were $5.2 billion and $5.4 billion. We reduce the liability for a gift card when redeemed by a customer. The portion of gift cards that we do not expect to
be redeemed is recognized based on customer usage patterns.
Self-Insurance Liabilities
Although we maintain certain high-deductible, third-party insurance coverage for catastrophic losses, we effectively self-insure for exposure primarily
related to workers’ compensation, employee health care benefits, general and product liability, and automobile liability, including liability resulting from third-
party transportation service providers. We estimate self-insurance liabilities by considering historical claims experience, frequency and costs of claims,
projected claims development, inflation, and other actuarial assumptions. Changes in the number or costs of claims, healthcare costs, judgment and settlement
amounts, associated legal expenses, and other factors could cause actual results to differ materially from these estimates. As of December 31, 2021 and 2022,
our total self-insurance liabilities were $2.2 billion and $4.0 billion and are included in “Accrued expenses and other” on our consolidated balance sheets. In
the fourth quarter of 2022, we increased our reserves for general, product, and automobile liabilities by $1.3 billion primarily driven by changes in our
estimates about the costs of asserted and unasserted claims, which was primarily recorded in “Cost of sales” on our consolidated statements of operations and
impacted our North America segment.
Unearned Revenue
Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service
period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31,
2021 was $14.0 billion, of which $11.3 billion was recognized as revenue during the year ended December 31, 2022 and our total unearned revenue as of
December 31, 2022 was $16.1 billion. Included in “Other long-term liabilities” on our consolidated balance sheets was $2.2 billion and $2.9 billion of unearned


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revenue as of December 31, 2021 and 2022.
Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that
have not yet been recognized in our financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were
$110.4 billion as of December 31, 2022. The weighted average remaining life of our long-term contracts is 3.7 years. However, the amount and timing of
revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.
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Other Long-Term Liabilities
Included in “Other long-term liabilities” on our consolidated balance sheets are liabilities primarily related to financing obligations, asset retirement
obligations, unearned revenue, tax contingencies, digital video and music content, and deferred tax liabilities.
Foreign Currency
We have internationally-focused stores for which the net sales generated, as well as most of the related expenses directly incurred from those operations,
are denominated in local functional currencies. The functional currency of our subsidiaries that either operate or support these stores is generally the same as
the local currency. Assets and liabilities of these subsidiaries are translated into U.S. Dollars at period-end foreign exchange rates, and revenues and expenses
are translated at average rates prevailing throughout the period. Translation adjustments are included in “Accumulated other comprehensive income (loss),” a
separate component of stockholders’ equity. Transaction gains and losses including intercompany transactions denominated in a currency other than the
functional currency of the entity involved are included in “Other income (expense), net” on our consolidated statements of operations. In connection with the
settlement and remeasurement of intercompany balances, we recorded gains (losses) of $(118) million, $19 million, and $386 million in 2020, 2021, and 2022.
Note 2 — FINANCIAL INSTRUMENTS
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities
As of December 31, 2021 and 2022, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money
market funds, U.S. and foreign government and agency securities, other investment grade securities, and marketable equity securities. Cash equivalents and
marketable securities are recorded at fair value. The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and
marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):
 December 31, 2021
  Cost or
Amortized
CostGross
Unrealized
GainsGross
Unrealized
LossesTotal
Estimated
Fair Value
Cash $ 10,942 $ — $ — $ 10,942 
Level 1 securities:
Money market funds 20,312 — — 20,312 
Equity securities (1) 1,646


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Equity securities (1) 1,646 
Level 2 securities:
Foreign government and agency securities 181 — — 181 
U.S. government and agency securities 4,316 9 (25) 4,300 
Corporate debt securities 35,810 75 (121) 35,764 
Asset-backed securities 6,763 7 (32) 6,738 
Other fixed income securities 688 2 (4) 686 
Equity securities (1)(3) 15,740 
$ 79,012 $ 93 $ (182)$ 96,309 
Less: Restricted cash, cash equivalents, and marketable securities (2) (260)
Total cash, cash equivalents, and marketable securities $ 96,049 
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 December 31, 2022
  Cost or
Amortized
CostGross
Unrealized
GainsGross
Unrealized
LossesTotal
Estimated
Fair Value
Cash $ 10,666 $ — $ — $ 10,666 
Level 1 securities:
Money market funds 27,899 — — 27,899 
Equity securities (1)(3) 3,709 
Level 2 securities:
Foreign government and agency securities 537 — (2) 535 
U.S. government and agency securities 2,301 — (155) 2,146 
Corporate debt securities 23,111 — (484) 22,627 
Asset-backed securities 2,721 — (149) 2,572 
Other fixed income securities 249 — (12) 237 
$ 67,484 $ — $ (802)$ 70,391 
Less: Restricted cash, cash equivalents, and marketable securities (2) (365)
Total cash, cash equivalents, and marketable securities $ 70,026 
___________________
(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $448 million, $11.6 billion, and $(13.6) billion for the years ended
December 31, 2020, 2021, and 2022.
(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income securities primarily as collateral for
real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and
marketable fixed income securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer
as non-current “Other assets” on our consolidated balance sheets. See “Note 7 — Commitments and Contingencies.”
(3)Our equity investment in Rivian had a fair value of $15.6 billion and $2.9 billion as of December 31, 2021 and December 31, 2022, respectively. The
investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $800 million as of December 31,


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2021, which expired in Q1 2022.
The following table summarizes gross gains and gross losses realized on sales of marketable fixed income securities (in millions):
Year Ended December 31,
2020 2021 2022
Realized gains $ 92 $ 85 $ 43 
Realized losses 56 38 341 
The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of December 31,
2022 (in millions):
Amortized
CostEstimated
Fair Value
Due within one year $ 46,854 $ 46,782 
Due after one year through five years 7,622 7,047 
Due after five years through ten years 602 565 
Due after ten years 1,740 1,622 
Total $ 56,818 $ 56,016 
Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.
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Consolidated Statements of Cash Flows Reconciliation
The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets
to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):
December 31, 2021 December 31, 2022
Cash and cash equivalents $ 36,220 $ 53,888 
Restricted cash included in accounts receivable, net and other 242 358 
Restricted cash included in other assets 15 7 
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 36,477 $ 54,253 
Note 3 — PROPERTY AND EQUIPMENT
Property and equipment, at cost, consisted of the following (in millions): 
 December 31,
 2021 2022
Gross property and equipment (1):
Land and buildings $ 81,104 $ 91,650 
Equipment 128,683 157,458 
Other assets 4,118 4,602 
Construction in progress 24,895 30,020 
Gross property and equipment 238,800 283,730 
Total accumulated depreciation and amortization (1) 78,519 97,015 
Total property and equipment, net $ 160,281 $ 186,715 
__________________
(1)Includes the original cost and accumulated depreciation of fully-depreciated assets.
Depreciation and amortization expense on property and equipment was $16.2 billion, $22.9 billion, and $24.9 billion which includes amortization of
property and equipment acquired under finance leases of $8.5 billion, $9.9 billion, and $6.1 billion for 2020, 2021, and 2022.
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Note 4 — LEASES
We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, data center, physical store, and sortation facilities as
well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of
the lease, are recorded in “Property and equipment, net” and were $72.2 billion and $68.0 billion as of December 31, 2021 and 2022. Accumulated
amortization associated with finance leases was $43.4 billion and $45.2 billion as of December 31, 2021 and 2022.
Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):
 Year Ended December 31,
2020 2021 2022
Operating lease cost $ 5,019 $ 7,199 $ 8,847 
Finance lease cost:
Amortization of lease assets 8,452 9,857 6,097 
Interest on lease liabilities 617 473 361 
Finance lease cost 9,069 10,330 6,458 
Variable lease cost 1,238 1,556 1,852 
Total lease cost $ 15,326 $ 19,085 $ 17,157 
Other information about lease amounts recognized in our consolidated financial statements is as follows:
 December 31, 2021 December 31, 2022
 
Weighted-average remaining lease term – operating leases 11.3 years 11.6 years
Weighted-average remaining lease term – finance leases 8.1 years 10.3 years
Weighted-average discount rate – operating leases 2.2 % 2.8 %
Weighted-average discount rate – finance leases 2.0 % 2.3 %
Our lease liabilities were as follows (in millions):
December 31, 2021
 Operating Leases Finance Leases Total
Gross lease liabilities $ 66,269 $ 25,866 $ 92,135 
Less: imputed interest (7,939) (2,113) (10,052)
Present value of lease liabilities 58,330 23,753 82,083


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Less: current portion of lease liabilities (6,349) (8,083) (14,432)
Total long-term lease liabilities $ 51,981 $ 15,670 $ 67,651 
December 31, 2022
 Operating Leases Finance Leases Total
Gross lease liabilities $ 81,273 $ 18,019 $ 99,292 
Less: imputed interest (12,233) (2,236) (14,469)
Present value of lease liabilities 69,040 15,783 84,823 
Less: current portion of lease liabilities (7,458) (4,397) (11,855)
Total long-term lease liabilities $ 61,582 $ 11,386 $ 72,968 
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Note 5 — ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS
2020 Acquisition Activity
During 2020, we acquired certain companies for an aggregate purchase price of $1.2 billion, net of cash acquired, of which $1.1 billion was capitalized to
in-process research and development intangible assets (“IPR&D”).
2021 Acquisition Activity
During 2021, we acquired certain companies for an aggregate purchase price of $496 million, net of cash acquired.
2022 Acquisition Activity
On March 17, 2022, we acquired MGM Holdings Inc., for cash consideration of approximately $6.1 billion, net of cash acquired, to provide more digital
media content options for customers. We also assumed $2.5 billion of debt, which we repaid immediately after closing. The acquired assets primarily consist of
$3.4 billion of video content and $4.9 billion of goodwill.
During 2022, we also acquired certain other companies for an aggregate purchase price of $141 million, net of cash acquired.
Pro forma results of operations have not been presented because the effects of the 2022 acquisitions, individually and in the aggregate, were not material
to our consolidated results of operations. Acquisition-related costs were expensed as incurred and were not significant.
Goodwill
The goodwill of the acquired companies is primarily related to expected improvements in technology performance and functionality, as well as sales
growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition. The
goodwill of the acquired companies is generally not deductible for tax purposes. The following summarizes our goodwill activity in 2021 and 2022 by segment
(in millions):
North
America International AWS Consolidated
Goodwill - January 1, 2021 $ 12,527 $ 1,288 $ 1,202 $ 15,017 
New acquisitions 230 60 76 366 
Other adjustments (1) 1 (21) 8 (12)
Goodwill - December 31, 2021 12,758 1,327 1,286 15,371 
New acquisitions 3,943 1,054 — 4,997 
Other adjustments (1) (80) 30 (30) (80)


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Goodwill - December 31, 2022 $ 16,621 $ 2,411 $ 1,256 $ 20,288 
 ___________________
(1)Primarily includes changes in foreign exchange rates.
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Intangible Assets
Acquired identifiable intangible assets are valued primarily by using discounted cash flows. These assets are included within “Other assets” on our
consolidated balance sheets and consist of the following (in millions):
 
 December 31,
 2021 2022
  Acquired
Intangibles,
Gross (1)Accumulated
Amortization (1)Acquired
Intangibles,
NetAcquired
Intangibles,
Gross (1)Accumulated
Amortization (1)Acquired
Intangibles,
NetWeighted
Average Life
Remaining
Finite-lived intangible assets (2):
Marketing-related $ 2,286 $ (548)$ 1,738 $ 2,407 $ (601)$ 1,806 18.6
Contract-based 2,327 (565) 1,762 3,661 (813) 2,848 12.8
Technology- and content-
based 976 (610) 366 883 (643) 240 3.2
Customer-related 197 (103) 94 184 (128) 56 2.2
Total finite-lived
intangible assets $ 5,786 $ (1,826)$ 3,960 $ 7,135 $ (2,185)$ 4,950 14.4
IPR&D and other (3) $ 1,147  $ 1,147 $ 1,147  $ 1,147 
Total acquired intangibles$ 6,933 $ (1,826)$ 5,107 $ 8,282 $ (2,185)$ 6,097 
 ___________________
(1)Excludes the original cost and accumulated amortization of fully-amortized intangibles.
(2)Finite-lived intangible assets, excluding acquired video content, have estimated useful lives of between one and twenty-five years, and are being amortized
to operating expenses on a straight-line basis.
(3)Intangible assets acquired in a business combination that are in-process and used in research and development activities are considered indefinite-lived
until the completion or abandonment of the research and development efforts. Once the research and development efforts are completed, we determine the
useful life and begin amortizing the assets.


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useful life and begin amortizing the assets.
Amortization expense for acquired finite-lived intangibles was $509 million, $512 million, and $604 million in 2020, 2021, and 2022. Expected future
amortization expense of acquired finite-lived intangible assets as of December 31, 2022 is as follows (in millions):
 
Year Ended December 31,
2023 $ 530 
2024 456 
2025 371 
2026 324 
2027 314 
Thereafter 2,955 
$ 4,950 
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Note 6 — DEBT
As of December 31, 2022, we had $69.5 billion of unsecured senior notes outstanding (the “Notes”), including $12.8 billion issued in April 2022 and
$8.3 billion issued in December 2022 for general corporate purposes, and $1.0 billion of borrowings under our secured revolving credit facility. Our total long-
term debt obligations are as follows (in millions):
Maturities (1) Stated Interest Rates Effective Interest Rates December 31, 2021 December 31, 2022
2012 Notes issuance of $3.0 billion 2022 2.50% 2.66% 1,250 — 
2014 Notes issuance of $6.0 billion 2024 - 2044 3.80% - 4.95% 3.90% - 5.12% 4,000 4,000 
2017 Notes issuance of $17.0 billion 2023 - 2057 2.40% - 5.20% 2.56% - 4.33% 16,000 16,000 
2020 Notes issuance of $10.0 billion 2023 - 2060 0.40% - 2.70% 0.56% - 2.77% 10,000 10,000 
2021 Notes issuance of $18.5 billion 2023 - 2061 0.25% - 3.25% 0.35% - 3.31% 18,500 18,500 
April 2022 Notes issuance of $12.8 billion 2024 - 2062 2.73% - 4.10% 2.83% - 4.15% — 12,750 
December 2022 Notes issuance of $8.3 billion 2024 - 2032 4.55% - 4.70% 4.61% - 4.83% — 8,250 
Credit Facility 803 1,042 
Total face value of long-term debt 50,553 70,542 
Unamortized discount and issuance costs, net (318) (393)


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Less: current portion of long-term debt (1,491) (2,999)
Long-term debt $ 48,744 $ 67,150 
___________________
(1)The weighted-average remaining lives of the 2014, 2017, 2020, 2021, April 2022, and December 2022 Notes were 12.6, 14.2, 16.7, 13.3, 13.3, and 5.9
years as of December 31, 2022. The combined weighted-average remaining life of the Notes was 13.1 years as of December 31, 2022.
Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time in whole, or from time to time, in part at specified
redemption prices. We are not subject to any financial covenants under the Notes. The estimated fair value of the Notes was approximately $53.3 billion and
$61.4 billion as of December 31, 2021 and 2022, which is based on quoted prices for our debt as of those dates.
We have a $1.5 billion secured revolving credit facility with a lender that is secured by certain seller receivables, which we increased from $1.0 billion to
$1.5 billion in August 2022 and we may from time to time increase in the future subject to lender approval (the “Credit Facility”). The Credit Facility is
available until August 2025, bears interest based on the daily Secured Overnight Financing Rate plus 1.25%, and has a commitment fee of up to 0.45% on the
undrawn portion. There were $803 million and $1.0 billion of borrowings outstanding under the Credit Facility as of December 31, 2021 and 2022, which had
an interest rate of 1.5% and 5.6%, respectively. As of December 31, 2021 and 2022, we have pledged $918 million and $1.2 billion of our cash and seller
receivables as collateral for debt related to our Credit Facility. The estimated fair value of the Credit Facility, which is based on Level 2 inputs, approximated
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As of December 31, 2022, future principal payments for our total long-term debt were as follows (in millions):
Year Ended December 31,
2023 $ 3,000 
2024 8,500 
2025 5,249 
2026 3,543 
2027 8,750 
Thereafter 41,500 
$ 70,542 
We have U.S. Dollar and Euro commercial paper programs (the “Commercial Paper Programs”) under which we may from time to time issue unsecured
commercial paper up to a total of $20.0 billion (including up to €3.0 billion) at the date of issue, with individual maturities that may vary but will not exceed
397 days from the date of issue. In March 2022, we increased the size of the Commercial Paper Programs from $10.0 billion to $20.0 billion. There were $725
million and $6.8 billion of borrowings outstanding under the Commercial Paper Programs as of December 31, 2021 and 2022, which were
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included in “Accrued expenses and other” on our consolidated balance sheets and had a weighted-average effective interest rate, including issuance costs, of
0.08% and 4.47%, respectively. We use the net proceeds from the issuance of commercial paper for general corporate purposes.
We have a $10.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), which was amended and restated in
March 2022 to increase the borrowing capacity from $7.0 billion to $10.0 billion and to extend the term to March 2025. It may be extended for up to three
additional one-year terms if approved by the lenders. The interest rate applicable to outstanding balances under the Credit Agreement is the applicable
benchmark rate specified in the Credit Agreement plus 0.45%, with a commitment fee of 0.03% on the undrawn portion of the credit facility. There were no
borrowings outstanding under the Credit Agreement as of December 31, 2021 and 2022.
In November 2022, we entered into a $10.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders (the “Short-Term Credit
Agreement”), which matures in November 2023 and may be extended for one additional period of 364 days if approved by the lenders. The interest rate
applicable to outstanding balances under the Short-Term Credit Agreement is the Secured Overnight Financing Rate specified in the Short-Term Credit
Agreement plus 0.45%, with a commitment fee of 0.05% on the undrawn portion. There were no borrowings outstanding under the Short-Term Credit
Agreement as of December 31, 2022.
We also utilize other short-term credit facilities for working capital purposes. There were $318 million and $1.2 billion of borrowings outstanding under
these facilities as of December 31, 2021 and 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we
had $6.9 billion of unused letters of credit as of December 31, 2022.
In January 2023, we entered into an $8.0 billion unsecured 364-day term loan with a syndicate of lenders (the “Term Loan”), which matures in January


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2024 and bears interest at the Secured Overnight Financing Rate specified in the Term Loan plus 0.75%. If we exercise our option to extend the Term Loan’s
maturity to January 2025, the interest rate spread will increase from 0.75% to 1.05%. As of the date of this filing, the entire Term Loan is outstanding.
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Note 7 — COMMITMENTS AND CONTINGENCIES
Commitments
The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally
cancellable, as of December 31, 2022 (in millions):
 Year Ended December 31,   
 2023 2024 2025 2026 2027 Thereafter Total
Long-term debt principal and interest $ 5,165 $10,618 $ 7,146 $ 5,253 $10,399 $ 63,815 $102,396 
Operating lease liabilities 9,574 8,658 8,024 7,393 6,675 40,949 81,273 
Finance lease liabilities, including interest 4,575 2,248 1,422 1,279 1,088 7,407 18,019 
Financing obligations, including interest (1) 465 464 456 464 471 6,712 9,032 
Leases not yet commenced 1,252 2,043 2,185 2,160 2,152 17,237 27,029 
Unconditional purchase obligations (2) 8,156 7,217 5,366 4,525 3,419 6,093 34,776 
Other commitments (3)(4) 3,173 1,608 1,027 982 622 8,652 16,064 
Total commitments $32,360 $32,856 $25,626 $22,056 $24,826 $150,865 $288,589 
___________________
(1)Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities. Excluding interest, current financing obligations of $196
million and $266 million are recorded within “Accrued expenses and other” and $6.2 billion and $6.7 billion are recorded within “Other long-term
liabilities” as of December 31, 2021 and 2022. The weighted-average remaining term of the financing obligations was 18.8 years and 17.9 years and the
weighted-average imputed interest rate was 3.2% and 3.1% as of December 31, 2021 and 2022.


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(2)Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on the
consolidated balance sheets and certain products offered in our Whole Foods Market stores. For those digital media content agreements with variable
terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with
renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.
(3)Includes asset retirement obligations, liabilities associated with digital media content agreements with initial terms greater than one year, and the estimated
timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction.
(4)Excludes approximately $4.0 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of
payment, if any.
In July 2022, we entered into an agreement to acquire 1Life Healthcare, Inc. (One Medical) for approximately $3.9 billion, including its debt, subject to
customary closing conditions. In August 2022, we entered into an agreement to acquire iRobot Corporation for approximately $1.7 billion, including its debt,
subject to customary closing conditions. We expect to fund these acquisitions with cash on hand.
Suppliers
During 2022, no vendor accounted for 10% or more of our purchases. We generally do not have long-term contracts or arrangements with our vendors to
guarantee the availability of merchandise, particular payment terms, or the extension of credit limits.
Other Contingencies
We are disputing claims and denials of refunds or credits related to various non-income taxes (such as sales, value added, consumption, service, and
similar taxes), including in jurisdictions in which we already collect and remit these taxes. These non-income tax controversies typically relate to (i) the
taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, and (iii)
the adequacy of compliance with reporting obligations, including evolving documentation requirements. Due to the inherent complexity and uncertainty of
these matters and the judicial and regulatory processes in certain jurisdictions, the final outcome of any such controversies may be materially different from our
expectations.
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Table of Contents
Legal Proceedings
The Company is involved from time to time in claims, proceedings, and litigation, including the following:
In November 2015, Eolas Technologies, Inc. filed a complaint against Amazon.com, Inc. in the United States District Court for the Eastern District of
Texas. The complaint alleges, among other things, that the use of “interactive features” on www.amazon.com, including “search suggestions and search
results,” infringes U.S. Patent No. 9,195,507, entitled “Distributed Hypermedia Method and System for Automatically Invoking External Application Providing
Interaction and Display of Embedded Objects Within a Hypermedia Document.” The complaint sought a judgment of infringement together with costs and
attorneys’ fees. In February 2016, Eolas filed an amended complaint seeking, among other things, an unspecified amount of damages. In February 2017, Eolas
alleged in its damages report that in the event of a finding of liability Amazon could be subject to $130 to $250 million in damages. In April 2017, the case was
transferred to the United States District Court for the Northern District of California. In May 2022, the district court granted summary judgment holding that
the patent is invalid. In June 2022, Eolas filed a notice of appeal. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this
matter.
In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC filed a complaint against Amazon.com, Inc. in the United States District
Court for the Northern District of New York. The complaint alleges, among other things, that “Alexa Voice Software and Alexa enabled devices” infringe U.S.
Patent No. 7,177,798, entitled “Natural Language Interface Using Constrained Intermediate Dictionary of Results.” The complaint seeks an injunction, an
unspecified amount of damages, enhanced damages, an ongoing royalty, interest, attorneys’ fees, and costs. We dispute the allegations of wrongdoing and
intend to defend ourselves vigorously in this matter.
In December 2018, Kove IO, Inc. filed a complaint against Amazon Web Services, Inc. in the United States District Court for the Northern District of
Illinois. The complaint alleges, among other things, that Amazon S3 and DynamoDB infringe U.S. Patent Nos. 7,814,170 and 7,103,640, both entitled


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“Network Distributed Tracking Wire Transfer Protocol”; and 7,233,978, entitled “Method and Apparatus for Managing Location Information in a Network
Separate from the Data to Which the Location Information Pertains.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’
fees, costs, interest, and injunctive relief. In March 2022, the case was stayed pending resolution of review petitions we filed with the United States Patent and
Trademark Office. In November 2022, the stay was lifted. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
Beginning in March 2020, with Frame-Wilson v. Amazon.com, Inc. filed in the United States District Court for the Western District of Washington,
private litigants have filed a number of cases in the U.S. and Canada alleging, among other things, price fixing arrangements between Amazon.com, Inc. and
vendors and third-party sellers in Amazon’s stores, monopolization and attempted monopolization, and consumer protection and unjust enrichment claims.
Attorneys General for the District of Columbia and California brought similar suits in May 2021 and September 2022 in the Superior Court of the District of
Columbia and the California Superior Court for the County of San Francisco, respectively. Some of the private cases include allegations of several distinct
purported classes, including consumers who purchased a product through Amazon’s stores and consumers who purchased a product offered by Amazon
through another e-commerce retailer. The complaints seek billions of dollars of alleged actual damages, treble damages, punitive damages, injunctive relief,
civil penalties, attorneys’ fees, and costs. In March 2022 and January 2023, Amazon’s motions to dismiss were granted in part and denied in part in Frame-
Wilson and De Coster v. Amazon.com, Inc. (WD Wash), respectively; both courts dismissed claims alleging that Amazon’s pricing policies are inherently
illegal and denied dismissal of claims alleging that Amazon’s pricing policies are an unlawful restraint of trade. In March 2022, the DC Superior Court
dismissed the DC Attorney General’s lawsuit in its entirety; the dismissal is under appeal as of January 2023. We dispute the allegations of wrongdoing and
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intend to defend ourselves vigorously in these matters.
In October 2020, BroadbandiTV, Inc. filed a complaint against Amazon.com, Inc., Amazon.com Services LLC, and Amazon Web Services, Inc. in the
United States District Court for the Western District of Texas. The complaint alleges, among other things, that certain Amazon Prime Video features and
services infringe U.S. Patent Nos. 9,648,388, 10,546,750, and 10,536,751, each entitled “Video-On-Demand Content Delivery System for Providing Video-On-
Demand Services to TV Services Subscribers”; 10,028,026, entitled “System for Addressing On-Demand TV Program Content on TV Services Platform of a
Digital TV Services Provider”; and 9,973,825, entitled “Dynamic Adjustment of Electronic Program Guide Displays Based on Viewer Preferences for
Minimizing Navigation in VOD Program Selection.” The complaint seeks an unspecified amount of damages. In April 2022, BroadbandiTV alleged in its
damages report that, in the event of a finding of liability, Amazon could be subject to $166 to $986 million in damages. In September 2022, the court granted
summary judgment, holding that the patents are invalid. In October 2022, BroadbandiTV filed a notice of appeal. We dispute the allegations of wrongdoing and
will continue to defend ourselves vigorously in this matter.
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In November 2020, the European Commission issued a Statement of Objections alleging that Amazon uses data relating to our marketplace sellers in a
manner that infringes EU competition rules. The Statement of Objections sought to impose unspecified fines and remedial actions. In December 2022, the
European Commission adopted formal commitments without fines, fully resolving the investigation.
In July 2021, the Luxembourg National Commission for Data Protection (the “CNPD”) issued a decision against Amazon Europe Core S.à r.l. claiming
that Amazon’s processing of personal data did not comply with the EU General Data Protection Regulation. The decision imposes a fine of €746 million and
corresponding practice revisions. We believe the CNPD’s decision to be without merit and intend to defend ourselves vigorously in this matter.
In November 2021, Jawbone Innovations, LLC filed a complaint against Amazon.com, Inc. and Amazon.com Services, Inc. in the United States District
Court for the Eastern District of Texas. The complaint alleges, among other things, that Amazon Echo smart speakers and displays, Fire TV Cube, and Echo
Buds infringe U.S. Patent Nos. 7,246,058, entitled “Detecting Voiced and Unvoiced Speech Using Both Acoustic and Nonacoustic Sensors”; 8,019,091,
entitled “Voice Activity Detector (VAD)-Based Multiple-Microphone Acoustic Noise Suppression”; 8,280,072, entitled “Microphone Array with Rear
Venting”; 8,321,213 and 8,326,611, both entitled “Acoustic Voice Activity Detection (AVAD) for Electronic Systems”; 8,467,543, entitled “Microphone and
Voice Activity Detection (VAD) Configurations for Use with Communications Systems”; 8,503,691, entitled “Virtual Microphone Arrays Using Dual
Omnidirectional Microphone Array (DOMA)”; 10,779,080, entitled “Dual Omnidirectional Microphone Array (DOMA)”; and 11,122,357, entitled “Forming
Virtual Microphone Arrays Using Dual Omnidirectional Microphone Array (DOMA).” The complaint seeks an unspecified amount of damages, enhanced
damages, attorneys’ fees, costs, interest, and injunctive relief. In November 2022, the case was transferred to the United States District Court for the Northern


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District of California. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In December 2021, the Italian Competition Authority (the “ICA”) issued a decision against Amazon Services Europe S.à r.l., Amazon Europe Core S.à
r.l., Amazon EU S.à r.l., Amazon Italia Services S.r.l., and Amazon Italia Logistica S.r.l. claiming that certain of our marketplace and logistics practices in Italy
infringe EU competition rules. The decision imposes remedial actions and a fine of €1.13 billion, which we are paying and will seek to recover pending
conclusion of all appeals. We believe the ICA’s decision to be without merit and intend to defend ourselves vigorously in this matter.
In July 2022, Acceleration Bay, LLC filed a complaint against Amazon Web Services, Inc. in the United States District Court for the District of
Delaware. The complaint alleges, among other things, that Amazon EC2, Amazon CloudFront, AWS Lambda, Amazon Lumberyard, Luna, Amazon Prime
Video, Twitch, Amazon GameLift, GridMate, Amazon EKS, AWS App Mesh, and Amazon VPC infringe U.S. Patent Nos. 6,701,344, entitled “Distributed
Game Environment”; 6,714,966, entitled “Information Delivery Service”; 6,732,147, entitled “Leaving a Broadcast Channel”; 6,829,634, entitled
“Broadcasting Network”; and 6,910,069, entitled “Joining a Broadcast Channel.” The complaint seeks injunctive relief, an unspecified amount of damages,
enhanced damages, interest, attorneys’ fees, and costs. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In November 2022, LightGuide, Inc. filed a complaint against Amazon.com, Inc. and Amazon.com Services LLC in the United States District Court for
the Eastern District of Texas. The complaint alleges, among other things, that Amazon’s Nike Intent Detection System used in certain fulfillment centers
infringes U.S. Patent Nos. 7,515,981, entitled “Light Guided Assembly System”; and 9,658,614 and 10,528,036, each entitled “Light Guided Assembly System


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and Method.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief. We dispute the
allegations of wrongdoing and intend to defend ourselves vigorously in this matter.
In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving patent and other
intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, consumer protection, commercial disputes,
goods and services offered by us and by third parties, and other matters.
The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to
our operating results and cash flows for a particular period. We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that
could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and
changes to our accruals and disclosures as appropriate. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such
an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the
application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been
incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position,
results of operations, or cash flows.
See also “Note 9 — Income Taxes.”
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Note 8 — STOCKHOLDERS’ EQUITY
Preferred Stock
We have authorized 500 million shares of $0.01 par value preferred stock. No preferred stock was outstanding for any year presented.
Common Stock
Common shares outstanding plus shares underlying outstanding stock awards totaled 10.4 billion, 10.5 billion, and 10.6 billion, as of December 31,
2020, 2021, and 2022. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited.
Stock Repurchase Activity
In March 2022, the Board of Directors authorized a program to repurchase up to $10.0 billion of our common stock, with no fixed expiration, which
replaced the previous $5.0 billion stock repurchase authorization, approved by the Board of Directors in February 2016. We repurchased 46.2 million shares of
our common stock for $6.0 billion in 2022 under these programs. There were no repurchases of common stock in 2020 or 2021. As of December 31, 2022, we
have $6.1 billion remaining under the repurchase program.
Stock Award Plans
Employees vest in restricted stock unit awards over the corresponding service term, generally between two and five years.
Stock Award Activity
Stock-based compensation expense is as follows (in millions):
Year Ended December 31,
2020 2021 2022
Cost of sales $ 283 $ 540 $ 757 
Fulfillment 1,357 1,946 2,745 
Technology and content 5,061 6,645 10,621 
Sales and marketing 1,710 2,530 3,875 
General and administrative 797 1,096 1,623 
Total stock-based compensation expense (1) $ 9,208 $ 12,757 $ 19,621 
___________________
(1)The related tax benefits were $1.9 billion, $2.7 billion, and $4.3 billion for 2020, 2021, and 2022.
The following table summarizes our restricted stock unit activity (in millions):
Number of UnitsWeighted Average
Grant-Date
Fair Value


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Number of UnitsWeighted Average
Grant-Date
Fair Value
Outstanding as of January 1, 2020 286.7 $ 73 
Units granted 158.6 119 
Units vested (115.5) 62 
Units forfeited (26.5) 82 
Outstanding as of December 31, 2020 303.3 100 
Units granted 127.3 167 
Units vested (108.4) 85 
Units forfeited (42.3) 116 
Outstanding as of December 31, 2021 279.9 134 
Units granted 262.8 142 
Units vested (113.3) 114 
Units forfeited (45.0) 143 
Outstanding as of December 31, 2022 384.4 144 
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Scheduled vesting for outstanding restricted stock units as of December 31, 2022, is as follows (in millions):
 Year Ended    
 2023 2024 2025 2026 2027 Thereafter Total
Scheduled vesting — restricted stock units 140.8 136.6 67.3 35.8 1.7 2.2 384.4 
As of December 31, 2022, there was $23.8 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements.
This compensation is recognized on an accelerated basis with more than half of the compensation expected to be expensed in the next twelve months, and has a
remaining weighted-average recognition period of 1.1 years. The estimated forfeiture rate as of December 31, 2020, 2021, and 2022 was 26.7%, 26.5%, and
26.5%. Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the
future.
During 2020, 2021, and 2022, the fair value of restricted stock units that vested was $15.5 billion, $18.2 billion, and $12.8 billion.
Common Stock Available for Future Issuance
As of December 31, 2022, common stock available for future issuance to employees is 1.7 billion shares.
Note 9 — INCOME TAXES
In 2020, 2021, and 2022, we recorded net tax provision (benefit) of $2.9 billion, $4.8 billion, and $(3.2) billion. Our U.S. taxable income is reduced by
accelerated depreciation deductions and increased by the impact of capitalized research and development expenses. Cash taxes paid, net of refunds, were
$1.7 billion, $3.7 billion, and $6.0 billion for 2020, 2021, and 2022.
Certain foreign subsidiary earnings and losses are subject to current U.S. taxation and the subsequent repatriation of those earnings is not subject to tax in
the U.S. The U.S. tax rules also provide for enhanced accelerated depreciation deductions by allowing the election of full expensing of qualified property,


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primarily equipment, through 2022. Our federal tax provision included a partial election for 2020 and 2021, and a full election for 2022. Effective January 1,
2022, research and development expenses are required to be capitalized and amortized for U.S. tax purposes.
The components of the provision (benefit) for income taxes, net are as follows (in millions):
 Year Ended December 31,
2020 2021 2022
U.S. Federal:
Current $ 1,835 $ 2,129 $ 2,175 
Deferred (151) 155 (6,686)
Total 1,684 2,284 (4,511)
U.S. State:
Current 626 763 1,074 
Deferred (190) (178) (1,302)
Total 436 585 (228)
International:
Current 956 2,209 1,682 
Deferred (213) (287) (160)
Total 743 1,922 1,522 
Provision (benefit) for income taxes, net $ 2,863 $ 4,791 $ (3,217)
U.S. and international components of income (loss) before income taxes are as follows (in millions):
 Year Ended December 31,
 2020 2021 2022
U.S. $ 20,219 $ 35,879 $ (8,225)
International 3,959 2,272 2,289 
Income (loss) before income taxes $ 24,178 $ 38,151 $ (5,936)
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The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as
follows (in millions):
 Year Ended December 31,
 2020 2021 2022
Income taxes computed at the federal statutory rate $ 5,078 $ 8,012 $ (1,246)
Effect of:
Tax impact of foreign earnings and losses (538) (1,349) (370)
State taxes, net of federal benefits 343 465 (173)
Tax credits (639) (1,136) (1,006)
Stock-based compensation (1) (1,107) (1,094) 612 
Foreign income deduction (2) (372) (301) (1,258)
Other, net 98 194 224 
Total $ 2,863 $ 4,791 $ (3,217)
___________________
(1)Includes non-deductible stock-based compensation and excess tax benefits or shortfalls from stock-based compensation. Our tax provision includes $1.8
billion and $1.9 billion of excess tax benefits from stock-based compensation for 2020 and 2021, and a $33 million tax shortfall from stock-based
compensation for 2022.
(2)U.S. companies are eligible for a deduction that lowers the effective tax rate on certain foreign income. This regime is referred to as the Foreign-Derived
Intangible Income deduction.
Our provision for income taxes in 2021 was higher than in 2020 primarily due to an increase in pretax income. This was partially offset by an increase in
U.S. federal research and development credits and the impact of the distribution of certain intangible assets from Luxembourg to the U.S. in Q4 2021, resulting
in the utilization of $2.6 billion of Luxembourg deferred tax assets previously subject to a valuation allowance.
We generated an income tax benefit in 2022 as compared to a provision for income taxes in 2021 primarily due to a decrease in pretax income and an
increase in the foreign income deduction. This was partially offset by a reduction in excess tax benefits from stock-based compensation and a decrease in the
tax impact of foreign earnings and losses driven by a decline in the favorable effects of corporate restructuring transactions. The foreign income deduction


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benefit recognized in 2022 reflects a change in our application of tax regulations related to the computation of qualifying foreign income and includes an
income tax benefit of approximately $655 million related to years prior to 2022.
We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S.
in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.
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Deferred income tax assets and liabilities are as follows (in millions):
 December 31,
 2021 2022
Deferred tax assets (1):
Loss carryforwards U.S. - Federal/States 228 386 
Loss carryforwards - Foreign 2,417 2,831 
Accrued liabilities, reserves, and other expenses 2,821 3,280 
Stock-based compensation 2,738 4,295 
Depreciation and amortization 941 1,009 
Operating lease liabilities 15,399 18,285 
Capitalized research and development — 6,824 
Other items 603 1,023 
Tax credits 626 950 
Total gross deferred tax assets 25,773 38,883 
Less valuation allowances (2) (3,596) (4,374)
Deferred tax assets, net of valuation allowances 22,177 34,509 
Deferred tax liabilities:
Depreciation and amortization (3,562) (9,039)
Operating lease assets (14,422) (17,140)
Assets held for investment (4,019) — 
Other items (668) (817)
Net deferred tax assets (liabilities), net of valuation allowances $ (494)$ 7,513 
 ___________________
(1)Deferred tax assets are presented after tax effects and net of tax contingencies.
(2)Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions or future
capital gains, as well as tax credits.
Our valuation allowances primarily relate to foreign deferred tax assets, including substantially all of our foreign net operating loss carryforwards as of
December 31, 2022. Our foreign net operating loss carryforwards for income tax purposes as of December 31, 2022 were approximately $10.4 billion before
tax effects and certain of these amounts are subject to annual limitations under applicable tax law. If not utilized, a portion of these losses will begin to expire in
2023.
Tax Contingencies
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax
positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the


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ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional
taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are
fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes
includes the impact of reserve provisions and changes to reserves that are considered appropriate.
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The reconciliation of our tax contingencies is as follows (in millions):
 December 31,
 2020 2021 2022
Gross tax contingencies – January 1 $ 3,923 $ 2,820 $ 3,242 
Gross increases to tax positions in prior periods 88 403 274 
Gross decreases to tax positions in prior periods (465) (354) (172)
Gross increases to current period tax positions 507 507 706 
Settlements with tax authorities (1,207) (60) (20)
Lapse of statute of limitations (26) (74) (28)
Gross tax contingencies – December 31 (1) $ 2,820 $ 3,242 $ 4,002 
 ___________________
(1)As of December 31, 2022, we had approximately $4.0 billion of accrued tax contingencies of which $2.2 billion, if fully recognized, would decrease our
effective tax rate.
As of December 31, 2021 and 2022, we had accrued interest and penalties, net of federal income tax benefit, related to tax contingencies of $110 million
and $103 million. Interest and penalties, net of federal income tax benefit, recognized for the years ended December 31, 2020, 2021, and 2022 were $(48)
million, $28 million, and $(7) million.
We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2016 and thereafter. These
examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination
as well as subsequent periods.
We are also subject to taxation in various states and other foreign jurisdictions including China, France, Germany, India, Japan, Luxembourg, and the
United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular
jurisdictions primarily for 2011 and thereafter. We are currently disputing tax assessments in multiple jurisdictions, including with respect to the allocation and
characterization of income.
In September 2022, the Luxembourg Tax Authority (“LTA”) denied the tax basis of certain intangible assets that we distributed from Luxembourg to the


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U.S. in 2021. We believe the LTA’s position is without merit and intend to defend ourselves vigorously in this matter.
In February 2023, we received a decision by the Indian Tax Authority (“ITA”) that tax applies to cloud services fees paid to the U.S. We will need to
remit taxes on the services in question, including for a portion of prior years, until this matter is resolved, which payments could be significant in the aggregate.
We believe the ITA’s decision is without merit, we intend to defend our position vigorously, and we expect to recoup taxes paid. If this matter is adversely
resolved, we would reflect significant additional tax expense, including for taxes previously paid.
In October 2014, the European Commission opened a formal investigation to examine whether decisions by the tax authorities in Luxembourg with
regard to the corporate income tax paid by certain of our subsidiaries comply with European Union rules on state aid. On October 4, 2017, the European
Commission announced its decision that determinations by the tax authorities in Luxembourg did not comply with European Union rules on state aid. Based on
that decision the European Commission announced an estimated recovery amount of approximately €250 million, plus interest, for the period May 2006
through June 2014, and ordered Luxembourg tax authorities to calculate the actual amount of additional taxes subject to recovery. Luxembourg computed an
initial recovery amount, consistent with the European Commission’s decision, which we deposited into escrow in March 2018, subject to adjustment pending
conclusion of all appeals. In December 2017, Luxembourg appealed the European Commission’s decision. In May 2018, we appealed. On May 12, 2021, the
European Union General Court annulled the European Commission’s state aid decision. In July 2021, the European Commission appealed the decision to the
European Court of Justice. We will continue to defend ourselves vigorously in this matter.
Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. Due to various factors,
including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the
resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities
may differ from the amounts accrued. It is reasonably possible that within the next twelve months we will receive additional assessments by various tax


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authorities or possibly reach resolution of income tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to
our contingencies related to positions on prior years’ tax filings. The actual amount of any change could vary significantly depending on the ultimate timing
and nature of any settlements. We cannot currently provide an estimate of the range of possible outcomes.
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Note 10 — SEGMENT INFORMATION
We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses
“Fulfillment,” “Technology and content,” “Sales and marketing,” and “General and administrative” based on usage, which is generally reflected in the segment
in which the costs are incurred. The majority of technology infrastructure costs are allocated to the AWS segment based on usage. The majority of the
remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. There are no internal revenue
transactions between our reportable segments. These segments reflect the way our chief operating decision maker evaluates the Company’s business
performance and manages its operations.
North America
The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions
through North America-focused online and physical stores. This segment includes export sales from these online stores.
International
The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through
internationally-focused online stores. This segment includes export sales from these internationally-focused online stores (including export sales from these
online stores to customers in the U.S., Mexico, and Canada), but excludes export sales from our North America-focused online stores.
AWS
The AWS segment consists of amounts earned from global sales of compute, storage, database, and other services for start-ups, enterprises, government
agencies, and academic institutions.
Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):
  Year Ended December 31,
 2020 2021 2022
North America
Net sales $ 236,282 $ 279,833 $ 315,880 
Operating expenses 227,631 272,562 318,727 
Operating income (loss) $ 8,651 $ 7,271 $ (2,847)
International
Net sales $ 104,412 $ 127,787 $ 118,007 
Operating expenses 103,695 128,711 125,753 
Operating income (loss) $ 717 $ (924)$ (7,746)
AWS
Net sales $ 45,370 $ 62,202 $ 80,096 
Operating expenses 31,839 43,670 57,255


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Operating expenses 31,839 43,670 57,255 
Operating income $ 13,531 $ 18,532 $ 22,841 
Consolidated
Net sales $ 386,064 $ 469,822 $ 513,983 
Operating expenses 363,165 444,943 501,735 
Operating income 22,899 24,879 12,248 
Total non-operating income (expense) 1,279 13,272 (18,184)
Benefit (provision) for income taxes (2,863) (4,791) 3,217 
Equity-method investment activity, net of tax 16 4 (3)
Net income (loss) $ 21,331 $ 33,364 $ (2,722)
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Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):
  Year Ended December 31,
 2020 2021 2022
Net Sales:
Online stores (1) $ 197,346 $ 222,075 $ 220,004 
Physical stores (2) 16,227 17,075 18,963 
Third-party seller services (3) 80,461 103,366 117,716 
Subscription services (4) 25,207 31,768 35,218 
Advertising services (5) 19,773 31,160 37,739 
AWS 45,370 62,202 80,096 
Other (6) 1,680 2,176 4,247 
Consolidated $ 386,064 $ 469,822 $ 513,983 
___________________
(1)Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of
consumable and durable goods that includes media products available in both a physical and digital format, such as books, videos, games, music, and
software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage
rights are included in “Subscription services.”
(2)Includes product sales where our customers physically select items in a store. Sales to customers who order goods online for delivery or pickup at our
physical stores are included in “Online stores.”
(3)Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.
(4)Includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book, and other non-
AWS subscription services.
(5)Includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video
advertising.
(6)Includes sales related to various other offerings, such as certain licensing and distribution of video content and shipping services, and our co-branded credit
card agreements.
Net sales are attributed to countries primarily based on country-focused online and physical stores or, for AWS purposes, the selling entity. Net sales


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attributed to countries that represent a significant portion of consolidated net sales are as follows (in millions):
 Year Ended December 31,
 2020 2021 2022
United States $ 263,520 $ 314,006 $ 356,113 
Germany 29,565 37,326 33,598 
United Kingdom 26,483 31,914 30,074 
Japan 20,461 23,071 24,396 
Rest of world 46,035 63,505 69,802 
Consolidated $ 386,064 $ 469,822 $ 513,983 
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Total segment assets exclude corporate assets, such as cash and cash equivalents, marketable securities, other long-term investments, corporate facilities,
goodwill and other acquired intangible assets, and tax assets. Technology infrastructure assets are allocated among the segments based on usage, with the
majority allocated to the AWS segment. Total segment assets reconciled to consolidated amounts are as follows (in millions):
 December 31,
 2020 2021 2022
North America (1) $ 108,405 $ 161,255 $ 185,268 
International (1) 42,212 57,983 64,666 
AWS (2) 47,574 63,835 88,491 
Corporate 123,004 137,476 124,250 
Consolidated $ 321,195 $ 420,549 $ 462,675 
___________________
(1)North America and International segment assets primarily consist of property and equipment, operating leases, inventory, and accounts receivable.
(2)AWS segment assets primarily consist of property and equipment and accounts receivable.
Property and equipment, net by segment is as follows (in millions):
 December 31,
 2020 2021 2022
North America $ 54,912 $ 83,640 $ 90,076 
International 15,375 21,718 23,347 
AWS 32,151 43,245 60,324 
Corporate 10,676 11,678 12,968 
Consolidated $ 113,114 $ 160,281 $ 186,715 
Total net additions to property and equipment by segment are as follows (in millions):
 Year Ended December 31,
 2020 2021 2022
North America (1) $ 29,889 $ 37,397 $ 23,682 
International (1) 8,072 10,259 6,711 
AWS (2) 16,530 22,047 27,755 
Corporate 3,485 2,622 2,688 
Consolidated $ 57,976 $ 72,325 $ 60,836 
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(1)Includes property and equipment added under finance leases of $5.6 billion, $3.6 billion, and $422 million in 2020, 2021, and 2022, and under build-to-
suit lease arrangements of $2.7 billion, $5.6 billion, and $3.2 billion in 2020, 2021, and 2022.
(2)Includes property and equipment added under finance leases of $7.7 billion, $3.5 billion, and $253 million in 2020, 2021, and 2022, and under build-to-
suit lease arrangements of $130 million, $51 million, and $20 million in 2020, 2021, and 2022.
U.S. property and equipment, net and operating leases were $109.5 billion, $155.0 billion, and $180.0 billion, as of December 31, 2020, 2021, and 2022,
and non-U.S. property and equipment, net and operating leases were $41.2 billion, $61.3 billion, and $72.9 billion as of December 31, 2020, 2021, and 2022.
Except for the U.S., property and equipment, net and operating leases in any single country were less than 10% of consolidated property and equipment, net
and operating leases.
Depreciation and amortization expense on property and equipment, including corporate property and equipment, are allocated to all segments based on
usage. Total depreciation and amortization expense, by segment, is as follows (in millions):
 Year Ended December 31,
 2020 2021 2022
North America $ 6,421 $ 9,234 $ 11,565 
International 2,215 3,022 3,483 
AWS 7,603 10,653 9,876 
Consolidated $ 16,239 $ 22,909 $ 24,924 
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Item 9. Changes in and Disagreements with Accountants On Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation required by the Securities Exchange Act of 1934 (the “1934 Act”), under the supervision and with the participation of our
principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined
in Rule 13a-15(e) of the 1934 Act, as of December 31, 2022. Based on this evaluation, our principal executive officer and principal financial officer concluded
that, as of December 31, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed
by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s
rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the 1934
Act. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this
assessment, management concluded that, as of December 31, 2022, our internal control over financial reporting was effective in providing reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. Ernst & Young has independently assessed the effectiveness of our internal control over financial reporting and its report is included
below.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2022 that materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their


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objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial
reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can
provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Amazon.com, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Amazon.com, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control
— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our
opinion, Amazon.com, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive income (loss),
stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022 and the related notes and our report dated February 2,
2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness
of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting


