Amazon Com Inc

Amazon's FY2023 total net sales rose 11.8% to $574.8B, operating income increased to $36.9B from $12.2B, and net income swung to $30.4B from a $2.7B loss, with diluted EPS of $2.90 versus $(0.27).

Total net sales increased 11.8% to $574.8B in 2023 from $514.0B in 2022. Operating income increased to $36.9B from $12.2B, and net income swung to $30.4B from a net loss of $2.7B. Management stated the increase in operating cash flow was due to an increase in net income (loss), excluding non-cash expenses, and changes in working capital. Management also disclosed that in Q4 2023 it completed a useful life study for its servers and is increasing the useful life from five years to six years in January 2024, which, based on servers included in property and equipment, net as of December 31, 2023, will have an anticipated impact to 2024 operating income of $3.1 billion.

Operating income of $36.9B in 2023 included other operating expense (income), net of $767 million, which was primarily related to asset impairments for fulfillment network facilities and physical store closures in 2023 and the amortization of intangible assets. Other income (expense), net was $938 million in 2023, which included a marketable equity securities valuation gain of $797 million from the equity investment in Rivian. In 2022, other income (expense), net was $(16.8) billion, which included a marketable equity securities valuation loss of $(12.7) billion from the Rivian investment. The 2022 period also included approximately $1.1 billion of impairments of property and equipment and operating leases primarily related to physical stores, approximately $480 million of expenses primarily relating to terminating contracts for certain leases not yet commenced as well as other purchase commitments, approximately $720 million of estimated severance costs primarily related to planned role eliminations, and a $1.3 billion increase in reserves for general, product, and automobile liabilities.

Capital expenditures $52.7B (prior $63.6B) (selected cash-flow amount, not necessarily total capital investment).

“In Q3 2023, we invested in a $1.25 billion note from Anthropic, PBC, which is convertible to equity.”

— Filing statement

“In January 2024, we and iRobot agreed to terminate the transaction.”

— Filing statement

Return on equity was 15.1% (prior -1.9%) (period net income / period-end equity, not annualized); return on assets 5.8% (prior -0.6%) (period net income / period-end assets, not annualized).

First Quarter 2024 Guidance: Net sales are expected to be between $138.0 billion and $143.5 billion, or to grow between 8% and 13% compared with first quarter 2023. This guidance anticipates a favorable impact of approximately 40 basis points from foreign exchange rates. Operating income is expected to be between $8.0 billion and $12.0 billion, compared with $4.8 billion in first quarter 2023. This guidance includes approximately $0.9 billion lower depreciation expense due to an increase in the estimated useful life of our servers beginning on January 1, 2024. This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.

“We expect spending in technology and infrastructure to increase over time as we continue to add employees and infrastructure.”

— Amazon.com, Inc. managementVerified in filing

“We also expect the current macroeconomic environment and enterprise customer cost optimization efforts to impact our AWS revenue growth rates.”

— Amazon.com, Inc. managementVerified in filing

Leverage: Identified debt as of 2023-12-31: reported debt balance of unestablished maturity scope of $58.3B. The concept behind this balance does not establish which maturities it covers. Total debt, net debt and debt-to-equity are therefore not stated.

Liquidity: Cash, cash equivalents, and marketable securities were $86.8B as of December 31, 2023, up from $70.0B as of December 31, 2022. The company had no borrowings outstanding under the two unsecured revolving credit facilities or the commercial paper programs, $682 million of borrowings outstanding under the secured revolving credit facility, and the entire amount of the term loan had been repaid as of December 31, 2023.

Cash flow: Cash flow — operating $84.9B, investing $-49.8B, financing $-15.9B.

Working capital: Current assets $172.4B vs. current liabilities $164.9B (current ratio 1.05x). Prior reported balance sheet as of 2022-12-31: $146.8B vs. $155.4B (0.94x).