# Amazon.com, Inc. (AMZN) — Narrative, FY26Q1

**Sources**
- **FY2025 Form 10-K** — accession `0001018724-26-000004`, filed 2026-02-06, period ended 2025-12-31.
- **Q1 FY2026 Form 10-Q** — accession `0001018724-26-000014`, filed 2026-04-30, period ended 2026-03-31.

---

## Business (10-K `0001018724-26-000004`, Item 1)

Amazon states its aim as being "Earth's most customer-centric company," guided by four principles: customer obsession over competitor focus, passion for invention, operational excellence, and long-term thinking. It serves seven customer sets: consumers, sellers, developers, enterprises, content creators, advertisers, and employees.

**Three reportable segments** (how the CODM — the President/CEO — evaluates the business):

- **North America** — retail sales of consumer products (own and third-party seller), advertising, and subscription services through North America-focused online and physical stores, including export sales from those stores.
- **International** — the same, through internationally-focused online stores, including exports from those stores (including to U.S./Mexico/Canada customers), but excluding exports out of the North America-focused stores.
- **AWS** — global sales of compute, storage, database, analytics, AI/ML and other on-demand services to start-ups, enterprises, government agencies, and academic institutions.

**How it makes money.** Product sales (goods plus shipping fees, and digital media where revenue is recorded gross) and service sales. Service revenue is third-party seller fees (commissions plus related fulfillment/shipping fees), AWS, advertising, Prime membership fees, and digital subscriptions. Seller programs earn fixed fees, a percentage of sales, per-unit activity fees, interest, or a combination — Amazon is not the seller of record in those transactions.

**FY2025 revenue by product/service group ($M)** — 2023 / 2024 / 2025:

| Line | 2023 | 2024 | 2025 |
|---|---|---|---|
| Online stores | 231,872 | 247,029 | 269,287 |
| Physical stores | 20,030 | 21,215 | 22,561 |
| Third-party seller services | 140,053 | 156,146 | 172,162 |
| Advertising services | 46,906 | 56,214 | 68,635 |
| Subscription services | 40,209 | 44,374 | 49,619 |
| AWS | 90,757 | 107,556 | 128,725 |
| Other | 4,958 | 5,425 | 5,935 |
| **Consolidated** | **574,785** | **637,959** | **716,924** |

**Geographic mix FY2025 ($M):** United States 489,657; Germany 45,900; United Kingdom 43,212; Japan 30,688; rest of world 107,467.

**Other business facts.** Consumers reach Amazon via websites, mobile apps, Alexa, devices, streaming and physical stores; Amazon manufactures Kindle, Fire tablet, Fire TV, Echo, Ring, Blink and eero, and produces media content. Prime bundles fast free shipping on tens of millions of items with video, live sports and other benefits. Business is seasonal, with Q4 the peak. Headcount was **approximately 1,576,000** full- and part-time employees at 2025-12-31, supplemented by contractors and temps. Property footprint at 2025-12-31: 741.5M leased sq ft and 78.1M owned sq ft, including 615 North America and 8 International physical stores; corporate HQ owned and leased in Puget Sound, WA and Arlington, VA. Competitors span ten enumerated categories, from physical/e-commerce retailers to cloud/IT providers, device makers, grocers, ad networks and virtual healthcare providers. Principal retail competitive factors: selection, price, convenience.

---

## Risk factors — substantive (10-K `0001018724-26-000004`, Item 1A; legal/regulatory block read from raw HTML)

**Business and industry**
- **Intense competition** across geographies and business models, including cross-border competition. Many competitors have longer operating histories, greater brand recognition, larger customer bases and materially greater resources; competition is intensifying with new business models and new well-funded entrants.
- **Expansion into new products, services, technologies and geographies** — limited or no experience in newer segments, customers may not adopt, and profitability may never materialize. Explicitly names automation, artificial intelligence, and machine learning among the newer activities carrying this risk.
- **International operations** — significant to revenue and profit and slated to expand further. Enumerated exposures include local economic/political conditions, government regulation and restrictive actions (trade protection, tariff policy changes), restrictions on sales of certain products, licensing/certification requirements, repatriation and FX restrictions, limited fulfillment/technology infrastructure abroad, longer receivable cycles, privacy/data-localization law, lower internet and credit-card penetration, works councils and unions, and FCPA compliance.
- **PRC and India country risk** — both regulate Amazon's and its affiliates' businesses through regulations and licensing; authorities may take a view contrary to Amazon's, and the businesses may be unable to continue operating. Separately, **China-based sellers account for significant portions of third-party seller services and advertising revenue, and China-based suppliers for significant portions of inventory** — a named concentration.
- **Foreign exchange** — international results and certain intercompany balances are exposed; consolidation can cause reported results to differ materially from expectations.

**Operating**
- **Strain from rapid expansion** on management, operational, financial and other resources.
- **Fluctuating results and decelerating growth** — expense levels and investment plans are set off sales estimates; a large share of costs is fixed in the near term, so revenue shortfalls flow straight to income. Revenue growth "may not be sustainable" and percentage growth rates may decrease.
- **Retail variability / seasonality** — demand swings on seasonality, promotions, launches; holiday sales drive the annual peak in cash and inventory at December 31.
- **Fulfillment network and data center execution** — failure to forecast demand or optimize the network raises net shipping cost; reliance on a **limited number of shipping companies**; inventory held on behalf of other companies adds complexity.
- **Data loss and security incidents**, and **system interruption / lack of redundancy** — systems have been damaged or interrupted in the past and could be again.
- **Key personnel** — dependence on senior management including the President/CEO, with no key-person life insurance; plus dependence on a very large operational workforce. **Labor union organizing efforts**, if successful, decrease operational flexibility and increase costs.
- **Supplier concentration** — significant suppliers including content and technology licensors, in some cases limited or single sources of supply.
- **Commercial agreements, strategic alliances and acquisitions** — compensation often depends on a counterparty's sales volume; renewal on comparable terms is not assured; acquisitions bring integration, impairment, unknown-liability and dilution risk. Future M&A may require issuing equity, spending cash, or incurring debt/contingent liabilities.
- **Inventory risk** and **payments-related risk** (multiple payment methods; regulated money-transmission-like services in certain jurisdictions where customers keep balances).
- **Rapidly evolving business model and highly volatile stock price.**
- **Climate** — increased operating costs from more frequent extreme weather.

- **Evolving government regulation** across taxation, privacy, data use/protection/security/localization, network security, consumer protection, pricing, content, copyright, competition, employment, trade and protectionist measures, online payments, environmental/climate rules, unmanned aircraft operation, healthcare, satellite communications services, and **artificial intelligence technologies and services**. It is not settled how existing law applies to Amazon's newer operations.
- **Claims, litigation and government investigations** — the number and scale have increased over time as the business expanded and as regulators seek to regulate pre-emptively. Explicitly names price-fixing, monopolization and consumer-protection matters brought by state attorneys general and the FTC. Resolution could require licenses, consent decrees, substantial future payments, withdrawal of products/services, or business-practice changes materially adverse to the business.
- **Product liability** — including for third-party-sold goods, with the A-to-z Guarantee reimbursement cost rising as third-party seller sales grow; insurance may be inadequate and vendor/seller agreements do not always indemnify.
- **Additional tax liabilities and collection obligations** — revenue-based digital/marketplace taxes proliferating; EU and other global minimum taxes; and a named live controversy: **the Indian tax authority asserts tax applies to cloud services fees paid to Amazon in the U.S.**, which Amazon is contesting.
- **Government contracts** — subject to procurement regulation, audit, and termination for convenience.

**Named litigation with quantified exposure (10-K Note 7)**
- **Italian Competition Authority** — December 2021 decision on marketplace/logistics practices, fine of €1.13 billion (paid, recovery sought). In September 2025 the Italian Administrative Tribunal affirmed but **cut the fine to €752 million**; Amazon appealed in December 2025.
- **Luxembourg CNPD (GDPR)** — €746 million fine; Amazon's appeal dismissed by the Luxembourg Administrative Court in March 2025; further appeal filed April 2025.
- **Kove IO v. AWS** (S3, DynamoDB patents) — April 2024 jury awarded **$525 million**, plus **$148 million** pre-judgment interest awarded August 2024; on appeal since September 2024.
- **Rensselaer Polytechnic / CF Dynamic Advances** (Alexa patents) — plaintiffs' 2023 damages report claimed $140M–$267M; patent ruled invalid and case dismissed March 2024, on appeal.
- **Antitrust class actions** since March 2020 in the U.S., Canada and U.K. seeking billions in alleged damages plus treble/punitive damages and structural relief. Two U.K. classes certified (a third pre-certification); one U.S. class certified (three pre-certification).
- **Xockets** (AWS Nitro System patents, June 2025), **InterDigital** (video patents, multi-jurisdiction from November 2025 following Amazon's own August 2025 U.K. rate-setting complaint), **Primos Storage Technology** (S3/EMR/EC2/EBS/FSx patents, December 2025), and Illinois BIPA biometric class actions.
- Approximately **$6.6 billion** of income tax contingencies excluded from the commitments table at 2025-12-31 because timing/amount are not reasonably estimable ($6.7 billion at 2026-03-31).

---

## MD&A — FY2025 (10-K `0001018724-26-000004`, Item 7)

**Overview framing.** Management flags macro factors it cannot isolate or quantify: inflation and interest rates, resource and supply volatility, global economic and geopolitical developments, **unpredictable shifts in global tariff and trade policies**, and the development and adoption of AI. It states it expects to continue making additional investments in AI initiatives.

**Segment results ($M)**

| | 2023 | 2024 | 2025 | YoY 25 |
|---|---|---|---|---|
| North America net sales | 352,828 | 387,497 | 426,305 | +10% |
| International net sales | 131,200 | 142,906 | 161,894 | +13% |
| AWS net sales | 90,757 | 107,556 | 128,725 | +20% |
| **Consolidated net sales** | **574,785** | **637,959** | **716,924** | **+12%** |
| North America operating income | 14,877 | 24,967 | 29,619 | |
| International operating income (loss) | (2,656) | 3,792 | 4,750 | |
| AWS operating income | 24,631 | 39,834 | 45,606 | |
| **Consolidated operating income** | **36,852** | **68,593** | **79,975** | |
| Total non-operating income | 705 | 21 | 17,336 | |
| Provision for income taxes | (7,120) | (9,265) | (19,087) | |
| Equity-method activity, net of tax | (12) | (101) | (554) | |
| **Net income** | **30,425** | **59,248** | **77,670** | |

Ex-FX growth was identical to reported for North America (+10%) and AWS (+20%); International grew 13% reported vs **10% ex-FX** — FX added $4.9B to International net sales and $4.4B consolidated. Mix shifted to 59% / 23% / 18% (NA / Intl / AWS).

**Drivers.** North America and International sales growth came from increased unit sales (including third-party sellers), advertising, and subscriptions, driven by focus on price, selection and convenience including fast shipping. **AWS growth reflects increased customer usage, partially offset by pricing changes primarily driven by long-term customer contracts** — the same wording used every period, and worth noting as a persistent price headwind inside the usage growth.

**Operating expenses ($M)** — 2024 → 2025, and % of net sales:

| | 2024 | 2025 | Growth | % sales 2024 | % sales 2025 |
|---|---|---|---|---|---|
| Cost of sales | 326,288 | 356,414 | +9% | 51.1% | 49.7% |
| Fulfillment | 98,505 | 109,074 | +11% | 15.4% | 15.2% |
| Technology and infrastructure | 88,544 | 108,521 | **+23%** | 13.9% | **15.1%** |
| Sales and marketing | 43,907 | 47,129 | +7% | 6.9% | 6.6% |
| General and administrative | 11,359 | 11,172 | (2)% | 1.8% | 1.6% |
| Other operating expense, net | 763 | 4,639 | +508% | 0.1% | 0.6% |
| **Total** | **569,366** | **636,949** | | | |

Shipping costs were $95.8B (2024) and **$102.7B** (2025). The technology and infrastructure jump is attributed primarily to **increased infrastructure spending including depreciation and amortization**. D&A on PP&E rose from $32.1B to **$41.9B**, with AWS D&A alone going $13.3B → **$21.5B**.

**Non-recurring items inside FY2025 operating income.** Operating income of $80.0B includes **$2.5 billion of charges for the FTC lawsuit settlement (Q3 2025)** and **$2.7 billion of estimated severance costs primarily for planned role eliminations, $1.8 billion of which was recorded in Q3 2025**. "Other operating expense, net" of $4.6B also includes the resolution of Italian stores-business tax disputes and physical-store/asset impairments.

**Below the line.** Interest income $4.7B → $4.4B (lower prevailing rates, higher invested balance). Interest expense $2.4B → $2.3B. Long-term lease liabilities $78.3B → **$87.3B**; long-term debt $52.6B → **$65.6B**. Other income (expense), net swung from **$(2.3)B to +$15.2B** — a non-operating, non-cash gain driven by an upward mark on Anthropic nonvoting preferred stock plus reclassification of gains on converted Anthropic convertible notes. (2024's loss was mainly the Rivian mark.) Income tax provision $9.3B → **$19.1B**. Equity-method activity $(101)M → $(554)M, mainly impairments.

**Capital intensity — the central FY2025 fact.** Cash capital expenditures were **$77.7B in 2024 and $128.3B in 2025**, and management says it expects both technology-infrastructure and fulfillment capacity spending **to increase in 2026**. Total net additions to PP&E (including non-cash) were $85.8B → **$142.4B**, of which **AWS $53.3B → $96.5B**. PP&E net by segment: AWS $110.7B → **$190.1B**; North America $103.0B → $122.0B. Consolidated PP&E net $252.7B → **$357.0B**.

**Cash flow FY2025 ($M).** Operating $115,877 → **$139,514**. Investing $(94,342) → $(142,545). Financing $(11,812) → **+$9,661**. **Free cash flow fell from $38,219 to $11,194** as purchases of PP&E net went $(77,658) → $(128,320). Cash + marketable securities at fair value $101.2B → **$123.0B**; foreign-held $25.5B → $29.7B (only $7.1B held by foreign subsidiaries). Acquisition/investment cash outflow $7.1B (2024) → $3.8B (2025), primarily Anthropic convertible notes, including $2.7B invested in 2025.

**Tax mechanics.** The One Big Beautiful Bill Act of 2025 reinstated 100% accelerated depreciation on qualified property (retroactive to 2025-01-20) and immediate expensing of domestic R&D (retroactive to 2025-01-01). It **significantly decreased 2025 cash taxes** — cash income taxes paid net of refunds fell from $12.3B to **$8.3B** — and management expects a similar effect in 2026.

A further, current-quarter development extends this (10-Q `0001018724-26-000014`, Note 7 and MD&A): on **February 18, 2026 the IRS issued Notice 2026-7 (the "2026 Notice")**, guidance on the U.S. tax treatment of **previously capitalized domestic research and development costs**. The Notice **applied retroactively to 2025**, and Amazon expects it to result in a **significant decrease of 2024 and 2025 cash taxes paid**. Cash paid for income taxes net of refunds was **$877 million in Q1 2025 and $1.3 billion in Q1 2026**. Read together with the 2025 Tax Act, the cash-tax line is being held well below the book provision ($19.1B in FY2025; $9.6B in Q1 2026) by accelerated depreciation on a rapidly growing PP&E base plus R&D expensing — a gap best treated as timing, not permanent.

**Acquisition history (10-K Note 5).** 2023: One Medical (1Life Healthcare) for ~$3.5B net of cash. 2024: aggregate $780M. **2025: immaterial aggregate cash consideration** — i.e., organic year. Goodwill $23.07B → $23.27B.

**Guidance issued with the 10-K (for Q1 2026, given 2026-02-05):** net sales $173.5B–$178.5B (+11% to +15% YoY), assuming ~180bp favorable FX; operating income $16.5B–$21.5B vs $18.4B in Q1 2025, **including approximately $1 billion of higher year-over-year Amazon Leo (satellite) costs as it scales in 2026, plus investment in quick commerce and sharper prices in international stores**.

---

## Current quarter — Q1 FY2026 (10-Q `0001018724-26-000014`, quarter ended 2026-03-31)

**Amazon beat the top end of its own revenue guidance and the top end of its operating income range.** Guidance was $173.5B–$178.5B net sales and $16.5B–$21.5B operating income; actual was **$181,519M net sales and $23,852M operating income**.

**Segment results ($M), Q1 2025 → Q1 2026**

| | Q1 2025 | Q1 2026 | Growth | Ex-FX growth |
|---|---|---|---|---|
| North America net sales | 92,887 | 104,143 | +12% | +12% |
| International net sales | 33,513 | 39,789 | **+19%** | **+11%** |
| AWS net sales | 29,267 | 37,587 | **+28%** | +28% |
| **Consolidated** | **155,667** | **181,519** | **+17%** | **+15%** |
| North America operating income | 5,841 | 8,267 | | |
| International operating income | 1,017 | 1,424 | | |
| AWS operating income | 11,547 | 14,161 | | |
| **Consolidated operating income** | **18,405** | **23,852** | | |
| Total non-operating income | 3,274 | 15,982 | | |
| Provision for income taxes | (4,553) | (9,560) | | |
| **Net income** | **17,127** | **30,255** | | |

Mix moved to 57% / 22% / 21%. FX added **$2.9B** to consolidated net sales ($346M NA, $2.5B International) — note that International's 19% reported growth is only **11% ex-FX**, so the apparent International acceleration is largely currency.

**AWS is the story.** AWS growth accelerated from **17% in Q1 2025 to 28% in Q1 2026**, and from 20% for FY2025 — a clear inflection. Driver stated: increased customer usage, partially offset by pricing changes from long-term customer contracts. AWS operating margin, however, **compressed from 39.5% to 37.7%** ($11,547/$29,267 vs $14,161/$37,587) as infrastructure spend outran revenue. AWS segment assets jumped $252.6B → **$294.1B** in one quarter; AWS PP&E net $190.1B → **$223.1B**.

**Revenue by product/service group ($M), Q1 2025 → Q1 2026:** Online stores 57,407 → 64,254; Physical stores 5,533 → 5,785; Third-party seller services 36,512 → 41,578; **Advertising services 13,921 → 17,243 (+24%)**; Subscription services 11,715 → 13,427 (+15%); AWS 29,267 → 37,587; Other 1,312 → 1,645.

**Operating expenses ($M):** Cost of sales 76,976 → 87,463 (+14%, 49.4% → **48.2%** of sales); Fulfillment 24,593 → 27,289 (+11%, 15.8% → **15.0%**); **Technology and infrastructure 22,994 → 29,567 (+29%, 14.8% → 16.3%)**; Sales and marketing 9,763 → 10,314 (+6%); G&A 2,628 → 2,587 (−2%); Other operating expense, net 308 → 447. Shipping costs $22.5B → **$25.7B**. Other operating expense in Q1 2026 relates primarily to **charges for damaged data centers in the Middle East**, plus asset impairments and intangible amortization. The pattern: retail-side cost lines are levering down as a % of sales while technology and infrastructure levers up ~150bp — retail efficiency is funding the AI/cloud build.

**Below the line.** Interest income flat at $1.1B; **interest expense $541M → $800M** on the larger debt stack. **Other income (expense), net was $2,749M → $15,647M**, composed of: upward adjustments on private-company equity investments **+$12,328M** (primarily the Anthropic nonvoting preferred mark), reclassification gains on AFS debt securities **+$4,479M** (Anthropic notes converting), marketable equity losses $(889)M, equity warrant losses $(398)M, FX +$160M, other, net $(33)M — summing to the reported $15,647M. **Roughly half of Q1 2026 net income ($30.3B) is a non-cash, non-operating mark on the Anthropic position** — the single most important adjustment a value investor must make to this quarter. The tax provision was $9.6B including **$4.1 billion of net discrete tax expense primarily attributable to the net gains on the Anthropic investments** (vs $559M discrete in Q1 2025).

**Capex trajectory — sharply higher.** Cash capital expenditures **$24.3B (Q1 2025) → $43.2B (Q1 2026)**, +78% YoY, and management repeats it expects both technology infrastructure and fulfillment capacity spending **to increase in 2026**. Total net additions to PP&E (including non-cash): $27,449M → **$54,757M**, of which **AWS $20,464M → $41,516M** and North America $5,096M → $11,126M. Property and equipment acquired under finance leases $54M → **$1,565M**. Increase in PP&E acquired but not yet paid $3,108M → **$9,920M** — a further signal that reported cash capex still understates the commitment rate.

**Cash flow and free cash flow.** Q1 operating cash flow $17,015M → $26,032M; investing $(29,803)M → $(64,212)M; financing $(47)M → **+$52,767M**. On a trailing-twelve-month basis to 2026-03-31: operating cash flow **$148,531M** (vs $113,903M), purchases of PP&E net **$(147,299)M** (vs $(87,978)M), so **TTM free cash flow collapsed from $25,925M to $1,232M**. TTM investing $(176,954)M; TTM financing **+$62,475M**. This is the sharpest single fact in the filing: Amazon's TTM free cash flow is now essentially zero, and the growth is being funded from the balance sheet and the debt markets.

**Financing / balance sheet.** Cash + marketable securities at fair value **$123.0B → $143.1B**; foreign-currency-held balances $29.7B → $22.1B. Proceeds from short- and long-term debt were **$59.5B in Q1 2026** (vs $2.6B in Q1 2025); repayments $6.7B. Management states plainly: **"We expect to undertake additional financing activities in 2026."**

Unsecured senior notes outstanding reached **$121.8 billion** at 2026-03-31, up from $68.8B face value at 2025-12-31, after two March 2026 issuances: **$37.0 billion** of USD notes (2028–2076 maturities, 3.85%–6.05% stated, includes $2.8B floating due 2028/2029) and **€14.5 billion ($16.8 billion)** of Euro-denominated notes (2028–2064, 2.50%–4.85%, includes €1.8B floating due 2028), both for general corporate purposes. Long-term debt on the balance sheet went **$65,648M → $119,074M**. Combined weighted-average remaining life 14.2 years. No financial covenants. Estimated fair value of the notes $61.1B → $113.6B. The Euro notes are designated as **net investment hedges**. Still no borrowings under the $30.0B commercial paper programs or the $20.0B revolvers ($15.0B Credit Agreement to November 2028; $5.0B 364-day facility maturing October 2026); $152M outstanding on other short-term facilities; $9.4B of unused letters of credit.

**Contractual commitments at 2026-03-31 ($M):** long-term debt principal and interest **203,538**; operating lease liabilities 110,135; finance leases incl. interest 16,496; financing obligations incl. interest 10,183; **leases not yet commenced 106,347**; unconditional purchase obligations (energy, digital media content, PP&E, software) **103,768**; other commitments 18,813; **total $569,280M**. Excludes ~$6.7B of income tax contingencies.

**AI commercial pipeline (Q1 2026, from Note 1 and Note 2).**
- **OpenAI**: AWS and OpenAI announced an **expansion of the existing $38.0 billion multi-year commitment by $100.0 billion over 8 years**, including contractual obligations tied to the performance of AWS chips. Separately, Amazon **invested $15.0 billion in OpenAI Series C Preferred Stock** and signed an equity commitment letter to purchase an **additional $35.0 billion** of Series C at its discretion, with mandatory purchase on the earlier of OpenAI hitting specified milestones or an OpenAI IPO/direct listing; obligations terminate if the $35.0B is not invested by **December 31, 2028**. Also entered an AWS cloud commercial arrangement (including AWS chips) and a joint collaboration agreement making certain OpenAI-model services available to Amazon and on AWS.
- **Anthropic**: $8.0 billion of convertible notes invested Q3 2023–Q4 2025. At 2026-03-31, nonvoting preferred carried at **$32.0 billion** (from $14.8B at year-end) and remaining convertible notes at fair value **$42.2 billion**, with **$36.3 billion of unrealized gain sitting in AOCI** (down from $39.5B as conversions reclassify it into earnings).
- Equity investments in private companies not under the equity method (primarily Anthropic and OpenAI) carried at **$16.2B → $48.1B**. Total recorded value of equity, equity-warrant and convertible debt investments in public and private companies **$96.5 billion** at 2026-03-31 (vs $69.1B at 2025-12-31), of which only **$3.8 billion** is publicly traded and marked to market price. Amazon states these are variable interests it does not consolidate because it is not the primary beneficiary.
- **Remaining performance obligations** (contracts with original terms over one year, primarily AWS) were **approximately $364 billion** at 2026-03-31, weighted-average remaining life **5.5 years** — the forward AWS backlog.

**Energy commitments.** ~200 million MWh of energy contracts subject to derivative fair-value accounting, weighted-average remaining duration ~15 years, majority delivered beyond nine years; Level 3 valuation with significant management judgment; P&L impact not significant in Q1 2025 or Q1 2026 but flagged as potentially material given duration and volatility.

**Other quarter facts.** Inventory valuation allowance $3.3B → $2.8B. Allowance for doubtful accounts $2.4B → $2.6B. Capitalized video and music content $21.3B → $21.5B; video/music expense $5.1B → $6.0B for the quarter. Unearned revenue $25.0B at year-end, $9.4B recognized in Q1. Diluted shares 10,793M → 10,874M. **No share repurchases in Q1 2025 or Q1 2026; $6.1 billion remains under the March 2022 $10.0 billion authorization.** Total consolidated assets $818.0B → **$916.6B** in one quarter.

**Litigation update in the quarter.** In **February 2026 the Federal Circuit affirmed** the district court's judgment that the Rensselaer/CF Dynamic Advances patent is invalid (the $140M–$267M claimed exposure), subject to further appeal.

**Guidance issued with the 10-Q (Q2 2026, given 2026-04-29):**
- **Net sales $194.0 billion to $199.0 billion**, +16% to +19% vs Q2 2025, anticipating an **unfavorable ~10 basis point FX impact**.
- **Operating income $20.0 billion to $24.0 billion**, vs $19.2 billion in Q2 2025.
- Assumes **Prime Day occurs in Q2 2026**.
- Assumes no additional business acquisitions, restructurings, or legal settlements are concluded — note this explicitly **excludes any Globalstar effect**.

---

Amazon does not file a standalone subsequent-events note. The post-period disclosures are embedded in Note 2 (Financial Instruments — Non-Marketable Investments) and Note 4 (Commitments and Contingencies). There are **two material post-period events**, both large:

### 1. Globalstar, Inc. acquisition — announced April 13, 2026 (Note 4)

- **Target:** Globalstar, Inc., a Delaware corporation. Definitive **merger agreement signed April 13, 2026**.
- **Consideration:** mix of cash and stock. Prior to closing, each Globalstar stockholder elects, per share, either **(i) $90.00 in cash** or **(ii) 0.3210 shares of Amazon common stock, with value capped at $90.00 per share**. Total consideration varies with Amazon's share price and the election mix.
- **Proration:** aggregate cash elections capped at a **maximum of 40% of total Globalstar shares**; excess cash elections automatically convert to stock consideration pro rata.
- **Adjustment:** downward adjustment of up to **$110 million** if Globalstar does not meet certain operational milestones.
- **Implied value:** as of the merger agreement date, **approximately $10.9 billion including Globalstar's debt**.
- **Apple side agreements:** on the same date Amazon entered agreements with **Apple Inc.**, Globalstar's largest customer, (a) to provide certain services after the acquisition and (b) to **redeem certain equity interests held by Apple in a Globalstar special purpose entity**.
- **Timing:** expected to close **in 2027**, subject to closing conditions including regulatory approvals and **Globalstar's achievement of certain satellite replacement milestones**.

*Analytical note:* this is a satellite-connectivity acquisition that pairs with the Amazon Leo satellite build already costing ~$1B incremental YoY per the FY2026 guidance. It is not in Q2 2026 guidance, and closing is more than a year out with genuine operational conditions attached.

### 2. Anthropic — additional investment and a $20 billion financing facility (Note 2)

Subsequent to March 31, 2026:
- **Invested $5.0 billion** in Anthropic nonvoting preferred stock.
- **Amended the commercial arrangement** (primarily provision of AWS cloud services), which now **includes contractual obligations related to the performance of AWS chips**.
- **Entered a financing arrangement making available to Anthropic an aggregate facility not to exceed $20.0 billion**, expiring **30 months after a liquidity event** (defined to include an Anthropic IPO or direct listing). At inception **no amount is available to draw**; capacity is released as Amazon reaches **certain compute-capacity delivery milestones** under the amended commercial arrangement. Draws take the form of new Anthropic convertible notes, or after a liquidity event Anthropic common stock, issued to Amazon in exchange for cash.
- Amazon also holds an **option to invest up to $5.0 billion in Anthropic's future equity financings**; exercising it reduces the facility availability by the amount exercised.

*Analytical note:* the structure is circular in a way worth flagging — Amazon supplies capital to Anthropic, which is contractually tied to Amazon delivering AWS compute capacity and AWS chips, and Anthropic revenue flows back into AWS. Combined with the $100B OpenAI expansion and the $35B OpenAI equity commitment, Amazon's committed AI-related capital and vendor-financing exposure extends well beyond what appears on the balance sheet, while the accounting gain from marking these same positions ($12.3B upward adjustment in Q1) is what carried reported EPS.

**No other material post-period acquisitions, divestitures, financings, or litigation outcomes are disclosed in the 10-Q.** The March 2026 note issuances ($37.0B USD and €14.5B) occurred *within* the quarter, not subsequently, and are reflected in the 2026-03-31 balance sheet.