Earnings Call Transcript - AMZN Q4 2022

Operator, Operator

Thank you for your patience. Good day, everyone, and welcome to the Amazon.com Quarter 4 2022 Financial Results Teleconference. I will now hand the call over to the Vice President of Investor Relations, Dave Fildes. Please proceed.

Dave Fildes, Vice President of Investor Relations

Hello, and welcome to our Q4 2022 financial results conference call. Joining us today to answer your questions is Andy Jassy, our CEO; and Brian Olsavsky, our CFO. As you listen to today's conference call, we encourage you to have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2021. Our comments and responses to your questions reflect management's views as of today, February 2, 2023 only, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings. During this call, we may discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Our guidance incorporates the order trends that we've seen to date and what we believe today to be appropriate assumptions. Our results are inherently unpredictable and may be materially affected by many factors, including 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, and the various factors detailed in our filings with the SEC. Our guidance assumes, among other things, that we don't conclude any additional business acquisitions, restructurings or legal settlements. It's not possible to accurately predict demand for our goods and services and, therefore, our actual results could differ materially from our guidance. And now I'll turn the call over to Brian.

Brian Olsavsky, CFO

Thank you for joining today's call. As Dave mentioned earlier, I'm joined today by Andy Jassy, our CEO. Before we move on to take your questions, I will make some comments about our Q4 results. Let's start with revenue. For the fourth quarter, worldwide net sales were $149.2 billion, representing an increase of 12% year-over-year, excluding approximately 360 basis points of unfavorable impact from changes in foreign exchange rates and above the top end of our Q4 guidance range. We've seen that during periods of economic uncertainty, consumers are very careful about how they allocate their resources and where they choose to spend their money. Throughout Amazon's history, we have found that our focus on the customer helps to set us apart in times like these. This past holiday season, customers came to Amazon for great deals, fast delivery, and our widest-ever selection, bolstered by nearly 2 million third-party seller partners who sell on Amazon. Enterprise customers continued their multi-decade shift to the cloud while working closely with our AWS teams to thoughtfully identify opportunities to reduce costs and optimize their work. In our worldwide stores business, with the ongoing economic uncertainty, coupled with the continuation of inflationary pressures, customers remain cautious about their spending behavior. We saw them spend less on discretionary categories and shift to lower-priced items and value brands in categories like electronics. We also saw them continue to spend on everyday essentials, such as consumables, beauty, and softlines. Our teams worked hard to offer low prices and secure millions of deals for customers in Q4, including our first-ever Prime Early Access Sale in October and the more traditional Thanksgiving to Cyber Monday holiday weekend. These global sales events outperformed our expectations as customers responded to millions of deals across our growing selection. Third-party sellers remain a key contributor to that expanding selection. In Q4, sellers comprised a record 59% of overall unit sales. Sellers, vendors, and brands continue to look to Amazon's advertising capabilities to reach customers in the always competitive holiday season, even as the macro environment required them to scrutinize their own marketing budgets. We saw good growth in advertising revenues in Q4, up 23% year-over-year, excluding the impact of foreign exchange. Prime membership continues to be a great value for our customers, and improving our Prime benefits is a continuous part of our investment strategy. Along with competitive pricing, broad selection and faster delivery speed, we've seen Prime members respond to our expanding entertainment offerings. During the quarter, we completed our first season of The Lord of the Rings: The Rings of Power, the most watched Amazon original series in every region of the world, reaching over 100 million viewers and driving more Prime sign-ups worldwide during its launch window than any previous Prime Video content. We also finished our inaugural season as the exclusive home of Thursday Night Football, reaching the youngest median age audience of any NFL broadcast package since 2013 and increasing viewership by 11% from last year among hard-to-reach 18- to 34-year-olds. In aggregate, we invested approximately $7 billion in 2022 across Amazon Originals, live sports, and licensed third-party video content included with Prime. That's up from about $5 billion in 2021. As a reminder, these digital video content costs are included in the cost of sales on our income statement. We regularly evaluate the return on the spend and continue to be encouraged by what we see, as video has proven to be a strong driver of Prime member engagement and new Prime member acquisition. Moving on to AWS. Net sales increased $21.4 billion in Q4, up 20% year-over-year and now representing an annualized sales run rate of more than $85 billion. Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions. As expected, these optimization efforts continued into the fourth quarter. Some of the key benefits of being in the cloud compared to managing your own data center are the ability to handle large demand swings and to optimize costs relatively quickly, especially during times of economic uncertainty. Our customers are looking for ways to save money, and we spend a lot of our time trying to help them do so. This customer focus is in our DNA and informs how we think about our customer relationships and how we will partner with them for the long term. As we look ahead, we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters. So far in the first month of the year, AWS year-over-year revenue growth is in the mid-teens. That said, stepping back, our new customer pipeline remains healthy and robust, and there are many customers continuing to put plans in place to migrate to the cloud and commit to AWS over the long term. Now let's shift to worldwide operating income. For the quarter, we reported $2.7 billion in operating income. The operating income was negatively impacted by three large items, which added approximately $2.7 billion of costs in the quarter. This was related to employee severance, impairments of property and equipment and operating leases, and changes in estimates related to self-insurance liabilities. This cost primarily impacted our North America segment. If we had not incurred these charges in Q4, our operating income would have been approximately $5.4 billion. We are encouraged with the progress we continue to make in streamlining the costs in our Amazon stores business. We entered the quarter with labor more appropriately matched to demand across our operations network compared to Q4 of last year, allowing us to have the right labor in the right place at the right time and drive productivity gains. We also saw continued efficiencies across our transportation network, where process and tech improvements resulted in higher Amazon Logistics productivity and improved line haul fill rates. While transportation overperformed expectations in the quarter, we also saw productivity improvements across our fulfillment centers, in line with our plan. We also saw good leverage driven by strong holiday volumes. Overall, it was a strong effort by the operations team, and we look forward to making further headway as we head into 2023. We remain focused on driving cost efficiencies throughout the network and reducing our cost to serve our customers while ensuring we maintain an outstanding customer experience. Circling back to the three large charges during the quarter. Let me share some additional color, starting with the job eliminations we initiated during the fourth quarter. As we consider the ongoing uncertainties of the macroeconomic environment, this led us to the difficult decision to eliminate just over 18,000 roles, primarily impacting our stores and device businesses as well as our human resources teams. As a result, we recorded estimated severance cost of $640 million. These charges were recorded primarily in technology and content, fulfillment and general administration on our income statement. Next, we recorded impairments of property and equipment and operating leases, primarily related to our Amazon Fresh and Amazon Go physical stores. We're continuously refining our store formats to find the ones that will resonate with customers, will build our grocery brand and will allow us to scale meaningfully over time. As such, we periodically assess our portfolio of stores and decided to exit certain stores with low growth potential. We'll also take an impairment on capitalized costs and associated values of our leased buildings. The impairment charge in Q4 was $720 million and is included in other operating expense on our income statement. We continue to believe grocery is a significant opportunity, and we're focused on serving customers through multiple channels, whether that's online delivery, pickup, or in-store shopping. Lastly, during the quarter, we increased our reserves for general product and automobile self-insurance liabilities, driven by changes in our estimates about the cost of asserted and unasserted claims, resulting in additional expense of $1.3 billion. This impact is primarily recorded in cost of sales on our income statement. As our business has grown quickly over the last several years, particularly as we've built out our fulfillment and transportation network and claim amounts have seen industry-wide inflation, we've continued to evaluate and adjust this reserve for both asserted claims as well as our estimate for unasserted claims. We reported overall net income of $278 million in the fourth quarter. While we primarily focus our comments on operating income, I'd point out that this net income includes a pretax valuation loss of $2.3 billion included in non-operating income from our common stock investment in Rivian Automotive. As we've noted in recent quarters, this activity is not related to Amazon's ongoing operations but rather the quarter-to-quarter fluctuations in Rivian's stock price. As we head into the new year, we remain heads-down focused on driving a better customer experience. We believe putting customers first is the only reliable way to create lasting value for our shareholders.

Andrew Jassy, CEO

Everybody, this is Andy. Just before we start with the questions, I just wanted to say it's good to be with you all on the call today. I thought I might jump on the calls from time to time moving forward. And given that this last quarter was the end of my first full year in this role, and given some of the unusual parts in the economy and our business, I thought this might be a good one to join. So thanks for having me.

Operator, Operator

And our first question comes from Brian Nowak with Morgan Stanley.

Brian Nowak, Analyst

I have two. Andy, I want to ask you, just the first one, you've been in the seat for a while. As you sit there, what are your key focal points, product categories or investment priorities that you're most focused on to drive durable multi-year growth in that North America retail segment as we recover? And then the second one, just sort of staying on the North America retail side, how do you think about the potential margin potential of that business over the next few years as you sort of grow into the warehouse? And what are the warehouse network? And what are the efficiency factors to get you to those goals?

Brian Olsavsky, CFO

Brian, this is Brian. To address your second question regarding expectations for retail margins in North America, we have reflected on our cost structure from late 2019 and early 2020 when we were beginning to implement one-day shipping. Since then, our circumstances have evolved significantly due to a substantial expansion of our network. As you've heard me mention in previous discussions, our goal is to restore our previous cost structure while also enhancing efficiency with the assets we've acquired in the past few years. We are continuously evaluating our investment areas to drive growth and are open to making adjustments where necessary. We anticipate that much of the improvement will come from operational cost reductions in North America. We made substantial progress in 2022, and our aim is to continue this momentum throughout 2023 and beyond. We are optimistic about making significant enhancements this year.

Andrew Jassy, CEO

Yes. At a broad level, our main priority is enhancing customers' lives daily. We're extremely focused on customer experience, which remains our top priority. Simultaneously, we're working hard to reduce costs while maintaining our long-term strategic investments aimed at improving customer experiences and transforming Amazon over time. Specifically regarding North American stores, a key focus has been on lowering our operational costs. Over the past few years, we’ve doubled our fulfillment center footprint, which we've built up over 25 years, and expanded our last-mile transportation network to a scale similar to UPS, all to meet a significant surge in demand. Optimizing these operations and enhancing productivity is a challenge we're diligently addressing. Moreover, the expansion of our fulfillment centers and transportation network has created a more complex network that requires efficiency across all connections to deliver products effectively. We’re committed to this optimization work, and I'm satisfied with our progress in Q4, which is evident in our results; however, this effort will continue into 2023. Another priority is improving delivery speed. Quicker deliveries enhance customer satisfaction and lead to higher conversion rates. We consistently focus on having a wide selection, working with countless selling partners. Last quarter, 59% of our sales came from third-party partners, and we strive to provide unmatched variety, as this is crucial for our customers. Competitive pricing is also critical, especially in today's uncertain economy where customers are mindful of spending. Our extensive range of deals contributed to the demand seen last quarter, and we’ll maintain focus on competitive pricing. Furthermore, we are continuously enhancing customer experiences, whether through initiatives like Buy with Prime, which allows Prime users to utilize their benefits beyond Amazon, or RxPass in healthcare, offering Prime customers unlimited medications for a monthly fee. Additionally, in our apparel segment, we’re innovating ways for customers to visualize how products work together. We remain dedicated to improving these experiences and have many more initiatives planned.

Operator, Operator

And the next question comes from the line of Doug Anmuth with JPMorgan.

Douglas Anmuth, Analyst

Also for Andy, I have two. Just first, how would you evaluate your efforts in grocery thus far? I know it's a big, huge market. You're attacking it different ways. What are the key steps here that you're focused on to drive greater market share? And then secondly, how should we think about the strategic importance of some of these emerging bets type of areas like health care and Kuiper and autonomous vehicles, among others?

Andrew Jassy, CEO

On grocery, I want to emphasize that it is a crucial and strategic focus for us. It represents a large market with frequent consumer engagement. We anticipate that grocery will evolve into an omnichannel experience, with many customers opting for online orders and deliveries, while others will continue shopping in physical stores. There will also be a blend of both approaches, where customers choose items online for in-store pickup or order items not available in-store for delivery. Therefore, an omnichannel strategy is essential. We have a substantial grocery business that may not be fully recognized, and it has been growing steadily. When we look at our online grocery offerings, we hold a significant market position, which differs from traditional large grocery stores. Our range includes packaged foods, paper products, canned goods, pet supplies, and health and personal care items, all of which are experiencing rapid growth. However, we have a smaller market share in perishables, which typically requires physical stores to gain substantial traction. We offer two distinct experiences: Whole Foods provides an excellent organic physical store experience and is a growing business that has made excellent strides in profitability. On the other hand, Amazon Fresh is our approach for mass physical store offerings, and we are currently experimenting with a number of stores to identify a format that appeals to customers, differentiates us meaningfully, and maintains strong economics. We decided not to expand Amazon Fresh locations until we have established a format that meets our standards for differentiation and economic viability, but we are hopeful that we will discover this in 2023. We are diligently working toward this, and we have seen some positive signs. Once we find the right model, we will pursue expansion. Overall, we believe there is a significant opportunity in the grocery sector, and we are developing a comprehensive grocery network that integrates both online and physical shopping.

Operator, Operator

And our next question comes from the line of Eric Sheridan with Goldman Sachs.

Eric Sheridan, Analyst

Maybe I'll ask one big picture of Andy and then just a housekeeping matter to Brian, if I can. Andy, keeping on this theme of sort of big picture and strategy and your perspective, I'd love to get your view on the international e-commerce businesses. Obviously, you're in a range of geographies with a wide variance of maturity and different investment cycles. Can you give us your perspective on how you see Amazon's global e-commerce footprint today? And how investors should be thinking about the mix of growth and margin evolution in those international businesses in the years ahead? And maybe, Brian, if I can just ask a quick follow-up. In the Q1 operating income guidance that you gave, I think there's some confusion among investors as to where you might be capturing some of the restructuring charges from the announcements that the company has made on employee count between Q4 and Q1. Can you just clarify what was captured in Q4 versus what might be included in the way you frame the Q1 operating income guidance?

Brian Olsavsky, CFO

Sure, let me start. This is Brian. Let me start with that second part. So as I said earlier, we took a $640 million charge tied to the position elimination that we announced in Q4. A lot of that fell into Q1 into mid to late January. So the way to think about it is for the terminations in January, the salaries for the first three weeks are covered in operating results for Q1. But the period after that, where there's weeks or months of severance coverage, a lot of those costs are what the $640 million charge was in Q4. So I hope that helps.

Andrew Jassy, CEO

We are very enthusiastic about the international e-commerce business we are developing. To provide some perspective, from 2019 to 2021, the compounded annual growth rate was over 30% in the U.K., 26% in Germany, and 21% in Japan. Importantly, we have maintained that growth, and despite fluctuations in foreign exchange, our numbers from recent quarters show continued growth without losing that momentum. A significant portion of market share has shifted to our established international e-commerce segments, which is exciting for us. Now that we have a substantial presence in these developed markets, we are aware that any significant macro developments will also affect us. For instance, in Europe, inflation rates are higher than in many other regions, and the impact of the war in Ukraine and rising energy costs are more pronounced there. This is reflected in some of our growth figures. Looking at emerging markets, each country is at different stages of development, as you've noted. However, we are encouraged by our progress in countries like India, Brazil, the Middle East, Africa, Turkey, Mexico, and Australia. Expanding into new geographies requires time and fixed investment, but we are on the right path, mirroring the growth trajectories we have seen in North America and our established international areas. We believe this is a wise investment and are confident that we will build a significant and profitable international e-commerce business.

Operator, Operator

And the next question comes from the line of Justin Post with Bank of America.

Justin Post, Analyst

Great. Maybe one for Andy and then one for Brian. AWS, if you look at the revenue growth of mid-teens, it implies it could be flattish and even down this quarter. So maybe talk about what's driving that. Is it workload changes? Are there some clients that are shifting? Anything on the market share you could comment on? And then second, when do you think this could recover? Like what's the time frame? And would you expect margins to come back when revenues re-accelerate? I'll leave it at that.

Brian Olsavsky, CFO

Thank you, Justin, for your question. This is Brian. I'll start by discussing what we're observing at the customer level. As I mentioned, the situation is affecting all industries. There are some areas of weakness, particularly in financial services and mortgage companies due to declining mortgage volumes, which in turn impacts their computing demands. The crypto market is also experiencing lower trading activity. Additionally, reduced advertising spending is leading to decreased analytics and compute related to that spending. Overall, we're noticing that our customers are focused on reducing their expenditures as they navigate an economic downturn. We are doing the same at Amazon, reevaluating our infrastructure costs and other expenses. There are various strategies to manage costs, such as deferring certain actions, switching to more affordable products, and adjusting the frequency of calculations or changing data storage methods. So, there are practical ways to adjust expenses and bills in a relatively short period. This is what we're observing, and we are assisting our customers in these efforts. Now, I'll let Andy provide more insight into the general trends in AWS, but that's the current situation from the customer perspective.

Andrew Jassy, CEO

I would just add that most enterprises are currently acting cautiously. This is evident across the board, and we are also being very deliberate about managing our costs. When companies are cautious, they seek ways to reduce spending. Some firms might traditionally analyze 90 days of data but may decide they can manage with just two weeks, which may not be the best long-term strategy. Many companies adopt this approach during uncertain economic times. The way we have structured our businesses, particularly AWS in this case, is to assist our customers in finding ways to spend less. Our focus is not on short-term optimizations but on building relationships that endure. If it's beneficial for our customers to be more cost-effective during uncertain times, our team will dedicate significant effort to that. One of the advantages of the cloud, which we have highlighted since we launched AWS in 2006, is the ability to scale up seamlessly with increased demand. Conversely, if demand decreases, customers can return capacity and stop paying for it. This level of elasticity is rare and cannot be replicated on-premises, making the cloud and AWS highly effective for our clients. I've spent considerable time with the AWS team analyzing the situation, and we have a robust and healthy customer pipeline along with upcoming migrations. Many companies tend to reevaluate their strategic goals during turbulent times, shifting towards cloud solutions to enhance their business and customer experiences. We observe this trend frequently. Furthermore, we are unique in providing a detailed breakdown of our cloud numbers, which complicates direct comparisons. However, based on our assessments, we continue to experience significant year-over-year absolute dollar growth, outperforming competitors in the sector. Part of this success is due to our extensive capabilities, superior security, operational performance, and a broad partner network. It's important to remember that 90% to 95% of global IT spending still occurs on-premises. If you believe this dynamic will shift, while on-premises will not disappear entirely, I genuinely believe that within the next 10 to 15 years, the majority will transition to the cloud, provided we maintain the best customer experience. We must strive to achieve that, which indicates considerable growth ahead for the AWS business.

Operator, Operator

And our next question comes from the line of Ron Josey with Citi.

Ronald Josey, Analyst

Maybe a bigger high-level question here just around Prime member engagement and just seeing third-party seller services growth accelerating in the quarter. And I believe it was mentioned that customer is spending more on everyday essentials, which may be a relatively new use case. Talk just a little bit more, maybe Andy and Brian, just around how engagement is evolving here for Prime members and really how this has grown wallet share over time and where this is going.

Brian Olsavsky, CFO

Yes. Thanks, Ron, for your question. I would say that the Prime membership remains strong and so has the dollars purchased per Prime member. It varies a bit by geography. But in general, if you step back, we had some very large video properties that we had launched last year, Thursday Night Football and Lord of the Rings: Rings of Power. Both of them had record sign-ups for Prime membership. And we know that, again, investments like that will help with not only a new member or new Prime member acquisition but also retention. And we see a direct link between that type of engagement and higher purchases of everyday products on our Amazon website. So the health of Prime is very strong. As Andy mentioned earlier, we are continuing to work to get our speed of delivery up to get more one-day shipments. And we think that will also be well received by Prime members. But it's a combination of price selection and convenience. I think we've made inroads on all of them, especially with the third-party selection that's been added over the last few years. So I think testament to that is the sales that we had in the fourth quarter. In a very competitive and deal-driven environment, people came, Prime members and others came to Amazon to do their shopping. So we're encouraged by it.

Andrew Jassy, CEO

Just to add really one piece here, which is just, if you step back and think about a lot of subscription programs, there are a number of them that are $14, $15 a month really for entertainment content, which is more than what Prime is today. If you think about the value of Prime, which is less than what I just mentioned, where you get the entertainment content on the Prime Video side and you get the shipping benefit, the fast shipping benefit you can't find elsewhere and you get the music benefit, you get the Prime Gaming benefit and you get the photos benefit and you get the Buy with Prime capability, use your Prime subscription on websites beyond just Amazon and some of the grocery benefits that we provide, and RxPass like we just launched to get a number of medications people take regularly for $5 a month unlimited, that is remarkable value that you just don't find elsewhere. And we will continue to add things to Prime and continue to experiment with lots of different features and benefits. But it's still early days. And as we continue to make the service better and better and fully featured, we see people continuing to spend more at Amazon across our various businesses. So we're optimistic about it.

Operator, Operator

And our final question comes from Mark Mahaney with Evercore ISI.

Mark Mahaney, Analyst

Two questions. Brian, just any color on why mid-teens is kind of a holdable growth rate for AWS over the next couple of quarters, given what looks like pretty clearly, continuing deterioration in enterprise demand? And then, Andy, I wonder at a high level if you could just talk about how your priorities may have changed or the company's priorities may have changed over the last year or so as you've been the CEO. And it looks like there's a bit of a peel back on devices, a peel back on physical stores, except for groceries and then maybe a little bit more of a lean in on health. And I'm not quite sure what you're doing with entertainment content spend like that. Maybe it's the same, maybe it's a little bit more. But just at a high level, how would you say your priorities have changed or are different than the prior CEOs?

Brian Olsavsky, CFO

I'm unable to predict with certainty what the AWS growth rate will look like beyond this quarter. The economic situation is somewhat uncertain. As noted, there are unique elements affecting our customer base that many in the industry are observing. While I can't provide definite projections, we are committed to supporting our customers. We have secured new deals, and new workloads are being transitioned to the cloud, demonstrating the ongoing value. Although some companies may temporarily tighten their infrastructure budgets, the long-term trends remain favorable. Moving to the cloud is, in fact, one of the fastest ways to cut costs. Even during challenging economic periods, there are significant long-term advantages. We witnessed this in 2020 when customer volume shifted rapidly, leading to a subsequent resurgence and likely speeding up the shift to the cloud. We'll need to see if this pattern repeats with the current circumstances.

Andrew Jassy, CEO

I believe that each leadership team faces unique challenges based on their circumstances. The past few years have brought significant events like the pandemic, labor shortages, the conflict in Ukraine, inflation, and an uncertain economy. Good leadership teams analyze these factors to determine how to adjust their businesses. In early 2022, we recognized that we had overestimated the capacity needed to meet the surge in demand from consumers and sellers, leading us to delay some of our projects and temporarily shut down some facilities for economic reasons. Regarding our physical store investments, we identified areas that wouldn’t significantly impact Amazon, which is why we closed our 4-Star bookstores. As we began our planning process in early summer, we aimed to streamline costs across all areas of the business while still prioritizing key long-term strategic investments that could enhance customer experiences. This led us to pause on adding more employees and to eliminate certain programs like fabric.com and Amazon Care. We also decided to slow down our grocery store expansion until we had a more viable format and took a measured approach with our device development, ultimately making the tough decision to reduce or eliminate 18,000 roles. Our investment approach differs from others; we evaluate potential investments based on whether they can significantly impact Amazon, if the area is currently well served, if we have a unique approach, and if we possess the necessary expertise or can quickly acquire it. If the answers are favorable, we proceed with investment. We've made logical extensions in the past, like moving from books to music and electronics, although some expansions surprised people, such as entering the tools market. Investments like Buy with Prime are seen as more predictable, while others, such as AWS, were initially met with skepticism but turned out to profoundly shape Amazon. We remain excited about investments in streaming devices, low Earth orbit satellites, healthcare, and more, though we recognize that not all new investments will succeed. However, even a couple of successful ventures could become crucial for our growth, so we see value in these investments. We will continue to invest thoughtfully and manage our costs effectively while keeping a long-term perspective.

Dave Fildes, Vice President of Investor Relations

Thank you for joining us today on the call and for your questions. A replay will be available on our Investor Relations website for at least 3 months. We appreciate your interest in Amazon, and we look forward to talking with you again next quarter.