Thread by @QuinnyPig

I've once again been snubbed by Amazon, and not listed as an explicit risk in their 10-K SEC filing. I will now livetweet a readthrough of that filing as a way of soothing my wounded pride. Thread...

Amazon organizes operations into three segments: North America, International, and @awscloud. I'll be restricting commentary to AWS, as that's my lane. I know nothing relevant about retail operations at this scale.

"AWS offers compute, storage, database and other service offerings" is an early candidate for "understatement of the year."

They employ 647,500 employees in a full or part time basis. Sadly, no breakdown as to how many of those are AWS specific.

I'm not saying that Amazon has a diversity problem, but 3 of their 7 executive officers are men.

Named Jeff.

Risk factors!

"We face intense competition" including from internal groups competing against each other. Strangely that part isn't named.

"Our expansion places a significant strain on our resources."

AWS IS RUNNING OUT OF TERRIBLE SERVICE NAMES!

"Our expansion subjects us to additional business, legal, financial and competitive risks" is the cost of doing business when your product strategy is "Yes."

There's a lot in here about international and other regulatory risks that all distill down into "Laws, and when we can't avoid them."

Credit where due, they're not pulling an Uber and just ignoring them.

"Our business could suffer if we are unsuccessful in making, integrating, and maintaining commercial agreements, strategic alliances, and other business relationships."

In other words "some people won't do business with their direct competitors."

"Inability to make, integrate, and maintain acquisitions" is listed. Fascinating that this is considered strategically vital--not being snarky. AWS has historically been a "build" company, not a "buy" company.

Retention of key management and hiring/retention of skilled workers is also a risk. Well yes.

"We do not have 'key person' life insurance policies." That's just good business.

You never want to incentivize a "your division has been underperforming, so the best outcome for the company is to have you killed. It's nothing personal. Sorry, Jeff 3" situation.

"We could be harmed by data loss or other security breaches."

Unfortunately this document isn't hosted in an insecure S3 bucket; what a story that would be...

"Some of our systems have experienced past security breaches, and while there were no material adverse effects on our results, that may be different next time."

That right there is the entire infosec problem: the market sees no consequences to data breaches.

"We many not be able to adequately protectd our IP rights" is a lengthy three paragraphs because they can't just say "China is China."

"Liability claims if people or property are harmed by products we sell or make."

Time for me to drop a Snowball Edge on my foot!

Thus concludes the risks section. To be clear, every company has funny things here. They're required to be comprehensive, there's nothing wrong about any of the above. Let's move on!

AWS leases 9.7 million square feet of property--and owns 4.4 million square feet. That's... a lot of datacenters.

AWS made $25.6 billion dollars of revenue last year. That's 47% YoY growth.

Seriously, that's the cost of like three x1e.xlarge instances!

"AWS sales growth reflecs increased customer usage, partially offset by pricing changes."

Pay attention. That means "we lost money because we cut prices of our offerings." They keep doing this. If this ever stops, it's a bellwether.

Net income for the year (that means profit, give or take) for AWS was $7.2 billion.

They lost $49 million of profit just due to currency fluctuations.

All of Amazon had a $13.8 billion marketing budget, 3/4 of which was spent in sending me 6,000 copies of the same email to all of my various accounts.

"Our increase in marketing costs is in part due to increased spending on online marketing channels."

HI AMAZON! Have you heard about "Last Week in AWS" sponsorships yet? They're fun, perform well, and speak directly to your target market. My DMs are open!

EY is their auditor and attests to the accuracy of these statements. Awesome!

AWS revenue is primarily recognized when the customer uses the service. For reserved services (RIs!) the revenue is recognized ratably, which is a complex topic: investopedia.com/terms/r/ratabl…

Sales commissions over 1 year re capitalized and amortized over the term.

They spent $8.2 billion in marketing costs last year. That would explain the airport ads...

They have $19.3 *billion* of unearned revenue, primarily related to AWS. Average weighted remaining life of that revenue is 3.3 years.

That means customers have committed to spend almost $20 billion on AWS that they haven't yet.

Total AWS depreciation expense last year was over $6 billion.

That's a *lot* of old servers being cast into the bay in the dead of night...

Legal proceedings!

AWS is being sued for... well a lot. Patent trolls mostly. The "US District Court for the Eastern District of Texas" is the giveaway.

Reconfigurable hardware patents, DRAM stuff, elastic transcoder, maintaining cryptographic sessions, motion tracking, and DynamoDB.

I have little tolerance for patent trolls. That'll be another thread someday. Ping me if you want to see it.

Some of it's deferred, but the entire company was taxed last year to the tune of $1.2 billion.

And lastly, there's a signature on the bottom of the document. The SEC is no joke; if anything's materially misrepresented, the CEO and CFO both go to federal prison.

So, end result:

AWS brought in $25.6 billion, and cost $18.3 billion to run.

Please remember to turn off your unused EC2 instances.

/fin