Thank you for standing by. Good day, everyone, and welcome to the Amazon.com third quarter 2013 financial results teleconference. At this time, all participants are on a listen-only mode. After the presentation, we will conduct a question and answer session. Today's call is being recorded. For opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Sean Boyle. Please go ahead, sir.
Hello, welcome to our Q3 2013 financial results conference call. Joining us today is Tom Szkutak, our CFO. We will be available for questions after our prepared remarks. The following discussion and responses to your questions reflect management's views as of today, October 24th, 2013, 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. 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 our metrics and commentary on the quarter. During this call, we will discuss certain non-GAAP financial measures.
In our press release, slides accompanying this webcast, 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. Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2012. I'll turn the call over to Tom.
Thanks, Sean. I'll begin with comments on our third quarter financial results. Trailing 12-month operating cash flow increased 48% to $4.98 billion. Trailing 12-month free cash flow decreased 63% to $388 million. Trailing 12-month capital expenditures were $4.59 billion. This amount includes $1.4 billion in purchases of our previously leased corporate office space, as well as property for our development of additional corporate office space located in Seattle, Washington, which we purchased in the fourth quarter of 2012. The increase in capital expenditures reflects additional investments in support of our continued business growth, consisting of investments in technology infrastructure, including Amazon Web Services and additional capacity to support fulfillment operations. Return on invested capital is 3%, down from 10%. ROIC is TTM free cash flow divided by average total assets minus current liabilities, excluding the current portion of long-term debt over five quarter ends.
The combination of common stock and stock-based awards outstanding was 475 million shares compared with 469 million shares. Worldwide revenue grew 24% to $17.09 billion, or 26% excluding the $332 million unfavorable impact from year-over-year changes in foreign exchange rates. We're grateful to our customers who continue to take advantage of our low prices, vast selection, and shipping offers. Media revenue increased to $5.03 billion, up 9% or 13% excluding foreign exchange. EGM revenue increased to $11.05 billion, up 29% or 31% excluding foreign exchange. Worldwide EGM increased to 65% of worldwide sales, up from 62%. Worldwide paid unit growth was 29%. Active customer accounts exceeded 224 million. Worldwide active seller accounts were more than 2 million. Seller units represented 40% of paid units. Now I'll discuss operating expenses excluding stock-based compensation. Cost of sales was $12.37 billion or 72.3% of revenue, compared with 74.7%.
Fulfillment, marketing, technology and content, and G&A combined was $4.46 billion or 26.1% of sales, up approximately 250 basis points year-over-year. Fulfillment was $1.96 billion or 11.5% of revenue, compared with 10.5%. Tech and content was $1.58 billion or 9.2% of revenue, compared with 7.8%. Marketing was $671 million or 3.9% of revenue, compared with 3.8%. Now I'll talk about our segment results, and consistent with prior periods, we do not allocate to segments our stock-based compensation or other operating expense line item. In the North America segment, revenue grew 31% to $10.3 billion. Media revenue grew 18% to $2.61 billion. EGM revenue grew 33% to $6.73 billion, representing 65% of North America revenues, up from 64%. North America segment operating income increased 1% to $295 million, a 2.9% operating margin. In the international segment, revenue grew 15% to $6.79 billion.
Adjusting for the $327 million year-over-year unfavorable foreign exchange impact, revenue growth was 20%. Media revenue increased 2% to $2.42 billion, or 9% excluding foreign exchange, and EGM revenue grew 23% to $4.32 billion, or 28% excluding foreign exchange. EGM now represents 64% of international revenues, up from 59%. International segment operating loss was $28 million compared to a $59 million loss in the prior period. Consolidated segment operating income increased 15% to $267 million or 1.6% of revenue, down approximately 10 basis points year-over-year. Excluding the unfavorable impact from foreign exchange, CSOI increased 18%. Unlike CSOI, our GAAP operating income or loss includes stock-based compensation expense and other operating expense. GAAP operating loss was $25 million compared to a $28 million loss in the prior year period. Our income tax benefit was $12 million.
GAAP net loss was $41 million or $0.09 per diluted share compared with net loss of $274 million or $0.60 per diluted share. The third quarter 2012 included a loss of $169 million or $0.37 per diluted share related to our equity method share of losses reported by LivingSocial, primarily attributable to its impairment charge of certain assets, including goodwill. Turning to the balance sheet, cash and marketable securities increased to $2.44 billion year-over-year to $7.69 billion. Inventory increased 20% to $6.07 billion, and inventory turns were 9.2, down from 9.7 turns a year ago as we expanded selection, improved in-stock levels, and introduced new product categories. Accounts payable increased 20% to $10.04 billion, and accounts payable days were 75, consistent with the prior year. I'll conclude my portion of today's call with guidance.
Incorporated into our guidance are the order trends that we've seen to date and what we believe today to be appropriately conservative assumptions. Our results are inherently unpredictable and may be materially affected by many factors, including a high level of uncertainty surrounding exchange rate fluctuations as well as the global economy and consumer spending. It's not possible to accurately predict demand, and therefore, our actual results could differ materially from our guidance. As we describe in more detail in our public filings, issues such as settling intercompany balances in foreign currencies amongst our subsidiaries, unfavorable resolution of legal matters, and changes to our effective tax rates can all have a material effect on guidance.
Our guidance further assumes that we don't conclude any additional business acquisitions, investments, restructurings, or legal settlements, record any further revisions to stock-based compensation estimates, and that foreign exchange rates remain approximately where they've been recently. For Q4 2013, we expect net sales of between $23.5 billion and $26.5 billion, a growth between 10% and 25%. This guidance anticipates approximately 125 basis points of unfavorable impact from foreign exchange rates. GAAP operating income or loss to be between a $500 million loss and $500 million in income, compared to $405 million income in the fourth quarter of 2012. This includes approximately $350 million for stock-based compensation and amortization of intangible assets. We anticipate consolidated segment operating income or loss, which excludes stock-based compensation and other expense, to be between a $150 million loss and $850 million income, compared to $678 million income in fourth quarter 2012.
We remain heads down focused on driving a better customer experience through price, selection, and convenience. We believe putting customers first is the only reliable way to create lasting value for shareholders. Thanks. With that, Sean, let's move to questions.
Great. Thanks, Tom. Let's move on to the Q&A portion of the call. Operator, will you please remind our listeners how to initiate a question?
At this time, we will now open the call up for questions. In the interest of time, we ask that you limit yourself to one question. If you would like to ask a question, please press star one on your keypad. We ask that when you pose your question, you pick up your handsets to provide optimum sound quality. Once again, to initiate a question, please press star then one on your touch-tone telephone at this time. Please hold while we poll for questions. Thank you. We'll go first to Ben Schachter with Macquarie.
Hi. Hey, Tom. On the press release, it says that you signed up millions of new Prime members. I believe if you read it says that happened in the last 90 days. I was wondering if you ever commented on a time period like that before. Is that a normal run rate to add millions of Prime users in 90 days, or is there something special in this quarter that drove Prime? Thanks.
I don't recall if we've actually given a 90-day period before. I don't believe that we have. In terms of beyond that, there's not a lot more that I can add to that. We are very excited. Prime is growing very fast. Very excited for the service that we offer customers, both in terms of physical and digital goods. It's exciting, and that's why we put it in there today in the release.
We'll go next to Scott Devitt with Morgan Stanley.
Oh, hey, Tom. Two, if I could. First, on the Kindle family, it seems like the timing of device launches, the e-book library size, and local language content could be drivers of different levels of penetration of digital media in the U.S. relative to what you've been able to attain outside the U.S. to date. I was wondering if there's anything else notable that you would highlight that helps explain the different dynamic that seems to be playing out within the media revenue line domestically versus international? Whether you think any of those issues are structural or they just work themselves out with the benefit of time and your execution.
Secondly, if you could talk a bit about how you think about the lifetime value of a non-Prime customer versus a Prime customer, and what the intended outcome may be as it relates to the increase in Super Saver pricing in the U.S. market. Thanks.
In terms of the first question, certainly, we've been launched devices in the U.S. earlier, in terms of content, both, you're really referring to mostly e-book content, and both are growing very fast. The base is different, as you mentioned. We have a higher base in the U.S. just based on when we launched. You're absolutely right. You do see that difference in the media line between North America and international. It's just, again, both are growing very nicely right now, in terms of digital Kindle books in this case, as you referenced. It's just a different base. We're excited about the opportunity that we have in both segments there. We're further ahead right now in North America. I'm sorry, could you repeat the second part of your question again?
Just how you think about the lifetime value of those that are not Prime subs versus Prime subs, given the increase that you recently did with Super Saver Shipping in the U.S. from $25 to $35 threshold.
Sure. In terms of the Prime customers, we've seen not only a very strong increase in Prime membership, but we've seen very good retention of Prime members. Certainly when you look at that in terms of lifetime value, we have a customer base that's certainly staying with us longer. They're doing more cross-shopping, and they're getting the benefits of Prime that we're offering, that we continue to add to. We still have a very good customer base that's non-Prime. You mentioned the threshold change. We did change, we have different thresholds in various geographies around the world for Super Saver shipping, our Super Saver delivery in those geographies. In the case of the U.S., we've had the $25 threshold for over 10 years, and we changed to 35. During this timeframe, we've certainly increased our selection that's eligible for that by millions of items.
Certainly as you would know, during this rather lengthy timeframe, transportation costs and fuel prices have changed significantly over that time period. We hadn't changed it, so we just thought that was the right thing to do.
We'll go next to Mark Mahaney with RBC Capital Markets.
Thanks. I want to ask about the North American EGM line. I guess it's the second quarter in a row you've had acceleration. When I asked you about it last quarter, I think you singled out fashion apparel and consumer staples. The growth, the acceleration really seems to be in line with easing comps. Is there something in there that to you indicates that you're getting real critical mass with your customers in those two particular categories? Just real quickly on the Kiva Robots, is there a reason you would call that out? Should that have some sort of material impact over time on leverage in the fulfillment cost line? Thank you.
Sure. In terms of our growth in EGM, you highlighted a couple categories that are growing very nicely, that we mentioned last quarter as well. Actually, the growth is very broad. We've added a lot of unique selection in both our hardlines and softlines categories, including consumables and apparel, as you mentioned. The experience is getting better on the site. Unique selection has increased dramatically over the past few years. There's been just a number of things that are coming together in those categories. When I look at it just seems very broad, which we like. There's just a lot of new selection with great category expansion too over the last several years. That's really what you're seeing there. In terms of Kiva, we have launched in a few FCs. We think it's an interesting opportunity.
I think as I mentioned last quarter at this time, we're ahead of the schedule that we had set forth at the time that we joined with Kiva. We're excited with what we see. We'll still be adding associates, certainly over time in those FCs, but there certainly will be productivity with Kiva. We'll have to stay tuned to see what that looks like, but we're certainly excited about that opportunity and the rollout.
We'll go next to Victor Anthony with Topeka Capital Markets.
Thanks for putting me on. ROIC is a metric you've highlighted each quarter. It's hovered around 20%, 30%, 40% range throughout the quarters of 2010, 2011. It's obviously been depressed over the past several year and a half due to investments. Maybe you can help us with the timing of when you expect ROIC to return to levels we saw in 2011. Second, you are investing a lot in video content for Prime Instant Video. Are there any hard numbers you can share in terms of conversions from the Kindle devices?
In the past, there's been talk about converting Prime Instant Video into a standalone product. Maybe you could share your thoughts there. Thanks.
Sure. Keep in mind, as you mentioned, we're investing very heavily in the business. We think that's the right thing to do. We have a lot of good long-term opportunities, which is why we're doing it. It is depressing ROIC. Just keep in mind, though, from a pure metric standpoint, just as a reminder, the way we measure ROIC is free cash flow divided by average invested capital, so total assets minus current liabilities, and that's over a five-point average. When you do that, first in the numerator, we do have, keep in mind, it's about $1.4 billion in our free cash flow number that relates to the purchase. It goes back to Q4 last year, but it's in our TTM free cash flow that relates to the purchase of our campus here in Seattle and some nearby land, so that's $1.4 billion of that.
That's bringing the free cash flow down. Also keep in mind, in the invested capital, we do include cash marketable securities, which is certainly the largest piece of our invested capital. We think that's the right thing to do until we either deploy that capital or return it in some way. Just keep in mind that that's included in the metric. In terms of Prime Instant Video, we're getting great usage from a broad set of customers on Kindle as well as other devices, and the adoption is going very well. I apologize I can't share any specific metrics today, but we like what we see. We think it's certainly helping the Prime numbers, the Prime membership increases that you're seeing. We think it's interesting, and we are investing there.
We included in both our Q3 results as well as the Q4 guidance, our assumptions around additional content that we'll be acquiring, including original content. Very excited about that opportunity.
We'll go next to Mark May with Citi.
Thanks for taking my question. The seasonal hiring, I think last year grew about in line with the growth rate in U.S. revenue growth. This year, it looks like you're growing at about 10 percentage points above the midpoint of your range. Is there anything that's different this year that is driving that? Second question on pricing. There have been numerous reports recently, and I think for a while now, that the multichannel competitors are competing more fiercely with Amazon in terms of price parity, et cetera. What impact are you seeing or do you think you could see from that and how are you addressing it? Thanks.
In terms of the seasonal employees, unfortunately, there's not a lot I can add to that. We're getting ready for an exciting holiday season, and that includes making sure that we have the right amount of employees as well as seasonal help during that period. It also includes making sure we have the right capacity in place, making sure we have We've added a lot of selection over the past couple of years, and particularly over the past 12 months, and making sure that we have good in-stock levels related to that selection. We're making sure that we have people to help us with not only serving customers with our retail inventory, but also Fulfillment by Amazon's grown certainly very strongly over the past year, and that impacts the capacity and the number of employees that you see there. That's really what you're seeing in that number.
In terms of pricing, we operate in a very competitive arena. That's not something that's new. That's something that we've been doing since our inception. We have many different competitors. You will pass those competitors on your way to work and on your way home. They're offline. It's a very competitive marketplace. Pricing is something we worked very hard at over the years. We want to make sure we have great values for customers, that's something that we spend a lot of time on and work very hard to make sure that we can offer that to customers. I wouldn't say that it's anything new. It's something that we've been dealing with since our inception, it is a very competitive environment.
We'll go next to Carlos Kirjner with Sanford Bernstein.
Hi, thank you. Two quick questions. First, how do you see your competitive position versus Alibaba in China, what gives you confidence that you have a chance of being a relevant player there, even in the long term? Secondly, in the U.S., you have a service similar to subscription video on demand that's a feature of Prime, which is Amazon Prime Video, while in Europe you have a full-blown standalone service with LoveFilm. Why is your strategy in Europe so different from the strategy in the U.S. when it comes to video on demand? Thank you.
In terms of China, it's very early there. There's certainly room for many winners. It's a very large segment. We have a good business there in terms of top line that's growing, we continue to look for ways to flag customer demand. We work on a lot of the same inputs that we work on in our other geographies, making sure we have great prices, good selection, speed of delivery. We've worked very hard in terms of putting in a lot of capacity close to customers. Those are the things that we're working on to try to ensure our success there. In terms of individual competitors, we have a longstanding practice of not talking about other companies. Again, there's room for a lot of winners. In terms of video content, there's not a lot I can add to that question. I apologize.
Certainly, we have been ramping up our content in the U.S. on Amazon.com as part of Amazon Prime. It's something that we've been looking at very carefully. We like what we see so far, and we think it's interesting. Beyond that, I can't speculate what we might do or might not do in other locations.
We'll go next to Mark Miller with William Blair.
Hi, good afternoon. On Amazon Fresh, can you comment on what you're seeing in L.A. versus the Seattle test? How important is the attachment rate with general merchandise? As you're making more frequent deliveries, are you finding that that is driving higher sales of general merchandise?
It's very early in L.A., what we see so far, we like. We're adding a lot of selection there on behalf of customers. It is a great opportunity for customers to get both a number of different items through Amazon Fresh, we're excited. The trials that we've done have been very good. The conversion has been good. We look forward to even improving that experience even more over time for customers. It's very early, we like what we see. You'll have to stay tuned on that one.
With general merchandise?
I'm sorry?
Well, are you selling more general merchandise as a result of more frequent deliveries in that market?
Yes.
We'll go next to Kerry Rice with Needham & Company.
I just wanted to ask a question on your acquisition of TenMarks, which is really diving a little bit deeper into the ed tech market. I know you sell and rent the textbooks. Can you talk a little bit maybe what your strategy is there?
We just thought it's a company that's doing some interesting things about helping students and children learn math. We thought it was an interesting fit for us, and we look forward to exploring what opportunities we can do together there. You'll have to stay tuned on that one, but we think they're doing a very nice job, and we're very excited to have them as part of the Amazon business.
We'll go next to Scott Tobin with B. Riley.
Thanks. Good afternoon. I just wanted to touch on the North American segment margins for a little bit. We've seen some pretty good progress there in terms of year-over-year improvement, a little bit of a backstep last quarter, but not too much. The categories fell back this quarter. Wondering if there's anything unusual in there in terms of timing or investments that maybe weren't called out and how we should think about that over the next few quarters?
Sure. In terms of Q3 specifically, Q3, just because of the, as I would call it, the Q4 readiness, the seasonal readiness you see this often in Q3 where both our total and our segment operating profit is lower than other quarters. That's certainly what you're seeing in Q3 in North America. That's in terms of the investments we're making to get ready for the season. We talked about, you saw in Jeff's quote, the capacity that we're adding, certainly in multiple geographies, but certainly in North America is impacting that as well. You can see it in our fulfillment line item as a percentage of revenue being up. You can see it in our tech and content. We're certainly investing.
The other part too, that I mentioned earlier is we're investing in video content for Prime in the U.S., and you see that certainly in those results as well.
We'll go next to Tom Forte with Telsey.
Great. Thanks for taking my question. Wanted to know where you stand. Last year, I think you added 20 fulfillment centers on a full-year basis, and the last time you gave us an update, I think this year it was five U.S. and a handful international. Wanted to know where you stood on that and why the change versus last year. Also very quickly, I wanted to see where you stood or how you felt about your Amazon Locker initiative. Thank you.
Sure. In terms of fulfillment centers, the number is seven, but it's a net number. Included in that are several consolidations. We are building generally larger FCs, and we're consolidating some of those. That's a net seven. What that means is if you were to take that as a percentage of our total fulfillment centers, you certainly get a number that's less than the square footage that we're actually adding. We're adding square footage that would be significantly higher than that. In terms of lockers, it's early. It's another way to get closer to customers, to make it convenient for customers. It's interesting. We have it in a few different geographies right now, but it is limited. We don't have it broadly across our full network.
Something that we're learning and it's an interesting experience and it's certainly something that, over time, we'll continue to take a closer look at and certainly expand if it makes sense to do so on behalf of customers.
We'll go next to Doug Anmuth with J.P. Morgan.
Great. Thanks for taking the question. I just want to ask two things. First, Tom, can you give us some color on where you are in the shift from third party to first party e-books and how much of a factor that's been in re-accelerating media revenue? We've seen re-acceleration in media the last three quarters, I think, in North America. Secondly, it looks like there's six fewer shopping days this holiday season between Black Friday and Christmas. Just curious what you do, if anything, differently to prepare for that, and do you think that could actually even drive more holiday shopping online? Thanks.
Sure. In terms of your second question, there are fewer days. There's not a lot that we do different. We certainly see when that happens, there is some behavioral differences on behalf of customers just because of the shorter time period, that we have certainly some more sizable days during that period. There's not a lot to add to that. In terms of the transition for e-books, in terms of our total growth across Amazon, both North America total or global total, it's not a significant or meaningful impact to the overall growth rate. Certainly this transition's been going on for some number of quarters now. There's not a lot I can help you with there.
We'll go next to Gregory Melich with ISI Group.
Hi, thanks. I wanted to dig into the inventory a little bit. It looks like the growth slowed to 20% yet the sales accelerated. Tom, would you give us some insight as to why that is and maybe which categories outperformed in the quarter?
Sure. I would look at it more from a turns perspective. If you look at it more over an average turns basis, it has gone down. The reason is unique selection. We keep adding growth in unique selection. It certainly has increased over the past year. In-stock levels have gotten better. So those are the things that are really driving it. In terms of endpoints for any particular quarter, they can be a little bit lumpy. I would look to the turns.
We'll go next to John Blackledge with Cowen and Company.
Great. Thank you. Two questions. First, is it a priority to offer one-day or same-day delivery at some point, as some competitors are offering same-day delivery in large markets for certain brick-and-mortar retailers? Secondly, can you talk about the prospects for the Login and Pay program? How many online merchants are signed up for it, and what is Amazon getting out of it, either economically and/or from maybe getting data on the purchases? Thank you.
In terms of speed of delivery, whether it be one day or same day, what's happened certainly over the past 10 plus years is we've added a lot of selection. We've added a lot of fulfillment centers. As a result of that, we have increased amount of selection that's closer and closer to customers. As a result of that, our speed of delivery has improved. Certainly for Prime customers, depending upon the geography, in the case of the U.S., we have express two-day shipping for free, and then for small fees, they certainly can get it faster than that. You've seen that improvement gradually over the past 10 plus years. You've seen it's certainly gotten even better the last few years as we've rapidly increased the number of fulfillment centers.
That's something that we think is important and we'll continue to work on behalf of customers to give them those options, and to make sure that they get product when they want it. In terms of Login and Pay, it's something that we think is interesting. Because of our large customer base, and the credentials that we have, and the secure payments that we have, we think it's an interesting opportunity. We think that there's certainly interesting ways to monetize that over time. Again, we think it's an interesting opportunity.
We'll go next to Ron Josey with JMP Securities.
Great. Thanks for taking my question. I want to talk about newer international markets, and specifically, I think Amazon India was called out, given 10 new category launches in the past 120 days or so. My question is related to really the infrastructure in India, and how good is it, and so that Amazon can continue to grow there, and then specifically, if other countries can follow a model like this, and Brazil comes to mind. Thank you.
Sure. We have a few different models in India. We have a marketplace model, which we offer Fulfillment by Amazon, which as you mentioned, certainly the infrastructure is not as advanced as some geographies, but we also view that as an opportunity. We're happy to help sellers with Fulfillment by Amazon. It's an interesting opportunity. It's very early. We're in investment mode there. It's a long-term opportunity, but it's a very exciting opportunity. We have a very strong team that's working on that opportunity. We're excited about it.
We'll go next to Brian Pitz with Jefferies.
Great. Thanks. Maybe you could comment on what you're seeing domestically and internationally in terms of e-commerce trends in the current quarter. Anything specific stand out, especially in North America, given some of the mixed commentary we've heard from some of your competitors? Just some additional comments, if you could, on growth in the other revenue categories, specifically on AWS and/or on your advertising business. Thanks.
I'll take the second one first. In terms of AWS, it's growing very strong. It's an area that's very early for us. It's growing very strong. We have a great team that's working on it, servicing customers, and we're very excited about the long-term opportunity. In terms of, you mentioned the trends in North America. What you've seen is really a nice, steady acceleration of growth since Q4 last year. If you look back to Q4 last year for North America specifically, and you just trace that back over the past four quarters, you see a really nice sequential increase from quarter to quarter. Again, that gets back to it went from 23% in Q4 last year to 26% to 30% and 31%. Those are the year-over-year increases by quarter for North America revenue. A lot of it is what we talked about earlier.
It's focused on a lot of the retail basics, as well as also improving seller performance as well. Those are the things that are driving it.
We'll go next to Jordan Rohan with Stifel Nicolaus.
Thanks so much. A follow-up to the last question on U.S. in particular, did you see any weakness or any discernible trends around the government shutdown and all the politics going on in Washington in September and in early October? Separately, can you talk about what you're learning from being an investor in LivingSocial with the accounting charges aside, can you talk about your own local business, how they compete with other players in the space and all the various initiatives you have? What can be learned from what you know at this point? You're no longer a new investor in that company. Thank you.
In terms of North America growth, other than what I mentioned on the quarterly growth, Q3 was strong. It was 31% growth. Again, we've seen a nice, steady increase over the past four quarters. That's overlapping a quarter from Q3 of last year that was 33%. Again, we like what we see from a growth perspective in Q3 for North America. In terms of total growth, giving a wide range for Q4, and that reflects our view for Q4, but we're excited about the quarter and about getting ready for our customers during this heavy seasonal quarter. We're excited about what we see there. In terms of LivingSocial, there's really not a lot I can add to your question, I apologize. They're doing a good job in terms of local. We also have a local offering on Amazon.
Team is very dedicated to make that work, and it's an interesting area. We're learning, but it's early.
Our final question will come from Heath Terry with Goldman Sachs.
Great. Thank you. Jeff, when you look at the deceleration in growth in North American other revenue, obviously it's still at a very high level, but when we're thinking about the major components of that line, AWS, advertising, credit card relationship, is there anything relevant to the relative growth rates between those components that we should be thinking about?
I'm not sure how to answer your question. The only part I would call out, you mentioned there's a number of different items that's in there. Certainly the fastest-growing, largest area by far is AWS, and it's growing very nicely. That's certainly reflected in that line item.
Great.
Thank you for joining us on the call today and for your questions. A replay will be available on our investor relations website at least through the end of the quarter. We appreciate your interest in Amazon.com and look forward to talking with you again next quarter.
Thank you. That does conclude our conference. You may now disconnect.