Brian T. Olsavsky
Senior Vice President and Chief Financial Officer at Amazon.com
Thanks 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. We're 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 cost of sales on our income statement. We regularly evaluate the return on this 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 AWS, net sales increased to $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 rate 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 months of the year, AWS's 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. This operating income was negatively impacted by three large items, which added approximately $2.7 billion of costs in the quarter. This is related to employee severance, impairments of property and equipment and operating leases, and changes in estimates related to self-insurance liabilities. These costs 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 in 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 costs 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 access our portfolio 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 has 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 pre-tax 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.
