SEATTLE--(BUSINESS WIRE)--Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its third quarter ended September 30, 2014.
Operating cash flow increased 15% to $5.71 billion for the trailing twelve months, compared with $4.98 billion for the trailing twelve months ended September 30, 2013. Free cash flow increased to $1.08 billion for the trailing twelve months, compared with $388 million for the trailing twelve months ended September 30, 2013. Free cash flow for the trailing twelve months ended September 30, 2013 includes cash outflows for purchases of corporate office space and property in Seattle, Washington, of $1.4 billion.
Common shares outstanding plus shares underlying stock-based awards totaled 481 million on September 30, 2014, compared with 475 million one year ago.
Net sales increased 20% to $20.58 billion in the third quarter, compared with $17.09 billion in third quarter 2013. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on net sales was $13 million.
Operating loss was $544 million in the third quarter, compared with operating loss of $25 million in third quarter 2013.
Net loss was $437 million in the third quarter, or $0.95 per diluted share, compared with net loss of $41 million, or $0.09 per diluted share, in third quarter 2013.
“As we get ready for this upcoming holiday season, we are focused on making the customer experience easier and more stress-free than ever,” said Jeff Bezos, founder and CEO of Amazon.com. “In addition to our already low prices, we will offer more than 15,000 Lightning Deals with early access to select deals for Prime members, hundreds of millions of products across dozens of categories, curated gift lists like Holiday Toy List and Electronics Holiday Gift Guide, new features like #AmazonWishList, and a great new lineup of products like Kindle Voyage and Fire HD Kids Edition. And if you order your gifts on AmazonSmile, we’ll donate a percentage of your purchase price to your favorite charity.”
Highlights
- Amazon announced the new Kindle Voyage, our thinnest, most advanced Kindle ever. Kindle Voyage has our highest resolution, highest contrast, and brightest display, reimagined page turns, and all of the features customers love about Kindle — books in seconds, no eyestrain or glare, readability in bright sunlight, and battery life measured in weeks, not hours. Amazon also launched the all-new $79 Kindle with a 20% faster processor, twice the storage, and new touch interface. Both e-readers feature customer favorites Kindle FreeTime, Goodreads, and Smart Lookup, plus new features like Word Wise, Family Library, FreeTime Unlimited, and more. These features will also be made available on Kindle Paperwhite as part of a free, over-the-air software update.
- Amazon introduced the all-new Fire HD — the most powerful tablet under $100. Fire HD features a quad-core processor, front- and rear-facing cameras, an HD display, incredible reliability, and a world-class ecosystem of exclusive features, services, and content. Fire HD is available in five color choices and in 6” and 7” sizes.
- Amazon introduced Fire HD Kids Edition, the first tablet built from the ground up for kids and parents, and featuring the first-ever 2-year worry-free guarantee — if anything happens, Amazon will replace it for free, no questions asked. Fire HD Kids Edition is a real tablet, not a toy — it features a quad-core processor, a vivid HD display, front- and rear-facing cameras, Dolby Digital Audio, a kid-proof case, and access to Amazon’s unmatched content ecosystem. Fire HD Kids Edition also comes with a year of FreeTime Unlimited, which provides unlimited access to 5,000 age-appropriate books, movies, TV shows, educational apps, and games.
- Amazon introduced the all-new Fire HDX 8.9, which combines a startlingly light design and stunning HDX display with a new, more powerful processor, exclusive Dolby Atmos and the latest Dolby Audio, and the all-new Fire OS 4 “Sangria,” Amazon’s next-generation software and services that power Amazon Fire devices.
- Amazon Fire TV is now the best-selling streaming box on Amazon for the U.S., U.K., and Germany.
- Amazon Game Studios unveiled its latest round of games launching this year exclusively on Amazon Fire tablets and Fire phone — Til Morning’s Light, CreepStorm, and Tales From Deep Space. These are creative, hand-crafted games that are fun to play, deliver interesting new customer experiences, and utilize exclusive Amazon content and technology, such as Fire phone’s Dynamic Perspective, Amazon AppStream, and comiXology.
- Amazon announced that all 10 episodes of the critically-acclaimed dark comedy series Transparent are now available for Prime Instant Video customers in the U.S., U.K., and Germany. Since its debut, Transparent is the #1 ranked TV series on Prime Instant Video. Also proving popular with critics, the new show clocked in a near perfect score on Rotten Tomatoes with a 98% critic rating, and a 91 metascore on Metacritic, making Transparent one of TV’s top three highest-ranked, currently-airing shows.
- Amazon announced it will premiere all 10 episodes of the second season of Garry Trudeau’s critically-acclaimed political comedy series Alpha House exclusively on Prime Instant Video starting tomorrow. Additionally, two more original pilots, dramatic thriller Hand of God and coming-of-age comedy Red Oaks, will return for full seasons following rave customer reviews. Amazon Studios has also greenlit five additional kids pilots for 2015: The Stinky & Dirty Show, Buddy: Tech Detective, Niko and the Sword of Light, Table 58, and Just Add Magic.
- Amazon launched KDP Kids and Kindle Kids’ Book Creator to help children’s book authors prepare, publish, and promote both illustrated and chapter books in Kindle Stores worldwide.
- Amazon acquired Twitch Interactive, Inc. With an average of over 55 million unique monthly visitors in the last quarter, and content produced by more than one million broadcasters per month, Twitch is the leading live video platform and community for gamers.
- Amazon Prime members now receive 30 minutes of early access to select Lightning Deals on Amazon.com and daily sales events on MyHabit.com. By taking advantage of this early access, members can find great deals this holiday and all year long.
- AmazonFresh expanded its service to Brooklyn. For a limited time, Prime members in eligible Brooklyn areas can use AmazonFresh for free, getting access to same-day and early next-day delivery of fresh groceries as well as over 500,000 Amazon.com items.
- Amazon launched Local Register, a mobile app and secure credit card reader, that enables individuals and small businesses to quickly and easily accept credit and debit cards from a smartphone or tablet at an industry-leading low, flat rate with no hidden fees or long-term contracts. Local Register customers also benefit from access to the Amazon.com award-winning, fully-dedicated customer support team, and in-app reporting tools.
- Amazon launched the 3D Printed Products store, a marketplace that gives customers access to more than 200 unique print-on-demand products, many that can be customized by material, size, style, and color, and personalized with text and image imprints. The store includes convenient search tools, interactive 3D preview functionality, and a product personalization widget.
- Purdue University and Amazon launched the Purdue Student Store on Amazon, a co-branded experience where students can purchase lower-cost textbooks and other college essentials. Amazon also will bring staffed customer order pickup and drop-off locations to Purdue’s campus, as well as expedited shipping benefits, in early 2015.
- Amazon launched Pay with Amazon in India to help sellers of all sizes across the country grow their online businesses. Sellers can outsource their financial transactions to a world-class payments platform, and customers can shop with confidence due to a 100% buyer protection guarantee. This new Amazon service will further aid and support the growth and integration of small and medium businesses in the new digital economy. Pay with Amazon is mobile-optimized across all operating systems including Android, iOS, and Windows.
- Amazon.in became the exclusive marketplace in India to find Xbox One, Xbox 360, Kinect, Xbox Live, Xbox Accessories, and all Microsoft-published Xbox game titles. With the roll-out of Xbox One, Amazon unveiled Release Day Delivery, a service committed to delivering customers new product offerings on their release day. Microsoft’s offerings join other global products including Coke Zero, Blackberry Passport, and the first Android One phone that have launched exclusively in India on Amazon.in.
- Amazon Web Services (AWS) announced the AWS Directory Service, making it easier for enterprise customers to integrate their AWS environments with existing on-premises access control systems and security policies.
- To help customers build more secure and efficient cloud environments, AWS announced it is offering four of its popular AWS Trusted Advisor security checks for free. AWS Trusted Advisor is an automated service that inspects a customer’s AWS environment and finds opportunities for customers to save money, improve system performance and reliability, and close security gaps. Since the beginning of 2013, customers have viewed more than 1.7 million AWS Trusted Advisor recommendations, and realized more than $300 million in estimated cost reductions.
- AWS announced the launch of its AWS EU (Frankfurt) Region, the second AWS Region in Europe and the 11th AWS Region globally. This allows organizations who want to ensure that their data resides inside of Germany the ability to do so.
- With over 350 significant service and feature releases year-to-date, and substantial price reductions (28% to 51% depending on the service) for customers starting in April 2014, AWS continues to grow strongly, with usage growth close to 90% year-over-year for the third quarter.
Financial Guidance
The following forward-looking statements reflect Amazon.com’s expectations as of October 23, 2014, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce, and the various factors detailed below.
Fourth Quarter 2014 Guidance
- Net sales are expected to be between $27.3 billion and $30.3 billion, or to grow between 7% and 18% compared with fourth quarter 2013.
- Operating income (loss) is expected to be between $(570) million and $430 million, compared to $510 million in fourth quarter 2013.
- This guidance includes approximately $470 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded and that there are no further revisions to stock-based compensation estimates.
A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.
These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment and data center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains, and develops commercial agreements, acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services, and technologies, system interruptions, government regulation and taxation, and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission (“SEC”), including its most recent Annual Report on Form 10-K and subsequent filings.
Our investor relations website is www.amazon.com/ir and we encourage investors to use it as a way of easily finding information about us. We promptly make available on this website, free of charge, the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics), and select press releases and social media postings.
About Amazon
Amazon.com opened on the World Wide Web in July 1995. The company is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire phone, Fire tablets, and Fire TV are some of the products and services pioneered by Amazon.
| AMAZON.COM, INC. | ||||||||||||||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
Twelve Months Ended September 30, |
||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | $ | 5,057 | $ | 3,704 | $ | 8,658 | $ | 8,084 | $ | 3,872 | $ | 2,980 | ||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||||||||||||
| Net income (loss) | (437 | ) | (41 | ) | (455 | ) | 34 | (216 | ) | 132 | ||||||||||||||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||||||||||||||||||||
| Depreciation of property and equipment, including internal-use software and website development, and other amortization | 1,247 | 834 | 3,366 | 2,291 | 4,329 | 2,953 | ||||||||||||||||||
| Stock-based compensation | 377 | 281 | 1,089 | 808 | 1,414 | 1,043 | ||||||||||||||||||
| Other operating expense (income), net | 31 | 11 | 93 | 74 | 133 | 110 | ||||||||||||||||||
| Losses (gains) on sales of marketable securities, net | (3 | ) | 1 | (4 | ) | 1 | (3 | ) | — | |||||||||||||||
| Other expense (income), net | 42 | 5 | (16 | ) | 115 | 36 | 214 | |||||||||||||||||
| Deferred income taxes | (270 | ) | 11 | (503 | ) | (47 | ) | (613 | ) | (195 | ) | |||||||||||||
| Excess tax benefits from stock-based compensation | — | — | (121 | ) | — | (199 | ) | (239 | ) | |||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||||||
| Inventories | (845 | ) | (586 | ) | (54 | ) | (80 | ) | (1,383 | ) | (1,054 | ) | ||||||||||||
| Accounts receivable, net and other | (362 | ) | (125 | ) | 66 | 393 | (1,173 | ) | (632 | ) | ||||||||||||||
| Accounts payable | 1,724 | 947 | (3,294 | ) | (3,240 | ) | 1,834 | 1,686 | ||||||||||||||||
| Accrued expenses and other | 4 | (72 | ) | (742 | ) | (853 | ) | 847 | 558 | |||||||||||||||
| Additions to unearned revenue | 1,069 | 672 | 3,055 | 1,872 | 3,874 | 2,417 | ||||||||||||||||||
| Amortization of previously unearned revenue | (811 | ) | (550 | ) | (2,353 | ) | (1,471 | ) | (3,175 | ) | (2,016 | ) | ||||||||||||
| Net cash provided by (used in) operating activities | 1,766 | 1,388 | 127 | (103 | ) | 5,705 | 4,977 | |||||||||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||||||||||||
| Purchases of property and equipment, including internal-use software and website development | (1,378 | ) | (1,038 | ) | (3,748 | ) | (2,565 | ) | (4,628 | ) | (4,589 | ) | ||||||||||||
| Acquisitions, net of cash acquired, and other | (860 | ) | (1 | ) | (926 | ) | (252 | ) | (986 | ) | (287 | ) | ||||||||||||
| Sales and maturities of marketable securities and other investments | 1,439 | 494 | 2,994 | 1,791 | 3,509 | 2,296 | ||||||||||||||||||
| Purchases of marketable securities and other investments | (147 | ) | (518 | ) | (920 | ) | (2,406 | ) | (1,339 | ) | (3,934 | ) | ||||||||||||
| Net cash provided by (used in) investing activities | (946 | ) | (1,063 | ) | (2,600 | ) | (3,432 | ) | (3,444 | ) | (6,514 | ) | ||||||||||||
| FINANCING ACTIVITIES: | ||||||||||||||||||||||||
| Excess tax benefits from stock-based compensation | — | — | 121 | — | 199 | 239 | ||||||||||||||||||
| Proceeds from long-term debt and other | 28 | 25 | 379 | 132 | 628 | 3,189 | ||||||||||||||||||
| Repayments of long-term debt, capital lease, and finance lease obligations | (440 | ) | (255 | ) | (1,277 | ) | (728 | ) | (1,547 | ) | (858 | ) | ||||||||||||
| Net cash provided by (used in) financing activities | (412 | ) | (230 | ) | (777 | ) | (596 | ) | (720 | ) | 2,570 | |||||||||||||
| Foreign-currency effect on cash and cash equivalents | (207 | ) | 73 | (150 | ) | (81 | ) | (155 | ) | (141 | ) | |||||||||||||
| Net increase (decrease) in cash and cash equivalents | 201 | 168 | (3,400 | ) | (4,212 | ) | 1,386 | 892 | ||||||||||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 5,258 | $ | 3,872 | $ | 5,258 | $ | 3,872 | $ | 5,258 | $ | 3,872 | ||||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||||||||||||||
| Cash paid for interest on long-term debt | $ | 7 | $ | 8 | $ | 56 | $ | 60 | $ | 93 | $ | 70 | ||||||||||||
| Cash paid for income taxes (net of refunds) | 38 | 23 | 148 | 143 | 173 | 195 | ||||||||||||||||||
| Property and equipment acquired under capital leases | 1,158 | 526 | 2,794 | 1,313 | 3,347 | 1,552 | ||||||||||||||||||
| Property and equipment acquired under build-to-suit leases | 343 | 269 | 707 | 663 | 920 | 647 | ||||||||||||||||||
| AMAZON.COM, INC. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net product sales | $ | 16,022 | $ | 13,808 | $ | 46,978 | $ | 39,831 | ||||||||
| Net services sales | 4,557 | 3,284 | 12,681 | 9,034 | ||||||||||||
| Total net sales | 20,579 | 17,092 | 59,659 | 48,865 | ||||||||||||
| Operating expenses (1): | ||||||||||||||||
| Cost of sales | 14,627 | 12,366 | 42,080 | 35,375 | ||||||||||||
| Fulfillment | 2,643 | 2,034 | 7,342 | 5,667 | ||||||||||||
| Marketing | 993 | 694 | 2,806 | 2,001 | ||||||||||||
| Technology and content | 2,423 | 1,734 | 6,639 | 4,703 | ||||||||||||
| General and administrative | 406 | 278 | 1,110 | 810 | ||||||||||||
| Other operating expense (income), net | 31 | 11 | 94 | 74 | ||||||||||||
| Total operating expenses | 21,123 | 17,117 | 60,071 | 48,630 | ||||||||||||
| Income (loss) from operations | (544 | ) | (25 | ) | (412 | ) | 235 | |||||||||
| Interest income | 9 | 9 | 31 | 28 | ||||||||||||
| Interest expense | (49 | ) | (36 | ) | (136 | ) | (102 | ) | ||||||||
| Other income (expense), net | (50 | ) | 9 | (23 | ) | (107 | ) | |||||||||
| Total non-operating income (expense) | (90 | ) | (18 | ) | (128 | ) | (181 | ) | ||||||||
| Income (loss) before income taxes | (634 | ) | (43 | ) | (540 | ) | 54 | |||||||||
| Benefit (provision) for income taxes | 205 | 12 | 38 | 18 | ||||||||||||
| Equity-method investment activity, net of tax | (8 | ) | (10 | ) | 47 | (38 | ) | |||||||||
| Net income (loss) | $ | (437 | ) | $ | (41 | ) | $ | (455 | ) | $ | 34 | |||||
| Basic earnings per share | $ | (0.95 | ) | $ | (0.09 | ) | $ | (0.99 | ) | $ | 0.08 | |||||
| Diluted earnings per share | $ | (0.95 | ) | $ | (0.09 | ) | $ | (0.99 | ) | $ | 0.07 | |||||
| Weighted average shares used in computation of earnings per share: | ||||||||||||||||
| Basic | 463 | 457 | 461 | 456 | ||||||||||||
| Diluted | 463 | 457 | 461 | 464 | ||||||||||||
|
_____________ |
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| (1) Includes stock-based compensation as follows: | ||||||||||||||||
| Fulfillment | $ | 93 | $ | 70 | $ | 278 | $ | 213 | ||||||||
| Marketing | 32 | 23 | 91 | 63 | ||||||||||||
| Technology and content | 204 | 154 | 579 | 428 | ||||||||||||
| General and administrative | 48 | 34 | 141 | 104 | ||||||||||||
| AMAZON.COM, INC. | ||||||||||||||||||||
| Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Net income (loss) | $ | (437 | ) | $ | (41 | ) | $ | (455 | ) | $ | 34 | |||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||
| Foreign currency translation adjustments, net of tax of $(1), $(1), $0 and $(14) | (248 | ) | 111 | (209 | ) | 41 | ||||||||||||||
| Net change in unrealized gains on available-for-sale securities: | ||||||||||||||||||||
| Unrealized gains (losses), net of tax of $2, $(1), $1 and $3 | (1 | ) | 1 | 2 | (8 | ) | ||||||||||||||
| Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $(1), $0, $(1) and $(1) | (2 | ) | 1 | (2 | ) | — | ||||||||||||||
| Net unrealized gains (losses) on available-for-sale securities | (3 | ) | 2 | — | (8 | ) | ||||||||||||||
| Total other comprehensive income (loss) | (251 | ) | 113 | (209 | ) | 33 | ||||||||||||||
| Comprehensive income (loss) | $ | (688 | ) | $ | 72 | $ | (664 | ) | $ | 67 | ||||||||||
| AMAZON.COM, INC. | ||||||||||||||||
| Segment Information | ||||||||||||||||
| (in millions) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| North America | ||||||||||||||||
| Net sales | $ | 12,867 | $ | 10,301 | $ | 36,722 | $ | 29,186 | ||||||||
| Segment operating expenses (1) | 12,779 | 10,006 | 35,634 | 28,024 | ||||||||||||
| Segment operating income | $ | 88 | $ | 295 | $ | 1,088 | $ | 1,162 | ||||||||
| International | ||||||||||||||||
| Net sales | $ | 7,712 | $ | 6,791 | $ | 22,937 | $ | 19,679 | ||||||||
| Segment operating expenses (1) | 7,936 | 6,819 | 23,254 | 19,724 | ||||||||||||
| Segment operating income (loss) | $ | (224 | ) | $ | (28 | ) | $ | (317 | ) | $ | (45 | ) | ||||
| Consolidated | ||||||||||||||||
| Net sales | $ | 20,579 | $ | 17,092 | $ | 59,659 | $ | 48,865 | ||||||||
| Segment operating expenses (1) | 20,715 | 16,825 | 58,888 | 47,748 | ||||||||||||
| Segment operating income (loss) | (136 | ) | 267 | 771 | 1,117 | |||||||||||
| Stock-based compensation | (377 | ) | (281 | ) | (1,089 | ) | (808 | ) | ||||||||
| Other operating income (expense), net | (31 | ) | (11 | ) | (94 | ) | (74 | ) | ||||||||
| Income (loss) from operations | (544 | ) | (25 | ) | (412 | ) | 235 | |||||||||
| Total non-operating income (expense) | (90 | ) | (18 | ) | (128 | ) | (181 | ) | ||||||||
| Benefit (provision) for income taxes | 205 | 12 | 38 | 18 | ||||||||||||
| Equity-method investment activity, net of tax | (8 | ) | (10 | ) | 47 | (38 | ) | |||||||||
| Net income (loss) | $ | (437 | ) | $ | (41 | ) | $ | (455 | ) | $ | 34 | |||||
| Segment Highlights: | ||||||||||||||||
| Y/Y net sales growth: | ||||||||||||||||
| North America | 25 | % | 31 | % | 26 | % | 29 | % | ||||||||
| International | 14 | 15 | 17 | 15 | ||||||||||||
| Consolidated | 20 | 24 | 22 | 23 | ||||||||||||
| Y/Y segment operating income/loss growth (decline): | ||||||||||||||||
| North America | (70 | )% | 1 | % | (6 | )% | 18 | % | ||||||||
| International | 685 | (52 | ) | 611 | (854 | ) | ||||||||||
| Consolidated | (151 | ) | 15 | (31 | ) | 13 | ||||||||||
| Net sales mix: | ||||||||||||||||
| North America | 63 | % | 60 | % | 62 | % | 60 | % | ||||||||
| International | 37 | 40 | 38 | 40 | ||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
|
_____________ |
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|
(1) Represents operating expenses, excluding stock-based compensation and "Other operating expense (income), net," which are not allocated to segments. |
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| AMAZON.COM, INC. | ||||||||||||||||
| Supplemental Net Sales Information | ||||||||||||||||
| (in millions) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net Sales: | ||||||||||||||||
| North America | ||||||||||||||||
| Media | $ | 2,734 | $ | 2,609 | $ | 8,023 | $ | 7,295 | ||||||||
| Electronics and other general merchandise | 8,793 | 6,732 | 24,988 | 19,337 | ||||||||||||
| Other (1) | 1,340 | 960 | 3,711 | 2,554 | ||||||||||||
| Total North America | $ | 12,867 | $ | 10,301 | $ | 36,722 | $ | 29,186 | ||||||||
| International | ||||||||||||||||
| Media | $ | 2,510 | $ | 2,424 | $ | 7,532 | $ | 7,193 | ||||||||
| Electronics and other general merchandise | 5,160 | 4,316 | 15,260 | 12,340 | ||||||||||||
| Other (1) | 42 | 51 | 145 | 146 | ||||||||||||
| Total International | $ | 7,712 | $ | 6,791 | $ | 22,937 | $ | 19,679 | ||||||||
| Consolidated | ||||||||||||||||
| Media | $ | 5,244 | $ | 5,033 | $ | 15,555 | $ | 14,488 | ||||||||
| Electronics and other general merchandise | 13,953 | 11,048 | 40,248 | 31,677 | ||||||||||||
| Other (1) | 1,382 | 1,011 | 3,856 | 2,700 | ||||||||||||
| Total consolidated | $ | 20,579 | $ | 17,092 | $ | 59,659 | $ | 48,865 | ||||||||
| Year-over-year Percentage Growth: | ||||||||||||||||
| North America | ||||||||||||||||
| Media | 5 | % | 18 | % | 10 | % | 16 | % | ||||||||
| Electronics and other general merchandise | 31 | 33 | 29 | 31 | ||||||||||||
| Other | 40 | 58 | 45 | 61 | ||||||||||||
| Total North America | 25 | 31 | 26 | 29 | ||||||||||||
| International | ||||||||||||||||
| Media | 4 | % | 2 | % | 5 | % | 1 | % | ||||||||
| Electronics and other general merchandise | 20 | 23 | 24 | 24 | ||||||||||||
| Other | (17 | ) | 28 | (1 | ) | 21 | ||||||||||
| Total International | 14 | 15 | 17 | 15 | ||||||||||||
| Consolidated | ||||||||||||||||
| Media | 4 | % | 9 | % | 7 | % | 8 | % | ||||||||
| Electronics and other general merchandise | 26 | 29 | 27 | 28 | ||||||||||||
| Other | 37 | 56 | 43 | 59 | ||||||||||||
| Total consolidated | 20 | 24 | 22 | 23 | ||||||||||||
| Year-over-year Percentage Growth: | ||||||||||||||||
|
Excluding the effect of foreign exchange rates |
||||||||||||||||
| International | ||||||||||||||||
| Media | 3 | % | 9 | % | 4 | % | 7 | % | ||||||||
| Electronics and other general merchandise | 19 | 28 | 22 | 30 | ||||||||||||
| Other | (19 | ) | 32 | (3 | ) | 26 | ||||||||||
| Total International | 13 | 20 | 15 | 20 | ||||||||||||
| Consolidated | ||||||||||||||||
| Media | 4 | % | 13 | % | 7 | % | 12 | % | ||||||||
| Electronics and other general merchandise | 26 | 31 | 26 | 30 | ||||||||||||
| Other | 37 | 56 | 43 | 59 | ||||||||||||
| Total consolidated | 20 | 26 | 22 | 25 | ||||||||||||
| Consolidated Net Sales Mix: | ||||||||||||||||
| Media | 25 | % | 29 | % | 26 | % | 30 | % | ||||||||
| Electronics and other general merchandise | 68 | 65 | 67 | 65 | ||||||||||||
| Other | 7 | 6 | 7 | 5 | ||||||||||||
| Total consolidated | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
|
_____________ |
||||||||||||||||
|
(1) Includes sales from non-retail activities, such as AWS sales, which are included in the North America segment, and advertising services and our co-branded credit card agreements, which are included in both segments. |
||||||||||||||||
| AMAZON.COM, INC. | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (in millions, except per share data) | ||||||||||
| September 30, 2014 | December 31, 2013 | |||||||||
| (unaudited) | ||||||||||
|
ASSETS |
||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 5,258 | $ | 8,658 | ||||||
| Marketable securities | 1,625 | 3,789 | ||||||||
| Inventories | 7,316 | 7,411 | ||||||||
| Accounts receivable, net and other | 4,373 | 4,767 | ||||||||
| Total current assets | 18,572 | 24,625 | ||||||||
| Property and equipment, net | 15,702 | 10,949 | ||||||||
| Goodwill | 3,332 | 2,655 | ||||||||
| Other assets | 2,813 | 1,930 | ||||||||
| Total assets | $ | 40,419 | $ | 40,159 | ||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 11,811 | $ | 15,133 | ||||||
| Accrued expenses and other | 7,217 | 6,688 | ||||||||
| Unearned revenue | 1,814 | 1,159 | ||||||||
| Total current liabilities | 20,842 | 22,980 | ||||||||
| Long-term debt | 3,099 | 3,191 | ||||||||
| Other long-term liabilities | 6,142 | 4,242 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock, $0.01 par value: | ||||||||||
| Authorized shares — 500 | ||||||||||
| Issued and outstanding shares — none | — | — | ||||||||
| Common stock, $0.01 par value: | ||||||||||
| Authorized shares — 5,000 | ||||||||||
| Issued shares — 487 and 483 | ||||||||||
| Outstanding shares — 463 and 459 | 5 | 5 | ||||||||
| Treasury stock, at cost | (1,837 | ) | (1,837 | ) | ||||||
| Additional paid-in capital | 10,827 | 9,573 | ||||||||
| Accumulated other comprehensive loss | (394 | ) | (185 | ) | ||||||
| Retained earnings | 1,735 | 2,190 | ||||||||
| Total stockholders’ equity | 10,336 | 9,746 | ||||||||
| Total liabilities and stockholders’ equity | $ | 40,419 | $ | 40,159 | ||||||
| AMAZON.COM, INC. | |||||||||||||||||||||||
| Supplemental Financial Information and Business Metrics | |||||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Y/Y % | |||||||||||||||||||||||
| Q3 2013 | Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Change | ||||||||||||||||||
| Cash Flows and Shares | |||||||||||||||||||||||
| Operating cash flow -- trailing twelve months (TTM) | $ | 4,977 | $ | 5,475 | $ | 5,345 | $ | 5,327 | $ | 5,705 | 15 | % | |||||||||||
| Purchases of property and equipment (incl. internal-use software & website development) -- TTM | $ | 4,589 | $ | 3,444 | $ | 3,854 | $ | 4,288 | $ | 4,628 | 1 | % | |||||||||||
| Free cash flow (operating cash flow less purchases of property and equipment) -- TTM | $ | 388 | $ | 2,031 | $ | 1,491 | $ | 1,039 | $ | 1,077 | 178 | % | |||||||||||
| Free cash flow -- TTM Y/Y growth (decline) | (63 | )% | 414 | % | 744 | % | 292 | % | 178 | % | N/A | ||||||||||||
| Invested capital (1) | $ | 14,306 | $ | 15,749 | $ | 16,681 | $ | 17,743 | $ | 18,715 | 31 | % | |||||||||||
| Return on invested capital (2) | 3 | % | 13 | % | 9 | % | 6 | % | 6 | % | N/A | ||||||||||||
| Common shares and stock-based awards outstanding | 475 | 476 | 476 | 480 | 481 | 1 | % | ||||||||||||||||
| Common shares outstanding | 458 | 459 | 460 | 462 | 463 | 1 | % | ||||||||||||||||
| Stock awards outstanding | 17 | 17 | 16 | 18 | 18 | 4 | % | ||||||||||||||||
| Stock awards outstanding -- % of common shares outstanding | 3.8 | % | 3.6 | % | 3.5 | % | 3.9 | % | 3.9 | % | N/A | ||||||||||||
| Results of Operations | |||||||||||||||||||||||
| Worldwide (WW) net sales | $ | 17,092 | $ | 25,587 | $ | 19,741 | $ | 19,340 | $ | 20,579 | 20 | % | |||||||||||
| WW net sales -- Y/Y growth, excluding F/X | 26 | % | 22 | % | 23 | % | 22 | % | 20 | % | N/A | ||||||||||||
| WW net sales -- TTM | $ | 70,133 | $ | 74,452 | $ | 78,124 | $ | 81,759 | $ | 85,246 | 22 | % | |||||||||||
| WW net sales -- TTM Y/Y growth, excluding F/X | 25 | % | 24 | % | 24 | % | 23 | % | 22 | % | N/A | ||||||||||||
| Operating income (loss) | $ | (25 | ) | $ | 510 | $ | 146 | $ | (15 | ) | $ | (544 | ) | N/A | |||||||||
| Operating income/loss -- Y/Y growth (decline), excluding F/X | (33 | )% | 24 | % | (29 | )% | (158 | )% | N/A | N/A | |||||||||||||
| Operating margin -- % of WW net sales | (0.1 | )% | 2.0 | % | 0.7 | % | (0.1 | )% | (2.6 | )% | N/A | ||||||||||||
| Operating income -- TTM | $ | 640 | $ | 745 | $ | 710 | $ | 617 | $ | 97 | (85 | )% | |||||||||||
| Operating income -- TTM Y/Y growth (decline), excluding F/X | 27 | % | 14 | % | 7 | % | (11 | )% | (94 | )% | N/A | ||||||||||||
| Operating margin -- TTM % of WW net sales | 0.9 | % | 1.0 | % | 0.9 | % | 0.8 | % | 0.1 | % | N/A | ||||||||||||
| Net income (loss) | $ | (41 | ) | $ | 239 | $ | 108 | $ | (126 | ) | $ | (437 | ) | 979 | % | ||||||||
| Net income (loss) per diluted share | $ | (0.09 | ) | $ | 0.51 | $ | 0.23 | $ | (0.27 | ) | $ | (0.95 | ) | 966 | % | ||||||||
| Net income (loss) -- TTM | $ | 132 | $ | 274 | $ | 299 | $ | 181 | $ | (216 | ) | (264 | )% | ||||||||||
| Net income (loss) per diluted share -- TTM | $ | 0.28 | $ | 0.59 | $ | 0.64 | $ | 0.39 | $ | (0.47 | ) | (262 | )% | ||||||||||
| Segments | |||||||||||||||||||||||
| North America Segment: | |||||||||||||||||||||||
| Net sales | $ | 10,301 | $ | 15,331 | $ | 11,858 | $ | 11,998 | $ | 12,867 | 25 | % | |||||||||||
| Net sales -- Y/Y growth, excluding F/X | 31 | % | 26 | % | 26 | % | 26 | % | 25 | % | N/A | ||||||||||||
| Net sales -- TTM | $ | 41,361 | $ | 44,517 | $ | 46,984 | $ | 49,487 | $ | 52,053 | 26 | % | |||||||||||
| Operating income | $ | 295 | $ | 725 | $ | 562 | $ | 438 | $ | 88 | (70 | )% | |||||||||||
| Operating margin -- % of North America net sales | 2.9 | % | 4.7 | % | 4.7 | % | 3.7 | % | 0.7 | % | N/A | ||||||||||||
| Operating income -- TTM | $ | 1,770 | $ | 1,886 | $ | 1,992 | $ | 2,020 | $ | 1,813 | 2 | % | |||||||||||
| Operating income -- TTM Y/Y growth, excluding F/X | 40 | % | 18 | % | 17 | % | 14 | % | 2 | % | N/A | ||||||||||||
| Operating margin -- TTM % of North America net sales | 4.3 | % | 4.2 | % | 4.2 | % | 4.1 | % | 3.5 | % | N/A | ||||||||||||
| International Segment: | |||||||||||||||||||||||
| Net sales | $ | 6,791 | $ | 10,256 | $ | 7,883 | $ | 7,342 | $ | 7,712 | 14 | % | |||||||||||
| Net sales -- Y/Y growth, excluding F/X | 20 | % | 15 | % | 18 | % | 14 | % | 13 | % | N/A | ||||||||||||
| Net sales -- TTM | $ | 28,772 | $ | 29,935 | $ | 31,140 | $ | 32,272 | $ | 33,193 | 15 | % | |||||||||||
| Net sales -- TTM % of WW net sales | 41 | % | 40 | % | 40 | % | 39 | % | 39 | % | N/A | ||||||||||||
| Operating income (loss) | $ | (28 | ) | $ | 151 | $ | (60 | ) | $ | (34 | ) | $ | (224 | ) | 685 | % | |||||||
| Operating margin -- % of International net sales | (0.4 | )% | 1.5 | % | (0.8 | )% | (0.5 | )% | (2.9 | )% | N/A | ||||||||||||
| Operating income (loss) -- TTM | $ | 25 | $ | 107 | $ | 63 | $ | 29 | $ | (166 | ) | (754 | )% | ||||||||||
| Operating income/loss -- TTM Y/Y growth (decline), excluding F/X | (56 | )% | 106 | % | 770 | % | N/A | (877 | )% | N/A | |||||||||||||
| Operating margin -- TTM % of International net sales | 0.1 | % | 0.4 | % | 0.2 | % | 0.1 | % | (0.5 | )% | N/A | ||||||||||||
| Consolidated Segments: | |||||||||||||||||||||||
| Operating expenses (3) | $ | 16,825 | $ | 24,711 | $ | 19,239 | $ | 18,936 | $ | 20,715 | 23 | % | |||||||||||
| Operating expenses -- TTM (3) | $ | 68,338 | $ | 72,459 | $ | 76,069 | $ | 79,710 | $ | 83,599 | 22 | % | |||||||||||
| Operating income (loss) | $ | 267 | $ | 876 | $ | 502 | $ | 404 | $ | (136 | ) | (151 | )% | ||||||||||
| Operating margin -- % of Consolidated net sales | 1.6 | % | 3.4 | % | 2.5 | % | 2.1 | % | (0.7 | )% | N/A | ||||||||||||
| Operating income -- TTM | $ | 1,795 | $ | 1,993 | $ | 2,055 | $ | 2,049 | $ | 1,647 | (8 | )% | |||||||||||
| Operating income -- TTM Y/Y growth (decline), excluding F/X | 26 | % | 21 | % | 20 | % | 14 | % | (12 | )% | N/A | ||||||||||||
| Operating margin -- TTM % of Consolidated net sales | 2.6 | % | 2.7 | % | 2.6 | % | 2.5 | % | 1.9 | % | N/A | ||||||||||||
| AMAZON.COM, INC. | |||||||||||||||||||||||
| Supplemental Financial Information and Business Metrics | |||||||||||||||||||||||
|
(in millions, except inventory turnover, accounts payable days and employee data) |
|||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Y/Y % | |||||||||||||||||||||||
| Q3 2013 | Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Change | ||||||||||||||||||
| Supplemental | |||||||||||||||||||||||
| Supplemental North America Segment Net Sales: | |||||||||||||||||||||||
| Media | $ | 2,609 | $ | 3,513 | $ | 2,825 | $ | 2,464 | $ | 2,734 | 5 | % | |||||||||||
| Media -- Y/Y growth, excluding F/X | 18 | % | 21 | % | 13 | % | 14 | % | 5 | % | N/A | ||||||||||||
| Media -- TTM | $ | 10,199 | $ | 10,809 | $ | 11,121 | $ | 11,411 | $ | 11,536 | 13 | % | |||||||||||
| Electronics and other general merchandise | $ | 6,732 | $ | 10,648 | $ | 7,829 | $ | 8,366 | $ | 8,793 | 31 | % | |||||||||||
| Electronics and other general merchandise -- Y/Y growth, excluding F/X | 33 | % | 25 | % | 28 | % | 29 | % | 31 | % | N/A | ||||||||||||
| Electronics and other general merchandise -- TTM | $ | 27,840 | $ | 29,985 | $ | 31,686 | $ | 33,575 | $ | 35,636 | 28 | % | |||||||||||
| Electronics and other general merchandise -- TTM % of North America net sales | 67 | % | 67 | % | 67 | % | 68 | % | 68 | % | N/A | ||||||||||||
| Other | $ | 960 | $ | 1,170 | $ | 1,204 | $ | 1,168 | $ | 1,340 | 40 | % | |||||||||||
| Other -- TTM | $ | 3,322 | $ | 3,723 | $ | 4,177 | $ | 4,501 | $ | 4,881 | 47 | % | |||||||||||
| Supplemental International Segment Net Sales: | |||||||||||||||||||||||
| Media | $ | 2,424 | $ | 3,714 | $ | 2,642 | $ | 2,380 | $ | 2,510 | 4 | % | |||||||||||
| Media -- Y/Y growth, excluding F/X | 9 | % | 6 | % | 4 | % | 4 | % | 3 | % | N/A | ||||||||||||
| Media -- TTM | $ | 10,803 | $ | 10,907 | $ | 11,004 | $ | 11,160 | $ | 11,246 | 4 | % | |||||||||||
| Electronics and other general merchandise | $ | 4,316 | $ | 6,478 | $ | 5,188 | $ | 4,912 | $ | 5,160 | 20 | % | |||||||||||
| Electronics and other general merchandise -- Y/Y growth, excluding F/X | 28 | % | 21 | % | 26 | % | 20 | % | 19 | % | N/A | ||||||||||||
| Electronics and other general merchandise -- TTM | $ | 17,771 | $ | 18,817 | $ | 19,919 | $ | 20,894 | $ | 21,737 | 22 | % | |||||||||||
| Electronics and other general merchandise -- TTM % of International net sales | 62 | % | 63 | % | 64 | % | 65 | % | 65 | % | N/A | ||||||||||||
| Other | $ | 51 | $ | 64 | $ | 53 | $ | 50 | $ | 42 | (17 | )% | |||||||||||
| Other -- TTM | $ | 198 | $ | 211 | $ | 217 | $ | 218 | $ | 210 | 6 | % | |||||||||||
| Supplemental Worldwide Net Sales: | |||||||||||||||||||||||
| Media | $ | 5,033 | $ | 7,227 | $ | 5,467 | $ | 4,844 | $ | 5,244 | 4 | % | |||||||||||
| Media -- Y/Y growth, excluding F/X | 13 | % | 13 | % | 8 | % | 9 | % | 4 | % | N/A | ||||||||||||
| Media -- TTM | $ | 21,002 | $ | 21,716 | $ | 22,125 | $ | 22,571 | $ | 22,782 | 8 | % | |||||||||||
| Electronics and other general merchandise | $ | 11,048 | $ | 17,126 | $ | 13,017 | $ | 13,278 | $ | 13,953 | 26 | % | |||||||||||
| Electronics and other general merchandise -- Y/Y growth, excluding F/X | 31 | % | 24 | % | 27 | % | 26 | % | 26 | % | N/A | ||||||||||||
| Electronics and other general merchandise -- TTM | $ | 45,611 | $ | 48,802 | $ | 51,605 | $ | 54,469 | $ | 57,373 | 26 | % | |||||||||||
| Electronics and other general merchandise -- TTM % of WW net sales | 65 | % | 66 | % | 66 | % | 67 | % | 67 | % | N/A | ||||||||||||
| Other | $ | 1,011 | $ | 1,234 | $ | 1,257 | $ | 1,218 | $ | 1,382 | 37 | % | |||||||||||
| Other -- TTM | $ | 3,520 | $ | 3,934 | $ | 4,394 | $ | 4,719 | $ | 5,091 | 45 | % | |||||||||||
| Balance Sheet | |||||||||||||||||||||||
| Cash and marketable securities | $ | 7,689 | $ | 12,447 | $ | 8,666 | $ | 7,986 | $ | 6,883 | (10 | )% | |||||||||||
| Inventory, net -- ending | $ | 6,068 | $ | 7,411 | $ | 6,716 | $ | 6,644 | $ | 7,316 | 21 | % | |||||||||||
| Inventory turnover, average -- TTM | 9.2 | 8.9 | 9.1 | 9.1 | 8.9 | (3 | )% | ||||||||||||||||
| Property and equipment, net | $ | 9,991 | $ | 10,949 | $ | 12,267 | $ | 14,089 | $ | 15,702 | 57 | % | |||||||||||
| Accounts payable -- ending | $ | 10,037 | $ | 15,133 | $ | 10,590 | $ | 10,457 | $ | 11,811 | 18 | % | |||||||||||
| Accounts payable days -- ending | 75 | 74 | 68 | 71 | 74 | (1 | )% | ||||||||||||||||
| Other | |||||||||||||||||||||||
| WW shipping revenue | $ | 721 | $ | 1,137 | $ | 849 | $ | 889 | $ | 1,048 | 45 | % | |||||||||||
| WW shipping costs | $ | 1,532 | $ | 2,344 | $ | 1,829 | $ | 1,812 | $ | 2,020 | 32 | % | |||||||||||
| WW net shipping costs | $ | 811 | $ | 1,207 | $ | 980 | $ | 923 | $ | 972 | 20 | % | |||||||||||
| WW net shipping costs -- % of WW net sales | 4.7 | % | 4.7 | % | 5.0 | % | 4.8 | % | 4.7 | % | N/A | ||||||||||||
| Employees (full-time and part-time; excludes contractors & temporary personnel) | 109,800 | 117,300 | 124,600 | 132,600 | 149,500 | 36 | % | ||||||||||||||||
|
_____________ |
|||||||||||||||||||||||
|
(1) Average Total Assets minus Current Liabilities (excluding current portion of Long-Term Debt) over five quarter ends. |
|||||||||||||||||||||||
|
(2) TTM Free Cash Flow divided by Invested Capital. |
|||||||||||||||||||||||
|
(3) Represents cost of sales, fulfillment, marketing, technology and content, and general and administrative operating expenses, excluding stock-based compensation. |
|||||||||||||||||||||||
Amazon.com, Inc.
Certain Definitions
Customer Accounts
- References to customers mean customer accounts, which are unique e-mail addresses, established either when a customer places an order or when a customer orders from other sellers on our websites. Customer accounts exclude certain customers, including customers associated with certain of our acquisitions, Amazon Payments customers, Amazon Web Services customers, and the customers of select companies with whom we have a technology alliance or marketing and promotional relationship. Customers are considered active when they have placed an order during the preceding twelve-month period.
Seller Accounts
- References to sellers means seller accounts, which are established when a seller receives an order from a customer account. Sellers are considered active when they have received an order from a customer during the preceding twelve-month period.
Registered Developers
- References to registered developers mean cumulative registered developer accounts, which are established when potential developers enroll with Amazon Web Services and receive a developer access key.
Units
- References to units mean physical and digital units sold (net of returns and cancellations) by us and sellers at Amazon domains worldwide — for example www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, www.amazon.cn, www.amazon.it, www.amazon.es, www.amazon.com.br, www.amazon.in, www.amazon.com.mx, www.amazon.com.au, www.diapers.com, www.shopbop.com and www.zappos.com — as well as Amazon-owned items sold through non-Amazon domains. Units sold are paid units and do not include units associated with certain acquisitions, rental businesses, web services or advertising businesses, or Amazon gift certificates.
