Amazon.com, Inc. (NASDAQ: AMZN) today announced financial
results for its first quarter ended March 31, 2015.
Operating cash flow increased 47% to $7.84 billion for the
trailing twelve months, compared with $5.35 billion for the
trailing twelve months ended March 31, 2014. Free cash
flow increased to $3.16 billion for the trailing twelve
months, compared with $1.49 billion for the trailing twelve months
ended March 31, 2014.
Common shares outstanding plus shares underlying stock-based
awards totaled 483 million on March 31, 2015, compared with
476 million one year ago.
Net sales increased 15% to $22.72 billion in the first quarter,
compared with $19.74 billion in first quarter 2014. Excluding the
$1.3 billion unfavorable impact from year-over-year changes in
foreign exchange rates throughout the quarter, net sales increased
22% compared to first quarter 2014.
Operating income increased 74% to $255 million in the first
quarter, compared with operating income of $146 million in first
quarter 2014.
Net loss was $57 million in the first quarter, or $0.12 per
diluted share, compared with net income of $108 million, or $0.23
per diluted share, in first quarter 2014.
“Amazon Web Services is a $5 billion business and still growing
fast — in fact it’s accelerating,” said Jeff Bezos, founder and CEO
of Amazon.com. “Born a decade ago, AWS is a good example of how we
approach ideas and risk-taking at Amazon. We strive to focus
relentlessly on the customer, innovate rapidly, and drive
operational excellence. We manage by two seemingly contradictory
traits: impatience to deliver faster and a willingness to think
long term. We are so grateful to our AWS customers and remain
dedicated to inventing on their behalf.”
Highlights
- Amazon launched Dash Button — a small
button that Prime customers can place in their home and use to
reorder frequently used household items. Today, customers can chose
from 18 popular brands, such as Bounty, Huggies, and Clorox.
- Amazon announced the Dash Replenishment
Service (DRS), a new service that enables connected devices to
order goods from Amazon when supplies are running low — like a
coffee maker that automatically orders more coffee beans. By using
DRS, device makers are able to leverage Amazon’s authentication and
payment systems, customer service, and fulfillment network. Early
adopters of DRS include Whirlpool, Quirky, Brother, and Brita.
- Amazon announced new features for
Amazon Fire TV and Fire TV Stick, including X-Ray (now available
directly on your HDTV), support for a captive portal to connect to
Wi-Fi at a hotel or dorm room, and new shortcuts. Amazon Fire TV
also added expandable USB storage and private listening with
support for Bluetooth headphones.
- In just one year, Amazon Fire TV apps
and games selection is up 5x, including Sling TV, Fox Sports Go,
Flappy Birds Family, TED, WSJ Live, Crossy Road, and Game of
Thrones - A Telltale Game Series.
- Fire TV Stick launched in the U.K. and
Germany, joining Amazon Fire TV. Pre-orders for Fire TV Stick on
Amazon.co.uk and Amazon.de broke all previous records for Amazon
devices in the first week of availability.
- Amazon Echo continues to get smarter as
more customers use it and provide feedback — new features include
Pandora integration, home automation, support for sports scores and
schedules, traffic reports and route suggestions, and voice control
for customers if listening to music via Bluetooth. Amazon has
released a limited preview of the Alexa SDK to enable
developers, content creators, and service providers to build apps
and experiences for Echo.
- Amazon launched unlimited cloud storage
with Amazon Cloud Drive — two new storage plans for customers to
securely store new and existing content collections. The Unlimited
Everything Plan provides unlimited storage for photos, videos,
movies, music, and files, and the Unlimited Photos Plan provides
unlimited photo storage plus 5 GB of additional storage for videos,
documents, or other files — all for a low annual fee. Customers can
sign up for a free 3-month trial on either plan.
- Prime Now has expanded to Miami,
Baltimore, Dallas, Atlanta, and Austin. Prime members can choose
from tens of thousands of daily essentials through a mobile app.
With Prime Now, two-hour delivery is free and one-hour delivery is
available for $7.99.
- Amazon Prime celebrated its 10-year
anniversary with tens of millions of Prime members around the
world. Prime members in the U.S. enjoy unlimited Free Two-Day
Shipping on more than 20 million items, unlimited streaming of tens
of thousands of movies and TV episodes with Prime Instant Video,
more than one million songs and hundreds of playlists with Prime
Music, unlimited photo storage with Prime Photos, and access to
more than 800,000 books to borrow with the Kindle Owners’ Lending
Library.
- Amazon Studios announced that full
seasons of Mad Dogs, The Man in the High Castle, The New Yorker
Presents, and children’s shows Just Add Magic and The Stinky &
Dirty Show will debut exclusively for Prime members in the U.S.,
U.K., and Germany. Amazon Studios also greenlit second seasons of
Mozart in the Jungle and Bosch, as well as original kids series
Tumble Leaf, Creative Galaxy, Annedroids, and Gortimer Gibbon’s
Life on Normal Street.
- Amazon introduced Amazon@Purdue, our
first staffed on-campus pickup and drop-off location at Purdue
University. Amazon Student and Amazon Prime members get Free
One-Day Shipping on textbooks and Free One-Day Pickup on over one
million items when shipped to the Amazon@Purdue location.
- Amazon officially launched Write On by
Kindle, an online community where writers and readers share in the
creative process. Readers can check out works-in-progress — from
short stories to novels — and offer feedback, or they can try their
hand at writing a story themselves.
- Amazon launched Amazon Home Services, a
new marketplace for on-demand professional services, backed by
Amazon’s Happiness Guarantee. Customers can browse, purchase, and
schedule hundreds of professional services directly on Amazon.com
in less than 60 seconds. Amazon Home Services features handpicked
pros offering upfront pricing on pre-packaged services with helpful
reviews from customers that have made verified purchases.
- Poppy J. Anderson became the first
German author to sell over one million Kindle books using Kindle
Direct Publishing (KDP), joining the Kindle Million Club with many
other internationally successful KDP authors such as John Locke,
J.A. Konrath, and Tina Folsom.
- Amazon expanded public fulfillment
center tours to the U.K., Germany, France, and Poland. Visit
www.amazon.com/fctours for information on available tour locations,
dates, and times.
- Amazon Prime members in Spain now
receive Free One-Day Shipping with their Prime subscription.
- Amazon Fashion, which has emerged as a
top category on Amazon.in, partnered with the Fashion Design
Council of India as the official title sponsor of the 25th edition
of India Fashion Week.
- Amazon.in launched the Amazon Seller
App, a best-in-class mobile app for sellers in India, which makes
it easy and convenient for sellers to update inventory, source and
list new items on Amazon.in, and respond faster to customer
queries.
- Amazon.in launched Kirana Now, a pilot
service that delivers everyday essentials to customers within two
to four hours. This local service utilizes India’s vast network of
small and medium businesses to achieve quick, easy, and convenient
delivery for Amazon.in customers.
- Amazon China opened an Amazon
international brand flagship store on Tmall, which features
thousands of Amazon China’s popular, directly imported products.
Additionally, Amazon Global Store selection on Amazon.cn has grown
to over one million items.
- AWS announced Amazon Machine Learning,
a fully managed service that makes it easy for any developer to use
historical data to build predictive models that can be used for a
broad array of purposes, including detecting problematic
transactions, preventing customer churn, and improving customer
support. Amazon Machine Learning is based on the same proven,
highly scalable machine learning technology used by developers
across Amazon to generate more than 50 billion predictions a
week.
- AWS announced AWS Marketplace for
Desktop Apps, a new category on the AWS Marketplace that makes it
easy for customers to search for and buy applications for their
Amazon WorkSpaces cloud-based desktops. Customers can choose from a
broad selection of more than 100 applications in eleven categories,
and pay by the month for the applications they use. To simplify
deployment of these desktop applications, AWS also announced Amazon
WorkSpaces Application Manager (Amazon WAM), a new service that
packages and delivers applications to Amazon WorkSpaces.
- AWS announced the general availability
of AWS Lambda, a compute service that runs developers’ code in
response to events and automatically manages the required compute
resources, making it easy to build and manage applications that
respond quickly to new information. AWS also launched several new
features to make it easy for mobile developers to use Lambda for
mobile, tablet, and Internet of Things applications.
- AWS announced the general availability
of the Amazon EC2 Container Service, a high-performance container
management service that makes it easy to run distributed
applications using Docker containers on AWS. AWS also added the
ability to use Elastic Block Store (“EBS”) and Elastic Load
Balancing (“ELB”) with the EC2 Container Service, as well as a new,
flexible container scheduler that combine to make the EC2 Container
Service the best place to run containers in production.
- AWS introduced the latest generation of
Amazon EC2 Dense-storage (D2) instances, and larger, faster Amazon
Elastic Block Storage (Amazon EBS) volumes. To support very large
transactional databases and big data analytics, the new Amazon EC2
D2 instances offer up to 48 TB of storage and up to 3,500 MB per
second of disk read throughput, while the new Amazon EBS volumes
store up to 16 TB and process up to 20,000 input/output operations
per second (IOPS).
Financial Guidance
The following forward-looking statements reflect Amazon.com’s
expectations as of April 23, 2015, 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.
Second Quarter 2015 Guidance
- Net sales are expected to be between
$20.6 billion and $22.8 billion, or to grow between 7% and 18%
compared with second quarter 2014.
- Operating income (loss) is expected to
be between $(500) million and $50 million, compared to $(15)
million in second quarter 2014.
- This guidance includes approximately
$600 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 2:30 p.m.
PT/5:30 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, sortation, delivery,
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, which may contain material information about us, and you
may subscribe to be notified of new information posted to this
site.
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 March
31, Twelve Months Ended March 31, 2015
2014 2015 2014
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 14,557 $ 8,658 $
5,074 $ 4,481 OPERATING ACTIVITIES: Net income (loss) (57 ) 108
(405 ) 299 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, including capitalized content costs 1,426 1,010 5,162
3,563 Stock-based compensation 407 321 1,582 1,226 Other operating
expense (income), net 44 35 139 117 Losses (gains) on sales of
marketable securities, net 1 — (3 ) 2 Other expense (income), net
91 (50 ) 203 48 Deferred income taxes (2 ) (185 ) (136 ) (261 )
Excess tax benefits from stock-based compensation (22 ) (121 ) 94
(199 ) Changes in operating assets and liabilities: Inventories 721
699 (1,172 ) (1,245 ) Accounts receivable, net and other 441 727
(1,324 ) (849 ) Accounts payable (4,249 ) (4,675 ) 2,184 1,400
Accrued expenses and other (940 ) (731 ) 500 708 Additions to
unearned revenue 1,803 1,092 5,144 3,100 Amortization of previously
unearned revenue (1,163 ) (732 ) (4,123 ) (2,564 ) Net cash
provided by (used in) operating activities (1,499 ) (2,502 ) 7,845
5,345 INVESTING ACTIVITIES: Purchases of property and equipment,
including internal-use software and website development (871 )
(1,080 ) (4,684 ) (3,854 ) Acquisitions, net of cash acquired, and
other (365 ) — (1,345 ) (208 ) Sales and maturities of marketable
securities 375 593 3,131 2,299 Purchases of marketable securities
(986 ) (437 ) (3,091 ) (2,487 ) Net cash provided by (used in)
investing activities (1,847 ) (924 ) (5,989 ) (4,250 ) FINANCING
ACTIVITIES: Excess tax benefits from stock-based compensation 22
121 (94 ) 199 Proceeds from long-term debt 183 65 6,478 426
Repayments of long-term debt (316 ) (70 ) (760 ) (272 ) Principal
repayments of capital lease obligations (502 ) (249 ) (1,537 ) (863
) Principal repayments of finance lease obligations (39 ) (42 )
(132 ) (47 ) Net cash provided by (used in) financing activities
(652 ) (175 ) 3,955 (557 ) Foreign-currency effect on cash and cash
equivalents (322 ) 17 (648 ) 55 Net increase
(decrease) in cash and cash equivalents (4,320 ) (3,584 ) 5,163
593 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,237
$ 5,074 $ 10,237 $ 5,074 SUPPLEMENTAL
CASH FLOW INFORMATION: Cash paid for interest on long-term debt $
17 $ 18 $ 90 $ 102 Cash paid for income taxes (net of refunds) 55
38 194 121 Property and equipment acquired under capital leases 954
716 4,246 2,243 Property and equipment acquired under build-to-suit
leases 103 126 897 852
AMAZON.COM, INC.
Consolidated Statements of Operations (in millions,
except per share data) (unaudited) Three
Months Ended March 31, 2015
2014 Net product sales $ 17,084 $ 15,705 Net service sales
5,633 4,036 Total net sales 22,717 19,741 Operating
expenses (1): Cost of sales 15,395 14,055 Fulfillment 2,759 2,317
Marketing 1,083 870 Technology and content 2,754 1,991 General and
administrative 427 327 Other operating expense (income), net 44
35 Total operating expenses 22,462 19,595
Income (loss) from operations 255 146 Interest income 11 11
Interest expense (115 ) (42 ) Other income (expense), net (130 ) 5
Total non-operating income (expense) (234 ) (26 ) Income
(loss) before income taxes 21 120 Provision for income taxes (71 )
(73 ) Equity-method investment activity, net of tax (7 ) 61
Net income (loss) $ (57 ) $ 108 Basic earnings per share $
(0.12 ) $ 0.23 Diluted earnings per share $ (0.12 ) $ 0.23
Weighted average shares used in computation of earnings per
share: Basic 465 460 Diluted 465 468
_____________ (1) Includes stock-based compensation as follows:
Fulfillment $ 90 $ 81 Marketing 35 27 Technology and content 233
169 General and administrative 49 44
AMAZON.COM, INC. Consolidated Statements of Comprehensive
Income (Loss) (in millions) (unaudited)
Three Months Ended March 31, 2015
2014 Net income (loss) $ (57 ) $ 108 Other
comprehensive income (loss): Foreign currency translation
adjustments, net of tax of $(1) and $0 (243 ) 27 Net change in
unrealized gains on available-for-sale securities: Unrealized
gains, net of tax of $0 and $(1) 1 1 Reclassification adjustment
for losses included in “Other income (expense), net,” net of tax of
$0 and $0 1 — Net unrealized gains on available-for-sale
securities 2 1 Total other comprehensive income (loss) (241
) 28 Comprehensive income (loss) $ (298 ) $ 136
AMAZON.COM, INC. Segment Information (in
millions) (unaudited) Three Months Ended
March 31, 2015 2014 North
America Net sales $ 13,406 $ 10,808 Segment operating expenses
(1) 12,889 10,518 Segment operating income (loss) $
517 $ 290
International Net sales $ 7,745 $
7,883 Segment operating expenses (1) 7,821 7,916
Segment operating income (loss) $ (76 ) $ (33 )
AWS Net
sales $ 1,566 $ 1,050 Segment operating expenses (1) 1,301
805 Segment operating income (loss) $ 265 $ 245
Consolidated Net sales $ 22,717 $ 19,741 Segment
operating expenses (1) 22,011 19,239 Segment
operating income (loss) 706 502 Stock-based compensation (407 )
(321 ) Other operating income (expense), net (44 ) (35 ) Income
(loss) from operations 255 146 Total non-operating income (expense)
(234 ) (26 ) Provision for income taxes (71 ) (73 ) Equity-method
investment activity, net of tax (7 ) 61 Net income (loss) $
(57 ) $ 108
Segment Highlights: Y/Y net sales growth:
North America 24 % 23 % International (2 ) 18 AWS 49 69
Consolidated 15 23 Net sales mix: North America 59 % 55 %
International 34 40 AWS 7 5 Consolidated 100 % 100 %
______________________________
(1) Excludes stock-based compensation and
"Other operating expense (income), net," which are not allocated to
segments.
AMAZON.COM, INC. Supplemental Net
Sales Information (in millions) (unaudited)
Three Months Ended March 31, 2015
2014 Net Sales: North America Media $ 2,969 $
2,825 Electronics and other general merchandise 10,250 7,829 Other
(1) 187 154 Total North America $ 13,406 $
10,808 International Media $ 2,320 $ 2,642 Electronics and
other general merchandise 5,378 5,188 Other (1) 47 53
Total International $ 7,745 $ 7,883
Year-over-year Percentage Growth: North America Media 5 % 12 %
Electronics and other general merchandise 31 28 Other 22 18 Total
North America 24 23 International Media (12 )% 4 % Electronics and
other general merchandise 4 27 Other (12 ) 13 Total International
(2 ) 18 Year-over-year Percentage Growth, excluding the effect of
foreign exchange rates: North America Media 5 % 13 % Electronics
and other general merchandise 31 28 Other 22 19 Total North America
24 23 International Media 2 % 4 % Electronics and other general
merchandise 21 26 Other 2 11 Total International 14 18
______________________________
(1) Includes sales from non-retail
activities, such as certain advertising services and our co-branded
credit card agreements.
AMAZON.COM, INC.
Consolidated Balance Sheets (in millions, except per
share data) March 31, 2015 December 31,
2014 (unaudited)
ASSETS Current assets:
Cash and cash equivalents $ 10,237 $ 14,557 Marketable securities
3,544 2,859 Inventories 7,369 8,299 Accounts receivable, net and
other 4,772 5,612 Total current assets 25,922 31,327
Property and equipment, net 17,736 16,967 Goodwill 3,491 3,319
Other assets 2,926 2,892 Total assets $ 50,075
$ 54,505
LIABILITIES AND STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable $ 11,917 $
16,459 Accrued expenses and other 8,840 9,807 Unearned revenue
2,420 1,823 Total current liabilities 23,177 28,089
Long-term debt 8,257 8,265 Other long-term liabilities 7,768 7,410
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 — 489 and 488 Outstanding
shares — 466 and 465 5 5 Treasury stock, at cost (1,837 ) (1,837 )
Additional paid-in capital 11,565 11,135 Accumulated other
comprehensive loss (752 ) (511 ) Retained earnings 1,892
1,949 Total stockholders’ equity 10,873 10,741
Total liabilities and stockholders’ equity $ 50,075 $ 54,505
AMAZON.COM, INC. Supplemental Financial Information and
Business Metrics (in millions, except per share data)
(unaudited) Q1 2014 Q2 2014 Q3
2014 Q4 2014 Q1 2015
Y/Y %Change
Cash Flows and Shares Operating cash flow -- trailing twelve
months (TTM) $ 5,345 $ 5,327 $ 5,705 $ 6,842 $ 7,845 47 % Purchases
of property and equipment (incl. internal-use software &
website development) -- TTM $ 3,854 $ 4,288 $ 4,628 $ 4,893 $ 4,684
22 % Principal repayments of capital lease obligations -- TTM $ 863
$ 969 $ 1,103 $ 1,285 $ 1,537 78 % Principal repayments of finance
lease obligations -- TTM $ 47 $ 60 $ 73 $ 135 $ 132 178 % Property
and equipment acquired under capital leases -- TTM $ 2,243 $ 2,716
$ 3,347 $ 4,008 $ 4,246 89 % Free cash flow -- TTM (1) $ 1,491 $
1,039 $ 1,077 $ 1,949 $ 3,161 112 % Free cash flow -- TTM Y/Y
growth (decline) 744 % 292 % 178 % (4 )% 112 % N/A Invested capital
(2) $ 16,681 $ 17,743 $ 18,715 $ 21,021 $ 23,090 38 % Return on
invested capital (3) 9 % 6 % 6 % 9 % 14 % N/A Free cash flow less
lease principal repayments -- TTM (4) $ 581 $ 10 $ (99 ) $ 529 $
1,492 157 % Free cash flow less finance principal lease repayments
and capital acquired under capital leases -- TTM (5) $ (799 ) $
(1,737 ) $ (2,343 ) $ (2,194 ) $ (1,217 ) 52 % Common shares and
stock-based awards outstanding 476 480 481 483 483 2 % Common
shares outstanding 460 462 463 465 466 1 % Stock awards outstanding
16 18 18 18 17 11 % Stock awards outstanding -- % of common shares
outstanding 3.5 % 3.9 % 3.9 % 3.8 % 3.8 % N/A
Results of
Operations Worldwide (WW) net sales $ 19,741 $ 19,340 $ 20,579
$ 29,328 $ 22,717 15 % WW net sales -- Y/Y growth, excluding F/X 23
% 22 % 20 % 18 % 22 % N/A WW net sales -- TTM $ 78,124 $ 81,759 $
85,246 $ 88,988 $ 91,963 18 % WW net sales -- TTM Y/Y growth,
excluding F/X 24 % 23 % 22 % 20 % 20 % N/A Operating income (loss)
$ 146 $ (15 ) $ (544 ) $ 591 $ 255 74 % Operating income/loss --
Y/Y growth (decline), excluding F/X (29 )% (158 )% N/A 22 % 90 %
N/A Operating margin -- % of WW net sales 0.7 % (0.1 )% (2.6 )% 2.0
% 1.1 % N/A Operating income -- TTM $ 710 $ 617 $ 97 $ 178 $ 287
(60 )% Operating income -- TTM Y/Y growth (decline), excluding F/X
7 % (11 )% (94 )% (79 )% (56 )% N/A Operating margin -- TTM % of WW
net sales 0.9 % 0.8 % 0.1 % 0.2 % 0.3 % N/A Net income (loss) $ 108
$ (126 ) $ (437 ) $ 214 $ (57 ) (153 )% Net income (loss) per
diluted share $ 0.23 $ (0.27 ) $ (0.95 ) $ 0.45 $ (0.12 ) (152 )%
Net income (loss) -- TTM $ 299 $ 181 $ (216 ) $ (241 ) $ (405 )
(236 )% Net income (loss) per diluted share -- TTM $ 0.64 $ 0.39 $
(0.47 ) $ (0.52 ) $ (0.88 ) (234 )% ______________________________
(1) “Free cash flow” is defined as net cash provided by
operating activities less cash expenditures for purchases of
property and equipment, including internal-use software and website
development. (2) Average Total Assets minus Current Liabilities
(excluding current portion of Long-Term Debt) over five quarter
ends. (3) TTM Free Cash Flow divided by Invested Capital. (4) “Free
cash flow less lease principal repayments” is defined as net cash
provided by operating activities, less (i) purchases of property
and equipment, including internal-use software and website
development, (ii) principal repayments of capital lease
obligations, and (iii) principal repayments of finance lease
obligations. Free cash flow less lease principal repayments
approximates the actual payments of cash for our capital and
finance leases. (5) “Free cash flow less finance principal lease
repayments and capital acquired under capital leases” is defined as
net cash provided by operating activities, less (i) purchases of
property and equipment, including internal-use software and website
development, (ii) principal repayments of finance lease
obligations, and (iii) property and equipment acquired under
capital leases. In this measure, property and equipment acquired
under capital leases is reflected as if these assets had been
purchased for cash, which is not the case as these assets have been
leased.
AMAZON.COM, INC. Supplemental Financial Information and
Business Metrics (in millions) (unaudited)
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1
2015
Y/Y %Change
Segments North America Segment: Net sales $ 10,808 $ 10,994
$ 11,699 $ 17,333 $ 13,406 24 % Net sales --
Y/Y growth, excluding F/X 23 % 25 % 23 % 21 % 24 % N/A Net sales --
TTM $ 50,834 $ 53,432 23 % Operating income (loss) $ 290 $ 329 $
(60 ) $ 733 $ 517 79 % Operating income/loss -- Y/Y growth
(decline), excluding F/X 77 % N/A Operating margin -- % of North
America net sales 2.7 % 3.0 % (0.5 )% 4.2 % 3.9 % N/A Operating
income -- TTM $ 1,292 $ 1,520 N/A Operating margin -- TTM % of
North America net sales 2.5 % 2.8 % N/A International Segment: Net
sales $ 7,883 $ 7,341 $ 7,711 $ 10,575 $ 7,745 (2 )% Net sales --
Y/Y growth, excluding F/X 18 % 14 % 13 % 12 % 14 % N/A Net sales --
TTM $ 33,510 $ 33,371 7 % Net sales -- TTM % of WW net sales 38 %
36 % N/A Operating income (loss) $ (33 ) $ (2 ) $ (174 ) $ 65 $ (76
) 137 % Operating income/loss -- Y/Y growth (decline), excluding
F/X N/A N/A Operating margin -- % of International net sales (0.4
)% — % (2.3 )% 0.6 % (1.0 )% N/A Operating income (loss) -- TTM $
(144 ) $ (188 ) N/A Operating margin -- TTM % of International net
sales (0.4 )% (0.6 )% N/A AWS Segment: Net sales $ 1,050 $ 1,005 $
1,169 $ 1,420 $ 1,566 49 % Net sales -- Y/Y growth, excluding F/X
69 % 43 % 43 % 47 % 49 % N/A Net sales -- TTM $ 4,644 $ 5,160 46 %
Net sales -- TTM % of WW net sales 5 % 6 % N/A Operating income $
245 $ 77 $ 98 $ 240 $ 265 8 % Operating income -- Y/Y growth
(decline), excluding F/X (13 )% N/A Operating margin -- % of AWS
net sales 23.3 % 7.7 % 8.4 % 16.9 % 16.9 % N/A Operating income --
TTM $ 660 $ 680 N/A Operating margin -- TTM % of AWS net sales 14.2
% 13.2 % N/A Consolidated Segments: Operating expenses (6) $ 19,239
$ 18,936 $ 20,715 $ 28,290 $ 22,011 14 % Operating expenses -- TTM
(6) $ 76,069 $ 79,710 $ 83,599 $ 87,180 $ 89,951 18 % Operating
income (loss) $ 502 $ 404 $ (136 ) $ 1,038 $ 706 41 % Operating
income/loss -- Y/Y growth (decline), excluding F/X 10 % (9 )% (151
)% 22 % 45 % N/A Operating margin -- % of Consolidated net sales
2.5 % 2.1 % (0.7 )% 3.5 % 3.1 % N/A Operating income -- TTM $ 2,055
$ 2,049 $ 1,647 $ 1,808 $ 2,012 (2 )% Operating income -- TTM Y/Y
growth (decline), excluding F/X 20 % 14 % (12 )% (10 )% (1 )% N/A
Operating margin -- TTM % of Consolidated net sales 2.6 % 2.5 % 1.9
% 2.0 % 2.2 % N/A ______________________________ (6)
Represents cost of sales, fulfillment, marketing, technology and
content, and general and administrative operating expenses,
excluding stock-based compensation.
AMAZON.COM, INC. Supplemental
Financial Information and Business Metrics (in millions,
except inventory turnover, accounts payable days and employee
data) (unaudited) Q1 2014 Q2 2014
Q3 2014 Q4 2014 Q1 2015
Y/Y %Change
Supplemental Supplemental North America Segment Net Sales:
Media $ 2,825 $ 2,464 $ 2,734 $ 3,544 $ 2,969 5 % Media -- Y/Y
growth, excluding F/X 13 % 14 % 5 % 1 % 5 % N/A Media -- TTM $
11,121 $ 11,411 $ 11,536 $ 11,567 $ 11,711 5 % Electronics and
other general merchandise $ 7,829 $ 8,366 $ 8,793 $ 13,529 $ 10,250
31 % Electronics and other general merchandise -- Y/Y growth,
excluding F/X 28 % 29 % 31 % 27 % 31 % N/A Electronics and other
general merchandise -- TTM $ 31,686 $ 33,575 $ 35,636 $ 38,517 $
40,938 29 % Electronics and other general merchandise -- TTM % of
North America net sales 73 % 74 % 74 % 76 % 77 % N/A Other $ 154 $
164 $ 172 $ 260 $ 187 22 % Supplemental International Segment Net
Sales: Media $ 2,642 $ 2,380 $ 2,510 $ 3,406 $ 2,320 (12 )% Media
-- Y/Y growth, excluding F/X 4 % 4 % 3 % (1 )% 2 % N/A Media -- TTM
$ 11,004 $ 11,160 $ 11,246 $ 10,938 $ 10,615 (4 )% Electronics and
other general merchandise $ 5,188 $ 4,912 $ 5,160 $ 7,109 $ 5,378 4
% Electronics and other general merchandise -- Y/Y growth,
excluding F/X 26 % 20 % 19 % 19 % 21 % N/A Electronics and other
general merchandise -- TTM $ 19,919 $ 20,894 $ 21,737 $ 22,369 $
22,559 13 % Electronics and other general merchandise -- TTM % of
International net sales 64 % 65 % 65 % 67 % 68 % N/A Other $ 53 $
49 $ 41 $ 60 $ 47 (12 )%
Balance Sheet Cash and marketable
securities $ 8,666 $ 7,986 $ 6,883 $ 17,416 $ 13,781 59 %
Inventory, net -- ending $ 6,716 $ 6,644 $ 7,316 $ 8,299 $ 7,369 10
% Inventory turnover, average -- TTM 9.1 9.1 8.9 8.6 8.8 (3 )%
Property and equipment, net $ 12,267 $ 14,089 $ 15,702 $ 16,967 $
17,736 45 % Accounts payable -- ending $ 10,590 $ 10,457 $ 11,811 $
16,459 $ 11,917 13 % Accounts payable days -- ending 68 71 74 73 70
3 %
Other WW shipping revenue $ 849 $ 889 $ 1,048 $ 1,701 $
1,299 53 % WW shipping costs $ 1,829 $ 1,812 $ 2,020 $ 3,049 $
2,309 26 % WW net shipping costs $ 980 $ 923 $ 972 $ 1,348 $ 1,010
3 % WW net shipping costs -- % of net sales (7) 5.2 % 5.0 % 5.0 %
4.8 % 4.8 % N/A Employees (full-time and part-time; excludes
contractors & temporary personnel) 124,600 132,600 149,500
154,100 165,000 32 %
______________________________
(7) Includes North America and
International segment net sales.
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, AWS 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.
AWS Customers
- References to AWS customers mean unique
AWS customer accounts, which are unique e-mail addresses that are
eligible to use AWS services. This includes AWS accounts in the AWS
free tier. Multiple users accessing AWS services via one account
are counted as a single account. Customers are considered active
when they have had AWS usage activity during the preceding
one-month period.
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.amazon.nl, 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 AWS, certain acquisitions, rental businesses,
or advertising businesses, or Amazon gift cards.
AMAZON.COM, INC.Supplemental Segment
Financial Information
Effective Q1 2015, Amazon.com, Inc. has three segments: North
America, International, and AWS. These segments reflect changes in
the way Amazon.com, Inc. evaluates its business performance and
manages its operations. Historical results for 2014 and 2013 for
the North America, International, and AWS segments are presented
below.
The North America segment consists primarily of amounts earned
from retail sales of consumer products (including from sellers) and
subscriptions through North America-focused websites such as
www.amazon.com, www.amazon.ca, and www.amazon.com.mx. This segment
includes export sales from these websites.
The International segment consists primarily of amounts earned
from retail sales of consumer products (including from sellers) and
subscriptions through internationally-focused websites. This
segment includes export sales from these internationally-focused
websites (including export sales from these sites to customers in
the U.S. and Canada), but excludes export sales from our North
American websites.
The AWS segment consists of amounts earned from sales of
compute, storage, database, and other AWS service offerings for
start-ups, enterprises, government agencies, and academic
institutions.
We allocate to segment results the operating expenses
“Fulfillment,” “Marketing,” “Technology and content,” and “General
and administrative” based on usage, which is generally reflected in
the segment in which the costs are incurred. In conjunction with
creating a separate reportable segment for AWS, we have made other
allocation changes among the North America and International
segments to reflect the relative contribution provided to both
segments. The majority of technology infrastructure costs are
allocated to the AWS segment based on usage. The majority of the
remaining non-infrastructure technology costs are incurred in the
U.S. and are allocated to our North America segment. We exclude
from our allocations the portions of these operating expense lines
attributable to stock-based compensation. We do not allocate the
line item “Other operating expense (income), net” to our segment
operating results. There are no internal revenue transactions
between our reportable segments.
AMAZON.COM, INC.
Supplemental Segment Financial
Information
Two years of historical financial
information on reportable segments and reconciliation to
consolidated net income (loss) using the new segment presentation
are as follows (in millions):
Year Ended
Three Months Ended
Year Ended
December 31, 2014 December 31, 2014
September 30, 2014 June 30,
2014 March 31, 2014 December 31,
2013 North America Net sales $ 50,834 $ 17,333 $
11,699 $ 10,994 $ 10,808 $ 41,410 Segment operating expenses (1)
49,542 16,600 11,759 10,665 10,518
40,244 Segment operating income (loss) $ 1,292
$ 733 $ (60 ) $ 329 $ 290 $ 1,166
International Net sales $ 33,510 $ 10,575 $ 7,711 $ 7,341 $
7,883 $ 29,934 Segment operating expenses (1) 33,654 10,510
7,885 7,343 7,916 29,780 Segment
operating income (loss) $ (144 ) $ 65 $ (174 ) $ (2 ) $ (33
) $ 154
AWS Net sales $ 4,644 $ 1,420 $ 1,169 $ 1,005
$ 1,050 $ 3,108 Segment operating expenses (1) 3,984 1,180
1,071 928 805 2,435 Segment
operating income $ 660 $ 240 $ 98 $ 77
$ 245 $ 673
Consolidated Net sales $ 88,988 $
29,328 $ 20,579 $ 19,340 $ 19,741 $ 74,452 Segment operating
expenses (1) 87,180 28,290 20,715 18,936
19,239 72,459 Segment operating income (loss)
1,808 1,038 (136 ) 404 502 1,993 Stock-based compensation (1,497 )
(408 ) (377 ) (391 ) (321 ) (1,134 ) Other operating income
(expense), net (133 ) (39 ) (31 ) (28 ) (35 ) (114 ) Income (loss)
from operations 178 591 (544 ) (15 ) 146 745 Total non-operating
income (expense) (289 ) (162 ) (90 ) (12 ) (26 ) (239 ) Benefit
(provision) for income taxes (167 ) (205 ) 205 (94 ) (73 ) (161 )
Equity-method investment activity, net of tax 37 (10 ) (8 )
(5 ) 61 (71 ) Net income (loss) $ (241 ) $ 214 $ (437
) $ (126 ) $ 108 $ 274
Segment Highlights: Y/Y
net sales growth: North America 23 % 21 % 23 % 25 % 23 % 26 %
International 12 3 14 18 18 14 AWS 49 47 43 43 69 69 Consolidated
20 15 20 23 23 22 Net sales mix: North America 57 % 59 % 57 % 57 %
55 % 56 % International 38 36 37 38 40 40 AWS 5 5 6
5 5 4 Consolidated 100 % 100 % 100 %
100 % 100 % 100 %
_________________
(1) Excludes stock-based compensation and
“Other operating expense (income), net” which are not allocated to
segments.
AMAZON.COM, INC.
Supplemental Segment Financial
Information
Segment Assets
Total segment assets exclude corporate
assets, such as cash and cash equivalents, marketable securities,
other long-term investments, corporate facilities, goodwill and
other acquired intangible assets, capitalized internal-use software
and website development costs, and tax assets. Technology
infrastructure assets are allocated among the segments based on
usage, with the majority allocated to the AWS segment. Total
segment assets reconciled to consolidated amounts are as follows
(in millions):
December 31, 2014 2013
North America (1) $ 13,257 $ 9,991 International (1) 6,747 6,199
AWS (2) 6,981 3,840 Corporate 27,520 20,129 Consolidated $
54,505 $ 40,159 _____________________________
(1) North America and International
segment assets primarily consist of inventory, accounts receivable,
and property and equipment.
(2) AWS segment assets primarily consist of property and equipment
and accounts receivable.
Property and Equipment, Net
Property and equipment, net by segment is as follows (in
millions):
December 31, 2014 2013 North
America $ 5,373 $ 3,477 International 2,000 1,549 AWS 6,043 3,253
Corporate 3,551 2,670 Consolidated $ 16,967 $ 10,949
Property and Equipment Additions
Total property and equipment additions by segment are as
follows (in millions):
December 31, 2014
2013 North America (1) $ 2,833 $ 2,326 International (1) 767
851 AWS (2) 4,295 2,215 Corporate 1,586 981 Consolidated $
9,481 $ 6,373 ___ _ ____________ (1) Includes property and
equipment added under capital leases of $887 million and $555
million in 2014 and 2013, and under other financing arrangements of
$599 million and $715 million in 2014 and 2013. (2) Includes
property and equipment added under capital leases of $3.0 billion
and $1.3 billion in 2014 and 2013, and under other financing
arrangements of $62 million and $67 million in 2014 and 2013.
AMAZON.COM, INC.
Supplemental Segment Financial
Information
Depreciation Expense
Depreciation expense, including
amortization of capitalized internal-use software and website
development costs and other corporate property and equipment
depreciation expense, are allocated to all segments based on usage.
Total depreciation expense, by segment, is as follows (in
millions):
Year Ended December 31, 2014
2013 North America $ 1,203 $ 914 International 740 583 AWS
1,673 963 Consolidated $ 3,616 $ 2,460
Amazon.com Investor RelationsPhil Hardin,
206/266-2171www.amazon.com/irorAmazon.com Public RelationsTy
Rogers, 206/266-7180www.amazon.com/pr
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