AMZN
$768.66
Amazon.Com
$1.33
.17%
Earnings Details
3rd Quarter September 2016
Thursday, October 27, 2016 4:01:06 PM
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Summary

Amazon.Com Misses

Amazon.Com (AMZN) reported 3rd Quarter September 2016 earnings of $0.52 per share on revenue of $32.7 billion. The consensus earnings estimate was $0.85 per share on revenue of $32.6 billion. The Earnings Whisper number was $0.93 per share. Revenue grew 29.0% on a year-over-year basis.

The company said it expects fourth quarter revenue of $42.0 billion to $45.5 billion. The current consensus revenue estimate is $44.69 billion for the quarter ending December 31, 2016.

Amazon.com Inc is an online retailer. The Company sells its products through the website which provides services, such as advertising services and co-branded credit card agreements. It also offers electronic devices like Kindle e-readers and Fire tablets.

Results
Reported Earnings
$0.52
Earnings Whisper
$0.93
Consensus Estimate
$0.85
Reported Revenue
$32.71 Bil
Revenue Estimate
$32.56 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Amazon.com Announces Third Quarter Sales up 29% to $32.7 Billion

Amazon.com, Inc. (AMZN) today announced financial results for its third quarter ended September 30, 2016.

Operating cash flow increased 49% to $14.6 billion for the trailing twelve months, compared with $9.8 billion for the trailing twelve months ended September 30, 2015. Free cash flow increased to $8.6 billion for the trailing twelve months, compared with $5.4 billion for the trailing twelve months ended September 30, 2015. Free cash flow less lease principal repayments increased to $4.9 billion for the trailing twelve months, compared with $3.1 billion for the trailing twelve months ended September 30, 2015. Free cash flow less finance lease principal repayments and assets acquired under capital leases increased to $3.4 billion for the trailing twelve months, compared with $637 million for the trailing twelve months ended September 30, 2015.

Common shares outstanding plus shares underlying stock-based awards totaled 496 million on September 30, 2016, compared with 489 million one year ago.

Net sales increased 29% to $32.7 billion in the third quarter, compared with $25.4 billion in third quarter 2015. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on net sales was $52 million.

Operating income was $575 million in the third quarter, compared with $406 million in third quarter 2015.

Net income was $252 million in the third quarter, or $0.52 per diluted share, compared with $79 million, or $0.17 per diluted share, in third quarter 2015.

"Alexa may be Amazon’s most loved invention yet -- literally -- with over 250,000 marriage proposals from customers and counting," said Jeff Bezos, founder and CEO of Amazon. "And she’s just getting better. Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful -- wait until you see some of the surprises the team is working on now."

Highlights

Amazon Studios announced a slate of new Original Movies and Series premiering in the coming months, including the theatrical debut of Manchester by the Sea, a Sundance and Toronto Film Festival favorite, as well as exclusive Prime Video premieres of Amazon Original Series including The Man in the High Castle, the second season of the most watched original series on Prime Video; The Grand Tour, the highly-anticipated series with Clarkson, Hammond, and May; and Mozart in the Jungle, the third season of the multi-Golden Globe winning series.

Amazon Studios released Gleason, The Dressmaker, The Handmaiden, and Author: The JT LeRoy Story in theaters nationwide. Each film will be available exclusively to Prime members through Prime Video following its theatrical release.

Amazon Video won six Emmys, including the second win for both Jeffrey Tambor and Jill Soloway for Outstanding Lead Actor in a Comedy Series and Outstanding Directing for a Comedy Series, respectively, for Transparent.

Amazon debuted five Amazon Original Series, including the third season of award-winning series Transparent, and the debut seasons of One Mississippi, Fleabag, Woody Allen’s first TV series, Crisis in Six Scenes, and David E. Kelley’s Goliath, starring Billy Bob Thornton.

Since launching in May, Amazon customers have streamed billions of minutes of content from providers that self-published through Amazon Video Direct.

Amazon launched Amazon Music Unlimited, an on-demand music streaming service with tens of millions of songs and thousands of curated playlists and personalized stations. Customers listening to Amazon Music Unlimited on Echo, Echo Dot, or Amazon Tap can access their favorite music with new natural language voice controls powered by Alexa. The on-demand music service is $7.99 per month for Prime members, and only $3.99 per month for customers who subscribe to the exclusive "for Echo" subscription plan.

Amazon announced that music from Garth Brooks -- the #2 all-time best-selling artist in the U.S. behind only the Beatles -- is now available to stream exclusively on Amazon Music. Fans can listen to hit songs and popular albums from the country music icon on Amazon Music Unlimited, with albums and songs also available for purchase and digital download on Amazon Music.

Amazon introduced the all-new version of the Echo Dot, a hands-free, voice-controlled device powered by Alexa -- available in the U.S. for under $50. Additionally, Amazon introduced Alexa, Echo, and Echo Dot to customers in the U.K. and Germany.

Alexa skills selection increased 3x in three months, and there are now more than 3,000 skills available, including Food Network, GE Appliances, Yahoo Sports Fantasy Football, and more. Amazon now has tens of thousands of developers building new skills for Alexa.

Amazon announced the Alexa Prize, an annual university competition with $2.5 million dedicated to accelerating the field of conversational artificial intelligence. The goal of the competition is to build a "socialbot" on Alexa that will converse with people about popular topics and news events.

Amazon introduced Fire HD 8, an all-new tablet that offers 12 hours of battery life, 50% more RAM for faster performance, and 2x the storage -- for $89.99. Amazon also announced that Alexa is coming to Fire tablets -- just press and ask, and Alexa will play music, launch games, read audiobooks, and more.

Amazon introduced the next generation of the best-selling Fire TV Stick, now with an included Alexa Voice Remote, and still $39.99. Amazon also released a software update for Fire TV and Fire TV Stick that enables customers to use their voice to search across more than 90 apps and channels, including Netflix, making it easier to find and watch their favorite TV shows and movies without navigating through multiple apps.

Amazon Game Studios announced its first three games at TwitchCon 2016: Breakaway, New World, and Crucible. All three games are built on the Amazon Lumberyard game engine, and created for Twitch broadcasters, viewers, and players.

Amazon and Twitch announced Twitch Prime, a new set of Prime benefits for gamers that includes exclusive discounts on pre-order and new release games, a rotating selection of free digital games and in-game loot, and a premium Twitch experience that includes a monthly Twitch channel subscription.

Amazon introduced new features to the Prime Photos service in the U.S., designed for Prime members and their family. Prime members can now invite up to five family members or friends to join their Family Vault, which includes access to Prime Photos benefits including unlimited storage of photos, plus an additional 5 GB for videos and other files.

Amazon introduced Prime Reading, a benefit for Prime members to enjoy unlimited, free reading from a rotating selection of over a thousand books, magazines, comics, and more.

Amazon and Audible announced Audible Channels, a new benefit for Prime members to enjoy unlimited, free access to the new short-form digital audio service as well as access to a rotating selection from Audible’s audiobook catalog.

AmazonFresh expanded to northern Virginia, Dallas, Maryland, and Chicago. Additionally, customers in all locations can now shop for groceries through AmazonFresh directly on the Amazon.com website alongside their other shopping.

The Great Indian Festival was Amazon.in’s biggest shopping event ever. During the event, customers from 97% of India’s serviceable postal codes placed at least one order on Amazon.in.

Handmade at Amazon launched in the U.K., Germany, France, Italy, and Spain. Customers across Europe can now shop from more than 30,000 genuinely handcrafted items sold by thousands of artisans from over 40 countries.

Amazon Japan became the new title sponsor of Amazon Fashion Week Tokyo, collaborating with the Japan Fashion Week Organization to help support and elevate the awareness of Japanese fashion designers and manufacturers globally.

Amazon expects to create 120,000 seasonal jobs in customer fulfillment and customer service this holiday season. Last year, Amazon transitioned more than 14,000 seasonal positions to regular, full-time roles after the holidays, and expects to increase that number this year.

Amazon.co.uk announced the "Amazon Women in Innovation Bursary" at University of Cambridge, University of Edinburgh, and King’s College, which provides scholarships for young women to pursue a degree in innovation-related fields.

Amazon Web Services (AWS) announced the availability of the U.S. East (Ohio) Region. AWS now operates 38 Availability Zones across 14 technology infrastructure Regions globally, and plans to open an additional nine Availability Zones in four regions (Canada, the U.K., France, and a second region in China) in the coming months.

VMware and AWS announced a new hybrid cloud service, "VMware Cloud on AWS," that enables customers to use their existing VMware software and tools to leverage AWS’s global footprint and breadth of services, including storage, databases, analytics, and more. This offering will be the primary public cloud service sold and supported by VMware, and AWS will be VMware’s primary public cloud partner.

AWS announced the availability of P2 instances, a new GPU instance type for Amazon EC2. The most powerful GPU virtual machine in the cloud with up to 16 NVIDIA Tesla(R) K80 GPUs, P2 instances are designed for compute-intensive applications such as artificial intelligence, deep learning, computational fluid dynamics, computational finance, seismic analysis, molecular modeling, genomics, and rendering workloads.

AWS announced the option for customers to bring their own encryption keys with AWS Key Management Service. This new feature allows customers to import keys from any key management and Hardware Security Module solution and use them with AWS services and their own applications.

AWS launched new capabilities for AWS Educate, a global program that provides students and educators with resources to accelerate cloud-related learning. The program now includes access to courses designed to teach cloud skills, paired with the AWS Educate Job Board, featuring cloud-related internships and jobs from top employers around the world.

AWS announced a new Application Load Balancer option for content-based routing that enables customers to route a request to an AWS service based on the content of the request and supports applications that run in containers. Web sites and mobile applications, running in containers or on Amazon EC2 instances, will benefit from the use of Application Load Balancers.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of October 27, 2016, 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 customer spending, world events, the rate of growth of the Internet, online commerce, and cloud services, and the various factors detailed below.

Fourth Quarter 2016 Guidance

Net sales are expected to be between $42.0 billion and $45.5 billion, or to grow between 17% and 27% compared with fourth quarter 2015. This guidance anticipates approximately 60 basis points of favorable impact from foreign exchange rates.

Operating income is expected to be between $0 and $1.25 billion, compared with $1.1 billion in fourth quarter 2015.

This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.

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 and services 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 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 tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon. For more information, visit www.amazon.com/about.

AMAZON.COM, INC.
Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
Twelve Months Ended
September 30,
September 30,
September 30,
2016
2015
2016
2015
2016
2015
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$ 12,521
$ 10,269
$ 15,890
$ 14,557
$ 10,709
$
5,258
OPERATING ACTIVITIES:
Net income
252
79
1,622
114
2,105
328
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation of property and equipment, including internal-use
2,084
1,599
5,819
4,529
7,572
5,908
software and website development, and other amortization, including
capitalized content costs
Stock-based compensation
776
544
2,088
1,513
2,694
1,921
Other operating expense, net
31
34
128
120
163
156
Other expense (income), net
(23 )
58
(41 )
170
39
248
Deferred income taxes
(81 )
(63 )
36
(108 )
226
76
Excess tax benefits from stock-based compensation
(173 )
(95 )
(493 )
(212 )
(401 )
(96 )
Changes in operating assets and liabilities:
Inventories
(1,095 )
(1,537 )
(383 )
(844 )
(1,726 )
(1,983 )
Accounts receivable, net and other
(671 )
(588 )
(1,443 )
(577 )
(2,621 )
(1,681 )
Accounts payable
2,540
2,030
(2,252 )
(1,846 )
3,887
3,207
Accrued expenses and other
441
143
(531 )
(925 )
1,306
525
Additions to unearned revenue
2,802
1,779
7,956
4,979
10,377
6,358
Amortization of previously unearned revenue
(2,397 )
(1,373 )
(6,715 )
(3,805 )
(9,018 )
(5,144 )
Net cash provided by (used in) operating activities
4,486
2,610
5,791
3,108
14,603
9,823
INVESTING ACTIVITIES:
Purchases of property and equipment, including internal-use software
(1,841 )
(1,195 )
(4,731 )
(3,280 )
(6,040 )
(4,424 )
and website development, net
Acquisitions, net of cash acquired, and other
(84 )
(105 )
(113 )
(478 )
(430 )
(531 )
Sales and maturities of marketable securities
1,431
1,045
3,500
1,890
4,635
2,244
Purchases of marketable securities
(2,076 )
(1,122 )
(4,358 )
(2,732 )
(5,717 )
(4,354 )
Net cash provided by (used in) investing activities
(2,570 )
(1,377 )
(5,702 )
(4,600 )
(7,552 )
(7,065 )
FINANCING ACTIVITIES:
Excess tax benefits from stock-based compensation
173
95
493
212
401
96
Proceeds from long-term debt and other
8
33
83
260
176
6,241
Repayments of long-term debt and other
(26 )
(181 )
(271 )
(712 )
(1,212 )
(894 )
Principal repayments of capital lease obligations
(938 )
(656 )
(2,855 )
(1,738 )
(3,579 )
(2,144 )
Principal repayments of finance lease obligations
(44 )
(21 )
(105 )
(95 )
(131 )
(163 )
Net cash provided by (used in) financing activities
(827 )
(730 )
(2,655 )
(2,073 )
(4,345 )
3,136
Foreign currency effect on cash and cash equivalents
46
(63 )
332
(283 )
241
(443 )
Net increase (decrease) in cash and cash equivalents
1,135
440
(2,234 )
(3,848 )
2,947
5,451
CASH AND CASH EQUIVALENTS, END OF PERIOD
$ 13,656
$ 10,709
$ 13,656
$ 10,709
$ 13,656
$ 10,709
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on long-term debt
$
1
$
7
$
146
$
177
$
295
$
212
Cash paid for interest on capital and finance lease obligations
50
41
145
109
188
138
Cash paid for income taxes, net of refunds
91
80
317
200
390
230
Property and equipment acquired under capital leases
1,369
1,047
3,666
3,385
4,998
4,599
Property and equipment acquired under build-to-suit leases
211
125
793
381
956
595
AMAZON.COM, INC.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Net product sales
$ 22,339
$ 18,463
$ 64,036
$ 52,650
Net service sales
10,375
6,895
28,210
18,609
Total net sales
32,714
25,358
92,246
71,259
Operating expenses:
Cost of sales
21,260
16,755
59,306
47,310
Fulfillment
4,335
3,230
11,900
8,865
Marketing
1,738
1,264
4,720
3,496
Technology and content
4,135
3,197
11,541
8,971
General and administrative
639
463
1,715
1,357
Other operating expense, net
32
43
133
136
Total operating expenses
32,139
24,952
89,315
70,135
Operating income
575
406
2,931
1,124
Interest income
26
13
71
37
Interest expense
(118 )
(116 )
(351 )
(344 )
Other income (expense), net
8
(56 )
75
(187 )
Total non-operating income (expense)
(84 )
(159 )
(205 )
(494 )
Income before income taxes
491
247
2,726
630
Provision for income taxes
(229 )
(161 )
(1,012 )
(498 )
Equity-method investment activity, net of tax
(10 )
(7 )
(92 )
(18 )
Net income
$
252
$
79
$
1,622
$
114
Basic earnings per share
$
0.53
$
0.17
$
3.43
$
0.24
Diluted earnings per share
$
0.52
$
0.17
$
3.36
$
0.24
Weighted-average shares used in computation of earnings per share:
Basic
474
468
473
467
Diluted
485
478
483
476
AMAZON.COM, INC.
Consolidated Statements of Comprehensive Income (Loss)
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Net income
$ 252
$
79
$ 1,622
$ 114
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $6, $4, $18,
19
(56 )
133
(170 )
and $3
Net change in unrealized gains (losses) on available-for-sale
securities:
Unrealized gains (losses), net of tax of $(15), $3, $(32), and $(5)
29
(3 )
65
3
Reclassification adjustment for losses (gains) included in "Other
2
1
4
3
income (expense), net," net of tax of $(1), $(1), $(2), and $(1)
Net unrealized gains (losses) on available-for-sale securities
31
(2 )
69
6
Total other comprehensive income (loss)
50
(58 )
202
(164 )
Comprehensive income (loss)
$ 302
$
21
$ 1,824
$ (50 )
AMAZON.COM, INC.
Segment Information
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
North America
Net sales
$ 18,874
$ 15,006
$ 53,544
$ 42,208
Operating expenses
18,180
14,478
50,769
40,461
Operating income before stock-based compensation and other
694
528
2,775
1,747
Stock-based compensation and other
439
342
1,230
959
Operating income
$
255
$
186
$
1,545
$
788
International
Net sales
$ 10,609
$
8,267
$ 30,019
$ 23,577
Operating expenses
10,941
8,323
30,242
23,728
Operating income (loss) before stock-based compensation and other
(332 )
(56 )
(223 )
(151 )
Stock-based compensation and other
209
152
573
440
Operating income (loss)
$
(541 )
$
(208 )
$
(796 )
$
(591 )
AWS
Net sales
$
3,231
$
2,085
$
8,683
$
5,474
Operating expenses
2,210
1,564
6,083
4,297
Operating income before stock-based compensation and other
1,021
521
2,600
1,177
Stock-based compensation and other
160
93
418
250
Operating income
$
861
$
428
$
2,182
$
927
Consolidated
Net sales
$ 32,714
$ 25,358
$ 92,246
$ 71,259
Operating expenses
31,331
24,365
87,094
68,486
Operating income before stock-based compensation and other
1,383
993
5,152
2,773
Stock-based compensation and other
808
587
2,221
1,649
Operating income
575
406
2,931
1,124
Total non-operating income (expense)
(84 )
(159 )
(205 )
(494 )
Provision for income taxes
(229 )
(161 )
(1,012 )
(498 )
Equity-method investment activity, net of tax
(10 )
(7 )
(92 )
(18 )
Net income
$
252
$
79
$
1,622
$
114
Segment Highlights:
Y/Y net sales growth:
North America
26
%
28
%
27
%
26
%
International
28
7
27
3
AWS
55
78
59
70
Consolidated
29
23
29
19
Net sales mix:
North America
58
%
59
%
58
%
59
%
International
32
33
33
33
AWS
10
8
9
8
Consolidated
100
%
100
%
100
%
100
%
AMAZON.COM, INC.
Supplemental Net Sales Information
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Net Sales:
North America
Media
$
3,237
$
2,963
$
9,372
$
8,552
Electronics and other general merchandise
15,327
11,840
43,297
33,077
Other (1)
310
203
875
579
Total North America
$ 18,874
$ 15,006
$ 53,544
$ 42,208
International
Media
$
2,491
$
2,320
$
7,254
$
6,734
Electronics and other general merchandise
8,056
5,901
22,593
16,705
Other (1)
62
46
172
138
Total International
$ 10,609
$
8,267
$ 30,019
$ 23,577
Year-over-year Percentage Growth:
North America
Media
9
%
8
%
10
%
7
%
Electronics and other general merchandise
29
35
31
32
Other
53
18
51
19
Total North America
26
28
27
26
International
Media
7
%
(8
)%
8
%
(11
)%
Electronics and other general merchandise
36
14
35
9
Other
37
10
24
(4 )
Total International
28
7
27
3
Year-over-year Percentage Growth, excluding the effect of foreign
exchange rates:
North America
Media
9
%
9
%
10
%
7
%
Electronics and other general merchandise
29
35
31
33
Other
53
18
51
18
Total North America
26
29
27
26
International
Media
7
%
6
%
7
%
4
%
Electronics and other general merchandise
36
32
35
28
Other
43
26
27
11
Total International
28
24
27
20
______________________________
(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)
September 30, 2016
December 31, 2015
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
13,656
$
15,890
Marketable securities
4,691
3,918
Inventories
10,696
10,243
Accounts receivable, net and other
6,566
5,654
Total current assets
35,609
35,705
Property and equipment, net
27,177
21,838
Goodwill
3,815
3,759
Other assets
4,296
3,445
Total assets
$
70,897
$
64,747
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
18,801
$
20,397
Accrued expenses and other
10,497
10,372
Unearned revenue
4,200
3,118
Total current liabilities
33,498
33,887
Long-term debt
8,205
8,227
Other long-term liabilities
11,412
9,249
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 -- 498 and 494
Outstanding shares -- 475 and 471
5
5
Treasury stock, at cost
(1,837 )
(1,837 )
Additional paid-in capital
15,968
13,394
Accumulated other comprehensive loss
(521 )
(723 )
Retained earnings
4,167
2,545
Total stockholders’ equity
17,782
13,384
Total liabilities and stockholders’ equity
$
70,897
$
64,747
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions, except per share data)
(unaudited)
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Cash Flows and Shares
Operating cash flow -- trailing twelve months (TTM)
$
8,980
$
9,823
$
11,920
$
11,258
$
12,726
$
14,603
49 %
Operating cash flow -- TTM Y/Y growth
69
%
72
%
74
%
44
%
42
%
49
%
N/A
Purchases of property and equipment, including internal-use software
$
4,607
$
4,424
$
4,589
$
4,897
$
5,395
$
6,040
37 %
and website development, net -- TTM
Principal repayments of capital lease obligations -- TTM
$
1,832
$
2,144
$
2,462
$
2,761
$
3,298
$
3,579
67 %
Principal repayments of finance lease obligations -- TTM
$
155
$
163
$
121
$
111
$
108
$
131
(20 )%
Property and equipment acquired under capital leases -- TTM
$
4,710
$
4,599
$
4,717
$
4,638
$
4,676
$
4,998
9 %
Free cash flow -- TTM (1)
$
4,373
$
5,399
$
7,331
$
6,361
$
7,331
$
8,563
59 %
Free cash flow less lease principal repayments -- TTM (2)
$
2,386
$
3,092
$
4,748
$
3,489
$
3,925
$
4,853
57 %
Free cash flow less finance lease principal repayments and assets
$
(492 )
$
637
$
2,493
$
1,612
$
2,547
$
3,434
440 %
acquired under capital leases -- TTM (3)
Invested capital (4)
$
26,478
$
28,860
$
31,393
$
32,824
$
34,695
$
36,722
27 %
Common shares and stock-based awards outstanding
488
489
490
490
495
496
1 %
Common shares outstanding
468
469
471
472
474
475
1 %
Stock-based awards outstanding
20
20
19
18
21
21
3 %
Stock-based awards outstanding -- % of common shares outstanding
4.4
%
4.3
%
4.1
%
3.9
%
4.4
%
4.4
%
N/A
Results of Operations
Worldwide (WW) net sales
$
23,185
$
25,358
$
35,747
$
29,128
$
30,404
$
32,714
29 %
WW net sales -- Y/Y growth, excluding F/X
27
%
30
%
26
%
29
%
30
%
29
%
N/A
WW net sales -- TTM
$
95,808
$ 100,588
$ 107,006
$ 113,418
$ 120,637
$ 127,993
27 %
WW net sales -- TTM Y/Y growth, excluding F/X
22
%
24
%
26
%
28
%
29
%
28
%
N/A
Operating income
$
464
$
406
$
1,108
$
1,071
$
1,285
$
575
42 %
FX impact -- favorable (unfavorable)
(9 )
25
20
50
45
8
N/A
Operating income -- Y/Y growth, excluding F/X
N/A
N/A
84
%
300
%
168
%
40
%
N/A
Operating margin -- % of WW net sales
2.0
%
1.6
%
3.1
%
3.7
%
4.2
%
1.8
%
N/A
Operating income -- TTM
$
765
$
1,715
$
2,233
$
3,049
$
3,871
$
4,040
136 %
Operating income -- TTM Y/Y growth (decline), excluding F/X
35
%
N/A
N/A
933
%
388
%
128
%
N/A
Operating margin -- TTM % of WW net sales
0.8
%
1.7
%
2.1
%
2.7
%
3.2
%
3.2
%
N/A
Net income (loss)
$
92
$
79
$
482
$
513
$
857
$
252
220 %
Net income (loss) per diluted share
$
0.19
$
0.17
$
1.00
$
1.07
$
1.78
$
0.52
215 %
Net income (loss) -- TTM
$
(188 )
$
328
$
596
$
1,166
$
1,931
$
2,105
541 %
Net income (loss) per diluted share -- TTM
$
(0.41 )
$
0.69
$
1.25
$
2.43
$
4.02
$
4.38
533 %
______________________________
(1) Free cash flow is cash flow from operations reduced by
"Purchases of property and equipment, including internal-use
software and website development, net," which is included in cash
flow from investing activities.
(2) Free cash flow less lease principal repayments is free cash
flow reduced by "Principal repayments of capital lease
obligations," and "Principal repayments of finance lease
obligations," which are included in cash flow from financing
activities.
(3) Free cash flow less finance lease principal repayments and
assets acquired under capital leases is free cash flow reduced by
"Principal repayments of finance lease obligations," which are
included in cash flow from financing activities, and 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 with cash, which is not the case
as these assets have been leased.
(4) Average Total Assets minus Current Liabilities (excluding
current portion of Long-Term Debt and current portion of capital
lease obligations and finance lease obligations) over five quarter
ends.
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions)
(unaudited)
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Segments
North America Segment:
Net sales
$ 13,796
$ 15,006
$ 21,501
$
16,996
$ 17,674
$ 18,874
26 %
Net sales -- Y/Y growth, excluding F/X
26 %
29 %
24 %
27 %
28 %
26 %
N/A
Net sales -- TTM
$ 56,233
$ 59,540
$ 63,708
$
67,299
$ 71,176
$ 75,045
26 %
Operating income before stock-based compensation and other:
Operating income
$
703
$
528
$
1,003
$
924
$
1,157
$
694
32 %
Operating income -- Y/Y growth, excluding F/X
111 %
N/A
36 %
78 %
64 %
30 %
N/A
Operating margin -- % of North America net sales
5.1 %
3.5 %
4.7 %
5.4 %
6.6 %
3.7 %
N/A
Operating income -- TTM
$
1,893
$
2,480
$
2,751
$
3,157
$
3,611
$
3,778
52 %
Operating margin -- TTM % of North America net sales
3.4 %
4.2 %
4.3 %
4.7 %
5.1 %
5.0 %
N/A
Operating income:
Operating income
$
348
$
186
$
636
$
588
$
702
$
255
37 %
FX impact -- favorable (unfavorable)
$
9
$
11
$
6
$
5
$
5
$
6
N/A
Operating income -- Y/Y growth, excluding F/X
129
%
100 %
34 %
N/A
Operating margin -- % of North America net sales
2.5 %
1.2 %
3.0 %
3.5 %
4.0 %
1.3 %
N/A
Operating income -- TTM
$
1,425
$
1,759
$
2,113
$
2,182
N/A
Operating margin -- TTM % of North America net sales
2.2 %
2.6 %
3.0 %
2.9 %
N/A
International Segment:
Net sales
$
7,565
$
8,267
$ 11,841
$
9,566
$
9,844
$ 10,609
28 %
Net sales -- Y/Y growth, excluding F/X
22 %
24 %
22 %
26 %
28 %
28 %
N/A
Net sales -- TTM
$ 33,598
$ 34,154
$ 35,418
$
37,239
$ 39,518
$ 41,860
23 %
Operating income (loss) before stock-based compensation and other:
Operating income (loss)
$
(19 )
$
(56 )
$
60
$
20
$
88
$
(332 )
496 %
Operating income/loss -- Y/Y growth (decline), excluding F/X
N/A
N/A
65 %
N/A
N/A
539 %
N/A
Operating margin -- % of International net sales
(0.2 )%
(0.7 )%
0.5
%
0.2
%
0.9
%
(3.1 )%
N/A
Operating income (loss) -- TTM
$
(205 )
$
(86 )
$
(91 )
$
6
$
113
$
(163 )
89 %
Operating margin -- TTM % of International net sales
(0.6 )%
(0.3 )%
(0.3 )%
--
%
0.3
%
(0.4 )%
N/A
Operating income (loss):
Operating income (loss)
$
(189 )
$
(208 )
$
(108 )
$
(121 )
$
(135 )
$
(541 )
161 %
FX impact -- favorable (unfavorable)
$
(89 )
$
(64 )
$
(47 )
$
21
$
40
$
22
N/A
Operating income/loss -- Y/Y growth (decline), excluding F/X
(27 )%
(8 )%
171
%
N/A
Operating margin -- % of International net sales
(2.5 )%
(2.5 )%
(0.9 )%
(1.3 )%
(1.4 )%
(5.1 )%
N/A
Operating income (loss) -- TTM
$
(699 )
$
(626 )
$
(571 )
$
(905 )
N/A
Operating margin -- TTM % of International net sales
(2.0 )%
(1.7 )%
(1.4 )%
(2.2 )%
N/A
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions)
(unaudited)
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Segments (continued)
AWS Segment:
Net sales
$ 1,824
$ 2,085
$ 2,405
$ 2,566
$
2,886
$
3,231
55 %
Net sales -- Y/Y growth, excluding F/X
81
%
78
%
69
%
64
%
58
%
55
%
N/A
Net sales -- TTM
$ 5,977
$ 6,894
$ 7,880
$ 8,880
$
9,943
$ 11,088
61 %
Operating income before stock-based compensation and other:
Operating income
$
391
$
521
$
687
$
716
$
863
$
1,021
96 %
Operating income -- Y/Y growth (decline), excluding F/X
314
%
353
%
161
%
161
%
121
%
100
%
N/A
Operating margin -- % of AWS net sales
21.4
%
25.0
%
28.5
%
27.9
%
29.9
%
31.6
%
N/A
Operating income -- TTM
$
993
$ 1,417
$ 1,863
$ 2,315
$
2,787
$
3,286
132 %
Operating margin -- TTM % of AWS net sales
16.6
%
20.6
%
23.6
%
26.1
%
28.0
%
29.6
%
N/A
Operating income:
Operating income
$
305
$
428
$
580
$
604
$
718
$
861
101 %
FX impact -- favorable (unfavorable)
$
71
$
78
$
60
$
24
$ --
$
(20 )
N/A
Operating income -- Y/Y growth, excluding F/X
198
%
136
%
106
%
N/A
Operating margin -- % of AWS net sales
16.7
%
20.5
%
24.1
%
23.5
%
24.9
%
26.6
%
N/A
Operating income -- TTM
$ 1,507
$ 1,916
$
2,329
$
2,762
N/A
Operating margin -- TTM % of AWS net sales
19.1
%
21.6
%
23.4
%
24.9
%
N/A
Consolidated Segments Before Stock-Based Compensation and Other:
Operating income
$ 1,075
$
993
$ 1,750
$ 1,660
$
2,108
$
1,383
39 %
Operating income -- Y/Y growth, excluding F/X
168
%
N/A
67
%
128
%
92
%
38
%
N/A
Operating margin -- % of Consolidated net sales
4.6
%
3.9
%
4.9
%
5.7
%
6.9
%
4.2
%
N/A
Operating income -- TTM
$ 2,682
$ 3,811
$ 4,523
$ 5,478
$
6,511
$
6,902
81 %
Operating margin -- TTM % of Consolidated net sales
2.8
%
3.8
%
4.2
%
4.8
%
5.4
%
5.4
%
N/A
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions, except inventory turnover, accounts payable days,
and employee data)
(unaudited)
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Supplemental
Supplemental North America Segment Net Sales:
Media
$
2,620
$
2,963
$
3,931
$
3,208
$
2,928
$
3,237
9 %
Media -- Y/Y growth, excluding F/X
7
%
9
%
12
%
8
%
12
%
9
%
N/A
Media -- TTM
$ 11,867
$ 12,096
$ 12,483
$ 12,722
$ 13,030
$ 13,304
10 %
Electronics and other general merchandise
$ 10,987
$ 11,840
$ 17,325
$ 13,511
$ 14,459
$ 15,327
29 %
Electronics and other general merchandise -- Y/Y growth, excluding
32
%
35
%
28
%
32
%
32
%
29
%
N/A
F/X
Electronics and other general merchandise -- TTM
$ 43,559
$ 46,606
$ 50,401
$ 53,663
$ 57,134
$ 60,622
30 %
Electronics and other general merchandise -- TTM % of North America
77
%
78
%
79
%
80
%
80
%
81
%
N/A
net sales
Other
$
189
$
203
$
245
$
277
$
287
$
310
53 %
Supplemental International Segment Net Sales:
Media
$
2,094
$
2,320
$
3,292
$
2,480
$
2,283
$
2,491
7 %
Media -- Y/Y growth, excluding F/X
3
%
6
%
5
%
9
%
7
%
7
%
N/A
Media -- TTM
$ 10,329
$ 10,140
$ 10,026
$ 10,186
$ 10,375
$ 10,546
4 %
Electronics and other general merchandise
$
5,425
$
5,901
$
8,491
$
7,034
$
7,504
$
8,056
36 %
Electronics and other general merchandise -- Y/Y growth, excluding
31
%
32
%
31
%
33
%
36
%
36
%
N/A
F/X
Electronics and other general merchandise -- TTM
$ 23,072
$ 23,814
$ 25,196
$ 26,851
$ 28,930
$ 31,084
31 %
Electronics and other general merchandise -- TTM % of International
69
%
70
%
71
%
72
%
73
%
74
%
N/A
net sales
Other
$
46
$
46
$
58
$
52
$
57
$
62
37 %
Balance Sheet
Cash and marketable securities -- ending
$ 14,001
$ 14,428
$ 19,808
$ 15,859
$ 16,540
$ 18,347
27 %
Inventory, net -- ending
$
7,470
$
8,981
$ 10,243
$
9,582
$
9,588
$ 10,696
19 %
Inventory turnover, average -- TTM
8.9
8.6
8.5
8.6
8.6
8.5
(1 )%
Property and equipment, net -- ending
$ 19,479
$ 20,636
$ 21,838
$ 23,308
$ 25,190
$ 27,177
32 %
Accounts payable -- ending
$ 12,391
$ 14,437
$ 20,397
$ 14,990
$ 16,123
$ 18,801
30 %
Accounts payable days -- ending
74
79
77
72
77
81
3 %
Stock-based Compensation Expense
Cost of sales
$
7
N/A
Fulfillment
$
132
$
122
$
137
$
116
$
186
$
165
35 %
Marketing
$
50
$
48
$
57
$
56
$
80
$
85
76 %
Technology and content
$
319
$
309
$
364
$
317
$
419
$
434
41 %
General and administrative
$
62
$
65
$
48
$
55
$
83
$
85
31 %
Total stock-based compensation expense
$
563
$
544
$
606
$
544
$
768
$
776
43 %
Other
WW shipping revenue
$
1,399
$
1,494
$
2,328
$
1,820
$
2,000
$
2,154
44 %
WW shipping revenue -- Y/Y growth
57
%
43
%
37
%
40
%
43
%
44
%
N/A
WW shipping costs
$
2,340
$
2,720
$
4,170
$
3,275
$
3,362
$
3,897
43 %
WW shipping costs -- Y/Y growth
29
%
35
%
37
%
42
%
44
%
43
%
N/A
WW net shipping costs
$
941
$
1,226
$
1,842
$
1,455
$
1,362
$
1,743
42 %
WW net shipping costs -- Y/Y growth
2
%
26
%
37
%
44
%
45
%
42
%
N/A
WW paid units -- Y/Y growth
22
%
26
%
26
%
27
%
28
%
28
%
N/A
WW seller unit mix -- % of WW paid units
45
%
46
%
47
%
48
%
49
%
50
%
N/A
Employees (full-time and part-time; excludes contractors & temporary
183,100
222,400
230,800
245,200
268,900
306,800
38 %
personnel)

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.

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SOURCE: Amazon.com, Inc.

Amazon.com Investor Relations
Darin Manney, ir@amazon.com
www.amazon.com/ir
or
Amazon.com Public Relations
Ty Rogers, amazon-pr@amazon.com
www.amazon.com/about