Amazon.com Announces Second Quarter Financial Results; Free Cash Flow Exceeds $1.5 Billion
SEATTLE--(BUSINESS WIRE)--Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its second quarter ended June 30, 2009.
Operating cash flow was $1.88 billion for the trailing twelve months, compared with $1.09 billion for the trailing twelve months ended June 30, 2008. Free cash flow increased 89% to $1.54 billion for the trailing twelve months, compared with $0.82 billion for the trailing twelve months ended June 30, 2008.
Common shares outstanding plus shares underlying stock-based awards outstanding totaled 451 million on June 30, 2009, compared with 446 million a year ago.
Net sales increased 14% to $4.65 billion in the second quarter, compared with $4.06 billion in second quarter 2008. Excluding the $227 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 20% compared with second quarter 2008.
Operating income decreased 27% to $159 million in the second quarter, compared with $217 million in second quarter 2008. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $30 million. Second quarter 2009 operating income includes the impact of our settlement with Toysrus.com LLC for $51 million, substantially all of which was expensed during the quarter. Additionally, second quarter 2008 operating income included a $53 million non-cash gain recognized on the sale of our European DVD rental assets.
Net income decreased 10% to $142 million in the second quarter, or $0.32 per diluted share, compared with net income of $158 million, or $0.37 per diluted share, in second quarter 2008.
“We’re pleased that customers saved more than $900 million with our free shipping offers, including Amazon Prime, over the last year,” said Jeff Bezos, founder and CEO of Amazon.com. “We’re staying heads down focused on providing customers low prices, vast selection, and fast delivery.”
- Amazon.com reduced the price of Kindle, the #1 bestseller in its consumer electronics store, to $299.
- The Kindle Store offers more than 320,000 books, including 104 of 110 New York Times Best Sellers, more than 6,000 blogs and top U.S. and international newspapers and magazines. The Economist, Foreign Affairs, and PC Magazine join top-selling periodicals in the Kindle Store including The New York Times, The Wall Street Journal, The Washington Post, USA Today, The New Yorker, Time, and Newsweek.
- North America segment sales, representing the Company’s U.S. and Canadian sites, were $2.45 billion, up 13% from second quarter 2008.
- International segment sales, representing the Company’s U.K., German, Japanese, French and Chinese sites, were $2.20 billion, up 16% from second quarter 2008. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 28%.
- Worldwide Media sales grew 1% to $2.44 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 7%.
- Worldwide Electronics & Other General Merchandise sales grew 35% to $2.07 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 41%.
- Sellers utilizing Fulfillment by Amazon more than tripled compared to second quarter 2008, and the service has shipped more items year-to-date than in all of 2008.
- Amazon launched its MP3 music service in France, offering more than 8 million DRM-free songs from all four major labels and hundreds of independent labels that can be played on any MP3 player.
- The Company launched a beta version of Amazon Wireless (amazonwireless.com), a new website offering cell phones and service plans, hassle-free rebates and FREE Two-Day Shipping on a broad selection of phones initially from AT&T and Verizon Wireless.
- Amazon Web Services (AWS) launched a public beta of the following new features to make using the Amazon Elastic Compute Cloud (Amazon EC2) even easier for developers: Amazon CloudWatch, a web service for monitoring AWS cloud resources; Auto Scaling for automatically growing and shrinking Amazon EC2 capacity based on demand; and Elastic Load Balancing for distributing incoming traffic across Amazon EC2 compute instances.
The following forward-looking statements reflect Amazon.com’s expectations as of July 23, 2009 and exclude Zappos.com, Inc. financial results. 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.
Third Quarter 2009 Guidance
- Net sales are expected to be between $4.75 billion and $5.25 billion, or to grow between 11% and 23% compared with third quarter 2008.
- Operating income is expected to be between $120 million and $210 million, or between 22% decline and 36% growth compared with third quarter 2008. This guidance includes approximately $95 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments 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 center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains and develops commercial agreements, acquisitions and strategic transactions, 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, payments 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, including its most recent Annual Report on Form 10-K and subsequent filings.
Amazon.com, Inc. (NASDAQ:AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth’s Biggest Selection. Amazon.com, Inc. seeks to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as Books; Movies, Music & Games; Digital Downloads; Computers & Office; Electronics; Home & Garden; Grocery, Health & Beauty; Toys, Kids & Baby; Apparel, Shoes & Jewelry; Sports & Outdoors; and Tools, Auto & Industrial.
Amazon Web Services provides Amazon’s developer customers with access to in-the-cloud infrastructure services based on Amazon’s own back-end technology platform, which developers can use to enable virtually any type of business. Examples of the services offered by Amazon Web Services are Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Storage Service (Amazon S3), Amazon Elastic Block Store, Amazon SimpleDB, Amazon Simple Queue Service (Amazon SQS), Amazon Flexible Payments Service (Amazon FPS), Amazon Mechanical Turk and Amazon CloudFront.
Amazon and its affiliates operate websites, including www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, and www.amazon.cn.
As used herein, “Amazon.com,” “we,” “our” and similar terms include Amazon.com, Inc., and its subsidiaries, unless the context indicates otherwise.