Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of
Thu July 24 2014 15:29:51

Amazon Releases Second Quarter 2014 Earnings

By: Ina Steiner

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Amazon's conference call with analysts is at 5:00 pm EST today, here is the company's press release announcing second quarter 2014 earnings, you can view the full release with tables on Amazon's investor relations website. Announces Second Quarter Sales up 23% to $19.34 Billion
SEATTLE -, Inc. (NASDAQ:AMZN) today announced financial results for its second quarter ended June 30, 2014.

Operating cash flow increased 18% to $5.33 billion for the trailing twelve months, compared with $4.53 billion for the trailing twelve months ended June 30, 2013. Free cash flow increased to $1.04 billion for the trailing twelve months, compared with $265 million for the trailing twelve months ended June 30, 2013. Free cash flow for the trailing twelve months ended June 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 480 million on June 30, 2014, compared with 474 million one year ago.

Net sales increased 23% to $19.34 billion in the second quarter, compared with $15.70 billion in second quarter 2013. Excluding the $237 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales grew 22% compared with second quarter 2013.

Operating loss was $15 million in the second quarter, compared with operating income of $79 million in second quarter 2013. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating loss was $31 million.

Net loss was $126 million in the second quarter, or $0.27 per diluted share, compared with net loss of $7 million, or $0.02 per diluted share, in second quarter 2013.

“We continue working hard on making the Amazon customer experience better and better,” said Jeff Bezos, founder and CEO of “We’ve recently introduced Sunday delivery coverage to 25% of the U.S. population, launched European cross-border Two-Day Delivery for Prime, launched Prime Music with over one million songs, created three original kids TV series, added world-class parental controls to Fire TV with FreeTime, and launched Kindle Unlimited, an eBook subscription service. For our AWS customers we launched Amazon Zocalo, T2 instances, an SSD-backed EBS volume, Amazon Cognito, Amazon Mobile Analytics, and the AWS Mobile SDK, and we substantially reduced prices. And today customers all over the U.S. will begin receiving their new Fire phones — including Firefly, Dynamic Perspective, and one full year of Prime — we can’t wait to get them in customers’ hands.”

    Amazon introduced Fire phone, offering instant access to Amazon’s vast content ecosystem and exclusive features like the Mayday button, ASAP, Second Screen, X-Ray, Dynamic Perspective, Firefly, free unlimited photo storage, and more. Fire phone ships today and is available exclusively on AT&T — the nation’s most reliable 4G LTE network. Customers can order at,, and in AT&T retail locations nationwide. Fire phone with 32GB is available for $199 with a two-year contract or zero down and $27.09 a month with AT&T Next 18.

    Fire phone is the only smartphone with Dynamic Perspective and Firefly. Dynamic Perspective uses a new sensor system to respond to the way customers hold, view, and move Fire phone, enabling experiences not possible on other smartphones. Firefly quickly recognizes things in the real world — web and email addresses, phone numbers, QR and bar codes, movies, music, and millions of products, and lets users take action in seconds — all with the simple press of the Firefly button.

    Amazon launched the Dynamic Perspective SDK and the Firefly SDK. The Dynamic Perspective SDK gives developers access to algorithms that identify the X, Y, and Z coordinates of the user’s head, enabling a whole new class of apps and games. The Firefly SDK allows developers to extend the use of the Firefly button to enable new actions for customers.

    Amazon announced that Amazon Appstore selection has nearly tripled over the past year and developers continue to report strong monetization from the apps they offer in the store. Since Fire phone launched, the rate of app submissions to the Amazon Appstore has more than doubled as developers have already begun finding innovative uses of the phone’s enhanced carousel, Dynamic Perspective, and Firefly.

    Amazon Game Studios announced two new games — Saber’s Edge and To-Fu Fury — created exclusively for Amazon’s new Fire phone. Saber’s Edge and To-Fu Fury are co-developed with partners, Hibernum and HotGen as part of Amazon Game Studios’ mission to build fun, immersive games from the ground up for Amazon devices.

    Amazon FreeTime is now available on Fire TV, bringing revolutionary parental controls that are simple and easy to use. FreeTime gives kids an experience designed just for them, with character search and content all their own. It gives parents peace of mind and control, enabling them to explicitly pick what content is available in FreeTime and set time limits by content type. FreeTime Unlimited brings thousands of apps, games, movies, and TV shows, and removes in-app purchasing and ads.

    Fire TV sales have significantly exceeded our sales forecast and we are working hard to increase our manufacturing output. Fire TV app selection has more than doubled since launch due to strong engagement from developers. Recent additions include MLB TV Premium, WWE Network, Animal Planet Live, and Grand Theft Auto.

    Amazon introduced Prime Music, a new service that offers Prime members unlimited, ad-free access to over a million songs at no additional cost to their membership. In the week following its introduction, Prime members streamed tens of millions of songs — that’s millions of hours of music — and added tens of millions of songs and more than a million Prime Playlists to their music libraries, for free.

    Amazon Studios introduced Amazon’s first two original children’s series: Tumble Leaf and Creative Galaxy, exclusively to Prime Instant Video, and will add a third, Annedroids, tomorrow. The first six episodes of each show are available this summer, with additional episodes to follow later this year. In addition, Amazon Studios has greenlit five additional new pilots — the dramatic thriller Hysteria, dramatic comedy Really, one hour drama Hand of God, and comedies The Cosmopolitans and Red Oaks — as part of its third pilot season debuting next month on Amazon Instant Video.

    Amazon expanded Whispersync for Voice to include Kindle reading apps for iOS and Android, providing a seamless listening experience for Audible content right inside the Kindle app. Users can switch instantly between reading a Kindle book and listening to the companion audiobook from Audible — all with just one tap, without leaving the book.

    Amazon introduced Kindle Unlimited — a new subscription service which allows customers to freely read as much as they want from over 600,000 Kindle books, and listen as much as they want to thousands of Audible audiobooks, all for only $9.99 a month. Finding a great book is easy, and there are never any due dates — just look for the Kindle Unlimited logo on eligible titles and click “Read for Free.” Customers can choose from best sellers like The Hunger Games, Diary of a Wimpy Kid, and The Lord of the Rings.

    More customers are using the Shop by Vehicle feature in the Amazon Automotive store than ever before. Over one million customers added their car, truck, or motorcycle to their Amazon Garage during the quarter to find products specifically designed to fit their vehicle, bringing the total count of active customers with a vehicle in the Amazon Garage to over 14 million.

    AmazonFresh continued to expand its service in the Los Angeles and San Francisco areas. AmazonFresh customers in Orange County, Berkeley, Oakland, and Silicon Valley now get same-day and early next-day delivery of fresh groceries as well as over 500,000 items.

    Amazon has expanded Sunday delivery to 18 additional cities since launching in the Los Angeles and New York metro areas. Since Sunday delivery launched, millions of packages have been delivered on Sundays to Amazon customers. Amazon Prime members, who receive unlimited two-day shipping on millions of items, can order as late as Friday and receive their packages on Sunday, for free.

    Amazon announced enhancements to its European cross border delivery network. and Prime members now have access to free Two-Day Delivery for approximately one million additional products stored in Amazon’s European fulfillment centers located outside their respective countries.

    Since launching the India marketplace website,, one year ago, Amazon has rapidly expanded selection to serve customers in India, averaging a launch of one new category every 13 days. With customers can shop from India’s largest store with ease and confidence from over 17 million products from a rapidly growing group of small and medium businesses.

    The AWS team grew by thousands of employees this past year, expanding AWS infrastructure, enterprise and public sector sales capabilities and allowing the team to innovate at an accelerating pace.

    With 250 significant service and feature releases year-to-date, and substantial price reductions for customers starting in the second quarter (28% to 51% depending on the service), AWS continues to grow strongly, with usage growth close to 90% year-over-year in the second quarter.

    AWS announced a new general purpose instance type for Amazon Elastic Compute Cloud (EC2). With On Demand Instance prices starting at $0.013 per hour, the new T2 instances are the lowest-cost Amazon EC2 instance option and are ideal for Web servers, developer environments, and small databases.

    AWS announced several new capabilities to make it easier for developers to build, deploy, and scale mobile applications, including Amazon Cognito for identity management and syncing, Amazon Mobile Analytics to visualize and understand app usage data, and an AWS Mobile SDK, which provides easy, mobile-optimized access to other AWS services to power mobile apps that can scale from tens to hundreds of millions of users.

    AWS announced Amazon Zocalo, a fully managed, secure enterprise storage and sharing service with strong administrative controls and feedback capabilities that improve user productivity. With Amazon Zocalo, customers can store, share, and gather feedback on documents, spreadsheets, presentations, webpages, images, PDFs, or text files — from the device of their choice.

    AWS further enhanced its reliable, secure block storage service, Amazon Elastic Block Store (EBS), announcing new encryption capabilities, introducing a new lower-cost SSD-backed EBS volume type, and reducing prices on EBS Provisioned IOPS volumes by 35 percent.

Financial Guidance
The following forward-looking statements reflect’s expectations as of July 24, 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.

Third Quarter 2014 Guidance
    Net sales are expected to be between $19.7 billion and $21.5 billion, or to grow between 15% and 26% compared with third quarter 2013.

    Operating loss is expected to be between $810 million and $410 million, compared to $25 million in third quarter 2013.

    This guidance includes approximately $410 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.

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by: former ebayer This user has validated their user name.

Fri Jul 25 12:38:17 2014

This article is a little misleading. Yes, their sales are up but their operating costs have increased dramtaically. Amazon stock price plunged over 9% yesterday. USA Today said the high cost of Prime was not expected by Amazon. So they are in the red again. I have a prime account and tried ordering some things from them yesterday. Many of the prime items were sold out with a 1 to 3 month wait. So I googled the books I wanted to order . Guess where they showed up. Walmart. I checked prices and they were less than Amazon. Walmart also offered free shipping on orders over $50 . My order came to $51 (planning). I recieved an e-mail today. It is on its way. I did have to pay sales tax of $3 but still less expensive than Amazon Prime. And I dislike Walmart. But the competition from Walmart and other sellers will be tough.Here is another aricle on Amazon from the Wall Street Journal.
Not as rosy as your article. Thanks      

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This user has validated their user name. by: Rexford

Fri Jul 25 12:38:50 2014

If I get on my hands and knees and beg this company to open the clothing and accessories category to all sellers will it happen?

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by: Xander This user has validated their user name.

Fri Jul 25 12:39:08 2014

Sure seems like Amazon is doing well. I'm sure all those former ebay sellers who switched from buying on ebay to Amazon contribute a little something to their growth.

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This user has validated their user name. by: Basset

Fri Jul 25 16:38:31 2014

@former ebayer

Completely understand the scenario. I can't tell you the last time I place an amazon order. Walmart (love 'em or hate 'em) is getting better and better on the online sales thing.

On grocery and personal care items that we always use I keep a running shopping basket as supplies get low, then as soon as we hit the $50 mark I send off the order.

We have started using over on many things like Alka-Seltzer, Pepcid (no comments on my cooking), OTC allergy and pain reliever, skincare, socks, ziplock bags, chapstick - really just about everything in the personal care realm. And it is soooo much nicer than a trip to Wally World.

They also have a fairly decent offering of ''USA Made'' Stuff on the site. I would like to see that section grow!

Drugstore is close in price, and sometimes has things Walmart does not. Their ''Free'' threshold is only $35. So I still rate them pretty high.

For our household, Amazon is trailing the above two, and also eBay for our online business.  A few years ago, it would have come in first or second.

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by: former ebayer This user has validated their user name.

Fri Jul 25 22:38:44 2014

Thanks for the info Bassett. I had not tried or heard of I will take a look. My direction of buying is sometimes dictated by Google search results. After selling on ebay I said I would never buy from ebay them again. So I went to Amazon
Now I am looking at whoever is least expensive. Wayfair has been coming at less than Amazon and free shipping on a lot of bulky items. I doubt whether Amazon will ever get into the used side of selling. ebay wants to be the other Amazon but Amazon does not want to be the other ebay. Changing world we live in.

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This user has validated their user name. by: Rexford

Sat Jul 26 12:09:52 2014

I actually would not want to sell used clothing and accessories on Amazon.  I would only want to sell new.  With that A-Z guarantee I think you'd be asking for a whole lot of trouble selling used on Amazon no matter how good the condition would be.

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by: Moonwishes This user has validated their user name.
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Mon Jul 28 09:02:17 2014

I got very turned off Walmart last year when I ordered something and in the same week got my one and only phishing email supposedly from Walmart the same week. My order never arrived and when they sent a replacement order that wasn't correct, I demanded my money back as it was definitely wrong and being as I had been using the product for several years, I knew by seeing the photo and description I had ordered the same thing. I also reccommended that they cheack out interal operations as to why the one and only time I ordered from them I got that phishing email and they gave me the run around and telling me what not to do if I suspected an email was fake. I already knew all that, but I suspect that one or more of the warehouse guys took my package, and have a running scam going with info they pick up via the ordering info they see. Walmart--no thanks!

I've never had a problem that harmed me from Amazon (although they made a few goofs that cost them) I get my orderes quickly.

For what I sell on Amazon, for the first six months of this year, the first quarter was 38% of gross sales. The seond quarter was 61% of gross sales. Not a bad increase in cash and I don't use FBA!

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