‘We believe putting customers first is
the only reliable way to create lasting value for shareholders’, said Thomas J.
Szkutak, Senior Vice President and Chief Financial Officer.
Third
Quarter Financial Results
Trailing 12-month operating cash flow
increased 48% to $4.98 billion. Trailing 12-month free cash flow decreased 63%
to $388 million. Trailing 12-month capital expenditures were $4.59 billion.
This amount includes $1.4 billion in purchases of the company’s previously
leased corporate office space as well as property for development of additional
corporate office space located in Seattle, Washington, which was purchased in
the fourth quarter of 2012.
Return on invested capital was 3%, down
from 10%. ROIC is TTM free cash flow divided by average total assets minus
current liabilities excluding the current portion of long-term debt over five
quarter ends. The combination of common stock and stock-based awards
outstanding was 475 million shares compared with 469 million shares.
Worldwide revenue grew 24% to $17.09
billion or 26% excluding the $332 million unfavorable impact from
year-over-year changes in the foreign exchange rate. The management is grateful
to its customers who continue to take advantage of low prices, vast selection
and shipping offers.
Media revenue increased to $5.03
billion, up 9% or 13% excluding foreign exchange. EGM revenue increased to
$11.05 billion, up 29% or 31% excluding foreign exchange. Worldwide EGM
increased to 65% of worldwide sales, up from 62%. Worldwide paid unit growth
was 29%. Active customer accounts exceeded 224 million. Worldwide active seller
accounts were more than 2 million. Seller units represented 40% of paid units.
Operating
Expenses, Excluding Stock-Based Compensation
Cost of sales was $12.37 billion or
72.3% of revenue compared with 74.7%. Fulfillment, marketing, technology and
content and G&A combined was $4.46 billion, or 26.1% of sales, up
approximately 250 basis points year-over-year. Fulfillment was $1.96 billion,
or 11.5% of revenue, compared with 10.5%. Tech and content was $1.58 billion,
or 9.2% of revenue compared with 7.8%. Marketing was $671 million, or 3.9% of
revenue, compared with 3.8%.
Segment
Results
In the North America segment, revenue
grew 31% to $10.3 billion. Media revenue grew 18% to $2.61 billion. EGM revenue
grew 33% to $6.73 billion, representing 65% of North America revenues up from
64%. North America segment operating income increased 1% to $295 million, a
2.9% operating margin.
In the International segment, revenue
grew 15% to $6.79 billion. Adjusting for the $327 million year-over-year
unfavorable foreign exchange impact, revenue growth was 20%. Media revenue
increased 2% to $2.42 billion or 9% excluding foreign exchange. And EGM revenue
grew 23% to $4.32 billion, or 28% excluding foreign exchange. EGM now
represents 64% of International revenues up from 59%.
International segment operating loss was
$28 million compared to a $59 million loss in the prior period. Consolidated
segment operating income interested 15% to $267 million or 1.6% of revenue down
approximately 10 basis points year-over-year. Excluding the unfavorable impact
from foreign exchange CSOI increased 18%.
GAAP operating loss was $25 million
compared to a $28 million in the prior year period. The company’s income tax
benefit was $12 million, GAAP net loss was $41 million $0.09 per diluted share
compared with net loss of $274 million or $0.60 per diluted share. The third
quarter 2012 included a loss of $169 million or $0.37 per diluted share related
to the company’s equity method share of losses recorded by Living Social
primarily attributable to impairment charge of certain assets including
goodwill.
Turning to the balance sheet, cash and
marketable securities increased $2.44 billion year-over-year to $7.69 billion.
Inventory increased 20% to $6.07 billion and inventory turns were 9.2, down
from 9.7 turns a year ago as Amazon expanded selection, improved in stock
levels and introduced new product categories. Accounts payable increased 20% to
$10.04 billion and accounts payable days was 75 consistent with the prior year.
Guidance
For Q4 2013, Amazon expects net sales of
between $22.5 billion and $26.5 billion, a growth between 10% and 25%. This
guidance anticipates approximately 125 basis points of unfavorable impact from
foreign exchange rates.
GAAP operating income or loss will be between a $500
million loss and $500 million in income compared to $405 million income in the
fourth quarter of 2012. This includes approximately $350 million for
stock-based compensation and amortization of intangible assets.
The company anticipates consolidated
segment operating income or loss, which excludes stock-based compensation and
other expense to be between $150 million loss and $850 million income compared
to $678 million income in fourth quarter 2012.
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