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

October 27, 2016 4:01 PM

SEATTLE--(BUSINESS WIRE)-- Amazon.com, Inc. (NASDAQ: 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

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

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 September 30, Nine Months Ended September 30, Twelve Months Ended 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 software and website development, and other amortization, including capitalized content costs 2,084 1,599 5,819 4,529 7,572 5,908
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 and website development, net (1,841 ) (1,195 ) (4,731 ) (3,280 ) (6,040 ) (4,424 )
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 September 30, Nine Months Ended 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 September 30, Nine Months Ended 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, and $3 19 (56 ) 133 (170 )
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 income (expense), net,” net of tax of $(1), $(1), $(2), and $(1) 2 1 4 3
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 September 30, Nine Months Ended 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 September 30, Nine Months Ended 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 and website development, net -- TTM $ 4,607 $ 4,424 $ 4,589 $ 4,897 $ 5,395 $ 6,040 37 %
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 acquired under capital leases -- TTM (3) $ (492 ) $ 637 $ 2,493 $ 1,612 $ 2,547 $ 3,434 440 %
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 F/X 32 % 35 % 28 % 32 % 32 % 29 % N/A
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 net sales 77 % 78 % 79 % 80 % 80 % 81 % N/A
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 F/X 31 % 32 % 31 % 33 % 36 % 36 % N/A
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 net sales 69 % 70 % 71 % 72 % 73 % 74 % N/A
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 personnel) 183,100 222,400 230,800 245,200 268,900 306,800 38 %

Amazon.com, Inc.Certain Definitions

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Seller Accounts

AWS Customers

Units

Amazon.com Investor Relations

Darin Manney, [email protected]

www.amazon.com/ir

or

Amazon.com Public Relations

Ty Rogers, [email protected]

www.amazon.com/about

Source: Amazon.com, Inc.

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