Q4 2013 amazon.com, inc. earnings conference call slides
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Q4 2013 Financial Results Conference Call Slides
This presentation may contain forward-looking statements which are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including 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, 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 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, including its most recent Annual Report on Form 10-K and subsequent filings.
Additional information relating to certain of our financial measures contained herein is available in the appendix to our presentation, our most recent earnings release and at our website at www.amazon.com/ir.
2
Free Cash Flow -- TTM (1)
(1) Free Cash Flow, a non-GAAP financial measure, is GAAP Operating Cash Flow Less Purchases of Property and Equipment. See appendix for a reconciliation of Operating Cash Flow to Free Cash Flow.
Long Term Goal – Optimize Free Cash Flow
MM
3
$395MM
$2,031MM
$0
$2,000
$4,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
454 459
16 17
0
300
600
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Common Shares Outstanding Stock-Based Awards Outstanding
470 476
Efficiently Managing Dilution
MM Shares
4
4%
13%
0%
10%
20%
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Return on Invested Capital -- TTM (1)
(1) ROIC = TTM Free Cash Flow divided by average Total Assets minus Current Liabilities, excluding current portion of our Long-Term Debt, over 5 quarter ends.
Efficient Capital Structure
5
$21,268MM
$25,587MM
$0
$20,000
$40,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Net Sales
Up 20% Y/Y (22% F/X Adjusted)
MM
6
$61,093MM
$74,452MM
$0
$50,000
$100,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Up 22% Y/Y; 24% F/X Adjusted
Net Sales -- TTM
66% of WW TTM Revenue from EGM, Up from 63% Y/Y
MM
7
WW Media
WW Electronics & Other General Merchandise(EGM)
WW Other
WW Revenue MixWW Revenue Mix
66%
5%
29%
$48,802MM
$3,934MM
$21,716MM
$405MM
$510MM
-$100
$300
$700
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
MM
GAAP Operating Income (Loss)
8
$676MM$745MM
$0
$500
$1,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
MM
GAAP Operating Income – TTM
9
$678MM
$876MM
$0
$600
$1,200
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Up 29% Y/Y
MM
Consolidated Segment Operating Income (1)
(1) Consolidated Segment Operating Income (CSOI), a non-GAAP financial measure, excludes Stock-Based Compensation and Other Operating Income (Expense). See appendix for a reconciliation of CSOI to GAAP Operating Income.
10
$1,668MM
$1,993MM
$0
$1,500
$3,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Up 20% Y/Y
MM
Consolidated Segment Operating Income -- TTM (1)
(1) Consolidated Segment Operating Income (CSOI), a non-GAAP financial measure, excludes Stock-Based Compensation and Other Operating Income (Expense). See appendix for a reconciliation of CSOI to GAAP Operating Income.
11
$97MM
$239MM
-$100
$0
$100
$200
$300
$400
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
MM
GAAP Net Income (Loss)
12
Segment Results – North America
TTM Net Sales $44.5B
MM
(1) A majority of our costs for "Technology and Content" are incurred in the United States and most of these costs are allocated to our North America segment.
$608MM
$725MM
$0
$500
$1,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Operating Income (1)
Up 19% Y/Y
MM
13
$12,175MM
$15,331MM
$0
$10,000
$20,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Net Sales
Up 26% Y/Y
$9,093MM
$10,256MM
$0
$5,000
$10,000
$15,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Net Sales
Up 13% Y/Y; up 15% F/X adjusted
Segment Results – International
TTM Net Sales $29.9B
MM
$70MM
$151MM
-$75
$0
$75
$150
$225
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Operating Income (Loss)
Up 116% Y/Y; up 119% F/X adjusted
MM
14
$2,903MM
$3,513MM
$0
$2,500
$5,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
North America
Up 21% Y/Y
Supplemental Revenue Highlights – Media
Books, Music, Movies, Video Games and Consoles, Software, and Digital Downloads
MM
15
$3,611MM $3,714MM
$0
$2,500
$5,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
International
Up 3% Y/Y; Up 6% F/X adjusted
MM
$8,503MM
$10,648MM
$0
$7,000
$14,000
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
North America
Up 25% Y/Y
Supplemental Revenue Highlights – Electronics & Other General Merchandise (EGM)
Computers and Office, Electronics, Home and Garden, Grocery, Health and Beauty, Toys, Kids and Baby, Apparel, Shoes and Jewelry, Sports and Outdoors, Tools, Auto and Industrial, and
Digital Devices
MM
$5,431MM
$6,478MM
$0
$4,500
$9,000
Q4 '12 Q1 '13 Q2 '13 Q2 '13 Q4 '13
International
Up 19% Y/Y; 21% F/X adjusted
MM
16
$769MM
$1,170MM
$0
$750
$1,500
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
North America
Up 52% Y/Y
Supplemental Revenue Highlights – Other
Amazon Web Services (North America), Advertising Services, and Co-branded Credit Cards
MM
$51MM
$64MM
$0
$40
$80
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
International
Up 25% Y/Y; 27% F/X adjusted
MM
17
Appendix
18
Free Cash Flow Reconciliation -- TTM
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13
Operating Cash Flow $ 4,180 $ 4,245 $ 4,532 $ 4,977 $ 5,475
Purchases of Property and Equipment, Including Internal-Use Software and Website Development
(3,785)
(4,068)
(4,267)
(4,589)
(3,444)
Free Cash Flow $ 395 $ 177 $ __265 $ __388 $ 2,031
$MM
19
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Consolidated Segment Operating Income $ 678 $ 441 $ 409 $ 267 $ 876
Stock-Based Compensation (235) (229) (298) (281) (326)
Other Operating Income (Expense), Net (38) (31) (32) (11) (40)
GAAP Operating Income (Loss) $ 405 $ 181 $ 79 $ (25) $ 510
Consolidated Segment Operating Income Reconciliation
$MM
20
Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Consolidated Segment Operating Income $ 1,668 $ 1,711 $ 1,760 $ 1,795 $ 1,993
Stock-Based Compensation (833) (901) (978)
(1,043)
(1,134)
Other Operating Income (Expense), Net (159) (145) (145) (112) (114)
GAAP Operating Income $ 676 $ 665 $ 637 $ 640 $ 745
Consolidated Segment Operating Income Reconciliation -- TTM
$MM
21
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