Q3 2011 Financial Results Conference Call Slides
Q3 2011 Financial Results Conference Call Slides
This presentation may contain forward-looking statements which are inherentlydifficult to predict. Actual results could differ materially for a variety of reasons,including fluctuations in foreign exchange rates, changes in global economicconditions and consumer spending, world events, the rate of growth of theInternet and online commerce, the amount that Amazon.com invests in newbusiness opportunities and the timing of those investments, the mix of productssold to customers, the mix of net sales derived from products as compared withservices, the extent to which we owe income taxes, competition, managementof growth, potential fluctuations in operating results, international growth andexpansion, the outcomes of legal proceedings and claims, fulfillment centeroptimization, risks of inventory management, seasonality, the degree to whichthe Company enters into, maintains and develops commercial agreements,acquisitions and strategic transactions, and risks of fulfillment throughput andproductivity. Other risks and uncertainties include, among others, risks related tonew products, services and technologies, system interruptions, governmentregulation and taxation, payments, and fraud. In addition, the current globaleconomic climate amplifies many of these risks. More information about factorsthat potentially could affect Amazon.com’s financial results is included inAmazon.com’s filings with the Securities and Exchange Commission, including itsmost recent Annual Report on Form 10-K and subsequent filings.
Additional information relating to certain of our financial measures containedherein is available in the appendix to our presentation, our most recent earningsrelease and at our website at www.amazon.com/ir under ‘Financial Documents’.
2
$0
$2,000
$4,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Free Cash Flow -- TTM (1)
(1) Free Cash Flow, a non-GAAP financial measure, is GAAP Operating Cash Flow Less Purchases of Fixed Assets. See appendix for a reconciliation of Operating Cash Flow to Free Cash Flow.
Down 17% Y/Y
Long Term Goal – Optimize Free Cash Flow
$1,829MM
$1,525MM
MM
3
449 455
16 14
0
300
600
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Common Shares Outstanding Stock-Based Awards Outstanding
Efficiently Managing Dilution – Up 1% Y/Y
MMShares
469465
4
0%
40%
80%
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
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
28%
17%
5
$0
$10,000
$20,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Net Sales
Up 44% Y/Y (39% F/X Adjusted)
$7,560MM
$10,876MM
MM
6
$0
$30,000
$60,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Net Sales -- TTM
58% of WW TTM Revenue from EGM, Up From 51% Y/Y
MM
7
Up 42% Y/Y; 39% F/X Adjusted
$43,594MM
$30,776MM
$17,005MM39%
$25,191MM58%
$1,398MM3%
WW Revenue Mix
$0
$350
$700
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
$268MM
$79MM
MM
GAAP Operating Income
8
Down 71% Y/Y
$0
$1,000
$2,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Down 24% Y/Y
$1,408MM
$1,076MM
MM
GAAP Operating Income – TTM (1)
9
$0
$400
$800
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Down 35% Y/Y
$401MM
$260MM
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
$0
$1,500
$3,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Down 9% Y/Y
$1,910MM$1,734MM
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
$0
$300
$600
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Down 73% Y/Y
$231MM
$63MM
MM
GAAP Net Income
12
$0
$5,000
$10,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Net Sales
Segment Results – North America
TTM Net Sales Over $24.0B
$4,126MM
$5,932MM
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.
Up 44% Y/Y
$0
$200
$400
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Operating Income (1)
MM
Down 23% Y/Y
$186MM
$144MM
13
$0
$5,000
$10,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Net Sales
Segment Results – International
TTM Net Sales Over $19.5B
$3,434MM
$4,944MM
MM
Up 44%Y/Y; 33% F/X Adjusted
$0
$250
$500
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Operating Income
MM
$215MM
$116MM
14
Down 46% Y/Y; 55% F/X Adjusted
$0
$2,000
$4,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
North America
Supplemental Revenue Highlights – Media
Books, Music, Movies, Video Games and Consoles, Software and Digital Downloads
$1,591MM
$1,927MM
MM
Up 21% Y/Y
15
$0
$2,000
$4,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
International
$2,226MM
$1,759MM
Up 27% Y/Y; 17% F/X adjusted
$0
$3,000
$6,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
North America
Supplemental Revenue Highlights –Electronics & Other General Merchandise (EGM)
Computers & Office, Electronics, Home & Garden, Grocery, Health & Beauty, Toys, Kids & Baby, Apparel, Shoes & Jewelry, Sports & Outdoors, Tools, Auto & Industrial and Digital Devices
$2,326MM
$3,635MM
MM
$0
$3,000
$6,000
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
International
Up 63% Y/Y; 51% F/X Adjusted
MM
Up 56% Y/Y
$1,644MM
$2,681MM
16
$0
$250
$500
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
North America
Supplemental Revenue Highlights – Other
Amazon Web Services, Marketing and Promotional Activities, Other Seller Sites, & Co-branded Credit Cards
$209MM
$370MM
MM
$0
$30
$60
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
International
MM
Up 77% Y/Y
$31MM
$37MM
17
Up 21% Y/Y; 13% F/X Adjusted
Appendix
18
Free Cash Flow Reconciliation -- TTM
Q3 ‘10 Q4 ‘10 Q1 ‘11 Q2 ‘11 Q3 ‘11
Operating Cash Flow $ 2,617 $ 3,495 $ 3,033 $ 3,205 $ 3,114
Purchases of Fixed Assets, Including Internal-Use Software and Website Development (788) (979) (1,138) (1,374) (1,589)
Free Cash Flow $ 1,829 $ 2,516 $ 1,895 $ 1,831 $ 1,525
$MM
19
Q3 ‘10 Q4 ‘10 Q1 ‘11 Q2 ‘11 Q3 ‘11
Consolidated Segment Operating Income $ 401 $ 622 $ 465 $ 386 $ 260
Stock-Based Compensation (107) (119) (110) (144) (144)
Other Operating Income (Expense), Net (26) (29) (33) (41) (37)
GAAP Operating Income $ 268 $ 474 $ 322 $ 201 $ 79
Consolidated Segment Operating Income Reconciliation
$MM
20
Q3 ‘10 Q4 ‘10 Q1 ‘11 Q2 ‘11 Q3 ‘11
Consolidated Segment Operating Income $ 1,910 $ 1,936 $ 1,894 $ 1,874 $ 1,734
Stock-Based Compensation (404) (424) (448) (481) (518)
Other Operating Income (Expense), Net (98) (106) (112) (128) (140)
GAAP Operating Income $ 1,408 $ 1,406 $ 1,334 $ 1,265 $ 1,076
Consolidated Segment Operating Income Reconciliation -- TTM
$MM
21