01—Abstract
Summary
Summary of the 10-K filed January 29, 2010. Cited figures are marked; the original filing is the authoritative source.
Amazon.com, Inc. reported robust performance for the fiscal year ended December 31, 2009, demonstrating significant growth in net sales and operational income.
The company's strategic focus on customer-centricity, expanding selection, and competitive pricing continues to drive top-line growth across both its North America and International segments. Investments in technology, including Amazon Web Services and the Kindle e-reader, along with the expansion of its third-party seller services, underscore Amazon's commitment to innovation and diversification. Financially, Amazon exhibited strong cash flow generation, driven by increasing operating income and efficient working capital management.
While the company continues to invest heavily in infrastructure and technology, the focus on long-term, sustainable free cash flow growth remains paramount. The report highlights the company's proactive approach to managing risks, including competitive pressures, international expansion challenges, and operational complexities, while maintaining a solid balance sheet and liquidity position.
02—Key points
Key Highlights
- Net sales grew to $24.5 billion in 2009, up from $19.17 billion in 2008, representing a 28% increase.
- Income from operations increased to $1.13 billion in 2009, a significant rise from $842 million in 2008.
- Net income for 2009 was $902 million, up from $645 million in 2008.
- Free cash flow showed substantial growth, reaching $2.92 billion in 2009 compared to $1.36 billion in 2008.
- The company's operations are primarily divided into two segments: North America and International, both showing strong year-over-year net sales growth.
- Amazon continues to invest heavily in technology and content, recognizing its critical role in enhancing customer experience and operational efficiency.
- Despite intense competition and ongoing global economic uncertainties, Amazon demonstrates resilience and a clear strategy for continued expansion and profitability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Amazon.com Inc kept $0.04.
- Revenue$24.51B100.0%
- Cost of revenue−$18.98B77.4%
- Gross profit$5.53B22.6%
- Operating costs−$4.40B18.0%
- Operating income$1.13B4.6%
- Interest, other & tax−$227.0M0.9%
- Net income$902.0M3.7%
Where FY2009 revenue went
$24.51B- Cost of revenue: $18.98B, 77% of revenue
- Operating costs: $4.40B, 18% of revenue
- Net income: $902.0M, 3.7% of revenue
- Interest, other & tax: $227.0M, 0.9% of revenue
Kept 3.7% as net incomeNet income $902.0M · 3.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed January 29, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $24.51B$19.17B | +27.9% |
| Cost of Revenue | $18.98B$14.90B | +27.4% |
| Gross Profit | $5.53B$4.27B | +29.5% |
| Operating Expenses | $4.40B$3.43B | +28.4% |
| Operating Income | $1.13B$842.00M | +34.1% |
| Interest Expense | $34.00M$71.00M | −52.1% |
| Net Income | $902.00M$645.00M | +39.8% |
| EPS (Basic) | $0.10$0.08 | +36.8% |
| EPS (Diluted) | $0.10$0.07 | +36.9% |
| Shares Outstanding (Basic) | 8.66B8.46B | +2.4% |
| Shares Outstanding (Diluted) | 8.84B8.64B | +2.3% |
05—Questions
Frequently Asked Questions
What were Amazon's key revenue drivers in 2009?
Amazon's net sales in 2009 reached $24.5 billion, a 28% increase from the previous year. This growth was driven by increased unit sales across both North America and International segments, fueled by competitive pricing, expanded product selection, improved in-stock availability, and growth in newer categories like electronics and general merchandise. The company also benefited from the increasing contributions of third-party seller services and its expanding digital initiatives like Amazon Web Services and the Kindle e-reader.
How did Amazon manage its expenses and profitability in 2009?
Amazon focused on managing its expenses by leveraging fixed costs and improving operational efficiencies, while continuing to invest in technology and content. Gross profit increased to $5.53 billion, and income from operations rose to $1.13 billion, reflecting effective cost management and sales growth. The company's strategy of reinvesting profits into strategic initiatives, such as expanding fulfillment capacity and technological infrastructure, is balanced with a focus on driving long-term profitability.
What are the primary risks and challenges highlighted by Amazon in its 2009 filing?
Amazon identified several key risks including intense competition from both online and physical retailers, the strain on its management and operational resources due to rapid expansion, and the inherent risks associated with entering new product, service, and geographic markets. Other significant risks include potential fluctuations in operating results, challenges in international market expansion, the complexities of optimizing fulfillment centers, seasonality impacting operations, and potential disruptions from system interruptions or security breaches. The company also noted the evolving regulatory landscape for e-commerce and taxation as ongoing concerns.
What was Amazon's cash flow situation and liquidity in 2009?
Amazon demonstrated strong cash flow generation in 2009, with net cash provided by operating activities increasing significantly to $3.29 billion. Free cash flow more than doubled to $2.92 billion, reflecting improved operating income and working capital management. The company's cash, cash equivalents, and marketable securities balance stood at $6.4 billion at year-end, providing ample liquidity to fund operations, investments, and strategic initiatives.
06—Continue