10-QPeriod: Q1 FY2004

AMAZON COM INC Quarterly Report for Q1 Ended Mar 31, 2004

Filed April 23, 2004For Securities:AMZN

Summary

Amazon.com, Inc. reported a net income of $111.1 million for the first quarter of 2004, a significant turnaround from a net loss of $10.1 million in the same period of 2003. This profitability was driven by a substantial 41% increase in consolidated net sales to $1.53 billion, fueled by strong performance in both North America and International segments. The company's focus on operational efficiencies and leveraging fixed costs contributed to a 73% growth in consolidated segment operating income to $117 million, with operating margins improving to 8% from 6% year-over-year. Despite increased spending in technology and content, and higher general administrative costs, Amazon demonstrated a more favorable cost structure relative to its revenue growth. Financially, Amazon.com ended the quarter with $768.6 million in cash and cash equivalents, a decrease from the prior quarter primarily due to debt redemptions. The company continued to manage its long-term debt, redeeming $150 million of its 4.75% Convertible Subordinated Notes. While the company acknowledges the positive net income, it cautions that volatility in "Remeasurements and other" and "Stock-based compensation" could impact future results. The strong revenue growth, improved profitability, and positive cash flow from operations highlight Amazon's strengthening financial position and continued expansion.

Key Highlights

  • 1Net income turned positive at $111.1 million, a significant improvement from a $10.1 million loss in Q1 2003.
  • 2Consolidated net sales increased by 41% year-over-year to $1.53 billion.
  • 3Consolidated segment operating income grew by 73% to $117 million, with margins improving to 8%.
  • 4International segment sales showed robust growth, increasing by 80% year-over-year.
  • 5The company redeemed $150 million of its 4.75% Convertible Subordinated Notes during the quarter.
  • 6Stock-based compensation expense decreased significantly to $7.1 million from $27.3 million in the prior year, partly due to variable accounting treatment adjustments.
  • 7Cash and cash equivalents stood at $768.6 million at the end of the quarter, reflecting debt redemptions.

Frequently Asked Questions

Amazon.com reported a net income of $111.1 million for the first quarter of 2004, a significant improvement compared to a net loss of $10.1 million in the same period of 2003.

Consolidated net sales increased by 41% year-over-year, reaching $1.53 billion. The International segment was a strong performer, with sales growing by 80%.

Amazon had $768.6 million in cash and cash equivalents at the end of the quarter. During the quarter, the company redeemed $150 million of its 4.75% Convertible Subordinated Notes, indicating active management of its debt obligations.

The improvement in operating income is attributed to strong revenue growth, improved operational efficiencies, the leveraging of fixed costs over increased sales volume, and a reduction in stock-based compensation expense compared to the prior year.