AMAZON COM INC Quarterly Report for Q3 Ended Sep 30, 2010

Summary

Amazon.com, Inc. (AMZN) reported strong financial performance for the third quarter and the first nine months of 2010, demonstrating robust revenue growth and improved profitability. Net sales increased by 39% year-over-year in the third quarter to $7.56 billion, driven by significant growth in both North America (45%) and International (32%) segments. This sales momentum continued through the first nine months, with net sales up 42% to $21.26 billion. Profitability also showed a positive trend, with net income for the third quarter rising 16% to $231 million, translating to diluted earnings per share of $0.51. For the nine-month period, net income increased by 42% to $736 million. The company continues to invest heavily in technology and infrastructure, as evidenced by the substantial increase in capital expenditures, supporting its long-term growth strategy. Despite significant investments, Amazon maintained a healthy operating cash flow and ended the period with a strong liquidity position.

Key Highlights

• 1Net sales surged 39% year-over-year to $7.56 billion in Q3 2010, and 42% for the first nine months to $21.26 billion.
• 2Net income grew 16% to $231 million in Q3 2010 ($0.51 diluted EPS) and 42% to $736 million for the first nine months.
• 3North America segment sales grew by a strong 45% in Q3 2010, while International segment sales increased by 32%.
• 4The company significantly increased capital expenditures, investing in technology infrastructure (including AWS), fulfillment capacity, and corporate office space.
• 5Free cash flow for the trailing twelve months ended September 30, 2010, was $1.83 billion.
• 6Amazon ended the quarter with $5.9 billion in cash, cash equivalents, and marketable securities, indicating a strong liquidity position.
• 7Stock-based compensation expense was $107 million for Q3 2010, an increase from $90 million in Q3 2009.

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