10-QPeriod: Q1 FY2011

AMAZON COM INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 27, 2011For Securities:AMZN

Summary

Amazon.com, Inc. reported its first-quarter results for 2011, showing robust revenue growth driven by strong performance in North America. Consolidated net sales increased by 38% year-over-year to $9.86 billion, with North America sales up 45% and International sales up 31%. Despite this top-line growth, operating income declined by 18% to $322 million, primarily due to increased operating expenses, particularly in fulfillment, marketing, and technology and content. The company continued to invest heavily in its infrastructure and technology to support future growth, with capital expenditures rising significantly. From a cash flow perspective, the company experienced a net cash used in operating activities of $1.59 billion for the quarter, a notable outflow compared to the previous year's $1.1 billion outflow. This was largely driven by significant increases in inventory and accounts payable. However, investing activities provided a net cash inflow of $390 million, primarily from the sale and maturity of marketable securities, which helped offset some of the operating cash outflow. The company maintained a strong liquidity position with cash and cash equivalents and marketable securities totaling $6.9 billion at the end of the period.

Financial Highlights

47 data points
Beta

Revenue

$13.19B

42.3% Gross Margin

Net Income

$130.00M

1.0% Net Margin

EPS (Diluted)

$0.01

Total Assets

$16.88B

Cash & Equivalents

$2.64B

Free Cash Flow

-$1.88B

Financial Statements
Beta
Revenue$13.19B
Cost of Revenue$7.61B
Gross Profit$5.58B
Operating Expenses$9.54B
Operating Income$322.00M
Interest Expense$12.00M
Net Income$130.00M
EPS (Basic)$0.01
EPS (Diluted)$0.01
Shares Outstanding (Basic)9.06B
Shares Outstanding (Diluted)9.20B

Key Highlights

  • 1Consolidated net sales grew 38% to $9.86 billion, driven by a 45% increase in North America sales and a 31% increase in International sales.
  • 2Operating income decreased by 18% to $322 million, indicating increased operating expenses relative to revenue growth.
  • 3Net cash used in operating activities was $1.59 billion for the quarter, a significant outflow driven by changes in working capital, particularly inventory.
  • 4Capital expenditures for fixed assets, including internal-use software and website development, nearly doubled to $298 million compared to the prior year's first quarter.
  • 5The company's liquidity remains strong, with cash, cash equivalents, and marketable securities totaling $6.9 billion at the end of the period.
  • 6Sales from third-party sellers on Amazon's platforms represented 33% of units sold, highlighting the continued growth of the marketplace model.
  • 7The company announced the acquisition of Quidsi, Inc. in April 2011 for approximately $500 million.

Frequently Asked Questions

Amazon's revenue growth in Q1 2011 was primarily driven by a 38% increase in consolidated net sales, with strong performance in the North America segment showing a 45% increase and the International segment growing by 31%.

Despite robust sales growth, Amazon's operating income decreased by 18% due to significant increases in operating expenses. Key areas contributing to this rise included fulfillment costs, marketing expenses, and technology and content investments, which outpaced revenue growth.

Amazon experienced a net cash used in operating activities of $1.59 billion in Q1 2011. This outflow was significantly influenced by increases in inventory and accounts payable, as well as other working capital changes. This represents a larger cash outflow compared to the $1.1 billion used in the same period of the prior year.

For the second quarter of 2011, Amazon guided for net sales to be between $8.85 billion and $9.65 billion, representing growth of 35% to 47% compared to Q2 2010. Operating income was projected to be between $95 million and $245 million, indicating a potential decline compared to the prior year.