10-QPeriod: Q1 FY2017

AMAZON COM INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 28, 2017For Securities:AMZN

Summary

Amazon.com, Inc. reported solid revenue growth in the first quarter of 2017, with total net sales increasing by 23% year-over-year to $35.714 billion. This growth was driven by strong performance across all segments, particularly AWS, which saw a 43% increase in sales. Despite revenue expansion, operating income slightly decreased to $1.005 billion from $1.071 billion in the prior year's quarter. This was primarily due to increased operating expenses in fulfillment, technology, and content, reflecting ongoing investments in the company's infrastructure and services. The company also reported a significant improvement in net income, which rose to $724 million from $513 million in Q1 2016, leading to a diluted EPS of $1.48. Cash flow from operations was negative for the quarter, at $(1.590) billion, a slight improvement from $(1.953) billion in the prior year. However, free cash flow (excluding capital lease principal repayments) for the trailing twelve months showed strong growth, reaching $10.217 billion. The company maintained a healthy balance sheet with $15.440 billion in cash and cash equivalents as of March 31, 2017. Amazon also announced its intention to acquire Souq Group Ltd. for $580 million, signaling continued strategic expansion.

Financial Highlights

54 data points
Beta

Revenue

$35.71B

37.2% Gross Margin

Net Income

$724.00M

2.0% Net Margin

EPS (Diluted)

$0.07

Total Assets

$80.97B

Cash & Equivalents

$15.44B

Free Cash Flow

-$3.48B

Financial Statements
Beta
Revenue$35.71B
Cost of Revenue$22.44B
Gross Profit$13.27B
Operating Expenses$34.71B
Operating Income$1.00B
Interest Expense$139.00M
Net Income$724.00M
EPS (Basic)$0.08
EPS (Diluted)$0.07
Shares Outstanding (Basic)9.54B
Shares Outstanding (Diluted)9.80B

Key Highlights

  • 1Total net sales grew 23% year-over-year to $35.714 billion.
  • 2AWS segment sales increased by a robust 43% to $3.661 billion.
  • 3Net income increased by 41% to $724 million, with diluted EPS of $1.48.
  • 4Operating income saw a slight decrease of 6% to $1.005 billion, impacted by increased operating expenses.
  • 5Free cash flow for the trailing twelve months ended March 31, 2017, reached $10.217 billion.
  • 6Amazon announced the acquisition of Souq Group Ltd. for $580 million, pending customary closing conditions.

Frequently Asked Questions

Amazon reported a 23% increase in total net sales, reaching $35.714 billion in the first quarter of 2017, up from $29.128 billion in the same period of 2016. This growth was consistent across its segments, with North America sales up 24%, International sales up 16%, and AWS sales up 43%.

Net income significantly increased by 41% to $724 million in Q1 2017, compared to $513 million in Q1 2016. This translated to diluted earnings per share of $1.48, up from $1.07. However, operating income experienced a slight decline of 6% to $1.005 billion, primarily due to increased operating expenses related to investments in fulfillment, technology, and content.

Amazon's cash flow from operations was $(1.590) billion in Q1 2017, which was an improvement from $(1.953) billion in Q1 2016. Free cash flow for the trailing twelve months was strong at $10.217 billion. As of March 31, 2017, the company had $15.440 billion in cash and cash equivalents, indicating a healthy liquidity position to fund operations and strategic initiatives like the proposed acquisition of Souq Group Ltd.

The increase in operating expenses, which impacted operating income, was primarily driven by investments in expanding Amazon's fulfillment network, increased spending on technology and content (including AWS infrastructure), and marketing efforts. These investments are aimed at supporting business growth, enhancing customer experience, and improving operational efficiency.