INTERNATIONAL. Amazon.com (NASDAQ:AMZN) today announced financial results for its second quarter ended June 30, 2010.
Operating cash flow was US$2.56 billion for the trailing twelve months, compared with US$1.88 billion for the trailing twelve months ended June 30, 2009. Free cash flow increased 29% to US$1.99 billion for the trailing twelve months, compared with US$1.54 billion for the trailing twelve months ended June 30, 2009.
Common shares outstanding plus shares underlying stock-based awards totaled 465 million on June 30, 2010, compared with 451 million a year ago.
Net sales increased 41% to US$6.57 billion in the second quarter, compared with US$4.65 billion in second quarter 2009. Excluding the US$48 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 42% compared with second quarter 2009.
Operating income increased 71% to US$270 million in the second quarter, compared with US$159 million in second quarter 2009. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was US$10 million. Second quarter 2009 operating income was negatively impacted by a US$51 million legal settlement.
Net income increased 45% to US$207 million in the second quarter, or US$0.45 per diluted share, compared with net income of US$142 million, or US$0.32 per diluted share, in second quarter 2009.
“We're seeing rapid growth in Kindle, Amazon Web Services, third-party sales, and retail. We're also encouraged by what we see in mobile. In the last twelve months, customers around the world have ordered more than $1 billion of products from Amazon using a mobile device,” said Jeff Bezos, founder and CEO of Amazon.com. “The leading mobile commerce device today is the smartphone, but we're excited by the potential of the new category of wireless tablet computers. Over time, tablet computers could become a meaningful additional driver for our business.”
Readers are responding to Kindle’s uncompromising approach to the reading experience. Weighing 10.2 ounces, Kindle can be held comfortably in one hand for hours, has an e-ink display that is easy on the eyes even in bright daylight, has two weeks of battery life, and has free 3G wireless with no monthly fees or annual contracts—all at a $189 price.
Amazon.com is now selling more Kindle books than hardcover books. Over the past three months, for every 100 hardcover books Amazon.com has sold, the Company has sold 143 Kindle books. Over the past month, for every 100 hardcover books Amazon.com has sold, the Company has sold 180 Kindle books. This is across Amazon.com’s entire U.S. book business and includes sales of hardcover books where there is no Kindle edition. Free Kindle books are excluded and if included would make the number even higher.
Amazon sold more than 3x as many Kindle books in the first half of 2010 as in the first half of 2009.
The Association of American Publishers’ latest data reports that e-book sales grew 163 percent in the month of May and 207 percent year-to-date through May. Kindle book sales in May and year-to-date through May exceeded those growth rates.
On July 6, Hachette announced that James Patterson had sold 1.14 million e-books to date. Of those, 867,881 were Kindle books.
Five authors—Charlaine Harris, Stieg Larsson, Stephenie Meyer, James Patterson, and Nora Roberts—have each sold more than 500,000 Kindle books.
Amazon.com continues to expand Kindle’s “Buy once, read everywhere” strategy with this quarter’s launch of Kindle for Android. Like all Kindle apps, Kindle for Android includes Whispersync technology, which automatically synchronizes your last page read, bookmarks, notes and highlights across your Kindle, Kindle DX, iPad, iPod touch, iPhone, Mac, PC, BlackBerry, and Android-based devices.
Kindle offers the largest selection of the most popular books people want to read. The U.S. Kindle Store now has more than 630,000 books, including New Releases and 106 of 110 New York Times Best Sellers. Over 510,000 of these books are $9.99 or less, including 75 New York Times Best Sellers. Over 1.8 million free, out-of-copyright, pre-1923 books are also available to read on Kindle.
North America segment sales, representing the Company’s U.S. and Canadian sites, were $3.59 billion, up 46% from second quarter 2009.
International segment sales, representing the Company’s U.K., German, Japanese, French and Chinese sites, were $2.98 billion, up 35% from second quarter 2009. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 38%.
Worldwide Media sales grew 18% to $2.87 billion.
Worldwide Electronics & Other General Merchandise sales grew 69% to $3.49 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 70%.
The Company introduced Textbook Buyback, an easy-to-use program that helps students lower their textbook costs, giving them great value for their used textbooks.
The Amazon.co.uk and Amazon.de websites each launched Grocery stores offering customers free delivery on thousands of new items from brands such as Kraft, Nestlé, Mars, PepsiCo, Proctor & Gamble, and Unilever.
Businesses and developers in over 190 countries are taking advantage of Amazon Web Services (AWS). In the first half of 2010, AWS continued significant geographic expansion, launching the first Asia Pacific Region in Singapore as well as extending additional services including Amazon Virtual Private Cloud and Amazon Relational Database Service into the EU.
AWS announced a new storage option within the Amazon Simple Storage Service (S3), Amazon S3 Reduced Redundancy Storage (RRS), which enables customers to reduce their costs by storing non-critical, reproducible data at lower levels of redundancy than Amazon S3's standard storage.
AWS introduced Cluster Compute Instances, an Amazon Elastic Compute Cloud (EC2) instance type specifically tailored for high-performance computing.
The following forward-looking statements reflect Amazon.com’s expectations as of July 22, 2010. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.
Third Quarter 2010 Guidance
Net sales are expected to be between $6.900 billion and $7.625 billion, or to grow between 27% and 40% compared with third quarter 2009.
Operating income is expected to be between $210 million and $310 million, or between 16% decline and 24% growth compared with third quarter 2009.
This guidance includes approximately $130 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.