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SEATTLE–(BUSINESS WIRE)–Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its third quarter ended September 30, 2019.
Operating cash flow increased 33% to $35.3 billion for the trailing twelve months, compared with $26.6 billion for the trailing twelve months ended September 30, 2018. Free cash flow increased to $23.5 billion for the trailing twelve months, compared with $15.4 billion for the trailing twelve months ended September 30, 2018. Free cash flow less principal repayments of finance leases and financing obligations increased to $14.6 billion for the trailing twelve months, compared with $8.1 billion for the trailing twelve months ended September 30, 2018. Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations increased to $10.5 billion for the trailing twelve months, compared with $5.4 billion for the trailing twelve months ended September 30, 2018.
Common shares outstanding plus shares underlying stock-based awards totaled 511 million on September 30, 2019, compared with 507 million one year ago.
Net sales increased 24% to $70.0 billion in the third quarter, compared with $56.6 billion in third quarter 2018. Excluding the $500 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 25% compared with third quarter 2018.
Operating income decreased to $3.2 billion in the third quarter, compared with operating income of $3.7 billion in third quarter 2018.
Net income decreased to $2.1 billion in the third quarter, or $4.23 per diluted share, compared with net income of $2.9 billion, or $5.75 per diluted share, in third quarter 2018.
“We are ramping up to make our 25th holiday season the best ever for Prime customers — with millions of products available for free one-day delivery,” said Jeff Bezos, Amazon founder and CEO. “Customers love the transition of Prime from two days to one day — they’ve already ordered billions of items with free one-day delivery this year. It’s a big investment, and it’s the right long-term decision for customers. And although it’s counterintuitive, the fastest delivery speeds generate the least carbon emissions because these products ship from fulfillment centers very close to the customer — it simply becomes impractical to use air or long ground routes. Huge thanks to all the teams helping deliver for customers this holiday.”
Highlights
Financial Guidance
The following forward-looking statements reflect Amazon.com’s expectations as of October 24, 2019, and are subject to substantial uncertainty. 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 customer spending, world events, the rate of growth of the Internet, online commerce, and cloud services, and the various factors detailed below.
Fourth Quarter 2019 Guidance
A conference call will be webcast live today at 2:30 p.m. PT/5:30 p.m. ET, and will be available for at least three months at amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.
These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products and services sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income or other taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment, sortation, delivery, and data center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains, and develops commercial agreements, proposed and completed acquisitions and strategic transactions, payments risks, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services, and technologies, system interruptions, government regulation and taxation, and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission (“SEC”), including its most recent Annual Report on Form 10-K and subsequent filings.
Our investor relations website is amazon.com/ir and we encourage investors to use it as a way of easily finding information about us. We promptly make available on this website, free of charge, the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics), and select press releases, which may contain material information about us, and you may subscribe to be notified of new information posted to this site.
About Amazon
Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon. For more information, visit amazon.com/about and follow @AmazonNews.
AMAZON.COM, INC. |
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Consolidated Statements of Cash Flows |
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(in millions) |
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(unaudited) |
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Three Months Ended |
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Nine Months Ended |
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Twelve Months Ended |
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2018 |
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2019 |
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2018 |
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2019 |
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2018 |
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2019 |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD |
$ |
20,536 |
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|
$ |
22,965 |
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|
$ |
21,856 |
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|
$ |
32,173 |
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|
$ |
13,960 |
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$ |
21,032 |
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OPERATING ACTIVITIES: |
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Net income |
2,883 |
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|
2,134 |
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|
7,046 |
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|
8,320 |
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|
8,902 |
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11,347 |
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Adjustments to reconcile net income to net cash from operating activities: |
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Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other |
3,778 |
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5,563 |
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11,079 |
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15,619 |
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14,577 |
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19,881 |
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Stock-based compensation |
1,350 |
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|
1,779 |
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|
4,001 |
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|
5,024 |
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|
5,180 |
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|
6,441 |
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Other operating expense (income), net |
62 |
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|
47 |
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|
202 |
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|
114 |
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|
258 |
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|
186 |
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Other expense (income), net |
96 |
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|
388 |
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|
22 |
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|
246 |
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|
17 |
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|
443 |
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Deferred income taxes |
266 |
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|
92 |
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|
268 |
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|
612 |
|
|
(40 |
) |
|
784 |
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Changes in operating assets and liabilities: |
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Inventories |
(1,094 |
) |
|
(381 |
) |
|
36 |
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|
(1,762 |
) |
|
(2,220 |
) |
|
(3,112 |
) |
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Accounts receivable, net and other |
(2,884 |
) |
|
(1,181 |
) |
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(3,220 |
) |
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(3,776 |
) |
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(5,983 |
) |
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(5,172 |
) |
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Accounts payable |
3,894 |
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|
226 |
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|
(3,618 |
) |
|
(2,490 |
) |
|
5,285 |
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|
4,393 |
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Accrued expenses and other |
237 |
|
|
(722 |
) |
|
(2,193 |
) |
|
(4,277 |
) |
|
(131 |
) |
|
(1,612 |
) |
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Unearned revenue |
— |
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|
(53 |
) |
|
623 |
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|
1,225 |
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|
759 |
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|
1,753 |
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Net cash provided by (used in) operating activities |
8,588 |
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|
7,892 |
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|
14,246 |
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|
18,855 |
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|
26,604 |
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|
35,332 |
|
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INVESTING ACTIVITIES: |
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Purchases of property and equipment |
(3,352 |
) |
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(4,697 |
) |
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(9,693 |
) |
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(11,549 |
) |
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(13,312 |
) |
|
(15,282 |
) |
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Proceeds from property and equipment sales and incentives |
825 |
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|
1,312 |
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|
1,490 |
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|
2,800 |
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|
2,073 |
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|
3,414 |
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Acquisitions, net of cash acquired, and other |
(976 |
) |
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(398 |
) |
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(1,855 |
) |
|
(1,684 |
) |
|
(1,936 |
) |
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(2,015 |
) |
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Sales and maturities of marketable securities |
1,964 |
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|
7,251 |
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|
6,301 |
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|
15,056 |
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|
9,787 |
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|
16,994 |
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Purchases of marketable securities |
(4,033 |
) |
|
(8,542 |
) |
|
(5,040 |
) |
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(25,368 |
) |
|
(7,390 |
) |
|
(27,428 |
) |
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Net cash provided by (used in) investing activities |
(5,572 |
) |
|
(5,074 |
) |
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(8,797 |
) |
|
(20,745 |
) |
|
(10,778 |
) |
|
(24,317 |
) |
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FINANCING ACTIVITIES: |
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Proceeds from long-term debt and other |
143 |
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|
702 |
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|
363 |
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|
1,175 |
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|
472 |
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|
1,581 |
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Repayments of long-term debt and other |
(183 |
) |
|
(355 |
) |
|
(533 |
) |
|
(819 |
) |
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(1,675 |
) |
|
(953 |
) |
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Principal repayments of finance leases |
(2,247 |
) |
|
(2,307 |
) |
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(5,544 |
) |
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(6,848 |
) |
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(7,016 |
) |
|
(8,754 |
) |
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Principal repayments of financing obligations |
(82 |
) |
|
— |
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|
(211 |
) |
|
(3 |
) |
|
(277 |
) |
|
(129 |
) |
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Net cash provided by (used in) financing activities |
(2,369 |
) |
|
(1,960 |
) |
|
(5,925 |
) |
|
(6,495 |
) |
|
(8,496 |
) |
|
(8,255 |
) |
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Foreign currency effect on cash, cash equivalents, and restricted cash |
(151 |
) |
|
(269 |
) |
|
(348 |
) |
|
(234 |
) |
|
(258 |
) |
|
(238 |
) |
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Net increase (decrease) in cash, cash equivalents, and restricted cash |
496 |
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|
589 |
|
|
(824 |
) |
|
(8,619 |
) |
|
7,072 |
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|
2,522 |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD |
$ |
21,032 |
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|
$ |
23,554 |
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|
$ |
21,032 |
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|
$ |
23,554 |
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|
$ |
21,032 |
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|
$ |
23,554 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid for interest on long-term debt |
$ |
283 |
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|
$ |
287 |
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$ |
733 |
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|
$ |
720 |
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|
$ |
907 |
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|
$ |
842 |
|
Cash paid for operating leases |
— |
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|
872 |
|
|
— |
|
|
2,420 |
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|
— |
|
|
2,420 |
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Cash paid for interest on finance leases |
118 |
|
|
167 |
|
|
277 |
|
|
481 |
|
|
335 |
|
|
585 |
|
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Cash paid for interest on financing obligations |
47 |
|
|
14 |
|
|
142 |
|
|
20 |
|
|
168 |
|
|
72 |
|
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Cash paid for income taxes, net of refunds |
200 |
|
|
241 |
|
|
1,013 |
|
|
692 |
|
|
1,106 |
|
|
863 |
|
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Assets acquired under operating leases |
— |
|
|
2,299 |
|
|
— |
|
|
5,393 |
|
|
— |
|
|
5,393 |
|
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Property and equipment acquired under finance leases |
2,329 |
|
|
3,606 |
|
|
6,934 |
|
|
9,541 |
|
|
9,704 |
|
|
13,222 |
|
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Property and equipment acquired under build-to-suit arrangements |
962 |
|
|
390 |
|
|
2,498 |
|
|
1,109 |
|
|
3,340 |
|
|
2,252 |
|
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______________________________ |
Contacts
Amazon.com Investor Relations
Dave Fildes, amazon-ir@amazon.com
amazon.com/ir
Amazon.com Public Relations
Dan Perlet, amazon-pr@amazon.com
amazon.com/pr
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