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Exhibit
Exhibit 99.1
 image1.jpg
AMAZON.COM ANNOUNCES THIRD QUARTER SALES UP 29% TO $32.7 BILLION

SEATTLE—(BUSINESS WIRE)—October 27, 2016—Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its third quarter ended September 30, 2016.
Operating cash flow increased 49% to $14.6 billion for the trailing twelve months, compared with $9.8 billion for the trailing twelve months ended September 30, 2015. Free cash flow increased to $8.6 billion for the trailing twelve months, compared with $5.4 billion for the trailing twelve months ended September 30, 2015. Free cash flow less lease principal repayments increased to $4.9 billion for the trailing twelve months, compared with $3.1 billion for the trailing twelve months ended September 30, 2015. Free cash flow less finance lease principal repayments and assets acquired under capital leases increased to $3.4 billion for the trailing twelve months, compared with $637 million for the trailing twelve months ended September 30, 2015.
Common shares outstanding plus shares underlying stock-based awards totaled 496 million on September 30, 2016, compared with 489 million one year ago.
Net sales increased 29% to $32.7 billion in the third quarter, compared with $25.4 billion in third quarter 2015. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on net sales was $52 million.
Operating income was $575 million in the third quarter, compared with $406 million in third quarter 2015.
Net income was $252 million in the third quarter, or $0.52 per diluted share, compared with $79 million, or $0.17 per diluted share, in third quarter 2015.

“Alexa may be Amazon’s most loved invention yet — literally — with over 250,000 marriage proposals from customers and counting,” said Jeff Bezos, founder and CEO of Amazon. “And she’s just getting better. Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful — wait until you see some of the surprises the team is working on now.”
Highlights
Amazon Studios announced a slate of new Original Movies and Series premiering in the coming months, including the theatrical debut of Manchester by the Sea, a Sundance and Toronto Film Festival favorite, as well as exclusive Prime Video premieres of Amazon Original Series including The Man in the High Castle, the second season of the most watched original series on Prime Video; The Grand Tour, the highly-anticipated series with Clarkson, Hammond, and May; and Mozart in the Jungle, the third season of the multi-Golden Globe winning series.
Amazon Studios released Gleason, The Dressmaker, The Handmaiden, and Author: The JT LeRoy Story in theaters nationwide. Each film will be available exclusively to Prime members through Prime Video following its theatrical release.
Amazon Video won six Emmys, including the second win for both Jeffrey Tambor and Jill Soloway for Outstanding Lead Actor in a Comedy Series and Outstanding Directing for a Comedy Series, respectively, for Transparent.
Amazon debuted five Amazon Original Series, including the third season of award-winning series Transparent, and the debut seasons of One Mississippi, Fleabag, Woody Allen’s first TV series, Crisis in Six Scenes, and David E. Kelley’s Goliath, starring Billy Bob Thornton.
Since launching in May, Amazon customers have streamed billions of minutes of content from providers that self-published through Amazon Video Direct.
Amazon launched Amazon Music Unlimited, an on-demand music streaming service with tens of millions of songs and thousands of curated playlists and personalized stations. Customers listening to Amazon Music Unlimited on Echo, Echo Dot, or Amazon Tap can access their favorite music with new natural language voice controls powered by Alexa. The on-demand music service is $7.99 per month for Prime members, and only $3.99 per month for customers who subscribe to the exclusive “for Echo” subscription plan.



Amazon announced that music from Garth Brooks — the #2 all-time best-selling artist in the U.S. behind only the Beatles — is now available to stream exclusively on Amazon Music. Fans can listen to hit songs and popular albums from the country music icon on Amazon Music Unlimited, with albums and songs also available for purchase and digital download on Amazon Music.
Amazon introduced the all-new version of the Echo Dot, a hands-free, voice-controlled device powered by Alexa — available in the U.S. for under $50. Additionally, Amazon introduced Alexa, Echo, and Echo Dot to customers in the U.K. and Germany.
Alexa skills selection increased 3x in three months, and there are now more than 3,000 skills available, including Food Network, GE Appliances, Yahoo Sports Fantasy Football, and more. Amazon now has tens of thousands of developers building new skills for Alexa.
Amazon announced the Alexa Prize, an annual university competition with $2.5 million dedicated to accelerating the field of conversational artificial intelligence. The goal of the competition is to build a “socialbot” on Alexa that will converse with people about popular topics and news events.
Amazon introduced Fire HD 8, an all-new tablet that offers 12 hours of battery life, 50% more RAM for faster performance, and 2x the storage — for $89.99. Amazon also announced that Alexa is coming to Fire tablets — just press and ask, and Alexa will play music, launch games, read audiobooks, and more.
Amazon introduced the next generation of the best-selling Fire TV Stick, now with an included Alexa Voice Remote, and still $39.99. Amazon also released a software update for Fire TV and Fire TV Stick that enables customers to use their voice to search across more than 90 apps and channels, including Netflix, making it easier to find and watch their favorite TV shows and movies without navigating through multiple apps.
Amazon Game Studios announced its first three games at TwitchCon 2016: Breakaway, New World, and Crucible. All three games are built on the Amazon Lumberyard game engine, and created for Twitch broadcasters, viewers, and players.
Amazon and Twitch announced Twitch Prime, a new set of Prime benefits for gamers that includes exclusive discounts on pre-order and new release games, a rotating selection of free digital games and in-game loot, and a premium Twitch experience that includes a monthly Twitch channel subscription.
Amazon introduced new features to the Prime Photos service in the U.S., designed for Prime members and their family. Prime members can now invite up to five family members or friends to join their Family Vault, which includes access to Prime Photos benefits including unlimited storage of photos, plus an additional 5 GB for videos and other files.
Amazon introduced Prime Reading, a benefit for Prime members to enjoy unlimited, free reading from a rotating selection of over a thousand books, magazines, comics, and more.
Amazon and Audible announced Audible Channels, a new benefit for Prime members to enjoy unlimited, free access to the new short-form digital audio service as well as access to a rotating selection from Audible’s audiobook catalog.
AmazonFresh expanded to northern Virginia, Dallas, Maryland, and Chicago. Additionally, customers in all locations can now shop for groceries through AmazonFresh directly on the Amazon.com website alongside their other shopping.
The Great Indian Festival was Amazon.in’s biggest shopping event ever. During the event, customers from 97% of India’s serviceable postal codes placed at least one order on Amazon.in.
Handmade at Amazon launched in the U.K., Germany, France, Italy, and Spain. Customers across Europe can now shop from more than 30,000 genuinely handcrafted items sold by thousands of artisans from over 40 countries.
Amazon Japan became the new title sponsor of Amazon Fashion Week Tokyo, collaborating with the Japan Fashion Week Organization to help support and elevate the awareness of Japanese fashion designers and manufacturers globally.
Amazon expects to create 120,000 seasonal jobs in customer fulfillment and customer service this holiday season. Last year, Amazon transitioned more than 14,000 seasonal positions to regular, full-time roles after the holidays, and expects to increase that number this year.
Amazon.co.uk announced the “Amazon Women in Innovation Bursary” at University of Cambridge, University of Edinburgh, and King’s College, which provides scholarships for young women to pursue a degree in innovation-related fields.
Amazon Web Services (AWS) announced the availability of the U.S. East (Ohio) Region. AWS now operates 38 Availability Zones across 14 technology infrastructure Regions globally, and plans to open an additional nine Availability Zones in four regions (Canada, the U.K., France, and a second region in China) in the coming months.
VMware and AWS announced a new hybrid cloud service, “VMware Cloud on AWS,” that enables customers to use their existing VMware software and tools to leverage AWS’s global footprint and breadth of services, including storage, databases, analytics, and more. This offering will be the primary public cloud service sold and supported by VMware, and AWS will be VMware’s primary public cloud partner. 
AWS announced the availability of P2 instances, a new GPU instance type for Amazon EC2. The most powerful GPU virtual machine in the cloud with up to 16 NVIDIA Tesla® K80 GPUs, P2 instances are designed for compute-



intensive applications such as artificial intelligence, deep learning, computational fluid dynamics, computational finance, seismic analysis, molecular modeling, genomics, and rendering workloads.
AWS announced the option for customers to bring their own encryption keys with AWS Key Management Service. This new feature allows customers to import keys from any key management and Hardware Security Module solution and use them with AWS services and their own applications.
AWS launched new capabilities for AWS Educate, a global program that provides students and educators with resources to accelerate cloud-related learning. The program now includes access to courses designed to teach cloud skills, paired with the AWS Educate Job Board, featuring cloud-related internships and jobs from top employers around the world.  
AWS announced a new Application Load Balancer option for content-based routing that enables customers to route a request to an AWS service based on the content of the request and supports applications that run in containers. Web sites and mobile applications, running in containers or on Amazon EC2 instances, will benefit from the use of Application Load Balancers.

Financial Guidance
The following forward-looking statements reflect Amazon.com’s expectations as of October 27, 2016, 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 2016 Guidance
Net sales are expected to be between $42.0 billion and $45.5 billion, or to grow between 17% and 27% compared with fourth quarter 2015. This guidance anticipates approximately 60 basis points of favorable impact from foreign exchange rates.
Operating income is expected to be between $0 and $1.25 billion, compared with $1.1 billion in fourth quarter 2015.
This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.
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 www.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 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, 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 www.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 and social media postings, 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 www.amazon.com/about.





AMAZON.COM, INC.
Consolidated Statements of Cash Flows
(in millions)
(unaudited)

 
  
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
Twelve Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$
12,521

 
$
10,269

 
$
15,890

 
$
14,557

 
$
10,709

 
$
5,258

OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
 
Net income
252

 
79

 
1,622

 
114

 
2,105

 
328

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Depreciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs
2,084

 
1,599

 
5,819

 
4,529

 
7,572

 
5,908

Stock-based compensation
776

 
544

 
2,088

 
1,513

 
2,694

 
1,921

Other operating expense, net
31

 
34

 
128

 
120

 
163

 
156

Other expense (income), net
(23
)
 
58

 
(41
)
 
170

 
39

 
248

Deferred income taxes
(81
)
 
(63
)
 
36

 
(108
)
 
226

 
76

Excess tax benefits from stock-based compensation
(173
)
 
(95
)
 
(493
)
 
(212
)
 
(401
)
 
(96
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
 
Inventories
(1,095
)
 
(1,537
)
 
(383
)
 
(844
)
 
(1,726
)
 
(1,983
)
Accounts receivable, net and other
(671
)
 
(588
)
 
(1,443
)
 
(577
)
 
(2,621
)
 
(1,681
)
Accounts payable
2,540

 
2,030

 
(2,252
)
 
(1,846
)
 
3,887

 
3,207

Accrued expenses and other
441

 
143

 
(531
)
 
(925
)
 
1,306

 
525

Additions to unearned revenue
2,802

 
1,779

 
7,956

 
4,979

 
10,377

 
6,358

Amortization of previously unearned revenue
(2,397
)
 
(1,373
)
 
(6,715
)
 
(3,805
)
 
(9,018
)
 
(5,144
)
Net cash provided by (used in) operating activities
4,486

 
2,610

 
5,791

 
3,108

 
14,603

 
9,823

INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
 
Purchases of property and equipment, including internal-use software and website development, net
(1,841
)
 
(1,195
)
 
(4,731
)
 
(3,280
)
 
(6,040
)
 
(4,424
)
Acquisitions, net of cash acquired, and other
(84
)
 
(105
)
 
(113
)
 
(478
)
 
(430
)
 
(531
)
Sales and maturities of marketable securities
1,431

 
1,045

 
3,500

 
1,890

 
4,635

 
2,244

Purchases of marketable securities
(2,076
)
 
(1,122
)
 
(4,358
)
 
(2,732
)
 
(5,717
)
 
(4,354
)
Net cash provided by (used in) investing activities
(2,570
)
 
(1,377
)
 
(5,702
)
 
(4,600
)
 
(7,552
)
 
(7,065
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
 
Excess tax benefits from stock-based compensation
173

 
95

 
493

 
212

 
401

 
96

Proceeds from long-term debt and other
8

 
33

 
83

 
260

 
176

 
6,241

Repayments of long-term debt and other
(26
)
 
(181
)
 
(271
)
 
(712
)
 
(1,212
)
 
(894
)
Principal repayments of capital lease obligations
(938
)
 
(656
)
 
(2,855
)
 
(1,738
)
 
(3,579
)
 
(2,144
)
Principal repayments of finance lease obligations
(44
)
 
(21
)
 
(105
)
 
(95
)
 
(131
)
 
(163
)
Net cash provided by (used in) financing activities
(827
)
 
(730
)
 
(2,655
)
 
(2,073
)
 
(4,345
)
 
3,136

Foreign currency effect on cash and cash equivalents
46

 
(63
)
 
332

 
(283
)
 
241

 
(443
)
Net increase (decrease) in cash and cash equivalents
1,135

 
440

 
(2,234
)
 
(3,848
)
 
2,947

 
5,451

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
13,656

 
$
10,709

 
$
13,656

 
$
10,709

 
$
13,656

 
$
10,709

SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
 
 
 
 
 
 
 
 
Cash paid for interest on long-term debt
$
1

 
$
7

 
$
146

 
$
177

 
$
295

 
$
212

Cash paid for interest on capital and finance lease obligations
50

 
41

 
145

 
109

 
188

 
138

Cash paid for income taxes, net of refunds
91

 
80

 
317

 
200

 
390

 
230

Property and equipment acquired under capital leases
1,369

 
1,047

 
3,666

 
3,385

 
4,998

 
4,599

Property and equipment acquired under build-to-suit leases
211

 
125

 
793

 
381

 
956

 
595




AMAZON.COM, INC.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)

  
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Net product sales
$
22,339

 
$
18,463

 
$
64,036

 
$
52,650

Net service sales
10,375

 
6,895

 
28,210

 
18,609

Total net sales
32,714

 
25,358

 
92,246

 
71,259

Operating expenses:
 
 
 
 
 
 
 
Cost of sales
21,260

 
16,755

 
59,306

 
47,310

Fulfillment
4,335

 
3,230

 
11,900

 
8,865

Marketing
1,738

 
1,264

 
4,720

 
3,496

Technology and content
4,135

 
3,197

 
11,541

 
8,971

General and administrative
639

 
463

 
1,715

 
1,357

Other operating expense, net
32

 
43

 
133

 
136

Total operating expenses
32,139

 
24,952

 
89,315

 
70,135

Operating income
575

 
406

 
2,931

 
1,124

Interest income
26

 
13

 
71

 
37

Interest expense
(118
)
 
(116
)
 
(351
)
 
(344
)
Other income (expense), net
8

 
(56
)
 
75

 
(187
)
Total non-operating income (expense)
(84
)
 
(159
)
 
(205
)
 
(494
)
Income before income taxes
491

 
247

 
2,726

 
630

Provision for income taxes
(229
)
 
(161
)
 
(1,012
)
 
(498
)
Equity-method investment activity, net of tax
(10
)
 
(7
)
 
(92
)
 
(18
)
Net income
$
252

 
$
79

 
$
1,622

 
$
114

Basic earnings per share
$
0.53

 
$
0.17

 
$
3.43

 
$
0.24

Diluted earnings per share
$
0.52

 
$
0.17

 
$
3.36

 
$
0.24

Weighted-average shares used in computation of earnings per share:
 
 
 
 
 
 
 
Basic
474

 
468

 
473

 
467

Diluted
485

 
478

 
483

 
476





AMAZON.COM, INC.
Consolidated Statements of Comprehensive Income (Loss)
(in millions)
(unaudited)

 
  
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
252

 
$
79

 
$
1,622

 
$
114

Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax of $6, $4, $18, and $3
19

 
(56
)
 
133

 
(170
)
Net change in unrealized gains (losses) on available-for-sale securities:
 
 
 
 
 
 
 
Unrealized gains (losses), net of tax of $(15), $3, $(32), and $(5)
29

 
(3
)
 
65

 
3

Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $(1), $(1), $(2), and $(1)
2

 
1

 
4

 
3

Net unrealized gains (losses) on available-for-sale securities
31

 
(2
)
 
69

 
6

Total other comprehensive income (loss)
50

 
(58
)
 
202

 
(164
)
Comprehensive income (loss)
$
302

 
$
21

 
$
1,824

 
$
(50
)




AMAZON.COM, INC.
Segment Information
(in millions)
(unaudited)
 
  
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
North America
 
 
 
 
 
 
 
Net sales
$
18,874

 
$
15,006

 
$
53,544

 
$
42,208

Operating expenses
18,180

 
14,478

 
50,769

 
40,461

Operating income before stock-based compensation and other
694

 
528

 
2,775

 
1,747

Stock-based compensation and other
439

 
342

 
1,230

 
959

Operating income
$
255

 
$
186

 
$
1,545

 
$
788

International
 
 
 
 
 
 
 
Net sales
$
10,609

 
$
8,267

 
$
30,019

 
$
23,577

Operating expenses
10,941

 
8,323

 
30,242

 
23,728

Operating income (loss) before stock-based compensation and other
(332
)
 
(56
)
 
(223
)
 
(151
)
Stock-based compensation and other
209

 
152

 
573

 
440

Operating income (loss)
$
(541
)
 
$
(208
)
 
$
(796
)
 
$
(591
)
AWS
 
 
 
 
 
 
 
Net sales
$
3,231

 
$
2,085

 
$
8,683

 
$
5,474

Operating expenses
2,210

 
1,564

 
6,083

 
4,297

Operating income before stock-based compensation and other
1,021

 
521

 
2,600

 
1,177

Stock-based compensation and other
160

 
93

 
418

 
250

Operating income
$
861

 
$
428

 
$
2,182

 
$
927

Consolidated
 
 
 
 
 
 
 
Net sales
$
32,714

 
$
25,358

 
$
92,246

 
$
71,259

Operating expenses
31,331

 
24,365

 
87,094

 
68,486

Operating income before stock-based compensation and other
1,383

 
993

 
5,152

 
2,773

Stock-based compensation and other
808

 
587

 
2,221

 
1,649

Operating income
575

 
406

 
2,931

 
1,124

Total non-operating income (expense)
(84
)
 
(159
)
 
(205
)
 
(494
)
Provision for income taxes
(229
)
 
(161
)
 
(1,012
)
 
(498
)
Equity-method investment activity, net of tax
(10
)
 
(7
)
 
(92
)
 
(18
)
Net income
$
252

 
$
79

 
$
1,622

 
$
114

Segment Highlights:
 
 
 
 
 
 
 
Y/Y net sales growth:
 
 
 
 
 
 
 
North America
26
%
 
28
%
 
27
%
 
26
%
International
28

 
7

 
27

 
3

AWS
55

 
78

 
59

 
70

Consolidated
29

 
23

 
29

 
19

Net sales mix:
 
 
 
 
 
 
 
North America
58
%
 
59
%
 
58
%
 
59
%
International
32

 
33

 
33

 
33

AWS
10

 
8

 
9

 
8

Consolidated
100
%
 
100
%
 
100
%
 
100
%




AMAZON.COM, INC.
Supplemental Net Sales Information
(in millions)
(unaudited)
  
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Net Sales:
 
 
 
North America
 
 
 
 
 
 
 
Media
$
3,237

 
$
2,963

 
$
9,372

 
$
8,552

Electronics and other general merchandise
15,327

 
11,840

 
43,297

 
33,077

Other (1)
310

 
203

 
875

 
579

Total North America
$
18,874

 
$
15,006

 
$
53,544

 
$
42,208

International
 
 
 
 
 
 
 
Media
$
2,491

 
$
2,320

 
$
7,254

 
$
6,734

Electronics and other general merchandise
8,056

 
5,901

 
22,593

 
16,705

Other (1)
62

 
46

 
172

 
138

Total International
$
10,609

 
$
8,267

 
$
30,019

 
$
23,577

 
 
 
 
 
 
 
 
Year-over-year Percentage Growth:
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
Media
9
%
 
8
 %
 
10
%
 
7
 %
Electronics and other general merchandise
29

 
35

 
31

 
32

Other
53

 
18

 
51

 
19

Total North America
26

 
28

 
27

 
26

International
 
 
 
 
 
 
 
Media
7
%
 
(8
)%
 
8
%
 
(11
)%
Electronics and other general merchandise
36

 
14

 
35

 
9

Other
37

 
10

 
24

 
(4
)
Total International
28

 
7

 
27

 
3

Year-over-year Percentage Growth, excluding the effect of foreign exchange rates:
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
Media
9
%
 
9
 %
 
10
%
 
7
 %
Electronics and other general merchandise
29

 
35

 
31

 
33

Other
53

 
18

 
51

 
18

Total North America
26

 
29

 
27

 
26

International
 
 
 
 
 
 
 
Media
7
%
 
6
 %
 
7
%
 
4
 %
Electronics and other general merchandise
36

 
32

 
35

 
28

Other
43

 
26

 
27

 
11

Total International
28

 
24

 
27

 
20

______________________________
(1)
Includes sales from non-retail activities, such as certain advertising services and our co-branded credit card agreements.


















AMAZON.COM, INC.
Consolidated Balance Sheets
(in millions, except per share data)
 
 
September 30, 2016
 
December 31, 2015
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
13,656

 
$
15,890

Marketable securities
4,691

 
3,918

Inventories
10,696

 
10,243

Accounts receivable, net and other
6,566

 
5,654

Total current assets
35,609

 
35,705

Property and equipment, net
27,177

 
21,838

Goodwill
3,815

 
3,759

Other assets
4,296

 
3,445

Total assets
$
70,897

 
$
64,747

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
18,801

 
$
20,397

Accrued expenses and other
10,497

 
10,372

Unearned revenue
4,200

 
3,118

Total current liabilities
33,498

 
33,887

Long-term debt
8,205

 
8,227

Other long-term liabilities
11,412

 
9,249

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $0.01 par value:
 
 
 
Authorized shares — 500
 
 
 
Issued and outstanding shares — none

 

Common stock, $0.01 par value:
 
 
 
Authorized shares — 5,000
 
 
 
Issued shares — 498 and 494
 
 
 
Outstanding shares — 475 and 471
5

 
5

Treasury stock, at cost
(1,837
)
 
(1,837
)
Additional paid-in capital
15,968

 
13,394

Accumulated other comprehensive loss
(521
)
 
(723
)
Retained earnings
4,167

 
2,545

Total stockholders’ equity
17,782

 
13,384

Total liabilities and stockholders’ equity
$
70,897

 
$
64,747





AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions, except per share data)
(unaudited)
 
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Cash Flows and Shares
 
 
 
 
 
 
 
Operating cash flow -- trailing twelve months (TTM)
$
8,980

$
9,823

$
11,920

$
11,258

$
12,726

$
14,603

49
 %
Operating cash flow -- TTM Y/Y growth
69
%
72
%
74
%
44
%
42
%
49
%
N/A

Purchases of property and equipment, including internal-use software and website development, net -- TTM
$
4,607

$
4,424

$
4,589

$
4,897

$
5,395

$
6,040

37
 %
Principal repayments of capital lease obligations -- TTM
$
1,832

$
2,144

$
2,462

$
2,761

$
3,298

$
3,579

67
 %
Principal repayments of finance lease obligations -- TTM
$
155

$
163

$
121

$
111

$
108

$
131

(20
)%
Property and equipment acquired under capital leases -- TTM
$
4,710

$
4,599

$
4,717

$
4,638

$
4,676

$
4,998

9
 %
Free cash flow -- TTM (1)
$
4,373

$
5,399

$
7,331

$
6,361

$
7,331

$
8,563

59
 %
Free cash flow less lease principal repayments -- TTM (2)
$
2,386

$
3,092

$
4,748

$
3,489

$
3,925

$
4,853

57
 %
Free cash flow less finance lease principal repayments and assets acquired under capital leases -- TTM (3)
$
(492
)
$
637

$
2,493

$
1,612

$
2,547

$
3,434

440
 %
Invested capital (4)
$
26,478

$
28,860

$
31,393

$
32,824

$
34,695

$
36,722

27
 %
Common shares and stock-based awards outstanding
488

489

490

490

495

496

1
 %
Common shares outstanding
468

469

471

472

474

475

1
 %
Stock-based awards outstanding
20

20

19

18

21

21

3
 %
Stock-based awards outstanding -- % of common shares outstanding
4.4
%
4.3
%
4.1
%
3.9
%
4.4
%
4.4
%
N/A

Results of Operations
 
 
 
 
 
 
 
Worldwide (WW) net sales
$
23,185

$
25,358

$
35,747

$
29,128

$
30,404

$
32,714

29
 %
WW net sales -- Y/Y growth, excluding F/X
27
%
30
%
26
%
29
%
30
%
29
%
N/A

WW net sales -- TTM
$
95,808

$
100,588

$
107,006

$
113,418

$
120,637

$
127,993

27
 %
WW net sales -- TTM Y/Y growth, excluding F/X
22
%
24
%
26
%
28
%
29
%
28
%
N/A

Operating income
$
464

$
406

$
1,108

$
1,071

$
1,285

$
575

42
 %
FX impact -- favorable (unfavorable)
(9
)
25

20

50

45

8

N/A

Operating income -- Y/Y growth, excluding F/X
N/A

N/A

84
%
300
%
168
%
40
%
N/A

Operating margin -- % of WW net sales
2.0
%
1.6
%
3.1
%
3.7
%
4.2
%
1.8
%
N/A

Operating income -- TTM
$
765

$
1,715

$
2,233

$
3,049

$
3,871

$
4,040

136
 %
Operating income -- TTM Y/Y growth (decline), excluding F/X
35
%
N/A

N/A

933
%
388
%
128
%
N/A

Operating margin -- TTM % of WW net sales
0.8
%
1.7
%
2.1
%
2.7
%
3.2
%
3.2
%
N/A

Net income (loss)
$
92

$
79

$
482

$
513

$
857

$
252

220
 %
Net income (loss) per diluted share
$
0.19

$
0.17

$
1.00

$
1.07

$
1.78

$
0.52

215
 %
Net income (loss) -- TTM
$
(188
)
$
328

$
596

$
1,166

$
1,931

$
2,105

541
 %
Net income (loss) per diluted share -- TTM
$
(0.41
)
$
0.69

$
1.25

$
2.43

$
4.02

$
4.38

533
 %
______________________________
(1)
Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, including internal-use software and website development, net,” which is included in cash flow from investing activities.
(2)
Free cash flow less lease principal repayments is free cash flow reduced by “Principal repayments of capital lease obligations,” and “Principal repayments of finance lease obligations,” which are included in cash flow from financing activities.
(3)
Free cash flow less finance lease principal repayments and assets acquired under capital leases is free cash flow reduced by “Principal repayments of finance lease obligations,” which are included in cash flow from financing activities, and property and equipment acquired under capital leases. In this measure, property and equipment acquired under capital leases is reflected as if these assets had been purchased with cash, which is not the case as these assets have been leased.
(4)
Average Total Assets minus Current Liabilities (excluding current portion of Long-Term Debt and current portion of capital lease obligations and finance lease obligations) over five quarter ends.















AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions)
(unaudited)

 
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Segments
 
 
 
 
 
 
 
North America Segment:
 
 
 
 
 
 
 
Net sales
$
13,796

$
15,006

$
21,501

$
16,996

$
17,674

$
18,874

26
%
Net sales -- Y/Y growth, excluding F/X
26
 %
29
 %
24
 %
27
 %
28
 %
26
 %
N/A

Net sales -- TTM
$
56,233

$
59,540

$
63,708

$
67,299

$
71,176

$
75,045

26
%
Operating income before stock-based compensation and other:
 
 
 
 
 
 
 
Operating income
$
703

$
528

$
1,003

$
924

$
1,157

$
694

32
%
Operating income -- Y/Y growth, excluding F/X
111
 %
N/A

36
 %
78
 %
64
 %
30
 %
N/A

Operating margin -- % of North America net sales
5.1
 %
3.5
 %
4.7
 %
5.4
 %
6.6
 %
3.7
 %
N/A

Operating income -- TTM
$
1,893

$
2,480

$
2,751

$
3,157

$
3,611

$
3,778

52
%
Operating margin -- TTM % of North America net sales
3.4
 %
4.2
 %
4.3
 %
4.7
 %
5.1
 %
5.0
 %
N/A

Operating income:
 
 
 
 
 
 
 
Operating income
$
348

$
186

$
636

$
588

$
702

$
255

37
%
             FX impact -- favorable (unfavorable)
$
9

$
11

$
6

$
5

$
5

$
6

N/A

Operating income -- Y/Y growth, excluding F/X






129
 %
100
 %
34
 %
N/A

Operating margin -- % of North America net sales
2.5
 %
1.2
 %
3.0
 %
3.5
 %
4.0
 %
1.3
 %
N/A

Operating income -- TTM




$
1,425

$
1,759

$
2,113

$
2,182

N/A

Operating margin -- TTM % of North America net sales




2.2
 %
2.6
 %
3.0
 %
2.9
 %
N/A

International Segment:
 
 
 
 
 
 
 
Net sales
$
7,565

$
8,267

$
11,841

$
9,566

$
9,844

$
10,609

28
%
Net sales -- Y/Y growth, excluding F/X
22
 %
24
 %
22
 %
26
 %
28
 %
28
 %
N/A

Net sales -- TTM
$
33,598

$
34,154

$
35,418

$
37,239

$
39,518

$
41,860

23
%
Operating income (loss) before stock-based compensation and other:
 
 
 
 
 
 
 
Operating income (loss)
$
(19
)
$
(56
)
$
60

$
20

$
88

$
(332
)
496
%
Operating income/loss -- Y/Y growth (decline), excluding F/X
N/A

N/A

65
 %
N/A

N/A

539
 %
N/A

Operating margin -- % of International net sales
(0.2
)%
(0.7
)%
0.5
 %
0.2
 %
0.9
 %
(3.1
)%
N/A

Operating income (loss) -- TTM
$
(205
)
$
(86
)
$
(91
)
$
6

$
113

$
(163
)
89
%
Operating margin -- TTM % of International net sales
(0.6
)%
(0.3
)%
(0.3
)%
 %
0.3
 %
(0.4
)%
N/A

Operating income (loss):
 
 
 
 
 
 
 
Operating income (loss)
$
(189
)
$
(208
)
$
(108
)
$
(121
)
$
(135
)
$
(541
)
161
%
FX impact -- favorable (unfavorable)
$
(89
)
$
(64
)
$
(47
)
$
21

$
40

$
22

N/A

Operating income/loss -- Y/Y growth (decline), excluding F/X






(27
)%
(8
)%
171
 %
N/A

Operating margin -- % of International net sales
(2.5
)%
(2.5
)%
(0.9
)%
(1.3
)%
(1.4
)%
(5.1
)%
N/A

Operating income (loss) -- TTM




$
(699
)
$
(626
)
$
(571
)
$
(905
)
N/A

Operating margin -- TTM % of International net sales




(2.0
)%
(1.7
)%
(1.4
)%
(2.2
)%
N/A






AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions)
(unaudited)

 
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Segments (continued)
 
 
 
 
 
 
 
AWS Segment:
 
 
 
 
 
 
 
Net sales
$
1,824

$
2,085

$
2,405

$
2,566

$
2,886

$
3,231

55
%
Net sales -- Y/Y growth, excluding F/X
81
%
78
%
69
%
64
%
58
%
55
%
N/A

Net sales -- TTM
$
5,977

$
6,894

$
7,880

$
8,880

$
9,943

$
11,088

61
%
Operating income before stock-based compensation and other:
 
 
 
 
 
 
 
Operating income
$
391

$
521

$
687

$
716

$
863

$
1,021

96
%
Operating income -- Y/Y growth (decline), excluding F/X
314
%
353
%
161
%
161
%
121
%
100
%
N/A

Operating margin -- % of AWS net sales
21.4
%
25.0
%
28.5
%
27.9
%
29.9
%
31.6
%
N/A

Operating income -- TTM
$
993

$
1,417

$
1,863

$
2,315

$
2,787

$
3,286

132
%
Operating margin -- TTM % of AWS net sales
16.6
%
20.6
%
23.6
%
26.1
%
28.0
%
29.6
%
N/A

Operating income:
 
 
 
 
 
 
 
Operating income
$
305

$
428

$
580

$
604

$
718

$
861

101
%
             FX impact -- favorable (unfavorable)
$
71

$
78

$
60

$
24

$

$
(20
)
N/A

Operating income -- Y/Y growth, excluding F/X






198
%
136
%
106
%
N/A

Operating margin -- % of AWS net sales
16.7
%
20.5
%
24.1
%
23.5
%
24.9
%
26.6
%
N/A

Operating income -- TTM




$
1,507

$
1,916

$
2,329

$
2,762

N/A

Operating margin -- TTM % of AWS net sales




19.1
%
21.6
%
23.4
%
24.9
%
N/A

Consolidated Segments Before Stock-Based Compensation and Other:
 
 
 
 
 
 
 
Operating income
$
1,075

$
993

$
1,750

$
1,660

$
2,108

$
1,383

39
%
Operating income -- Y/Y growth, excluding F/X
168
%
N/A

67
%
128
%
92
%
38
%
N/A

Operating margin -- % of Consolidated net sales
4.6
%
3.9
%
4.9
%
5.7
%
6.9
%
4.2
%
N/A

Operating income -- TTM
$
2,682

$
3,811

$
4,523

$
5,478

$
6,511

$
6,902

81
%
Operating margin -- TTM % of Consolidated net sales
2.8
%
3.8
%
4.2
%
4.8
%
5.4
%
5.4
%
N/A















AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(in millions, except inventory turnover, accounts payable days, and employee data)
(unaudited)

 
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Y/Y %
Change
Supplemental
 
 
 
 
 
 
 
Supplemental North America Segment Net Sales:
 
 
 
 
 
 
 
  Media
$
2,620

$
2,963

$
3,931

$
3,208

$
2,928

$
3,237

9
 %
  Media -- Y/Y growth, excluding F/X
7
%
9
%
12
%
8
%
12
%
9
%
N/A

  Media -- TTM
$
11,867

$
12,096

$
12,483

$
12,722

$
13,030

$
13,304

10
 %
  Electronics and other general merchandise
$
10,987

$
11,840

$
17,325

$
13,511

$
14,459

$
15,327

29
 %
  Electronics and other general merchandise -- Y/Y growth, excluding F/X
32
%
35
%
28
%
32
%
32
%
29
%
N/A

  Electronics and other general merchandise -- TTM
$
43,559

$
46,606

$
50,401

$
53,663

$
57,134

$
60,622

30
 %
  Electronics and other general merchandise -- TTM % of North America net sales
77
%
78
%
79
%
80
%
80
%
81
%
N/A

  Other
$
189

$
203

$
245

$
277

$
287

$
310

53
 %
Supplemental International Segment Net Sales:
 
 
 
 
 
 
 
  Media
$
2,094

$
2,320

$
3,292

$
2,480

$
2,283

$
2,491

7
 %
  Media -- Y/Y growth, excluding F/X
3
%
6
%
5
%
9
%
7
%
7
%
N/A

  Media -- TTM
$
10,329

$
10,140

$
10,026

$
10,186

$
10,375

$
10,546

4
 %
  Electronics and other general merchandise
$
5,425

$
5,901

$
8,491

$
7,034

$
7,504

$
8,056

36
 %
  Electronics and other general merchandise -- Y/Y growth, excluding F/X
31
%
32
%
31
%
33
%
36
%
36
%
N/A

  Electronics and other general merchandise -- TTM
$
23,072

$
23,814

$
25,196

$
26,851

$
28,930

$
31,084

31
 %
  Electronics and other general merchandise -- TTM % of International net sales
69
%
70
%
71
%
72
%
73
%
74
%
N/A

  Other
$
46

$
46

$
58

$
52

$
57

$
62

37
 %
Balance Sheet
 
 
 
 
 
 
 
Cash and marketable securities -- ending
$
14,001

$
14,428

$
19,808

$
15,859

$
16,540

$
18,347

27
 %
Inventory, net -- ending
$
7,470

$
8,981

$
10,243

$
9,582

$
9,588

$
10,696

19
 %
Inventory turnover, average -- TTM
8.9

8.6

8.5

8.6

8.6

8.5

(1
)%
Property and equipment, net -- ending
$
19,479

$
20,636

$
21,838

$
23,308

$
25,190

$
27,177

32
 %
Accounts payable -- ending
$
12,391

$
14,437

$
20,397

$
14,990

$
16,123

$
18,801

30
 %
Accounts payable days -- ending
74

79

77

72

77

81

3
 %
Stock-based Compensation Expense
 
 
 
 
 
 
 
Cost of sales










$
7

N/A

Fulfillment
$
132

$
122

$
137

$
116

$
186

$
165

35
 %
Marketing
$
50

$
48

$
57

$
56

$
80

$
85

76
 %
Technology and content
$
319

$
309

$
364

$
317

$
419

$
434

41
 %
General and administrative
$
62

$
65

$
48

$
55

$
83

$
85

31
 %
Total stock-based compensation expense
$
563

$
544

$
606

$
544

$
768

$
776

43
 %
Other
 
 
 
 
 
 
 
WW shipping revenue
$
1,399

$
1,494

$
2,328

$
1,820

$
2,000

$
2,154

44
 %
WW shipping revenue -- Y/Y growth
57
%
43
%
37
%
40
%
43
%
44
%
N/A

WW shipping costs
$
2,340

$
2,720

$
4,170

$
3,275

$
3,362

$
3,897

43
 %
WW shipping costs -- Y/Y growth
29
%
35
%
37
%
42
%
44
%
43
%
N/A

WW net shipping costs
$
941

$
1,226

$
1,842

$
1,455

$
1,362

$
1,743

42
 %
WW net shipping costs -- Y/Y growth
2
%
26
%
37
%
44
%
45
%
42
%
N/A

WW paid units -- Y/Y growth
22
%
26
%
26
%
27
%
28
%
28
%
N/A

WW seller unit mix -- % of WW paid units
45
%
46
%
47
%
48
%
49
%
50
%
N/A

Employees (full-time and part-time; excludes contractors & temporary personnel)
183,100

222,400

230,800

245,200

268,900

306,800

38
 %





Amazon.com, Inc.
Certain Definitions
Customer Accounts
References to customers mean customer accounts, which are unique e-mail addresses, established either when a customer places an order or when a customer orders from other sellers on our websites. Customer accounts exclude certain customers, including customers associated with certain of our acquisitions, Amazon Payments customers, AWS customers, and the customers of select companies with whom we have a technology alliance or marketing and promotional relationship. Customers are considered active when they have placed an order during the preceding twelve-month period.
Seller Accounts
References to sellers means seller accounts, which are established when a seller receives an order from a customer account. Sellers are considered active when they have received an order from a customer during the preceding twelve-month period.

AWS Customers

References to AWS customers mean unique AWS customer accounts, which are unique e-mail addresses that are eligible to use AWS services. This includes AWS accounts in the AWS free tier. Multiple users accessing AWS services via one account are counted as a single account. Customers are considered active when they have had AWS usage activity during the preceding one-month period.
Units
References to units mean physical and digital units sold (net of returns and cancellations) by us and sellers at Amazon domains worldwide — for example www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, www.amazon.cn, www.amazon.it, www.amazon.es, www.amazon.com.br, www.amazon.in, www.amazon.com.mx, www.amazon.com.au, www.amazon.nl, www.diapers.com, www.shopbop.com, and www.zappos.com — as well as Amazon-owned items sold through non-Amazon domains. Units sold are paid units and do not include units associated with AWS, certain acquisitions, rental businesses, or advertising businesses, or Amazon gift cards.

Contacts:
 
 
 
Amazon.com Investor Relations
 
Amazon.com Public Relations
Darin Manney, ir@amazon.com
 
Ty Rogers, amazon-pr@amazon.com
www.amazon.com/ir
 
www.amazon.com/about


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