The company posted net sales of $25.59 billion in the fourth quarter, up 20 percent from the same quarter a year ago, but short of the more than $26 billion in sales expected by the analysts polled in advance by Thomson Reuters. Earnings per share of 51 cents missed expectations by 15 cents based on the Thomson survey, or as much as 18 cents according to other analyst surveys.
The company’s shares are down 10 percent in after-hours trading to $362.50 as of 1:30 p.m. Pacific time. Here’s the company’s full earnings release:
Amazon.com Announces Fourth Quarter Sales up 20% to $25.59 Billion
SEATTLE–(BUSINESS WIRE)–Jan. 30, 2014– Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its fourth quarter ended December 31, 2013.
Operating cash flow increased 31% to $5.47 billion for the trailing twelve months, compared with $4.18 billion for the trailing twelve months ended December 31, 2012. Free cash flow increased to $2.03 billion for the trailing twelve months, compared with $395 million for the trailing twelve months ended December 31, 2012. Free cash flow for the trailing twelve months ended December 31, 2012 includes fourth quarter cash outflows for purchases of corporate office space and property in Seattle, Washington, of $1.4 billion.
Common shares outstanding plus shares underlying stock-based awards totaled 476 million on December 31, 2013, compared with 470 million one year ago.
Fourth Quarter 2013
Net sales increased 20% to $25.59 billion in the fourth quarter, compared with $21.27 billion in fourth quarter 2012. Excluding the $258 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales grew 22% compared with fourth quarter 2012.
Operating income increased 26% to $510 million in the fourth quarter, compared with $405 million in fourth quarter 2012. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $7 million.
Net income increased to $239 million in the fourth quarter, or $0.51 per diluted share, compared with $97 million, or$0.21 per diluted share, in fourth quarter 2012.
“It’s a good time to be an Amazon customer. You can now read your Kindle gate-to-gate, get instant on-device tech support via our revolutionary Mayday button, and have packages delivered to your door even on Sundays,” said Jeff Bezos, founder and CEO of Amazon.com. “In just the last weeks, Forrester, YouGov, and ForeSee have all rankedAmazon #1 – and we believe we’re just scratching the surface of what world-class customer service can be.”
Full Year 2013
Net sales increased 22% to $74.45 billion, compared with $61.09 billion in 2012. Excluding the $1.28 billionunfavorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales grew 24% compared with 2012.
Operating income increased 10% to $745 million, compared with $676 million in 2012. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $29 million.
Net income was $274 million, or $0.59 per diluted share, compared with net loss of $39 million, or $0.09 per diluted share, in 2012.
- Amazon announced a record-setting holiday season for Amazon Prime, the annual membership program with tens of millions of members worldwide. Amazon is working hard to increase capacity for the Prime program. In December, Prime was so popular that Amazon limited new Prime membership signups during peak periods.
- Prime Instant Video selection increased from 33,000 to more than 40,000 movies and TV episodes in 2013.
- Selection in the Kindle Owners’ Lending Library in 2013 grew from 250,000 books to more than 475,000 books-books that Kindle owners with a Prime membership can borrow for free with no due dates.
- Amazon worked with the FAA to update its rules on the use of electronic devices on planes and now over 20 airlines allow customers to use their Kindles gate-to-gate.
- Amazon announced that on Christmas Day, the average response time when a customer tapped the Mayday button on Kindle Fire HDX was just 9 seconds, faster than the response time goal of 15 seconds. Thousands of Mayday Tech Advisors in the U.S. were available on Christmas Day to take calls from customers.
- Amazon announced a new version of Kindle FreeTime on Kindle Fire tablets that brings new educational features built from the ground up for parents and kids. The new features let parents set educational goals for their kids before switching to cartoons or games. Parents can also manage screen time with additional Time Limits features: set different limits for weekends vs. weekdays, and use “Bedtime” to set a curfew.
- Amazon announced a software update for the new Kindle Paperwhite that brings exclusive features including Goodreads integration and Kindle FreeTime.
- Amazon launched the Australian Kindle Store, offering over 2 million eBooks, including more than 400,000 Kindle-exclusive titles.
- Amazon launched Kindle MatchBook, a new benefit that gives customers the option to buy – for $2.99,$1.99, $0.99 or free – the Kindle edition of the print books they have purchased from Amazon, including more than 100,000 titles.
- Since its launch one year ago, Amazon AutoRip has delivered more than 2 billion digital music tracks to customers who have purchased AutoRip albums. The digital copy is automatically added to the customer’s Cloud Player library where it is available, free of charge, for immediate playback or download.
- Amazon Instant Video announced it is working with the world’s leading consumer electronics companies, top Hollywood studios and TV programmers, including Samsung, Warner Bros., Lionsgate, 20th Century Fox, Discovery and others to offer customers a premium 4K Ultra HD experience. In addition, Amazon Studios announced that it plans to shoot all 2014 full original series, including comedies and dramas, in 4K Ultra HD.
- Amazon Studios debuted new original series Alpha House and Betas. The first three episodes are available for all customers to enjoy, with the remaining episodes available exclusively on Prime Instant Video.
- Amazon Prime Instant Video will be the exclusive premium subscription home for Extant, a serialized drama starring Halle Berry and produced by Steven Spielberg’s Amblin Television. The drama will premiere on the CBS Television Network in June with unlimited streaming of all the series’ episodes available four days after their initial broadcast on CBS.
- Amazon launched AmazonSmile, a new program that makes it easy for customers to support their favorite charitable organizations every time they shop. Customers who visit AmazonSmile (smile.amazon.com) will find the exact same Amazon they know and love, with the added bonus that Amazon will donate a portion of the purchase price to their favorite charitable organization. There is no cap on the total donation amount and customers can choose from nearly one million organizations around the country.
- During the quarter, Amazon Web Services (AWS) announced over 100 new services and features, including Amazon AppStream, Amazon Kinesis, and three new Amazon Elastic Compute Cloud (Amazon EC2) instances. AWS now offers six Amazon EC2 instance families with 13 instance types to support a wide range of use-cases.
- AWS announced Amazon WorkSpaces, a fully managed desktop computing service in the cloud that allows end-users to access the documents, applications and resources they need with the device of their choice, including laptops, iPad, Kindle Fire, and Android tablets.
- The AWS Partner Network program, which provides technical, business and marketing support for the AWS partner ecosystem, has grown to more than 8,000 technology and consulting partners worldwide. In addition, AWS Marketplace now offers over 1,100 third-party software products for customers to choose from.
- AWS announced the upcoming launch of its China Region. This will be the fourth AWS Region in Asia Pacific and the tenth Region globally.
The following forward-looking statements reflect Amazon.com’s expectations as of January 30, 2014, 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 consumer spending, world events, the rate of growth of the Internet and online commerce, and the various factors detailed below.
First Quarter 2014 Guidance
Net sales are expected to be between $18.2 billion and $19.9 billion, or to grow between 13% and 24% compared with first quarter 2013.
Operating income (loss) is expected to be between $(200) million and $200 million, compared to $181 million in first quarter 2013.
This guidance includes approximately $350 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded and that there are no further revisions to stock-based compensation estimates.