This is a summary of the fourth quarter fiscal 2008 earnings call conducted by Amazon.com, Inc. (AMZN) on January 29, 2009.
Management:
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SVP & CFO: Thomas Szkutak
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Chairman, President & CEO: Jeff Bezos
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IR: Rob Eldridge
Key Investor Issues:
- Profit in the fourth quarter was $225 million, or 52 cents per share, versus $207 million, or 48 cents per share, a year ago.
- Revenue rose 18% to $6.7 billion. If not for the strengthening dollar, revenue would have risen 24%.
- Sales of items like books, CDs and DVDs climbed 9% to $3.64 billion, and sales of electronics and other merchandise rose 31% to $2.89 billion.
- For the full year, Amazon earned $645 million, or $1.49 per share, on $19.2 billion in revenue versus $476 million, or $1.12 per share, on revenue of $14.8 billion during 2007.
Fourth Quarter Highlights:
- Trailing 12-month free cash flow grew 16% to $1.36 billion.
- Return on invested capital was 41%, down from 55%.
ROIC is trailing 12-month free cash flow divided by average total assets minus current liabilities, excluding the current portion of long-term debt, over five quarter ends. The combination of common stock and stock-based awards outstanding was 446 million shares compared with 435 million.
Worldwide revenue grew 18% to $6.7 billion, or 24% excluding the $320 million unfavorable impact from year-over-year changes in foreign exchange rate.
- Media revenue increased to $3.64 billion, up 9%, or 15% excluding FX. EGM revenue increased to $2.89 billion, up 31%, or 36% excluding FX.
- Worldwide EGM increased to 43% of worldwide sales, up from 39%.
- Worldwide unit growth was 28%.
Active customer accounts exceeded 88 million, up 16%.
- Worldwide active seller accounts were more than 1.5 million, up 18%.
- Seller units were 27% of total units versus 26%.
- Worldwide gross profit was $1.35 billion, up 15%.
Fulfillment, marketing, technology and content, and G&A combined was $989 million, or 14.7% of sales, down 9 basis points year-over-year. Fulfillment was $530 million, or 7.9% of revenue compared with 8.2%. Tech and content was $236 million, or 3.5% of revenue compared with 3.4%.
In the North America segment, revenue grew 18% to $3.63 billion.
- Media revenue grew 7% to $1.75 billion.
- EGM revenue grew 30% to $1.73 billion, representing 48% of North America revenues, up from 43%.
Kindle revenue and cost are recognized over a two-year period. The Kindle Store contains the largest collection of e-books available anywhere in the world. Selection increased by 45,000 titles in the fourth quarter, bringing the total to 230,000 titles. 103 out of 112 current New York Times Best Sellers are available and, along with most new releases, are priced at $9.99 or less.
In addition, the Kindle Store recently added the Arizona Republic, Baltimore Sun, Orange County Register and USA Today and now offers newspapers from eight of the top ten metro areas in the United States.
North America gross profit grew 12% to $781 million and gross margin decreased 114 basis points to 21.5%, driven by lower prices for our customers, including free shipping offers in Amazon Prime, and changes in product mix, partially offset by higher other revenue. North America segment operating income declined 15% to $130 million, a 3.6% operating margin.
In the International segment, revenue grew 19% to $3.07 billion.
- Revenue growth was 31%, adjusting for the $308 million year-over-year unfavorable FX impact during the quarter.
- Media revenue grew 12% to $1.89 billion, or 22% excluding FX.
- EGM grew 32% to $1.16 billion, or 46% excluding FX. EGM now represents 38% of international revenues, up from 34%.
International gross profit grew 20% to $567 million, or grew 32% excluding the impact from foreign exchange rates, while gross margin increased 23 basis points to 18.5%, driven by improvements in vendor pricing and increases in 3P product sales, partially offset by lower prices for the customers and changes in product mix.
