Amazon.com, Inc. (
AMZN)
Q2 2011 Earnings Call Transcript
July 26, 2011 5:00 p.m. ET
Executives
John Felton – Director, Investment Relations
Thomas J. Szkutak – Senior Vice President and Chief Financial Officer
Analysts
James Friedland – Cowen and Company
Spencer Wang – Credit Suisse
Mark Mahaney – Citigroup
Douglas Anmuth – Barclays Capital
Youssef Squali – Jefferies & Company
Scott Devitt – Morgan Stanley
Colin Sebastian – Robert W. Baird
Brian Pitz – UBS
Jeetil Patel – Deutsche Bank Securities
Gene Munster – Piper Jaffray & Co.
Justin Post – Bank of America/Merrill Lynch
Presentation
Operator
Thank you for standing by. Good day, everyone and welcome to the Amazon.com Second Quarter 2011 Financial Results Teleconference. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today’s call is being recorded. For opening remarks, I will be turning the call over to the Director of Investor Relations, Mr. John Felton. Please go ahead.
John Felton
Hello and welcome to our Q2 2011 financial results conference call. Joining us today is Tom Szkutak, our CFO. We will be available for questions after our prepared remarks.
The following discussion and responses to your questions reflect Management’s views as of today, July 26, 2011, only and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today’s press release and our filings with the SEC, including our most recent Annual Report on Form 10-K.
As you listen to today’s conference call, we encourage you to have our Press Release in front of you, which includes our financial results, as well as metrics and commentary on the quarter. During this call, we will discuss certain non-GAAP financial measures.
In our press release, slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website. You will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2010.
Now, we’ll turn the call over to Tom.
Thomas J. Szkutak
Thanks, John. I’ll begin with comments on our second quarter financial results. Trailing 12-month operating cash flow increased 25% to $3.21 billion. Trailing 12-month free cash flow decreased 8%, to $1.83 billion. Return on invested capital was 21%, down from 34%. ROIC is TTM 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 468 million shares compared with 465 million shares.
Worldwide revenue grew 51%, to 9.91 billion, or 44%, excluding the $477 million favorable impact from year-over-year changes in foreign exchange. We’re grateful to our customers who continue to take advantage of our low prices, vast selection and shipping offers.
Media revenue increased to 3.66 billion, up 27% or 20%, excluding foreign exchange. EGM revenue increased to 5.89 billion, up 69%, or 62%, excluding foreign exchange. Worldwide EGM increased to 59% of worldwide sales up from 53%.
Worldwide paid unit growth was 56%, compared to 45% paid unit growth in Q1 2011. Active customer counts exceeded 144 million. Worldwide active seller accounts were more than 2 million. Seller units were 36% of paid units, compared to 36% of paid units in Q1 2011 and 34% of paid units in Q2 2010.
Now, I’ll discuss operating expenses, excluding stock-based compensation. The cost of sales was 7.52 billion or 75.9% of revenue, compared with 75.5%. Fulfillment, marketing, technology and content and G&A combined, was 2 billion or 20.2% of sales, up approximately 190 basis points year-over-year. Fulfillment was $909 million or 9.2% of revenue, compared with 8.5%.
