SEATTLE, WA (October 23, 1997)--, Inc. (Nasdaq: AMZN) today announced financial results for the third quarter of 1997.

Net sales for the third quarter were $37.9 million, a 36 percent increase over net sales of $27.9 million reported for the second quarter ended June 30, 1997. Sales increased 808 percent over net sales of $4.2 million reported for the third quarter of 1996. Net loss for the third quarter ended September 30, 1997 was $8.5 million, or $0.37 per share, compared with a net loss in the quarter ended June 30, 1997 of $6.7 million, or $0.31 per share. The company reported a net loss of $2.4 million, or $0.12 per share, in the quarter ended September 30, 1996. also announced that cumulative customer accounts grew to more than 940,000 by September 30, 1997, an increase of 54 percent from 610,000 customer accounts at the end of June. Repeat customer orders represented more than 55 percent of orders placed during the quarter ended September 30, 1997.'s audience reach increased dramatically during the quarter, according to Media Metrix: The PC Meter Company. The site was ranked as the No. 1 Internet site across all shopping categories among both business and household users in August 1997. More broadly, in August, moved to No. 29 in rank among all Internet sites compared to No. 62 in June and No. 87 in January. No other book retailer appeared among the top 500 sites. Among household users,'s reach rose to 4.5 percent in August, up from 3.2 percent in June.

"The strong growth in our customer base and our growing reach among Internet users demonstrate our leadership in this rapidly evolving market," said Jeff Bezos, president and chief executive officer. "During the quarter, we progressed along many fronts in our effort to build an enduring franchise. We intend to continue to invest aggressively in building our business and brand, enhancing our product and service offerings, expanding the range of products we offer to our customers, and broadening our distribution relationships with the goal of maintaining and extending our leadership position in this competitive market."

The company entered into agreements to increase its distribution center capacity to nearly six times the current level, including a new 200,000-square-foot facility in Delaware and a 70 percent increase in square footage in its Seattle facility. The capacity increases, scheduled for late 1997 and early 1998, will enable the company to stock hundreds of thousands of titles and support substantial future growth. In addition, by establishing distribution centers on both coasts, many customers will benefit from immediate reductions in shipping times.

In September, launched major improvements to the store, including powerful new features that increase the benefits of online shopping. The new features include a state-of-the-art Recommendation Center; 22 subject-browsing areas; and the use of a proprietary technology, 1- Click(SM) ordering, to streamline the ordering process. These enhancements represent the largest-ever step forward in the company's strategy of offering customers the easiest, most enjoyable, and most effective way to find their next book. extended its promotional placement significantly during the quarter. Beginning in September,,, and Yahoo! implemented extensive promotional placements as part of the strategic relationships established in June. In addition, became the premier bookseller on the AltaVista Search Network, the Prodigy Shopping Network, and Netscape's Netcenter Marketplace. continued to extend its Associates Program by offering a bonus to Premium Associates. These relationships extend's customer reach and brand visibility throughout the Internet.

This announcement contains forward-looking statements that involve risks and uncertainties, and actual results may differ materially from predicted results. Potential risks and uncertainties include, among others,'s limited operating history, the unpredictability of its future revenues, and risks associated with capacity constraints and management of growth. More information about factors that potentially could affect's financial results is included in the company's final prospectus, dated May 15, 1997, as well as in the company's Form 10Q for the quarter ended June 30, 1997, both filed with the Securities and Exchange Commission., Inc., Earth's Biggest Bookstore, is the leading online retailer of books and is the premier bookseller on, Yahoo!, Netscape,, the AltaVista Search Network, and the Prodigy Shopping Network. offers a catalog of 2.5 million titles, easy-to-use search and browse features, e-mail services, personalized shopping services, Web-based credit card payment, and direct shipping to customers. has virtually unlimited online shelf space and offers customers a vast selection through an efficient search-and-retrieval interface., Inc. is headquartered at 1516 Second Avenue, Seattle, WA 98101. Internet address: Telephone: 206-622-2335.

NOTE:, Earth's Biggest Bookstore, and 1-Click are service marks of, Inc. All other names are trademarks and/or registered trademarks of their respective owners.

Statements of Operations*
(in thousands, except per share amounts)

                                    (Unaudited)                                   Quarter Ended                                          September 30,                                          1997          1996         Net sales                 $ 37,887     $  4,173        Cost of sales               30,709        3,262         Gross profit                 7,178          911         Operating expenses:      Marketing and sales       10,979        2,251           Product development        3,582          755            General and       administrative            1,803          377               expenses               16,364        3,383         Loss from operations       (9,186)      (2,472)        Interest income                676           92          Net loss                 $ (8,510)    $ (2,380)       Net loss per share       $  (0.37)    $  (0.12)       Shares used in     computation of     net loss per share         22,863       19,041          22,550

Balance Sheets
(in thousands)

                                           September 30,    December 31,                                                1997          1996                                            (Unaudited)      (Audited)    ASSETS    Current Assets      Cash and cash equivalents                $ 44,687       $  6,248      Short-term investments                      3,494             --      Inventories                                 2,732            571      Prepaid expenses and other                  1,784            321        Total current assets                     52,697          7,140    Equipment and purchased software, net         4,403            985    Other long-term assets                          347            146        Total assets                           $ 57,447       $  8,271    LIABILITIES & STOCKHOLDERS' EQUITY    Current Liabilities      Accounts payable                         $ 15,386       $  2,852      Accrued advertising                            --            598      Accrued product development                    --            500      Other liabilities and accrued expenses      4,462            920        Total current liabilities                19,848          4,870    LT Lease Obligations                            181             --    Stockholders' equity:      Preferred stock, $0.01 par value -       Authorized, 10,000,000 shares       Issued and outstanding, none       and 569,396 shares, respectively              --              6      Common stock, $0.01 par value -       Authorized, 100,000,000 shares       Issued and outstanding, 23,858,702       and 15,900,229 shares, respectively          238            159    Additional paid-in capital                   63,749          9,873    Deferred compensation                       (2,291)          (612)    Accumulated deficit                        (24,278)        (6,025)        Total stockholders' equity               37,418          3,401    Total liabilities & stockholders' equity   $ 57,447       $  8,271

* Because of new requirements issued in 1998 by the Securities and Exchange Commission for companies that recently completed an initial public offering and new interpretation by the Financial Accounting Standards Board of the initial application of the Statement of Financial Accounting Standard No. 128, Earnings per Share, the number of shares used to calculate net loss per share was revised as of March 30, 1998 when the company filed its Annual Report on Form 10-K. Share counts and net loss per share shown are revised figures.