Amazon.com Announces Financial Results for Third Quarter 1997
SEATTLE, WA (October 23, 1997)-- Amazon.com, 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.
Amazon.com 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.
Amazon.com'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, Amazon.com 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, Amazon.com'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, Amazon.com 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 Amazon.com customers will benefit from immediate reductions in shipping times.
In September, Amazon.com launched major improvements to the Amazon.com 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.
Amazon.com extended its promotional placement significantly during the quarter. Beginning in September, AOL.com, Excite.com, and Yahoo! implemented extensive Amazon.com promotional placements as part of the strategic relationships established in June. In addition, Amazon.com became the premier bookseller on the AltaVista Search Network, the Prodigy Shopping Network, and Netscape's Netcenter Marketplace. Amazon.com continued to extend its Associates Program by offering a bonus to Premium Associates. These relationships extend Amazon.com'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, Amazon.com'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 Amazon.com'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.
Amazon.com, Inc., Earth's Biggest Bookstore, is the leading online retailer of books and is the premier bookseller on AOL.com, Yahoo!, Netscape, Excite.com, the AltaVista Search Network, and the Prodigy Shopping Network. Amazon.com 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. Amazon.com has virtually unlimited online shelf space and offers customers a vast selection through an efficient search-and-retrieval interface.
Amazon.com, Inc. is headquartered at 1516 Second Avenue, Seattle, WA 98101. Internet address: http://www.amazon.com. Telephone: 206-622-2335.
NOTE: Amazon.com, Earth's Biggest Bookstore, and 1-Click are service marks of Amazon.com, 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
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.