Amazon.com
Summary
- Amazon has organized its operations into three segments: North America, International, and Amazon Web Services (“AWS”).
- 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Career Choice, Fire tablets, Fire TV, Amazon Echo, Alexa, Just Walk Out technology, Amazon Studios, and The Climate Pledge are some of the things pioneered by Amazon.
Amazon.com (Nasdaq:AMZN, LSE:0R1O) opened its virtual doors on the World Wide Web in July 1995. The company seeks to be Earth’s most customer-centric company.
Recent developments
AWS to Launch an Infrastructure Region in Thailand1
October 17, 2022; Amazon Web Services (AWS), an Amazon.com, Inc. company announced plans to open an infrastructure Region in Thailand. The new AWS Asia Pacific (Bangkok) Region will consist of three Availability Zones, adding to the existing 87 Availability Zones across 27 geographic regions. Globally, AWS has now announced plans for 24 more Availability Zones across eight more AWS Regions in Australia, Canada, India, Israel, New Zealand, Spain, Switzerland, and Thailand. The upcoming AWS Region in Thailand will enable developers, startups, and enterprises, as well as government, education, and nonprofit organizations, to run their applications and serve end users from AWS data centers located in Thailand, ensuring that customers who want to keep their data in Thailand can do so. In addition, as part of its commitment to the region, AWS plans an estimated investment of more than $5 billion (190 billion baht) in Thailand over 15 years.
Common Stock Split
On May 27, 2022, the company effected a 20-for-1 stock split of its common stock and proportionately increased the number of authorized shares of common stock.
Financial Highlights
Second Quarter June 30, 2022 Results
July 28, 2022; amazon.com, Inc. announced financial results for its second quarter ended June 30, 2022.2
Operating cash flow decreased 40% to $35.6 billion for the trailing twelve months, compared with $59.3 billion for the trailing twelve months ended June 30, 2021.
Free cash flow decreased to an outflow of $23.5 billion for the trailing twelve months, compared with an inflow of $12.1 billion for the trailing twelve months ended June 30, 2021.
Free cash flow less principal repayments of finance leases and financing obligations decreased to an outflow of $33.5 billion for the trailing twelve months, compared with an inflow of $0.6 billion for the trailing twelve months ended June 30, 2021.
Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations decreased to an outflow of $26.1 billion for the trailing twelve months, compared with an inflow of $4.2 billion for the trailing twelve months ended June 30, 2021.
Common shares outstanding plus shares underlying stock-based awards totaled 10.6 billion on June 30, 2022, compared with 10.4 billion one year ago. All share and per share information throughout this release has been retroactively adjusted to reflect the 20-for-1 stock split effected on May 27, 2022.
Net sales increased 7% to $121.2 billion in the second quarter, compared with $113.1 billion in second quarter 2021. Excluding the $3.6 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 10% compared with second quarter 2021.
Operating income decreased to $3.3 billion in the second quarter, compared with $7.7 billion in second quarter 2021.
Net loss was $2.0 billion in the second quarter, or $0.20 per diluted share, compared with net income of $7.8 billion, or $0.76 per diluted share, in second quarter 2021. Second quarter 2022 net loss includes a pre-tax valuation loss of $3.9 billion included in non-operating expense from its common stock investment in Rivian Automotive, Inc.
Prime members worldwide shopped more and saved more this Prime Day than any other Prime Day event, purchasing more than 300 million items and saving more than $1.7 billion. On July 12 and July 13, Prime members worldwide purchased more than 100,000 items per minute, and some of the best-selling categories were Amazon Devices, Consumer Electronics, and Home. Amazon Devices had a record-breaking Prime Day, selling more devices than any other Prime Day event.
Automakers continue to launch Alexa integrations in new vehicle models, including the 2023 Acura Integra, 2023 GM Equinox, and 2022 Lucid Air. With Alexa Built-in, customers can ask Alexa to navigate, play music and audiobooks, share the news, check the weather, control smart home devices, pay for gas, and find parking. Customers can also remotely control their vehicle from home by asking Alexa to lock or unlock the car doors, check gas levels or charging range, and start or stop the engine. These automakers join other companies with existing integrations such as Audi, BMW, Chrysler, Ford, GM, Jaguar-Land Rover, Jeep, Mahindra, Rivian, and Volkswagen.
Amazon has organized its operations into three segments: North America, International, and AWS. These segments reflect the way the Company evaluates its business performance and manages its operations.
North America sales increased 10% in Q2 2022, and 9% for the six months ended June 30, 2022 compared to the comparable prior year periods. The sales growth primarily reflects increased unit sales, including sales by third-party sellers, and advertising sales. Increased unit sales were driven largely by its continued focus on price, selection, and convenience for its customers, including from its shipping offers.
International sales decreased 12% in Q2 2022, and 9% for the six months ended June 30, 2022 compared to the comparable prior year periods, primarily due to the impact of foreign currency exchange rates, and also due to decreased unit sales, partially offset by increased subscription services and advertising sales. Unit sales decreased compared to the higher levels the company experienced in the comparable prior year periods due to widespread regional and national COVID-19 lockdowns in the 2021 periods. Changes in foreign currency exchange rates impacted International net sales by $(3.5) billion for Q2 2022, and by $(5.3) billion for the six months ended June 30, 2022.
AWS sales increased 33% in Q2 2022, and 35% for the six months ended June 30, 2022 compared to the comparable prior year periods. The sales growth primarily reflects increased customer usage, partially offset by pricing changes. Pricing changes were driven largely by its continued efforts to reduce prices for its customers.
The North America operating loss in Q2 2022 and for the six months ended June 30, 2022, as compared to the operating income in the comparable prior year periods, is primarily due to increased shipping and fulfillment costs, due in part to increased investments in its fulfillment network, increased transportation costs, increased wage rates and incentives, and fulfillment network inefficiencies, and growth in certain operating expenses, partially offset by increased unit sales, including sales by third-party sellers, and advertising sales. Changes in foreign exchange rates positively impacted operating income (loss) by $61 million for Q2 2022, and by $103 million for the six months ended June 30, 2022.
The International operating loss in Q2 2022 and for the six months ended June 30, 2022, as compared to the operating income in the comparable prior year periods, is primarily due to: increased shipping and fulfillment costs, due in part to increased investments in its fulfillment network, increased transportation costs, increased wage rates and incentives, and fulfillment network inefficiencies; decreased unit sales; and growth in certain operating expenses; partially offset by increased advertising sales. Changes in foreign exchange rates negatively impacted operating income (loss) by $231 million for Q2 2022, and by $310 million for the six months ended June 30, 2022.
The increase in AWS operating income in absolute dollars in Q2 2022 and for the six months ended June 30, 2022, compared to the comparable prior year periods, is primarily due to increased customer usage and cost structure productivity, including a reduction in depreciation and amortization expense from its change in the estimated useful lives of its servers and networking equipment, partially offset by increased payroll and related expenses and spending on technology infrastructure, all of which were primarily driven by additional investments to support AWS business growth, and reduced prices for its customers. Changes in foreign exchange rates positively impacted operating income by $335 million for Q2 2022, and by $498 million for the six months ended June 30, 2022.
Company Overview
Some of the things pioneered by Amazon are 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Career Choice, Fire tablets, Fire TV, Amazon Echo, Alexa, Just Walk Out technology, Amazon Studios, and The Climate Pledge.
Amazon Store
wide selection of products is through the 1.7 million small and medium businesses around the world selling on Amazon.com and offering more options for customers.3
Delivery and Logistics
The company operates award-winning Customer Service teams managing Amazon fulfillment center, or delighting its customers by delivering packages directly to millions of customers.
Devices and Services
From Alexa and Echo, Fire TV, Fire Tablets, and more, customers are using devices and services to make their daily lives easier and more enjoyable.
Amazon Web Services
AWS is the world’s most comprehensive and broadly adopted cloud platform, offering over 200 fully featured services from data centers globally.
Entertainment
Th company offers world-class entertainment through Amazon Originals, Prime Video, Audible, Twitch, Amazon Music, Prime Gaming, and more. Amazon’s digital entertainment products enable customers to access the latest apps and games, stream or download movies, TV shows, and music, and gives customers the ability to access their own files anywhere in the world.
