Amazon.com Sales Jump 32%, Profits Up 38%

MAIN NEWS HEADLINES
May 3 – May 10, 2007 Edition

Amazon.com

Sales Jump 32%,

Profits Up 38%

SEATTLE/4/25/07–Amazon.com, Inc. announced April 24 that first quarter sales ending March 31 2007 surpassed $3 Billion, up 32% Year over Year, and operating Profit Grew 38%.

Operating cash flow was $726 million for the trailing twelve months, compared with $724 million for the trailing twelve months ended March 31, 2006. Free cash flow was $521 million for the trailing twelve months, an increase of 4% compared with $501 million for the trailing twelve months ended March 31, 2006.

Net sales increased 32% to $3.02 billion in the first quarter, compared with $2.28 billion in first quarter 2006. Excluding the $84 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales grew 29% compared with first quarter 2006. Operating income increased 38% to $145 million in the first quarter, compared with $106 million in first quarter 2006. Net income increased 115% to $111 million in the first quarter, or $0.26 per diluted share, compared with net income of $51 million, or $0.12 per diluted share in first quarter 2006.

"We’re pleased with our overall strong growth and especially with the number of people joining Amazon Prime," said Jeff Bezos, founder and CEO of Amazon.com. "Prime continues to grow as a percentage of overall units shipped, and we’re very grateful to our Amazon Prime members."

Amazon Prime, Amazon.com‘s first-ever membership program, was introduced in February 2005. For a flat membership fee of $79 per year, Amazon Prime members get unlimited, express two-day shipping for free, with no minimum purchase requirement on over a million eligible items sold by Amazon.com.

Highlights

North America segment sales, representing the Company’s U.S. and Canadian sites, were $1.62 billion, up 30% from first quarter 2006. International segment sales, representing the Company’s U.K., German, Japanese, French and Chinese sites, were $1.39 billion, up 35% from first quarter 2006. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International net sales growth was 27%. Worldwide Media grew 26% to $1.99 billion in first quarter 2007, compared to $1.58 billion in first quarter 2006. Worldwide Electronics & Other General Merchandise grew 48% to $947 million in first quarter 2007, and increased to 31% of worldwide net sales compared with 28% in first quarter 2006. Amazon Enterprise Solutions Europe and leading UK retailer Marks & Spencer launched a leading-edge multi-channel e-commerce solution, including website (www.marksandspencer.com), phone catalog, customer support applications and point-of-sale system integration using the proven technology and expertise of Amazon. Amazon Europe launched a Sports & Leisure store on its amazon.co.uk website, with thousands of products to choose from in categories like fitness, team sports, outdoor sports, clothing and accessories, footwear and more. Amazon Europe launched a Toys store on its amazon.fr website, offering customers a selection of thousands of items from well-known brands, including Hasbro, Mattel and LEGO. Over 240,000 developers have registered to use Amazon Web Services, up greater than 50% year-over-year. Additionally, just over one year after introducing Amazon S3, a simple storage service for software developers, over 5 billion data objects are stored using this web service. Amazon’s Japan website launched the Merchants@ technology, which enables larger, branded businesses to offer their selection of new products on www.amazon.co.jp. Amazon Business Solutions expanded its Fulfillment by Amazon program in the US by enabling multi-channel order fulfillment for third parties. The Company launched "Amazon Unbox on TiVo," available to over 1.5 million broadband-ready TiVo boxes and offering subscribers a way to find, download and watch on their televisions thousands of movies and TV shows available through Amazon Unbox.

Common shares outstanding plus shares underlying stock-based awards outstanding totaled 430 million on March 31, 2007, compared with 438 million a year ago. During the quarter, the Company repurchased 6 million shares for $248 million.

Looking ahead to the second quarter 2007, Amazon expects net sales to be between $2.70 billion and $2.85 billion, or to grow between 26% and 33% compared with second quarter 2006. Operating income is expected to be between $65 million and $105 million, or grow between 39% and 125% compared with second quarter 2006. This guidance includes $45 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional intangible assets are recorded and that there are no further revisions to stock-based compensation estimates.

For the full 2007 year, net sales are expected to be between $13.40 billion and $14.00 billion, or to grow between 25% and 31% compared with 2006. Operating income is expected to be between $463 million and $593 million, or grow between 19% and 52% compared with 2006. This guidance includes $170 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional intangible assets are recorded and that there are no further revisions to stock-based compensation estimates.

Additionally, the Company’s Board of Directors has authorized the Company to repurchase up to $500 million of the Company’s common stock within the next 24 months, through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions or a combination of the foregoing. The program allows the Company to opportunistically repurchase its shares.