Amazon Conference Call Highlights

Amazon

reported its second-quarter earnings on Thursday. Shares of the company are down more than 10%. Below are some key takeaways from its conference call: The Results: • Trailing 12-month operating cash flow increased 18% to $5.33 billion. • Trailing 12-month free cash flow increased to $1.04 billion. • Trailing 12-month capital expenditures were $4.29 billion. • Return on invested capital was 6%, up from 2%. • The combination of common stock and stock-based awards outstanding was 480 million shares compared with 474 million one year ago. • Worldwide revenue grew 23% to $19.34 billion or 22% excluding the $237 million favorable impact from year-over-year changes in foreign exchange rates. • Media revenue increased to $4.84 billion, up 10%, or 9% excluding foreign exchange. • Active customer accounts exceeded 250 million. Worldwide active seller accounts were more than 2 million. Seller units represented 41% of paid units. • Cost of sales was $13.4 billion or 69.3% of revenue compared with 71.4%. • In the International segment revenue grew 18% to $7.34 billion. Excluding the $246 million year-over-year favorable foreign exchange impact, revenue growth was 14%. • Media revenue grew 7% to $2.38 billion or 4% excluding foreign exchange. • Our income tax expense was $94 million. Guidance: • For Q3 2014, we expect net sales of between $19.7 billion and $21.5 billion or growth of between 15% and 26%. • This guidance anticipates approximately 120 basis points of favorable impact from foreign exchange rates. • GAAP operating loss to be between $810 million loss and a $410 million loss compared to a $25 million loss in third quarter of 2013. • This includes approximately $410 million for stock-based compensation amortization of intangible assets. • We remain heads-down focused on driving a better customer experience through price, selection, and convenience. • We believe putting customers first is the only reliable way to create lasting value for shareholders.