Third quarter financial results point to big losses but sales boost.
Amazon.com Inc., has announced its financial results for its third quarter ended September 30 2014, citing a 20% increase in net sales, but a significant overall net loss of $437 million (£272.4m).
In a continued downward streak, Amazon has reported operating losses of $544m (£339m) in the third quarter, compared with a $25m (£15.5m) loss during the same period in 2013.
Similarly, net loss was $437m (£272.4m) in the period ended September 30, compared to a significantly lower figure of $41m (£25.5m) in 2013. In terms of shares, this represents a drop from $0.95 (59p) per diluted share to $0.09 (0.05p).
However, there were some positive results for the company, including a 20% increase in net sales to $20.58bn (£12.8bn), compared with $17.09bn (£10.6bn) during the same period in 2013. The impact of favourable exchange rate fluctuations throughout the year resulted in a year-on-year boost of $13m (£8.1m).
Additionally, operating cash flow increased 15% to $5.71bn (£3.5bn) for the 12 months leading up to September 30 2014, compared with $4.98bn (£3.1bn) for the 12 months ended September 30 2013.
Free cash flow increased to $1.08bn (£673m), compared with $388m (£241m) for the twelve months ended September 30 2013.
Founder and chief executive officer of Amazon.com, Jeff Bezos, commented: “As we get ready for this upcoming holiday season, we are focused on making the customer experience easier and more stress-free than ever.
“In addition to our already low prices, we will offer more than 15,000 Lightning Deals with early access to select deals for Prime members, hundreds of millions of products across dozens of categories, curated gift lists like Holiday Toy List and Electronics Holiday Gift Guide, new features like #AmazonWishList, and a great new lineup of products like Kindle Voyage and Fire HD Kids Edition.”
Amazon has spent heavily in key areas over the past 12 months that have significantly impacted profits, including its grocery delivery service in the US, the $1bn acquisition of video game streaming service site Twitch, and its 3D printed product store.
This has resulted in an increase in operating expenses from $17.1bn (£10.6bn) in 2013 to £21.1bn (£13.1bn) in the months ended September 30 2014.
Amazon is predicting further losses in the fourth quarter, expecting operating income to drop somewhere in the region of $570m (£355m) and $430m (£267m), compared to $510m (£317.8m) in fourth quarter 2013. However, net sales are expected to grow in the region of $27.3bn (£17bn) and $30.3bn (£18.8bn) – roughly 7% to 18% compared to the fourth quarter in 2013.
Some reports suggest investors are losing patience in the company’s policy of reinvesting profits back into the business. This appears to be reflected in shares, which have fallen nearly 20% since the beginning of this year.