Internet retailing giant Amazon.com reported a huge first-quarter loss as expenses piled up but still beat Wall Street expectations. The Seattle-based company posted a net loss of $61.7m, up from $10.4m in the year-ago period and $46.4m in the prior quarter. Revenue for the quarter more than tripled year- over-year from $87.3m to $293.6m. The bottom line included acquisition-related charges of $25.3m, without which the loss for the quarter amounted to $0.23 per share, beating the $0.29 consensus estimate of analysts surveyed by First Call.
The company incurred a steep increase in overall costs as it continued to build its distribution infrastructure, increased marketing activities and entered new markets, with total operating expenses rising to $120.7m from $29.3m in the year-ago quarter. Sales and marketing expenses rose 205% year-over-year to $60.7m and product development costs jumped 221% to $23.5m. Adding to the overall drag, the newly-launched auction business won’t contribute to the top line any time soon and should be seen as an investment-stage business for a long time to come, according to chief executive Jeff Bezos.
The increased expenditures are in keeping with the company’s announced strategy of forgoing near-term profits as it makes heavy investments in an attempt to build its brand and become the premiere internet retailing site. The company has been selling books and other items on the web since 1994 but has yet to turn a profit. Bezos warned analysts on a conference call that the investments would continue, revenue growth ahead will not match historic levels and operational losses will increase throughout the remainder of the year – to about twice the level of the first-quarter net loss, depending upon top line growth. Amortization expenses related to recent acquisitions will also add several million dollars in expenses in the coming quarters.
Amazon said cumulative customer accounts rose by more than 2.2 million in the quarter and stood at over 8.4 million as of March. That represents a jump of more than 250% from the 2.3 million it had one year earlier. In addition, repeat customer orders accounted for about 66% of total orders during the quarter. Its international businesses now account for about 20% of overall sales. Gross margins for the quarter rose to 22.1% from 21.1% in the prior quarter. The company ended the quarter with 3,000 staff and cash and marketable securities of $1.4bn, a jump of more than $1bn from a year ago, thanks to its $1.25bn debt offering early in the quarter.
