Q2 2012 Earnings Call Transcript

Transcript Call Date 07/26/2012

Operator: Good day everyone and welcome to the Second Quarter 2012 Financial Results Teleconference. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today's call is being recorded.

For opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Sean Boyle. Please go ahead.

Sean Boyle - VP, IR: Hello and welcome to our Q2 2012 financial results conference call. Joining us today is Tom Szkutak, our CFO. We will be available for questions after our prepared remarks.

The following discussion and responses to your questions reflect management's views as of today, July 26, 2012 only, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent Annual Report on Form 10-K.

As you listen to today's conference call, we encourage you to have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter.

During this call, we will discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website, you'll find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures.

Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2011.

Now, I will turn the call over to Tom.

Thomas J. Szkutak - SVP and CFO: Thanks, Sean. I'll begin with comments on our second quarter financial results. Trailing 12 months operating cash flow was $3.22 billion compared with $3.21 billion. Trailing 12 months free cash flow decreased 40% to $1.1 billion. Return on invested capital was 11%, down from 21%. ROIC is trailing 12-month free cash flow divided by average total assets minus current liabilities, excluding the current portion of long-term debt over five quarter ends.

The combination of common stock and stock-based awards outstanding was 468 million shares compared with 468 million shares. Worldwide revenue grew 29% to $12.83 billion or 32%, excluding the $272 million unfavorable impact from year-over-year changes in foreign exchange rates. We're grateful to our customers who continue to take advantage of our low prices, vast selection and shipping offers.

Media revenue increased to $4.12 billion, up 13% or 15% excluding foreign exchange. EGM revenue increased to $8.16 billion, up 38%, or 42% excluding foreign exchange. Worldwide EGM increased to 64% of worldwide sales, up from 59%.

Worldwide paid unit growth was 43%. Active customer accounts exceeded to 180 million. Worldwide active seller accounts were more than 2 million. Seller units were 40% of paid units compared to 36% of paid units in Q2 of 2011.

Now I'll discuss operating expenses excluding stock-based compensation. Cost of sales was $9.49 billion or 73.9% of revenue compared with 75.9%. Fulfillment, marketing, technology and content, and G&A combined was $2.99 billion or 23.3% of sales, up approximately 307 basis points year-over-year. Fulfillment was $1.3 billion or 10.1% of revenue compared with 9.2%. Tech and content was $970 million or 7.6% of revenue compared with 6.3%. Marketing was $521 million, or 4.1% of revenue compared with 3.3%.

Read our Earnings Call Transcript disclaimer.
Add a Comment
E-mail me new replies.