July 27, 2005, 9:41 AM — Amazon.com Inc.'s revenue surged ahead in the second quarter both inside and outside the U.S. as electronics and other merchandise made up more of its business, the company reported Tuesday.
Revenue hit US$1.75 billion in the quarter ended June 30, up 26 percent from $1.39 billion in last year's second quarter. Sales in the Seattle company's international segment, including its U.K., French, German, Japanese and Chinese units, grew 33 percent from a year earlier to reach $793 million, according to a company statement.
The pioneer in online bookselling saw sales of electronics and general merchandise, as distinct from books and other media, grow to 26 percent of its worldwide sales from 23 percent a year earlier.
Net income declined to $52 million from $76 million in the second quarter of 2004, including $56 million in income tax expense, which was up from $5 million a year earlier. Amazon's earnings were $0.12 per share, down from $0.18 per share in last year's second quarter. However, that figure beat financial analysts' consensus estimate of $0.10 per share according to Thomson First Call. Amazon also slightly exceeded the consensus estimate of revenue, which was $1.73 billion.
The decline in net income in the quarter was primarily due to the increased tax expense, said Tom Szkutak, senior vice president and chief financial officer, in a conference call following the earnings announcement.
International sales make up a gradually growing share of Amazon's revenue. In the 12 months ended June 30, they made up 45 percent of net sales, up from 42 percent in the 12 months ended on June 30, 2004.
For the third quarter, Amazon expects revenue between $8.275 billion and $8.675 billion, representing growth of between 20 percent and 25 percent from last year's third quarter.
The biggest product introduction in Amazon's history, the release of the book Harry Potter and the Half-Blood Prince,hit on July 16. Amazon received more than 1.5 million pre-orders of the book, the company said. Because of the price it charged and the cost of the coordinated shipment of the eagerly awaited book, the company essentially broke even, but it hopes the experience makes young Harry Potter readers into happy long-term customers, executives said.
Customers have saved about $200 million on shipping by joining Amazon Prime, a paid membership program that gives users free two-day shipping and discounted overnight shipping, the company said. But Amazon is pleased with the results of the program so far and expects it to increase purchases by members, the executives said.