Press Release

<< Back Announces Financial Results for Fourth Quarter and 1997 Year End

Net Sales Increase 74 Percent Over Third Quarter

SEATTLE, Wa (January 22, 1998)--, Inc. (NASDAQ: AMZN) today announced financial results for the fourth quarter of 1997 and for the fiscal year.

Net sales for the fourth quarter were $66.0 million, a 74 percent increase over net sales of $37.9 million reported for the third quarter ended September 30, 1997.  Net sales increased 680 percent over net sales of $8.5 million reported for the fourth quarter of 1996.  Net loss for the fourth quarter ended December 31, 1997 was $9.3 million, or $0.41 per share, compared with a net loss in the quarter ended September 30, 1997 of $8.5 million, or $0.37 per share.  The company reported a net loss of $2.3 million or $0.12 per share in the quarter ended December 31, 1996.

Net sales for fiscal 1997 were $147.8 million, an 838 percent increase over net sales of $15.7 million reported for fiscal 1996.  Net loss for fiscal 1997 was $27.6 million, or $1.27 per share, compared with a net loss in fiscal 1996 of $5.8 million, or $0.31 per share. also announced that cumulative customer accounts grew to over 1,510,000 at December 31, 1997, an increase of 61 percent from 940,000 customer accounts at the end of September 1997 and 739 percent from 180,000 customer accounts at December 31, 1996.  Repeat customer orders represented more than 58 percent of orders placed during the quarter ended December 31, 1997.

During the quarter, continued to demonstrate its leadership in the online commerce arena.  Audience reach increased dramatically during the quarter, according to Media Metrix: The PC Meter Company.  December saw moving to number 22 in rank among all Internet sites for household users, and number 16 among all Internet sites for business users.  Among household users,'s reach rose to 6.3 percent in December, from 4.2 percent in September and 3.2 percent in June.  Among business users,'s reach rose to 8.8 percent in December, from 6.1 percent in September.'s growing audience reach was also measured by Relevant Knowledge, which ranked number  18 among all Internet sites in December, with an estimated 2.0 million unique visitors during the month, up from number 25 in October.

"The 1997 holiday season demonstrated increased acceptance of online commerce, which drove our exceptional growth in sales and customers," said Jeff Bezos, president and chief executive officer.  "Serving so many of our customers' holiday shopping needs capped a year of significant progress for We solidified and extended our leadership position in this rapidly evolving market, significantly improved our product and service offering, and increased our cash and investment balances by nearly $120 million. We intend to continue to invest aggressively in building our business and brand, enhancing our product and service offerings, expanding the range of products we offer to our customers and broadening our distribution relationships with the goal of maintaining and continuing to extend our leadership position."

During the quarter, opened its new 200,000 square foot distribution center in Delaware and completed the previously announced 70 percent expansion of its Seattle distribution center. These moves complete the company's planned expansion of its distribution center capacity to nearly six times previous floor space, enable the company to stock hundreds of thousands of titles and can support substantial future growth. Such expanded inventory will enable to increase the portion of books shipped same-day and broaden its direct-from-publisher buying programs. Establishing distribution centers on both coasts has already reduced shipping times for customers.

In November, introduced an innovative Gift Center to make gift giving fast and easy and to augment its powerful recommendation services. The Gift Center includes thousands of recommendations and a Gift Ideas for Kids feature that offers tailored gift ideas for children and young adults by age range. In addition, the company introduced gift certificates, including electronic gift certificates that can be delivered by e-mail. continued to extend its distribution relationships during the quarter, and ended the quarter with premier or exclusive relationships with the top three and five of the top six Internet sites, according to Media Metrix. During the quarter, GeoCities named its exclusive bookseller, providing placement throughout its themed communities and anchor tenant presence in the GeoCities Marketplace. In addition, became the premier bookseller on the @Home Network's shopping service, book directories and search pages, and Netscape made the exclusive bookseller in the recently launched Marketplace section of Netscape Netcenter. The company continued to add members to its Associates program, and ended the year with more than 28,000 registered Associate program members.

In December, substantially increased its cash and investment balances by completing a $75 million three-year credit facility. The fully funded facility provides the company with increased flexibility to pursue its long-term strategic objectives., Inc., Earth's Biggest Bookstore, is the leading online retailer of books and is the premier bookseller on, Yahoo!, Netscape,, GeoCities, the AltaVista Search Service, @Home Network, and the Prodigy Shopping Network. offers a catalog of 2.5 million titles, easy-to-use search and browse features, e-mail services, personalized shopping services, Web-based credit card payment, and direct shipping to customers. has virtually unlimited online shelf space and can offer customers a vast selection through an efficient search-and-retrieval interface, as well as streamlined ordering through 1-ClickSM technology.

This announcement contains forward-looking statements that involve risks and uncertainties, and actual results may differ materially from predicted results. Potential risks and uncertainties include, among others,'s limited operating history, the unpredictability of its future revenues, and risks associated with capacity constraints and management of growth. More information about factors that potentially could affect's financial results is included in the company's final prospectus, dated May 15, 1997, as well as the company's Form 10-Q for the third quarter ended September 30, 1997, both filed with the Securities and Exchange Commission., Earth's Biggest Bookstore, and 1-Click are service marks of, Inc. All other names are trademarks of their respective owners.

Statements of Operations*

(in thousands except per share amounts)
	                               Quarter Ended December 31,    Year Ended December 31,
	                                  1997          1996             1997	     1996	
Net sales                               $66,011       $8,468	      $147,758     $15,746
Cost of sales	                         53,119        6,577           118,945      12,287 
     Gross profit                        12,892        1,891            28,813       3,459
Operating expenses:						          		
     Marketing and sales                 16,306        2,938            38,964       6,090
     Product development                  4,520          901            12,485       2,313
     General and administrative           1,920          447             6,573       1,035
          Total operating expenses       22,746        4,286            58,022       9,438 
Loss from operations			 (9,854)      (2,395)          (29,209)     (5,979)
Interest income			            517           96             1,619         202 
     Net loss		                $(9,337)     $(2,299)         $(27,590)    $(5,777)
Net loss per share			 $(0.41)      $(0.12)	        $(1.27)	    $(0.31)
Shares used in computation 					    
     of net loss per share		 23,021       19,085            21,651      18,544

Balance Sheets

In thousands except share data
(preliminary pending completion of audit)
							Year Ended December 31,
                                                          1997          1996		

Current Assets:					       
     Cash and cash equivalents			       $109,810        $6,248	 
     Short-term investments				 15,256           - 
     Inventories					  8,971           571
     Prepaid expenses and other	                          3,298           321
        Total current assets				137,335         7,140
Equipment, net						  9,265           985
Deposits						    166	          146 
Deferred charges                                          2,240           -  
     Total assets			               $149,006        $8,271
Current Liabilities	                                   
     Accounts payable				        $32,697        $2,852
     Accrued expenses and other liabilities		  3,454           598
     Accrued product development                           -              500
     Other liabilities and accrued expenses               7,667           920
        Total current liabilites                         43,818         4,870

Long-term debt                                           76,521           -
Long-term leas obligations                                  181           -

Stockholder's Equity:
     Preferred stock 	
	Preferred stock, $0.01 per value -
	   Authorized, 10,000,000 shares
           Issued and outstanding, none
 	      and 569,396 shares, respectively              -               6

        Common stock, $0.01 per value -
           Authorized, 100,000,000 shares
           Issued and outstanding, 23,937,169
              and 15,900,229 shares, respectively            239           159

	Additional paid-in capital			  63,792         9,873
	Deferred compensation				  (1,930)         (612)
	Accumulated deficit				 (33,615)       (6,025)
		Total stockholders' equity		  28,486         3,401
	Total liabilities & stockholders' equity	$149,006        $8,271

* Because of new requirements issued in 1998 by the Securities and Exchange Commission for companies that recently completed an initial public offering and new interpretation by the Financial Accounting Standards Board of the initial application of the Statement of Financial Accounting Standard No. 128, Earnings per Share, the number of shares used to calculate net loss per share was revised as of March 30, 1998 when the company filed its Annual Report on Form 10-K. Share counts and net loss per share shown are revised figures.

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