This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF

HONG KONG, TH North America Equity Research

24 July 2015

Overweight
Amazon.com AMZN, AMZN US
Price: $482.18
Strong 2Q on Accelerating Growth & Profit Upside; Price Target: $710.00
Reiterate Overweight & Raising PT to $710 Previous: $535.00

Amazon delivered another quarter of very strong results with accelerating FXN Internet
revenue growth of 27% and significant CSOI outperformance as margin of 4.6% Doug Anmuth
AC
was the highest in more than 4 years. The primary drivers of upside were Intl (1-212) 622-6571
EGM, AWS, and margins in both NA and Intl. We believe Amazon is now reaping douglas.anmuth@jpmorgan.com
the benefits of its recently heavy investments in Prime, category expansion, and Bloomberg JPMA ANMUTH <GO>
fulfillment centers while also being more selective on new investments. As shown in Dae K Lee
AMZNs better than expected 3Q guidance, the company has strong momentum (1-212) 622-5673
heading into the back half with Prime Day success and still favorable comps related to dae.k.lee@jpmorgan.com

Japan and AWS a year ago. Our '15/'16 revenue estimates increase by 2%, but our Diana R Kluger, CFA
(1-212) 622-4539
CSOI projections increase by 22% / 10%. We are establishing a Dec-16 price target of
diana.r.kluger@jpmorgan.com
$710 (up from $535 for Dec-15 prior) based on our SOP analysis which assumes 0.8x
J.P. Morgan Securities LLC
2017E Retail GMV of $297B and 16x 2017E AWS EBITDA of $5.2B.
Price Performance
2Q upside across the board. Revenue of $23.2B increased 27% Y/Y FXN, ahead 500

of our $22.2B and consensus $22.4B, and above the high end of guidance. Top-line 450
400
outperformance came even with $1.4B of Y/Y FX headwinds, in-line with our $
350
estimate. Upside was driven by EGM acceleration in both NA and Int'l, which grew 300
32% and 31% FXN, respectively, and by AWS, which increased 81% Y/Y. CSOI of 250

$1,075M increased 166% Y/Y and was also 78% above our $604M projection. NA Jul-14 Oct-14 Jan-15 Apr-15 Jul-15

AMZN share price ($)

CSOI margin of 5.1% was up 210bps Y/Y. S&P500 (rebased)
YTD 1m 3m 12m
Intl EGM accel not just about Japan. Intl EGM of $5.4B increased 31% Y/Y Abs 56.3% 8.1% 23.6% 34.6%
FXN, accelerating from +21% in 1Q. AMZN indicated that roughly 1/2 of the Rel 54.2% 9.1% 24.1% 28.8%

overall 800bps sequential increase in total Int'l FXN revenue growth was due to
Japans consumption tax impact in 2Q14. However, we believe Int'l markets are
also benefiting from increased Prime adoption as Prime members grew faster Int'l
than NA in 2014 and PIV is likely helping in the UK and Germany.
AWS strength. AWS revenue accelerated to 81% Y/Y in 2Q w/a CSOI margin of
21%. A favorable comp from the 2Q14 price cuts helped, but usage growth likely far
outpaces that of revenue, and importantly, we believe AMZN is less vulnerable to
competitive pricing actions.
Highest profit margin since 1Q11. CSOI margin of 4.6% was up ~250bps Y/Y as
gross margin expanded nearly 400bps. AMZN is benefiting from moving closer to
customers and being more selective w/investments, along with the ongoing mix-shift
toward AWS.

Amazon.com Inc (AMZN;AMZN US)

FYE Dec 2013A 2014A 2015E 2015E 2016E 2016E 2017E Company Data
(Prev) (Curr) (Prev) (Curr) Price ($) 482.18
EPS - Reported ($) Date Of Price 23 Jul 15
Q1 (Mar) 0.18 0.23 (0.12)A (0.12)A - - - 52-week Range ($) 493.20-284.00
Q2 (Jun) (0.02) (0.27) (0.04) 0.19A - - - Market Cap ($ mn) 225,178.10
Q3 (Sep) (0.09) (0.94) (0.10) 0.01 - - - Fiscal Year End Dec
Q4 (Dec) 0.51 0.45 1.76 1.54 - - - Shares O/S (mn) 467
FY 0.58 (0.51) 1.50 1.63 4.45 4.41 7.61 Price Target ($) 710.00
Bloomberg EPS FY ($) 2.95 2.16 - 4.27 - 6.46 10.65 Price Target End Date 31-Dec-16
Source: Company data, Bloomberg, J.P. Morgan estimates.

See page 7 for analyst certification and important disclosures.

J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.

www.jpmorganmarkets.com
This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

Summary of the Quarter

Figure 1: AMZN 2Q Results vs. J.P. Morgan Estimates
$ in millions, except per share data
Amazon 2Q15 JPME
($ in millions) JPME Actuals Diff (%) Consensus Diff (%)
Total Revenue 22,194 23,185 4.5% 22,397 3.5%
Media Revenue 4,605 4,714 2.4%
Electronics & General Merchandise Revenue 15,836 16,412 3.6%
AWS 1,508 1,824 21.0%
Other Revenue 244 235 -3.8%
Consoldated Segment Operating Income 604 1,075 78.0%
% Margin 2.7% 4.6% 192 bps
GAAP EPS -$0.04 $0.19 NA -$0.14 NA

Y/Y Grow th
Total Revenue 14.8% 19.9% 15.8%
Media Revenue -4.9% -2.7%
Electronics & General Merchandise Revenue 19.3% 23.6%
AWS 50.0% 81.5%
Other Revenue 14.7% 10.3%
Consoldated Segment Operating Income 49.5% 166.1%
GAAP EPS NA NA N/A

Source: J.P. Morgan estimates, Company data.

Adjusting Estimates
Figure 2: Adjusting J.P. Morgan Estimates
Am azon 3Q15 JPME 4Q15 JPME 2015 JPME 2016 JPME
($ in millions) Old Ne w Old Ne w Old New Old New
Net Reve nue 23,612 24,634 34,057 34,383 102,580 104,919 122,446 125,342
Y/Y Growth 14.7% 19.7% 16.1% 17.2% 15.3% 17.9% 19.4% 19.5%
% chg vs. old 4.3% 1.0% 2.3% 2.4%

Gros s Profit 7,124 8,032 10,248 10,934 31,372 34,312 39,394 41,473
Y/Y Growth 19.7% 34.9% 18.4% 26.3% 19.6% 30.8% 25.6% 20.9%
Margin (%) 30.2% 32.6% 30.1% 31.8% 30.6% 32.7% 32.2% 33.1%
% chg vs. old 12.7% 6.7% 9.4% 5.3%

CSOI 472 690 1,600 1,654 3,381 4,125 4,849 5,311

Y/Y Growth NA NA 54.1% 59.4% 87.0% 128.1% 43.4% 28.7%
Margin (%) 2.0% 2.8% 4.7% 4.8% 3.3% 3.9% 4.0% 4.2%
% chg vs. old 46.1% 3.4% 22.0% 9.5%

GAAP EPS ($0.10) $0.01 $1.76 $1.54 $1.50 $1.63 $4.45 $4.41
Y/Y Growth NA NA 288.9% 240.7% NA NA 196.4% 170.2%
% chg vs. old NA -12.4% 8.6% -1.0%
Source: J.P. Morgan estimates.

2
This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

Investment Thesis, Valuation and Risks

Amazon.com (Overweight; Price Target: $710.00)
Investment Thesis
Overweight rating. We believe Amazon continues to show strong ability to take
share of overall eCommerce, and its flexibility in pushing first-party versus third-
party inventory is a major advantage compared with other retailers. We think
Amazon remains a share gain story in Media and EGM. And we believe the recent
AWS disclosure shows segment profitability that exceeded virtually all expectations.
High AWS profitability gives us increased confidence in the business and also drives a
meaningful increase in our SOP valuation.

Valuation
Overweight rating and Dec-16 PT of $710. Our Dec-16 price target of $710 is
based on a sum-of-the-parts analysis as we believe this methodology appropriately
attributes value to the companys large, fast-growing and surprisingly profitable
(from a CSOI perspective) AWS segment, which Amazon continues to invest in.

We apply a 0.8x multiple on 2017E North America & Int'l GMV of $297B, which
we believe is justified as large retailer peer WMT trades at ~0.6x 2017E GMV and as
Amazon has a meaningfully higher growth profile. We apply a 16x multiple on our
2017E AWS EBITDA of $5.2B, which is at a discount to other SaaS companies such
as Salesforce(currently trading at ~28x 2017E EBITDA). See the figure below for
our sum-of-the-parts analysis.

Figure 1: Sum-of-the-Parts Analysis

($ in millions except per share)

2017

GMV EBITDA Multiple 2017E

NA & Int'l Retail 296,657 0.8x 228,723

AWS 5,150 16x 82,393

Total Value $311,116

Less: Debt 8,250

Plus: Cash 36,480
Value to Common Shareholders $339,346

Total shares outstanding 478

Value per AMZN share $710
Source: J.P. Morgan estimates.

Risks to Rating and Price Target

Downside risks include 1) heavy investment spending in AWS, video content, and
international expansion that creates further margin pressure, 2) competition from
online and offline retailers coming out with improved offerings, and 3) consumer

3
This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

spending suffering due to macroeconomic weakness. 4) GMV decelerating more than

expected. 5) AWS price cutting pressure on CSOI

4
This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

Figure 3: Amazon Income Statement

2013A 3/14A 6/14A 9/14A 12/14A 2014A 3/15A 6/15A 9/15E 12/15E 2015E 2016E
GMV 124,485,163 34,231,667 34,391,000 37,188,667 54,039,931 159,851,264 42,637,333 43,052,387 47,349,235 63,991,328 197,030,283 240,609,156
Net sales 74,453,000 19,741,000 19,340,000 20,579,000 29,328,000 88,988,000 22,717,000 23,185,000 24,634,157 34,382,858 104,919,015 125,342,319
Cost of sales 54,182,000 14,055,000 13,399,000 14,627,000 20,671,000 62,752,000 15,395,000 15,160,000 16,602,479 23,449,172 70,606,652 83,868,869
Gross profit 20,271,000 5,686,000 5,941,000 5,952,000 8,657,000 26,236,000 7,322,000 8,025,000 8,031,678 10,933,686 34,312,364 41,473,451

Operating expenses
Fulfillment 8,292,000 2,236,000 2,278,000 2,550,000 3,327,000 10,391,000 2,669,000 2,744,000 2,906,831 3,919,646 12,239,476 15,041,078
Marketing 3,046,000 843,000 911,000 961,000 1,492,000 4,207,000 1,048,000 1,100,000 1,157,805 1,822,291 5,128,097 5,640,404
Technology and content 5,961,000 1,822,000 2,020,000 2,219,000 2,409,000 8,470,000 2,521,000 2,701,000 2,882,196 3,094,457 11,198,654 13,662,313
General and administrative 979,000 283,000 328,000 358,000 391,000 1,360,000 378,000 405,000 395,245 443,021 1,621,266 1,819,068
Stock-based compensation 1,134,000 321,000 391,000 377,000 408,000 1,497,000 407,000 563,000 535,340 579,360 2,084,700 2,168,088
Amortization of other intangibles 114,000 35,000 28,000 31,000 39,000 133,000 44,000 48,000 44,020 55,380 191,400 199,056
Restructuring related and other - - - - - - - - - - - -
Total operating expenses 19,526,000 5,540,000 5,956,000 6,496,000 8,066,000 26,058,000 7,067,000 7,561,000 7,921,437 9,914,155 32,463,593 38,530,008

Operating income 745,000 146,000 (15,000) (544,000) 591,000 178,000 255,000 464,000 110,241 1,019,530 1,848,771 2,943,443
PF Operating income (CSOI) 1,993,000 502,000 404,000 (136,000) 1,038,000 1,808,000 706,000 1,075,000 689,601 1,654,270 4,124,871 5,310,587

Interest income 38,000 11,000 11,000 9,000 8,000 39,000 11,000 12,000 17,887 21,969 62,857 121,260
Interest expense (141,000) (42,000) (45,000) (49,000) (74,000) (210,000) (115,000) (114,000) (113,438) (113,438) (455,875) (412,500)
Other income, net (136,000) 5,000 22,000 (50,000) (96,000) (119,000) (130,000) - - - (130,000) -
Total non-operating expenses, net
(239,000) (26,000) (12,000) (90,000) (162,000) (290,000) (234,000) (102,000) (95,550) (91,468) (523,018) (291,240)

Income (loss) before equity-method investees

506,000 120,000 (27,000) (634,000) 429,000 (112,000) 21,000 362,000 14,690 928,062 1,325,752 2,652,203
Equity in losses of equity-method investees,
(71,000)net 61,000 (5,000) (8,000) (10,000) 38,000 (7,000) (4,000) (7,200) (9,000) (27,200) (24,480)
Income (loss) before income taxes 435,000 181,000 (32,000) (642,000) 419,000 (74,000) 14,000 358,000 7,490 919,062 1,298,552 2,627,723
Provision (benefit) for income taxes 162,000 73,000 94,000 (205,000) 205,000 167,000 71,000 266,000 1,498 183,812 522,310 525,545
Effective Tax Rate 37.2% 40.3% -293.8% 31.9% 48.9% -225.7% 507.1% 74.3% 20.0% 20.0% 40.2% 20.0%
Income before change in acctg/ Fully Taxed
273,000
Income 108,000 (126,000) (437,000) 214,000 (241,000) (57,000) 92,000 5,992 735,250 776,242 2,102,179
Cumulative effect of change in acctng principle
- - - - - - - - - - - -
GAAP Net income (loss) 273,000 108,000 (126,000) (437,000) 214,000 (241,000) (57,000) 92,000 5,992 735,250 776,242 2,102,179
Basic income (loss) per share $0.60 $0.23 ($0.27) ($0.94) $0.46 ($0.52) ($0.12) $0.20 $0.01 $1.57 $1.66 $4.49
Diluted income (loss) per share $0.58 $0.23 ($0.27) ($0.94) $0.45 ($0.51) ($0.12) $0.19 $0.01 $1.54 $1.63 $4.41
Basic shares outstanding 458,000 460,000 461,000 463,000 464,000 464,000 465,000 467,000 467,000 467,000 467,000 468,000
Diluted shares outstanding 467,000 468,000 461,000 463,000 472,000 472,000 465,000 476,000 476,000 476,000 476,000 477,000

Non-recurring items:
Stock-based compensation 1,134,000 321,000 391,000 377,000 408,000 1,497,000 407,000 563,000 535,340 579,360 2,084,700 2,168,088
Amortization of other intangibles 114,000 35,000 28,000 31,000 39,000 133,000 44,000 48,000 44,020 55,380 191,400 199,056
Restructuring related and other - - - - - - - - - - - -
Remeasurement of 6.875% PEACS, other- - - - - - - - - - - -
Equity in losses of equity-method investees,
71,000net (61,000) 5,000 8,000 10,000 (38,000) 7,000 4,000 7,200 9,000 27,200 24,480
Cum. Effect of change in acctg/Other one-tim
- e items - - - - - - - - - - -
PF Net income (loss) 1,592,000 403,000 298,000 (21,000) 671,000 1,351,000 401,000 707,000 592,552 1,378,990 3,079,542 4,493,803
PF basic income (loss) per share $3.48 $0.88 $0.65 ($0.05) $1.45 $2.91 $0.86 $1.51 $1.27 $2.95 $6.59 $9.60
PF diluted income (loss) per share $3.41 $0.86 $0.65 ($0.05) $1.42 $2.86 $0.86 $1.49 $1.24 $2.90 $6.47 $9.42
PF diluted fully-taxed EPS (normalized) $2.44 $0.66 $0.55 ($0.32) $1.21 $2.09 $0.66 $1.33 $0.81 $2.13 $4.92 $6.84
PF diluted EPS un-taxed (equivalent to pre-2005
$3.76 PF #) $1.02 $0.85 -$0.49 $1.86 $3.22 $1.02 $2.04 $1.25 $3.28 $7.57 $10.52
Basic shares outstanding 458,000 460,000 461,000 463,000 464,000 464,000 465,000 467,000 467,000 467,000 467,000 468,000
Diluted shares outstanding 467,000 468,000 461,000 463,000 472,000 472,000 465,000 476,000 476,000 476,000 476,000 477,000

EBITDA Reconciliation
PF Operating income (CSOI) 1,993,000 502,000 404,000 (136,000) 1,038,000 1,808,000 706,000 1,075,000 689,601 1,654,270 4,124,871 5,310,587
Depreciation and other amortization3,253,000 1,010,000 1,109,000 1,247,000 1,379,000 4,745,000 1,426,000 1,504,000 1,478,800 1,449,301 5,858,101 5,258,558
EBITDA 5,246,000 1,512,000 1,513,000 1,111,000 2,417,000 6,553,000 2,132,000 2,579,000 2,168,401 3,103,571 9,982,972 10,569,145

2013A 3/14A 6/14A 9/14A 12/14A 2014A 3/15A 6/15A 9/15E 12/15E 2015E 2016E
Y/Y Grow th
Net sales 21.9% 22.8% 23.2% 20.4% 14.6% 19.5% 15.1% 19.9% 19.7% 17.2% 17.9% 19.5%
Net sales (excluding FX impact) 24.0% 22.9% 21.4% 20.2% 18.1% 20.3% 21.6% 27.0% 26.2% 20.6% 23.5% 19.5%
Cost of sales 17.9% 19.1% 19.5% 18.3% 9.9% 15.8% 9.5% 13.1% 13.5% 13.4% 12.5% 18.8%
Gross profit 34.0% 33.2% 32.2% 25.9% 27.7% 29.4% 28.8% 35.1% 34.9% 26.3% 30.8% 20.9%
Fulfillment 33.6% 28.9% 29.7% 29.8% 17.3% 25.3% 19.4% 20.5% 14.0% 17.8% 17.8% 22.9%
Marketing 29.8% 36.9% 39.9% 43.2% 34.7% 38.1% 24.3% 20.7% 20.5% 22.1% 21.9% 10.0%
Technology and content 44.3% 44.3% 41.2% 40.4% 42.8% 42.1% 38.4% 33.7% 29.9% 28.5% 32.2% 22.0%
General and administrative 26.8% 32.2% 32.3% 46.7% 43.2% 38.9% 33.6% 23.5% 10.4% 13.3% 19.2% 12.2%
Total cash operating expenses 35.8% 35.4% 35.5% 36.5% 29.0% 33.6% 27.6% 25.5% 20.6% 21.8% 23.6% 19.8%
Operating income 10.2% -19.3% -119.0% N/A 15.9% -76.1% 74.7% -3193.3% -120.3% 72.5% 938.6% 59.2%
PF Operating income 19.5% 13.8% -1.2% -150.9% 18.5% -9.3% 40.6% 166.1% -607.1% 59.4% 128.1% 28.7%
GAAP Net income -779.1% 31.7% NA N/A -10.5% -188.3% -152.8% NA -101.4% 243.6% -422.1% 170.8%
PF Net income 43.7% 12.3% -10.8% -108.0% 5.2% -15.1% -0.5% 137.2% -2921.7% 105.5% 127.9% 45.9%
GAAP EPS -770.4% 30.3% 1680.5% N/A -11.4% -187.3% -153.1% -170.7% -101.3% 240.7% -419.4% 170.2%
PF EPS 41.9% 11.1% -11.7% -107.9% 4.1% -16.0% 0.1% 129.8% -2844.6% 103.8% 126.0% 45.6%
PF diluted FT EPS (normalized) 12.7% 38.1% 11.7% -189.6% 6.1% -14.4% -0.2% 140.4% -355.7% 76.9% 135.3% 39.1%
EBITDA 37.1% 32.5% 29.9% 0.9% 31.4% 24.9% 41.0% 70.5% 95.2% 28.4% 52.3% 5.9%

Source: J.P. Morgan estimates, Company data.

5
This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

Figure 4: Amazon Segment Breakdown

3/14A 6/14A 9/14A 12/14A 2014A 3/15A 6/15A 9/15E 12/15E 2015E 2016E
NET SALES
North America
Media 2,825,000 2,464,000 2,734,000 3,544,000 11,567,000 2,969,000 2,620,000 2,898,040 3,685,760 12,172,800 12,720,576
% change 13.0% 14.0% 5.0% 1.0% 7.4% 5.1% 6.3% 6.0% 4.0% 5.2% 4.5%
Electronics and other general merchandise 7,829,000 8,366,000 8,793,000 13,529,000 38,517,000 10,250,000 10,987,000 11,694,690 17,046,540 49,978,230 61,973,005
% change 28.0% 29.0% 31.0% 27.4% 28.7% 30.9% 31.3% 33.0% 26.0% 29.8% 24.0%
% change (Organic)
Other 154,000 164,000 172,000 260,000 750,000 187,000 189,000 197,800 293,800 867,600 997,740
% change 6.8% 0.8% 4.5% 12.0% 6.6% 21.4% 15.2% 15.0% 13.0% 15.7% 15.0%
Total North America Sales 10,808,000 10,994,000 11,699,000 17,333,000 50,834,000 13,406,000 13,796,000 14,790,530 21,026,100 63,018,630 75,691,321
% change 23.4% 24.8% 23.4% 20.7% 22.8% 24.0% 25.5% 26.4% 21.3% 24.0% 20.1%

International
Media 2,642,000 2,380,000 2,510,000 3,406,000 10,938,000 2,320,000 2,094,000 2,151,924 3,192,470 9,758,394 9,953,562
% change 10.1% 7.0% 3.5% -8.3% 1.6% -12.2% -12.0% -14.3% -6.3% -10.8% 2.0%
% change, ex-FX impact 4.0% 4.0% 3.0% -1.0% 2.0% 2.0% 3.0% 3.0% 3.0% 2.8% 2.0%
Electronics and other general merchandise 5,188,000 4,912,000 5,160,000 7,109,000 22,369,000 5,378,000 5,425,000 5,610,675 7,765,216 24,178,892 28,772,881
% change 22.4% 24.8% 19.5% 9.8% 17.9% 3.7% 10.4% 8.7% 9.2% 8.1% 19.0%
% change, ex-FX impact 26.0% 20.0% 19.0% 19.0% 20.8% 21.0% 31.0% 26.0% 18.5% 23.6% 19.0%
Other 53,000 49,000 41,000 60,000 203,000 47,000 46,000 35,278 56,072 184,349 189,880
% change 10.3% 58.5% -21.7% -13.8% -11.3% -6.1% -14.0% -6.5% -9.2% 3.0%
% change, ex-FX impact 11.0% -1.0% -19.0% 11.0% 2.0% 8.0% 4.0% 3.0% 4.1% 3.0%
Total International Sales 7,883,000 7,341,000 7,711,000 10,575,000 33,510,000 7,745,000 7,565,000 7,797,877 11,013,758 34,121,635 38,916,323
% change 17.9% 18.6% 13.5% 3.1% 11.9% -1.8% 3.1% 1.1% 4.1% 1.8% 14.1%
% change, ex-FX impact 18.0% 14.1% 13.0% 11.7% 13.9% 14.5% 21.8% 18.4% 13.4% 16.6% 14.1%

AWS
Total 1,050,000 1,005,000 1,169,000 1,420,000 4,644,000 1,566,000 1,824,000 2,045,750 2,343,000 7,778,750 10,734,675
% change 69.0% 43.0% 42.9% 47.0% 49.1% 81.5% 75.0% 65.0% 67.5% 38.0%
% change, ex-FX impact 69.0% 43.0% 42.9% 47.0% 49.0% 81.0% 75.0% 65.0% 38.0%
Total Consolidated Sales 4.0% 0
Media 5,467,000 4,844,000 5,244,000 6,950,000 22,505,000 5,289,000 4,714,000 5,049,964 6,878,230 21,931,194 22,674,138
% change 11.6% 10.5% 4.3% -3.8% 4.5% -3.3% -2.7% -3.7% -1.0% -2.5% 3.4%
% change, ex-FX impact 8.0% 9.0% 4.0% 0.0% 4.7% 3.6% 4.7% 4.6% 3.5% 4.0% 3.4%
Electronics and other general merchandise 13,017,000 13,278,000 13,953,000 20,638,000 60,886,000 15,628,000 16,412,000 17,305,365 24,811,756 74,157,122 90,745,886
% change 25.7% 27.4% 26.5% 20.7% 24.5% 20.1% 23.6% 24.0% 20.2% 21.8% 22.4%
% change, ex-FX impact 27.0% 26.0% 26.0% 24.0% 25.6% 27.0% 31.2% 30.4% 23.4% 27.5% 22.4%
AWS 1,050,000 1,005,000 1,169,000 1,420,000 4,644,000 1,566,000 1,824,000 2,045,750 2,343,000 7,778,750 10,734,675
% change 69.0% 43.0% 42.9% 47.0% 49.4% 49.1% 81.5% 75.0% 65.0% 67.5% 38.0%
% change, ex-FX impact 49.0% 81.0% 75.0% 65.0% 0.0% 38.0%
Other 207,000 213,000 213,000 320,000 953,000 234,000 235,000 233,078 349,872 1,051,949 1,187,620
% change 7.6% 10.1% -1.8% 6.0% 5.4% 13.0% 10.3% 9.4% 9.3% 10.4% 12.9%
% change, ex-FX impact 58.0% 36.0% 37.0% 41.0% 42.6% 16.5% 13.6% 12.9% 11.1% 13.2% 12.9%
Total Consolidated Sales 19,741,000 19,340,000 20,579,000 29,328,000 88,988,000 22,717,000 23,185,000 24,634,157 34,382,858 104,919,015 125,342,319
% change Y/Y 22.8% 23.2% 20.4% 14.6% 19.5% 15.1% 19.9% 19.7% 17.2% 17.9% 19.5%
% change Q/Q -22.8% -2.0% 6.4% 42.5% -22.5% 2.1% 6.3% 39.6%
% change, ex-FX impact 22.9% 21.4% 20.2% 18.1% 20.3% 21.6% 27.0% 26.2% 20.6% 23.5% 19.5%

GROSS PROFIT
North America 2,702,000 2,748,500 2,924,750 4,333,250 12,708,500 3,619,620 3,862,880 3,919,490 5,782,178 17,184,168 20,815,113
% change 23% 34% 41% 34% 33% 35% 21%
% margin 25.0% 25.0% 25.0% 25.0% 25.0% 27.0% 28.0% 26.5% 27.5% 27.3% 27.5%
International 1,934,000 2,187,500 1,858,250 2,903,750 8,883,500 2,136,380 2,338,120 2,066,437 2,808,508 9,349,446 9,923,662
% change 30% 10% 7% 11% -3% 5% 6%
% margin 24.5% 29.8% 24.1% 27.5% 26.5% 27.6% 30.9% 26.5% 25.5% 27.4% 25.5%
% change ex-FX 33% 32% 29% 35% 7% 24% 6%
AWS 1,050,000 1,005,000 1,169,000 1,420,000 4,644,000 1,566,000 1,824,000 2,045,750 2,343,000 7,778,750 10,734,675
% change
% margin 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
% change ex-FX
Total Consolidated 5,686,000 5,941,000 5,952,000 8,657,000 26,236,000 7,322,000 8,025,000 8,031,678 10,933,686 34,312,364 41,473,451
% change 33% 32% 26% 28% 53% 29% 35% 35% 26% 31% 21%
% margin 28.8% 30.7% 28.9% 29.5% 29.5% 32.2% 34.6% 32.6% 31.8% 32.7% 33.1%
% change ex-FX 33% 30% 26% 32% 54% 36% 43% 42% 30% 37% 21%

CASH OPERATING EXPENSES

North America 2,412,000 2,419,500 2,984,750 3,600,250 11,416,500 3,102,620 3,159,880 3,520,146 4,604,716 14,387,362 17,333,313
% change 25% 29% 31% 18% 28% 26% 20%
% of sales 22.3% 22.0% 25.5% 20.8% 22.5% 23.1% 22.9% 23.8% 21.9% 22.8% 22.9%
International 1,967,000 2,189,500 2,032,250 2,838,750 9,027,500 2,212,380 2,357,120 2,144,416 2,753,440 9,467,356 9,919,771
% change 35% 12% 8% 6% -3% 5% 5%
% of sales 25.0% 29.8% 26.4% 26.8% 26.9% 28.6% 31.2% 27.5% 25.0% 27.7% 25.5%
AWS 805,000 928,000 1,071,000 1,180,000 3,984,000 1,301,000 1,433,000 1,677,515 1,921,260 6,332,775 8,909,780
% change 64% 62% 54% 57% 63% 59% 41%
% of sales 76.7% 92.3% 91.6% 83.1% 85.8% 83.1% 78.6% 82.0% 82.0% 81.4% 83.0%
Total Consolidated 5,184,000 5,537,000 6,088,000 7,619,000 24,428,000 6,616,000 6,950,000 7,342,077 9,279,415 30,187,493 36,162,864
% change 55% 56% 60% 48% 54% 28% 26% 21% 22% 24% 20%
% of sales 26.3% 28.6% 29.6% 26.0% 27.5% 29.1% 30.0% 29.8% 27.0% 28.8% 28.9%

PF OPERATING INCOME 45,000 210

North America (ex AWS starting '1Q13) 290,000 329,000 (60,000) 733,000 1,292,000 517,000 703,000 399,344 1,177,462 2,796,806 3,481,801
% change NA NA NA NA 6% 78% 114% -766% 61% 116% 24%
% margin 2.7% 3.0% -0.5% 4.2% 2.5% 3.9% 5.1% 2.7% 5.6% 4.4% 4.6%
International (ex AWS starting '1Q13) (33,000) (2,000) (174,000) 65,000 (144,000) (76,000) (19,000) (77,979) 55,069 (117,910) 3,892
% change -143% NA N/A -74% -239% N/A N/A -55% -15% -18% -103%
% margin -0.4% 0.0% -2.3% 0.6% -0.4% -1.0% -0.3% -1.0% 0.5% -0.3% 0.0%
% change ex-FX -143% -- N/A -74% -239% N/A N/A -55% -15% -18% -103%
AWS 245,000 77,000 98,000 240,000 660,000 265,000 391,000 368,235 421,740 1,445,975 1,824,895
% change -2% 8.2% 407.8% 276% 76% 119% 26%
% margin 23% 8% 8% 17% 6.0% 17% 21% 18% 18% 19% 17%
% change
Total Consolidated 502,000 404,000 -136,000 1,038,000 1,808,000 706,000 1,075,000 689,601 1,654,270 4,124,871 5,310,587
% change 14% -1% -151% 18% -9% 41% 166% -607% 59% 128% 29%
% margin 2.5% 2.1% -0.7% 3.5% 2.0% 3.1% 4.6% 2.8% 4.8% 3.9% 4.2%
% change ex-FX 14% -1% -151% 18% -9% 41% 166% -607% 59% 128% 29%

Source: J.P. Morgan estimates, Company data.

6
This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

Amazon.com: Summary of Financials

Income Statement - Annual FY14A FY15E FY16E FY17E Income Statement - Quarterly 1Q15A 2Q15A 3Q15E 4Q15E
Revenues 88,988 104,919 125,342 148,723 Revenues 22,717A 23,185A 24,634 34,383
Operating income 178 1,849 2,943 4,818 Operating income 255A 464A 110 1,020
D&A 4,745 5,858 5,259 4,947 D&A 1,426A 1,504A 1,479 1,449
EBITDA 5,056 7,898 8,401 9,972 EBITDA 1,725A 2,016A 1,633 2,524
Net interest income / (expense) (171) (393) (291) (251) Net interest income / (expense) (104)A (102)A (96) (91)
Other income / (expense) (252) (550) (316) (273) Other income / (expense) (241)A (106)A (103) (100)
Pretax income (74) 1,299 2,628 4,545 Pretax income 14A 358A 7 919
Income taxes (167) (522) (526) (909) Income taxes (71)A (266)A (1) (184)
Net Income (241) 776 2,102 3,636 Net Income (57)A 92A 6 735
Weighted average diluted shares 472 476 477 478 Weighted average diluted shares 465A 476A 476 476
Diluted EPS (0.51) 1.63 4.41 7.61 Diluted EPS (0.12)A 0.19A 0.01 1.54
Balance Sheet and Cash Flow Data FY14A FY15E FY16E FY17E Ratio Analysis FY14A FY15E FY16E FY17E
Cash and cash equivalents 17,416 20,533 27,971 36,480 Sales growth 19.5% 17.9% 19.5% 18.7%
Accounts receivable 5,612 6,705 6,618 7,853 EBITDA growth 24.9% 52.3% 5.9% 15.7%
Other current assets 0 0 0 0 EPS growth (187.3%) (419.4%) 170.2% 72.6%
Current assets 31,327 37,036 45,244 56,974
PP&E 16,967 19,642 18,457 18,344 EBITDA margin 7.4% 9.5% 8.4% 8.2%
Total assets 54,505 63,149 69,972 81,382 Net margin 1.5% 2.9% 3.6% 4.1%
Total debt 8,265 8,250 8,250 8,250 Debt / EBITDA 1.3 0.8 0.8 0.7
Total liabilities 43,764 49,541 52,070 57,567
Shareholders' equity 10,741 13,608 17,902 23,815 Return on assets (ROA) 2.9% 5.2% 6.8% 8.1%
Return on equity (ROE) 13.2% 25.3% 28.5% 29.3%
Net Income (including charges) (241) 776 2,102 3,636
D&A 4,745 5,858 5,259 4,947 Enterprise value / EBITDA 33.0 21.3 19.4 16.1
Change in working capital 977 1,283 1,760 2,275 Enterprise value / Free cash flow 102.8 40.3 26.7 22.6
Other - - - - P/E NM 295.7 109.4 63.4
Cash flow from operations 6,841 10,120 11,513 13,342
Capex (4,892) (5,175) (4,074) (4,834)
Free cash flow 2,102 5,281 7,700 8,727
Cash flow from investing activities (5,066) (6,314) (4,074) (4,834)
Cash flow from financing activities 4,433 (1,343) 0 0
Dividends - - - -
Dividend yield - - - -

Source: Company reports and J.P. Morgan estimates.

Note: $ in millions (except per-share data).Fiscal year ends Dec

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This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per
KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or
intervention.
Important Disclosures

Market Maker: JPMS makes a market in the stock of Amazon.com.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Amazon.com.
Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
company(ies) as clients, and the services provided were non-investment-banking, securities-related: Amazon.com.
Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,
and the services provided were non-securities-related: Amazon.com.
Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Amazon.com.
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compendium reports and all J.P. Morgancovered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406,
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0406 or e-mail research.disclosure.inquiries@jpmorgan.com.

Date Rating Share Price Price Target

($) ($)
25-Jul-07 N 86.18 -
05-Jan-09 OW 54.36 65.00
30-Jan-09 OW 50.00 74.00
Amazon.com (AMZN, AMZN US) Price Chart 02-Apr-09 OW 76.34 91.00

864 24-Jul-09 OW 86.49 108.00

23-Oct-09 OW 93.45 150.00
OW $91 OW $175OW $199 OW $235
OW $245 N $285 N $350 N $323
04-Jan-10 OW 134.52 175.00
720
29-Jan-10 OW 125.41 180.00
OW $74OW $150 OW $198 OW $250
OW $250 N $300 N $365 N $307
OW $535
23-Jul-10 OW 120.07 154.00
576
24-Sep-10 OW 152.85 198.00
N OW $65
OW $108
OW $180
OW $154
OW $192
OWOW$251
OW
$230
$210 OW $333 N $340 N $340N $375
22-Oct-10 OW 169.13 199.00
Price($) 432 28-Jan-11 OW 171.14 192.00
13-Jul-11 OW 211.23 251.00
288 26-Oct-11 OW 227.15 230.00
14-Nov-11 OW 217.39 250.00
144 13-Jan-12 OW 175.93 235.00
01-Feb-12 OW 194.44 210.00
27-Apr-12 OW 195.99 250.00
0
06-Jun-12 OW 213.21 245.00
Oct Apr Oct Apr Oct Apr
06 08 09 11 12 14 30-Jan-13 OW 260.35 333.00
14-Mar-13 N 275.10 300.00
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Jul 25, 2007. 26-Apr-13 N 254.81 285.00
25-Oct-13 N 363.39 340.00
29-Jan-14 N 384.20 365.00
24-Apr-14 N 337.15 350.00
25-Jul-14 N 324.01 340.00
24-Oct-14 N 287.06 307.00

8
This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

26-Jan-15 N 306.75 323.00

30-Jan-15 N 354.53 375.00
24-Apr-15 OW 389.99 535.00

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stocks expected total return is
compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear
in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research
website, www.jpmorganmarkets.com.
Coverage Universe: Anmuth, Doug: Amazon.com (AMZN), Bankrate Inc (RATE), Care.com (CRCM), Chegg, Inc. (CHGG), Criteo
(CRTO), Everyday Health (EVDY), Expedia, Inc. (EXPE), Facebook (FB), Google (GOOG), Google Inc. (GOOGL), Groupon (GRPN),
HomeAway Inc (AWAY), King Digital Entertainment (KING), LinkedIn Corp (LNKD), Netflix Inc (NFLX), Pandora Media Inc (P),
Priceline.com (PCLN), TripAdvisor, Inc. (TRIP), TrueCar Inc. (TRUE), TubeMogul (TUBE), Twitter, Inc. (TWTR), Yahoo Inc (YHOO),
Yelp Inc. (YELP), Zynga Inc (ZNGA), eBay, Inc (EBAY)

J.P. Morgan Equity Research Ratings Distribution, as of June 30, 2015

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage 44% 43% 13%
IB clients* 51% 48% 38%
JPMS Equity Research Coverage 45% 47% 9%
IB clients* 71% 66% 57%
*Percentage of investment banking clients in each rating category.
For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table
above.

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This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

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This document is being provided for the exclusive use of HO SING WONG at CHINESE UNIVERSITY OF
HONG KONG, TH

Doug Anmuth North America Equity Research

(1-212) 622-6571 24 July 2015
douglas.anmuth@jpmorgan.com

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