Welcome to the Amazon.com first quarter 2009 financial results teleconference. (Operator Instructions) For opening remarks I will now turn the conference over to the Vice President of Investor Relations, Mr. Rob Eldridge.
Hello and welcome to our Q1 '09 financial results conference call. Joining us today is Tom Szkutak, our CFO. Jeff Bezos, our founder and Tom will both be available for Q&A.
The following discussion or responses to your questions reflect management's views as of today, April 23, 2009 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 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 web cast and our filings with the SEC, each of which is posted on our IR website, you will 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 2008. Now, I'll turn the call over to Tom.
I'll begin with comments on our financial results. Trailing 12 month free cash flow grew 82% to $1.43 billion. Return on invested capital was 41%, up from 32%. 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 447 million shares compared with 435 million. Worldwide revenue grew 18% to $4.89 billion or 25% excluding the $268 million unfavorable impact of year over year changes in foreign exchange rates.
Media revenue increased to $2.72 billion, up 7% or 13% excluding foreign exchange. EGM revenue increased to $2.05 billion, up 38% or 46% excluding FX. World wide EGM increased to 42% of worldwide sales up from 26%.
Worldwide unit growth was 30%. Active customer count exceeded 91 million, up 16%. Worldwide active seller accounts were more than 1.6 million, up 19%. Seller units were 32% of total units versus 30%. Worldwide gross profit was $1.15 billion, up 20%.
Now we'll discuss operating expense excluding stock based compensation. Fulfillment, marketing, technology and content and G&A combined was $826 million or 16.9% of sales, unchanged, year over year.
Fulfillment was $407 million or 8.3% of revenue while tech and content was $239 million or 4.9% of revenue. Both were unchanged from the prior year. Marketing was $124 million or 2.5% of revenue, up 11 basis points from the prior year.
Now I'll talk about our segment results and consistent with prior periods, we do not allocate the segments or stock based compensation or the other operating expense income net line item.
In the North America segment, revenue grew 21% to $2.58 million. Media revenue grew 8% to $1.31 million. EGM grew 42% to $1.17 billion representing 45% of North America revenues up from 39%.
North American gross profit grew 22% to $694 million and gross margin increased 18 basis points to 26.9% driven by improvements in inventory management including vendor pricing and the increase in 3P product sales, partially offset by lower prices for our customers and changes in product mix. North America segment operating income increased 15% to $150 million, a 5.8% operating margin.
In the international segment, revenue grew 15% to $2.31 billion. Revenue growth was 28% adjusting for the $258 million year over year unfavorable impact from foreign exchange rates during the quarter.
Media revenue grew 6% to $1.42 billion or 17% excluding FX and EGM revenue grew 44% to $874 million or 50% excluding the impact of foreign exchange rates. EGM now represents 38% of international revenues, up from 33%.
International gross profit grew 17% to $454 million or grew 33% excluding foreign exchange rates while gross margin increased 36 basis points to 19.6% driven by improvements in inventory management including vendor pricing and increases in 3P product sales partially offset by lower prices for our customers and changes in product mix.
International segment operating income increased 34% to $172 million, a 7.4% operating margin. Excluding the unfavorable impact from FX, international segment operating income increased 63%.
CSOI grew 25% to $322 million or 6.6% of revenue, up 33 basis points year over year. Excluding the $32 million unfavorable impact from foreign exchange rates, CSUY grew 37%. Unlike CSOY, our GAAP operating income includes stock based compensation expense and other operating expense/income. GAAP operating income grew 23% to $244 million or 5% of net sales.
Our income tax expense was $69 million in Q1 or a 28% rate for the quarter. GAAP net income was $177 million or $0.41 per diluted share compared with $143 million and $0.34 per diluted share.
Turning to the balance sheet, cash and marketable securities increased $579 million year over year to $2.73 billion. Our cash and marketable securities primarily consists of cash, government and government agency securities triple A money market funds and other investment grade securities. Such amounts are recorded at fair value.
During the quarter we redeemed the remaining 240 million Euros, $319 million based on the Euro to U.S. dollar exchange rate at date of redemption in principal of our 6.875% peaks.
Inventory increased 18% to $1.27 billion and inventory turns were 12.5 down half a turn from the prior year as we expanded selection and improved in stock levels and introduced new product categories.
Accounts payable increased 28% to $2.3 billion and accounts payable days increased to 57 from 53 in the prior year. Our investment in net fixed assets increased $295 million from a year ago to $889 million. Our Q1 2009 capital expenditures were $55 million.
I'll conclude my portion of today's call with guidance. Incorporated into our guidance are the order trends that we've seen to date and what we believe today to be appropriately conservative assumptions.
Our results are inherently unpredictable and may be materially affected by many factors including the high level of uncertainties on exchange rate fluctuations as well as the global economy and consumer spending. It's not possible to accurately predict demand and therefore our actual results could differ materially from our guidance.
As we describe in more detail in our public filings, issues such as settling inter company balances in foreign currencies among our subsidiaries, unfavorable resolution of legal matters and changes to our effective tax rates can all have material affect on guidance.
Our guidance assumes that we don't conclude any additional business acquisitions or investments, record any further revisions to stock based compensation estimates and that foreign exchange rates remain approximately where they've been recently.
For Q2, we expect net sales between $4.3 billion and $4.75 billion on growth between 6% and 17%. This guidance anticipates approximately 700 basis points of negative impact from foreign exchange. GAAP operating income to be between $110 million and $190 million or a decline between 49% and 12%.
The second quarter of 2008 results include a $53 million non cash gain recognized from the sale of the company's European DVD assets. This includes approximately $90 million for stock based compensation, amortization of intangible assets.
We anticipated consolidate segment operating income which excludes stock based compensation and other operating expense, to be between $200 million and $280 million or between 18% decline and 14% growth.
We anticipate our free cash flow growth rate to trend similar to our operating profit growth rate over time with some variability including some changes in working capital and excess tax benefits from stock based compensation.
We remain heads down focused on driving a better customer experience through price, selection and convenience. We believe putting customers first is the only reliable way to create lasting value for shareholders.
Thanks, and with that, let's move to questions.
(Operator Instructions) Your first question comes from Douglas Anmuth – Barclays Capital.
Douglas Anmuth – Barclays Capital
Can you talk a little bit more about the Q2 guidance and in particular is there something that you're seeing early in the quarter that's making the outlook look a little bit lower than we would have expected versus the 1Q numbers particularly on the margin side?
Our guidance from a revenue standpoint is growth of 6% to 17%. That's on a dollar basis, on a local currency basis that works out to be 13% to 24%. A few things to keep in mind; one, last year Q2 was our strongest growth quarter so if you take a look at the splits by quarter, last year we had 41% growth rate in Q2 or 35% growth rate on a local currency basis. We're overlapping that growth rate in the strongest quarter.
The other thing to keep in mind on the top line as well, smaller impacts, but certainly Easter was in Q1 last year last year and Q2 this year, so we had that benefit in Q1 and will be overlapping that in Q2. Also, as I mentioned from an exchange standpoint, the 700 basis points is more than you saw in Q1, so again those are the impacts on the top line.
So that's why the high end of the range works out to be 24% which is a little bit lower than we came in for Q1. So that translates down into a lower operating income. The other thing to keep in mind too is as you look at our Q2, seasonally, Q2 is our lowest quarter from a revenue perspective which means with that top line you get a little bit less leverage, particularly the fixed operating costs. So that's reflected in the guidance.
Your next question comes from James Mitchell – Goldman Sachs.
James Mitchell – Goldman Sachs
The question is about improvements in gross margin year on year in the first quarter. Were there any unusual gross margin influences other than our old friends inventory management, product mix, lower prices?
Those are the big piece of inventory management. We worked well with vendors in terms of getting vendor savings. An example would be something that we've been working on for a number of quarters but certainly working with them to ship when they have shipments, to ship in bulk to the nearest fulfillment center.
The benefit to that is a way to share some of those savings for them shipping to the closest facility and then we get to optimize taking that larger bulk shipment and optimizing that in our network. But certainly inventory vendor management savings and also third party growth were certainly key factors and those were partially offset by lower prices to customers.
Were digital sales an impact or not?
Digital sales, are you referring to Kindle sales or all digital? Digital is certainly part of the numbers. The key thing to keep in mind as you think about Kindle specifically from a device standpoint, we recognize that in the month following shipment over a two year period. We amortize that over a two year period.
Your next question comes from Jeetil Patel – Deutsche Bank.
Jeetil Patel – Deutsche Bank
It's probably hard to break out but maybe a qualitative view; I'm curious how much of your core infrastructure that you've been building the last couple of years is being redeployed in other business initiatives such as FPA and AWS that are maybe contributing to the operating profit line. Is there any way to quantify that what the contribution looks like to CSOI at the end of the day some of your newer initiatives in terms of leverage the fixed assets and costs that you've built out over the years.
Second question is can you characterize how much down sizing and retrenching that online and offline that retailers are doing out there in the landscape is impacting your business positively or in general as it relates as you go after customers or consumers as well as just talking to your suppliers.
The first part of your question, just to talk about how we think about the overall infrastructure both from a operations as well as infrastructure capacity standpoint, the retail part of our business we plan for peak and so when you think about fulfillment capacity, we're certainly planning for peak which is in December.
Our infrastructure supports our retail business. We also plan for peak as well, so some of the things that you're seeing with FBA as well as web services, we're not looking at it as a way to use our existing infrastructure. We're looking at them as separately standing businesses and we look at the economics that way as well.
Could you repeat the second part of your question?
Jeetil Patel – Deutsche Bank
Just trying to understand online and offline retailers shrink their business growth spending out there. How much of an impact is that having or opportunity is that as you go after customers as well as go after better supplier terms out there?
I apologize. I don't think I can help you much with that one. I would just answer the first one, we use the same, for example fulfillment by Amazon inventory is co-mingled with our Amazon owned inventory in the same fulfillment center. So in that respect we're leveraging those fixed investment, but there's not excess capacity that we can, we're building new capacity both for Amazon owned inventory and new capacity for FDA, but it is comingled inventory.
Same thing for web services. When you look at our data centers, the Amazon retail services and web services that we offer through infrastructure computing like EC2 and S3, those are co-mingled in the same data centers as well.
Your next question comes from Mark Mahaney – Citi.
Mark Mahaney – Citi
Jeff, in your shareholder letter you referred to Mooda or waste, the Japanese word for waste and you talked about being able to, seeing it in a lot of different places and a lot of potential. Could you maybe bring it down to financial terms for us and where do you think you have your best opportunity to get at that waste and where we would see it maybe show up or are we already seeing it in terms of some of those CapEx efficiencies? CapEx spending seems to be nicely contained.
And then secondly on marketing spend, is there any particular reason why you're not seeing a little bit more efficiency in marketing spend given what seems to be pretty clear deflationary trends in online display or search advertising?
On the Mooda point, this is very encouraging for me and very energizing for me that every where we look and every team here looks. When we look we find that we are doing every operation that we do in some optimal way. So we've gotten better every year but we still have a lot of progress that we can make. And that's encouraging because it means that we can get variable, we believe we can get variable and fixed productivity for a long time to come. So that's the opportunity.
I don't know how to quantify that for you. Every time we go through our planning process we do set top down targets for variable and fixed productivity and we try to work towards those to make sure that we're being frugal and efficient so that we can have a cost structure that supports the customer experience that we want to have which is have the lowest prices.
So that's something that we take very seriously and as I said, it's very, very energizing for me to see how much opportunity there is there.
Your next question comes from Justin Post – Merrill Lynch.
Justin Post – Merrill Lynch
Some people measure Google's paid clicks versus revenues as a measure of the recession impact. When I look at your revenues versus your units, 30% units, 25% revenues, does that 5% maybe relate to ASP's or is there a mix issue or shift going on? Your shipping revenue was down 1% year over year. Does that have any indication on prime adoption and then the other revenue in the U.S., the gross there, were there some interesting things going on last year that maybe have stopped and can we read anything into your web services adoption based on that number?
From a mix standpoint, the one thing that we are seeing certainly is higher priced items are still growing but certainly not growing as much as they were a few quarters ago. So that's one of the impacts that you're seeing.
Keep in mind when you look at our business, given the selection that we have in the categories that we're in, you do see certainly some variation by quarter in terms of the mix just because of the sheer amount of the selection that we have.
In terms of the shipping revenue, there's no question that we're seeing a good adoption of prime and certainly free shipping and that's certainly impacting that revenue line item. And that's a trend that you've been seeing back to our prior quarters. That's something that you've been seeing for awhile.
In terms of your last portion of the revenues, there's a number of things that go in that line item and as we've talked about in previous calls it can tend to be a little lumpy from quarter to quarter. But again, there's a large number of things that go in there and so as we've described in other quarters.
Your next question comes from Scott Devitt – Morgan Stanley.
Scott Devitt – Morgan Stanley
I wanted to touch on vendor pricing if I could and ask it a different way. I was wondering if you're seeing any significant differences by category, possibly in areas where there's more significant retail disruption, and then also if you could comment on the sustainability of these vendor pricing improvements in all economic environments. You mentioned getting product to different fulfillment centers. That seems sustainable. I'm interested as well if there's vendor pricing that is just driven by the general disruption in the channel and whether the relevance on the business model can sustain that as the economy improves.
There's not a lot of help on the vendor pricing side. We continue to work with our partners in all of the categories that we're in geographically. Certainly the way you should think about it is we think that there's room over time to work with our partners to get better prices over the long term. Certainly the categories that we've been in the longest, there are still opportunities, but when you think about magnitude in terms of basis points, I would think t here would be more opportunity in the categories that we've been in the shortest amount of time. That's the way I would think about it.
In terms of what it could look like going forward, we certainly had healthy amount of savings in Q1 as reflected in the gross margins that you see and what we believe is certainly reflected in our Q2 guidance, but we'll continue to work over certainly a long period of time to try to get better, work better with suppliers to get better savings.
Your next question comes from Jeffrey Lindsay – Sanford Bernstein.
Jeffrey Lindsay – Sanford Bernstein
Did you have a specific push on fulfillment by Amazon or was that demand driven? And could you give us an indication about margins on that business and where you're booking it exactly. Is it all going into other or is it spread across the product categories?
In terms of FBA this is something that we've been doing for not long but again over the last several quarters and it's continued to build. I wouldn't call it any specific push. It's certainly something that we're offering to sellers. We think it's a very good experience for sellers so that they can take advantage of our multi-net fulfillment network in the U.S. and our fulfillment networks outside of the U.S. So we think that that's a great opportunity.
It comes in a number of different forms in terms of the revenue. Certainly the third party revenue that you see would come in the individual categories which is certainly the largest piece, and obviously we're recording the operating expense associated with those fulfillment services in our fulfillment line item.
I'll add to that just to say that one of the things that's driving the uptake of fulfillment by Amazon is that sellers have the opportunity to drive up their sales when they switch to fulfillment by Amazon in large part because of the interaction between fulfillment by Amazon and Amazon Prime.
So as soon as a seller switches to using fulfillment by Amazon, all of their products become eligible for Amazon Prime just as if they were Amazon owned items. So the interaction between those two programs is driving sales for sellers and that is something of course that sellers want.
That's in large part what is driving the uptake of fulfillment by Amazon.
Your next question comes from Spencer Wang – Credit Suisse.
Spencer Wang – Credit Suisse
I was wondering about the media line. That's been decelerating. Is there anything, I know FX was impacted by the international, was there anything going on there beyond just the category. And then on a related matter is media as a category as you transition to digital, could you maybe talk a little bit about Amazon DOD and how you plan on differentiating that going forward?
If you take a look at our international media and our media growth in general, we saw North America, we saw an 8% growth which is consistent with what we saw in Q4. Q4 was just slightly less that 7% and then in international on a local currency basis, it was 17% which was down a little bit from Q3. It was 22%.
And again, you saw our total revenue, if you go back to Q4 for international, was 31% on a local currency basis, so it was really consistent with what we saw in the first three quarters of the year. We saw that dip a little bit and we believe that was economic related in Q1 to 28%, but still very solid growth, 28% in total for our international businesses on a local currency basis.
So we did see a little bit of decline in international media, but we saw a corresponding increase in ETM also growing 50% on a local currency basis.
The Amazon video on demand team is doing a terrific job. The strategy is very simple, which is to keep improving the customer experience of video on demand relentlessly as we go forward and at the same time to make it very easy for partners to integrate the video on demand service into their set top box or video display device.
So again, today you can use video on demand, Amazon video on demand very seamlessly on TIVO and also on the ROC2 box, so continuing to do those kinds of integrations is an important part of the strategy of making those integrations easy for our partners.
Your next question comes from Sandeep Aggarwal – Collins Stewart.
Sandeep Aggarwal – Collins Stewart
Obviously Kindle both generation one and generation two of Kindle did very well. Any plan to unleash the computing power of Kindle and let it compete with uniform factors like Net book which are gaining traction now?
We're really focused on purposeful reading devices and so we wouldn't talk anyway about what we might do in the future, but I can tell you that we're really focused on devices with electronic displays that are purpose built for reading.
Kindle 2 really is a terrific long form reading device and we think reading is an important enough activity that it deserves a purpose built device and that's really a sweet spot for us.
Your next question comes from Marianne Wolk – Susquehanna.
Marianne Wolk – Susquehanna
Can you update us on your cloud computing business and any initiatives of larger corporate accounts that you've been successful with. Also in the past you disclosed a number of web developers in your solution as nearly 400,000. Can you provide any update to that figure? And you reduced capacity earlier this quarter which appeared minor and head count fell by about 100 sequentially, can you comment whether these are cost control efforts and describe any other specific cost reduction initiatives in place that are helping margins.
Examples of enterprise customers using our infrastructure web services today, there are many but I'll name a few; Eli Lilly doing basic research, clinical trial analysis using UC2. ESPN is another user of UC2. Auto Desk is a user of UC2. There are many more, some of them preferred not to be identified for competitive reasons.
A number of hedge funds using UC2 for compute, so I'll just leave it at that. But there is good traction in the enterprise customer set as well of course there is with start up small business and medium business.
In terms of your other question related to head count, it's pretty flat. Q1 head count was pretty flat with year end. We did continue to hire but we also had attrition as well, so it remained pretty flat.
In terms of other productivity, we have a large number of things that we're working on from a productivity standpoint. I talked about some of them earlier. We continue to work with suppliers to find ways where we can make them more successful as well as us more successful. One of the ways that we like, Jeff talked about some of the efforts we have earlier in Mark's question and one of the ways we spend a lot of time on is to get productivity is by becoming more efficient for customers.
We find that the many, many programs that we have, as they become more efficient for customers, translates into a better experience for customers, but it also results in productivity. So we have many, many different programs across the company. This is not something new. This is something we've been working on for quite a few years and as Jeff described earlier, we have a lot of opportunity to continue to work on those going forward as well.
Your next question comes from Youssef Squali – Jefferies & Company.
Youssef Squali – Jefferies & Company
If I look at the segment breakouts and I look at your electronics and other in the U.S. there was a noticeable reacceleration of that business. Growth was at 42%. Can you help us understand why the reacceleration? Were there any sub categories that performed exceptionally well or better than your expectations?
Back to the Amazon VOD, what would be the hurdles to allowing Amazon to move into a subscription model in addition to the current offering that you already have?
In terms of electronics and other general merchandise we did see strong growth in North America. We also saw strong growth in international, and it was we continue to add selection and those categories, we continue to improve our in stock level so that when customers came to our VOD to order it was available right away for shipment.
And pricing was very, very competitive, so we think the combination of certainly prices, adding additional selections in stock and certainly fast delivery with prime helping those numbers as well.
In answer to the video on demand subscription, there's nothing structural that would prohibit that. The amount of selection that you have available in a subscription model today is much less than what you can get with a la carte model. So that's the beginnings of an answer to your question.
Your next question comes from Colin Sebastian – Lazard Capital Markets.
Colin Sebastian – Lazard Capital Markets
I was hoping to get your perspective on some of the regional and national initiatives to impose sales taxation on the internet. For example, what you might expect to see in terms of any impact on demand perhaps from a historical perspective.
It's hard to say. There's not a lot I can help you with there.
Your next question comes from Imran Khan – J.P. Morgan.
Imran Khan – J.P. Morgan
I think some of the retail companies and some of the online retailers also talked about business conditions stabilization are improving. Your business was not impacted that much by the economy. Can you give us sense, have you seen some sign of improvement in your growth as we focused at the end of the quarter.
And third party business is growing at a faster pace and becoming a bigger part of the business. The challenge is I think you are extremely focused on improving user experience. As third party becomes a bigger part of the business, how close are you monitoring the users for consumer satisfaction and how do you guarantee that consumer gets the same satisfaction as when they buy from Amazon when Amazon is the principal?
In terms of growth rate, it's obviously difficult to say what the economic impact is but we certainly starting Q4 by looking at our overall growth rates we saw solid growth rates but not as strong as we saw for the several quarters previous to that and you saw the same thing again in Q1.
So our Q1 revenue growth was 25% on a local currency basis, but last year in the first three quarters, it was well into the 30's and so we did see some slow down both in Q4 and in Q1. But we're not doing anything different than we've done in the past. We continue to focus on what we think are the right things for customers and that's what we're doing. So it's hard to say what the economic impact is.
On the third party sales business question, how do we guarantee the customer experience in that third party model, there are a couple of ways. One, we maintain score cards on the sellers and the sellers are very interested in self improvement. The fact of the matter is, the vast majority of sellers do a very good job fulfilling for customers and the small fraction that do not, we can provide them feedback and we can ultimately ask them not to sell on Amazon.
The second thing we do is we have the AZ guarantee so ultimately we can take care of customers if the seller cannot. And then third, we have fulfillment by Amazon so fulfillment by Amazon really levels the experience and makes it so that those third parties sold items have exactly the same fulfillment and customer service experience as Amazon owned inventory.
Your next question comes from Heath Terry – FBR Capital Markets.
Heath Terry – FBR Capital Markets
Given that third party this quarter was 32%, that's a number that's been surprising stable for awhile and given the growth that you're obviously seeing to some degree in third party in Europe. Can you give us a sense of where you feel like the right balance for that is and to the extent that you're willing to talk about the difference in where you are with third party as a percentage of your units in the U.S. or as a percentage of orders in the U.S. versus Europe and what level do you see that balancing out?
Ultimately the customers can decide what that mix ends up being and what we're trying to do is make sure we have a great customer experience. Certainly for our consumers we continue to work as well on our sellers which is another customer set that we have and so the way you should think about it is we're trying to make those two experiences as well as our third customer set which is developers.
In terms of mix, the customer is ultimately going to decide and what we're trying to do is make that experience as good as we can make it and so that the customers will decide who they buy from.
We haven't disclosed what the numbers are for each of the two segments but looking at Q1, both segments are growing nicely.
Your next question comes from James Friedland – Cohen & Company.
James Friedland – Cohen & Company
I was wondering if you could give us any color on what's going on with the asset in China in terms of how big is it at this point or if you can give us some sort of comparison of what it looks like compared to Amazon. When did it become a material part of the business?
We haven't split out the specific geography numbers but we're very pleased with the business we have in China. It's growing nicely and we think that it's an interesting long term opportunity for us.
Your next question comes from Gene Munster – Piper Jaffray.
Gene Munster – Piper Jaffray
If you could talk a little bit about Prime and the overall percentage of products on Prime right now. I know you talked about some of Amazon and how do you basically fulfill and promote more products being offered by Prime. And can you talk a little bit about behavior when people actually sign up for Prime, just general difference in how people's behavior changes once they become Prime.
In terms of selection we have very vast selection in Prime and so it's just a very good experience for customers and we continue to add to that selection. We continued to add selections back in Q1. We'll continue to add selection in the coming quarters for our Prime customers.
We're seeing customers do a lot more cross shopping than they have previously and so it's a very good experience for customers. It's certainly impacting the growth rates that you're seeing not only this quarter but the last several quarters so it's a very good experience for customers.
When Tom talks about Prime section growing, it is millions of different items and it is across all categories so you can use your Prime membership to buy shoes, to buy food, to buy diapers, to buy media products and electronics and so on. But it's across a wide array of categories and growing every day.
Thank you for joining us on the call today and for your questions. A replay will be available on our investor relations website until the end of the quarter. We appreciate your interest in Amazon.com and look forward to talking with you again next quarter.
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