Internet Media

Victor Anthony
646-502-2452
VAnthony@aegiscap.com

Company Update / Estimates Change

February 3, 2017
Key Metrics Amazon.com, Inc.
Rating: Buy
AMZN - NASDAQ $839.95
Pricing Date Feb 2 2017
$953.00
Revs Miss, Margins Expand; Own For Sustained
Price Target
52-Week Range $847.21 - $474.00
Shares Outstanding (mm) 497.0 Top-line Growth, Margin Expansion and FCF Growth
Market Capitalization (mm) $417,455.2
3-Mo Average Daily Volume 4,132,641 Investment Highlights:
Book Value/Share $28.42
Price/Book 29.6x Amazon's revenue missed our estimate by 2% with all three segments missing our
estimates. However, overall margins expanded, including at North America retail and
EPS FY: December at AWS, and were 80bps better that we were expecting. Despite the revenue miss,
Prior Curr. Prior Curr. the retail business still grew +20% YoY and AWS grew revenues a healthy 47%.
2015A 2016E 2016E 2017E 2017E The margin expansion refutes a bear case that Amazon has embarked on another
1Q-Mar (0.12) -- 1.07A 1.49E 1.15E prolonged investment cycle. The 1Q17 margin guidance was a bit light but Amazon
historically guides margins conservatively. Our thesis on the stock is unchanged.
2Q-Jun 0.19 -- 1.77A 2.45E 2.17E
Buy the stock for the share gains in retail, strong AWS growth coupled with margin
3Q-Sep 0.17 -- 0.52A 1.28E 1.10E
expansion, and overall company margin expansion despite heavy investments. See
4Q-Dec 1.00 1.39E 1.54A 2.07E 1.91E our January 20th, 2017 note "Sustained Solid Top-line Growth, With LT Margin
FY 1.25 -- 4.75E 7.30E 6.33E Expansion & FCF Growth; Initiating At Buy" for an in-depth view of our thesis on
P/E NM NM NM Amazon.
GAAP EPS
4Q16 Key Points. Reported revenue of $43.74B (+24% ex-FX vs. +28% in
REVENUE 3Q16), missed our/consensus estimates by 2%. NA retail missed our estimate by
Prior Curr. Prior Curr. 1%, while International retail missed by 4%, and AWS missed by 4%, suggesting
2015A 2016E 2016E 2017E 2017E that FX may have played a bigger role in the revenue miss vs consensus, although
1Q-Mar 22,717.0 -- 29,128.0A 35,981.1E 35,465.2E AWS was further impacted by the December price cuts. Pro-forma operating
2Q-Jun 23,185.0 -- 30,404.0A 37,367.5E 36,803.0E
margins of 5.0% expanded by 10bps and was higher than our estimate of 4.2%.
GAAP EPS of $1.54 was 15c ahead of our/consensus estimate of $1.39. North
3Q-Sep 25,358.0 -- 32,714.0A 39,933.9E 39,507.7E
American retail pro-forma margins expanded by 30bps to 5.0%. International
4Q-Dec 35,747.0 44,782.7E 43,741.0A 54,956.1E 53,193.2E margins, however, was -1.8%, turning negative for the second consecutive quarter
FY 107,007.0 --137,028.7E168,238.6E164,969.1E on investments in India and digital content. AWS margins expanded by 271bps to
31.3% but came down 30bps from 3Q16, we assume due to the December price
Company Description: cuts.
Amazon.com is one of the largest e-commerce companies in the world.
The company was incorporated in 1994, went live in July 1995, and
Other Salient Points: (1) Gross margins expanded by 189bps to 33.8% driven by
become a public company in 1997. Amazon operates principally via
three business models: core retail sales from Amazon.com, third- AWS accounting, 3P sales, and a greater mix of higher-margin categories, such
party seller programs, and Amazon Web Services (AWS). Amazon also as apparel and consumables; (2) Both fulfillment and marketing expense growth
owns the Kindle device manufacturing business and Amazon Prime
Video. Amazon has physical operations in the U.S., Canada, the U.K,
decelerated but were higher YoY as a percent of revenue; (3) Paid unit growth
Germany, France, Japan, China, Italy, Spain, and India. was 24%, decelerating from 28% in 3Q16. (4) Amazon ended the quarter with
$25.9B ($52/share) in cash and $7.69B in debt. (6) Capex was 4.6% of sales, and
capex grew 53% vs. 54% in 3Q16. (7) TTM FCF per-share grew 31% YoY to
$19.97 while TTM FCF per-share, ex lease payments, grew 20% YoY to $11.73.

Estimate Changes & Valuation. We trimmed our 2017 revenue estimate by

2% and our pro-forma operating income by 1%. Our price target, however, is
unchanged at $953 for year-end 2017. We value Amazon using a SOTP , in which
we apply a 1.5x multiple to our 2018 retail revenue estimate and a 12x multiple
to our 2018 AWS EBITDA estimate.

The Disclosure section may be found on pages 12 - 13 of this report.

Amazon.com, Inc. February 3, 2017

Exhibit 1. Aegis Estimate Changes

Item Aegis Estimate Guidance Prior Estimates Variance Variance %
1Q17E
Revenues $35,465 $33.25B-$35.75B $35,981 ($516) -1.5%
EBITDA $4,238 $4,159 $79 1.9%
Pro-Forma Oper Income (CSOI) $1,849 $1,948 ($99) -5.3%
Non-GAAP EPS $2.27 $2.40 ($0.14) -6.0%
GAAP EPS $1.15 $1.49 ($0.34) -29.8%

2017E
Revenues $164,969 $168,239 ($3,270) -2.0%
EBITDA $18,997 $18,349 $648 3.4%
Pro-Forma Oper Income (CSOI) $9,003 $9,099 ($96) -1.1%
Non-GAAP EPS $11.28 $11.41 ($0.13) -1.2%
GAAP EPS $6.33 $7.30 ($0.97) -15.3%

2018E
Revenues $199,029 $203,671 ($4,642) -2.3%
EBITDA $24,695 $24,072 $623 2.5%
Pro-Forma Oper Income (CSOI) $13,447 $13,662 ($215) -1.6%
Non-GAAP EPS $15.10 $15.23 ($0.13) -0.9%
GAAP EPS $8.95 $10.62 ($1.68) -18.7%
Source: Aegis Capital; Company Reports

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Amazon.com, Inc. February 3, 2017

Valuation

We value Amazon using a sum-of-the-parts analysis, in which we apply a 1.5x multiple to our 2018 retail revenue estimate
and a 12x multiple to our 2018 AWS EBITDA estimate. After adjusting for cash & equivalents and debt, we arrive at a per
share value of $953 for year-end 2017%.
Exhibit 2: Sum-of-The-Parts Valuation
2018 2018 % of per
Revenue EBITDA Multiple Enterprise Value Total EV Share

Retail, Method: Revenue $171,985 1.5x $260,557 57.2% $524

Other (Ad Rev,CC Fees), Method: Revenue $2,498 1.0x $2,498 0.5% $5
Total AMZN Retail & Other $174,483 $8,416 $263,055 57.8% $529

AWS, Method: EBITDA $24,546 $16,279 12x $192,091 42.2% $387

Total AMZN Enterprise Value $455,146
Add: Cash & Equivalents, Current $25,981 $52
Less: Debt ($7,694) ($15)
Equity Value $473,433
Diluted Shares 497.0
Fair Value per Share $953
Current Share price $839.95
Upside/(Downside) 13%
Source: Aegis Capital Estimates

Amazon is currently trading above its historical price-to-sales valuation and similarly above its average relative price-to-sales
to the S&P 500, but off its peak.

Exhibit 2. Amazon: Historical P/S and P/S Relative to S&P500

Amazon: P/Sales Amazon: Relative P/Sales, to S&P500

2.9x 1.95x
2.0x
1.8x
2.4x
1.6x
1.4x 1.28x
1.9x
1.2x
1.4x 1.0x
0.8x 0.91x
0.9x
0.6x
0.4x 0.4x
10/1/2011

10/1/2012

10/1/2013

10/1/2014

10/1/2015

10/1/2016

10/1/2011

10/1/2012

10/1/2013

10/1/2014

10/1/2015

10/1/2016
1/1/2011
4/1/2011
7/1/2011

1/1/2012
4/1/2012
7/1/2012

1/1/2013
4/1/2013
7/1/2013

1/1/2014
4/1/2014
7/1/2014

1/1/2015
4/1/2015
7/1/2015

1/1/2016
4/1/2016
7/1/2016

1/1/2011
4/1/2011
7/1/2011

1/1/2012
4/1/2012
7/1/2012

1/1/2013
4/1/2013
7/1/2013

1/1/2014
4/1/2014
7/1/2014

1/1/2015
4/1/2015
7/1/2015

1/1/2016
4/1/2016
7/1/2016

P/Sales Average Relative Valuation Min Max Average

Source: FacetSet; Aegis Capital

Interestingly, and for both illustrative and comparison purposes, Amazons current market capitalization is only 8% of its
market opportunity (global retail sales and our rough estimate for AWSs market opportunity), compared to 63% for
Facebook and 93% for Alphabet. For this comparison, we rely on the $600B global advertising market for Facebook and

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Amazon.com, Inc. February 3, 2017

Alphabet, and ignore Facebooks under-monetized opportunities outside of advertising (Messenger, WhatsApp, Oculus, e-
commerce) and Alphabets optimality on Other Bets.

Exhibit 3. Amazons Market Capitalization % of Market Opportunity vs Facebook & Alphabet

100% 93%
90%

80%

70%
63%
60%

50%

40%

30%

20%
8%
10%

0%
Amazon Facebook Alphabet

Source: eMarketer; Company Reports; Aegis Capital

Notes: For Amazon we use $4.9T global retail sales and assume $500B AWS market opportunity. Bezos has said that the
AWS market opportunity could be larger than retail and could be in the trillions of dollars.
Facebook and Alphabet's Market opportunity limited to $600B in annual global advertising, which is the super majoity of
their revenues.

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Amazon.com, Inc. February 3, 2017

Supplemental Charts

Exhibit 4. Amazon: Core Retail & AWS Pro-forma Operating Margins (CSOI)
35.0%
30.3% 30.2% 30.7%
30.0%

25.0% 23.7%

20.0%

14.2%
15.0%

10.0%

5.0% 3.4%
2.7% 2.6% 2.5%
1.4%

0.0%
2014 2015 2016 2017E 2018E

Retail Segment CSOI Margin AWS Segment CSOI Margin

Source: Company Reports; Aegis Estimates

Exhibit 5. Amazon: Total Company Pro-forma Operating Margin (CSOI)

8.0%

Investment Cycle Begins

7.0% 6.8%

6.0% 5.7%
5.5%
5.1%
5.0%
4.2%
4.0%
3.3%
2.7% 2.7%
3.0%
2.0%
2.0%

1.0%

0.0%
2010 2011 2012 2013 2014 2015 2016 2017E 2018E

Proforma operating margin (CSOI)

Source: Company Reports; Aegis Estimates

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Amazon.com, Inc. February 3, 2017

Free Cash Continues To Build. Along with margin expansion, we expect free cash flow per-share to continue to increase at a
measured pace. We estimate that capital expenditures will range between 4.5% and 5.0% over the next two years leading
free cash flow per share to grow at an 17% CAGR from $20.06 per share in 2016 to $28.91 per-share in 2018.

Exhibit 6. Free-cash-flow per-share

$35.15

$30.15 $28.91

$25.12
$25.15

$20.06
$23.56
$20.15

$15.44
$17.13
$15.15

$10.15 $11.78
$10.00
$5.50
$4.55 $4.41 $4.18
$5.15

$0.86
$1.14
$0.15
2010 2011 2012 2013 2014 2015 2016 2017E 2018E

FCF Per-Share FCF Per-Share, Less Lease Payments

Source: Company Reports; Aegis Estimates

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Amazon.com, Inc. February 3, 2017

Company Description
Amazon.com is one of the largest e-commerce companies in the world. The company was incorporated in 1994, went live in
July 1995, and become a public company in 1997. Amazon operates principally via three business models: core retail sales
from Amazon.com, third-party seller programs, and Amazon Web Services (AWS). Amazon also owns the Kindle device
manufacturing business and Amazon Prime Video. Amazon has physical operations in the U.S., Canada, the U.K, Germany,
France, Japan, China, Italy, Spain, and India.

Investment Thesis
An investment in Amazon today is a bet that: a) Amazon will continue to take share of retail sales, Prime will
continue to add subscribers, and retail top-line growth will continue in the high-teen to low-20% range; b)
AWS will continue to grow at a healthy pace, and margins continue to expand, despite rising competition; c)
overall company margins will expand despite aggressive investments in digital content, infrastructure, India
and others; and d) the current valuation will withstand potential macro shocks as well as quarterly variations
in earnings versus consensus. We see a, b, and c as highly likely over the next two years, while d, if it were
to occur, would present buying opportunities.

Risks To Our Analysis

Rising competition for retail and AWS.
Key man risk Amazons future growth and strategic direction could be negatively impacted if Jeff Bezos were not able to
perform his duties as CEO.
Macro weakness could weigh on growth.
India could impose restrictions on foreign firms that, like China, could diminish Amazons competitive position.
Trump Effect new regulations (taxes, net neutrality) could negatively impact revenues and profits.

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Amazon.com, Inc. February 3, 2017

Amazon.com, Income Statement (in $Millions, except per share data)

Period 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Media $10,808 $11,567 $12,483 $3,208 $2,928 $3,237 $4,208 $13,581 $3,417 $3,118 $3,447 $4,482 $14,464 $15,476
Electronics & Other GM $29,986 $38,517 $50,402 $13,511 $14,459 $15,327 $21,590 $64,887 $16,686 $17,857 $18,852 $26,556 $79,951 $98,340
Other $3,724 $750 $824 $277 $287 $310 $442 $1,316 $416 $402 $403 $553 $1,773 $2,163
Total North America $44,518 $50,834 $63,709 $16,996 $17,674 $18,874 $26,240 $79,784 $20,518 $21,377 $22,703 $31,590 $96,187 $115,979
y/y % change 27.9% 14.2% 25.3% 26.8% 28.1% 25.8% 22.0% 25.2% 20.7% 21.0% 20.3% 20.4% 20.6% 20.6%

Media $10,907 $10,938 $10,026 $2,480 $2,283 $2,491 $3,377 $10,631 $2,524 $2,263 $2,506 $3,549 $10,843 $11,064
Electronics & Other GM $18,817 $22,369 $25,195 $7,034 $7,504 $8,056 $10,514 $33,108 $8,637 $8,938 $9,636 $12,943 $40,154 $47,105
Other $211 $209 $197 $52 $57 $62 $74 $245 $65 $69 $74 $90 $299 $335
Total International $29,935 $33,516 $35,418 $9,566 $9,844 $10,609 $13,965 $43,984 $11,226 $11,270 $12,217 $16,582 $51,296 $58,504
y/y % change 13.9% 12.0% 5.7% 23.5% 30.1% 28.3% 17.9% 24.2% 17.4% 14.5% 15.2% 18.7% 16.6% 14.1%

AWS $3,108 $4,644 $7,880 $2,566 $2,886 $3,231 $3,536 $12,219 $3,721 $4,156 $4,588 $5,021 $17,486 $24,546
y/y % change 49.4% 69.7% 63.9% 58.2% 55.0% 47.0% 55.1% 45.0% 44.0% 42.0% 42.0% 43.1% 40.4%

Total Global Net Sales $74,453 $88,988 $107,007 $29,128 $30,404 $32,714 $43,741 $135,987 $35,465 $36,803 $39,508 $53,193 $164,969 $199,029
y/y % change 21.9% 19.5% 20.2% 28.2% 31.1% 29.0% 22.4% 27.1% 21.8% 21.0% 20.8% 21.6% 21.3% 20.6%

Total Cost of Sales $54,182 $62,752 $71,651 $18,866 $19,180 $21,260 $28,958 $88,264 $22,616 $22,849 $25,280 $34,684 $105,428 $125,210
Gross Profit 20,271 26,236 35,356 10,262 11,224 11,454 14,783 47,723 12,849 13,954 14,228 18,509 59,541 73,819
Gross Profit Margin % 27.2% 29.5% 33.0% 35.2% 36.9% 35.0% 33.8% 35.1% 36.2% 37.9% 36.0% 34.8% 36.1% 37.1%

Fulfillment $8,585 $10,766 $13,411 $3,687 $3,878 $4,335 $5,719 $17,619 $4,637 $4,728 $5,228 $7,160 $21,753 $26,088
Marketing & Sales $3,134 $4,332 $5,252 $1,436 $1,546 $1,738 $2,513 $7,233 $1,928 $1,977 $2,159 $2,887 $8,951 $10,621
Technology and Content $6,565 $9,275 $12,542 $3,526 $3,880 $4,135 $4,545 $16,086 $4,593 $4,751 $5,020 $5,963 $20,327 $24,434
General and administrative $1,128 $1,552 $1,747 $497 $580 $639 $717 $2,433 $623 $707 $775 $882 $2,986 $3,624
Other Operating Expenses $114 $133 $171 $45 $55 $32 $34 $166 $34 $34 $34 $34 $136 $136
Total Operating Expenses 73,708 88,810 104,774 28,057 29,119 32,139 42,486 131,801 34,431 35,045 38,496 51,609 159,580 190,113
y/y % change 22.0% 20.5% 18.0% 24.9% 28.2% 28.8% 22.7% 25.8% 22.7% 20.4% 19.8% 21.5% 21.1% 19.1%
% of Revenues 99.0% 99.8% 97.9% 96.3% 95.8% 98.2% 97.1% 96.9% 97.1% 95.2% 97.4% 97.0% 96.7% 95.5%

EBITDA, Adj $5,246 $6,553 $10,805 $3,487 $3,656 $3,467 $4,473 $15,067 $4,238 $4,842 $4,557 $5,361 $18,997 $24,695
y/y % change 37.1% 24.9% 64.9% 63.6% 41.8% 33.8% 27.7% 39.4% 21.5% 32.4% 31.4% 19.8% 26.1% 30.0%
EBITDA Margin 7.0% 7.4% 10.1% 12.0% 12.0% 10.6% 10.2% 11.1% 11.9% 13.2% 11.5% 10.1% 11.5% 12.4%

Depreciation & Amortization $3,253 $4,745 $6,281 $1,827 $1,909 $2,084 $2,297 $8,117 $2,389 $2,461 $2,534 $2,610 $9,994 $11,249

Pro Forma Operating Income (CSOI) $1,993 $1,808 $4,524 $1,660 $2,108 $1,383 $2,176 $6,950 $1,849 $2,381 $2,022 $2,750 $9,003 $13,447
y/y % change 19.5% -9.3% 150.2% 135.1% 96.1% 39.3% 24.3% 53.6% 11.4% 13.0% 46.2% 26.4% 29.5% 49.4%
Margin 2.7% 2.0% 4.2% 5.7% 6.9% 4.2% 5.0% 5.1% 5.2% 6.5% 5.1% 5.2% 5.5% 6.8%

Operating Income $745 $178 $2,233 $1,071 $1,285 $575 $1,255 $4,186 $1,035 $1,758 $1,012 $1,584 $5,389 $8,916
y/y % change 10.2% -76.1% 1154.5% 320.0% 176.9% 41.6% 13.3% 87.5% -3.4% 36.8% 76.0% 26.2% 28.7% 65.4%
Margin 1.0% 0.2% 2.1% 3.7% 4.2% 1.8% 2.9% 3.1% 2.9% 4.8% 2.6% 3.0% 3.3% 4.5%

Interest Income $38 $39 $49 $21 $24 $26 $30 $101 $19 $12 $13 $17 $62 $120
Interest Expense ($141) ($210) ($460) ($117) ($116) ($118) ($133) ($484) ($116) ($116) ($116) ($116) ($464) ($464)
Other Income (Expenses) ($136) ($119) ($254) $81 ($14) $8 $14 $89 $0 $0 $0 $0 $0 $0
Remeasurements and other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
PRETAX INCOME $506 ($112) $1,568 $1,056 $1,179 $491 $1,166 $3,892 $938 $1,654 $909 $1,486 $4,987 $8,572

Tax Rate % 29% 29% 29% 45% 26% 47% 36% 29% 30% 30% 30% 30% 29% 29%
Income Tax Expense (Benefit) $162 $167 $951 $475 $307 $229 $414 $1,425 $281 $496 $273 $446 $1,496 $2,571

Equity in Losses of Equity Method Investees ($71) $38 ($21) ($68) ($15) ($10) ($3) ($96) ($96) ($96) ($96) ($96) ($384) ($1,536)
Other (Amort of Goodwill, Acquisition charges, other) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
NET INCOME $273 ($241) $596 $513 $857 $252 $749 $2,371 $561 $1,062 $540 $944 $3,107 $4,464
y/y % change -782.5% -188.3% -347.3% -1000.0% 831.5% 219.0% 55.4% 297.8% 9.3% 23.9% 114.5% 26.0% 31.0% 43.7%

Basic Shares Outstanding 457 462 468 471 473 474 476 474 478 480 482 484 481 489
Diluted Shares Outstanding 461 466 475 481 483 485 486 484 488 490 492 494 491 499

Basic GAAP EPS $0.60 ($0.52) $1.27 $1.09 $1.81 $0.53 $1.57 $5.01 $1.17 $2.21 $1.12 $1.95 $6.46 $9.13
Fully Diluted GAAP EPS $0.59 -$0.52 $1.25 $1.07 $1.77 $0.52 $1.54 $4.90 $1.15 $2.17 $1.10 $1.91 $6.33 $8.95
y/y % change -781.0% -188.0% -340.5% -970.1% 818.0% 214.4% 53.8% 290.6% 7.7% 22.1% 111.4% 24.0% 29.1% 41.4%

Pro Forma EPS (Fully Diluted) $2.21 $4.54 $0.52 $1.69 $2.40 $1.37 $2.72 $8.18 $2.27 $3.01 $2.49 $3.51 $11.28 $15.10
y/y % change 213.4% 105.7% -88.6% -176.5% 372.9% 144.6% 64.4% 1486.7% 34.3% 25.5% 81.2% 29.3% 37.9% 33.9%
Source: Company Reports; Aegis Capital Estimates

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Amazon.com Free Cash Flow (in $Millions, except per share data)
Period 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
TTM Free Cash Flow, TCM Calc
+ Cash from ops (SCF) $5,474 $6,841 $11,920 $11,259 $12,727 $14,603 $16,442 $16,442 $13,485 $14,479 $16,701 $19,756 $19,756 $23,382
- Capex ($3,443) ($4,892) ($4,588) ($4,896) ($5,394) ($6,040) ($6,736) ($6,736) ($7,153) ($7,098) ($7,035) ($7,424) ($7,424) ($8,956)
= Levered Free Cash Flow $2,031 $1,949 $7,332 $6,361 $7,331 $8,563 $9,706 $9,706 $6,332 $7,381 $9,666 $12,333 $12,333 $14,425
q/q % change -13.2% 15.2% 16.8% 13.3% -34.8% 16.6% 31.0% 27.6%
y/y % change 412.9% -4.0% 276.2% 101.2% 67.6% 58.6% 32.4% 32.4% -0.4% 0.7% 12.9% 27.1% 27.1% 17.0%
FCF % of EBITDA, Adjusted 38.7% 29.7% 67.9% 52.3% 55.4% 60.7% 64.4% 64.4% 23.2% 25.8% 33.7% 64.9% 64.9% 58.4%

TTM FCF per share $4.41 $4.18 $15.44 $13.22 $15.18 $17.66 $19.97 $20.06 $12.98 $15.06 $19.65 $24.96 $25.12 $28.91
q/q % change -13.2% 14.8% 16.3% 13.1% -35.0% 16.1% 30.4% 27.1%
y/y % change 411.8% -5.1% 269.1% 94.5% 65.2% 56.3% 31.0% 30.0% -1.9% -0.8% 11.3% 25.0% 25.2% 15.1%
LFCF/pro forma EPS % 199.8% 92.1% 2994.8% 299.8% 296.0% 248.2% 244.2% 245.3% 89.3% 93.1% 123.2% 221.3% 222.7% 191.4%

FCF Less Lease Principal repayments, TTM $1,251.00 $529.00 $4,748.00 $3,489.00 $3,925.00 $4,853.00 $5,699.00 $5,699.00 $2,177.17 $3,393.62 $5,680.56 $8,411.56 $8,411.52 $11,758.46
q/q % change 0.0% -26.5% 12.5% 23.6% 17.4% -61.8% 55.9% 67.4% 48.1%
y/y % change 0.0% -57.7% 797.5% 133.8% 64.5% 57.0% 20.0% 20.0% -37.6% -13.5% 17.1% 47.6% 47.6% 39.8%

FCF Per-Share Less Lease Obligations $1.14 $10.00 $7.25 $8.13 $10.01 $11.73 $11.78 $4.46 $6.93 $11.55 $17.03 $17.13 $23.56
q/q % change -26.5% 12.0% 23.1% 17.2% -62.0% 55.2% 66.7% 47.5%
y/y % change 0.0% 780.5% 126.1% 62.1% 54.7% 18.8% 17.9% -38.5% -14.8% 15.4% 45.2% 45.4% 37.5%

Source: Company Reports; Aegis Capital Estimates

AWS Estimates (in $Millions)

Period 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Revenue $3,108 $4,644 $7,880 $2,566 $2,886 $3,231 $3,536 $12,219 $3,721 $4,156 $4,588 $5,021 $17,486 $24,546
q/q % change 6.7% 12.5% 12.0% 9.4% -69.5% 11.7% 10.4% 9.4%
y/y % change 69.0% 49.4% 69.7% 63.9% 58.2% 55.0% 47.0% 55.1% 45.0% 44.0% 42.0% 42.0% 43.1% 40.4%
y/y % change, Ex-FX 0.0% 0.0% 0.0% 64.0% 58.0% 55.0% 47.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% of Amazon's Revenues 7.0% 9.1% 12.4% 15.1% 16.3% 17.1% 13.5% 15.3% 18.1% 19.4% 20.2% 15.9% 18.2% 21.2%

Segment operating expenses (Ex-SBC, Amort of Intangibles)

$2,435 $3,984 $6,016 $1,850 $2,023 $2,210 $2,508 $8,591 $2,664 $2,892 $3,115 $3,537 $12,208 $17,015
q/q % change 7.7% 9.4% 9.2% 13.5% -69.0% 8.6% 7.7% 13.5%
y/y % change 0.0% 63.6% 51.0% 42.2% 41.2% 41.3% 46.0% 42.8% 44.0% 43.0% 41.0% 41.0% 42.1% 39.4%
% of revenues 78.3% 85.8% 84.0% 72.1% 70.1% 68.4% 70.9% 70.3% 71.6% 69.6% 67.9% 70.4% 69.8% 69.3%

CSOI - Segment operating income (loss) $673 $660 $1,864 $716 $863 $1,021 $1,106 $3,706 $1,057 $1,263 $1,473 $1,485 $5,278 $7,530
q/q % change 4.2% 20.5% 18.3% 8.3% -71.5% 19.6% 16.6% 0.8%
y/y % change 0.0% -1.9% 182.4% 170.2% 120.7% 96.0% 61.0% 98.8% 47.6% 46.4% 44.2% 34.2% 42.4% 42.7%
y/y % change, Ex-FX 0.0% 0.0% 0.0% 161.0% 121.0% 100.0% 62.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Margins 21.7% 14.2% 23.7% 27.9% 29.9% 31.6% 31.3% 30.3% 28.4% 30.4% 32.1% 29.6% 30.2% 30.7%

Source: Company Reports; Aegis Capital Estimates

9 AEGIS CAPITAL CORP.

Amazon.com, Inc. February 3, 2017

Amazon.com Balance Sheet (in $Millions, except per share data)

Period 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Cash, cash equivalents, and marketable securities: $12,447 $17,416 $19,808 $15,859 $16,540 $18,347 $25,981 $25,981 $18,288 $20,111 $24,061 $34,393 $34,393 $46,151
Inventories $7,411 $8,299 $10,243 $9,582 $9,588 $10,696 $11,461 $11,461 $11,989 $11,930 $13,280 $14,498 $14,498 $18,190
Accounts receivable, net and other current assets $4,767 $5,612 $6,423 $5,072 $6,092 $6,566 $8,339 $8,339 $6,964 $8,192 $8,807 $11,323 $11,323 $15,130
Deferred tax assets, current portion $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total current assets $24,625 $31,327 $36,474 $30,513 $32,220 $35,609 $45,781 $45,781 $37,241 $40,232 $46,148 $60,214 $60,214 $79,472

Fixed assets, net $10,949 $16,967 $21,838 $23,308 $25,190 $27,177 $29,114 $29,114 $28,321 $27,517 $26,760 $26,543 $26,543 $24,251
Deferred tax assets, long term portion $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Goodwill $2,655 $3,319 $3,759 $3,785 $3,774 $3,815 $3,784 $3,784 $3,784 $3,784 $3,784 $3,784 $3,784 $3,784
Other assets $1,930 $2,892 $3,373 $3,522 $3,892 $4,296 $4,723 $4,723 $4,723 $4,723 $4,723 $4,723 $4,723 $4,723
Total Assets $40,159 $54,505 $65,444 $61,128 $65,076 $70,897 $83,402 $83,402 $74,069 $76,256 $81,415 $95,264 $95,264 $112,230

Accounts payable $15,133 $16,459 $20,397 $14,990 $16,123 $18,801 $25,309 $25,309 $17,467 $18,699 $21,794 $29,542 $29,542 $34,278
Accrued expenses and other current liabilities $6,688 $9,807 $10,384 $9,431 $9,613 $10,497 $13,739 $13,739 $12,036 $12,210 $13,293 $17,538 $17,538 $22,223
Unearned revenue $1,159 $1,823 $3,118 $3,766 $3,851 $4,200 $4,768 $4,768 $4,585 $4,662 $5,072 $5,798 $5,798 $7,016
Interest payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current portion of long-term debt and other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total current liabilities $22,980 $28,089 $33,899 $28,187 $29,587 $33,498 $43,816 $43,816 $34,088 $35,571 $40,160 $52,879 $52,879 $63,516
Long-term debt $3,191 $8,265 $8,235 $8,219 $8,158 $8,205 $7,694 $7,694 $7,694 $7,694 $7,694 $7,694 $7,694 $7,694
Other Long-term liabilities $4,242 $7,410 $9,926 $9,966 $10,793 $11,412 $12,607 $12,607 $12,607 $12,607 $12,607 $12,607 $12,607 $12,607

Issued and outstanding shares $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5

Treasury Stock ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837) ($1,837)
Additional paid-in capital $9,573 $11,135 $13,394 $14,144 $15,026 $15,968 $17,186 $17,186 $17,020 $16,663 $16,693 $16,879 $16,879 $18,743
Accumulated other comprehensive income ($185) ($511) ($723) ($614) ($571) ($521) ($985) ($985) ($985) ($985) ($985) ($985) ($985) ($985)
Accumulated deficit $2,190 $1,949 $2,545 $3,058 $3,915 $4,167 $4,916 $4,916 $5,477 $6,538 $7,079 $8,023 $8,023 $12,487
Total stockholders' equity (deficit) $9,746 $10,741 $13,384 $14,756 $16,538 $17,782 $19,285 $19,285 $19,680 $20,384 $20,955 $22,084 $22,084 $28,412

Total Liabilities & Shareholders Equity $40,159 $54,505 $65,444 $61,128 $65,076 $70,897 $83,402 $83,402 $74,069 $76,256 $81,415 $95,264 $95,264 $112,230
Source: Company Reports; Aegis Capital Estimates

Amazon.com Cash Flow Statement (in $Millions, except per share data)
Period 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Net income (loss) $273 ($241) $596 $513 $857 $252 $749 $2,371 $561 $1,062 $540 $944 $3,107 $4,464
Adjustments to reconcile net income (loss) to net cash provided$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation of fixed assets, including internal-use software$3,253
and website development,
$4,745 and other
$6,281
amortization$1,827 $1,909 $2,084 $2,297 $8,117 $2,389 $2,461 $2,534 $2,610 $9,994 $11,249
Stock-based compensation $1,134 $1,497 $2,120 $544 $768 $776 $887 $2,975 $780 $589 $977 $1,132 $3,478 $4,395
Other operating expense (income) $114 $130 $155 $43 $53 $31 $31 $158 $34 $34 $34 $34 $136 $136
Losses (gains) on sales of marketable securities, net $1 ($4) $5 $2 $1 $0 $0 $3 $0 $0 $0 $0 $0 $0
Remeasurements and other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Non-cash interest expense and other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Expense (income) $166 $62 $244 ($52) $31 ($23) $21 ($23) $0 $0 $0 $0 $0 $0
Deferred income taxes ($157) ($319) $82 $11 $106 ($81) ($282) ($246) $0 $0 $0 $0 $0 $0
Excess tax benefits on stock awards ($78) ($6) ($119) ($207) ($113) ($173) ($336) ($829) $0 $0 $0 $0 $0 $0
Cumulative effect of change in accounting principle $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Changes in operating assets and liabilities:

Inventories ($1,411) ($1,193) ($2,186) $769 ($57) ($1,095) ($1,043) ($1,426) ($528) $59 ($1,351) ($1,218) ($3,037) ($3,693)
Accounts receivable, net and other current assets ($846) ($1,038) ($1,755) $412 ($1,184) ($671) ($1,924) ($3,367) $1,375 ($1,228) ($615) ($2,516) ($2,984) ($3,807)
Accounts payable $1,888 $1,758 $4,294 ($5,770) $977 $2,540 $7,283 $5,030 ($7,842) $1,232 $3,095 $7,748 $4,233 $4,735
Accrued expenses and other current liabilities $737 $709 $910 ($956) ($15) $441 $2,254 $1,724 ($1,703) $174 $1,083 $4,245 $3,799 $4,686
Additions to unearned revenue $2,691 $4,433 $7,401 $2,814 $2,340 $2,802 $3,975 $11,931 ($183) $76 $411 $726 $1,030 $1,217
Amortization of previously unearned revenue ($2,291) ($3,692) ($6,108) ($2,110) ($2,208) ($2,397) ($3,261) ($9,976) $0 $0 $0 $0 $0 $0
Interest payable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net cash provided by (used in) operating activities $5,474 $6,841 $11,920 ($2,160) $3,465 $4,486 $10,651 $16,442 ($5,117) $4,459 $6,708 $13,706 $19,756 $23,382

Investing Activities
Purchases of fixed assets, including internal-use software and
($3,443)
website development
($4,892) ($4,588) ($1,179) ($1,711) ($1,841) ($2,005) ($6,736) ($1,596) ($1,656) ($1,778) ($2,394) ($7,424) ($8,956)
Acquisitions, net of cash acquired ($311) ($980) ($795) ($16) ($14) ($84) ($3) ($117) $0 $0 $0 $0 $0 $0
Sales and maturities of marketable securities and other investments
$2,304 $3,349 $3,025 $1,138 $931 $1,431 $1,233 $4,733 $0 $0 $0 $0 $0 $0
Purchases of marketable securities ($2,826) ($2,543) ($4,092) ($636) ($1,645) ($2,076) ($3,399) ($7,756) $0 $0 $0 $0 $0 $0
Proceeds from sale of subsidiary $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investments in equity-method investees and other investments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net cash provided by (used in) investing activities ($4,276) ($5,066) ($6,450) ($693) ($2,439) ($2,570) ($4,174) ($9,876) ($1,596) ($1,656) ($1,778) ($2,394) ($7,424) ($8,956)

Financing Activities
Proceeds from exercises of stock options and other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Excess tax benefit on stock awards $78 $6 $119 $207 $113 $173 $336 $829 $0 $0 $0 $0 $0 $0
Proceeds from issuance of common stock, net of issuance costs$0 $0 $93 $0 $0 $0 $537 $537 $0 $0 $0 $0 $0 $0
Common Stock repurchased $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Proceeds from long-term debt and other $380 $6,360 ($680) $9 $66 $8 ($84) ($1) $0 $0 $0 $0 $0 $0
Repayments of long-term debt, capital lease obligations ($997) ($1,865) ($712) ($175) ($70) ($26) $0 ($271) $0 $0 $0 $0 $0 $0
Net cash provided by (used in) financing activities ($539) $4,433 ($3,763) ($789) ($1,039) ($827) ($256) ($2,911) ($980) ($980) ($980) ($980) ($3,921) ($2,667)
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Foreign-currency effect on cash and cash equivalents ($85) ($309) ($374) $222 $64 $46 ($543) ($211) $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net increase (decrease) in cash and cash equivalents $574 $5,899 $1,333 ($3,420) $51 $1,135 $5,678 $3,444 ($7,693) $1,822 $3,950 $10,332 $8,412 $11,758
Cash and the beginning of period $8,084 $8,658 $14,557 $15,890 $12,470 $12,521 $13,656 $15,890 $19,334 $11,641 $13,464 $17,414 $19,334 $27,746
Cash and cash equivalents at end of period $8,658 $14,557 $15,890 $12,470 $12,521 $13,656 $19,334 $19,334 $11,641 $13,464 $17,414 $27,746 $27,746 $39,504
Source: Company Reports; Aegis Capital Estimates

10 AEGIS CAPITAL CORP.

Amazon.com, Inc. February 3, 2017

Amazon.com Statistics (in $Millions, except per share data)

Period 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Revenue Mix
Total North America 59.8% 57.1% --- --- --- --- --- --- --- --- --- --- --- ---
Total International 40.2% 37.7% 33.1% 32.8% 32.4% 32.4% 31.9% 32.3% 31.7% 30.6% 30.9% 31.2% 31.1% 29.4%

Total Media 29.2% 25.3% 21.0% 19.5% 17.1% 17.5% 17.3% 17.8% 16.8% 14.6% 15.1% 15.1% 15.3% 13.3%
Total Electronics 65.5% 68.4% 70.6% 70.5% 72.2% 71.5% 73.4% 72.1% 71.4% 72.8% 72.1% 74.3% 72.8% 73.1%
Total Other 5.3% 1.1% 1.0% 1.1% 1.1% 1.1% 1.2% 1.1% 1.4% 1.3% 1.2% 1.2% 1.3% 1.3%

North America Media 14.5% 13.0% 11.7% 11.0% 9.6% 9.9% 9.6% 10.0% 9.6% 8.5% 8.7% 8.4% 8.8% 7.8%
North America Electronics 40.3% 43.3% 47.1% 46.4% 47.6% 46.9% 49.4% 47.7% 47.0% 48.5% 47.7% 49.9% 48.5% 49.4%
North America Other 5.0% 0.8% 0.8% 1.0% 0.9% 0.9% 1.0% 1.0% 1.2% 1.1% 1.0% 1.0% 1.1% 1.1%
International Media 14.6% 12.3% 9.4% 8.5% 7.5% 7.6% 7.7% 7.8% 7.1% 6.1% 6.3% 6.7% 6.6% 5.6%
International Electronics 25.3% 25.1% 23.5% 24.1% 24.7% 24.6% 24.0% 24.3% 24.4% 24.3% 24.4% 24.3% 24.3% 23.7%
International Other 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%

Margins
Gross Margins 27.2% 29.5% 33.0% 35.2% 36.9% 35.0% 33.8% 35.1% 36.2% 37.9% 36.0% 34.8% 36.1% 37.1%
EBITDA Margins 7.0% 7.4% 10.1% 12.0% 12.0% 10.6% 10.2% 11.1% 11.9% 13.2% 11.5% 10.1% 11.5% 12.4%
Operating Margins 1.0% 0.2% 2.1% 3.7% 4.2% 1.8% 2.9% 3.1% 2.9% 4.8% 2.6% 3.0% 3.3% 4.5%
Marketing Expenses as a % of sales, ex-Stock based comp 4.1% 4.7% 4.7% 4.7% 5.0% 5.1% 5.5% 5.1% 5.2% 5.2% 5.2% 5.2% 5.2% 5.1%
Fulfillment exp. as % of Sales , ex-stock based comp 11.1% 11.7% 12.1% 12.3% 12.5% 12.7% 12.6% 12.5% 12.6% 12.5% 12.7% 13.0% 12.7% 12.6%
Technology & Content exp. as % of Sales, ex-stock based8.0%
comp 9.5% 10.6% 11.0% 12.0% 11.3% 9.3% 10.7% 11.7% 12.0% 11.3% 10.0% 11.1% 11.0%
General and administrative exp. as % of Sales, ex-stock based
1.3% comp 1.5% 1.4% 1.5% 1.7% 1.7% 1.4% 1.6% 1.5% 1.7% 1.7% 1.4% 1.6% 1.6%
Total Opex as % of Sales, ex-stock based comp 97.5% 98.1% 95.9% 94.5% 94.4% 95.9% 95.1% 95.0% 94.9% 93.6% 95.0% 94.9% 94.6% 93.3%

Expense Growth Rates

Gross Profit Growth, q/q % (10.0)% 9.4% 2.0% 29.1% --- (13.1)% 8.6% 2.0% 30.1% --- ---
Gross Profit Growth, y/y % 34.0% 29.4% 34.8% 40.2% 39.9% 33.1% 29.6% 35.0% 25.2% 24.3% 24.2% 25.2% 24.8% 24.0%

Marketing & Sales (ex-SBC), q/q% --- (18.7)% (70.2)% 19.8% 59.6% --- (23.5)% (72.5)% 11.4% 44.5% --- ---
Marketing & Sales (ex-SBC), y/y% 29.8% 38.1% 20.3% 31.7% 37.4% 35.9% 42.0% 37.4% 33.6% 26.7% 24.3% 14.7% 23.3% 18.3%

Technology and Content (ex-SBC), q/q% 0.1% 13.6% 1.5% 9.5% --- 2.4% 6.4% 1.1% 19.2% --- ---
Technology and Content (ex-SBC), y/y% 44.3% 42.1% 33.6% 27.3% 35.0% 28.2% 26.3% 29.1% 29.3% 21.1% 20.6% 31.3% 25.6% 19.5%

General and administrative (ex-SBC), q/q% 29.2% 20.1% 4.3% 12.6% --- (13.8)% 19.4% 4.1% 13.4% --- ---
General and administrative (ex-SBC), y/y% 26.8% 38.9% 12.0% 16.9% 31.1% 39.2% 82.5% 41.2% 21.8% 21.0% 20.8% 21.6% 21.3% 20.6%

Book Value per Share $21.15 $23.05 $28.18 $30.68 $34.24 $36.66 $39.68 $39.87 $40.33 $41.60 $42.59 $44.71 $44.98 $56.94
Cash & Equivalents per Share $27.01 $37.37 $41.70 $32.97 $34.24 $37.83 $53.46 $53.71 $37.48 $41.04 $48.90 $69.62 $70.05 $92.49
Source: Company Reports; Aegis Capital Estimates

Amazon.com Revenue Detail (in $Millions, except per share data)

Period 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Total Revenues $74,453 $88,988 $107,007 $29,128 $30,404 $32,714 $43,741 $135,987 $35,465 $36,803 $39,508 $53,193 $164,969 $199,029
y/y % change 21.9% 19.5% 20.2% 28.2% 31.1% 29.0% 22.4% 27.1% 21.8% 21.0% 20.8% 21.6% 21.3% 20.6%

Product Sales $60,903 $70,080 $79,269 $20,581 $21,116 $22,339 $30,629 $94,665 $24,704 $25,192 $26,583 $36,716 $113,195 $134,579
q/q % change -22.7% 2.6% 5.8% 37.1% $0 -19.3% 2.0% 5.5% 38.1% $0 $0
y/y % change 17.7% 15.1% 13.1% 20.5% 23.5% 21.0% 15.1% 19.4% 20.0% 19.3% 19.0% 19.9% 19.6% 18.9%
% of Total 81.8% 78.8% 74.1% 70.7% 69.5% 68.3% 70.0% 69.6% 69.7% 68.5% 67.3% 69.0% 68.6% 67.6%

Service Sales $13,550 $18,908 $27,738 $8,547 $9,288 $10,375 $13,112 $41,322 $10,761 $11,611 $12,925 $16,477 $51,774 $64,450
q/q % change -6.4% 8.7% 11.7% 26.4% $0 -17.9% 7.9% 11.3% 27.5% $0 $0
y/y % change 44.8% 39.5% 46.7% 51.7% 52.7% 50.5% 43.6% 49.0% 25.9% 25.0% 24.6% 25.7% 25.3% 24.5%
% of Total 18.2% 21.2% 25.9% 29.3% 30.5% 31.7% 30.0% 30.4% 30.3% 31.5% 32.7% 31.0% 31.4% 32.4%

3P Sales $6,507 $13,305 $18,837 $5,652 $6,058 $6,772 $9,060 $27,542 $6,560 $6,984 $7,859 $10,813 $32,217 $37,406
q/q % change -12.0% 7.2% 11.8% 33.8% $0 -27.6% 6.5% 12.5% 37.6% $0 $0
y/y % change -4.8% 104.5% 41.6% 47.5% 50.6% 48.5% 41.1% 46.2% 16.1% 15.3% 16.1% 19.4% 17.0% 16.1%
% of Total 8.7% 15.0% 17.6% 19.4% 19.9% 20.7% 20.7% 20.3% 18.5% 19.0% 19.9% 20.3% 19.5% 18.8%
3P Gross Sales $38,276 $78,265 $110,806 $33,247 $35,635 $39,835 $53,294 $162,012 $38,586 $41,083 $46,232 $63,608 $189,509 $220,037
q/q % change -12.0% 7.2% 11.8% 33.8% $0 -27.6% 6.5% 12.5% 37.6% $0 $0
y/y % change -4.8% 104.5% 41.6% 47.5% 50.6% 48.5% 41.1% 46.2% 16.1% 15.3% 16.1% 19.4% 17.0% 16.1%
Commission % 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
Total Gross Product Sales $99,179 $148,345 $190,075 $53,828 $56,751 $62,174 $83,923 $256,677 $63,290 $66,276 $72,815 $100,324 $302,704 $354,616
q/q % change -16.4% 5.4% 9.6% 35.0% $0 -24.6% 4.7% 9.9% 37.8% $0 $0
y/y % change 7.9% 49.6% 28.1% 35.8% 39.2% 37.3% 30.3% 35.0% 17.6% 16.8% 17.1% 19.5% 17.9% 17.1%
1P % of Gross Product Sales 61.4% 47.2% 41.7% 38.2% 37.2% 35.9% 36.5% 36.9% 39.0% 38.0% 36.5% 36.6% 37.4% 38.0%
3P % of Gross Product Sales 38.6% 52.8% 58.3% 61.8% 62.8% 64.1% 63.5% 63.1% 61.0% 62.0% 63.5% 63.4% 62.6% 62.0%

AWS, Advertising, CC Fees $3,935 $959 $1,021 $329 $344 $372 $516 $1,561 $481 $471 $477 $643 $2,072 $2,498
q/q % change 8.6% 4.6% 8.1% 38.7% $0 -6.8% -2.1% 1.3% 34.7% $0 $0
y/y % change 56.0% -75.6% 6.5% 40.6% 46.4% 49.4% 70.3% 52.9% 46.2% 36.9% 28.3% 24.6% 32.7% 20.6%
AWS $3,108 $4,644 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Advertising & Other $827 ($3,685) $1,021 $329 $344 $372 $516 $1,561 $481 $471 $477 $643 $2,072 $2,498
Source: Company Reports; Aegis Capital Estimates

11 AEGIS CAPITAL CORP.

Amazon.com, Inc. February 3, 2017

Required Disclosures
Price Target
We have a $953 price target on Amazon

Valuation Methodology
Our price target is based on a sum-of-the-parts analysis.

Risk Factors
Rising competition for retail and AWS.
Key man risk Amazons future growth and strategic direction could be negatively impacted if Jeff Bezos were not able to perform
his duties as CEO.
Macro weakness could weigh on growth. The impact of the Brexit vote is one that we are monitoring closely.
India could impose restrictions on foreign firms that, like China, could diminish Amazons competitive position.

For important disclosures go to www.aegiscap.com.

I, Victor Anthony, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject
companies and their securities. I also certify that I have not been, do not, and will not be receiving direct or indirect compensation in
exchange for expressing the specific recommendations in this report.

Research analyst compensation is not dependent upon investment banking revenues received by Aegis Capital Corp.

Aegis Capital Corp. intends to seek or expects to receive compensation for investment banking services from the subject company within
the next three months.

The firm nor the Research Analyst have any material conflict of interest in which the Research Analyst has a reason to know or knows
at the time of publication of this research report.

As of the report date neither Aegis Capital Corp. or its affiliates beneficially own 1% or more of any class of common equity securities
of the subject company of this report.

Neither the research analyst who prepared this report or a member of the research analysts household has a financial position in the debt
or equity securities of the subject company.

12 AEGIS CAPITAL CORP.

Amazon.com, Inc. February 3, 2017

Investment Banking
Services/Past 12 Mos.
Rating Percent Percent
BUY [BUY] 86.11 30.11
HOLD [HOLD] 12.96 21.43
SELL [SELL] 0.93 0.00

Meaning of Ratings
A) A Buy rating is assigned when we do not believe the stock price adequately reflects a company's prospects over 12-18 months.
B) A Hold rating is assigned when we believe the stock price adequately reflects a company's prospects over 12-18 months.
C) A Sell rating is assigned when we believe the stock price more than adequately reflects a company's prospects over 12-18 months.

Other Disclosures
Other Disclosures The information contained herein is based upon sources believed to be reliable but is not guaranteed by us and is not
considered to be all inclusive. It is not to be construed as an offer or the solicitation of an offer to sell or buy the securities mentioned herein.
Aegis Capital Corp., its affiliates, shareholders, officers, staff, and/or members of their families, may have a position in the securities
mentioned herein, and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts
or for the accounts of other customers of the Firm from time to time in the open market or otherwise. Opinions expressed are our present
opinions only and are subject to change without notice. Aegis Capital Corp. is under no obligation to provide updates to the opinions or
information provided herein. Additional information is available upon request.
The common stock of the subject company in this report may not be suitable for certain investors based on their investment objectives,
degree of risk, as well as their financial status.

Copyright 2017 by Aegis Capital

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13 AEGIS CAPITAL CORP.