<p>It is very common for a company to have a loss (i.e. expenses > revenue) in the first year. Amazon is actually a very good example of that. It’s also a good example of ‘growth before profit’ strategy.</p>

<p>Amazon was incorporated on July 5, 1994, and begun service in July 1995. This means that not only it did not generate profit in its first year, there were also no sales. <a href="http://faculty.london.edu/chigson/casestudies/pdfs/Amazon.pdf" rel="noreferrer">Even after the launch the company generated loss</a>:</p>

<blockquote>
  <p>Amazon had stated from the outset that it did not expect to turn a
  profit for four to five years, and it duly delivered on its promise.
  The firm grew quickly but failed to generate profit, making a net loss
  of USD -303,000 on net sales of USD 511,000 during its first six months of
  trading. At the beginning of 1996, Amazon employed eleven people and
  moved out of Bezos’s home to a small warehouse nearby. By the end of
  the year, Amazon.com offered 2.5m titles online, although it still
  carried only a minimal inventory. By this point, the firm had 151
  employees and relocated once again to accommodate its growing
  workforce. Sales for 1996 were USD 15.7m, with the company making a net
  loss of USD 5.7m.</p>
</blockquote>

<p>Please see below historic results from Amazon’s <a href="https://www.slideshare.net/matthbrody/amazon-annual-report-1997" rel="noreferrer">first public annual report</a> from 1997 (the year of IPO):</p>

<pre><code>                           1997 |   1996  | 1995|   5 Jul 1994 - 31 Dec 1994

(1) net sales            147758 |   15746 | 511 |   0
(2) cost of sales        118945 |   12287 | 409 |   0
(1+2) gross profit        28813 |    3459 | 102 |   0
                            ---       ---   ---     --
(4) total operating
expenses                  58022 |    9438 | 406 |   52
(5) profit from interest   1619 |     202 |   1 |   0
                            ---       ---   ---     --
(1+2+5-4) net loss        27590 |   5777 |  303 |   52
</code></pre>

<hr>

<p>As for an easy reference, <strong>@denesp</strong> cited <a href="https://revenuesandprofits.com/amazon-vs-walmart-revenues-profits-1995-2015/" rel="noreferrer">an interesting source</a> on this. There are some slight differences in the data, so I thought I would cite it alongside with annual report data, which is more precise.</p>

<p><a href="https://i.sstatic.net/DHRoy.png" rel="noreferrer"><img src="https://i.sstatic.net/DHRoy.png" alt="enter image description here"></a></p>

CC BY-SA 3.0
2018-03-22T14:43:59.147Z
2018-03-22T14:43:59.147Z
Pawel Kam
<p>In a discussion with a friend, he mentioned that a new company may fail to gain profits for several years before it becomes profitable. I asked him for examples but he did not know any. I though of Amazon, but I think they made "some" profit in their first year. Could you please tell me What famous company name that turned a loss at its first year(s) but then became profitable? It would be great if you have an easy reference for me to refer to. I am not in financial business.</p>

CC BY-SA 3.0
2018-03-21T22:17:05.657Z
I'm voting to close this question as off-topic because it is about trivia, not economics.
Giskard
CC BY-SA 3.0
2018-03-22T01:37:19.333Z
@NoChance, it is very common to have a loss (i.e. expences > revenue) in the first year. Amazon would be a safe bet: they started in 1994, probably had huge expenditures on IT, and launched the website in 1995. It’s hard to be specific in such cases because the financial statements of starting companies usually are not public.
Pawel Kam
CC BY-SA 3.0
2018-03-22T06:39:29.230Z
https://revenuesandprofits.com/amazon-vs-walmart-revenues-and-profits-1995-2014/
Giskard
CC BY-SA 3.0
2018-03-22T12:35:30.940Z
@PawelKam, good answer, if you post it as an answer I will mark it as such. Thank you.
NoChance
<profits>
What famous company that turned a loss at its first year(s) but then became profitable?
NoChance
# What famous company that turned a loss at its first year(s) but then became profitable?

(Asked by: username_0 on 2018-03-21)

In a discussion with a friend, he mentioned that a new company may fail to gain profits for several years before it becomes profitable. I asked him for examples but he did not know any. I though of Amazon, but I think they made "some" profit in their first year. Could you please tell me What famous company name that turned a loss at its first year(s) but then became profitable? It would be great if you have an easy reference for me to refer to. I am not in financial business.

**Tags:** profits
> **Comments:**
> **username_1**: I'm voting to close this question as off-topic because it is about trivia, not economics.  
> **username_2**: @NoChance, it is very common to have a loss (i.e. expences > revenue) in the first year. Amazon would be a safe bet: they started in 1994, probably had huge expenditures on IT, and launched the website in 1995. It’s hard to be specific in such cases because the financial statements of starting companies usually are not public.  
> **username_1**: https://revenuesandprofits.com/amazon-vs-walmart-revenues-and-profits-1995-2014/  
> **username_0**: @PawelKam, good answer, if you post it as an answer I will mark it as such. Thank you.  

---

## 1 answers

### Answer by username_2 on 2018-03-22. Score: 4 | Accepted answer

It is very common for a company to have a loss (i.e. expenses > revenue) in the first year. Amazon is actually a very good example of that. It’s also a good example of ‘growth before profit’ strategy.
Amazon was incorporated on July 5, 1994, and begun service in July 1995. This means that not only it did not generate profit in its first year, there were also no sales. Even after the launch the company generated loss:

Amazon had stated from the outset that it did not expect to turn a
  profit for four to five years, and it duly delivered on its promise.
  The firm grew quickly but failed to generate profit, making a net loss
  of USD -303,000 on net sales of USD 511,000 during its first six months of
  trading. At the beginning of 1996, Amazon employed eleven people and
  moved out of Bezos’s home to a small warehouse nearby. By the end of
  the year, Amazon.com offered 2.5m titles online, although it still
  carried only a minimal inventory. By this point, the firm had 151
  employees and relocated once again to accommodate its growing
  workforce. Sales for 1996 were USD 15.7m, with the company making a net
  loss of USD 5.7m.

Please see below historic results from Amazon’s first public annual report from 1997 (the year of IPO):
                           1997 |   1996  | 1995|   5 Jul 1994 - 31 Dec 1994

(1) net sales            147758 |   15746 | 511 |   0
(2) cost of sales        118945 |   12287 | 409 |   0
(1+2) gross profit        28813 |    3459 | 102 |   0
                            ---       ---   ---     --
(4) total operating
expenses                  58022 |    9438 | 406 |   52
(5) profit from interest   1619 |     202 |   1 |   0
                            ---       ---   ---     --
(1+2+5-4) net loss        27590 |   5777 |  303 |   52


As for an easy reference, @denesp cited an interesting source on this. There are some slight differences in the data, so I thought I would cite it alongside with annual report data, which is more precise.


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