GSI Commerce Inc. reported that net revenues for the fiscal first quarter ended April 3, 2004 increased 36% to $66.3 million and reported a net loss of $4.0 million, or 10 cents per share, decreasing the company's net loss by $1.5 million, or 4 cents per share, compared to last year's first fiscal quarter.
For the same comparable periods, adjusted EBITDA, a non-GAAP financial measure, improved by approximately $1.8 million to a loss of $1.1 million, and net merchandise sales, also a non-GAAP financial measure, rose 59% to $85.9 million.
Net revenues were $66.3 million for the first quarter of fiscal 2004, which was a 36% increase compared to net revenues of $48.9 million for the first quarter of fiscal 2003.
Net revenues from product sales generated by the company's sporting goods category were $33.5 million for the first quarter of fiscal 2004, which was a 37% increase compared to $24.4 million for the first quarter of fiscal 2003. Net revenues from product sales generated by the company's other merchandise categories were $23.3 million for the first quarter of fiscal 2004, which was an 18% increase compared to $19.8 million for the first quarter of fiscal 2003.
Service fee revenues increased 100% to $9.4 million in the first quarter of fiscal 2004 compared to $4.7 million in the first quarter of fiscal 2003.
Net merchandise sales were $85.9 million for the first quarter of fiscal 2004, a 59% increase compared to net merchandise sales of $54.2 million for the first quarter of fiscal 2003. Net merchandise sales represent the retail value of all sales transactions, inclusive of freight charges and net of allowances for returns and discounts, which flow through the GSI Commerce platform, whether or not the company is the seller of the merchandise or records the full amount of such sales on its financial statements.
Net merchandise sales from the sporting goods category increased 44% in the first quarter of fiscal 2004 to $35.1 million compared to $24.4 million in the first quarter of fiscal 2003. Net merchandise sales from the company's other merchandise categories increased 71% in the first quarter of fiscal 2004 to $50.8 million from $29.8 million in the first quarter of fiscal 2003. Net merchandise sales and net revenues from product sales for the company's other merchandise categories included $735,000 and $8,000 for the first quarter of fiscal 2003 and first quarter of fiscal 2004, respectively, related to the jewelry business of Ashford.com, which the company sold in December 2002.
The company had a net loss of $4.0 million for the first quarter of fiscal 2004, which was an improvement of approximately $1.5 million compared to the net loss of $5.5 million for the first quarter of fiscal 2003.
The company showed a $0.04 per share improvement with a net loss per share of $0.10 for the first quarter of fiscal 2004 compared to net loss per share of $0.14 for the first quarter of fiscal 2003.
The company showed a $1.8 million improvement in adjusted EBITDA, with an adjusted EBITDA loss of $1.1 million in the first quarter of fiscal 2004 versus an adjusted EBITDA loss of $2.9 million in the first quarter of fiscal 2003. Adjusted EBITDA represents earnings (or losses) before interest income/expense, taxes, depreciation, amortization, and stock-based compensation.
The company's gross profit improved 45% with $24.8 million in the first quarter of fiscal 2004 compared to a gross profit of $17.0 million in the first quarter of fiscal 2003. Gross margin improved to 37.4% for the first quarter of fiscal 2004 from 34.8% in the first quarter of fiscal 2003, an increase of 260 basis points.
Total operating expenses were $29.1 million for the first quarter of fiscal 2004, an increase of 27% compared to $22.9 million for the first quarter of fiscal 2003. Total operating expenses, as a%age of net revenues, decreased to 44% in the first quarter of fiscal 2004 compared to 47% in the first quarter of fiscal 2003.
In addition, total operating expenses of $29.1 million, as a%age of net merchandise sales of $85.9 million, decreased to 34% in the first quarter of fiscal 2004 compared to total operating expenses of $22.9 million, as a%age of net merchandise sales of $54.2 million, which was 42% in the first quarter of fiscal 2003.
The company's cash, cash equivalents, short-term investments and marketable securities at the end of fiscal 2004's first quarter were $51.9 million compared to $69.5 million at fiscal 2003 year end, a decrease of $17.6 million, which was attributable to the expected seasonality of working capital. Cash, cash equivalents, short-term investments and marketable securities at the end of fiscal 2004's first quarter increased $623,000 compared to the $51.9 million at the end of fiscal 2003's first quarter.
The company's inventory at the end of fiscal 2004's first quarter was $21.1 million compared to $22.9 million at fiscal 2003 year end, a decrease of $1.9 million. Comparing inventory at the end of fiscal 2004's first quarter to the end of fiscal 2003's first quarter, inventory decreased $4.0 million to $21.1 million from $25.1 million.
“GSI Commerce had an excellent first quarter of fiscal 2004,” said Michael Rubin, chairman and CEO of GSI Commerce. “We generated substantial revenue growth and added meaningful improvement to the bottom line. The revenue growth exceeded our guidance, and we delivered bottom-line results that came in at the high-end of our guidance, as we continued to focus strategically on investing to build a foundation for the planned growth of our business. We remain confident in our financial outlook for the year and, more importantly, with our long-term prospects.”
Net revenues for fiscal 2004 second quarter are expected to be in the range of $63 million to $67 million. Net merchandise sales are expected to be in the range of $90 million to $94 million.
The Q2 net loss is expected to be in the range of $3 million to $4 million. Adjusted EBITDA is expected to be in the range of a loss of $500,000 to an adjusted EBITDA profit of $500,000.
For full year fiscal 2004 net revenues are expected to be in the range of $300 million to $320 million. Net merchandise sales are expected to be in the range of $440 million to $460 million.
Net income is expected to be in the range of $0 to $2 million. Adjusted EBITDA is expected to be in the range of $13.5 million to $15 million.
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 29, April 3,
2003 2004
Revenues:
Net revenues from product sales $44,173 $56,878
Service fee revenues 4,706 9,390
Net revenues 48,879 66,268
Cost of revenues from product sales 31,853 41,508
Gross profit 17,026 24,760
Operating expenses:
Sales and marketing, exclusive
of $229 and $494 reported below
as stock-based compensation,
respectively 13,124 17,449
Product development, exclusive
of $0 and $49 reported below
as stock-based compensation,
respectively 3,699 4,483
General and administrative,
exclusive of $59 and $84
reported below as stock-based
compensation, respectively 3,081 3,920
Stock-based compensation 288 627
Depreciation and amortization 2,698 2,599
Total operating expenses 22,890 29,078
Other (income) expense:
Interest income (381) (290)
Total other (income) expense (381) (290)
Net loss $(5,483) $(4,028)
Losses per share - basic and diluted:
Net loss $(0.14) $(0.10)
