GSI Commerce reported that net revenues for the third quarter were $84.9 million, a 24% increase compared to $68.6 million in the same period last year. Merchandise sales were $126.6 million for the quarter, a 26% increase compared to $100.2 million in the same period in fiscal 2004. Net revenues from product sales from the sporting goods category were $38.1 million up 28% compared to $29.8 million for the same period last year. Merchandise sales from the sporting goods category were $46.5 million for the third quarter of fiscal 2005, a 29% increase compared to $36.1 million in the same period last year. Net revenues from product sales from other categories were $30.4 million for the third quarter of fiscal 2005, a 17% increase compared to $26.0 million for the same period last year. Merchandise sales from other categories were $80.2 million for the third quarter of fiscal 2005, a 25% increase compared to $64.1 million in the same period last year. Service fee revenues were $16.4 million in the third quarter of fiscal 2005, a 29% increase compared to $12.7 million in the same period last year.
Net loss was $4.5 million or 10 cents per share for the third quarter of fiscal 2005, compared to a net loss of $3.0 million, or 7 cents per share in the same period last year. Adjusted EBITDA was approximately break even for the third quarter of fiscal 2005, compared to an adjusted EBITDA loss of $0.1 million in the same period last year.
Gross profit was $34.2 million in the third quarter of fiscal 2005, an increase of 29% compared to $26.4 million in the same period last year. Gross margin was 40.3% in the third quarter of fiscal 2005, an increase of 180 basis points from 38.5% in the same period last year. Total operating expenses were $38.7 million for the third quarter of fiscal 2005, a 31% increase compared to $29.6 million for the same period last year. Total operating expenses, as a percentage of net revenues, increased to
45.6% in the third quarter of fiscal 2005 compared to 43.0% in the third quarter of fiscal 2004.
Total operating expenses of $38.7 million, as a percentage of
merchandise sales of $126.6 million, were 30.6% in the third
quarter of fiscal 2005. This compared to total operating expenses of
$29.6 million in the same period last year, which as a percentage of
merchandise sales of $100.2 million, was 29.5%.
Balance Sheet
The company's cash, cash equivalents and marketable securities at the end of the third fiscal quarter of 2005 were $112.2 million compared to $75.4 million at the end of fiscal year 2004, and $45.5 million at the end of third fiscal quarter of 2004.
Management Commentary
“We are pleased to have resolved the issues that caused us to delay the release of our 2005 fiscal third quarter operating results and suggest that investors read the separate press release that we issued today that discusses the resolution of these matters,” said Michael G. Rubin, chairman and CEO of GSI Commerce. “As for our third quarter results, net revenues for the fiscal third quarter exceeded the high end of our guidance range and gross margins were solid. This demonstrates the strength of our underlying business. As previously announced, our adjusted EBITDA and net income were below our guidance due to the cost of partner launches in the second half of fiscal 2005 being greater than our original expectations and, to a lesser extent, because of modest delays in actual launch dates. We are excited to have launched six new sites for five partners between September and November and we look forward to their future contribution.
“For the full year, we expect net revenues to be approximately $432 million and net income to be approximately $5.0 million. Our net income guidance is modestly lower than the guidance of $5.5 million to $6.5 million that we issued on Oct. 26, primarily due to one launch that we had previously planned for November 2005 being moved to January 2006, and additional professional fees related to the resolution of the two previously disclosed matters that caused the delay of our operating results. We do not expect these issues to have an impact on fiscal 2006.”
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
October 2, October 1, October 2, October 1,
2004 2005 2004 2005
(as restated) (as restated)
Revenues:
Net revenues from
product sales $55,873 $68,484 $165,882 $220,294
Service fee
revenues 12,715 16,422 33,663 47,844
Net revenues 68,588 84,906 199,545 268,138
Cost of revenues from
product sales 42,171 50,724 123,243 165,749
Gross profit 26,417 34,182 76,302 102,389
Operating expenses:
Sales and marketing,
exclusive of $385,
$699, $1,075 and
$1,808 reported below
as stock-based
compensation expense 16,818 21,667 51,182 63,755
Product development,
exclusive of $1,
$151, $3 and $375
reported below as
stock-based
compensation expense 5,137 7,414 14,165 20,439
General and
administrative,
exclusive of ($2),
$236, $86 and $391
reported below as
stock-based
compensation expense 4,499 4,852 12,794 14,596
Stock-based
compensation 384 1,086 1,164 2,574
Depreciation and
amortization 2,733 3,693 7,978 10,433
Total operating
expenses 29,571 38,712 87,283 111,797
Other (income) expense:
Interest expense 244 788 298 1,434
Interest income (423) (1,015) (955) (1,834)
Other (income) expense 66 237 66 31
Total other
(income)
expense (113) 10 (591) (369)
Net loss $(3,041) $(4,540) $(10,390) $(9,039)
Loss per share - basic
and diluted:
Net loss $(0.07) $(0.10) $(0.25) $(0.21)
