GSI Commerce said it lost more money on operations despite a 36%
increase in net revenues to $186.8 million in the third quarter ended
Sept. 27.

GSIC, which runs e-commerce sites for a variety of major retailers
and brands, said its loss from operations was $16.5 million compared to
$11.5 million in the same quarter a year ago. Net revenues reached
$186.8 million, up from $137.3 million. Much of the gain came from an
84% increase in service fee revenues GSIC earns for managing other
companies e-commerce operations. By comparison, net revenues from
product sales rose 11.8% to $102.1 million.

GSIC’s net loss was $12.8 million, or 27 cents per share, compared to $6.1 million, or 13 cents per share.

“Our third quarter performance was strong,” said Michael G. Rubin,
chairman, president and CEO of GSI. “We achieved excellent results
through the first nine months of the year and we believe we are on
track to meet our bottom line guidance for the year, albeit with
slightly lower, but still strong revenue growth, offset by better than
planned operating margins.”

Fiscal Year 2008 and Fourth Quarter Guidance

The company provided the following guidance for fiscal year 2008:

  • Net revenues are expected to be in a range of $950.0 million to $985.0 million.
  • Loss from operations is expected to be in a range of $6.5 million to $9.5 million.
  • Capital expenditures are estimated to be approximately $65.0
    million, and include approximately $57.0 million related to the base
    business and approximately $8.0 million of acquisition-related
    integration capital expenditures.

The company provided the following guidance for fiscal 2008 fourth quarter:

  • Net revenues are expected to be in a range of $375.0 million to $410.0 million.
  • Income from operations is expected to be in a range of $42.0 million to $45.0 million.
                        GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended

September 29, September 27, September 29, September 27,
2007 2008 2007 2008
Revenues:
Net revenues from
product sales $91,298 $102,139 $289,053 $332,314
Service fee
revenues 45,987 84,655 125,780 243,232

Net revenues 137,285 186,794 414,833 575,546

Costs and expenses:
Cost of revenues
from product sales 65,258 73,089 207,843 236,950
Marketing 10,329 11,412 32,259 40,141
Account management
and operations,
inclusive of $774,
$1,373, $2,084
and $3,818 of
stock-based
compensation 36,992 58,732 100,543 175,339
Product development,
inclusive of
$395, $705, $1,026
and $1,788 of
stock-based
compensation 15,925 25,736 44,737 73,356
General and
administrative,
inclusive
of $1,006, $2,473,
$2,708 and $6,721
of stock-based
compensation 11,198 17,487 31,014 51,820
Depreciation and
amortization 9,129 16,868 23,744 49,503

Total costs and
expenses 148,831 203,324 440,140 627,109

Loss from operations (11,546) (16,530) (25,307) (51,563)

Other (income) expense:
Interest expense 2,075 2,594 3,842 7,118
Interest income (3,342) (190) (7,025) (1,397)
Other expense, net 28 480 51 833

Total other
(income)
expense (1,239) 2,884 (3,132) 6,554


Loss before
income taxes (10,307) (19,414) (22,175) (58,117)
Benefit for
income taxes (4,221) (6,575) (8,711) (16,753)

Net loss $(6,086) $(12,839) $(13,464) $(41,364)

Basic and diluted loss
per share $(0.13) $(0.27) $(0.29) $(0.88)