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Blue Apron Holdings, Inc. Reports Second Quarter 2017 Results

NEW YORK--(BUSINESS WIRE)--Blue Apron Holdings, Inc. (NYSE:APRN) announced today financial results for the quarter ended June 30, 2017.

"In the second quarter, we saw an 18 percent year-over-year increase in net revenue, and a $20.6 million improvement in our net loss between the first and second quarters. We recently strengthened our balance sheet as a result of our initial public offering, convertible note issuance and the expansion of our revolving credit facility," said Matt Salzberg, chief executive officer of Blue Apron. “We are beginning a new chapter as a public company, and remain focused on our long-term strategy to build an iconic consumer brand, develop a more diverse product portfolio, and further build out an end-to-end supply chain platform.”

Second Quarter 2017 Financial Results

  • Net revenue increased 18% year-over-year to $238.1 million in the second quarter of 2017, driven by an increase in orders and customers. The year-over-year growth rate in the second quarter of 2017 was lower than the year-over-year growth rate of 42% from the first quarter of 2017, driven by a planned reduction in marketing spend of $26.1 million between the first and second quarter.
  • Cost of Goods Sold, excluding depreciation and amortization (COGS), increased 28% year-over-year to $163.5 million in the second quarter of 2017, and increased 560 basis points as a percentage of net revenue, driven by increased costs associated with the ongoing launch of new infrastructure to support Blue Apron’s product expansion initiatives, including the launch of its new Linden, New Jersey facility. This increase also reflects higher food costs related to increased use of seasonal produce and other premium ingredients in Blue Apron’s recipes.
  • Marketing expense was $34.5 million, or 14.5% as a percentage of net revenue, in the second quarter of 2017, compared to $32.0 million, or 15.9% as a percentage of net revenue in the second quarter of 2016. Marketing expense in the second quarter of 2017 reflected a significant decrease from the first quarter of 2017, which was $60.6 million, or 24.8% as a percentage of net revenue, driven by a planned reduction resulting from our current marketing strategy.
  • Product, Technology, General, and Administrative costs increased 86% year-over-year to $65.7 million in the second quarter of 2017 largely due to investments in employee talent through headcount increases and increased facilities costs to support the company’s growth strategy, including the costs of operating two overlapping fulfillment centers in New Jersey.
  • Interest income (expense), net was $(3.1) million in the second quarter of 2017 and included $(2.1) million of non-cash discount amortization related to Blue Apron’s convertible notes issued in May and June 2017.
  • Other income (expense), net was $2.6 million in the second quarter of 2017 as a result of a non-cash fair market value adjustment relating to Blue Apron’s convertible notes. Other income (expense), net in the third quarter of 2017 is expected to include a non-cash loss of approximately $(18) million related to the automatic conversion and settlement of the convertible notes upon the closing of the initial public offering.
  • Net loss was $(31.6) million and diluted loss per share was $(0.47) in the second quarter of 2017 based on 67.4 million weighted average common shares outstanding for the second quarter 2017, compared to net income of $5.5 million and diluted earnings per share of $0.00 in the second quarter of 2016. The second quarter net loss of $(31.6) million was an improvement of $20.6 million compared to the net loss in the first quarter of 2017 of $(52.2) million, reflecting the planned reduction in marketing spend. Since Blue Apron closed its initial public offering of 30,000,000 shares of Class A common stock on July 5, 2017, the shares from the offering as well as the automatic conversion of Blue Apron’s convertible preferred stock and convertible notes into shares of Class B common stock will be reflected in the financial statements in the third quarter of 2017.
  • Adjusted EBITDA was a loss of $(23.9) million in the second quarter 2017, compared to $8.0 million in the second quarter of 2016. The second quarter adjusted EBITDA loss of $(23.9) million was an improvement of $22.4 million compared to the adjusted EBITDA loss in the first quarter of 2017 of $(46.3) million.

Key Customer Metrics

  • Customers increased 23% year-over-year and declined 9% quarter-over-quarter reflecting a planned reduction in marketing of $26.1 million between the first and second quarter.
  • Average Revenue per Customer was $251 in the second quarter of 2017 compared to $264 in the second quarter of 2016, and an improvement relative to $236 in the first quarter of 2017.
  • Key customer metrics included in the chart below reflect seasonal trends of the business and strategic actions the company is undertaking related to its ongoing product expansion strategy.
June 30, September 30, December 31, March 31, June 30,
2016 2016 2016 2017 2017
Orders (in thousands) 3,399 3,597 3,674 4,273 4,033
Customers (in thousands) 766 907 879 1,036 943
Average Order Value $59.40 $57.12 $58.78 $57.23 $58.81
Orders per Customer 4.4 4.0 4.2 4.1 4.3
Average Revenue per Customer $264 $227 $246 $236 $251

For a description of how we define and use these key customer metrics, please see “Use of Key Customer Metrics” below.

Liquidity and Capital Resources

  • Cash and cash equivalents was $61.6 million as of June 30, 2017.
  • In the second quarter of 2017, Blue Apron amended its revolving credit facility to increase the amount available to borrow by $50.0 million to a total maximum amount of $200.0 million. The remaining amount available to borrow as of June 30, 2017 was $73.6 million.
  • Blue Apron closed its initial public offering of 30,000,000 shares of Class A common stock on July 5, 2017, generating net proceeds of $278.5 million. The proceeds from the offering will be reflected in Blue Apron’s financial statements in the third quarter of 2017.
  • Capital expenditures totaled $33.6 million for the second quarter of 2017, including amounts in accounts payable, primarily driven by construction and investments in automation equipment...

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