Net Revenue Up 18% Year-Over-Year Driven by
Customer Growth of 23%
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 at Blue Apron’s fulfillment centers,
including its new fulfillment center in Linden, New Jersey.
Blue Apron will provide its second half 2017 financial
performance outlook on the company's earnings conference call and
webcast.
Conference Call and Webcast
Blue Apron will hold a call and webcast today at 8:30 a.m.,
Eastern Time to discuss its second quarter 2017 results and outlook
for second half of 2017. The conference call can be accessed by
dialing (877) 883-0383 or (412) 902-6506, utilizing the conference
ID 9126601. Alternatively, participants may access the live webcast
on Blue Apron’s Investor Relations website at
investors.blueapron.com.
A recording of the webcast will also be available on Blue
Apron’s Investor Relations website at investors.blueapron.com
following the conference call. Additionally, a replay of the
conference call can be accessed until Thursday, August 17, 2017 by
dialing (877) 344-7529 or (412) 317-0088, utilizing the conference
ID 10110307.
About Blue Apron
Blue Apron’s mission is to make incredible home cooking
accessible to everyone. Launched in 2012, Blue Apron is reimagining
the way that food is produced, distributed, and consumed, and as a
result, building a better food system that benefits consumers, food
producers, and the planet. The company has developed an integrated
ecosystem that enables the company to work in a direct, coordinated
manner with farmers and artisans to deliver high-quality products
to customers nationwide at compelling values. Blue Apron’s current
products include Blue Apron Meals, Blue Apron Wine, the Blue Apron
Market, and BN Ranch, a premium supplier of grass-fed beef and
pasture-raised poultry.
Forward Looking Statements
This press release includes statements concerning Blue Apron
Holdings, Inc. and its future expectations, plans and prospects
that constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. For this
purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terms
such as "may," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential," or "continue," or
the negative of these terms or other similar expressions. Blue
Apron has based these forward-looking statements largely on its
current expectations and projections about future events and
financial trends that it believes may affect its business,
financial condition and results of operations. These
forward-looking statements speak only as of the date of this press
release and are subject to a number of risks, uncertainties and
assumptions including, without limitation, the Company’s
anticipated growth strategies; its ability to achieve future
revenue growth and manage future growth effectively; its
expectations regarding competition and its ability to effectively
compete; its ability to successfully build out and operate its
fulfillment centers; its ability to expand its product offerings;
its ability to cost-effectively attract new customers, retain
existing customers and increase the number of customers it serves;
seasonal trends in customer behavior; its expectations regarding,
and the stability of, its supply chain; the size and growth of the
markets for its product offerings and its ability to serve those
markets; federal and state legal and regulatory developments; other
anticipated trends and challenges in its business; and the other
risks set forth under the caption “Risk Factors” in its final
prospectus related to the initial public offering filed with the
U.S. Securities and Exchange Commission (the “SEC”) on June 29,
2017 and other filings that Blue Apron may make with the SEC in the
future. Blue Apron assumes no obligation to update any
forward-looking statements contained in this press release as a
result of new information, future events or otherwise.
Use of Non-GAAP Financial Information
This press release includes adjusted EBITDA, a non-GAAP
financial measure, that is not prepared in accordance with, nor an
alternative to, financial measures prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”). In addition,
adjusted EBITDA is not based on any standardized methodology
prescribed by GAAP and is not necessarily comparable to
similarly-titled measures presented by other companies.
The Company defines adjusted EBITDA as earnings (loss) before
interest income and expense, other income and expense, taxes,
depreciation, amortization and share-based compensation expense.
The Company presents adjusted EBITDA because it is a key measure
used by the Company’s management and board of directors to
understand and evaluate the Company’s operating performance,
generate future operating plans and make strategic decisions
regarding the allocation of capital. In particular, the Company
believes that the exclusion of certain items in calculating
adjusted EBITDA can produce a useful measure for period-to-period
comparisons of the Company’s business. Further, Blue Apron uses
adjusted EBITDA to evaluate its operating performance and trends
and make planning decisions, and it believes that adjusted EBITDA
helps identify underlying trends in its business that could
otherwise be masked by the effect of the items that Company
excludes. Accordingly, Blue Apron believes that adjusted EBITDA
provide useful information to investors and others in understanding
and evaluating its operating results, enhancing the overall
understanding of the Company’s past performance and future
prospects, and allowing for greater transparency with respect to
key financial metrics used by its management in its financial and
operational decision-making.
There are a number of limitations related to the use of adjusted
EBITDA rather than net income (loss), which is the most directly
comparable GAAP equivalent. Some of these limitations are:
• adjusted EBITDA excludes share-based compensation expense, as
share-based compensation expense has recently been, and will
continue to be for the foreseeable future, a significant recurring
expense for the Company’s business and an important part of its
compensation strategy;
• adjusted EBITDA excludes depreciation and amortization expense
and, although these are non-cash expenses, the assets being
depreciated may have to be replaced in the future;
• adjusted EBITDA does not reflect interest expense, or the cash
requirements necessary to service interest, which reduces cash
available to us;
• adjusted EBITDA does not reflect income tax payments that
reduce cash available to us; and
• other companies, including companies in the Company’s
industry, may calculate adjusted EBITDA differently, which reduces
its usefulness as a comparative measure.
Because of these limitations, adjusted EBITDA should be
considered together with other operating and financial performance
measures presented in accordance with GAAP. A reconciliation of
adjusted EBITDA to net income (loss), the most directly comparable
measure calculated in accordance with GAAP, is set forth below
under the heading “Reconciliation of Non-GAAP Financial
Measures”.
Use of Key Customer Metrics
This press release includes various key customer metrics that we
use to evaluate our business and operations, measure our
performance, identify trends affecting our business, project our
future performance, and make strategic decisions. You should read
these metrics in conjunction with our financial statements.
We define and determine our key customer metrics as follows: We
define Orders as the number of paid orders by our Customers across
our meal, wine and market products sold on our e-commerce platforms
in any reporting period, inclusive of orders that may have
eventually been refunded or credited to customers. We determine our
number of Customers by counting the total number of individual
customers who have paid for at least one Order from Blue Apron
across our meal, wine or market products sold on our e-commerce
platforms in a given reporting period. We define Average Order
Value as our net revenue from our meal, wine and market products
sold on our e-commerce platforms in a given reporting period
divided by the number of Orders in that period. We define Orders
per Customer as the number of Orders in a given reporting period
divided by the number of Customers in that period. We define
Average Revenue per Customer as our net revenue from our meal, wine
and market products sold on our e-commerce platforms in a given
reporting period divided by the number of Customers in that
period.
BLUE APRON HOLDINGS, INC.
Condensed Consolidated Balance
Sheets
(In thousands, except share and
per-share data)
(Unaudited)
June 30, December 31,
2017 2016 ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 61,628 $ 81,468 Accounts receivable 526 485
Inventories, net 46,923 42,887 Prepaid expenses and other current
assets 12,556 8,267 Other receivables 1,513 4,991
Total current assets 123,146 138,098 Restricted cash 2,371 3,966
Property and equipment, net 233,356 130,961 Other noncurrent assets
416 382 TOTAL ASSETS $ 359,289 $ 273,407
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’
EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 67,659
$ 49,549 Accrued expenses and other current liabilities 51,317
40,911 Convertible notes 31,525 — Deferred revenue 14,331
24,278 Total current liabilities 164,832 114,738 Long-term
debt 124,593 44,533 Facility financing obligation 60,739 49,809
Other noncurrent liabilities 7,691 2,858 TOTAL
LIABILITIES 357,855 211,938 TOTAL CONVERTIBLE
PREFERRED STOCK 194,869 194,869 TOTAL STOCKHOLDERS’ EQUITY
(DEFICIT) (193,435) (133,400) TOTAL LIABILITIES,
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) $
359,289 $ 273,407
BLUE APRON HOLDINGS, INC.
Condensed Consolidated Statements of
Operations
(In thousands, except share and
per-share data)
(Unaudited)
Three Months Ended
Six Months Ended June 30, June 30, 2017
2016 2017 2016 Net revenue $ 238,057 $
201,924 $ 482,900 $ 374,022 Operating expenses: Cost of goods sold,
excluding depreciation and amortization 163,520 127,322 332,051
239,845 Marketing 34,519 32,031 95,124 57,444 Product, technology,
general, and administrative 65,673 35,307 128,883 64,997
Depreciation and amortization 5,383 1,774
9,563 3,259 Total operating
expenses 269,095 196,434 565,621
365,545 Income (loss) from operations (31,038
) 5,490 (82,721 ) 8,477 Interest income (expense), net (3,052 ) 71
(3,522 ) 128 Other income (expense), net 2,567
— 2,567 — Income (loss) before
income taxes (31,523 ) 5,561 (83,676 ) 8,605 Provision for income
taxes (105 ) (28 ) (146 ) (55 ) Net
income (loss) $ (31,628 ) $ 5,533 $ (83,822 ) $ 8,550
Net income (loss) per share – basic
$ (0.47 ) $ — $ (1.25 ) $ —
Net income (loss) per share – diluted
$ (0.47 ) $ — $ (1.25 ) $ —
Weighted average shares outstanding –
basic
67,387,634 65,846,620 67,239,640 63,909,934
Weighted average shares outstanding –
diluted
67,387,634 69,693,228 67,239,640 69,506,396
BLUE APRON HOLDINGS, INC.
Condensed Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30,
2017 2016 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income (loss) $ (83,822 ) $ 8,550 Adjustments
to reconcile net income (loss) to net cash used in operating
activities: Depreciation and amortization of property and equipment
8,364 2,628 Amortization of capitalized software development costs
1,199 632 Loss on disposal of property and equipment 23 — Changes
in reserves and allowances 552 1,226 Share-based compensation 2,992
1,289 Debt discount and issuance cost amortization 2,234 — Fair
value adjustment on derivative (2,567 ) — Changes in operating
assets and liabilities 334 11,715 Net cash provided
by (used in) operating activities (70,691 ) 26,040
CASH FLOWS FROM INVESTING ACTIVITIES: Capitalized
software development costs (1,848 ) (1,351 ) Decrease (increase) in
restricted cash 1,595 (2,371 ) Cash paid for acquisition (1,177 ) —
Purchases of property and equipment (89,906 ) (7,982
) Net cash used in investing activities (91,336 )
(11,704 )
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds
from debt issuances 144,410 — Net proceeds from issuance of Common
stock 781 85 Payments of public offering costs (2,909 ) — Principal
payments on capital lease obligations (95 ) (146 )
Net cash provided by (used in) financing activities 142,187
(61 ) NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (19,840 ) 14,275
CASH AND CASH EQUIVALENTS – Beginning of
period
81,468 126,860
CASH AND CASH EQUIVALENTS – End of
period
$ 61,628 $ 141,135
BLUE APRON HOLDINGS, INC.
Reconciliation of Non-GAAP Financial
Measures
(In thousands)
(Unaudited)
Three Months Ended June 30,
Three Months Ended March 31, 2017 2016
2017 2016 Reconciliation of net income
(loss) to adjusted EBITDA Net income (loss) $ (31,628 ) $ 5,533
$ (52,194 ) $ $ 3,017 Share-based compensation 1,754 712 1,238 576
Depreciation and amortization 5,383 1,774 4,180 1,485 Interest
(income) expense, net 3,052 (71 ) 470 (57 ) Other (income) expense,
net (2,567 ) — — — Provision for income taxes 105
28 41 27 Adjusted
EBITDA $ (23,901 ) $ 7,976 $ (46,265 ) $ 5,048
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version on businesswire.com: http://www.businesswire.com/news/home/20170810005324/en/
Blue ApronInvestors:Felise Glantz
Kissellfelise.kissell@blueapron.comorMedia:Nisha
Devarajannisha.devarajan@blueapron.com
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