Expects full year 2021 net sales to be
approximately $2.4 billion and net income to be between $36.1 and
$40.1 million.
Newegg Commerce, Inc. (NASDAQ: NEGG), a leading tech-focused
e-retailer in North America (the “Company” or “Newegg”), announced
its financial forecasts for the six-month and full year periods
ending December 31, 2021, as well as certain compensation and
capital initiatives and the opening of a limited trading window for
its restricted shares.
Second Half and Full Year 2021 Financial Forecast
Following on a strong first half 2021 financial and operational
performance, Newegg currently expects its financial performance for
the second half of 2021 to remain strong. Specifically, for the
six-month period ending December 31, 2021, the Company expects to
achieve net sales of approximately $1.2 billion and net income
between $14.5 and $18.5 million. For the full year ending December
31, 2021, the Company expects net sales of approximately $2.4
billion and net income between $36.1 and $40.1 million.
Robert Chang, the Company’s Chief Financial Officer, commented,
“These financial forecasts reflect significant expected growth over
the prior year, and we are excited about our future prospects. We
expect to see continued strength in customer demand for technology
products and anticipate a good holiday season, brought about in
part by our deeper engagement with customers, our overall strength
and the execution of our growth strategies.”
These forecasts consider the impacts of consumer demand and
spending patterns, including impacts due to concerns over the
current economic outlook and business climate, and assumes that
going forward they will be in line with those experienced during
the first half of 2021 through the date hereof. However, it is not
possible to determine the ultimate impact on our operations for the
second half of 2021, or whether other currently unanticipated
direct or indirect consequences of the COVID-19 pandemic are
reasonably likely to materially affect our operations. Actual
results may differ from the financial forecasts above as a result
of, among other things, the factors described below under the
heading “Forward-Looking Statements”.
Compensation and Capital Initiatives Under
Consideration
In recognition of the Company’s strong financial performance and
successful public listing that occurred on May 19, 2021, Newegg is
considering various compensatory measures to reward, incentivize
and retain its growing employee workforce. Anthony Chow, the
Company’s Chief Executive Officer, said, “I am so proud of our
company and what we have achieved over the last twenty years. Our
public listing was the culmination of two decades of hard work by
our many employees. Our board of directors believes that
equity-based compensation helps us to gain and retain new talent,
while simultaneously helping our employees, who deserve to share in
the tremendous value they have helped create. It also helps to
further incentivize our employees to continue their contributions
for the benefit of the company and its shareholders.”
As part of these compensatory measures, the Company will be
filing a registration statement on Form S-8 to register 75,741,449
of its common shares, par value $0.021848, issuable pursuant to the
Newegg Inc. Fourth Amended and Restated 2005 Incentive Award Plan
(the “Award Plan”). As of August 31, 2021, the Award Plan had
30,081,565 vested options and 36,777,410 unvested options issued
and outstanding, all of which were issued prior to the Company’s
public listing on May 19, 2021. In addition, 8,882,474 common
shares remain available for future issuance under the Award
Plan.
The Company anticipates that its employee base will continue to
grow in the future. To supplement the limited number of common
shares available for issuance under the Award Plan and to further
incentivize, reward and retain its growing workforce, the Company
is currently considering adopting a new equity incentive plan that
could allow for grants of stock options, restricted stock,
restricted stock units and other forms of equity awards. Awards
could be granted over the life of the plan and could vest based on
a combination of service time and performance metrics. Assuming
full satisfaction of all vesting conditions, the maximum number of
common shares that could vest in any given year could range between
two to ten million common shares per year under the currently
contemplated plan grants. The Company is also considering adopting
an employee stock purchase plan that would allow qualified
employees to purchase a limited number of Newegg common shares at a
15% discount to the then current market price. The proposed plans
and all proposed grants, terms and conditions remain subject to the
final determination and approval of the Company’s independent
compensation committee and may differ from the terms described
above.
The Company is also exploring avenues to raise additional
capital, including the possibility of offering newly issued common
shares. This would help raise additional capital to enable the
Company to grow and diversify its shareholder base. Any potential
offering is subject to board approval, market conditions, and other
factors.
Temporary, Limited Trading Window for Restricted
Shares
Currently, approximately 364.7 million of the Company’s
outstanding common shares remain subject to various transfer
restrictions contained in Newegg’s Amended and Restated
Shareholders Agreement dated October 23, 2020 (the “Shareholders
Agreement”), the Award Plan, certain standalone lockup agreements
entered into with the Company and/or the Company’s insider trading
policy. In addition, all of the shares issuable under the Award
Plan described above are also subject to various transfer
restrictions set forth in the Award Plan, the Shareholders
Agreement and/or Newegg’s insider trading policy.
Over the next two weeks, beginning Tuesday September 14, 2021
and ending Friday, September 24, 2021, inclusive of those dates
(the “Trading Window”), the Company will allow a strictly
controlled, temporary waiver of these transfer restrictions to
enable limited trading of common shares by its employees, former
employees, officers, directors, and stockholders who received
restricted common shares of the Company as part of the merger
between Newegg Inc. and Lianluo Smart Limited (the Company’s
predecessor). Each such employee, former employee, officer,
director, or stockholder, together with their respective
affiliates, is referred to below as a “Restricted Holder.”
As of August 31, 2021, there were 125 Restricted Holders, who
will be limited to selling an aggregate of 1,533,000 shares during
the Trading Window. The two largest Restricted Holders, Hangzhou
Liaison Interactive Information Technology Co., Ltd., and Mr. Fred
Faching Chang, will be limited to selling 571,000 and 337,000
shares, respectively, with daily sales limits of not more than 5%
and 3%, respectively, of each day’s aggregate trading volume,
during the Trading Window. All other Restricted Holders will be
limited to selling 625,000 shares in total, with daily sales limits
of between 5,000 to 10,000 common shares per Restricted Holder per
trading day, during the Trading Window. Newegg may decide to
further limit, but not expand, the volume limitations imposed on
such Restricted Holders in its sole discretion during the Trading
Window based on prevailing market conditions and other factors. No
sales would be allowed by the Restricted Holders when the NASDAQ
stock market is closed (i.e., in after-hours trading). Based on
recent historical trading volumes, the Company expects that
aggregate sales by the Restricted Holders could comprise a material
portion of the trading volume during the Trading Window; however,
the actual number of common shares offered for sale by Restricted
Holders is subject to their own discretion, within the limits
described above, and could vary from the Company’s
expectations.
The Trading Window provides Restricted Holders with the
opportunity to obtain some liquidity for their common shares and
vested stock options, while also gradually increasing the size of
the public float for Newegg common shares.
After the Trading Window closes on September 24, all trading
restrictions contained in the Award Plan, the Shareholders
Agreement, and the lockup agreements will be in full effect in
accordance with their original terms and restrictions.
About Newegg Commerce, Inc.
Newegg Commerce, Inc., headquartered in the City of Industry,
California, is a leading tech-focused e-retailer in North America
and serves a global customer base throughout Europe, Asia Pacific,
Latin America and the Middle East. Founded in 2001, the company
offers direct sales and an online marketplace platform for PC and
IT hardware, consumer electronics, automotive, gaming products and
finished goods. Newegg also offers an extensive portfolio of
technology, marketing, logistics and other partner services to help
companies grow their business. For more information, please visit
https://www.newegg.com/.
Forward-Looking Statements
Newegg’s Financial Forecast and other statements in this release
that refer to future plans and expectations are "forward-looking
statements" within the meaning of U.S. federal securities laws.
Forward-looking statements involve a number of risks and
uncertainties that could cause actual results or performance to
differ materially from those expressed or implied in such
statements, and, consequently, you should not rely on these
forward-looking statements as predictions of future events. Words
such as "anticipates," "expects," "intends," "goals," "plans,"
"forecast," "guidance," "believes," "seeks," "estimates,"
"continues," "accelerate," "forward," "may," "will," "would,"
"should," "could," and variations of such words and similar
expressions are intended to identify such forward-looking
statements. Statements that refer to or are based on estimates,
forecasts, projections, uncertain events or assumptions, including
statements relating to our financial forecasts, our compensation
and capital initiatives under consideration, plans to allow a
limited trading window for our restricted shares, market
opportunity, future product demand, business plans and their
anticipated benefits, and anticipated trends in our businesses or
the markets relevant to them, are forward-looking statements. These
forward looking statements are subject to risks and uncertainties,
including, among others, risks related to market trading in our
common shares, system interruptions, fluctuation in foreign
exchange rates, changes in global economic conditions and customer
spending, world events, online commerce, government regulation and
taxation. In addition, additional or unforeseen effects from the
COVID-19 pandemic and the global economic climate may give rise to
or amplify many of these risks.
All forward-looking statements included in this release are
based on management's expectations as of the date of this release
and, except as required by law, Newegg disclaims any obligation to
update these forward-looking statements to reflect future events or
circumstances. More information about factors that potentially
could affect Newegg’s financial results is included in Newegg’s
filings with the Securities and Exchange Commission (“SEC”),
including its most recent Annual Report on Form 20-F and subsequent
filings.
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version on businesswire.com: https://www.businesswire.com/news/home/20210913005177/en/
Public Relations:
John Snedigar Faultline Communications john@faultlinecomms.com
408-705-7518
Investor Relations:
Lena Cati The Equity Group Inc. 212-836-9611
lcati@equityny.com
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