Newegg Commerce, Inc. (NASDAQ: NEGG), a leading global
technology e-commerce retailer, today announced its guidance for
the quarter ending September 30, 2022, which follows its first half
2022 results that were released on August 30, 2022.
Newegg Chief Executive Officer Anthony Chow noted: “As with many
in our industry, our performance for the first half of 2022 was
affected by several factors that were out of our control including
macro-economic conditions, higher inflation, and a weak sales
environment due to changes in customer spending behavior.”
Newegg Chief Financial Officer Robert Chang noted: “These
challenges and the oversupply of inventory from our sellers
negatively affected our net sales and gross margin. As a result, we
reported first half 2022 net sales of $890.5 million, gross profit
of $110.8 million, net loss of $18.9 million and Adjusted
EBITDA[Note 1] of $(4.0) million. For the third quarter of the
year, we expect net sales of between $358.8 million and $383.3
million, gross profit of between $42.0 million and $45.0 million,
net loss of between $10.1 million and $8.5 million and Adjusted
EBITDA[Note 2] of between $(1.7) million and $0.1 million.”
Mr. Chow added, “Through our continued investments in
state-of-the-art technologies, which aim to improve customer
experience, new product launches in several categories, and our
persistent focus on bringing high-quality products to our
customers, we have laid a strong foundation for our financial and
operational performance. Additionally, we have taken steps to
optimize our operations and lower our general costs going
forward.”
Newegg’s business plan anticipates the launch of several
programs, including:
- Black Friday Deals (launching earlier than usual this
year) along with Black Friday Price Protection Program ahead
of an early holiday shopping season: the promotion offers price
protection on select Black Friday deals to reward shoppers by
automatically refunding the price difference if purchased products
drop in price.
- FantasTech Round 2 in October with Black Friday-type
offers focusing on PC components, computer systems, entertainment
and other tech-related products.
- Other new products and services such as:
- JustGPU.com, a research and e-commerce site fully dedicated to
graphics cards to help customers determine the best GPU choices for
their gaming PC builds or upgrades.
- A variety of deals for gamers, from CPUs, GPUs, Motherboards,
Cases, Power Supplies and other gaming peripherals as part of the
annual Gametober in October.
- Other major product launches in core components that gamers and
DIY’ers have been waiting to get.
- Further expansion of its Newegg Live platform targeting
loyal customers who are looking for exclusive sales and live
interaction with the hosts on all streaming platforms to purchase
high-demand tech products.
Mr. Chow concluded, “Newegg continues to execute its business
strategy, which is designed to navigate current global market
challenges and help the company gain market share. Our goal is to
continue to provide a superb shopping experience for our customers,
develop and maintain long-term, efficient working relationships
with our vendors and suppliers, and provide better returns to our
shareholders.”
[Note 1] Newegg calculates first half 2022 Adjusted EBITDA as
net loss, excluding stock-based compensation expense of $16.1
million, depreciation and amortization expense of $5.0 million,
interest and other income, net of $73,000, benefit from income
taxes of $3.7 million, gain from warrants liabilities of $0.7
million, and gain from sales of equity method investment of $1.7
million.
Newegg believes that exclusion of these non-recurring and/or
non-cash expense items from Adjusted EBITDA facilitates operating
performance comparisons on a period-to-period basis and excludes
items that Newegg does not consider to be indicative of its core
operating performance. Accordingly, Newegg believes that Adjusted
EBITDA provides useful information to investors and others in
understanding and evaluating its operating results. Adjusted EBITDA
is reviewed regularly by Newegg management and board of directors
as a regular financial performance metric.
Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis
of Newegg results as reported under GAAP. For example, depreciation
and amortization are non-cash charges, but the assets being
depreciated and amortized may have to be replaced in the future,
resulting in cash capital expenditures. Adjusted EBITDA also does
not reflect changes in, or cash requirements for, working capital
needs. Adjusted EBITDA also does not consider the potentially
dilutive impact of stock-based compensation or reflect tax payments
that may represent a reduction in cash available to Newegg. Other
companies, including companies in our industry, may calculate
Adjusted EBITDA differently, which reduces its usefulness as a
comparative measure. Because of these limitations, you should
consider Adjusted EBITDA alongside other financial performance
measures, including various cash flow metrics, operating profit and
Newegg’s other GAAP results.
[Note 2] Third quarter 2022 Adjusted EBITDA excludes stock-based
compensation expense of approximately $7.6 million, depreciation
and amortization expense of approximately $2.9 million, interest
and other income, net of approximately $93,000, benefit from income
taxes of between $2.0 million and $1.8 million, and assumes that
there is no gain (loss) from warrants liabilities.
About Newegg
Newegg Commerce, Inc. (NASDAQ: NEGG), founded in 2001 and based
in the City of Industry, Calif., near Los Angeles, is a leading
global online retailer for PC hardware, consumer electronics,
gaming peripherals, home appliances, automotive and lifestyle
technology. Newegg serves businesses’ e-commerce needs with
marketing, supply chain, and technical solutions in a single
platform. For more information: Newegg.com.
Follow Newegg on Twitter, TikTok, Instagram, Facebook, YouTube,
Twitch and Discord.
This news release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements give our current expectations,
opinion, belief or forecasts of future events and performance. A
statement identified by the use of forward-looking words including
"will," "may," "expects," "projects," "anticipates," "plans,"
"believes," "estimate," "should," and certain of the other
foregoing statements may be deemed forward-looking statements.
Although Newegg believes that the expectations reflected in such
forward-looking statements are reasonable, these statements involve
risks and uncertainties that may cause actual future activities and
results to be materially different from those suggested or
described in this news release. Investors are cautioned that any
forward-looking statements are not guarantees of future performance
and actual results or developments may differ materially from those
projected. The forward-looking statements in this press release are
made as of the date hereof. The Company takes no obligation to
update or correct its own forward-looking statements, except as
required by law, or those prepared by third parties that are not
paid for by the Company. The Company's SEC filings are available at
http://www.sec.gov.
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version on businesswire.com: https://www.businesswire.com/news/home/20220902005161/en/
Media: Eric Wein Newegg eric.j.wein@newegg.com
Investor Relations: Lena Cati The Equity Group Inc.
lcati@equityny.com 212-836-9611
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