NEW YORK--(BUSINESS WIRE)--Blue Apron Holdings, Inc. (NYSE: APRN) announced today financial results for the quarter ended March 31, 2018.
“We are pleased with the progress we achieved this quarter, including significant improvement in operational efficiencies as reflected by our margin performance, which was the strongest we have seen since the second quarter of 2016,” said Brad Dickerson, Chief Executive Officer, Blue Apron Holdings Inc. “We also improved our customer metrics as we began to methodically reaccelerate marketing late last year, with a specific focus on attracting new customers with high affinity as well as deepening our engagement with current customers.”
“We look forward to building on this momentum as we continue to optimize our direct-to-consumer business, create new products that complement our core offering, and leverage new distribution channels––including our newly launched pilot program with Costco––to expand the reach of our strong brand to more households across the country.”
First Quarter 2018 Financial Results
- Net revenue decreased 20% year-over-year to $196.7 million in the first quarter of 2018 compared to the first quarter of 2017, driven primarily by a decrease in Customers and Orders following the deliberate pull back in marketing spend in the second half of 2017, as Blue Apron builds toward momentum in the business in 2018. Net revenue increased 5% quarter-over-quarter reflecting Blue Apron’s methodical reacceleration of its marketing efforts and advanced product merchandising capabilities in the first quarter of 2018.
- Cost of goods sold, excluding depreciation and amortization (COGS), as a percentage of net revenue, improved 310 basis points year-over-year from 68.8% to 65.8% and improved 430 basis points from the fourth quarter of 2017. This progress is mainly due to the benefits realized through enhanced planning and process-driven strategies in fulfillment center operations, led by Blue Apron’s Linden, New Jersey fulfillment center.
- Marketing expense was $39.3 million, or 20.0% as a percentage of net revenue, in the first quarter of 2018, compared to $60.6 million, or 24.8% as a percentage of net revenue, in the first quarter of 2017. Blue Apron methodically reaccelerated marketing efforts in the first quarter of 2018 with a focus on building efficient and sustainable growth.
- Product, technology, general, and administrative (PTGA) costs decreased 22% year-over-year from $63.2 million in the first quarter of 2017 to $49.5 million in the first quarter of 2018 primarily due to continued focus on expense management.
- Net loss was $(31.7) million and diluted loss per share was $(0.17) in the first quarter of 2018 based on 191.5 million weighted average common shares outstanding, compared to net loss of $(52.2) million and diluted loss per share of $(0.78) in the first quarter of 2017 based on 67.1 million weighted average common shares outstanding. Sequentially, net loss improved $7.5 million quarter-over-quarter from a net loss of $(39.1) million in the fourth quarter of 2017.
- Adjusted EBITDA was a loss of $(17.2) million in the first quarter 2018, compared to a loss of $(46.3) million in the first quarter of 2017 reflecting improved expense management and operational efficiencies. Sequentially, adjusted EBITDA improved $2.5 million quarter-over-quarter from a loss of $(19.7) million in the fourth quarter of 2017.
Key Customer Metrics
- Customers decreased 24% year-over-year and increased 5% quarter-over-quarter following the deliberate pullback in marketing spend in the second half of 2017, as the Company builds toward momentum in the business in 2018.
- Average Revenue per Customer was $250 in the first quarter of 2018 compared to $236 in the first quarter of 2017, and $248 in the fourth quarter of 2017.
- Key customer metrics included in the chart below reflect trends of the business and seasonality as well as strategic actions by the company.
|Three Months Ended,|
|March 31,||December 31,||March 31,|
|Orders (in thousands)||4,273||3,196||3,474|
|Customers (in thousands)||1,036||746||786|
|Average Order Value||$57.23||$57.99||$56.58|
|Orders per Customer||4.1||4.3||4.4|
|Average Revenue per Customer||$236||$248||$250|
For a description of how Blue Apron defines and uses these key customer metrics, please see “Use of Key Customer Metrics” below.
Liquidity and Capital Resources
- Cash and cash equivalents was $203.5 million as of March 31, 2018.
- Capital expenditures, including amounts in accounts payable, totaled $4.8 million for the first quarter of 2018, largely from investments in automation equipment as Blue Apron continued to strategically invest to further drive operational improvements. This represents a reduction in capital expenditures from prior year levels following the substantial completion of the Linden fulfillment center
Conference Call and Webcast
Blue Apron will hold a call and webcast today at 8:30 a.m., Eastern Time to discuss its first quarter 2018 results and business outlook. The conference call can be accessed by dialing (877) 883-0383 or (412) 902-6506, utilizing the conference ID 5915531. 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, May 10, 2018 by dialing (877) 344-7529 or (412) 317-0088, utilizing the conference ID 10118403.
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.
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; risks associated with its ability to achieve the benefits of the realignment; 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 other risks described in the Company’s public reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including under the caption “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018 to be filed with the SEC and in 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 net earnings (loss) before interest income (expense), net, other operating expense, other income (expense), net, benefit (provision) for income taxes and depreciation and amortization, adjusted to eliminate 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 excludes other operating expense, as other operating expense represents impairment losses and charges related to the personnel realignment;
- 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”.
In addition, the Company will be presenting certain guidance regarding future operating results, including forward-looking non-GAAP measures, on today’s call and webcast. Reconciliations of these forward-looking non-GAAP measures to the most directly comparable measures calculated in accordance with GAAP will be posted on the Company’s investor relations section of its website, located at investors.blueapron.com under “Events and Presentations”.
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.
Average Order Value
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.
Orders per Customer
We define Orders per Customer as the number of Orders in a given reporting period divided by the number of Customers in that period.
Average Revenue per Customer
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
|March 31,||December 31,|
|Cash and cash equivalents||$||203,517||$||228,514|
|Prepaid expenses and other current assets||10,672||7,824|
|Total current assets||256,929||282,749|
|Property and equipment, net||227,110||230,828|
|Other noncurrent assets||1,664||1,761|
|LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)|
|Accrued expenses and other current liabilities||37,589||32,615|
|Total current liabilities||88,152||90,709|
|Facility financing obligation||70,945||70,347|
|Other noncurrent liabilities||7,013||8,116|
|TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)||196,826||223,850|
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)||$||487,670||$||517,709|
BLUE APRON HOLDINGS, INC.
Condensed Consolidated Statement of Operations
(In thousands, except share and per-share data)
|Three Months Ended|
|Cost of goods sold, excluding depreciation and amortization||129,332||168,531|
|Product, technology, general, and administrative||49,488||63,210|
|Depreciation and amortization||8,404||4,180|
|Total operating expenses||226,553||296,526|
|Income (loss) from operations||(29,863)||(51,683)|
|Interest income (expense), net||(1,777)||(470)|
|Income (loss) before income taxes||(31,640)||(52,153)|
|Benefit (provision) for income taxes||(25)||(41)|
|Net income (loss)||$||$ (31,665)||$||(52,194)|
|Net income (loss) per share – basic||$||(0.17)||$||(0.78)|
|Net income (loss) per share – diluted||$||(0.17)||$||(0.78)|
|Weighted average shares outstanding – basic||191,494,036||67,090,001|
|Weighted average shares outstanding – diluted||191,494,036||67,090,001|
BLUE APRON HOLDINGS, INC.
Condensed Consolidated Statement of Cash Flows
|Three Months Ended|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Net income (loss)||$||(31,665)||$||(52,194)|
Adjustments to reconcile net income (loss) to net cash used in
|Depreciation and amortization of property and equipment||8,404||4,180|
|Loss (gain) on disposal of property and equipment||514||23|
|Changes in reserves and allowances||(581)||411|
|Non-cash interest expense||645||44|
|Changes in operating assets and liabilities||(1,992)||27,259|
|Net cash from (used in) operating activities||(20,460)||(19,039)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Decrease (increase) in restricted cash||125||—|
|Cash paid for acquisition||—||(1,177)|
|Purchases of property and equipment||(5,077)||(55,086)|
|Proceeds from sale of fixed assets||430||—|
|Net cash from (used in) investing activities||(4,522)||(56,263)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Net proceeds from debt issuances||—||55,000|
|Proceeds from the exercise of stock options||46||78|
|Principal payments on capital lease obligations||(61)||(77)|
|Net cash from (used in) financing activities||(15)||55,001|
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS||(24,997)||(20,301)|
|CASH AND CASH EQUIVALENTS — Beginning of period||228,514||81,468|
|CASH AND CASH EQUIVALENTS — End of period||$||203,517||$||61,167|
BLUE APRON HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measures
|Three Months Ended|
|March 31,||December 31,||March 31,|
Reconciliation of net income (loss) to adjusted EBITDA
|Net income (loss)||$||(31,665)||$||(39,120)||$||(52,194)|
|Depreciation and amortization||8,404||8,501||4,180|
|Other operating expense||—||6,779||—|
|Interest (income) expense, net||1,777||1,581||470|
|Provision (benefit) for income taxes||25||2||41|