- Strong financial position with approximately $7.8 million in cash, $30.5 million in positive working capital and zero debt
- Announces that Federal Trade Commission has concluded its investigation relating to Bidz' email marketing practices
- Appoints Peter Hanelt Chairman of its Board of Directors
- Improves marketing efficiencies, reduces customer acquisition costs by 23.5% to $39 per new buyer
CULVER CITY, Calif., May 13, 2010 (GLOBE NEWSWIRE) -- Bidz.com (Nasdaq:BIDZ), a leading online retailer of jewelry, announced results for the first quarter ended March 31, 2010.
Net revenues for the first quarter of 2010 were $28.2 million, compared with $31.2 million reported in the first quarter of 2009. During the quarter, the Company reported B2B sales of $1.6 million, compared with $0.2 million of sales in the prior year period. While the Company saw a sequential increase in revenues from the seasonally stronger fourth quarter of 2009, its business continues to be impacted by the ongoing economic weakness, as well as an overall decline in demand for jewelry and other merchandise as consumers reduced their discretionary spending. Additionally, at the end of the first quarter, the Company had approximately $1.2 million in sales orders from its layaway plan, which the Company expects to book as revenues in the second and third quarters when the product is paid for in full by the customer and delivered. This deferred revenue is expected to increase in the second quarter and thereafter.
The Company's domestic and international sales for the first quarter 2010 represented 62.1% and 37.9%, respectively, compared with 69.7% and 30.3%, respectively, in 2009. The top five international markets in the first quarter 2010 represented Canada, Australia, Azerbaijan, Saudi Arabia and Spain.
In the first quarter 2010, gross profit was approximately $7.2 million, compared with $10.2 million in the first quarter of 2009. Gross margin in the first quarter of 2010 was 25.5%, at the high-end of the Company's guidance range, compared with 32.7% in the same period of 2009. The decrease in gross profit as a percentage of sales was primarily due to lower net shipping and handling revenue and lower gross margins from B2B revenues, partially offset by higher gross margins from the Company's online revenue.
In the first quarter, the Company also saw improvements in many of its key revenue metrics. During the quarter, the average selling price per order increased 5.0% to $190 from $181; average items sold per transaction increased approximately 37.0% to 4.1 items and the Company's acquisition cost per new buyer decreased by 23.5% to $39 from $51.
| Auction Metrics | Three Months Ended March 31, | ||
| 2010 | 2009 | % Change | |
| Number of new buyers | 40,501 | 51,021 | -20.6% |
| Average selling price per order (gross) | $190 | $181 | 5.0% |
| Average orders per day | 1,713 | 2,043 | -16.2% |
| Average items sold per day | 7,018 | 6,110 | 14.9% |
| Average items sold per transaction | 4.1 | 3.0 | 37.0% |
| Acquisition cost per new buyer | $39 | $51 | -23.5% |
| Gross Margin $ per average order | $49 | $59 | -17.0% |
David Zinberg, Chief Executive Officer, added, "I am pleased to report that we are beginning to see positive momentum in both our core business and many of our newer initiatives. Since the end of last year, our Bidz.com site has experienced increased activity in terms of the number of items sold per day, and both our Modnique.com and Buyz sites are off to a good start. Given these trends, as well as a somewhat improved overall economic climate, I believe that we will soon be seeing improved financial results. We remain focused on achieving profitability and leveraging our model to deliver higher earnings, cash flow and shareholder returns."
"We are focused on building awareness and visibility by increasing the number of brands and product offerings at compelling values for all three of our sites, Bidz, Buyz and Modnique," said Leon Kuperman, the Company's President and Chief Technology Officer. "We are becoming more customer-focused and technology driven with the new ERP system, as we deliver more trend-right product and drive operating efficiencies within our business. We are beginning to see many of our key operating metrics show signs of improvement and stabilization."
General and administrative expenses for the first quarter were $5.4 million, compared to $4.8 million in the prior year period. The increase in general and administrative expenses was due to higher administrative expenses, as well as the launch of Modnique.com. Sales and marketing expenses for the quarter were $1.6 million, compared with $2.6 million, in the prior year period. Total operating expenses in the first quarter 2010 were $7.2 million, compared with $7.6 million in the prior year period. Loss from operations for the first quarter of 2010 was $25,000, compared to a profit from operations of $2.6 million in the first quarter of 2009. The Company's income tax expense decreased to $75,000 in the first quarter of 2010, compared to $1.1 million the prior year period, due to additional paid-in-capital pool ("APIC Pool") shortfalls, related to stock based compensation arrangements.
Net loss for the first quarter of 2010 was approximately $111,000, or $0.01 per fully diluted share, on 21.9 million weighted average shares outstanding, compared to net income of $1.5 million, or $0.07 per fully diluted share, on 22.9 million weighted average shares outstanding in the same period of 2009.
As of March 31, 2010, the Company had approximately $7.8 million in cash. Additionally, the Company had $30.5 million in positive working capital and no long-term debt. The Company believes that cash and cash equivalents currently on hand and cash flows from operations will be sufficient to continue its operations and to pursue its growth strategy for the foreseeable future.
Lawrence Kong, Chief Financial Officer, commented, "It is also important to note that we aggressively reduced inventories by $9.8 million from year-end, and focused on cash generation resulting in a very significant increase in net cash from operations of 9.8 million. We also more than doubled our cash balance from year-end to $7.8 million. We are confident that these aggressive liquidity steps will position us well for the future."
As of March 31, 2010, the Company has spent a total of $18.5 million to cumulatively repurchase 3.4 million shares at an average price of approximately $5.51 per share since the inception of its stock repurchase program in June, 2007. The Company intends to continue to make additional share repurchases based upon market conditions, stock price and other considerations.
Business Outlook/Guidance
The Company is introducing new revenue guidance for the second quarter of 2010 of $25-$27 million, gross profit margin of approximately 24-26%, as the Company will push for market share to get back on a growth curve, and expects EBITDA to be approximately breakeven.
Investor Conference Call
Bidz.com's quarterly earnings conference call is scheduled to begin later today (May 13, 2010) at 1:30 p.m., Pacific Time. The call will be open to all interested investors through a live audio Web broadcast via the Internet on the investor relations section of the Company's website at http://investors.bidz.com/.
For those unable to participate during the live broadcast, the webcast will be archived for 90 days and a replay will be available beginning Thursday, May 13, 2010 at 7:30 p.m. ET through May 27, 2010 at 12:00 a.m. ET. To access the replay, dial 800-406-7325 (U.S.) or 303-590-3030 (International), and use passcode: 4285987.
About Bidz.com
Bidz.com, founded in 1998, is a leading online retailer of jewelry. Bidz offers its products through a live auction format as well as a fixed price online retail store, Buyz.com. Bidz.com's auctions are also available in Arabic, German and Spanish. To learn more about Bidz.com visit its website at www.bidz.com. Bidz also operates Modnique, a division of Bidz.com. Modnique offers its members exclusive access to 24-72 hour sale events of designer apparel, accessories, shoes, and housewares at price points up to 85% off of retail. To learn more about Modnique visit its website at www.modnique.com.
Safe Harbor Statement
This press release includes forward looking statements about the Company's estimated revenue and earnings within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this release, including statements regarding the Company's future financial position, business strategy and plans and objectives of management for future operations, are forward looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions, as they relate to the Company, are intended to identify forward looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect the Company's financial condition, results of operations, business strategy and financial needs. Risks and uncertainties include that our common stock is subject to short selling and trading, and prices of our stock may be volatile; that we are subject to "prank" bidding; that we may face increasing costs to acquire new customers; the ability of the Company to attract customers to its website and offer attractive products; the ability to maintain profit levels while expanding international sales; the ability to detect fraud if we fail to maintain an effective system of internal controls; the ability to maintain our website, electronic data processing systems, and systems hardware; the ability to forecast accurately net revenue and plan for expenses; that we do not have a guaranteed supply of jewelry products and that we have a heavy concentration of inventory purchased from our top two suppliers; the ability to protect our intellectual property rights; and potential litigation and government enforcement actions that may result from our prior securities offerings. Please refer to Bidz.com's reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. Bidz.com undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.
| Bidz.com, Inc. | ||
| Condensed Balance Sheets (Unaudited) | ||
| (in thousands, except share data and per share) | ||
| December 31, | March 31, | |
| 2009 | 2010 | |
| (Revised) | ||
| Assets | ||
| Current assets: | ||
| Cash | $1,121 | $7,783 |
| Accounts receivable | 447 | 491 |
|
Inventories, net of reserves of $1,767 and $1,536 at December 31, 2009 and March 31, 2010, respectively |
40,961 | 31,379 |
|
Other receivable (includes related party amounts of $179 and $136 at December 31, 2009 and March 31, 2010, respectively) |
1,454 | 1,337 |
| Current deferred tax assets | 1,400 | 1,262 |
| Other current assets | 2,960 | 1,161 |
| Total current assets | 48,343 | 43,413 |
| Long term deferred tax asset | 663 | 684 |
| Property and equipment, net | 1,202 | 1,059 |
| Intangible asset | 240 | 239 |
| Deposits | 157 | 157 |
| Total assets | $50,605 | $45,552 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Revolving credit line | $2,898 | $ -- |
|
Accounts payable (includes related party amounts of $1,513 and $1,027 at December 31, 2009 and March 31, 2010, respectively) |
12,159 | 10,060 |
| Accrued expenses | 2,291 | 1,939 |
| Deferred revenue | 632 | 879 |
| Total current liabilities | 17,980 | 12,878 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
|
Preferred stock: par value $0.001; authorized 4,000,000 shares; none issued and outstanding at December 31, 2009 and March 31, 2010, respectively |
-- | -- |
|
Common stock: par value $0.001; authorized 100,000,000 shares; issued and outstanding 22,114,257 and 21,900,357 at December 31, 2009 and March 31, 2010, respectively |
22 | 22 |
| Additional paid in capital | 19,857 | 20,017 |
| Accumulated earnings | 12,746 | 12,635 |
| Total stockholders' equity | 32,625 | 32,674 |
| $50,605 | $45,552 | |
| Bidz.com, Inc. | ||
| Condensed Statements of Income (Operations) (Unaudited) | ||
| (in thousands, except share and per share data) | ||
| Three Months Ended March 31, | ||
| 2009 | 2010 | |
| (Revised) | ||
| Net revenue: | ||
| Merchandise sales | $30,891 | $26,467 |
|
Wholesale merchandise sales (includes related party amounts of $206 and $1,200 for the three months ended March 31, 2009 and 2010, respectively |
206 | 1,647 |
| Other revenue | 80 | 75 |
| 31,177 | 28,189 | |
| Cost of revenue | 20,991 | 21,000 |
| Gross Profit | 10,186 | 7,189 |
| Operating expenses: | ||
| General and administrative | 4,802 | 5,411 |
| Sales and marketing | 2,605 | 1,587 |
| Depreciation and amortization | 180 | 216 |
| Total operating expenses | 7,587 | 7,214 |
| Income (loss) from operations | 2,599 | (25) |
| Other income - interest income | 2 | -- |
| Other expense - interest (expense) | (11) | (11) |
| Income (loss) before income tax expense | 2,590 | (36) |
| Income tax expense | 1,082 | 75 |
| Net income (loss) | $1,508 | $(111) |
| Net income (loss) per share available to common shareholders - basic | $0.07 | $(0.01) |
| Net income (loss) per share available to common shareholders - diluted | $0.07 | $(0.01) |
| Weighted average number of shares outstanding - basic | 22,898,532 | 21,949,359 |
| Weighted average number of shares outstanding - diluted | 22,898,532 | 21,949,359 |
| Bidz.com, Inc. | ||
| Condensed Statements of Cash Flows (Unaudited) | ||
| (in thousands) | ||
| Three Months Ended March 31, | ||
| 2009 | 2010 | |
| (Revised) | ||
| Cash flows provided by (used for) operating activities: | ||
| Net income (loss) | $1,508 | $(111) |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||
| Depreciation and amortization | 180 | 216 |
| Change in inventory reserve | 530 | (231) |
| Stock-based compensation | 111 | 262 |
| Changes in assets and liabilities: | ||
| (Increase) decrease in assets: | ||
| Accounts receivable | 21 | (44) |
| Inventories | (1,820) | 9,813 |
| Other receivable | (118) | 117 |
| Current deferred tax assets | (103) | 138 |
| Other current assets | 139 | 1,799 |
| Increase (decrease) in liabilities: | ||
| Accounts payable | (743) | (2,099) |
| Accrued expenses | 462 | (352) |
| Deferred revenue | 317 | 247 |
| Net cash provided by operating activities | 484 | 9,755 |
| Cash flows (used for) investing activities: | ||
| Capital expenditures | (625) | (72) |
| Net cash (used for) investing activities | (625) | (72) |
| Cash flows provided by (used for) financing activities: | ||
| Revolving credit line | -- | (2,898) |
| Long term deferred tax assets, net | 77 | (21) |
| Tax benefit from stock based compensation | (158) | -- |
| Purchase of treasury stock | (1,074) | (102) |
| Net cash (used for) financing activities | (1,155) | (3,021) |
| Net increase (decrease) in cash | (1,296) | 6,662 |
| Cash, beginning of period | 4,456 | 1,121 |
| Cash, end of period | $3,160 | $7,783 |
| Supplemental disclosure of cash flow information: | ||
| Interest paid | $11 | $11 |
|
Supplemental disclosure of non-cash investing and financing activities: |
||
| Retirement of treasury shares | $203 | $102 |