* Stable financial position with approximately $30.4 million in positive working capital * 404,815 shares repurchased during the third quarter at an average price of $3.50 * Branded Sales exceed Non-Branded Sales for the first time in August and again in September * Company goes live with its 24/7 Call Center
CULVER CITY, Calif., Nov. 9, 2009 (GLOBE NEWSWIRE) -- Bidz.com (Nasdaq:BIDZ), a leading online retailer of jewelry, announced results for the third quarter ended September 30, 2009.
Net revenues for the third quarter of 2009 were $24.8 million, compared with $55.4 million reported in the third quarter of 2008, with domestic and international sales representing 62.2% and 37.8%, respectively. The decrease was primarily a result of the soft global economy, as well as a decrease in wholesale (B2B) merchandise sales to $0.9 million, compared with $17.2 million in the same period of 2008. Excluding B2B sales in both periods, net revenues were $23.9 million, a decline of 37.4% from the prior year. This decline is significantly smaller on a year-over-year basis than the previous two quarters. As a percentage of total revenue, the Company's international sales increased 17.1% to 37.8% from 20.7% in the prior year due to the relatively stronger demand for the Company's products overseas.
In the third quarter 2009, gross profit was approximately $7.2 million, compared with $13.3 million in the third quarter of 2008. Gross margin in the third quarter of 2009 increased to 28.9%, compared with 24.0% in the same period of 2008.
Three Months Ended
September 30,
----------------------------
Auction Metrics 2009 2008 % Change
--------------- ---- ---- --------
Number of new buyers 34,252 54,072 -36.7%
Average selling price per order (gross) $187 $175 6.9%
Average orders per day 1,465 2,453 -40.3%
Average items sold per day 6,899 8,431 -18.2%
Average items sold per transaction 4.7 3.4 37.0%
Acquisition cost per new buyer $65 $43 51.2%
Gross Margin $ per average order $54 $42 28.7%
Recent Key Developments:
* In September, the Company launched its 24 hours, 7 days a week customer service call center, in addition to its automated online live help and e-mail support. * In September, the Company acquired the intellectual property and trademark registrations of Whitehall Jewelers, Lundstrom Jewelers, Marks Bros. Jewelers and White Star Private Label, in the bankruptcy auction of Whitehall Jewelers. The Company also acquired the customer mailing list with over 800,000 names, addresses and transaction information. * In August, the Company's branded sales exceeded its non-branded sales for the first time and did so again in September. * In the third quarter of 2009, the Company spent approximately $1.4 million to repurchase 404,815 shares at an average price of approximately $3.50. Approximately $15.1 million still remains under the authorized plan. The Company intends to continue to make additional share repurchases from time to time based upon market conditions, stock price, and other considerations. * As of September 30, 2009 the Company has spent a total of $18.4 million to cumulatively repurchase 3.3 million shares at an average price of approximately $5.56 since the inception of its stock repurchase program in June, 2007. * On October 2, 2009, the Company migrated from its proprietary enterprise operating system to an ERP system running on a customized Microsoft Dynamics AX. While the Company believes the new operating system will provide future leverage, unexpected problems with the system conversion have led to an inability to maximize current sales and Q4 will be impacted as a result. However, most issues are now resolved, but continued testing and system fixes may continue for a short period and this will continue to depress fourth quarter sales and earnings. Bidz expects to enter 2010 with enhanced system capabilities that will offer the Company the opportunity to gain sales momentum and market share.
"We are disappointed by our top-line results, yet we have managed to remain profitable through careful management of our expenses, inventory and gross margin," said Leon Kuperman, the Company's President and Chief Technology Officer. "We believe the combination of the addition of branded products on the Bidz.com site and improved customer service has resulted in an increase in number of items sold per transaction and average selling price per order."
"While our revenues continue to be impacted by the weakness in the global economy, we are making progress in stabilizing our business by providing our customers with a large selection of quality brands at significant discounts from their retail value," said David Zinberg, the Company's Chief Executive Officer. "The current abundance of closeouts for both branded and non-branded product has allowed us to stock up on merchandise that we believe will offer good value to our customers in the upcoming holiday season. The combination of our business showing increasing signs of stabilization, and our improved customer service and system capabilities, make us optimistic that we are capitalizing on the significant long-term opportunities for our business. As we look ahead, we expect to resume year over year revenue growth and profitability in 2010."
Operating expenses in the third quarter 2009 were $7.1 million compared to $7.8 million in the prior year period. The dollar decrease in expenses was primarily due to the Company's cost cutting initiatives in virtually all areas of operations and administration.
The Company's pre-tax income for the third quarter of 2009 was $0.07 million, compared to $5.5 million in the prior year period. The Company's income tax expense decreased to $0.03 million in the third quarter of 2009, compared to $2.2 million in the prior year period, and the effective tax rate was 41.9% versus 40.2% in the same period of 2008.
Net income for the third quarter of 2009 was approximately $0.04 million, or $0.00 per fully diluted share, on 22.2 million weighted average shares outstanding, compared to net income of $3.3 million, or $0.13 per fully diluted share, on 25.2 million weighted average shares outstanding in the same period of 2008.
The Company's revenues for the nine months ended September 30, 2009 were $82.9 million, compared with $172.3 million reported for the nine months ended September 30, 2008. Gross profit was $25.6 million compared with $46.6 million in the nine months ended September 30, 2008. Gross margin for the first nine months was 30.9% versus 27.1% in the nine months of 2008. Income from operations was $3.8 million or 4.6% of sales as compared to $19.6 million or 11.4% of sales in the same period a year ago.
The Company's pre-tax income for the nine months ended September 30, 2009 was $3.8 million compared with $19.5 million in the prior year period. The Company's income tax expense decreased to $1.6 million in the first nine months from $8.0 million in the prior year period, and the effective tax rate increased to 42.2% from 41.0%. Net income for the first nine months was $2.2 million, or $0.10 per fully diluted share, on 22.7 million weighted average shares outstanding, compared to $11.5 million, or $0.45 per fully diluted share, on 25.6 million weighted average shares outstanding, in the same period of 2008.
As of September 30, 2009, the Company had approximately $1.1 million in cash. Additionally, the Company had $30.4 million in positive working capital, no long-term debt and a balance of $2.5 million on its $25 million line of credit. The Company believes that its positive cash flow and liquidity are among its core financial strengths. The Company's inventory currently includes a variety of branded merchandise and many at higher prices in preparation for the holiday shopping season in the fourth quarter of 2009. The current abundance of closeouts has allowed the Company to stock up on merchandise that would offer good value to its customers. The Company continues to improve its financial position and believes that it has the balance sheet strength, liquidity and free cash flow it needs to make further progress on its core strategies, as the Company continues to navigate the soft economic climate.
Business Outlook/Guidance
The Company is introducing new revenue guidance for the fourth quarter of 2009 of $28-$32 million, gross profit margin of approximately 28-30%, pre-tax income of approximately $0.4-$1.5 million and expects fully taxed GAAP EPS of $0.01-$0.04. The Company's results will be affected by its ERP conversion in the fourth quarter of 2009, but the Company expects to resume normalized operations in the first quarter of 2010.
Investor Conference Call
Bidz.com's quarterly earnings conference call is scheduled to begin later today (November 9, 2009) 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 Monday, November 9, 2009 at 7:30 p.m. ET, through November 23, 2009 at 12:00 a.m. ET. To access the replay, dial 800-406-7325 (U.S.) or 303-590-3030 (International), and use passcode: 4119654.
About Bidz.com
Bidz.com, Inc. 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.
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.
Balance Sheets
(in thousands, except share data and per share)
Dec. 31, Sept. 30,
--------- ---------
2008 2009
--------- ---------
(Unaudited)
Assets
Current assets:
Cash $ 4,456 $ 1,144
Accounts receivable 591 580
Inventories, net of reserves of $820 and
$1,870 at December 31, 2008 and September 30,
2009, respectively 37,657 43,685
Other receivable (includes related party
amounts of $102 and $270 at December 31, 2008
and September 30, 2009, respectively 1,041 1,628
Current deferred tax assets 1,950 1,679
Other current assets 689 1,447
--------- ---------
Total current assets 46,384 50,163
Long term deferred tax asset 84 484
Property and equipment, net 1,672 1,423
Intangible asset 161 241
Deposits 104 104
--------- ---------
Total assets $ 48,405 $ 52,415
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit line $ -- $ 2,535
Accounts payable (includes related party
amounts of $1,364 and $2,092 at December 31,
2008 and September 30, 2009, respectively 9,636 13,680
Accrued expenses 3,091 2,670
Deferred revenue 872 855
--------- ---------
Total current liabilities 13,599 19,740
Commitments and contingencies (Note 10) -- --
Stockholders' equity:
Preferred stock: par value $0.001; authorized
4,000,000 shares; none issued and outstanding
at December 31, 2008 and September 30, 2009,
respectively -- --
Common stock: par value $0.001; authorized
100,000,000 shares; issued and outstanding
22,917,918 and 22,116,950 shares at December
31, 2008 and September 30, 2009, respectively 23 22
Additional paid in capital 24,520 20,045
Employees share purchase receivable (708) (536)
Retained earnings 10,971 13,144
--------- ---------
Total stockholders' equity 34,806 32,675
--------- ---------
$ 48,405 $ 52,415
========= =========
Bidz.com, Inc.
Statements of Income
(in thousands,
except share and
per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2008 2009 2008 2009
----------- ----------- ----------- -----------
Net revenue:
Merchandise sales $ 38,023 $ 23,795 $ 142,021 $ 81,072
Wholesale
merchandise
sales (includes
related party
amounts of $0 and
$641 for three
months ended
September 30 2008
and 2009,
respectively, and
$0 and $1,318 for
nine months ended
September 30, 2008
and 2009,
respectively) 17,247 917 29,875 1,595
Other revenue 86 74 375 240
----------- ----------- ----------- -----------
55,356 24,786 172,271 82,907
Cost of revenue 42,062 17,622 125,623 57,322
----------- ----------- ----------- -----------
Gross Profit 13,294 7,164 46,648 25,585
----------- ----------- ----------- -----------
Operating expenses:
General and
administrative 5,267 4,644 16,854 14,252
Sales and marketing 2,315 2,235 9,645 6,968
Depreciation and
amortization 171 200 505 573
----------- ----------- ----------- -----------
Total operating
expenses 7,753 7,079 27,004 21,793
----------- ----------- ----------- -----------
Income from
operations 5,541 85 19,644 3,792
Other income -
interest income 1 -- 24 2
Other expense -
interest (expense) (84) (18) (175) (33)
----------- ----------- ----------- -----------
Income before
income tax expense 5,458 67 19,493 3,761
Income tax expense 2,199 28 8,014 1,588
----------- ----------- ----------- -----------
Net income $ 3,259 $ 39 $ 11,479 $ 2,173
=========== =========== =========== ===========
Net income per share
available to common
shareholders -
basic $ 0.14 $ 0.00 $ 0.48 $ 0.10
=========== =========== =========== ===========
Net income per share
available to common
shareholders -
diluted $ 0.13 $ 0.00 $ 0.45 $ 0.10
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - basic 23,523,063 22,206,893 23,961,564 22,653,151
=========== =========== =========== ===========
Weighted average
number of shares
outstanding -
diluted 25,213,019 22,206,893 25,619,236 22,653,151
=========== =========== =========== ===========
Bidz.com, Inc.
Statements of Cash Flows
(in thousands)
Nine Months Ended
September 30,
2008 2009
-------- --------
Cash flows provided by (used for) operating
activities:
Net income $ 11,479 $ 2,173
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 505 573
Change in inventory reserve (254) 1,050
Impairment in employees share purchase
receivable -- 172
Stock-based compensation 796 587
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 1,243 11
Inventories 9,391 (7,078)
Other receivable -- (587)
Current deferred tax assets -- 271
Other current assets 2,455 (758)
Increase (decrease) in liabilities:
Accounts payable (765) 4,044
Accrued expenses (2,063) (421)
Deferred revenue (2,047) (17)
-------- --------
Net cash provided by operating activities 20,740 20
-------- --------
Cash flows used for investing activities:
Capital expenditures (514) (324)
Intangible asset -- (80)
Disposal of fixed assets 19 --
-------- --------
Net cash used for investing activities (495) (404)
Cash flows provided by (used for) financing
activities:
Revolving credit line (5,924) 2,535
Long term deferred tax asset -- (400)
Issuance of common stock 5 --
Proceeds from exercise of stock options 1,915 --
Retirement of common stock from net exercise
of stock options (2,480) --
Tax benefit from stock based compensation 913 (69)
Purchase of treasury stock (11,151) (4,994)
-------- --------
Net cash used for financing activities (16,722) (2,928)
Net increase (decrease) in cash 3,523 (3,312)
Cash, beginning of period 4,808 4,456
-------- --------
Cash, end of period $ 8,331 $ 1,144
======== ========
Supplemental disclosure of cash flow
information:
Interest paid $ 175 $ 33
======== ========
Income taxes paid $ 8,769 $ 2,550
======== ========
Supplemental disclosure of non-cash investing
and financing activities:
Retirement of treasury shares $ 12,037 $ 4,994
======== ========