PFSweb Reports First Quarter 2023 Results
eCommerce Fulfillment and Luxury Brand Demand Drive Service Fee Revenue Growth and Sales Booking Momentum,
Recorded Strongest Q1 Fulfillment Activity Levels in Company History
Reiterating Full Year 2023 Guidance of 5% to 10% Annual Service Fee Revenue Growth
“In the first quarter, we carried on the momentum from our record performance in 2022, with solid service fee revenue growth and continued strong sales booking activity,” said
Q1 2023 Summary vs. Q1 2022
- Total revenues increased 4% to
$69.3 million , including$21.7 million in pass-through revenue. - Service fee revenue increased 5% to
$47.6 million . - Service fee gross margin increased 450 basis points to 24.4% compared to 19.9%. The service fee gross margin in the first quarter of 2023 reflects the sustained sequential improvements driven by the favorable impact of productivity enhancements and pricing modifications implemented in 2022.
- Net loss improved to
$1.5 million or$(0.06) per share, compared to a net loss of$7.5 million or$(0.33) per share in Q1 22, largely driven by the gross margin improvements and a 24% year-over-year reduction in general and administrative expenses as a result of the reduced professional fees related to the LiveArea transaction and the Company’s restructuring and cost optimization measures in 2022. - Consolidated adjusted EBITDA (a non-GAAP measure defined and reconciled below) increased significantly to
$3.0 million compared to$(0.4) million .
Recent Operational Highlights
- Recorded four bookings in Q1 worth an estimated
$6.8 million in annual contract value (ACV). - Made continued progress on opening the Company’s second fulfillment center in
Dallas . The facility is anticipated to go live by early Q3 2023 and offer greater capacity to support clients’ eCommerce consumers in the Southwestern region of theU.S. - Signed an agreement in
April 2023 , to open a secondSouthampton -area fulfillment center in theUnited Kingdom (UK ). The facility is expected to expand the Company’s multi-node footprint in theUK and address growing fulfillment demand among new and current European clients.
“We also remain underway with expanding our domestic and international fulfillment footprint. Most recently, we announced the signing of the lease on a new 70,000 square foot fulfillment center in Fareham,
“We believe our execution has placed us in a strong position for the first half of 2023, and we expect to continue driving our growth as a fulfillment platform. From a sales perspective, we are focused on converting the high-quality opportunities in our sales pipeline and leveraging the ongoing demand for premier and luxury brands in our core categories. We will work to support this momentum with an optimized cost structure, benefited by our previous restructuring work and our focus on driving additional cost savings. With our agile and streamlined operations, we seek to facilitate continued client growth and long-term strategic progress.”
2023 Outlook
The Company is reiterating its previously stated 2023 outlook for annual service fee revenue growth, which is expected to range between at least 5% to 10%. Given sustained indications of strong consumer and fulfillment service demand across its core verticals, the Company is optimistic that it can achieve service fee revenue growth at the upper end of this targeted range. As a percentage of service fee revenue,
Excluding public company costs, the Company is targeting total company adjusted EBITDA as a percentage of service fee revenue to range between 8% to 10% in 2023.
Share Repurchase Update
Strategic Alternatives Process
Conference Call
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Please call the conference telephone number 5-10 minutes prior to the start time. If you have any difficulty connecting with the conference call, please contact
The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.ir.pfsweb.com.
Forward-Looking Information
This press release contains forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “potential,” “project,” “seek,” “strive,” “predict,” “continue,” “target,” “estimate”, and other similar expressions. These forward-looking statements involve risks and uncertainties and may include assumptions as to how we may perform in the future, including our overall performance for our clients, as well as the impact of inflation, labor cost increases and overall economic conditions. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee these expectations will actually be achieved. The Company’s 2022 10-K, and any subsequent amendments thereto and our quarterly reports on Form 10-Q identify certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the periodic reports of the Company and the Risk Factors described therein.
The Company undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.
Non-GAAP Financial Measures
This news release contains certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA) and adjusted EBITDA.
Non-GAAP net income (loss) represents net income (loss) calculated in accordance with
EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, as well as restructuring and other costs.
Non-GAAP net income (loss), EBITDA and adjusted EBITDA are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, restructuring and other costs, and EBITDA and adjusted EBITDA further eliminate the effect of financing, remaining income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance.
The Company believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.
About
PFS, the business unit of
Investor Relations:
1-949-574-3860
PFSW@gatewayir.com
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||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In Thousands, Except Share Data) | ||||||||
(Unaudited) |
2022 |
|||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 39,741 | $ | 30,034 | ||||
Accounts receivable, net of reserve for credit loss of |
49,398 | 82,540 | ||||||
Other receivables | 1,936 | 9,578 | ||||||
Prepaid expenses and other current assets | 7,393 | 7,665 | ||||||
Total current assets | 98,468 | 129,817 | ||||||
Property and equipment, net | 19,915 | 20,888 | ||||||
Operating lease right-of-use assets, net | 30,084 | 30,841 | ||||||
21,468 | 21,310 | |||||||
Other assets | 1,486 | 1,806 | ||||||
Total assets | $ | 171,421 | $ | 204,662 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 20,286 | $ | 38,518 | ||||
Accrued expenses | 24,284 | 36,973 | ||||||
Current portion of operating lease liabilities | 9,118 | 8,284 | ||||||
Current portion of finance lease obligations | 63 | 72 | ||||||
Deferred revenues | 3,055 | 3,906 | ||||||
Total current liabilities | 56,806 | 87,753 | ||||||
Finance lease obligations, less current portion | 10 | 22 | ||||||
Deferred revenue, less current portion | 970 | 870 | ||||||
Operating lease liabilities, less current portion | 23,783 | 25,478 | ||||||
Other liabilities | 4,902 | 4,315 | ||||||
Total liabilities | 86,471 | 118,438 | ||||||
Shareholders' equity: | ||||||||
Preferred stock, |
— | — | ||||||
Common stock, |
23 | 23 | ||||||
Additional paid-in capital | 180,661 | 180,353 | ||||||
Accumulated deficit | (92,269 | ) | (90,893 | ) | ||||
Accumulated other comprehensive loss | (2,944 | ) | (3,134 | ) | ||||
(521 | ) | (125 | ) | |||||
Total shareholders’ equity | 84,950 | 86,224 | ||||||
Total liabilities and shareholders’ equity | $ | 171,421 | $ | 204,662 |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(In Thousands, Except Per Share Data) | ||||||||
Three Months Ended |
||||||||
2023 | 2022 | |||||||
Revenues: | ||||||||
Service fee revenue | $ | 47,612 | $ | 45,531 | ||||
Product revenue, net | — | 3,197 | ||||||
Pass-through revenue | 21,652 | 17,759 | ||||||
Total revenues | 69,264 | 66,487 | ||||||
Costs of Revenues: | ||||||||
Cost of service fee revenue | 35,997 | 36,492 | ||||||
Cost of product revenue | — | 2,951 | ||||||
Cost of pass-through revenue | 21,652 | 17,759 | ||||||
Total costs of revenues | 57,649 | 57,202 | ||||||
Gross profit | 11,615 | 9,285 | ||||||
Selling, general and administrative expenses | 12,532 | 16,428 | ||||||
Loss from operations | (917 | ) | (7,143 | ) | ||||
Interest (income) expense, net | (78 | ) | 6 | |||||
Loss before income taxes | (839 | ) | (7,149 | ) | ||||
Income tax expense, net | 645 | 318 | ||||||
Net loss | $ | (1,484 | ) | $ | (7,467 | ) | ||
Loss per share: | ||||||||
Basic | $ | (0.06 | ) | $ | (0.33 | ) | ||
Diluted | $ | (0.06 | ) | $ | (0.33 | ) | ||
Weighted average number of shares outstanding: | ||||||||
Basic | 23,079 | 22,445 | ||||||
Diluted | 23,079 | 22,445 | ||||||
EBITDA | $ | 1,134 | $ | (5,188 | ) | |||
Adjusted EBITDA | $ | 2,956 | $ | (371 | ) | |||
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Unaudited Reconciliation of Certain Non-GAAP Items to GAAP | ||||||||
(In Thousands) | ||||||||
Three Months Ended |
||||||||
2023 | 2022 | |||||||
Net loss | $ | (1,484 | ) | $ | (7,467 | ) | ||
Income tax expense, net | 645 | 318 | ||||||
Interest (income) expense, net | (78 | ) | 6 | |||||
Depreciation and amortization | 2,051 | 1,955 | ||||||
EBITDA | 1,134 | (5,188 | ) | |||||
Stock-based compensation | 1,004 | 739 | ||||||
Restructuring and other costs | 818 | 4,078 | ||||||
Adjusted EBITDA | $ | 2,956 | $ | (371 | ) |
Three Months Ended |
||||||||
2023 | 2022 | |||||||
Net loss | $ | (1,484 | ) | $ | (7,467 | ) | ||
Stock-based compensation | 1,004 | 739 | ||||||
Restructuring and other costs | 818 | 4,078 | ||||||
Non-GAAP net income (loss) | $ | 338 | $ | (2,650 | ) |
![](https://ml.globenewswire.com/media/YzI2ZjhmZmMtMTY2Mi00Y2RlLTllNGMtYjM5NmUxODBmMTNhLTEwMTUzOTY=/tiny/Priority-Fulfillment-Services-.png)
Source: PFSweb, Inc.