17 Feb 2015

Borderfree Reports Record Fourth Quarter and Year End 2014 Financial Results

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  • Gross merchandise volume reached a fourth quarter record of $167.0 million, a 7% increase from prior year; 2014 gross merchandise volume increased 22% year-over-year to a record $546.7 million
  • Ecommerce services revenue reached a fourth quarter record of $20.1 million, a 10% increase from prior year; 2014 ecommerce services revenue increased 23% year-over-year to a record $65.7 million
  • Total revenue reached a fourth quarter record of $36.7 million; 2014 total revenue increased 14% year-over-year to a record $125.5 million
  • Successfully reduced fourth quarter and full year logistics costs by 24% and 17%, respectively
  • Fourth quarter and full year Adjusted EBITDA of $3.5 million and a record $5.8 million, respectively
  • Successfully completed the $22.0 million acquisition of DutyCalculator in January 2015

Borderfree (Nasdaq:BRDR), a market leader in global ecommerce, today announced financial results for the fourth quarter and year ended December 31, 2014.

"We had a record year. Despite facing FX headwinds, both gross merchandise volume and ecommerce revenue reached quarterly record levels throughout the year," said Michael DeSimone, Chief Executive Officer of Borderfree. "We continue to execute against our growth objectives and have made excellent progress in enhancing our technology platform, reducing logistics costs to their lowest level yet, and laying the groundwork to diversify our revenue base. With the recent acquisition of DutyCalculator, we are accelerating our strategy to expand our presence in the European global ecommerce space, and extending our business into cross-border data and transaction services to better serve customers around the world."

Key Metrics*

  Three Months Ended Years Ended
  December 31, December 31,
  2014 2013 2014 2013
  (Dollars in thousands)
Gross merchandise volume $ 167,027 $ 155,809 $ 546,734 $ 447,836
Number of customers 96 91 96 91
Number of customer ecommerce sites 171 158 171 158
 
*Only gross merchandise volume and customer ecommerce site metrics will be presented beginning with the three months ended March 31, 2015.

Revenue

Revenue for the fourth quarter of 2014 was $36.7 million, a 2% increase as compared to $35.9 million in the fourth quarter of 2013.

  • Ecommerce services revenue increased 10% to $20.1 million over the fourth quarter of 2013 ecommerce services revenue of $18.2 million. For the full year 2014, ecommerce services revenue increased 23% to $65.7 million from $53.3 million in 2013.
  • Fulfillment services revenue decreased 6% to $16.6 million over the fourth quarter of 2013 fulfillment services revenue of $17.7 million. For the full year 2014, fulfillment services revenue increased 4% to $59.7 million from $57.2 million in 2013.
  • The Company has been successful in optimizing its logistics program resulting in lower shipping and handling costs passed through to the end consumer. As a result, fulfillment services revenue as a percentage of revenue decreased from 49.4% in the fourth quarter of 2013 to 45.3% in the fourth quarter of 2014 and decreased from 51.8% for the full year 2013 to 47.6% for the full year 2014.

Net Income (Loss)

Net income on a GAAP basis for the fourth quarter of 2014 was $0.5 million as compared to net income of $1.8 million in the fourth quarter of 2013. Basic net income per share on a GAAP basis was $0.02 based on 31.9 million weighted average basic shares outstanding and diluted net income per share was $0.01 based on 33.5 million weighted average diluted shares outstanding for the fourth quarter of 2014. This compares to basic net income per share of $0.39 based on 4.6 million weighted average basic shares outstanding and diluted net income per share of $0.25 based on 7.1 million diluted shares outstanding for the fourth quarter of 2013. On a pro forma basis, as if all preferred shares converted to common shares outstanding as of January 1, 2013, GAAP basic net income per share was $0.07 based on 25.5 million weighted average shares outstanding and diluted net income per share was $0.06 based on 28.2 million weighted average diluted shares outstanding for the fourth quarter of 2013.

Net loss on a GAAP basis for the full year 2014 was $3.1 million as compared to a net loss of $0.7 million in 2013. Net loss per share on a GAAP basis was $0.12 for the full year 2014 based on 25.8 million weighted average basic and diluted shares outstanding. This compares to a net loss per share on a GAAP basis of $0.15 for the full year 2013 based on 4.3 million weighted average basic and diluted shares outstanding. On a pro forma basis, as if all preferred shares converted to common shares outstanding as of January 1, 2013, GAAP basic and diluted net loss per share for the full year 2014 were $0.10 based on 30.3 million weighted average basic and diluted shares outstanding.

Non-GAAP net income for the fourth quarter of 2014 was $2.0 million as compared to non-GAAP net income of $2.6 million in the fourth quarter of 2013. Non-GAAP basic and diluted net income per share was $0.06, based on 31.9 million and 33.5 million weighted average basic and diluted shares outstanding, respectively. On a pro forma basis, as if all preferred shares converted to common shares outstanding as of January 1, 2013, non-GAAP pro forma basic net income per share was $0.10 based on 25.4 million weighted average basic shares outstanding and diluted net income per share was $0.09 based on 28.2 million weighted average diluted shares outstanding for the fourth quarter of 2013.

Non-GAAP net income for the full year 2014 was $1.4 million as compared to non-GAAP net income of $0.9 million for the full year 2013. Non-GAAP basic and diluted net income per share was $0.05 for the full year 2014 based on 25.8 million and 27.8 million weighted average basic and diluted shares outstanding, respectively. On a pro forma basis, as if all preferred shares converted to common shares outstanding as of January 1, 2013, non-GAAP pro forma basic net income per share for the full year 2014 was $0.05 based on 30.3 million weighted average shares outstanding and diluted net income per share was $0.04 based on 32.4 million weighted average diluted shares outstanding.

Adjusted EBITDA

Adjusted EBITDA for the fourth quarter of 2014 was $3.5 million compared to $3.5 million in the fourth quarter of 2013. Adjusted EBITDA for the full year 2014 was $5.8 million compared to $3.5 million in 2013. Adjusted EBITDA as a percentage of revenue for the fourth quarter of 2014 was 9.5% compared to 9.6% for the fourth quarter of 2013. Adjusted EBITDA as a percentage of revenue for the full year 2014 was 4.7% compared to 3.1% in 2013.

A description of non-GAAP net income (loss), adjusted EBITDA and other non-GAAP calculations and reconciliation to comparable GAAP measures is provided in the financial statement tables included at the end of this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures".

Cash

Borderfree's cash balance was $99.2 million as of December 31, 2014 as compared to $43.6 million as of December 31, 2013. Borderfree held investments in marketable securities of $27.6 million as of December 31, 2014. Borderfree did not hold investments in marketable securities as of December 31, 2013. Borderfree had no bank debt as of December 31, 2014.

For the fourth quarter of 2014 Borderfree generated $5.5 million in cash from operations and invested $1.3 million in purchases of property and equipment and capitalization of internal use software, resulting in positive free cash flow of $4.2 million. For the full year, Borderfree generated $4.5 million in cash from operations and invested $6.1 million in purchases of property and equipment and capitalization of internal use software, resulting in negative free cash flow for the year ended December 31, 2014 of $1.6 million. Borderfree generated positive free cash flow of $16.3 million for the year ended December 31, 2013 due in large part to one-time increases in cash associated with changes in credit terms with a payment processor and improved payment terms with certain large merchants operating on our platform.

On January 26, 2015, subsequent to year-end, the Company utilized $22.0 million of its available cash to purchase Bundle Tech Limited, the operator of DutyCalculator, a provider of cloud-based global trade and customs compliance data services.

Financial Outlook

Borderfree's current financial and operating expectations for the first quarter and full year 2015, as of February 17, 2015, are as follows:

First Quarter 2015

  • Ecommerce services revenue of $11.4 million to $12.7 million
  • Revenue of $21.7 million to $24.2 million
  • Adjusted EBITDA loss of $3.4 million to $2.5 million
  • Non-GAAP net loss of $4.7 million to net loss of $3.8 million or net loss of $0.15 to net loss of $0.12 per basic and diluted share
  • Weighted average basic and diluted shares outstanding of 31.9 million
  • Non-cash stock-based compensation expense of approximately $1.1 million

Full Year 2015

  • Ecommerce services revenue of $66.7 million to $73.3 million
  • Revenue of $125.1 million to $137.4 million
  • Adjusted EBITDA of $4.8 million to $7.0 million
  • Non-GAAP net loss of $1.3 million to net income of $1.0 million or net loss of $0.04 per basic and diluted share to net income of $0.03 per basic and diluted share
  • Weighted average basic shares outstanding of 32.1 million and diluted shares outstanding of 35.3 million
  • Non-cash stock-based compensation expense of approximately $5.3 million

Earnings Teleconference Information

Borderfree will discuss its fourth quarter and year ended 2014 financial results during a teleconference today, February 17, 2015, at 5:00 PM ET. The conference call can be accessed at (877) 407-4018 or (201) 689-8471 (outside the US). The call will also be broadcast simultaneously at http://investors.borderfree.com.

Following completion of the call, a recorded replay of the webcast will be available on Borderfree's website for a limited time. To listen to the telephone replay, call toll-free (877) 870-5176 or (858) 384-5517 (outside the US), replay pin #13593454. The telephone replay will be available from 8:00 PM ET February 17 through 11:59 PM ET February 24, 2015. Additional investor information can be accessed at http://www.borderfree.com.

Non-GAAP Financial Measures

Borderfree has provided in this release financial information that has not been prepared in accordance with GAAP. Borderfree uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Borderfree's ongoing operational performance. Borderfree believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Borderfree's industry, many of which present similar non-GAAP financial measures to investors. This information includes, adjusted EBITDA as a percentage of revenue, non-GAAP net income (loss) and non-GAAP net income (loss) per share, pro forma non-GAAP net income (loss) per share, and free cash flow. Borderfree defines adjusted EBITDA as net income (loss) before income taxes, interest income (expense), depreciation and amortization, loss on change in fair value of warrants, stock-based compensation expense, market based royalties and outsourcing servicing fees earned as a result of the sale of Global Settlements Service, which we refer to as other income-GSS, costs related to acquisitions and other one-time items; non-GAAP net income (loss) as net income (loss) excluding non-cash stock-based compensation, loss on change in fair value of warrants, other income-GSS, costs related to acquisitions and other one-time items; and free cash flow as cash provided by (used in) operating activities adjusted for purchases of property and equipment and capitalized internal use software. Non-GAAP financial measures that Borderfree uses may differ from measures that other companies may use. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included as part of this press release. Earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of the Company's web site athttp://www.borderfree.com.