4 Aug 2014

Borderfree Reports Record Second Quarter 2014 Financial Results

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"We closed a strong quarter, growing our ecommerce revenue 34% while making significant improvements in our logistics cost structure that will further accelerate our business in the second half of the year," said Michael DeSimone, Chief Executive Officer of Borderfree. "In addition, we have made excellent progress across all of our strategic growth initiatives and have begun to engage retailers in the EU who are interested in expanding their business globally."

Key Metrics


Three Months EndedSix Months Ended
June 30,June 30,
2014201320142013
(Dollars in Thousands)(Dollars in Thousands)Gross Merchandise Volume$136,261$102,956$249,208$195,331Number of Customers95839583Number of Customer Ecommerce Sites164143164143

Revenue

Revenue for the second quarter of 2014 was $31.0 million, a 21% increase as compared to $25.6 million in the second quarter of 2013.  

  • Ecommerce services revenue increased 34% to $16.4 million over the second quarter 2013 ecommerce services revenue of $12.3 million.
  • Fulfillment services revenue increased 9% to $14.6 million over the second quarter 2013 fulfillment services revenue of $13.3 million. The Company has been successful in driving down logistics costs, delivering lower costs to the end consumer. As a result, fulfillment services revenue as a percentage of revenue decreased from 52% in the second quarter 2013 to 47% in the second quarter 2014.

Net Income (Loss)

Net loss on a GAAP basis for the second quarter of 2014 was $0.7 million as compared to a net loss of $0.8 million in the second quarter of 2013. Net loss per share on a GAAP basis was $0.02 for the second quarter of 2014, based on 31.4 million weighted-average basic and diluted shares outstanding. This compares to a net loss per share of $0.20 for the second quarter of 2013, based on 4.1 million weighted-average basic and fully diluted shares outstanding.

Non-GAAP net income for the second quarter of 2014 was $0.3 million as compared to a net loss of $0.5 million in the second quarter of 2013. Non-GAAP basic and diluted net income per share was $0.01, based on 31.4 million weighted average basic shares outstanding and 33.9 million weighted average diluted shares outstanding. Non-GAAP net income (loss) excludes stock-based compensation expense, loss on change in fair value of warrants, other income-GSS, and other one-time items.

Adjusted EBITDA

Adjusted EBITDA for the second quarter of 2014 was $1.3 million, compared to $0.1 million in the second quarter of 2013. Adjusted EBITDA as a percentage of revenue for the second quarter of 2014 was 4.3%, compared to 0.6% for the second quarter of 2013.

A description of 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 $102.2 million as of June 30, 2014 as compared to $33.1 million as of June 30, 2013. Borderfree held investments in marketable securities of $18.5 million as of June 30, 2014. Borderfree had no bank debt as of June 30, 2014. 

Borderfree used $4.6 million in cash from operations and invested $3.0 million in purchases of property and equipment and capitalization of internal use software, resulting in negative free cash flow for the six months ended June 30, 2014 of $7.6 million. Borderfree generated positive free cash flow of $5.0 million for the six months ended June 30, 2013.   

Financial Outlook

Borderfree's current financial and operating expectations for the third quarter and full year 2014, as of August 4, 2014, are as follows:

Third Quarter 2014

  • Ecommerce services revenue of $16.6 million to $ 17.0 million
  • Revenue of $ 31.1 million to $ 31.9 million
  • Adjusted EBITDA of $0.6 million to $0.9 million
  • Non-GAAP net loss of $0.4 million to $0.6 million or $0.01 to $0.02 per share
  • Weighted average basic and diluted shares outstanding of 31.5 million
  • Non-cash stock-based compensation expense of approximately $1.0 million

Full Year 2014

  • Ecommerce services revenue of $72.9 million to $73.8 million
  • Revenue of $139.0 million to $141.0 million
  • Adjusted EBITDA of $8.9 million to $9.7 million
  • Non-GAAP net income of $4.6 million to $5.4 million or $0.15 to $0.18 per basic share and $0.14 to $0.16 per diluted share. Weighted average basic shares outstanding of 30.6 million and diluted shares outstanding of 33.3 million, on a pro forma basis, as if all preferred shares converted to common shares outstanding as of January 1, 2013
  • Non-cash stock-based compensation expense of approximately $3.8 million

Earnings Teleconference Information

Borderfree will discuss its second quarter 2014 financial results during a teleconference today, August 4, 2014, 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 # 13587336. The telephone replay will be available from 8:00 PM ET August 4 through August 11, 2014. 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, 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, gain recognized from the sale of the Global Settlements Service, or GSS, business in August 2011, and market based royalties and outsourcing servicing fees earned as a result of the sale of GSS, which we refer to as other income –GSS, 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 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 at http://www.borderfree.com.