Newegg Announces First Half 2021 Financial Results

Reports first half 2021 increases of 39.9% and 33.9% in net sales and gross margin, respectively

LOS ANGELES–(BUSINESS WIRE)–$NEGG #earningsNewegg Commerce, Inc. (NASDAQ: NEGG), a leading tech-focused e-retailer in North America, announced its financial results for the six months ended June 30, 2021.

First Half 2021 vs. First Half 2020 Financial Highlights (unaudited)

  • Net sales increased 39.9% to $1,206.9 million from $862.7 million
  • Gross profit increased 33.9% to $166.9 million from $124.6 million
  • Net income increased 14.0% to $21.6 million (or $0.05 per diluted share) compared to net income of $18.9 million (or $0.05 per diluted share)

Operational Highlights as of June 30, 2021

  • Unique active customers: 4.2 million
  • Repeat purchases: 32.5%
  • Average value per order: $359

Newegg’s CEO, Anthony Chow noted, “Over the last two years, we focused on innovation and growth-oriented initiatives to position Newegg for success in the years ahead. As a result, we diversified our revenue sources and strengthened the company’s business and operational structure. And by optimizing and expanding our vendor relationships, we enhanced our product offering and grew our geographic footprint.”

Mr. Chow added, “Our first half 2021 results were a strong validation of this strategy as we were able to grow our net sales and gross margin by 39.9% and 33.9%, respectively, as compared to the same period in 2020. We optimized products that were in high demand and promoted high-margin services. We refined Newegg’s product selection, improved relationships with suppliers by establishing a “quarterly strategic partnership execution program” (“QSPEP”) and shared market intelligence data with our vendors to help them make strategic decisions in providing the right products, to the right customers, at the right time. We also invested in new technologies to improve customer experience, order fulfillment and delivery times. Additionally, we made significant investments to expand our global infrastructure with the opening of our 43,000 sq. ft. warehouse in the Yangshan Free Trade Zone in Shanghai earlier this year. This warehouse acts as a freight collection and fulfillment center for our marketplace vendors and third-party logistics clients from which we transport merchandise to North America by freight and air. As a result of these additional expenses, our income from operations and net income increased by 26.9% and 14.0%, respectively.”

Mr. Chow concluded, “Today, due to the successful execution of our strategy, Newegg is a much stronger organization and well positioned to take advantage of several growth opportunities, create additional revenue sources, improve margins, expand our geographic footprint and provide higher returns to our shareholders.”

Operational Highlights by Revenue Stream

Direct sales business: Part of our strategy was to execute our QSPEP program designed to help us gain market share. We focused on establishing a strict validation process in selecting our suppliers and making sure that our end-customers were paying the best price for high-quality products purchased through our platform, supported by superb customer service.

Marketplace business: Through the Global Seller initiative, we recruited quality APAC sellers, specifically from China, into our platform and thus substantially broadened our product offerings. Newegg worked aggressively to build a platform that charges competitive, and at times, the lowest commission to vendors.

Newegg Partner Services (“NPS”) business: We recently launched several new services designed to support our vendor partners by providing them with the necessary resources to improve operations and logistics, marketing and advertising, customer service and finance, all aiming to help them increase sales and customer reach.

About Newegg Commerce, Inc.

Newegg Commerce, Inc., headquartered in the City of Industry, California, is a leading tech-focused e-retailer in North America and serves a global customer base throughout Europe, Asia Pacific, Latin America and the Middle East. Founded in 2001, the company offers direct sales and an online marketplace platform for PC and IT hardware, consumer electronics, automotive, gaming products and finished goods. Newegg also offers an extensive portfolio of technology, marketing, logistics and other partner services to help companies grow their business. For more information, please visit https://www.newegg.com/.

Forward-Looking Statements

This news release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations, opinion, belief or forecasts of future events and performance. A statement identified by the use of forward-looking words including “will,” “may,” “expects,” “projects,” “anticipates,” “plans,” “believes,” “estimate,” “should,” and certain of the other foregoing statements may be deemed forward-looking statements. Although Newegg believes that the expectations reflected in such forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to be materially different from those suggested or described in this news release. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from those projected. The forward-looking statements in this press release are made as of the date hereof. The Company takes no obligation to update or correct its own forward-looking statements, except as required by law, or those prepared by third parties that are not paid for by the Company. The Company’s SEC filings are available at http://www.sec.gov.

 

NEWEGG COMMERCE, INC.

Consolidated Statements of Income

(In thousands, except per share data) (Unaudited)

 

Six Months Ended

June 30,

 

2021

2020

Net sales

$

1,206,872

 

$

862,700

 

Cost of sales

 

1,039,946

 

 

738,122

 

Gross profit

 

166,926

 

 

124,578

 

Other operating income

 

 

 

264

Selling, general, and administrative expenses

 

144,463

 

 

107,138

 

Income from operations

 

22,463

 

17,704

Interest income

 

567

 

 

590

 

Interest expense

 

(312

)

 

(378

)

Other income, net

 

495

 

 

2,790

 

Gain from disposal of subsidiary

 

2,043

 

 

 

Change in fair value of warrants liabilities

 

(1,270)

 

 

 

Income before provision for income taxes

 

23,986

 

 

20,706

 

Provision for income taxes

2,395

1,767

Net income

$

21,591

 

$

18,939

 

Basic earnings per share

$

0.06

$

0.05

Diluted earnings per share

$

0.05

$

0.05

Weighted average shares used in computation of earnings per share:

 

 

 

 

 

 

Basic

 

364,493

 

 

363,326

 

Diluted

 

425,542

 

 

379,901

 

NEWEGG COMMERCE, INC.

Consolidated Balance Sheets

(In thousands, except par value) (Unaudited)

 

 

June 30,

2021

December 31,

2020

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

124,526

 

$

156,635

 

Restricted cash

 

4,777

 

 

1,111

 

Accounts receivable, net

 

41,510

 

 

66,465

 

Inventories

 

207,373

 

 

182,056

 

Income taxes receivable

 

2,509

 

 

2,510

 

Prepaid expenses and other current assets

 

19,080

 

 

19,834

 

Total current assets

 

399,775

 

 

428,611

 

 

 

 

 

 

 

 

Property and equipment, net

 

47,306

 

 

46,466

 

Noncurrent deferred tax assets

 

680

 

 

669

 

Equity investment

 

9,655

 

 

9,655

 

Investment at cost

 

15,000

 

 

15,000

 

Right of use assets

 

42,368

 

 

46,557

 

Other noncurrent assets

 

10,825

 

 

10,510

 

Total assets

$

525,609

 

$

557,468

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

202,095

 

$

241,502

 

Accrued liabilities

 

72,300

 

 

83,939

 

Deferred revenue

 

33,482

 

 

47,398

 

Line of credit

 

6,148

 

 

5,276

 

Current portion of long-term debt

 

289

 

 

281

 

Lease liabilities – current

 

8,989

 

 

9,695

 

Total current liabilities

 

323,303

 

 

388,091

 

 

 

 

 

 

 

 

Long-term debt, less current portion

 

1,982

 

 

2,088

 

Income taxes payable

 

696

 

 

696

 

Lease liabilities – noncurrent

 

35,974

 

 

39,043

 

Warrants liabilities

 

2,422

 

 

 

Other liabilities

 

53

 

 

53

 

Total liabilities

 

364,430

 

 

429,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common Stock, $0.021848 par value; unlimited shares authorized as of June 30, 2021 and December 31, 2020; 368,299 and 363,326 shares issued and outstanding as of June 30, 2021 and December 31, 2020

 

8,047

 

 

7,938

 

Additional paid-in capital

 

192,658

 

 

182,230

 

Notes receivable

 

(15,189

)

 

(15,186

)

Accumulated other comprehensive income

 

4,614

 

 

3,057

 

Accumulated deficit

 

(28,951

)

 

(50,542

)

Total equity

 

161,179

 

 

127,497

 

Total liabilities and equity

$

525,609

 

$

557,468

 

 

Contacts

FOR MORE INFORMATION, CONTACT:

Public Relations:

John Snedigar

Faultline Communications

[email protected]
408-705-7518

Investor Relations:

Lena Cati

The Equity Group Inc.

212-836-9611

[email protected]

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