Newegg Commerce Announces First Half 2022 Results and Third Quarter 2022 Guidance
CITY OF INDUSTRY, Calif.–(BUSINESS WIRE)–Newegg Commerce, Inc. (NASDAQ:NEGG), one of the world’s leading technology e-commerce retailers, today announced its guidance for the quarter ending September 30, 2022, following its results from first half of 2022 published on August 30, 2022.
Newegg CEO Anthony Chow said:As with many others in our industry, our performance for the first half of 2022 was impacted by several factors beyond our control, including macroeconomic conditions, higher inflation and a weak selling environment due to changes in behavior customer purchases.
Newegg’s Chief Financial Officer, Robert Chang, said:These challenges and the oversupply of inventory from our vendors negatively impacted our net sales and gross margin. As a result, we reported net sales of $890.5 million in the first half of 2022, gross profit of $110.8 million, net loss of $18.9 million and adjusted EBITDA.[Note 1] of (4.0) million dollars. For the third quarter of the year, we expect net sales between $358.8 million and $383.3 million, gross profit between $42.0 million and $45.0 million, net loss between $10.1 million and $8.5 million and adjusted EBITDA[Note 2] between (1.7) million dollars and 0.1 million dollars.
Mr Chow added: “Through our continued investment in cutting-edge technologies to improve the customer experience, new product launches across multiple categories, and our constant focus on delivering high-quality products to our customers, we have laid the foundation strong for our financial and operational performance. Additionally, we have taken steps to optimize our operations and reduce our overhead in the future.
Newegg’s business plan foresees the launch of several programs, including:
- Black Friday Deals (launching earlier than usual this year) as well as Black Friday Price Protection Program ahead of an early holiday shopping season: The promotion offers price protection on select Black Friday deals to reward shoppers by automatically refunding the price difference if the price of purchased products drops.
- FantasTech Round 2 in October with Black Friday-like deals focused on PC components, computer systems, entertainment, and other tech-related products.
Other new products and services such as:
JustGPU.com, an e-commerce and research site dedicated entirely to graphics cards to help customers determine the best GPU choices for their gaming PC builds or upgrades.
A variety of deals for gamers, CPUs, GPUs, motherboards, cases, power supplies and other gaming peripherals as part of the annual Gametober in October.
Other major product launches in core components that gamers and tinkerers have been waiting for.
Further expansion of its Newegg Live platform targeting loyal customers who seek exclusive sales and live interaction with hosts across all streaming platforms to purchase high-demand tech products.
Mr. Chow concluded: “Newegg continues to execute its business strategy, which is designed to meet current global market challenges and help the company gain market share. Our goal is to continue to provide a superb shopping experience for our customers, to develop and maintain effective, long-term working relationships with our vendors and suppliers, and to deliver better returns to our shareholders.
[Note 1] Newegg calculates H1 2022 Adjusted EBITDA as a net loss, excluding stock-based compensation expense of $16.1 million, amortization expense of $5.0 million, interest and other income, net of $73,000, income tax benefit of $3.7 million, gain on warrant liability of $0.7 million and a gain of $1.7 million on the sale of a equity-accounted investment.
Newegg believes that the exclusion of these non-recurring and/or non-cash expense items from Adjusted EBITDA facilitates period-to-period operating performance comparisons and excludes items that Newegg does not consider indicative of its basic operational performance. Accordingly, Newegg believes that Adjusted EBITDA provides useful information for investors and others to understand and evaluate its results of operations. Adjusted EBITDA is reviewed regularly by Newegg’s management and Board of Directors as a regular measure of financial performance.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analyzing Newegg’s results as reported under GAAP. For example, depreciation and amortization are non-cash charges, but depreciated assets may need to be replaced in the future, resulting in cash capital expenditures. Adjusted EBITDA also does not reflect changes in working capital requirements or cash requirements for working capital requirements. Adjusted EBITDA also does not take into account the potentially dilutive impact of stock-based compensation or reflect tax payments that may represent a reduction in cash available to Newegg. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Due to these limitations, you should consider Adjusted EBITDA alongside other measures of financial performance, including various cash flow measures, operating profit and other Newegg GAAP results.
[Note 2] Adjusted EBITDA for the third quarter of 2022 excludes stock-based compensation expense of approximately $7.6 million, amortization expense of approximately $2.9 million, interest and other net income from approximately $93,000, an income tax benefit of between $2.0 million and $1.8 million, and assumes that there is no gain (loss) on the warrant liability. subscription.
Newegg Commerce, Inc. (NASDAQ: NEGG), founded in 2001 and headquartered in Industry City, California, near Los Angeles, is a leading global online retailer of computer hardware, large electronics audience, gaming peripherals, home appliances, automotive and lifestyle technology. Newegg meets the e-commerce needs of businesses with marketing, supply chain and technical solutions in a single platform. For more information: Newegg.com.
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This press release contains “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, opinions, beliefs or forecasts regarding future events and performance. A statement identified by the use of forward-looking words, including “will”, “may”, “expect”, “project”, “anticipate”, “plan”, “believe”, “estimate”, “should and certain of the other foregoing statements may be considered forward-looking statements. Although Newegg believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to differ materially from those suggested or described in this press release. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected. The forward-looking statements contained in this press release are made as of the date hereof. The Company undertakes no obligation to update or correct its own forward-looking statements, except as required by law, or those prepared by third parties who are not paid by the Company. The documents filed with the SEC by the Company are available at http://www.sec.gov.