ALLEN, TX — (Marketwired) — 08/10/15 — PFSweb, Inc. (NASDAQ: PFSW), a global provider of end-to-end eCommerce solutions, reported results for the second quarter ended June 30, 2015.
Service fee equivalent revenue (a non-GAAP measure defined below) increased 40% to a Q2 record $39.8 million
Service fee gross margin increased 180 basis points to 31.8%
Adjusted EBITDA (a non-GAAP measure defined below) increased 138% to a Q2 record $4.1 million
“We are pleased to once again report record quarterly results,” said Michael Willoughby, CEO of PFSweb. “These results reflect continued strong execution for our new and existing clients. In addition, our service fee equivalent revenue and Adjusted EBITDA again benefitted from higher margin incremental project activity in our digital agency and technology services businesses. Our second quarter was also highlighted by the acquisition of MODA, which expands our offerings into the U.K. and adds integration capabilities with the Magento software platform. We believe our continuous execution, high level of client referenceability, and expansion of agency and technology service offerings are validating our position as a leader among full-service eCommerce providers.
“As recently announced, the breadth of our agency and technology service offering has been further enhanced through our acquisition of CrossView in August. Through combining CrossView–s IBM WebSphere and SAP hybris related capabilities with our Demandware, Oracle Commerce and Magento experience, we believe we are now the only provider of end-to-end eCommerce solutions in the marketplace supporting all five major eCommerce software platforms. CrossView also provides us with a robust B2B front-end commerce platform which, we believe, when combined with our strong B2B order fulfillment, customer care and financial services capabilities, creates a unique B2B offering. By providing complete platform choice and a strong B2B full-service solution, we believe we will be able to target an even larger addressable market. As a result, we plan to further ramp our sales and marketing efforts to capitalize on the newly added capabilities and the cross sell opportunities from the CrossView acquisition.”
As announced in the company–s CrossView acquisition press release dated August 3, 2015, PFSweb has increased its 2015 service fee equivalent revenue guidance to range between $175 million and $185 million, up from $160 million to $170 million. This reflects growth of 26% to 33% from 2014. The company has also increased its adjusted EBITDA target to range between $18 million to $20 million, up from $16 million to $18 million. This reflects growth of 32% to 47% from 2014. This guidance excludes the impact of potential future acquisitions.
The updated guidance is based on the strength of the pre-acquisition PFSweb business and the contribution from the CrossView acquisition. The new service fee equivalent revenue and adjusted EBITDA guidance also reflects the expectation that CrossView revenues will be seasonally lower in the last quarter compared to the first three quarters, which is typical of commerce system integrators. The new guidance also includes the impact from increased sales and marketing expenses in the remainder of 2015, as well as expenses related to preparation for the 2015 holiday season.
Total revenues in the second quarter of 2015 increased 17% to $63.2 million compared to $54.0 million in the same period of 2014. Service fee revenue in the second quarter of 2015 increased 43% to $39.1 million compared to $27.4 million last year. Product revenue was $13.7 million compared to $18.1 million in the same period of 2014 due to ongoing restructuring activities by the company–s largest client in this segment.
Service fee equivalent revenue in the second quarter of 2015 increased 40% to a second quarter record $39.8 million compared to $28.5 million in the same period of 2014.
Service fee gross margin in the second quarter increased 180 basis points to 31.8% compared to 30.0% in the same period of 2014. The 2015 quarter included a higher proportion of professional and technology services, including the impact from our acquisitions of Rev Solutions and LiveAreaLabs and certain incremental projects.
Adjusted EBITDA increased 138% to a second quarter record $4.1 million in of 2015 compared to $1.7 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 430 basis points to 10.3% compared to 6.0% in the year-ago quarter.
Net loss in the second quarter was $1.9 million or $(0.11) per diluted share, compared to a net loss of $2.4 million or $(0.14) per diluted share in the same period of 2014. Net loss in the second quarter of 2015 included $1.2 million in stock-based compensation expense and $1.1 million in acquisition related and restructuring costs. This compares to $0.9 million in stock-based compensation expense and $0.2 million in acquisition related and restructuring costs in the same period of 2014.
Non-GAAP net income (a non-GAAP measure defined below) in the second quarter of 2015 was $0.6 million or $0.03 per diluted share, compared to non-GAAP net loss of $1.4 million or $(0.08) per diluted share in the second quarter of 2014.
At June 30, 2015, cash and cash equivalents was $15.7 million compared to $18.1 million at December 31, 2014. Total debt decreased to $9.5 million from $10.9 million at December 31, 2014.
Total revenues in the first six months of 2015 increased 14% to $127.0 million compared to $111.3 million in the same period of 2014. Service fee revenue in the first six months of 2015 increased 38% to $75.8 million compared to $55.0 million last year. Product revenue was $30.3 million compared to $39.8 million in the same period of 2014.
Service fee equivalent revenue in the first six months of 2015 increased 35% to $77.5 million compared to $57.3 million in the same period of 2014.
Service fee gross margin in the first six months of 2015 increased 140 basis points to 31.6% compared to 30.2% in the same period of 2014.
Adjusted EBITDA increased 97% to $7.8 million in the first six months of 2015 compared to $4.0 million in the same period of 2014. As a percentage of service fee equivalent revenue, adjusted EBITDA increased 320 basis points to 10.1% compared to 6.9% in the year-ago period.
Net loss in the first six months of 2015 was $3.6 million or $(0.21) per diluted share, compared to a net loss of $4.2 million or $(0.25) per diluted share in the same period of 2014. Net loss in the first six months of 2015 included $2.0 million in stock-based compensation expense and $1.9 million in acquisition related and restructuring costs. This compares to $1.7 million in stock-based compensation expense and $0.2 million in acquisition related and restructuring costs in the same period of 2014.
Non-GAAP net income in the first six months of 2015 was $0.7 million or $0.04 per diluted share, compared to non-GAAP net loss of $2.4 million or $(0.14) per diluted share in the same period of 2014.
PFSweb will conduct a conference call today at 4:30 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2015.
The company–s CEO Mike Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.
Date: Monday, August 10, 2015
Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)
Toll-free dial-in number: 1-888-539-3678
International dial-in number: 1-719-325-2454
Conference ID: 8118507
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
The conference call will be broadcast live and available for replay at and via the investor relations section of the company–s website at .
A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through August 24, 2015.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 8118507
PFSweb (NASDAQ: PFSW) is a global provider of end-to-end eCommerce solutions including digital agency and marketing services, technology development services, business process outsourcing services and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFSweb supports organizations across various industries, including Procter & Gamble, L–Oreal, LEGO, Columbia Sportswear, Ricoh, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Ohio, North Carolina, Canada, Belgium, London, Munich and India. For more information, please visit or download the free PFSweb IR App on your or device.
This news release may contain certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and service fee equivalent revenue.
Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, acquisition related costs and restructuring and other charges.
EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, acquisition related costs and restructuring and other charges.
Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue.
Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue 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, acquisition related costs and restructuring and other charges and EBITDA and adjusted EBITDA further eliminate the effect of financing, income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.
PFSweb 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.
The matters discussed herein consist of 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. PFSweb–s Annual Report on Form 10-K for the year ended December 31, 2014 identifies 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 Annual Report of the Company and the Risk Factors described therein. PFSweb 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.
Michael C. Willoughby
Chief Executive Officer
or
Thomas J. Madden
Chief Financial Officer
Tel 972-881-2900
Liolios Group Inc.
Scott Liolios or Sean Mansouri
Tel 949-574-3860
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