Newegg Commerce, Inc. (NASDAQ: NEGG), a leading global technology e-commerce retailer, today announced results for the nine months ended September 30, 2023, and revised guidance for the year ending December 31, 2023.
“While we continued to experience lower-than-expected results in the third quarter due to challenging macroeconomic conditions and declining consumer demand, I am excited to share the launch of several new initiatives underway, including the development of new sales channels through Walmart.com and TikTok Shop, our renewed focus on systems and finished good categories, and the expansion of our U.S. marketplace efforts,” said Newegg CEO Anthony Chow. “I am also proud of our continued progress in streamlining operations, an example of which includes our implementation of Geek+ autonomous robots to enhance warehouse operational efficiency. Further, we are beginning to see some positive momentum for Black Friday, Cyber Monday and holiday shopping during the fourth quarter, which we hope to carry into the new year.”
“Finally, I am pleased to have announced our inaugural $10.0 million share repurchase program last month, which we intend to use opportunistically to enhance shareholder value.”
Newegg Chief Accounting Officer Christina Ching added, “We have started to see some moderation in the rate of decline in our business in the second half as a result of momentum from our Black Friday and Cyber Monday sales period.”
“Our team has moved swiftly to realize SG&A savings in response to declining demand this year, and I am pleased with our progress thus far in achieving substantial year-over-year savings. As a result of various one-time reduction expenses, we expect to see the full benefit of these initiatives in 2024. Separately, our full year projections were negatively impacted by a combination of external factors, including one-time product shortages and delayed product launch cycles, particularly in the GPU category.”
“We remain keenly focused on maintaining healthy inventory turnover and a strong cash position. Our current average inventory turnover is 40 days, and we have reduced total inventory levels from $156 million, as of December 31, 2022, to $142 million as of September 30, 2023. Furthermore, as of September 30, 2023, we had $54 million in cash on hand and no outstanding balance under our revolving credit facility.”
2023 Q3 Financial Highlights
- Net sales decreased 16.0% to $1,040.8 million for the nine months ended September 30, 2023, compared to $1,239.7 million for the nine months ended September 30, 2022.
- GMV (defined below) decreased 20.2% to $1,265.0 million for the nine months ended September 30, 2023, compared to $1,585.0 million for the nine months ended September 30, 2022.
- Gross profit decreased 24.7% to $118.1 million for the nine months ended September 30, 2023, compared to $156.9 million for the nine months ended September 30, 2022.
- Net loss was $44.0 million for the nine months ended September 30, 2023, compared to $27.4 million for the nine months ended September 30, 2022.
- Adjusted EBITDA (defined below) decreased to $(17.0) million for the nine months ended September 30, 2023, compared to $(4.5) million for the nine months ended September 30, 2022.
2023 Updated Full Year Guidance
The Company currently expects to achieve the following financial performance for the current year ending December 31, 2023:
- Net sales to be between $1.42 billion and $1.47 billion.
- GMV to be between $1.78 billion and $1.83 billion.
- Gross profit to be between $160.0 million and $165.0 million.
- Net loss to be between $56.0 million and $60.0 million.
- Adjusted EBITDA to be between $(21.0) million and $(25.0) million.
Mr. Chow added, “We remain optimistic about the future of the business. We continue to innovate in important areas, such as social media and social sharing. As a key partner of TikTok Shop, we have substantially enhanced our social media presence and reach within the key Gen Z demographic. We also launched an innovative social sharing sales channel, Group Buy, in November. Group Buy is our daily deal offer that requires a minimum number of customers to register online each day in order to unlock an attractive deal. Group Buy is designed to encourage customers to share daily deals through social media in order to generate group excitement and attract additional traffic to our site. We believe these types of forward-looking initiatives continue to set Newegg apart in the e-commerce market.”
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