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| 8-K - FORM 8-K - Geeknet, Inc | a8kgknt20131231.htm |
Exhibit 99.1
Geeknet Announces Fourth Quarter and Full Year 2013 Financial Results
Revenue increases 12% in the 4th quarter to $74 million, and 16% for the year to $138 million
FAIRFAX, Va., February 21, 2014 /PRNewswire/ -- Geeknet, Inc. (Nasdaq: GKNT), the parent company of online retailer ThinkGeek.com, today announced financial results for the quarter and year ended December 31, 2013.
Total revenue for the fourth quarter of 2013 was $74.3 million, an increase of 12% from $66.3 million in the fourth quarter of 2012. Net income for the fourth quarter of 2013 was $5.1 million or $0.76 per diluted share compared to net income of $6.1 million or $0.92 per diluted share for the same period a year ago. Excluding income from discontinued operations, net income from continuing operations was $4.7 million in the fourth quarter of 2012, or $0.71 per diluted share. Adjusted EBITDA for the fourth quarter of 2013 was $5.7 million, compared to an adjusted EBITDA of $7.5 million for the same period a year ago.
Revenue for 2013 grew 16% to $138.3 million. Net loss for 2013 was $0.2 million, or $0.04 per diluted share, compared to net income of $13.9 million, or $2.12 per diluted share, for 2012. 2012 net income included income from discontinued operations of $12.1 million and a $4.0 million gain from the sale of our Collabnet investment. Excluding these non-recurring items in 2012, Geeknet had a loss from operations of $2.1 million, compared to a loss from operations of $0.1 million in 2013. Adjusted EBITDA for 2013 was $3.2 million, compared to adjusted EBITDA of $2.9 million for 2012. A reconciliation of net income or loss as reported to adjusted EBITDA is included in this release.
2013 ThinkGeek Highlights:
• | Gross margin increased to 20% vs. 18% in 2012 |
• | Launched over 2000 new items including over 470 exclusive items |
• | Wholesale revenue increased over 200% to $22.4 million |
• | Daily unique visitors were 91 million, an increase of 2% and average order value for orders received increased to $59 compared to $58 in 2012 |
“Overall, we had a solid performance in 2013, ending the year with 16% revenue growth and positive adjusted EBITDA ,” said Katy McCarthy, Chief Executive Officer. “Our Wholesale segment had a breakout year and expanded our reach to new customers with our exclusive products. We also invested this year in our leadership, our website and our infrastructure which should position us to take advantage of future opportunities.”
Supplemental schedules of the Company's quarterly statements of operations and operational statistics are available on the Company's web site at investors.geek.net.
A conference call and audio webcast will be held at 11:00 am ET on February 21, 2014 and may be accessed by calling (877) 348-9353 or (253) 237-1159 outside the U.S., or by visiting investors.geek.net. A dial in replay will be available from 2:00 PM ET February, 21, 2014 until 11:59PM ET February 23, 2014 by calling (855) 859-2056 or (404) 537-3406, with conference ID 81544069.
About Geeknet, Inc.
ThinkGeek, a wholly owned subsidiary of Geeknet, Inc. (NASDAQ: GKNT), is the premier retailer for the global geek community. Since 1999, ThinkGeek has been creating a world where everyone can express their inner geek, embrace their passions, and connect with each other. Our obsession is creating and sharing unique and authentic product experiences that stimulate our fans’ imaginations and fuel their geek core. We believe that there is a geek in everyone and that it should be celebrated. Want to learn more? Check out thinkgeek.com or geek.net.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, we also report adjusted EBITDA. The method we use to calculate adjusted EBITDA is not in accordance with GAAP, is likely to differ from the methods used by other companies for similarly titled measures and 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.
We believe that adjusted EBITDA provides useful information to both management and investors and is an additional measurement which may be used to evaluate our operating performance. Our management and Board of Directors use adjusted EBITDA as part of their reporting and planning process and it is the primary measure we use to evaluate our operating performance. In addition, we have historically reported adjusted EBITDA to the investment community. We also believe that the financial analysts who regularly follow and report on us and the business sector in which we compete use adjusted EBITDA to prepare their financial performance estimates to measure our performance against other sector participants and to project our future financial results.
We define adjusted EBITDA as earnings or loss from continuing operations before gain on sale of non-marketable securities, interest and other expense, income taxes, stock-based compensation and depreciation. Adjusted EBITDA excludes certain expenses that we believe are not directly related to our core operating results. Although some of the items may recur on a regular basis, management does not consider activities associated with these items as core to its operations. With respect to stock-based compensation, we recognize expenses associated with stock-based compensation that require management to make assumptions about our common stock, such as expected future stock price volatility, the anticipated duration of outstanding stock options and awards and the forfeiture rate. While other forms of expenses (such as cash compensation, inventory costs and real estate costs) are reasonably correlated to our underlying business and such costs are incurred principally or wholly in the particular fiscal period being reported, stock-based compensation expense is not reasonably correlated to the particular fiscal period in question, but rather is based on expected future events that have no relationship (and in certain instances, an inverse relationship) with how well we currently operate our business.
NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations, and involve risks and uncertainties. Forward-looking statements contained herein include statements regarding our ability to take advantage of future business opportunities. Actual results may differ materially from those expressed or implied in such forward-
looking statements due to various factors, including: popularity and demand for our retail products; management’s strategy, plans and objectives for future operations; employee relations and our ability to attract and retain highly qualified personnel; our ability to continue to invest in developing and acquiring new products; competition, competitors and our ability to compete; liquidity and capital resources; the outcome of any litigation to which we are a party; our accounting policies; and sufficiency of our cash resources and investments to meet our operating and working capital requirements. Investors should consult our filings with the Securities and Exchange Commission, sec.gov, including the risk factors section of our Annual Report on Form 10-K for the year ended December 31, 2013, for further information regarding these and other risks of our business. All forward-looking statements included in this press release are based upon information available to us as of the date hereof, and we do not assume any obligations to update such statements or the reasons why actual results could differ materially from those projected in such statements.
GKNT-F
GEEKNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Year Ended December 31, | Three Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net revenue | $ | 138,262 | $ | 118,913 | $ | 74,338 | $ | 66,339 | |||||||
Cost of revenue | 111,145 | 97,848 | 59,500 | 52,192 | |||||||||||
Gross margin | 27,117 | 21,065 | 14,838 | 14,147 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 11,888 | 9,184 | 6,130 | 4,095 | |||||||||||
Technology and design | 6,076 | 3,968 | 1,721 | 1,176 | |||||||||||
General and administrative | 9,296 | 10,001 | 1,922 | 2,372 | |||||||||||
Total operating expenses | 27,260 | 23,153 | 9,773 | 7,643 | |||||||||||
(Loss) income from operations | (143 | ) | (2,088 | ) | 5,065 | 6,504 | |||||||||
Gain on sale of non-marketable securities | — | 4,021 | — | — | |||||||||||
Interest and other (expense) income, net | (24 | ) | (122 | ) | 1 | (63 | ) | ||||||||
(Loss) income before income taxes | (167 | ) | 1,811 | 5,066 | 6,441 | ||||||||||
Income tax provision | — | 6 | — | 1,765 | |||||||||||
Net (loss) income from continuing operations | (167 | ) | 1,805 | 5,066 | 4,676 | ||||||||||
(Loss) income from discontinued operations, net of tax | (67 | ) | 12,102 | 3 | 1,380 | ||||||||||
Net (loss) income | $ | (234 | ) | $ | 13,907 | $ | 5,069 | $ | 6,056 | ||||||
(Loss) income per share from continuing operations: | |||||||||||||||
Basic | $ | (0.03 | ) | $ | 0.28 | $ | 0.76 | $ | 0.71 | ||||||
Diluted | $ | (0.03 | ) | $ | 0.28 | $ | 0.76 | $ | 0.71 | ||||||
(Loss) income per share from discontinued operations: | |||||||||||||||
Basic | $ | (0.01 | ) | $ | 1.87 | $ | — | $ | 0.21 | ||||||
Diluted | $ | (0.01 | ) | $ | 1.85 | $ | — | $ | 0.21 | ||||||
Net (loss) income per share: | |||||||||||||||
Basic | $ | (0.04 | ) | $ | 2.15 | $ | 0.76 | $ | 0.92 | ||||||
Diluted | $ | (0.04 | ) | $ | 2.12 | $ | 0.76 | $ | 0.92 | ||||||
Shares used in per share calculations: | |||||||||||||||
Basic | 6,620 | 6,466 | 6,638 | 6,551 | |||||||||||
Diluted | 6,620 | 6,556 | 6,698 | 6,607 | |||||||||||
GEEKNET, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
December 31, 2013 | December 31, 2012 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ 53,084 | $ 57,294 | |||
Accounts receivable, net of allowance of $6 and $14 as of December 31, 2013 and December 31, 2012, respectively | 9,719 | 1,050 | |||
Inventories, net | 20,186 | 16,657 | |||
Prepaid expenses and other current assets | 4,202 | 7,013 | |||
Total current assets | 87,191 | 82,014 | |||
Property and equipment, net | 2,465 | 3,523 | |||
Other long-term assets | 50 | 335 | |||
Total assets | $ 89,706 | $ 85,872 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ 10,250 | $ 10,192 | |||
Deferred revenue | 2,828 | 2,303 | |||
Accrued liabilities and other | 6,661 | 4,265 | |||
Total current liabilities | 19,739 | 16,760 | |||
Other long-term liabilities | — | 29 | |||
Total liabilities | 19,739 | 16,789 | |||
Commitments and Contingencies (Note 4) | |||||
Stockholders’ equity: | |||||
Preferred stock, $0.001 par value; 1,000 shares authorized; no shares issued or outstanding | — | — | |||
Common stock, $0.001 par value; authorized — 25,000; issued — 6,901 and 6,738 shares, as of December 31, 2013 and December 31, 2012, respectively; outstanding — 6,639 and 6,555 shares as of December 31, 2013 and December 31, 2012, respectively | 7 | 7 | |||
Treasury stock, 263 shares at December 31, 2013 and 183 shares at December 31, 2012 | (3,479 | ) | (2,182 | ) | |
Additional paid-in capital | 816,826 | 814,411 | |||
Accumulated other comprehensive income | 16 | 16 | |||
Accumulated deficit | (743,403 | ) | (743,169 | ) | |
Total stockholders’ equity | 69,967 | 69,083 | |||
Total liabilities and stockholders’ equity | $ 89,706 | $ 85,872 | |||
GEEKNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Year Ended December 31, | ||||||||
2013 | 2012 | |||||||
Cash flows from operating activities from continuing operations: | ||||||||
Net (loss) income | $ | (234 | ) | $ | 13,907 | |||
Loss (income) from discontinued operations, net of tax | 67 | (12,102 | ) | |||||
(Loss) income from continuing operations | (167 | ) | 1,805 | |||||
Adjustments to reconcile (loss) income from continuing operations to net cash used in operating activities: | ||||||||
Depreciation | 1,258 | 1,394 | ||||||
Stock-based compensation expense | 2,070 | 3,559 | ||||||
Provision for bad debts | 70 | 38 | ||||||
Change in reserve for excess and obsolete inventory | (15 | ) | 120 | |||||
Gain on sale of non-marketable securities | — | (4,021 | ) | |||||
Loss on sale of assets, net | 16 | 53 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (8,739 | ) | (322 | ) | ||||
Inventories | (3,514 | ) | (7,842 | ) | ||||
Prepaid expenses and other assets | 96 | (1,855 | ) | |||||
Accounts payable | 58 | 4,636 | ||||||
Deferred revenue | 525 | 744 | ||||||
Accrued liabilities and other | 2,396 | 122 | ||||||
Other long-term liabilities | (29 | ) | (314 | ) | ||||
Net cash used in operating activities | (5,975 | ) | (1,883 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (216 | ) | (113 | ) | ||||
Proceeds from sale of non-marketable equity investment | — | 6,000 | ||||||
Proceeds from sale of discontinued operations | 3,000 | 17,000 | ||||||
Transaction costs from sale of discontinued operations | — | (1,100 | ) | |||||
Net cash provided by investing activities | 2,784 | 21,787 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 317 | 355 | ||||||
Repurchase of stock | (1,297 | ) | (1,204 | ) | ||||
Net cash used in financing activities | (980 | ) | (849 | ) | ||||
Cash flows from discontinued operations: | ||||||||
Net cash (used in) provided by operating activities | (39 | ) | 2,395 | |||||
Net cash used in investing activities | — | (1,066 | ) | |||||
Net cash (used in) provided by discontinued operations | (39 | ) | 1,329 | |||||
Net change in cash and cash equivalents | (4,210 | ) | 20,384 | |||||
Cash and cash equivalents, beginning of year | 57,294 | 36,910 | ||||||
Cash and cash equivalents, end of period | $ | 53,084 | $ | 57,294 | ||||
GEEKNET, INC.
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
(In thousands, unaudited)
Year Ended December 31, | Three Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net (loss) Income - as reported | $ | (234 | ) | $ | 13,907 | $ | 5,069 | $ | 6,056 | ||||||
Reconciling items: | |||||||||||||||
Loss (income) from discontinued operations - net of tax | 67 | (12,102 | ) | (3 | ) | (1,380 | ) | ||||||||
Gain on sale of non-marketable securities | — | (4,021 | ) | — | — | ||||||||||
Interest and other expense (income), net | 24 | 122 | (1 | ) | 63 | ||||||||||
Income taxes provision | — | 6 | — | 1,765 | |||||||||||
Stock-based compensation expense included in cost of revenues | (81 | ) | 376 | 20 | 107 | ||||||||||
Stock-based compensation expense included in operating expenses | 2,151 | 3,183 | 297 | 609 | |||||||||||
Depreciation | 1,258 | 1,394 | 308 | 318 | |||||||||||
Adjusted EBITDA | $ | 3,185 | $ | 2,865 | $ | 5,690 | $ | 7,538 | |||||||
GEEKNET, INC.
Segment Data
(In thousands, unaudited)
Website | Wholesale | Total Company | ||||||||||
Year Ended December 31, 2013 | ||||||||||||
Net revenue | $ | 115,909 | $ | 22,353 | $ | 138,262 | ||||||
Cost of revenue | 96,458 | 14,687 | 111,145 | |||||||||
Gross margin | 19,451 | 7,666 | 27,117 | |||||||||
Gross margin % | 16.8% | 34.3% | 19.6% | |||||||||
Year Ended December 31, 2012 | ||||||||||||
Net revenue | $ | 111,938 | $ | 6,975 | $ | 118,913 | ||||||
Cost of revenue | 92,758 | 5,090 | 97,848 | |||||||||
Gross margin | 19,180 | 1,885 | 21,065 | |||||||||
Gross margin % | 17.1% | 27.0% | 17.7% | |||||||||
Year Ended December 31, 2011 | ||||||||||||
Net revenue | $ | 93,691 | $ | 5,366 | $ | 99,057 | ||||||
Cost of revenue | 79,568 | 4,034 | 83,602 | |||||||||
Gross margin | 14,123 | 1,332 | 15,455 | |||||||||
Gross margin % | 15.1% | 24.8% | 15.6% | |||||||||
CONTACT: ir@geek.net for Geeknet, Inc.