FAIRFAX, Va., Nov. 3, 2011 (GLOBE NEWSWIRE) -- Geeknet, Inc. (Nasdaq:GKNT), the online network for the global geek community, today announced financial results for the quarter ended September 30, 2011.
Total revenue for the third quarter of 2011 was $19.7 million compared to $14.7 million of revenue for the third quarter of 2010. Net loss for the third quarter of 2011 was $2.7million or $0.42 per diluted share compared to net loss of $3.9 million or $0.64 per share, for the same period a year ago. Adjusted EBITDA for the third quarter of 2011 was a loss of $1.1 million, compared to an adjusted EBITDA loss of $4.1 million for the same period a year ago. A reconciliation of net income as reported to adjusted EBITDA is included in this release.
Third Quarter Highlights:
- ThinkGeek e-commerce revenue increased 38 percent to $14.7 million for the third quarter of 2011, compared to $10.6 million for the third quarter of 2010. Orders shipped increased by 30 percent in the third quarter of 2011 as compared with the same period last year.
- Media revenue increased 25 percent to $5.0 million for the third quarter of 2011, compared to $4.0 million for the third quarter of 2010.
- Total cash and investments at the end of third quarter 2011 was $24.0 million.
"Geeknet delivered a solid quarter heading into the important holiday season, executing against the Company's business goals and staying on track to deliver profitable growth in 2011", said Ken Langone, Executive Chairman, Geeknet. "Notably, our media business has consistently delivered profitable growth this year and is on track for a record year. This is an important complement to ThinkGeek which historically has delivered seasonally strong revenue and profit in the fourth quarter, and has already delivered 40% revenue growth through the end of September. The changes we have implemented in the past year across the Company are creating the operational efficiencies and organizational alignment that we believe will deliver higher satisfaction for our customers and profitable returns to our shareholders."
Supplemental schedules of the Company's quarterly statements of operations and operational statistics are available on the Company's web site at geek.net/cyresults.
A conference call and audio webcast will be held at 2:00 p.m. ET on November 3, 2011 and may be accessed by calling (877) 348-9353 or (253) 237-1159 outside the U.S., or by visiting geek.net/investors. An audio replay will be available between 9:30 p.m. ET on November 3, 2011 and 11:59 p.m. ET on November 17, 2011 by calling (855) 859-2056 or (404) 537-3406, with Conference ID 12758343.
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. Adjusted EBITDA 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 our 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 net loss which is adjusted for interest and other income (expense) net and income taxes as well as stock-based compensation, gain or loss on sale of assets, restructuring charges and depreciation and amortization. The method we use to produce adjusted EBITDA is not computed according to GAAP, is likely to differ from the methods used by other companies and should not be regarded as a substitute for results prepared in accordance with accounting principles generally accepted in the United States. Adjusted EBITDA, as we compute it, excludes certain expenses that we believe are not indicative of our core operating results. We consider our core operating results to include revenue recorded in a particular period and the related expenses that are intended to directly drive operating income during that period.
The EBITDA calculation excludes interest, income taxes and depreciation and amortization by its nature. In addition, when we compute adjusted EBITDA we exclude stock-based compensation, gain on sale of assets, restructuring charges and other amounts included in the Interest income and other income (expense) net caption. 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 rate at which we recognize the corresponding stock-based compensation expense over the course of future fiscal periods. 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. Gain on sale of assets is excluded from adjusted EBITDA because such activities is not representative of our core operations. Restructuring costs are excluded from adjusted EBITDA because they represent non-cash charges which are not representative of our core operations. Amounts included in the Interest income and other income (expense) net caption are excluded from adjusted EBITDA because they represent income and expenses that are not directly related to our core operations.
About Geeknet, Inc.
Geeknet is home to some of the best known brands in the geek universe, and is the online network for the global geek community. We serve an audience of over 53 million users each month and provide the tech-obsessed with content, culture, connections, commerce, and all the things that geeks crave. Want to learn more? Check out geek.net. Geeknet is a trademark of Geeknet, Inc. SourceForge, Slashdot, ThinkGeek, and Freecode are trademarks of Geeknet, Inc. in the United States and other countries. All other trademarks or product names are property of their respective owners.
The Geeknet, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7330
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 potential profitability and the growth prospects for our online media and e-commerce businesses. Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors, including: success in designing and offering innovative online advertising programs; decreases or delays in online advertising spending, especially in light of current macroeconomic challenges and uncertainty; our effectiveness at planning and managing our e-commerce inventory; our ability to achieve and sustain higher levels of revenue; our ability to protect and defend our intellectual property rights; rapid technological and market change; unforeseen expenses that we may incur in future quarters; and competition with, and pricing pressures from larger and/or more established competitors. 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, 2010, and Quarterly Reports on Form 10-Q filed since that date 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.
| GEEKNET, INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (In thousands, except per share data) | ||||
| (unaudited) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Revenue: | ||||
| ThinkGeek revenue | $ 14,693 | $ 10,646 | $ 44,217 | $ 31,588 |
| Media revenue | 5,007 | 4,013 | 15,470 | 13,024 |
| Revenue | 19,700 | 14,659 | 59,687 | 44,612 |
| Cost of revenue: | ||||
| ThinkGeek cost of revenue | 13,414 | 10,178 | 40,263 | 27,788 |
| Media cost of revenue | 1,193 | 1,693 | 3,999 | 5,269 |
| Cost of revenue | 14,607 | 11,871 | 44,262 | 33,057 |
| Gross margin | 5,093 | 2,788 | 15,425 | 11,555 |
| Operating expenses: | ||||
| Sales and marketing | 3,038 | 3,329 | 9,707 | 10,042 |
| Research and development | 1,607 | 1,635 | 3,893 | 4,778 |
| General and administrative | 3,143 | 2,942 | 9,042 | 7,115 |
| Amortization of intangible assets | 20 | 101 | 61 | 285 |
| Restructuring | -- | -- | -- | (101) |
| Gain on sale of assets | (72) | (1,409) | (72) | (1,391) |
| Total operating expenses | 7,736 | 6,598 | 22,631 | 20,728 |
| Loss from continuing operations | (2,643) | (3,810) | (7,206) | (9,173) |
| Interest and other income (expense), net | (39) | (2) | (33) | 43 |
| Loss from continuing operations before income taxes | (2,682) | (3,812) | (7,239) | (9,130) |
| Income tax expense (benefit) | 1 | (51) | (22) | (64) |
| Loss from continuing operations | (2,683) | (3,761) | (7,217) | (9,066) |
| Discontinued operations: | ||||
| Loss from operations, net of taxes | -- | (89) | -- | (111) |
| Net loss | $ (2,683) | $ (3,850) | $ (7,217) | $ (9,177) |
| Loss per share from continuing operations: | ||||
| Basic and diluted | $ (0.42) | $ (0.62) | $ (1.14) | $ (1.50) |
| Loss per share from discontinued operations: | ||||
| Basic and diluted | $ -- | $ (0.02) | $ -- | $ (0.02) |
| Net loss per share: | ||||
| Basic and diluted | $ (0.42) | $ (0.64) | $ (1.14) | $ (1.52) |
| Shares used in per share calculations: | ||||
| Basic and diluted | 6,337 | 6,046 | 6,306 | 6,030 |
| Reconciliation of net loss as reported to adjusted EBITDA loss: | ||||
| Net loss - as reported | $ (2,683) | $ (3,850) | $ (7,217) | $ (9,177) |
| Reconciling items: | ||||
| Interest and other expense (income), net | (39) | (2) | 33 | (43) |
| Income tax expense (benefit) | 1 | (51) | (22) | (64) |
| Stock-based compensation expense included in COGS | 47 | 14 | 170 | 171 |
| Stock-based compensation expense included in Op Ex. | 1,125 | 507 | 2,915 | 1,780 |
| Gain on sale of assets | (72) | (1,409) | (72) | (1,391) |
| Restructuring | -- | -- | -- | (101) |
| Depreciation and amortization | 431 | 676 | 1,487 | 1,765 |
| Adjusted EBITDA loss | $ (1,112) | $ (4,111) | $ (2,706) | $ (7,060) |
| GEEKNET, INC. | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| (unaudited) | ||
| September 30, | December 31, | |
| 2011 | 2010 | |
| (unaudited) | ||
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 24,001 | $ 35,333 |
| Short-term investments | -- | 8 |
| Accounts receivable, net of allowance of $9 and $0, respectively | 5,355 | 5,078 |
| Inventories | 8,285 | 13,322 |
| Prepaid expenses and other current assets | 6,363 | 2,919 |
| Total current assets | 44,004 | 56,660 |
| Property and equipment, net | 5,452 | 5,114 |
| Other long-term assets | 4,195 | 4,983 |
| Total assets | $ 53,651 | $ 66,757 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 4,479 | $ 13,381 |
| Deferred revenue | 2,445 | 1,836 |
| Accrued liabilities and other | 2,522 | 3,591 |
| Total current liabilities | 9,446 | 18,808 |
| Other long-term liabilities | 72 | 77 |
| Total liabilities | 9,518 | 18,885 |
| Commitments and contingencies (Note 11) | ||
| Stockholders' equity: | ||
| Common stock, $0.001 par value; authorized --- 25,000; issued- 6,458 and 6,365 shares, respectively; outstanding --- 6,343 and 6,273 shares, respectively | 6 | 6 |
| Treasury stock | (977) | (622) |
| Additional paid-in capital | 807,001 | 803,160 |
| Accumulated other comprehensive income | 3 | 10 |
| Accumulated deficit | (761,900) | (754,682) |
| Total stockholders' equity | 44,133 | 47,872 |
| Total liabilities and stockholders' equity | $ 53,651 | $ 66,757 |
| GEEKNET, INC. | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (In thousands) | ||
| (unaudited) | ||
| Nine Months Ended September 30, | ||
| 2011 | 2010 | |
| Cash flows from operating activities from operations: | ||
| Net Loss | $ (7,217) | $ (9,177) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and amortization | 1,487 | 1,765 |
| Stock-based compensation expense | 3,085 | 1,951 |
| Provision for bad debts | 9 | -- |
| Provision for excess and obsolete inventory | 83 | 57 |
| Gain on sale of assets | (66) | (1,391) |
| Changes in assets and liabilities: | ||
| Accounts receivable | (286) | 434 |
| Inventories | 4,953 | (10,999) |
| Prepaid expenses and other assets | (2,558) | (2,452) |
| Accounts payable | (8,902) | 3,338 |
| Accrued restructuring liabilities | -- | (1,238) |
| Deferred revenue | 609 | 611 |
| Accrued liabilities and other | (1,069) | (1,248) |
| Other long-term liabilities | (6) | (14) |
| Net cash used in operating activities | (9,878) | (18,363) |
| Cash flows from investing activities from operations: | ||
| Change in restricted cash | -- | 1,000 |
| Purchase of property and equipment | (1,829) | (3,860) |
| Proceeds from sales of intangible assets, net | -- | 1,040 |
| Purchase of intangible assets | (20) | (122) |
| Maturities or sale of marketable securities | -- | 10,207 |
| Acquistion of a business, net of cash acquired | -- | (1,000) |
| Net cash (used in) provided by investing activities from operations: | (1,849) | 7,265 |
| Cash flows from financing activities from operations: | ||
| Proceeds from issuance of common stock | 757 | 252 |
| Repurchase of common stock | (355) | (118) |
| Net cash provided by financing activities from operations: | 402 | 134 |
| Effect of exchange rate changes on cash and cash equivalents | (7) | (4) |
| Net decrease in cash and cash equivalents | (11,332) | (10,968) |
| Cash and cash equivalents, beginning of period | 35,333 | 28,943 |
| Cash and cash equivalents, end of period | $ 24,001 | $ 17,975 |