Geeknet Announces First Quarter 2013 Financial Results Revenue increases 12% in first quarter to $19.6 million

FAIRFAX, Va., May 8, 2013 /PRNewswire/ -- Geeknet, Inc. (Nasdaq: GKNT), the parent company of online retailer ThinkGeek.com, today announced financial results for the first quarter ended March 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20120510/MM05555LOGO)

Total revenue for the first quarter of 2013 was $19.6 million, an increase from $17.5 million for the first quarter of 2012.  Historical results have been recast to reflect the sale of the Company's media business in September 2012 to discontinued operations.  Net loss for the first quarter of 2013 was $2.3 million or $0.35 per diluted share compared to a net loss of $2.1 million or $0.33 per diluted share for the same period a year ago.  Adjusted EBITDA loss for the first quarter of 2013 was $1.3 million, compared to an adjusted EBITDA loss of $850,000 for the same period a year ago.  A reconciliation of net loss as reported to adjusted EBITDA is included in this release.  Included in GAAP net loss and adjusted EBITDA are severance and other expenses totaling $1.0 million related to changes in the leadership team.

First Quarter Highlights:

  • Increased orders shipped by 7% compared to the first quarter of 2012
  • Launched over 300 new products, including the Unicorn Bouquet, Unicorn Slippers, the Build-On Brick Mug and the Titan Sword
  • Total cash and investments at the end of the first quarter 2013 was $51.0 million, compared to $32.5 million in the first quarter of 2012.

"ThinkGeek had a solid first quarter with continued year over year progress in our operating metrics," said Kathryn McCarthy, Chief Executive Officer.  "This quarter we also delivered over 300 creative new products and increased the number of partnerships with specialty retailers.  Looking to the rest of the year, our team will continue to delight customers and improve the customer experience. We have a large opportunity in front of us and will concentrate our efforts on building a brand that sustains top and bottom line growth."

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 May 8, 2013 and may be accessed by calling (877) 348-9353 or (253) 237-1159 outside the U.S., or by visiting investors.geek.net. An audio replay will be available between 2:00 pm ET on May 8, 2013 and 11:59 pm ET on May 10, 2013 by calling (855) 859-2056 or (404) 537-3406, with Conference ID 45783204.

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 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 interest and other expense, income taxes, stock-based compensation and depreciation and amortization.  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.

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 sought to provide tech, gadget, and toy-obsessed communities with all the things geeks crave.  ThinkGeek was founded to serve the distinct needs and interests of technology professionals and enthusiasts and today has grown to become the first choice for innovative and imaginative products that appeal to the geek in everyone.  Want to learn more?  Check out thinkgeek.com or geek.net.

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 customer satisfaction, the customer experience, the business opportunity, improving the brand, revenue growth and profitability.  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 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, 2012, 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)



Three Months Ended

March 31,


2013


2012





Net revenue

$ 19,557


$ 17,510

Cost of revenue

15,937


14,943

   Gross margin

3,620


2,567

Operating expenses:




 Sales and marketing

1,723


1,577

 Technology and design

1,404


798

 General and administrative

2,784


2,473

   Total operating expenses

5,911


4,848

Loss from operations

(2,291)


(2,281)

Interest and other income (expense), net

(14)


(3)

Loss before income taxes

(2,305)


(2,284)

Provision (benefit) for income taxes

3


(121)

Loss from continuing operations

(2,308)


(2,163)

(Loss) income from discontinued operations, net of tax

(28)


42

 Net loss

$ (2,336)


$ (2,121)

Loss per share from continuing operations:




 Basic and diluted

$ (0.35)


$ (0.34)

Income per share from discontinued operations:




 Basic and diluted

$ —


$ 0.01

Net loss per share:




 Basic and diluted

$ (0.35)


$ (0.33)

Shares used in per share calculations:




 Basic and diluted

6,586


6,385




GEEKNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS 
(In thousands, unaudited)



March 31,

2013

December 31,

2012

ASSETS




Current assets:




 Cash and cash equivalents

$ 51,017


$ 57,294

 Accounts receivable, net of allowance of $14 as of

 March 31, 2013 and December 31, 2012

1,240


1,050

Inventories, net

15,132


16,657

Prepaid expenses and other current assets

5,724


7,013

 Total current assets

73,113


82,014

Property and equipment, net

3,218


3,523

Other long-term assets

335


335

    Total assets

$ 76,666


$ 85,872





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




 Accounts payable

$ 5,881


$ 11,641

 Deferred revenue

1,844


2,303

 Accrued liabilities and other

1,803


2,816

    Total current liabilities

9,528


16,760

Other long-term liabilities

15


29

    Total liabilities

9,543


16,789

Commitments and Contingencies (Note 8)




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 — 6,821 and 6,738 shares, as of March 31, 2013 and December 31, 2012, respectively; outstanding — 6,612 and 6,555 shares as of March 31, 2013 and December 31, 2012, respectively

7


7

 Treasury stock

(2,603)


(2,182)

 Additional paid-in capital

815,208


814,411

 Accumulated other comprehensive income

16


16

 Accumulated deficit

(745,505)


(743,169)

    Total stockholders' equity

67,123


69,083

     Total liabilities and stockholders' equity

$ 76,666


$ 85,872




GEEKNET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)



Three Months Ended

March 31,


2013


2012

Cash flows from operating activities from continuing operations:




 Net loss

$ (2,336)


$ (2,121)

 Loss (income) from discontinued operations, net of tax

28


(42)

 Loss from continuing operations

(2,308)


(2,163)

 Adjustments to reconcile loss from continuing operations to net cash used in operating activities:




Depreciation and amortization

316


384

Stock-based compensation expense

657


1,047

Provision for bad debts

(3)


10

Provision for excess and obsolete inventory

85


86

Provision for returns

204


80

Changes in assets and liabilities:




Accounts receivable

(187)


182

Inventories

1,440


(735)

Prepaid expenses and other assets

1,289


(688)

Accounts payable

(5,759)


(1,312)

Deferred revenue

(459)


(504)

Accrued liabilities and other

(1,218)


(1,582)

Other long-term liabilities

(14)


4

Net cash used in operating activities

(5,957)


(5,191)

Cash flows from investing activities:




Purchase of property and equipment

(11)


(207)

Net cash used in investing activities

(11)


(207)

Cash flows from financing activities:




 Proceeds from issuance of common stock

112


145

 Repurchase of stock

(421)


(204)

Net cash used in financing activities

(309)


(59)

Cash flows from discontinued operations:




 Net cash provided by operating activities


1,153

 Net cash used in investing activities


(60)

Net cash provided by discontinued operations


1,093

Net decrease in cash and cash equivalents

(6,277)


(4,364)

Cash and cash equivalents, beginning of year

57,294


36,910

Cash and cash equivalents, end of period

$ 51,017


$ 32,546




GEEKNET, INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands, unaudited)




Three Months Ended

March 31,



2013


2012

Net loss - as reported


$ (2,336)


$ (2,121)

Reconciling items:





 Loss (income) from discontinued operations - net of tax


28


(42)

 Interest and other expense, net


14


3

 Provision (benefit) for income taxes


3


(121)

 Stock-based compensation expense included in cost of revenues


(154)


107

 Stock-based compensation expense included in operating expenses


811


940

 Depreciation and amortization


316


384

Adjusted EBITDA


$ (1,318)


$ (850)

SOURCE Geeknet, Inc.



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