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Geeknet Announces Third Quarter 2013 Financial Results

Revenue increases 30% in third quarter to $22.4 million

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FAIRFAX, Va., Nov. 8, 2013 /PRNewswire/ -- Geeknet, Inc. (Nasdaq: GKNT), the parent company of online retailer ThinkGeek.com, today announced financial results for the third quarter ended September 30, 2013.

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

Total revenue for the third quarter of 2013 was $22.4 million, an increase from $17.3 million for the third quarter of 2012.  Net loss from continuing operations for the third quarter of 2013 was $1.4 million or $0.21 per diluted share. Net loss from continuing operations for the third quarter of 2012 was $2.0 million or $0.31 per diluted share.  Adjusted EBITDA loss for the third quarter of 2013 was $831,000, compared to an adjusted EBITDA loss of $2.0 million for the same period a year ago.  A reconciliation of net loss as reported to adjusted EBITDA is included in this release.  

Third Quarter Highlights:

  • Launched over 477 new products, including 98 exclusive products
  • Total cash and investments at the end of the third quarter 2013 was $40.7 million which included $3 million received related to the sale of the media business, compared to $37.9 million in the third quarter of 2012, which included $17 million received from the sale of the media business

"ThinkGeek had a great third quarter, highlighted by 30% revenue growth, an increase in gross margin and significant progress on the bottom line," said Kathryn McCarthy, Chief Executive Officer and Chairman of the Board.  "Our strong performance was driven by increasing sales from both our wholesale business and our exclusive Geek Labs products.  As we enter the holiday season, the most exciting time of the year for ThinkGeek, we continue to focus on brand recognition and product awareness. We launched our Holiday Gift Center on November 1st and we are looking forward to bringing many new products to life during the holiday season."

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 November 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 4:00 pm ET on November 8, 2013 and 11:59 pm ET on November 10, 2013 by calling (855) 859-2056 or (404) 537-3406, with Conference ID 73909163.

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.

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 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  the business opportunity, improving the brand, and product awareness  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.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)



Three Months Ended
September 30,


Nine Months Ended
 September 30,


2013


2012


2013


2012

Net revenue

$    22,363


$    17,260


$    63,924


$    52,574

Cost of revenue

18,113


15,004


51,645


45,656

Gross margin

4,250


2,256


12,279


6,918

Operating expenses:








     Sales and marketing

2,116


1,714


5,758


5,089

     Technology and design

1,457


1,117


4,355


2,792

     General and administrative

2,117


2,635


7,374


7,629

        Total operating expenses

5,690


5,466


17,487


15,510

Loss from operations

(1,440)


(3,210)


(5,208)


(8,592)

Gain on sale of non-marketable securities




4,021

Interest and other income (expense), net

2


(15)


(25)


(59)

Loss from continuing operations before income taxes

(1,438)


(3,225)


(5,233)


(4,630)

Income tax benefit

(52)


(1,226)


(49)


(1,759)

     Net loss from continuing operations

(1,386)


(1,999)


(5,184)


(2,871)

Discontinued operations:








(Loss) income from discontinued operations, net of tax

(50)


10,362


(119)


10,722

Net (loss) income

$    (1,436)


$     8,363


$    (5,303)


$     7,851

Loss per share from continuing operations:








     Basic

$      (0.21)


$      (0.31)


$      (0.78)


$      (0.45)

     Diluted

$      (0.21)


$      (0.31)


$      (0.78)


$      (0.45)

(Loss) income per share from discontinued operations:








     Basic

$      (0.01)


$       1.60


$      (0.02)


$       1.67

     Diluted

$      (0.01)


$       1.57


$      (0.02)


$       1.64

Net (loss) income per share:








     Basic

$      (0.22)


$       1.29


$      (0.80)


$       1.22

     Diluted

$      (0.22)


$       1.27


$      (0.80)


$       1.20

Shares used in per share calculations:








     Basic

6,618


6,483


6,614


6,438

     Diluted

6,618


6,597


6,614


6,529

 

GEEKNET, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)



September 30,

2013


December 31,

2012

ASSETS

Current assets:




     Cash and cash equivalents

$          40,667


$         57,294

     Accounts receivable, net of allowance of $167 and $14 as of September 30, 2013 and December 31, 2012, respectively

5,109


1,050

     Inventories, net

19,672


16,657

     Prepaid expenses and other current assets

7,756


7,013

     Total current assets

73,204


82,014

Property and equipment, net

2,577


3,523

Other long-term assets

50


335

   Total assets

$          75,831


$         85,872





LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




     Accounts payable

$            7,607


$         11,641

     Deferred revenue

1,972


2,303

     Accrued liabilities and other

1,684


2,816

      Total current liabilities

11,263


16,760

Other long-term liabilities


29

Total liabilities

11,263


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 — 6,899 and 6,738 shares, as of September 30, 2013 and December 31, 2012, respectively; outstanding — 6,637 and 6,555 shares as of September 30, 2013 and December 31, 2012, respectively

7


7

     Treasury stock

(3,476)


(2,182)

     Additional paid-in capital

816,493


814,411

     Accumulated other comprehensive income

16


16

     Accumulated deficit

(748,472)


(743,169)

        Total stockholders' equity

64,568


69,083

           Total liabilities and stockholders' equity

$          75,831


$         85,872

 

GEEKNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)



Nine Months Ended September 30,


2013


2012

Cash flows from operating activities from continuing operations:




Net (loss) income

$  (5,303)


$     7,851

Loss (income) from discontinued operations, net of tax

119


(10,722)

Loss from continuing operations

(5,184)


(2,871)

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




   Depreciation expense

950


1,076

   Stock-based compensation expense

1,753


2,843

   Provision for bad debts

164


21

   Provision for excess and obsolete inventory

712


230

   Gain on sale of non-marketable securities


(4,021)

   Loss on disposal of assets, net

4


56

      Changes in assets and liabilities:




      Accounts receivable

(4,223)


(195)

      Inventories

(3,727)


(13,967)

      Prepaid expenses and other assets

(3,458)


(7,604)

      Accounts payable

(4,034)


5,805

      Deferred revenue

(331)


(250)

      Accrued liabilities and other liabilities

(1,131)


(1,796)

      Other long-term liabilities

(29)


         Net cash used in operating activities

(18,534)


(20,673)

Cash flows from investing activities:




   Purchase of property and equipment

(8)


(108)

   Proceeds from sale of non-marketable equity investment


6,000

   Proceeds from sale of discontinued operations

3,000


17,000

      Net cash provided by investing activities

2,992


22,892

Cash flows from financing activities:




   Proceeds from issuance of common stock

292


249

   Repurchase of stock

(1,286)


(1,194)

      Net cash used in financing activities

(994)


(945)

Cash flows from discontinued operations:




   Net cash used in operating activities

(91)


(2,220)

   Net cash provided by investing activities


1,958

Net cash used in discontinued operations

(91)


(262)

Net change in cash and cash equivalents

(16,627)


1,012

Cash and cash equivalents, beginning of year

57,294


36,910

Cash and cash equivalents, end of period

$ 40,667


$    37,922

 

GEEKNET, INC.

RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA

(In thousands, unaudited)



Three Months Ended
September 30,


Nine Months Ended
 September 30,


2013


2012


2013


2012

Net (loss) income - as reported

$    (1,436)


$     8,363


$    (5,303)


$     7,851

Reconciling items:








Loss (income) from discontinued operations - net of tax

50


(10,362)


119


(10,722)

Gain on sale of non-marketable securities




(4,021)

Interest and other income (expense), net

(2)


15


25


59

Benefit for income taxes

(52)


(1,226)


(49)


(1,759)

Stock-based compensation expense included in cost of revenues

19


95


(101)


269

Stock-based compensation expense included in operating expenses

270


741


1,854


2,574

Depreciation expense

320


331


950


1,076

Adjusted EBITDA

$       (831)


$    (2,043)


$    (2,505)


$    (4,673)

 

SOURCE Geeknet, Inc.



RELATED LINKS
http://investors.geek.net

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