Newegg Announces First Half 2021 Financial Results

Rhea-AI Summary

Newegg Commerce reported strong financial results for H1 2021, with net sales increasing 39.9% to $1,206.9 million, and gross profit rising 33.9% to $166.9 million. Net income grew by 14.0% to $21.6 million ($0.05 per diluted share). The company expanded its customer base to 4.2 million active users and achieved a 32.5% rate of repeat purchases. Investments in new technologies and a new 43,000 sq. ft. warehouse in Shanghai are set to enhance operational capacity and customer experience.

Positive

• Net sales increased 39.9% to $1,206.9 million.
• Gross profit rose 33.9% to $166.9 million.
• Net income increased by 14.0% to $21.6 million.
• Unique active customers reached 4.2 million.
• Repeat purchases accounted for 32.5%.

Negative

• None.

Reports first half 2021 increases of 39.9% and 33.9% in net sales and gross margin, respectively

LOS ANGELES--(BUSINESS WIRE)-- Newegg Commerce, Inc. (NASDAQ: NEGG), a leading tech-focused e-retailer in North America, announced its financial results for the six months ended June 30, 2021.

First Half 2021 vs. First Half 2020 Financial Highlights (unaudited)

• Net sales increased 39.9% to $1,206.9 million from $862.7 million
• Gross profit increased 33.9% to $166.9 million from $124.6 million
• Net income increased 14.0% to $21.6 million (or $0.05 per diluted share) compared to net income of $18.9 million (or $0.05 per diluted share)

Operational Highlights as of June 30, 2021

• Unique active customers: 4.2 million
• Repeat purchases: 32.5%
• Average value per order: $359

Newegg’s CEO, Anthony Chow noted, “Over the last two years, we focused on innovation and growth-oriented initiatives to position Newegg for success in the years ahead. As a result, we diversified our revenue sources and strengthened the company’s business and operational structure. And by optimizing and expanding our vendor relationships, we enhanced our product offering and grew our geographic footprint.”

Mr. Chow added, “Our first half 2021 results were a strong validation of this strategy as we were able to grow our net sales and gross margin by 39.9% and 33.9%, respectively, as compared to the same period in 2020. We optimized products that were in high demand and promoted high-margin services. We refined Newegg’s product selection, improved relationships with suppliers by establishing a “quarterly strategic partnership execution program” (“QSPEP”) and shared market intelligence data with our vendors to help them make strategic decisions in providing the right products, to the right customers, at the right time. We also invested in new technologies to improve customer experience, order fulfillment and delivery times. Additionally, we made significant investments to expand our global infrastructure with the opening of our 43,000 sq. ft. warehouse in the Yangshan Free Trade Zone in Shanghai earlier this year. This warehouse acts as a freight collection and fulfillment center for our marketplace vendors and third-party logistics clients from which we transport merchandise to North America by freight and air. As a result of these additional expenses, our income from operations and net income increased by 26.9% and 14.0%, respectively.”

Mr. Chow concluded, “Today, due to the successful execution of our strategy, Newegg is a much stronger organization and well positioned to take advantage of several growth opportunities, create additional revenue sources, improve margins, expand our geographic footprint and provide higher returns to our shareholders.”

Operational Highlights by Revenue Stream

Direct sales business: Part of our strategy was to execute our QSPEP program designed to help us gain market share. We focused on establishing a strict validation process in selecting our suppliers and making sure that our end-customers were paying the best price for high-quality products purchased through our platform, supported by superb customer service.

Marketplace business: Through the Global Seller initiative, we recruited quality APAC sellers, specifically from China, into our platform and thus substantially broadened our product offerings. Newegg worked aggressively to build a platform that charges competitive, and at times, the lowest commission to vendors.

Newegg Partner Services (“NPS”) business: We recently launched several new services designed to support our vendor partners by providing them with the necessary resources to improve operations and logistics, marketing and advertising, customer service and finance, all aiming to help them increase sales and customer reach.

About Newegg Commerce, Inc.

Newegg Commerce, Inc., headquartered in the City of Industry, California, is a leading tech-focused e-retailer in North America and serves a global customer base throughout Europe, Asia Pacific, Latin America and the Middle East. Founded in 2001, the company offers direct sales and an online marketplace platform for PC and IT hardware, consumer electronics, automotive, gaming products and finished goods. Newegg also offers an extensive portfolio of technology, marketing, logistics and other partner services to help companies grow their business. For more information, please visit https://www.newegg.com/.

Forward-Looking Statements

This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations, opinion, belief or forecasts of future events and performance. A statement identified by the use of forward-looking words including "will," "may," "expects," "projects," "anticipates," "plans," "believes," "estimate," "should," and certain of the other foregoing statements may be deemed forward-looking statements. Although Newegg believes that the expectations reflected in such forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to be materially different from those suggested or described in this news release. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from those projected. The forward-looking statements in this press release are made as of the date hereof. The Company takes no obligation to update or correct its own forward-looking statements, except as required by law, or those prepared by third parties that are not paid for by the Company. The Company's SEC filings are available at http://www.sec.gov.

NEWEGG COMMERCE, INC.
Consolidated Statements of Income
(In thousands, except per share data) (Unaudited)
		Six Months Ended June 30,
		2021				2020
Net sales		$	1,206,872			$	862,700
Cost of sales			1,039,946				738,122
Gross profit			166,926				124,578
Other operating income			-				264
Selling, general, and administrative expenses			144,463				107,138
Income from operations			22,463				17,704
Interest income			567				590
Interest expense			(312	)			(378	)
Other income, net			495				2,790
Gain from disposal of subsidiary			2,043				-
Change in fair value of warrants liabilities			(1,270)				-
Income before provision for income taxes			23,986				20,706
Provision for income taxes			2,395				1,767
Net income		$	21,591			$	18,939
Basic earnings per share		$	0.06			$	0.05
Diluted earnings per share		$	0.05			$	0.05
Weighted average shares used in computation of earnings per share:
Basic			364,493				363,326
Diluted			425,542				379,901

NEWEGG COMMERCE, INC.
Consolidated Balance Sheets
(In thousands, except par value) (Unaudited)
		June 30, 2021				December 31, 2020
Assets
Current assets:
Cash and cash equivalents		$	124,526			$	156,635
Restricted cash			4,777				1,111
Accounts receivable, net			41,510				66,465
Inventories			207,373				182,056
Income taxes receivable			2,509				2,510
Prepaid expenses and other current assets			19,080				19,834
Total current assets			399,775				428,611
Property and equipment, net			47,306				46,466
Noncurrent deferred tax assets			680				669
Equity investment			9,655				9,655
Investment at cost			15,000				15,000
Right of use assets			42,368				46,557
Other noncurrent assets			10,825				10,510
Total assets		$	525,609			$	557,468
Liabilities and Equity
Current liabilities:
Accounts payable		$	202,095			$	241,502
Accrued liabilities			72,300				83,939
Deferred revenue			33,482				47,398
Line of credit			6,148				5,276
Current portion of long-term debt			289				281
Lease liabilities – current			8,989				9,695
Total current liabilities			323,303				388,091
Long-term debt, less current portion			1,982				2,088
Income taxes payable			696				696
Lease liabilities – noncurrent			35,974				39,043
Warrants liabilities			2,422				-
Other liabilities			53				53
Total liabilities			364,430				429,971
Equity:
Common Stock, $0.021848 par value; unlimited shares authorized as of June 30, 2021 and December 31, 2020; 368,299 and 363,326 shares issued and outstanding as of June 30, 2021 and December 31, 2020			8,047				7,938
Additional paid-in capital			192,658				182,230
Notes receivable			(15,189	)			(15,186	)
Accumulated other comprehensive income			4,614				3,057
Accumulated deficit			(28,951	)			(50,542	)
Total equity			161,179				127,497
Total liabilities and equity		$	525,609			$	557,468

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210830005227/en/

FOR MORE INFORMATION, CONTACT:

Public Relations:

John Snedigar

Faultline Communications

john@faultlinecomms.com

408-705-7518

Investor Relations:

Lena Cati

The Equity Group Inc.

212-836-9611

lcati@equityny.com

Source: Newegg Commerce, Inc.

FAQ

What were Newegg's financial results for the first half of 2021?

Newegg reported net sales of $1,206.9 million, a 39.9% increase, with gross profit rising 33.9% to $166.9 million.

How much did Newegg's net income increase in H1 2021?

Net income for Newegg increased by 14.0% to $21.6 million.

What operational changes did Newegg implement in 2021?

Newegg opened a new 43,000 sq. ft. warehouse in Shanghai, enhancing logistics and customer fulfillment.

What is Newegg's rate of repeat purchases?

Newegg achieved a repeat purchase rate of 32.5% as of June 30, 2021.

What is Newegg's strategy for growth?

Newegg focuses on innovation, vendor partnerships, customer service, and expanding its global infrastructure to drive growth.