PFSweb Reports Second Quarter 2022 Results
PFSweb reported a 13% increase in PFS Operations service fee equivalent revenue year-over-year, reaching $45.3 million. Total revenues grew by 6% to $64.6 million. Despite a net loss of $4.5 million, adjusted EBITDA improved to $(0.4) million compared to $(1.7) million in the previous year. The company recorded 10 new bookings worth an estimated $11 million in annual contract value. PFSweb maintains its 2022 SFE revenue growth outlook of 5% to 10% and continues to explore strategic alternatives.
- PFS Operations service fee equivalent revenue increased 13% year-over-year to $45.3 million.
- Total revenues rose by 6% to $64.6 million.
- Adjusted EBITDA from continuing operations improved to $(0.4) million from $(1.7) million.
- Recorded 10 bookings with an estimated $11 million in annual contract value, with 82% from new clients.
- Net loss from continuing operations was $4.5 million, similar to the previous year.
- PFS Operations Service Fee Equivalent Revenue Increased
ALLEN, Texas, Aug. 08, 2022 (GLOBE NEWSWIRE) -- PFSweb, Inc. (NASDAQ: PFSW) (the “Company"), a global commerce services company, today reported results for the second quarter ended June 30, 2022.
“We maintained our momentum as a fulfillment-oriented business during the second quarter, performing at high levels for clients across our core verticals of health and beauty, fashion and apparel, jewelry, and consumer packaged goods,” said Mike Willoughby, CEO of PFSweb. “Our PFS Operations service fee equivalent revenue increased
Q2 2022 Summary vs. Q2 2021
Results and comparisons reflect the classification of LiveArea as a discontinued operation; all comparisons are to the comparable period in 2021.
- Total revenues increased
6% to$64.6 million . - PFS Operations service fee equivalent (SFE) revenue (a non-GAAP measure defined and reconciled below) increased
13% to$45.3 million . - PFS Operations service fee gross margin, excluding certain LiveArea-related activity, was
21% compared to25% . - Net loss from continuing operations was
$4.5 million or$(0.20) per share, compared to net loss from continuing operations of$4.5 million or$(0.21) per share. - Consolidated adjusted EBITDA from continuing operations (a non-GAAP measure defined and reconciled below) improved to
$(0.4) million compared to$(1.7) million . - PFS Operations adjusted EBITDA from continuing operations (a non-GAAP measure defined and reconciled below) increased
28% to$4.7 million compared to$3.6 million .
Q2 2022 Operational Highlights
- Recorded 10 bookings worth an estimated
$11 million in annual contract value (ACV), comprising new North American fulfillment engagements, as well as existing client expansions for fulfillment and order management. - For the first and second quarter of 2022 combined, net new clients accounted for
82% of recorded ACV compared to68% for the same period in 2021.
Zach Thomann, COO of PFSweb, commented: “Through the second quarter, consumer demand has remained strong within our core verticals, particularly among luxury brands and retailers. Despite macroeconomic recessionary pressures—as well as slowing consumer spending patterns noted among major big-box and eCommerce retailers—many luxury brand customers have maintained or even increased their usual purchase volumes. Amid these trends, we have continued to experience equally strong pipeline demand for our services from our existing clients, as well as from new clients and prospects, adding 10 bookings worth an estimated
“We have also continued to make solid progress with expanding the reach and capabilities of our fulfillment footprint as we look to continue leveraging our multi-node fulfillment strategy and enhance our operational efficiency to support additional client growth. Our second Las Vegas fulfillment center remains on track to open within approximately one month, and we believe this additional capacity will strengthen our multi-node infrastructure for our West Coast clients. In fact, given our new client growth through the first half of this year, we currently expect the second Las Vegas facility to reach over
2022 Outlook
PFSweb is maintaining its previously stated 2022 financial outlook, which targets 2022 PFS Operations annual SFE revenue growth in the range of
Strategic Alternatives Process
The Company continues to work with its financial advisor, Raymond James, on a review of a full range of strategic alternatives for its PFSweb business. As previously disclosed, PFSweb has also concluded its obligations to Merkle under a Transition Services Agreement as of April 2022.
The Company does not currently have a specific timeline for the completion of its strategic review process, and it does not intend to comment further regarding the review process unless or until a specific transaction is approved by its Board of Directors, the review process is concluded, or it has otherwise determined that further disclosure is appropriate or required by law.
Conference Call
PFSweb will conduct a conference call today, August 8, at 5:00 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2022.
PFSweb management will host the conference call, followed by a question-and-answer period.
Date: Monday, August 8, 2022
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: (800) 715-9871
International dial-in number: (646) 307-1963
Conference ID: 7345539
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website at www.ir.pfsweb.com.
A replay of the conference call will be available after 9:00 p.m. Eastern time on the same day through August 22, 2022.
Toll-free replay number: (800) 770-2030
International replay number: (609) 800-9909
Replay ID: 7345539
Forward-Looking Information
This press release contains forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “potential,” “project,” “seek,” “strive,” “predict,” “continue,” “target,” “estimate”, and other similar expressions. These forward-looking statements involve risks and uncertainties and may include assumptions as to how we may perform in the future, the impact of the COVID-19 pandemic on our business and results of operations, and global economic conditions. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee these expectations will actually be achieved. The Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and our quarterly reports on Form 10-Q identify certain factors that could cause actual results to differ materially from those projected in any forward-looking statements made and investors are advised to review the periodic reports of the Company and the Risk Factors described therein.
The Company undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.
Financial Statement Presentation Matters
The LiveArea segment has been presented as a discontinued operation for all periods presented in this news release.
Non-GAAP Financial Measures
This news release contains certain non-GAAP measures, including non-GAAP net income (loss) from continuing operations, earnings before interest, income taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations and service fee equivalent revenue.
Non-GAAP net income (loss) from continuing operations represents net income (loss) from continuing operations calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, restructuring and other costs.
EBITDA from continuing operations represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA from continuing operations further eliminates the effect of stock-based compensation, as well as restructuring and other costs.
Non-GAAP net income (loss) from continuing operations, EBITDA from continuing operations, adjusted EBITDA from continuing operations and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, restructuring and other costs, and EBITDA from continuing operations and adjusted EBITDA from continuing operations further eliminate the effect of financing, remaining income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent (SFE) revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.
The Company has presented non-GAAP financial measures for the PFS Operations business including total Direct contribution, EBITDA, adjusted EBITDA and service fee equivalent (SFE) revenue which include adjustments for certain LiveArea related revenue activity and unallocated corporate costs. Such measures are reconciled below.
The Company believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures 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. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.
About PFS
PFS, the business unit of PFSweb, Inc. (NASDAQ: PFSW) is a premier eCommerce order fulfillment provider. We facilitate each operational step of an eCommerce order in support of DTC and B2B retail brands and specialize in health & beauty, fashion & apparel, jewelry, and consumer packaged goods. Our scalable solutions support customized pick/pack/ship services that deliver on brand ethos with each order. A proven order management platform, as well as high-touch customer care, reinforce our operation. With 20+ years as an industry leader, PFS is the BPO of choice for brand-centric companies and household brand names, such as L’Oréal USA, Champion, Pandora, Shiseido Americas, Kendra Scott, the United States Mint, and many more. The Company is headquartered in Allen, TX with additional locations around the globe. For more information, visit www.pfscommerce.com or ir.pfsweb.com for investor information.
Investor Relations:
Cody Slach and Jackie Keshner
Gateway Group, Inc.
1-949-574-3860
PFSW@gatewayir.com
PFSWEB, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
| Unaudited June 30, 2022 | December 31, 2021 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 148,171 | $ | 152,332 | |||
| Restricted cash | — | 214 | |||||
| Accounts receivable, net of allowance for doubtful accounts of | 49,550 | 78,024 | |||||
| Inventories, net of reserves of | — | 3,133 | |||||
| Other receivables | 7,849 | 7,005 | |||||
| Prepaid expenses and other current assets | 6,930 | 7,244 | |||||
| Total current assets | 212,500 | 247,952 | |||||
| Property and equipment, net | 19,434 | 19,315 | |||||
| Operating lease right-of-use assets, net | 31,133 | 35,371 | |||||
| Goodwill | 21,438 | 22,218 | |||||
| Other assets | 1,666 | 1,610 | |||||
| Total assets | $ | 286,171 | $ | 326,466 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Trade accounts payable | $ | 27,257 | $ | 36,450 | |||
| Accrued expenses | 21,571 | 31,643 | |||||
| Current portion of operating lease liabilities | 9,584 | 10,104 | |||||
| Current portion of finance lease obligations | 98 | 222 | |||||
| Deferred revenue | 2,949 | 4,391 | |||||
| Total current liabilities | 61,459 | 82,810 | |||||
| Finance lease obligations, less current portion | 54 | 89 | |||||
| Deferred revenue, less current portion | 571 | 833 | |||||
| Operating lease liabilities, less current portion | 25,714 | 30,393 | |||||
| Other liabilities | 2,663 | 2,565 | |||||
| Total liabilities | 90,461 | 116,690 | |||||
| Commitments and Contingencies | |||||||
| Shareholders' equity: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 22 | 21 | |||||
| Additional paid-in capital | 177,008 | 177,511 | |||||
| Retained earnings | 21,732 | 33,522 | |||||
| Accumulated other comprehensive loss | (2,927 | ) | (1,153 | ) | |||
| Treasury stock at cost, 33,467 shares | (125 | ) | (125 | ) | |||
| Total shareholders’ equity | 195,710 | 209,776 | |||||
| Total liabilities and shareholders’ equity | $ | 286,171 | $ | 326,466 | |||
PFSWEB, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In Thousands, Except Per Share Data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Revenues: | |||||||||||||||
| Service fee revenue | $ | 45,234 | $ | 43,009 | $ | 90,765 | $ | 88,529 | |||||||
| Product revenue, net | 122 | 4,492 | 3,319 | 8,800 | |||||||||||
| Pass-through revenue | 19,278 | 13,598 | 37,037 | 24,474 | |||||||||||
| Total revenues | 64,634 | 61,099 | 131,121 | 121,803 | |||||||||||
| Costs of Revenues: | |||||||||||||||
| Cost of service fee revenue | 35,645 | 31,863 | 72,137 | 65,393 | |||||||||||
| Cost of product revenue | 104 | 4,284 | 3,055 | 8,370 | |||||||||||
| Cost of pass-through revenue | 19,278 | 13,598 | 37,037 | 24,474 | |||||||||||
| Total costs of revenues | 55,027 | 49,745 | 112,229 | 98,237 | |||||||||||
| Gross profit | 9,607 | 11,354 | 18,892 | 23,566 | |||||||||||
| Selling, general and administrative expenses | 14,077 | 15,678 | 30,505 | 28,609 | |||||||||||
| Loss from operations | (4,470 | ) | (4,324 | ) | (11,613 | ) | (5,043 | ) | |||||||
| Interest (income) expense, net | (151 | ) | 333 | (145 | ) | 708 | |||||||||
| Loss from continuing operations before income taxes | (4,319 | ) | (4,657 | ) | (11,468 | ) | (5,751 | ) | |||||||
| Income tax expense (benefit), net | 184 | (155 | ) | 502 | 124 | ||||||||||
| Net loss from continuing operations | (4,503 | ) | (4,502 | ) | (11,970 | ) | (5,875 | ) | |||||||
| Income (loss) from discontinued operations before income taxes | 180 | (590 | ) | 180 | (1,410 | ) | |||||||||
| Income tax expense, net | — | 2,528 | — | 2,557 | |||||||||||
| Income (loss) from discontinued operations | 180 | (3,118 | ) | 180 | (3,967 | ) | |||||||||
| Net loss | $ | (4,323 | ) | $ | (7,620 | ) | $ | (11,790 | ) | $ | (9,842 | ) | |||
| Basic loss per share | |||||||||||||||
| Loss from continuing operations per share | $ | (0.20 | ) | $ | (0.21 | ) | $ | (0.53 | ) | $ | (0.28 | ) | |||
| Income (loss) from discontinued operations per share | 0.01 | (0.15 | ) | 0.01 | (0.19 | ) | |||||||||
| Basic loss per share | $ | (0.19 | ) | $ | (0.36 | ) | $ | (0.52 | ) | $ | (0.47 | ) | |||
| Diluted loss per share | |||||||||||||||
| Loss from continuing operations per share | $ | (0.20 | ) | $ | (0.21 | ) | $ | (0.53 | ) | $ | (0.28 | ) | |||
| Income (loss) from discontinued operations per share | 0.01 | (0.15 | ) | 0.01 | (0.19 | ) | |||||||||
| Diluted loss per share | $ | (0.19 | ) | $ | (0.36 | ) | $ | (0.52 | ) | $ | (0.47 | ) | |||
| Weighted average number of shares outstanding: | |||||||||||||||
| Basic | 22,650 | 21,166 | 22,547 | 21,221 | |||||||||||
| Diluted | 22,650 | 21,166 | 22,547 | 21,221 | |||||||||||
| Comprehensive loss: | |||||||||||||||
| Net loss | $ | (4,323 | ) | $ | (7,620 | ) | $ | (11,790 | ) | $ | (9,842 | ) | |||
| Foreign currency translation adjustment | (1,267 | ) | 46 | (1,774 | ) | (309 | ) | ||||||||
| Total comprehensive loss | $ | (5,590 | ) | $ | (7,574 | ) | $ | (13,564 | ) | $ | (10,151 | ) | |||
| EBITDA from continuing operations | $ | (2,748 | ) | $ | (2,477 | ) | $ | (7,936 | ) | $ | (1,186 | ) | |||
| Adjusted EBITDA from continuing operations | $ | (361 | ) | $ | (1,660 | ) | $ | (732 | ) | $ | (734 | ) | |||
PFSWEB, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP
(In Thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net loss from continuing operations | $ | (4,503 | ) | $ | (4,502 | ) | $ | (11,970 | ) | $ | (5,875 | ) | |||
| Income tax expense (benefit), net | 184 | (155 | ) | 502 | 124 | ||||||||||
| Interest (income) expense, net | (151 | ) | 333 | (145 | ) | 708 | |||||||||
| Depreciation and amortization | 1,722 | 1,847 | 3,677 | 3,857 | |||||||||||
| EBITDA from continuing operations | (2,748 | ) | (2,477 | ) | (7,936 | ) | (1,186 | ) | |||||||
| Gross margin on LiveArea activity (1) | — | (1,324 | ) | — | (2,592 | ) | |||||||||
| Stock-based compensation | 577 | 1,781 | 1,316 | 2,398 | |||||||||||
| Restructuring and other costs | 1,810 | 360 | 5,888 | 646 | |||||||||||
| Adjusted EBITDA from continuing operations | $ | (361 | ) | $ | (1,660 | ) | $ | (732 | ) | $ | (734 | ) | |||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net loss from continuing operations | $ | (4,503 | ) | $ | (4,502 | ) | $ | (11,970 | ) | $ | (5,875 | ) | |||
| Stock-based compensation | 577 | 1,781 | 1,316 | 2,398 | |||||||||||
| Restructuring and other costs | 1,810 | 360 | 5,888 | 646 | |||||||||||
| Non-GAAP net loss from continuing operations | $ | (2,116 | ) | $ | (2,361 | ) | $ | (4,766 | ) | $ | (2,831 | ) | |||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Total revenues from continuing operations | $ | 64,634 | $ | 61,099 | $ | 131,121 | $ | 121,803 | |||||||
| Pass-through revenue | (19,278 | ) | (13,598 | ) | (37,037 | ) | (24,474 | ) | |||||||
| Cost of product revenue | (104 | ) | (4,284 | ) | (3,055 | ) | (8,370 | ) | |||||||
| Service fee revenue related to LiveArea activity (1) | — | (3,283 | ) | — | (6,372 | ) | |||||||||
| Service fee equivalent revenues from continuing operations | $ | 45,252 | $ | 39,934 | $ | 91,029 | $ | 82,587 | |||||||
(1) In completing the discontinued operations presentation, certain LiveArea revenues, costs of revenues and gross profit related to client contracts that were not fully transferred to contracts directly operating under the LiveArea operating entities as of the August 2021 transaction date were maintained by PFSweb as part of the continuing operations presentation. As of the LiveArea transaction date, future activities of certain contracts where we have subcontracted services to LiveArea are expected to be recorded as pass-through revenue and pass-through costs, for as long as such contracts continue to be maintained directly through PFSweb.
PFSWEB, INC. AND SUBSIDIARIES
UNAUDITED NON-GAAP OPERATING INFORMATION
(In Thousands)
The following table represents the financial information for PFS Operations for the three and six months ended June 30, 2022 and 2021 excluding certain unallocated corporate costs and certain non-continuing revenues and expenses.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| PFS Operations (Non-GAAP) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| Revenues: | |||||||||||||||
| Service fee revenue | $ | 45,234 | $ | 43,009 | $ | 90,765 | $ | 88,529 | |||||||
| Product revenue, net | 122 | 4,492 | 3,319 | 8,800 | |||||||||||
| Pass-through revenue | 19,278 | 13,598 | 37,037 | 24,474 | |||||||||||
| Service fee revenue related to LiveArea activity (1) | — | (3,283 | ) | — | (6,372 | ) | |||||||||
| Total revenues | 64,634 | 57,816 | 131,121 | 115,431 | |||||||||||
| Costs of Revenues: | |||||||||||||||
| Cost of service fee revenue | 35,645 | 31,863 | 72,137 | 65,393 | |||||||||||
| Cost of product revenue | 104 | 4,284 | 3,055 | 8,370 | |||||||||||
| Cost of pass-through revenue | 19,278 | 13,598 | 37,037 | 24,474 | |||||||||||
| Cost of service fee revenue related to LiveArea activity (1) | — | (1,959 | ) | — | (3,780 | ) | |||||||||
| Total costs of revenues | 55,027 | 47,786 | 112,229 | 94,457 | |||||||||||
| Gross profit | 9,607 | 10,030 | 18,892 | 20,974 | |||||||||||
| Direct operating expenses (2) | 7,109 | 9,080 | 14,566 | 16,309 | |||||||||||
| Direct contribution | 2,498 | 950 | 4,326 | 4,665 | |||||||||||
| Depreciation and amortization (3) | 1,677 | 1,722 | 3,656 | 3,607 | |||||||||||
| Stock-based compensation (4) | 228 | 602 | 357 | 754 | |||||||||||
| Restructuring and other costs (5) | 253 | 360 | 598 | 646 | |||||||||||
| Adjusted EBITDA | $ | 4,656 | $ | 3,634 | $ | 8,937 | $ | 9,672 | |||||||
| Total Revenues | $ | 64,634 | $ | 57,816 | $ | 131,121 | $ | 115,431 | |||||||
| Pass-through revenue | (19,278 | ) | (13,598 | ) | (37,037 | ) | (24,474 | ) | |||||||
| Cost of product revenue | (104 | ) | (4,284 | ) | (3,055 | ) | (8,370 | ) | |||||||
| Service fee equivalent revenue | $ | 45,252 | $ | 39,934 | $ | 91,029 | $ | 82,587 | |||||||
(1) In completing the discontinued operations presentation, certain LiveArea revenues, costs of revenues and gross profit related to client contracts that were not fully transferred to contracts directly operating under the LiveArea operating entities as of the August 2021 transaction date were maintained by PFSweb as part of the continuing operations presentation. As of the LiveArea transaction date, future activities of certain contracts where we have subcontracted services to LiveArea are expected to be recorded as pass-through revenue and pass-through costs, for as long as such contracts continue to be maintained directly through PFSweb.
(2) Direct operating expenses for PFS Operations exclude unallocated corporate costs included in consolidated selling, general and administrative expense of
(3) Depreciation and amortization for PFS Operations exclude depreciation and amortization applicable to unallocated corporate costs included in consolidated selling, general and administrative expense of approximately
(4) Stock based compensation for PFS Operations exclude stock-based compensation applicable to unallocated corporate costs included in consolidated selling, general and administrative expense of
(5) Restructuring and other costs for PFS Operations exclude restructuring and other costs applicable to unallocated corporate costs included in consolidated selling, general and administrative expense of
FAQ
What was PFSweb's revenue growth in Q2 2022?
How did PFS Operations service fee equivalent revenue perform?
What was the net loss for PFSweb in Q2 2022?
What is PFSweb's 2022 revenue growth outlook?
What significant bookings did PFSweb record in Q2 2022?
