ALLEN, TX — (Marketwired) — 05/09/16 — PFSweb, Inc. (NASDAQ: PFSW), a global commerce service provider, reported results for the first quarter ended March 31, 2016.
Total revenues increased 18% to $75.1 million
Service fee equivalent revenue (a non-GAAP measure defined below) increased 33% to a Q1 record $50.0 million
Service fee gross margin increased 310 basis points to 34.6%
Adjusted EBITDA (a non-GAAP measure defined below) increased to $3.8 million
“The momentum from our record 2015 has carried into the first quarter of 2016,” said Mike Willoughby, CEO of PFSweb. “Our Q1 record revenue was driven by growth across all of our core service offerings — agency, technology and omni-channel operations-, including the benefit from last year–s acquisitions of CrossView and Moda. We also continued to leverage our newly launched consulting practice during the quarter, which enhances our positioning earlier in the client sales cycle.
“Our incremental investments in sales, marketing and infrastructure resources in 2016 are beginning to yield results. We continue to believe that our full end-to-end service offering, with integration and support capabilities across all five major enterprise level technology platforms, is a differentiator for us in the marketplace and positions us well to be a valued, strategic partner for our clients.
“For the remainder of 2016, we are targeting to continue to drive growth across our operations and professional service offerings to capitalize on our large and growing addressable market. We also remain in the early innings of leveraging our B2B capabilities, and we continue to believe this underserved portion of the market is a sizeable opportunity for our company. Most importantly, we plan to continue executing for our clients and enabling them to maximize online sales, which we believe will drive the most enhanced value for our stockholders.”
Total revenues in the first quarter of 2016 increased 18% to $75.1 million compared to $63.8 million in the same period of 2015. Service fee revenue in the first quarter increased 34% to $49.3 million compared to $36.7 million last year. Product revenue was $13.6 million compared to $16.7 million in the same period of 2015 due to ongoing restructuring activities by the company–s last remaining client in this segment and their discontinuation of certain product lines.
Service fee equivalent revenue increased 33% to a first quarter record $50.0 million compared to $37.7 million in the year-ago quarter, driven by both new and expanded client relationships, as well as approximately $8.2 million of service fees generated in the first quarter of 2016 by the company–s CrossView and Moda subsidiaries which were acquired midyear 2015.
Service fee gross margin in the first quarter of 2016 increased 310 basis points to 34.6% compared to 31.5% in the same period of 2015. The increase was due to a higher proportion of agency and technology services in the first quarter of 2016, in part due to the benefit from the Moda and CrossView acquisitions.
Adjusted EBITDA increased slightly to $3.8 million compared to $3.7 million in the same period of 2015. As a percentage of service fee equivalent revenue, adjusted EBITDA was 7.5% compared to 9.9% in the year-ago quarter. The decline in adjusted EBITDA margin was anticipated and driven by increased investment in sales, marketing and infrastructure resources to support our targeted future growth.
Net loss in the first quarter of 2016 improved to $0.8 million or $(0.04) per share, compared to a net loss of $1.7 million or $(0.10) per share in the same period of 2015. Net loss in the first quarter of 2016 included $0.8 million in amortization of acquisition-related intangible assets, $0.8 million in stock-based compensation expense, and a $0.8 million benefit from acquisition-related, restructuring and other income. This compares to $0.2 million in amortization of acquisition-related intangible assets, $0.8 million in stock-based compensation expense and $0.8 million in acquisition-related, restructuring and other costs in the same period of 2015.
Non-GAAP net income (a non-GAAP measure defined below) in the first quarter of 2016 was $41,000 or $0.00 per diluted share, compared to $130,000 or $0.01 per diluted share in the first quarter of 2015.
At March 31, 2016, cash and cash equivalents was $15.6 million compared to $21.8 million at December 31, 2015. Total debt was $37.0 million compared to $35.4 million at December 31, 2015.
PFSweb is reiterating its target for 2016 service fee equivalent revenue to range between $220 million and $230 million, reflecting growth of 19% to 24% from 2015. The company is also reiterating its target for adjusted EBITDA to range between $23 million to $25 million, up 11% to 21% from 2015. This adjusted EBITDA target includes the expected impact of incremental sales and marketing expenditures as well as other infrastructure expenditures to support the company–s targeted future growth.
PFSweb will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2016.
CEO Michael Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.
Date: Monday, May 9, 2016
Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time)
Toll-free dial-in number: 1-888-503-8169
International dial-in number: 1-719-325-2354
Conference ID: 8424190
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 Liolios at 1-949-574-3860.
The conference call will be broadcast live and available for replay at and via the investor relations section of the company–s website at .
A replay of the conference call will be available after 8:00 p.m. Eastern Time on the same day through May 23, 2016.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 8424190
PFSweb (NASDAQ: PFSW) is a global commerce service provider of solutions including digital strategy consulting, digital agency and marketing services, technology development services, business process outsourcing services, and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFSweb supports organizations across various industries, including Procter & Gamble, L–Oreal, LEGO, Columbia Sportswear, ASICS, Roots Canada Ltd., PANDORA, Diageo, BCBGMAXAZRIA, ROKA Sports, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Ohio, North Carolina, Canada, Belgium, London, Munich, and India. For more information, please visit or download the free PFSweb IR App on your , or device.
This news release may contain certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and service fee equivalent revenue.
Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, acquisition related, restructuring and other costs and the amortization of acquisition-related intangible assets.
EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, acquisition related, restructuring and other costs.
Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue.
Non-GAAP net income (loss), EBITDA, Adjusted EBITDA 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, acquisition related, restructuring and other costs and amortization of acquisition-related intangible assets and EBITDA and adjusted EBITDA further eliminate the effect of financing, 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 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.
PFSweb 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.
The matters discussed herein consist of 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. PFSweb–s Annual Report on Form 10-K for the year ended December 31, 2015 identifies 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 Annual Report of the Company and the Risk Factors described therein. PFSweb 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.
Michael C. Willoughby
Chief Executive Officer
or
Thomas J. Madden
Chief Financial Officer
Tel 972-881-2900
Liolios
Scott Liolios or Sean Mansouri
Tel 949-574-3860
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