Bidz (
BIDZ, $2.92)
reported 3Q09 results after Market close today that were mixed: top-line of $24.8 million versus guidance of $22-24 million and a gross margin of 28.9% versus guidance of 28-30% (24.0% in year ago period), but pre-tax income of $0.07 million compared to guidance for $0.2-$1.0 million ($5.5 million in prior year period) and fully diluted EPS of $0.01-$0.03. Slightly higher than expected expenses, including litigation expense, led to the slight bottom-line miss. Bidz also filed its 10-Q today --
link here. Key operating metrics were as follows:
Three Months Ended
September 30,
----------------------------
Auction Metrics 2009 2008 % Change
--------------- ---- ---- --------
Number of new buyers 34,252 54,072 -36.7%
Average selling price per order (gross) $187 $175 6.9%
Average orders per day 1,465 2,453 -40.3%
Average items sold per day 6,899 8,431 -18.2%
Average items sold per transaction 4.7 3.4 37.0%
Acquisition cost per new buyer $65 $43 51.2%
Gross Margin $ per average order $54 $42 28.7%
The 37% decline in new buyers matched a 37.4% Y/Y decline in net revenue excluding B2B sales and is a modest improvement from declines of ~40% in recent quarters. Still, fewer buyers are leading to higher acqusitions costs per new buyer (e.g. costs spread across fewer new purchasers).
Unfortunately, forecasting remains a challenge in a tough consumer environment where discretionary items are increasingly secondary. In addition, Bidz cited recent challenges related to the company's new enterprise resource planning (ERP) software deployment. As a result, 4Q09 guidance came up light relative to both consensus estimates ($34.5 million) and prior management commentary (
from 2Q09 report) calling for a return to Y/Y growth in 4Q (i.e. greater than $35.1 million):
- Guidance for the fourth quarter of 2009 of $28-$32 million, gross profit margin of approximately 28-30%, pre-tax income of approximately $0.4-$1.5 million and expects fully taxed GAAP EPS of $0.01-$0.04.
- The Company's results will be affected by its ERP conversion in the fourth quarter of 2009, but the Company expects to resume normalized operations in the first quarter of 2010.
In addition, we need to keep waiting with regard to SEC/FTC/legal overhangs as management merely said it's working diligently on all fronts, but alluded to positive progress with respect shareholder litigation suits.
