Provide Commerce, Inc. (Nasdaq: PRVD): For the First Quarter: --
Net Sales Increased 34.4% with GAAP loss of $(23,000) or Break-Even
Per Share -- Pro Forma Earnings of $3,000 or Break-Even Per Share
Provide Commerce, Inc. (Nasdaq: PRVD), an e-commerce marketplace of
websites for perishable goods, today reported financial results for
its fiscal first quarter ended September 30, 2005. The Company
reported net sales of $26.8 million for the first quarter of fiscal
2006, up 34.4% from $19.9 million in the first quarter of fiscal
2005. Gross profit increased 33.3% to $12.1 million compared to
$9.0 million in the prior year quarter, resulting in a gross margin
percentage of 45.0% versus 45.4% in the first quarter of fiscal
2005. The GAAP net loss for the quarter was $(23,000), or $(0.00)
per share, compared to $(497,000), or $(0.04) per share, in the
first quarter of fiscal 2005. GAAP net loss for the first quarter
of fiscal 2006 includes a benefit of $444,000 for the cumulative
effect of a change in accounting principle related to the adoption
of SFAS 123(R). The net loss for the first quarter of fiscal 2006
before the cumulative effect of a change in accounting principle
was $(467,000) compared to a loss of $(497,000) for the first
quarter of fiscal 2005. GAAP net loss also includes $839,000 of
stock based compensation expense as calculated under SFAS 123(R),
compared to $626,000 in the first quarter of fiscal 2005.
Management believes that a useful and relevant measure of
year-over-year operating performance is pro forma earnings or loss
from operations, defined as: GAAP earnings or loss excluding stock
based compensation expense and the related tax effect. In addition,
we have excluded the cumulative effect of a change in accounting
principle resulting from the adoption of SFAS 123(R), which also
relates to stock based compensation. Management does not believe
the use of pro forma earnings or loss and the corresponding per
share amounts lessens the importance of comparable GAAP measures.
The pro forma earnings or loss and its reconciliation to the
nearest GAAP measure are included in the attached financial tables.
(1) The pro forma earnings for the quarter were $3,000 compared to
a loss of $(189,000) for the first quarter of fiscal year 2005. The
pro forma per share earnings on 13.5 million fully diluted shares
outstanding was $0.00 for the quarter ended September 30, 2005
versus a loss of $(0.02) on 11.8 million shares outstanding for the
quarter ended September 30, 2004. Bill Strauss, Chief Executive
Officer of Provide Commerce, stated, "We are pleased with our
results for the first quarter of this fiscal year. Despite high
fuel surcharges, we were able to achieve strong operating results
as measured by revenue growth and margins. As we enter the
remainder of fiscal 2006, our management team remains focused on
balancing growth and profitability by executing on our direct
business model, which provides our customers with superior value."
Provide Commerce continued to show customer growth in the first
quarter. For the three-month period ended September 30, 2005,
ProFlowers added approximately 150,000 new customers which is a 28%
year-over-year increase compared to approximately 117,000 new
customers added in the first quarter of fiscal 2005. New customers
added in the first quarter brings the ProFlowers total customer
base to 4.5 million, representing an increase of approximately 39%
or 1.2 million new customers from the 3.2 million at September 30,
2004. ProFlowers returning customers generated approximately 67% of
net sales during the quarter, compared to approximately 68% in the
year-ago quarter. Average order value for the core consumer floral
business increased to $49.32 in the first quarter of fiscal 2006
from $46.96 during the first quarter of fiscal 2005. Strauss
continued, "During the first quarter, which is traditionally our
slowest, with no large flower-gifting holidays, we made substantial
progress on a number of strategic operating initiatives. In
addition to strengthening our team with key hires, we continue to:
build our logistics infrastructure, develop our programs to build
brand equity, and improve our insight into our customer segments.
We look forward to the challenges and opportunities during the
current fiscal year and delivering value to our customers and
stockholders by executing our direct business model and generating
strong free cash flow." Balance Sheet & Liquidity On May 3,
2005, Provide Commerce announced that its Board of Directors had
authorized the repurchase of up to $25 million of the Company's
common stock during the succeeding 12 months. During the quarter
ended September 30, 2005, Provide Commerce repurchased 89,700
shares of its common stock for $2.2 million at an average price of
$25.03. Since the repurchase plan was announced, the Company has
repurchased 498,200 shares of common stock for $11.1 million at an
average price of $22.27. At September 30, 2005, the Company had
approximately $60.0 million of cash, cash equivalents and
marketable securities, a 7.4% increase over $55.9 million at
September 30, 2004. At September 30, 2005, Provide Commerce had
$70.2 million of stockholders' equity and no bank debt. Financial
Guidance For the second quarter of fiscal 2006 and the full fiscal
year, management believes that a useful and relevant measure of
year-over-year operating performance is pro forma earnings or loss
from operations, defined as: GAAP earnings or loss excluding stock
based compensation expense, cumulative effect of a change in
accounting principle and the related tax effects. The Company is
confirming its net sales guidance and increasing pro forma and GAAP
net income and earnings per share guidance for the fiscal year
ending June 30, 2006 and also reducing its expected fully diluted
shares outstanding for the fiscal year. Based on the current
outlook for fiscal 2006: -- Net sales are expected to be between
$216 million and $224 million. -- GAAP net income is expected to be
between $10.9 million and $12.0 million or $0.79 and $0.87 per
fully diluted share. -- Pro forma earnings are expected to be
between $13.3 million and $14.6 million or $0.97 and $1.06 per
fully diluted share. -- Fully diluted shares outstanding for fiscal
year 2006 are expected to be approximately 13.8 million compared to
approximately 13.7 million for fiscal year 2005. For the second
quarter of fiscal 2006: -- Net sales are expected to be between
$41.8 and $43.8 million. -- GAAP net income is expected to be
between $0.3 million and $0.6 million or $0.02 and $0.04 per fully
diluted share. -- Pro forma earnings are expected to be between
$1.0 million and $1.3 million or $0.08 and $0.10 per fully diluted
share. Conference Call A conference call to discuss fiscal first
quarter 2006 financial results will be webcast live on Wednesday,
November 2, 2005 at approximately 5:00pm Eastern Time on the
investor relations section of Provide Commerce's website,
www.prvd.com or www.providecommerce.com. Listeners may also access
the call by dialing 1-800-289-0533 or 1-913-981-5525. A replay of
the call is available by dialing 1-888-203-1112 or 1-719-457-0820,
password 1405294. About Provide Commerce, Inc. Provide Commerce(SM)
operates an e-commerce marketplace of websites for perishable goods
that consistently delivers fresh, high-quality products direct from
the supplier to the customer at competitive prices. The Company's
platform combines an online storefront, proprietary supply chain
management technology and established supplier relationships to
create a market platform that bypasses traditional supply chains of
wholesalers, distributors and retailers. Provide Commerce launched
its marketplace in 1998 to sell and deliver fresh cut flowers for
everyday and special occasions such as Thanksgiving, Christmas,
birthday and anniversary events, through its ProFlowers(R) brand
and website, www.proflowers.com. Provide Commerce also offers fresh
fruit and premium meat direct from the supplier through its Gourmet
Food business unit. To date, these offerings consist of Cherry Moon
Farms(SM), www.cherrymoonfarms.com, and Uptown Prime(R),
www.uptownprime.com. For more information, please visit
www.prvd.com. Forward-looking Statements Statements in this press
release, other than historical information, may be
"forward-looking" in nature within the meaning of Section 21E of
the Private Securities Litigation Reform Act of 1995 and are
subject to various risks, uncertainties and assumptions. These
statements are based on management's current expectations,
estimates and projections about Provide Commerce and its industry
and include, but are not limited to, statements about projections
of net sales, marketing costs, cash flows, GAAP net income, pro
forma earnings, earnings per share growth, potential gains for
stockholders and repurchases of stock, as well as increasing and
managing overall customer satisfaction numbers and retention, its
overall business and market penetration and its ability to leverage
its business model. These statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in the applicable statements. The
risks, uncertainties and assumptions that may affect Provide
Commerce, its operating results and your investments, include, but
are not limited to, fluctuation in quarterly and annual results,
its ability to attain and maintain long-term customer satisfaction,
Provide Commerce's ability to meet projected financial results,
managing the seasonality of its business, scaling of existing
infrastructure expansion of its core floral business within the
floral business as well as into other perishable product
categories, rising fuel costs, managing challenges in customer
retention and translation of perceived customer loyalty into
financial results and its ability to maximize leverage in the
Company's cost structure, as well as the factors disclosed in the
Company's filings with the U.S. Securities and Exchange Commission,
available via Provide Commerce's website at www.prvd.com. The
Company undertakes no obligation to update any forward-looking
statements in order to reflect events or circumstances that may
arise after the date of this release. -0- *T PROVIDE COMMERCE, INC.
CONDENSED BALANCE SHEETS (unaudited) (in thousands) Sept. 30, June
30, --------- --------- 2005 2005 --------- --------- Assets
Current assets: Cash and cash equivalents $ 4,243 $ 12,308
Marketable securities 55,741 53,116 Accounts receivable, net 1,931
1,649 Inventory, net 3,766 3,719 Prepaid expenses and other current
assets 1,454 1,082 Income tax receivable 1,022 76 Deferred tax
assets 4,800 4,810 --------- --------- Total current assets 72,957
76,760 Property and equipment, net 7,176 6,871 Deferred tax assets
1,775 1,775 Other assets 5,008 4,802 --------- --------- Total
assets $ 86,916 $ 90,208 ========= ========= Liabilities and
Stockholders' Equity Current liabilities: Accounts payable and
other accrued liabilities $ 10,477 $ 13,198 Accrued compensation
2,766 3,416 Deferred revenue 443 592 --------- --------- Total
current liabilities 13,686 17,206 Accrued pension costs 1,262 1,186
Deferred compensation 1,746 1,181 Commitments and contingencies
Stockholders' equity: Common stock 12 12 Additional paid-in capital
103,462 104,666 Treasury stock, at cost (11,094) (8,849) Deferred
stock-based compensation - (3,068) Accumulated other comprehensive
loss (105) (96) Accumulated deficit (22,053) (22,030) ---------
--------- Total stockholders' equity 70,222 70,635 ---------
--------- Total liabilities and stockholders' equity $ 86,916 $
90,208 ========= ========= PROVIDE COMMERCE, INC. STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except share and per share
data) Three Months Ended September 30, ------------------------
2005 2004 ------------ ----------- Net sales $ 26,782 $ 19,921 Cost
of sales 14,727 10,875 ------------ ----------- Gross profit 12,055
9,046 Operating expenses: Selling and marketing 5,983 4,843 General
and administrative 5,703 4,196 Information technology systems 1,712
1,223 ------------ ----------- Total operating expenses 13,398
10,262 ------------ ----------- Operating loss (1,343) (1,216)
Other income, net 509 270 ------------ ----------- Loss before
income tax (834) (946) Income tax benefit (367) (449) ------------
----------- Net loss before cumulative effect of a change in
accounting principle (467) (497) Cumulative effect of a change in
accounting principle 444 - ------------ ----------- Net loss $ (23)
$ (497) ============ =========== Net loss per share before
cumulative effect of a change in accounting principle, basic and
diluted $ (0.04) $ (0.04) ============ =========== Cumulative
effect of a change in accounting principle per share Basic $ 0.04 $
0.00 ============ =========== Diluted $ 0.03 $ 0.00 ============
=========== Net loss per share, basic and diluted $ (0.00) $ (0.04)
============ =========== Weighted average common shares
outstanding: Basic 11,978,739 11,844,949 ============ ===========
Diluted 13,454,914 11,844,949 ============ =========== PROVIDE
COMMERCE, INC RECONCILING TABLE (unaudited) (in thousands, except
share and per share data) Table 1 ------- Three Months Ended
September 30, ------------------------ 2005 2004 ------------
----------- Non-GAAP Pro forma income reconciliation: Net loss $
(23) $ (497) Less: Cumulative effect of a change in accounting
principle (444) - Income tax benefit (367) (449) Add back:
Stock-based compensation 839 626 ------------ ----------- Non-GAAP
Pro forma earnings (loss) before taxes $ 5 $ (320) Non-GAAP Pro
forma income tax provision (benefit) 2 (131) ------------
----------- Non-GAAP Pro forma earnings (loss) $ 3 $ (189)
============ =========== Non-GAAP Net income (loss) per share,
basic and diluted: $ 0.00 $ (0.02) ============ ===========
Weighted average common shares outstanding: Basic 11,978,739
11,844,949 ============ =========== Diluted 13,454,914 11,844,949
============ =========== Stock-based compensation expense is
included in the statements of operations as follows: Three Months
Ended September 30, ------------------- 2005 2004 ---------
--------- Cost of sales $ 4 $ 5 Selling and marketing 281 216
General and administrative 359 321 Information technology systems
195 84 --------- --------- Total stock based compensation 839 626
========= ========= PROVIDE COMMERCE, INC. STATEMENT of CASH FLOWS
(unaudited) (in thousands) Three Months Ended September 30,
------------------ 2005 2004 --------- -------- Operating
activities: Net loss $ (23) $ (497) Adjustments to reconcile net
income to cash provided by operating activities: Depreciation and
amortization 802 599 Stock based compensation 839 626 Cumulative
effect of a change in accounting principle (444) - Changes in
operating assets and liabilities: Accounts receivable (282) (256)
Inventory (47) 142 Prepaid expenses and other current assets (372)
(228) Accounts payable and other accrued liabilities (2,722)
(2,852) Accrued compensation (650) (1,092) Accrued pension costs 76
98 Deferred compensation 565 502 Deferred revenue (149) (80)
Accrued and deferred income taxes (946) (1,120) Other assets (206)
248 --------- -------- Net cash used in operating activities
(3,559) (3,910) Investing activities: Purchase of property and
equipment (1,107) (1,529) Purchases of marketable securities
(28,658) (7,599) Sales/maturities of marketable securities 26,019
13,950 --------- -------- Net cash provided by (used in) investing
activities (3,746) 4,822 Financing activities: Payment of long-term
debt and capital lease obligations - (32) Common stock issued in
connection with secondary public offering - 1,299 Tax benefit from
the exercise of stock options 555 340 Proceeds from exercise of
common stock options and Warrants 930 229 Repurchase of common
stock (2,245) - --------- -------- Net cash provided by (used in)
financing activities (760) 1,836 --------- -------- Net increase
(decrease) in cash and cash equivalents (8,065) 2,748 Cash and cash
equivalents at beginning of the period 12,308 18,210 ---------
-------- Cash and cash equivalents at end of the period $ 4,243
$20,958 ========= ======== *T
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