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LightInTheBox Reports Second Quarter 2019 Financial ResultsBEIJING, Sept. 9, 2019 /PRNewswire/ -- LightInTheBox Holding Co., Ltd. (NYSE: LITB) ("LightInTheBox" or the "Company"), a cross-border e-commerce platform that delivers products directly to consumers around the world, today announced its unaudited financial results for the second quarter ended June 30, 2019. Second Quarter 2019 Highlights
Mr. Jian He, Chief Executive Officer of LightInTheBox, commented, "I'm glad to report solid results which I believe demonstrate just how effective our efforts over the past few quarters have been in stabilizing and turning our business around. Revenues during the quarter regained growth momentum by increasing 4.9% year-over-year. Gross margin expanded significantly to 41.9%, driven by a shift in product mix towards higher margin products. More importantly, adjusted EBITDA turned positive, increasing to earnings of $0.9 million compared to a loss of $8.9 million during the same period last year. We continue to cut costs and are carefully investing in R&D in order to drive future growth. Sales and marketing expenses as a percentage of revenue also continued to trend downwards, decreasing to 19.8% as our repeat purchase rate gradually increases. With our financial and operational metrics improving since the acquisition of Ezbuy, I'm fully confident that we have the right strategy in place to build upon this momentum going forward."
Second Quarter 2019 Financial Results Total revenues increased by 4.9% year-over-year to $58.1 million from $55.4 million in the same quarter of 2018. Revenues from product sales were $57.1 million, compared with $52.0 million in the same quarter of 2018. Revenues from service and others were $1.0 million, compared with $3.4 million in the same quarter of 2018. The number of orders for product sales was 1.3 million in the second quarter of 2019, compared with 0.9 million in the same quarter of 2018. The number of customers for product sales was 0.8 million for the second quarter of 2019, compared with 0.7 million in the same quarter of 2018. Revenues generated from product sales in the apparel category were $20.3 million in the second quarter of 2019, compared with $18.7 million in the same quarter of 2018. As a percentage of product sales, apparel revenues accounted for 35.6% in the second quarter of 2019, compared with 36.0% in the same quarter of 2018. Product sales from other general merchandise were $36.8 million in the second quarter of 2019. Total cost of revenues was $33.8 million in the second quarter of 2019, compared with $41.4 million in the same quarter of 2018. Cost for product sales was $33.6 million in the second quarter of 2019, compared with $38.2 million in the same quarter of 2018. Cost for service and others was $0.2 million in the second quarter of 2019, compared with $3.2 million in the same quarter of 2018. Gross profit in the second quarter of 2019 was $24.4 million, compared with $14.0 million in the same quarter of 2018. Gross margin was 41.9% in the second quarter of 2019, compared with 25.4% in the same quarter of 2018. The increase in gross margin was a result of the Company's shift in product mix towards higher margin products. Total operating expenses in the second quarter of 2019 were $26.9 million, compared with $23.7 million in the same quarter of 2018.
Gain from equity method investment was $2.0 million in the second quarter of 2019, compared with $0.1 million in the same quarter of 2018. The $2.0 million of gain in the second quarter of 2019 was derived from the disposal of the equity investment in Demon Network Tech Co., Ltd. The disposal allows the Company to focus more on operating the cross-border platform. Loss from operations was $2.6 million in the second quarter of 2019, compared with a loss from operations of $9.7 million in the same quarter of 2018. Net loss was $7.3 million in the second quarter of 2019, compared with a net loss of $9.5 million in the same quarter of 2018. Net loss included the impact from a $6.6 million non-operating loss due to the change in fair value of the convertible promissory notes associated with the acquisition of Ezbuy. Net loss per American Depository Share ("ADS") was $0.11 in the second quarter of 2019, compared with net loss per ADS of $0.14 in the same quarter of 2018. Each ADS represents two ordinary shares. In the second quarter of 2019, the Company's weighted average number of ADSs used in computing the loss per ADS was 67,302,278. Adjusted EBITDA, which represents gain /(loss) from operations before share-based compensation expense, change in fair value of convertible promissory notes, interest income, interest expense, income tax expense and depreciation and amortization expenses, was a gain of $0.9 million in the second quarter of 2019, compared with a loss of $8.9 million in the same quarter of 2018. As of June 30, 2019, the Company had cash and cash equivalents and restricted cash of $29.4 million, compared with $30.3 million as of March 31, 2019. Business outlook For the third quarter of 2019, based on current information available to the Company and business seasonality, the Company expects net revenues to be between $58 million and $61 million. Change in Fair Value of Convertible Promissory Notes Associated with the Acquisition of Ezbuy The Company entered into a Share Purchase Agreement ("SPA") on November 8, 2018 to acquire Ezbuy in the form of non-interest bearing one-year convertible promissory notes. This SPA took effect on December 10, 2018 when LITB's closing stock price was $0.64. LITB's closing stock price on December 31, 2018 and June 30,2019 was $1.22 and $1.48 respectively. The Company adopted Monte-Carlo Simulation based on a scenario-weighted average method to estimate the fair value of the convertible promissory notes. The estimate is based on the probability of each scenario and pay-off of the convertible promissory notes under each scenario. The scenarios include different timing and corresponding conversion price of the convertible promissory notes. The key assumptions adopted in the convertible promissory notes valuation include risk-free rate of interest and expected stock price volatility in the conversion period. The Company recorded a non-cash loss arising from change in fair value of the convertible promissory notes of $6.6 million in the second quarter of 2019. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use the following non-GAAP financial measures to help evaluate our operating performance: "Adjusted EBITDA" represents gain /(loss) from operations before share-based compensation expense, change in fair value of convertible promissory notes, interest income, interest expense, income tax expense and depreciation and amortization expenses. Although other companies may calculate adjusted EBITDA differently or not present it at all, we believe that the adjusted EBITDA helps to identify underlying trends in our operating results, enhancing their understanding of the past performance and future prospects. Potential impact on adoption of ASC 606 – revenue from contracts with customers The Company is in the process of assessing on the announcement of ASC 606 – revenue from contracts with customers, principal versus agent considerations for one of the business lines of Ezbuy, which was acquired by the Company on December 10, 2018. In the second quarter and the first quarter of 2019, the Company recognized revenue of $5.5 million and $5.9 million on gross basis, respectively. If this revenue does not meet the criteria under gross basis, it will be recorded under net basis and accordingly, both total revenues and total cost of revenues will decrease by $4.0 million and $4.3 million for the second quarter and the first quarter of 2019, respectively. Conference Call The Company will hold a conference call at 8:00 a.m. Eastern Time on September 9, 2019 to discuss its financial results and operating performance for the second quarter 2019. To participate in the call, please dial the following numbers:
A telephone replay will be available two hours after the conclusion of the conference call through September 16, 2019. The dial-in details are:
A live and archived webcast of the conference call will be available on the Investor Relations section of LightInTheBox's website at http://ir.lightinthebox.com. About LightInTheBox Holding Co., Ltd. LightInTheBox is a cross-border e-commerce company that delivers products directly from manufacturers to its customers around the world. The Company offers customers a convenient way to shop for a wide selection of products at attractive prices through its platforms at www.lightinthebox.com, www.miniinthebox.com, www.ezbuy.com and other websites and mobile applications, which are available in 25 major languages and cover more than 140 countries. For more information, please visit www.lightinthebox.com. Investor Relations Contact Christensen OR Christensen Forward-Looking Statements This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "potential," "continue," "ongoing," "targets" and similar statements. Among other things, statements that are not historical facts, including statements about LightInTheBox's beliefs and expectations, the business outlook and quotations from management in this announcement, as well as LightInTheBox's strategic and operational plans, are or contain forward-looking statements. LightInTheBox may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward- looking statement, including but not limited to the following: LightInTheBox's goals and strategies; LightInTheBox's future business development, results of operations and financial condition; the expected growth of the global online retail market; LightInTheBox's ability to attract customers and further enhance customer experience and product offerings; LightInTheBox's ability to strengthen its supply chain efficiency and optimize its logistics network; LightInTheBox's expectations regarding demand for and market acceptance of its products; competition; fluctuations in general economic and business conditions and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in LightInTheBox's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and LightInTheBox does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
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