Newegg(NEGG) - 2024 Q4 - Annual Report

Newegg Fiscal Year 2024 Results Management Commentary Newegg's management focused on operational discipline and cost reduction in FY2024, improving Adjusted EBITDA and driving strong Q4 sales momentum - The company executed significant SG&A reduction initiatives, including warehouse consolidation and workforce alignment, which improved the bottom line and strengthened its financial foundation[3] - Sales momentum accelerated in Q4 2024 due to a successful Black Friday campaign and continued into Q1 2025 with double-digit GMV growth, spurred by new product launches like NVIDIA 50 Series GPUs and AMD Ryzen CPUs[3] - Strategic initiatives include exploring B2B software-as-a-service (SaaS) opportunities and focusing on high-growth segments such as AI PCs and high-performance gaming hardware[3] - Inventory was efficiently managed, decreasing from $136.2 million in 2023 to $98.5 million in 2024, aided by strong holiday sales[3] - The company is not providing full-year 2025 guidance due to uncertainty surrounding the impact of tariff policies on consumer confidence[3] - A twenty-to-one reverse stock split was completed on April 7, 2025, to regain compliance with Nasdaq's minimum bid price requirement, which was achieved on April 22, 2025[3] Fiscal Year 2024 Financial & Operational Highlights Newegg's FY2024 saw decreased net sales and GMV, yet significantly narrowed net loss and improved Adjusted EBITDA despite operational metric declines Fiscal Year 2024 Financial Highlights (vs. 2023) | Financial Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1.24 billion | $1.50 billion | -17.4% | | GMV | $1.53 billion | $1.81 billion | -15.4% | | Gross Profit | $131.5 million | $167.6 million | -21.5% | | Net Loss | ($43.3 million) | ($59.0 million) | +26.6% (Loss narrowed) | | Adjusted EBITDA | ($9.5 million) | ($21.3 million) | +55.4% (Loss narrowed) | Fiscal Year 2024 Operational Metrics (vs. 2023) | Operational Metric | As of Dec 31, 2024 | As of Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Average Order Value | $396 | $379 | +4.5% | | Active Customers | 2.1 million | 2.5 million | -16.0% | | Repeat Purchase Rate | 26.0% | 29.2% | -3.2 p.p. | Consolidated Financial Statements Consolidated Balance Sheets As of Dec 31, 2024, Newegg's total assets and liabilities decreased due to reductions in cash, inventories, and accounts payable, impacting stockholders' equity Consolidated Balance Sheet Summary (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $283,645 | $344,451 | | Inventories, net | $98,537 | $136,164 | | Cash and cash equivalents | $96,255 | $102,512 | | Total Assets | $407,321 | $499,047 | | Total Current Liabilities | $243,573 | $296,544 | | Accounts payable | $148,279 | $206,588 | | Total Liabilities | $301,229 | $369,655 | | Total Stockholders' Equity | $106,092 | $129,392 | Consolidated Statements of Operations Newegg's FY2024 net sales decreased, but significant SG&A reductions narrowed operating and net losses compared to the prior year Consolidated Statement of Operations Summary (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Net sales | $1,235,576 | $1,496,963 | | Gross profit | $131,488 | $167,557 | | Selling, general, and administrative expenses | $183,039 | $238,641 | | Loss from operations | $(51,551) | $(71,084) | | Net loss | $(43,328) | $(58,990) | - SG&A expenses were significantly reduced by 23.3% year-over-year, from $238.6 million in 2023 to $183.0 million in 2024, which was a key driver in narrowing the operating loss[20] Consolidated Statements of Cash Flows In FY2024, Newegg significantly improved cash used in operating activities, with investing activities providing cash, leading to an overall decrease in cash and equivalents Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(821) | $(3,839) | | Net cash provided by (used in) investing activities | $2,445 | $(14,254) | | Net cash (used in) provided by financing activities | $(6,053) | $1,560 | | Net decrease in cash, cash equivalents and restricted cash | $(6,732) | $(17,032) | | Cash, cash equivalents and restricted cash at end of period | $99,742 | $106,474 | Non-GAAP Financial Measures & Reconciliations Definition of Non-GAAP Measures Newegg uses non-GAAP measures like GMV and Adjusted EBITDA to provide a clearer view of core operating performance by excluding certain non-cash or non-recurring items - Gross Merchandise Value (GMV) is the total dollar value of products sold on its websites and third-party marketplaces, net of returns, discounts, taxes, and cancellations, and includes service fees[11] - Adjusted EBITDA is calculated as net income/loss, excluding stock-based compensation, depreciation & amortization, net interest income, income tax, and certain other gains/losses to better reflect core operating performance[12][13] Reconciliation of Net Sales to GMV Newegg's FY2024 Net Sales of $1.236 billion reconciled to a GMV of $1.534 billion, primarily by including marketplace seller sales Reconciliation of Net Sales to GMV (in millions) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Net Sales | $1,235.6 | $1,497.0 | | Adjustments | $298.1 | $315.5 | | GMV | $1,533.7 | $1,812.5 | Reconciliation of Net Loss to Adjusted EBITDA Newegg's FY2024 net loss of $43.3 million reconciled to an Adjusted EBITDA of ($9.5) million, a significant improvement from prior year due to key adjustments Reconciliation of Net Loss to Adjusted EBITDA (in millions) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Net loss | $(43.3) | $(59.0) | | Stock-based compensation expenses | $27.3 | $33.7 | | Depreciation and amortization | $10.7 | $13.4 | | Other Adjustments | $(1.2) | $(9.4) | | Adjusted EBITDA | $(9.5) | $(21.3) |