BETHESDA, Md., May 03, 2018 (GLOBE NEWSWIRE) -- Liquidity Services (NASDAQ:LQDT) (www.liquidityservices.com), a global solution provider in the reverse supply chain with the world’s largest marketplace for business surplus, today announced financial results for the second quarter fiscal year 2018 ended March 31, 2018. The company's Q2-FY18 performance was ahead of our guidance range for GAAP Net Loss, Non-GAAP Adjusted EBITDA, GAAP EPS, and Non-GAAP Adjusted EPS and within guidance range for gross merchandise volume (GMV).
"We continue to make steady progress driving growth in our RSCG and GovDeals segments. We also continued to drive cost discipline and needed investments in our technology platform during Q2. Reflecting the demand for our scale, services and strong client results, we added over 300 new sellers and approximately 40,000 new registered buyers to our marketplaces during Q2, led by the strong growth in our RSCG and GovDeals segments. Notably, our RSCG segment delivered 13% growth in GMV and recorded its highest GMV quarter since Q3-FY15. Our RSCG segment continues to secure and grow programs with large and mid-size retailers and manufacturers. Despite lower than expected seller activity on the East Coast related to severe weather, our GovDeals segment continued to drive solid organic growth and expansion of seller accounts. Our CAG segment had mixed results in Q2 due to project delays and lower than expected availability of product flows. As expected, our DoD business (included in our CAG segment) declined versus the prior year period as we executed the wind down of our Surplus contract and received lower volumes under our Scrap contract. Lastly, as we wound down our DoD Surplus contract, we aligned our development and product management resources with the remaining deliverables under our LiquidityOne transformation initiative, resulting in lower than expected technology expenses," said Bill Angrick, chairman and CEO of Liquidity Services.
Update on LiquidityOne
Our LiquidityOne transformation initiative remains focused on delivering an improved online marketplace platform and related tools to enhance our customer experience, operations and ability to scale to a much larger business. We are expecting to deploy these enhancements to all our marketplaces by the end of calendar year 2018. This initiative will further align our business processes and optimize our platform technology. Under our product roadmap we plan to deploy a new version of our GovDeals and AuctionDeals self-service marketplaces during Q3-FY18.
Finally, we anticipate the launch of a new consolidated marketplace on our LiquidityOne e-commerce platform by the end of calendar year 2018, which will serve as a single marketplace to search, find and buy any asset from across our network of marketplaces. We believe a single, unified marketplace will drive increased traffic from our buyer base through more efficient marketing strategies and provide our buyers with a more efficient method of sourcing our global supply of available assets from the most recognizable sellers across the globe.
Second Quarter Consolidated Operating and Earnings Results
The company reported Q2-FY18 GMV, an operating measure of the total sales value of all merchandise sold by us or our sellers through our marketplaces and other channels during a given period of time, of $152.2 million, down from $163.7 million in the prior year’s comparable period. Revenue for Q2-FY18 was $60.1 million, down from $72.3 million in the prior year’s comparable period. GAAP Net loss for Q2-FY18 was $(5.7) million, which resulted in a diluted loss per share of $(0.18) based on a weighted average of 32.0 million diluted shares outstanding, improved from $(8.3) million and $(0.26) respectively, in the prior year’s comparable period. Non-GAAP adjusted net loss, which excludes stock-based compensation, impairment and business realignment expenses, acquisition costs, and the estimated impact of income taxes on these adjustments as well as non-recurring tax adjustments, was $(3.9) million or $(0.12) adjusted diluted loss per share, an improvement from $(6.6) million and $(0.21) respectively, in the prior year’s comparable period.
Non-GAAP Adjusted EBITDA, which excludes stock-based compensation, impairment and business realignment expenses, and acquisition costs, was a loss of $(2.2) million, an improvement from the prior year’s comparable period of $(4.4) million.
Q2-FY18 comparative consolidated financial results reflect strong growth in our GovDeals and RSCG segments, benefits from the wind down of the TruckCenter live auction business, and lower expenses due to restructuring in our IronDirect business and our CAG segment. These gains were offset by lower volume and an unfavorable mix of goods received under our DoD Scrap contract, lower volume of goods sold under the wind down of our DoD Surplus contract, and lower sales volumes in the industrial and energy verticals in our CAG segment.
Second Quarter Segment Operating and Earnings ResultsWe present operating results in three reportable segments: GovDeals, Capital Assets Group (CAG), and Retail Supply Chain Group (RSCG). These three segments constitute approximately 98% of our revenue, and each offers separately branded marketplaces to enable sellers to achieve channel marketing objectives to reach buyers. Across our segments, we offer our sellers various pricing and transaction models as well as a suite of services, and our revenues vary depending upon the pricing models employed and the level of service selected by sellers.
Additional Second Quarter 2018 Operational Results
- Registered Buyers — At the end of Q2-FY18, registered buyers totaled approximately 3,249,000, representing a 7% increase over the approximately 3,028,000 registered buyers at the end of Q2-FY17.
- Auction Participants — Auction participants, defined as registered buyers who have bid in an auction during the period (a registered buyer who bids in more than one auction is counted as an auction participant in each auction in which he or she bids), decreased to approximately 549,000 in Q2-FY18, an 11% decrease from the approximately 619,000 auction participants in Q2-FY17.
- Completed Transactions — Completed transactions decreased to approximately 118,000, an 18% decrease for Q2-FY18 from the approximately 144,000 completed transactions in Q2-FY17.
Business Outlook
We remain cautious regarding our near-term outlook, but we expect to realize improvements across the ongoing businesses during the remainder of FY18. In Q3-FY18, we expect strong performance in our RSCG segment as we have a strong pipeline and continue to expand our seller base and services. We also expect our GovDeals segment to grow during Q3-FY18, its seasonally high quarter, as it leverages growth in current and new seller volumes. Our commercial business within the CAG segment is expected to be in-line with our performance in Q3-FY17 with sequential improvement partly related to the anticipated completion of projects that were delayed in Q2-FY18. However, we remain cautious with our CAG segment outlook because both the energy and industrial verticals are experiencing low volumes of available supply in the secondary markets. Our DoD Scrap contract is expected to have comparatively lower performance as the result of decreased property flows and lower quality mix of assets. Lastly, we have completed the sell-through of all remaining inventory under the legacy DoD Surplus contract. At the same time, we will continue to incur expenses related to the closure of warehouse locations and field sites supporting the legacy DoD Surplus contract. The combined impact of the DoD contracts will negatively affect our quarter-over-quarter CAG segment results in Q3-FY18.
Lastly, our investments related to the LiquidityOne transformation, including the deployment of our e-commerce platform and implementation of the ERP and back-end systems, will continue throughout the remainder of calendar 2018.
The following forward-looking statements reflect the following trends and assumptions for Q3-FY18:
- negative impact related to the completed wind down of our DoD Surplus contract;
- spending under our LiquidityOne transformation initiative as we continue with our ERP implementation and the launch of our next marketplace onto the new e-commerce platform;
- benefits from restructuring and business realignment charges related to streamlining of our organizational processes;
- variability in our CAG industrial and energy verticals related to project timing;
- continued strength in our GovDeals segment and steady year-over-year growth during its seasonal high quarter;
- strong activity in our RSCG segment; and
- continued declining volumes of goods received and an increasingly lower-value mix of commodities under the DoD Scrap contract.
For Q3-FY18 our guidance is as follows:
GMV - We expect GMV for Q3-18 to range from $150 million to $170 million.
GAAP Net Loss - We expect GAAP Net Loss for Q3-18 to range from $(9.6) million to $(6.8) million.
GAAP Diluted EPS - We expect GAAP Diluted Loss Per Share for Q3-18 to range from $(0.30) to $(0.21).
Non-GAAP Adjusted EBITDA -We expect non-GAAP Adjusted EBITDA for Q3-18 to range from $(5.5) million to $(3.5) million.
Non-GAAP Adjusted Diluted EPS - We expect non-GAAP Adjusted Loss Per Diluted Share for Q3-18 to range from $(0.26) to $(0.19). This guidance assumes a diluted weighted average number of shares outstanding for the quarter of 32.1 million and that we will not repurchase shares during the quarter with the approximately $10.1 million available under the share repurchase program.
About Liquidity Services
Liquidity Services (NASDAQ:LQDT) operates a network of leading e-commerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering over 500 product categories. The company employs innovative e-commerce marketplace solutions to manage, value and sell inventory and equipment for business and government sellers. Our superior service, unmatched scale and ability to deliver results enable us to forge trusted, long-term relationships with over 11,000 sellers worldwide. With over $7 billion in completed transactions, and over 3 million buyers in almost 200 countries and territories, we are the proven leader in delivering smart commerce solutions. Visit us at LiquidityServices.com.
