- Ken Langone Named Executive Chairman and Interim CEO
- Board of Directors approves 1:10 Reverse Stock Split Subject to
Shareholder Approval
- Announces Change in Ticker Symbol to GKNT Effective Thursday,
August 5, 2010
Geeknet, Inc. (Nasdaq:LNUX), the online network
for the global geek community, today announced financial results
for the quarter ended June 30, 2010 and the resignation of
President and CEO Scott Kauffman. The Company also announced that
Chairman of the Board Ken Langone has been named Executive Chairman
and Interim CEO.
Total revenue for the second quarter of 2010 was $15.3 million
compared to $11.8 million of revenue for the second quarter of
2009. Net loss for the second quarter of 2010 was $2.5
million or $0.04 per share compared to a net loss of $3.6 million
or $0.06 per share, for the same period a year ago.
Adjusted EBITDA loss for the second quarter of 2010 was $1.3
million, compared to an adjusted EBITDA loss of $1.2 million for
the same period a year ago. A reconciliation of net loss as
reported to adjusted EBITDA loss is included in this release.
Second Quarter Highlights:
- E-commerce revenue increased 42 percent to $10.6 million for
the second quarter of 2010, compared to $7.4 million for the second
quarter of 2009. E-commerce orders shipped increased by 43
percent in the second quarter of 2010 as compared with the same
period last year.
- Media revenue increased 9 percent to $4.8 million for the
second quarter of 2010, compared to $4.3 million for the second
quarter of 2009. Revenue for the second quarter of 2010
included $2.4 million from our premium advertising products
compared to $1.6 million of revenue from premium advertising
products for the same period last year.
- Total cash and investments at the end of the second quarter
2010 was $28.0 million.
"Both our ecommerce and media business grew in the second
quarter, resulting in a 30% combined top-line increase," said Ken
Langone, Executive Chairman, Geeknet. "ThinkGeek continued
its tremendous success, driving strong results across the board.
Our media business is gaining traction with modest year-over-year
growth as we continue to improve the underlying metrics and expand
our premium advertising."
The Company also today announced that Scott Kauffman has
resigned as the company's President and Chief Executive Officer,
and as a member of the Board of Directors, to pursue other
opportunities. Ken Langone, who is currently a member and Chairman
of the Board of Directors, has been appointed as the Executive
Chairman. "We thank Scott for his contributions to Geeknet over the
past eighteen months. Scott will serve as an advisor to me through
a transition period yet to be determined," Langone commented. "We
wish him the best in his new endeavors."
On August 3, 2010, the Board of Directors approved a 1:10
reverse split of our common stock. The split is subject to
stockholder approval which is expected to occur in the fourth
quarter.
Effective August 5, 2010, the Company's NASDAQ ticker symbol
will be changed from LNUX to GKNT.
Supplemental schedules of the Company's quarterly statements of
operations and operational statistics are available on the
Company's web site at geek.net/cyresults.
A conference call and audio webcast will be held at 1:30 p.m. PT
or 4:30 p.m. ET on August 4, 2010 and may be accessed by calling
(877) 348-9353 or (253) 237-1159 outside the U.S., or by visiting
geek.net/investors. An audio replay will be available between 6:30
p.m. PT on August 4, 2010 and 11:59 p.m. PT on August 11, 2010 by
calling (800) 642-1687 or (706) 645-9291, with Conference ID
85874596.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, we also report
adjusted EBITDA. Adjusted EBITDA should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP
results. We believe that adjusted EBITDA provides useful
information to both management and investors and is an additional
measurement which may be used to evaluate our operating
performance. Our management and Board of Directors use
adjusted EBITDA as part of their reporting and planning process and
it is the primary measure we use to evaluate our operating
performance. In addition, we have historically reported
adjusted EBITDA to the investment community. We also believe
that the financial analysts who regularly follow and report on us
and the business sector in which we compete use adjusted EBITDA to
prepare their financial performance estimates to measure our
performance against other sector participants and to project our
future financial results.
We define adjusted EBITDA as net loss which is adjusted for
interest and other income (expense) net and income taxes as well as
stock-based compensation, restructuring charges and depreciation
and amortization. The method we use to produce adjusted
EBITDA is not computed according to GAAP, is likely to differ from
the methods used by other companies and should not be regarded as a
substitute for results prepared in accordance with accounting
principles generally accepted in the United States. Adjusted
EBITDA, as we compute it, excludes certain expenses that we believe
are not indicative of our core operating results, as well as income
taxes, stock-based compensation and depreciation and
amortization. We consider our core operating results to
include revenue recorded in a particular period and the related
expenses that are intended to directly drive operating income
during that period.
The EBITDA calculation excludes interest, income taxes and
depreciation and amortization by its nature. In addition,
when we compute adjusted EBITDA we exclude stock-based
compensation, restructuring charges and other amounts included in
the Interest income and other income (expense) net caption, as we
believe that these amounts represent income and expenses that are
not directly related to our core operations. Although some of
the items may recur on a regular basis, management does not
consider activities associated with these items as core to its
operations. With respect to stock-based compensation, we
recognize expenses associated with stock-based compensation that
require management to make assumptions about our common stock, such
as expected future stock price volatility, the anticipated duration
of outstanding stock options and awards and the rate at which we
recognize the corresponding stock-based compensation expense over
the course of future fiscal periods. While other forms of
expenses (such as cash compensation, inventory costs and real
estate costs) are reasonably correlated to our underlying business
and such costs are incurred principally or wholly in the particular
fiscal period being reported, stock-based compensation expense is
not reasonably correlated to the particular fiscal period in
question, but rather is based on expected future events that have
no relationship (and in certain instances, an inverse relationship)
with how well we currently operate our business. Restructuring
costs are excluded from adjusted EBITDA because they represent
non-cash charges which are not representative of our core
operations.
About Geeknet, Inc.
Geeknet is the online network for the global geek community. Our
sites include SourceForge, Slashdot, ThinkGeek, Geek.com, Ohloh and
freshmeat. We serve an audience of 48 million users* each month and
provide the tech-obsessed with content, culture, connections,
commerce, and all the things that geeks crave. Want to learn more?
Check out geek.net.
(*July 2010 Unique Visitors 48.4M. Source: Google Analytics and
Omniture)
Geeknet is a trademark of Geeknet, Inc. SourceForge, Slashdot,
ThinkGeek, Geek.com, Ohloh and freshmeat are trademarks of Geeknet,
Inc. in the United States and other countries. All other trademarks
or product names are property of their respective owners.
The Geeknet, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7330
NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
are based on our current expectations, and involve risks and
uncertainties. Forward-looking statements contained herein include
statements regarding the growth strategies and prospects for our
online media and e-commerce businesses. Actual results may
differ materially from those expressed or implied in such
forward-looking statements due to various factors, including:
shareholder approval or rejection of the Board approved reverse
stock split, impact of the Company's new ticker symbol, success in
designing and offering innovative online advertising programs;
decreases or delays in online advertising spending, especially in
light of current macroeconomic challenges and uncertainty; our
effectiveness at planning and managing our e-commerce inventory;
our ability to achieve and sustain higher levels of revenue; our
ability to protect and defend our intellectual property rights;
rapid technological and market change; unforeseen expenses that we
may incur in future quarters; and competition with, and pricing
pressures from larger and/or more established competitors.
Investors should consult our filings with the Securities and
Exchange Commission, sec.gov, including the risk factors section of
our Annual Report on Form 10-K for the year ended December 31, 2009
and our quarterly report on Form 10-Q for the period ending March
31, 2010, for further information regarding these and other risks
of our business. All forward-looking statements included in this
press release are based upon information available to us as of the
date hereof, and we do not assume any obligations to update such
statements or the reasons why actual results could differ
materially from those projected in such statements.
| GEEKNET,
INC. |
| CONDENSED CONSOLIDATED
BALANCE SHEETS |
| (In
thousands) |
|
(unaudited) |
| |
June 30, 2010 |
December 31,
2009 |
| |
|
|
| ASSETS |
| |
|
|
| Current assets: |
|
|
| Cash and cash equivalents |
$ 24,971 |
$ 28,943 |
| Short-term investments, including
restricted cash of $0 and $1,000, respectively |
3,015 |
10,408 |
| Accounts receivable, net |
4,694 |
4,299 |
| Inventories |
6,895 |
5,280 |
| Prepaid expenses and other current
assets |
2,963 |
3,564 |
| Total current assets |
42,538 |
52,494 |
| Property and equipment, net |
4,731 |
2,569 |
| Other long-term assets |
5,716 |
5,088 |
| Total assets |
$ 52,985 |
$ 60,151 |
| |
|
|
| LIABILITIES AND
STOCKHOLDERS' EQUITY |
| |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$ 4,919 |
$ 5,763 |
| Deferred revenue |
1,189 |
928 |
| Accrued liabilities and other |
2,377 |
3,854 |
| Accrued restructuring
liabilities |
-- |
1,238 |
| Total current liabilities |
8,485 |
11,783 |
| Other long-term liabilities |
94 |
103 |
| Total liabilities |
8,579 |
11,886 |
| |
|
|
| Stockholders' equity: |
|
|
| Common stock |
61 |
61 |
| Treasury stock |
(590) |
(492) |
| Additional paid-in capital |
800,488 |
798,917 |
| Accumulated other comprehensive
income |
8 |
13 |
| Accumulated deficit |
(755,561) |
(750,234) |
| Total stockholders' equity |
44,406 |
48,265 |
| Total liabilities and stockholders'
equity |
$ 52,985 |
$ 60,151 |
| |
| |
| GEEKNET,
INC. |
| CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
| (In thousands, except
per share data) |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Three Months
Ended June 30, |
Six Months Ended
June 30, |
| |
2010 |
2009 |
2010 |
2009 |
| Media revenue |
$ 4,751 |
$ 4,341 |
$ 9,046 |
$ 8,118 |
| E-commerce revenue |
10,558 |
7,444 |
20,942 |
14,038 |
| Net revenue |
15,309 |
11,785 |
29,988 |
22,156 |
| |
|
|
|
|
| Media cost of revenue |
1,831 |
1,718 |
3,612 |
3,625 |
| E-commerce cost of revenue |
8,792 |
6,152 |
17,610 |
11,762 |
| Cost of revenue |
10,623 |
7,870 |
21,222 |
15,387 |
| Gross margin |
4,686 |
3,915 |
8,766 |
6,769 |
| |
|
|
|
|
| Operating expenses: |
|
|
|
|
| Sales and marketing |
3,551 |
1,952 |
6,713 |
4,267 |
| Research and development |
1,613 |
2,078 |
3,143 |
3,672 |
| General and administrative |
2,049 |
2,244 |
4,173 |
4,349 |
| Amortization of intangible assets |
114 |
27 |
205 |
27 |
| Restructuring |
(101) |
-- |
(101) |
-- |
| Total operating expenses |
7,226 |
6,301 |
14,133 |
12,315 |
| Operating loss |
(2,540) |
(2,386) |
(5,367) |
(5,546) |
| Interest and other income (expense), net |
22 |
(1,231) |
27 |
(5,561) |
| Loss before income taxes |
(2,518) |
(3,617) |
(5,340) |
(11,107) |
| Income tax benefit |
(12) |
(31) |
(13) |
(95) |
| Net loss |
$ (2,506) |
$ (3,586) |
$ (5,327) |
$ (11,012) |
| |
|
|
|
|
| Earnings per share: |
|
|
|
|
| Basic and diluted |
$ (0.04) |
$ (0.06) |
$ (0.09) |
$ (0.18) |
| |
|
|
|
|
| Shares used in computing earnings per
share: |
|
|
|
|
| Basic and diluted |
60,288 |
59,916 |
60,209 |
61,618 |
| |
|
|
|
|
| |
|
|
|
|
| |
Three Months
Ended June 30, |
Six Months Ended
June 30, |
| |
2010 |
2009 |
2010 |
2009 |
| Reconciliation of net loss as reported to
adjusted EBITDA loss: |
|
|
|
|
| Net loss - as reported |
$ (2,506) |
$ (3,586) |
$ (5,327) |
$ (11,012) |
| Reconciling items: |
|
|
|
|
| Interest and other income (expense),
net |
(22) |
1,231 |
(27) |
5,561 |
| Income tax benefit |
(12) |
(31) |
(13) |
(95) |
| Stock-based compensation expense included
in COGS |
76 |
87 |
157 |
154 |
| Stock-based compensation expense included
in Op Ex. |
675 |
540 |
1,273 |
1,154 |
| Restructuring |
(101) |
-- |
(101) |
-- |
| Depreciation and amortization |
561 |
555 |
1,089 |
1,158 |
| Adjusted EBITDA loss |
$ (1,329) |
$ (1,204) |
$ (2,949) |
$ (3,080) |
| |
| |
| GEEKNET,
INC. |
| CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
| (In
thousands) |
|
(unaudited) |
| |
|
|
|
|
| |
Three months
ended |
Six Months
ended |
| |
June
30, |
June
30, |
| |
2010 |
2009 |
2010 |
2009 |
| |
|
|
|
|
| Cash flows from operating activities: |
|
|
|
|
| Net loss |
$ (2,506) |
$ (3,586) |
$ (5,327) |
$ (11,012) |
| Adjustments to reconcile net loss to net
cash used in operating activities: |
|
|
|
|
| Depreciation and amortization |
561 |
555 |
1,089 |
1,158 |
| Stock-based compensation expense |
751 |
627 |
1,430 |
1,308 |
| Provision for bad debts |
-- |
87 |
|
87 |
| Provision for excess and obsolete
inventory |
(3) |
21 |
14 |
13 |
| Loss on sale of assets |
-- |
1,246 |
18 |
1,020 |
| Impairment of investments |
-- |
-- |
-- |
4,585 |
| Non-cash restructuring |
(101) |
-- |
(101) |
-- |
| Changes in assets and liabilities: |
|
|
|
|
| Accounts receivable |
(432) |
192 |
(395) |
1,077 |
| Inventories |
(1,457) |
(303) |
(1,629) |
(13) |
| Prepaid expenses and other
assets |
(419) |
230 |
83 |
260 |
| Accounts payable |
1,253 |
838 |
(844) |
(1,784) |
| Deferred revenue |
228 |
105 |
261 |
124 |
| Accrued liabilities and other |
(465) |
(306) |
(1,477) |
(636) |
| Accrued restructuring
liabilities |
(417) |
(677) |
(1,137) |
(1,363) |
| Other long-term liabilities |
(5) |
21 |
(9) |
23 |
| Net cash used in operating
activities |
(3,012) |
(950) |
(8,024) |
(5,153) |
| |
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
| Change in restricted cash |
1,000 |
-- |
1,000 |
-- |
| Purchase of property and
equipment |
(2,015) |
(184) |
(3,063) |
(250) |
| Maturities or sale of marketable
securities |
7,100 |
-- |
7,200 |
559 |
| Business acquisitions, net of cash
acquired |
(1,000) |
(2,613) |
(1,000) |
(2,613) |
| Proceeds from sale of intangible assets,
net |
-- |
-- |
-- |
172 |
| Purchases of intangible assets |
(109) |
-- |
(122) |
-- |
| Net cash provided by (used in) investing
activities |
4,976 |
(2,797) |
4,015 |
(2,132) |
| |
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
| Proceeds from issuance of common
stock |
113 |
-- |
141 |
4 |
| Repurchase of common stock |
(98) |
(3,127) |
(98) |
(3,127) |
| Net cash provided by (used in) financing
activities |
15 |
(3,127) |
43 |
(3,123) |
| Effect of exchange rate changes on cash and
cash equivalents |
(4) |
-- |
(6) |
-- |
| Net increase (decrease) in cash and cash
equivalents |
1,975 |
(6,874) |
(3,972) |
(10,408) |
| Cash and cash equivalents, beginning of
period |
22,996 |
36,977 |
28,943 |
40,511 |
| Cash and cash equivalents, end of
period |
$ 24,971 |
$ 30,103 |
$ 24,971 |
$ 30,103 |
CONTACT: The Blueshirt Group
Investor Relations Contact:
Todd Friedman
todd@blueshirtgroup.com
Stacie Bosinoff
stacie@blueshirtgroup.com
(415) 217-7722
Airfoil Public Relations
Media Contact:
Tracey Parry
(650) 691-7302
geeknet@airfoilpr.com
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