Streamline.com Announces Third Quarter 1999 Results;
Net Revenue Grows 117% for Third Quarter Ended October 2, 1999, Compared to Similar Period in 1998; Company Announces Fourth Major Market
WESTWOOD, Mass.--(BUSINESS WIRE)--Oct. 28, 1999-- Streamline.com, Inc. (NASDAQ: SLNE), a pioneer in the consumer direct market place, today reported its financial results for the third quarter and nine months ended October 2, 1999. The company also announced that Northern New Jersey would be the fourth major market in its national expansion plan.
As of October 2, 1999, Streamline.com began reporting its earnings on a retail calendar, using four thirteen-week periods. The company has not restated prior year numbers because management believes the change does not present a material effect on previously reported earnings.
Net revenue was $3.62 million, an increase of 117% for third quarter 1999, compared to $1.67 million a year ago. Net loss was $5.33 million, compared to $3.33 million a year ago.
Product and service revenue increased 113%, subscription fees increased 159% and advertising, research and marketing fees increased 119%; for third quarter 1999, compared to the same period in 1998. The increase in product and service revenues and subscription fees is directly attributable to increases in total orders and customers. Customer orders increased 119% to over 32,000 orders for third quarter 1999. Average order size decreased to $93 for third quarter 1999 from $96 for the same period in 1998.
Revenue from advertising, research and marketing fees includes Consumer Learning Center membership fees paid by consumer packaged goods ("CPG") companies for the opportunity to participate in research and marketing programs. The growth in advertising, research and marketing fees was attributable to an increased number of CPG companies that became members of our Consumer Learning Center. At October 2, 1999, there were 13 CPG companies participating in our Consumer Learning Center, compared with five in the same period in 1998.
"We're very excited about our third quarter results because of our continued growth in top-line revenue," said Timothy A. DeMello, the founder and Chief Executive Officer of Streamline.com. "Our new market entries, combined with increasing consumer interest and the addition of solid managers such as Ed Albertian as President and COO, and Bill Paul as Vice President of Merchandising, are instrumental as we continue to execute our national expansion plan to reach the top 20 U.S. markets by year-end 2004."
Total operating expenses were $9.43 million for third quarter 1999, an increase of 135%, compared to $4.01 million for the same period in 1998. The cost of revenue as a percentage of revenue increased to 70.2% in third quarter 1999 from 69.6% for the same period in 1998. The increases in other operating expense categories were primarily related to growth in order volume, as well as the necessary infrastructure to support continued corporate growth and planned expansion.
Basic and diluted loss per share were $(0.29) for third quarter 1999, compared to a pro forma loss per share of $(0.41) for third quarter 1998.
Results of operations for the Nine Months ended October 2, 1999
Net revenue was $10.24 million, an increase of 126% for the nine months ended October 2, 1999, compared to $4.53 million a year ago. Net loss was $13.19 million for the nine months ended October 2, 1999, compared to $8.74 million a year ago.
Product and service revenue increased 124%, subscription fees increased 151% and advertising, research and marketing fees increased 131%, for the nine months ended October 2, 1999, compared to the same period in 1998. Customer orders increased by 127% to over 89,000 orders for the nine months ended October 2, 1999.
Total operating expenses were $23.46 million, an increase of 97%, for the nine months ended October 2, 1999, compared to $11.89 million for the same period in 1998. The cost of revenue as a percentage of revenues decreased to 68.5% for the nine months ended October 2, 1999, from 72.1% for the same period in 1998. The improvement in cost of revenue as a percentage of revenues was primarily attributable to a higher proportional growth of advertising, research and marketing fees and subscription fees compared to the growth in product and service revenues
Pro forma basic and diluted loss per share were $(0.86) for the nine months ended October 2, 1999, compared to $(1.16) for the same period in 1998.
Significant Events
Fourth Market Announced - Northern New Jersey
The company announced that the Northern New Jersey area will be the fourth major market in its national expansion plan. Streamline.com chose the Northern New Jersey market because it is part of the New York metropolitan market, the largest U.S. metropolitan area with approximately 7.0 million households and a strong Nordstrom presence.
The company signed a lease on a 102,000 square foot build-to-suit distribution facility in the Meadowlands Distribution Center in Carlstadt, NJ. The new facility will allow Streamline.com to effectively fill customer orders and meet its distribution needs throughout Bergen County, New Jersey. The facility is expected to be completed and ready for occupancy in the second quarter of 2000.
"Offering our service in the New Jersey area is the next logical step in our national expansion plan, as it represents an entry point into the largest U.S. market, with a high percentage of busy suburban families who can benefit from the service," stated DeMello.
Scotty's Home Market Acquisition Announced
On October 19, the company announced that it signed a definitive agreement to acquire Scotty's Home Market, a Chicago-based Internet retailer of grocery store products and pioneer in the consumer direct industry with expected 1999 revenues of $7.5 million. Scotty's has more than 4,000 active customers and is currently completing a new 93,000 square foot, state-of-the-art fulfillment center, which is expected to be ready in the first quarter of 2000, allowing the company to serve a larger customer base.
The proposed acquisition of Scotty's calls for the exchange of Streamline.com stock for Scotty's stock, which is expected to result in the issuance of 4.3 million shares of Streamline.com stock. Following the acquisition, which was approved by the board of directors of both companies, Scotty's will change its name to Streamline.com. The acquisition is expected to be completed by the first quarter of next year and is subject to approval by the stockholders of each company, regulatory approval and other typical conditions.
Washington D.C. Market Launched
Streamline.com opened in the Washington, D.C. area, its second major market, on October 12, serving 34 communities in Northwest Washington, Montgomery County in Maryland and Arlington and Fairfax counties in Virginia. The company began signing up customers in late August with a goal of having 100 beta customers; however, interest was so strong that Streamline.com had 200 beta customers, exceeding pre-opening customer acquisition goals. The company will launch a co-marketing program with Nordstrom, Inc., a fashion specialty retailer and Streamline.com's lead investor, to acquire customers in the Washington market. Streamline.com expects to have more than 750 customers in the Washington area by year-end.
Additions to Management Team
In early September, the company appointed Ed Albertian as its President and Chief Operating Officer. Albertian was formerly Chief Operating Officer of Star Markets Company and Senior Vice President of Staples. "Ed brings a wealth of experience in retail operations and national expansion," said DeMello. William Paul, formerly Vice President of Merchandising of Star Markets Company and Vice President of Staples, was appointed as Vice President of Merchandising for Streamline.com in late October. Albertian and Paul bring extensive retail operation, merchandising and expansion experience, both in the food industry and at Staples, which will be important for the company as it continues its national expansion.
ProLogis Relationship
Streamline.com signed a lease agreement with ProLogis, a leading global provider of distribution services and facilities, for a 102,000 square foot distribution facility, to serve customers in Northern New Jersey. ProLogis is also expected to assist Streamline.com as it continues to expand throughout the United States. ProLogis was selected because of its track record of providing integrated distribution services throughout North America and Europe, owning and operating more than 1,575 facilities.
"We are very excited to have initiated our first new distribution facility with ProLogis," said DeMello. "As an online retailer dependent on efficient supply chain strategy, we were in search of a space provider that would enable Streamline.com to develop a distribution facility to help us deliver our products to our customers as quickly as possible. As Streamline.com continues to grow into new and existing markets, we look forward to working with ProLogis to help expand our distribution network."
About Streamline.com
Founded in 1993, Streamline.com is a pioneer in the consumer direct market place operating in the Boston and Washington D.C. markets. The company provides busy suburban families with time-saving lifestyle solutions through Internet-based ordering of groceries and a wide range of other quality goods and services. The company delivers these items directly to customers' homes using a full-size refrigerator/freezer shelving unit and a keypad garage entry system. The company also provides targeted research and marketing services to many consumer goods companies nationwide. Streamline.com can be found on the World Wide Web at www.streamline.com.
Note: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. Actual performance and results may differ materially from those projected or suggested due to certain risks and uncertainties, including, without limitation, those associated with our limited operating history and history of losses, inexperience in implementing our expansion strategy, need to raise additional capital, reliance on the growth of e-commerce and the infrastructure of the Internet, increased competition, and dependence on customer acceptance of direct, unattended delivery of goods and services. Additional information concerning these and certain other risks and uncertainties that could cause actual results to differ materially from those projected or suggested, is contained in the Company's public filings with the Securities and Exchange Commission (SEC), copies of which are available from the SEC's website at sec.gov or from the Company upon request. The forward-looking statements contained herein represent the Company's judgment as of the date of this release, and the Company cautions readers not to place undue reliance on such statements.
- 2 tables to follow -
Streamline.com, Inc.
Statement of Operations Data
(in thousands, except per share data)
(unaudited)
Quarter Ended Nine Months Ended
9/30/98 10/2/99 9/30/98 10/02/99
Revenue
Product and service revenues, net 1,409 3,007 3,882 8,694
Subscription fees 105 272 276 693
Advertising, research & marketing
fees 158 345 370 855
Total 1,672 3,624 4,528 10,242
Operating
Cost of revenue 1,164 2,543 3,266 7,016
Fulfillment center operations 946 2,741 2,901 5,978
Sales and marketing 376 1,137 989 2,595
Technology systems and development 637 1,004 1,937 2,808
General and administrative 884 2,007 2,798 5,066
Total operating expenses 4,007 9,431 11,891 23,463
Loss from operations (2,335) (5,808) (7,363) (13,221)
Other income (expense), net (205) 480 (454) 582
Loss before minority interest and
extraordinary item (2,540) (5,328) (7,817) (12,639)
Minority interest in net loss of
consolidated subsidiary - - 138 -
Loss on early extinguishment of debt 744 - 744 -
Net loss (3,284) (5,328) (8,699) (12,639)
Dividends on preferred stock 41 - 41 549
Net loss attributable to common
stockholders (3,325) (5,328) (8,740) (13,188)
Pro forma basic and diluted loss per
common share: (1) $(0.41) $(0.29) $(1.16) $(0.86)
Basic and diluted net loss per
common share - pro forma
Shares used in computing unaudited pro forma
basic and diluted net loss per
share 8,052 18,237 7,512 15,272
Historical basic and diluted loss per
common share $(0.95) $(0.29) $(2.50) $(1.39)
Basic and diluted net loss per
common share - historical
Shares used in computing unaudited historical
basic
and diluted net loss per share 3,499 18,237 3,498 9,494
(1) The pro forma basic and diluted net loss per share calculation
assumes the conversion of all outstanding shares of preferred
stock and accrued preferred stock dividends into common shares,
as if the shares had been converted immediately upon their
issuance.
Streamline.com, Inc.
Balance Sheet
(in thousands)
(unaudited)
Quarter Ended
12/31/98 10/02/99
Cash and cash equivalents 12,593 43,021
Working capital (deficit) 12,061 40,616
Total assets 20,066 56,115
Capital lease obligations net of
current portion 381 752
Redeemable convertible preferred
stock 37,186 -
Stockholder's equity (deficit) (18,593) 51,133
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Contact:
Streamline.com, Inc.
Lauren A. Farrell
VP, Finance & Administration
Tel: 781/407-1900
E-mail: lfarrell@streamline.com
or
Gavin Anderson & Company
Scott Tagliarino
Managing Director
Tel: 212/515-1900
E-mail: stagliarino@gavinanderson.com |
