Seeking Alpha
Long/short equity, tech, ETF investing
Profile| Send Message| ()  

eDiets (ticker: DIET) met the consensus revenue estimate but beat the EPS number by a penny. Details and a quick comment:


Q1 Results
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Revenues were $13.0 million, up 18%. Consensus was $12.18 million.
  • New members were 146,000; total members at end-quarter were 247,000.
  • Sales and marketing up 16.6% to $12.4 million.
  • Total expenses were $16.5 million, up 12.1%.
  • Net loss was $3.5 million.
  • EPS was loss of $0.16, versus consensus of loss of $0.17.
  • Cash burn was $2.1 million versus $0.7 million a year earlier.
  • Balance sheet: cash and equivalents were $6.9 million.

From the press release:

"eDiets.com recognizes advertising expense at the time the advertising is run but recognizes related subscription revenue ratably over the subscription cycle, which currently averages approximately six months. As a result, the company tends to report lower profits or losses in quarters when it is investing in advertising to grow its subscriber base. Profitability in the second quarter of fiscal 2005 is expected to improve substantially compared to the first quarter of the year."

"The growth in expenses was primarily related to the company's ability
to put a larger number of advertising dollars to work in this year's
first quarter compared to the first quarter of fiscal 2004 without
driving the average cost to acquire a member above year-ago levels.
Quarterly advertising investments for the remainder of fiscal 2005 are
expected to decline sequentially."

"Higher cash usage in the first quarter of 2005 compared to the first quarter of 2004 was primarily related to the company's shift from quarterly upfront billing to monthly billing later in 2004. This shift negatively impacted cash flow in the first quarter of 2005 by approximately $2.5 million."

Resources:

  • Press release here.
  • DIET's 4Q04 results here.

Quick comment

Looks like things are improving: sales and marketing actually rose less than revenues (17% versus 18%). But let's not get too excited: sales and marketing still accounted for 96% of revenue...

DIET chart below.
Big_9

Source: eDiets beats EPS estimate, but marketing spend still a problem (1Q05 earnings results)