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Provide Commerce Discusses E-commerce Revenue and Expense Growth (PRVD 2Q05 conf call quotes)

David Jackson profile picture
David Jackson

Provide Commerce, an online retailer of perishables, pre-announced negative Q2 earnings. On its scheduled Q2 conference call, CEO Bill Strauss outlined the company's targets for fiscal 2006. The stats are an interesting benchmark for other e-commerce companies; note the comment about rising online marketing costs and the increased focus on cash flow generation:

…we are mindful of the competitive nature of our category, as well as increases in oil and online marketing costs…

…the company will now target 45% gross margins and marketing costs in the 20-21% range of net sales …pro-forma operating margins… essentially flat for fiscal '06 from fiscal '05. Pro-forma EPS growth… slightly lower than revenue growth due solely to an increased share count… projected earnings is about 24% at the mid point of our guidance and we believe this metric is most representative of the growth of our business… We may leverage opportunities to grow the top line faster than is currently planned as we did in 2005, but not at the expense of our earnings forecast. Furthermore, we have CapEx planned … essentially flat in absolute dollars and down as a percentage of net sales for FY '05.

…Our low cost direct business model enables us to target top line growth in the mid 20% range, with industry leading margins while generating significant levels of free cash flow on relatively low CapEx.

…we added more than 1.2 million new customers in the past 12 months and still generated 55% of our net sales from repeat customers.

(Quotes are from the CCBN StreetEvents transcript.)

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This article was written by

David Jackson profile picture
I'm the founder and CEO of Seeking Alpha. Before Seeking Alpha, I worked as a technology research analyst for Morgan Stanley in New York. After I left, I wrote The ETF Investing Guide (which you can find by clicking on "Author's Picks" below), and some articles about individual stocks, and then started inviting other people to contribute to the website. Seeking Alpha is now the dominant crowdsourced platform for discussion of stocks and investing, and the only place with coverage of many mid and small cap stocks. I have a B.A from Oxford University and an MSc from The London School of Economics, and am married with five children.

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