![]() © Copyright 2006 – GSI Commerce proprietary & confidential GSI Commerce Fourth Quarter 2006 Exhibit 99.1 |
![]() 2 Safe Harbor Statement All statements made in this presentation, other than statements of historical fact, are forward- looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” “prospects,” “schedule” and similar expressions typically are used to identify forward- looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business of GSI Commerce. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. Factors which may affect GSI Commerce’s business, financial condition and operating results include the effects of changes in the economy, consumer spending, the financial markets and the industries in which GSI Commerce and its partners operate, changes affecting the Internet and e-commerce, the ability of GSI Commerce to develop and maintain relationships with strategic partners and suppliers and the timing of its establishment, extension or termination of its relationships with strategic partners, the ability of GSI Commerce to timely and successfully develop, maintain and protect its technology, confidential and proprietary information, and product and service offerings, the ability of GSI Commerce to execute operationally and attract and retain qualified personnel, the ability of GSI Commerce to successfully integrate its acquisitions of other businesses, if any, the performance of any acquired businesses and the impact of SFAS 123(R). More information about potential factors that could affect GSI Commerce can be found in its most recent Form 10-K, Form 10-Q and other reports and statements filed by GSI Commerce with the SEC. GSI Commerce expressly disclaims any intent or obligation to update these forward-looking statements. |
![]() 3 Non-GAAP Financial Measures This presentation contains the non-GAAP measures merchandise sales, adjusted EBITDA and certain ratios that use those measures. Merchandise sales represent the retail value of all sales transactions, inclusive of freight charges and net of allowances for returns and discounts, which flow through the GSI Commerce platform, whether or not the company is the seller of the merchandise or records the full amount of such sales on its financial statements. GSI Commerce uses merchandise sales as a metric for operating its business. Variable costs such as fulfillment and customer service labor expense, order processing costs such as credit card and bank processing fees and organizational costs such as business management are related to the amount of sales made through GSI Commerce’s platform, whether or not GSI Commerce records the revenue from such sales. GSI Commerce believes that investors will have a more thorough understanding of its historical expenses and expense trends if they have visibility to GAAP net revenue as well as the non-GAAP financial measure merchandise sales and the percentages that such expenses bear to net revenues and merchandise sales. GSI Commerce also uses adjusted EBITDA, which represents earnings (or losses) before interest income/expense, loss on investment, income taxes, depreciation and amortization, cumulative effect of change in accounting principle related to the adoption of SFAS 123(R) and stock-based compensation. GSI Commerce uses adjusted EBITDA as a means to evaluate its performance period to period without taking into account certain expenses, particularly stock-based compensation expense, which historically has been materially impacted by fluctuations in the price of GSI Commerce’s common stock both on a quarterly and annual basis, and is now materially impacted by the adoption of SFAS 123(R), and does not consistently reflect GSI Commerce’s results from its core business activities. These financial measures should be considered in addition to, and not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures included in this presentation have been reconciled to the nearest GAAP measures as required under Securities and Exchange Commission rules and can be found in the appendices of this presentation. |
![]() 4 Leading Platform for Outsourced e-Commerce Approximately 60 major retailers & brands, 11 merchandise categories * and an international offering End-to-end e-commerce platform Technology Logistics and customer care Marketing services Delivers customized solutions to partners through platform Marketing Services Marketing Services Target retail categories include apparel, accessories & footwear, appliances & tools, baby products, consumer electronics, cosmetics & fragrances, home furnishings, jewelry, music & videos, personal care, sporting goods & apparel, toys & video games as reported in the “US e-Commerce: Five-Year Forecast and Data Overview” published by Forrester Research, Inc., Oct. 2006. |
![]() 5 Large Addressable Domestic Market 2006 U.S. Online General 2006 U.S. Online General Merchandise Market * Merchandise Market * $105 billion $105 billion * GSI Commerce excludes automobiles and parts, food, beverage, grocery, travel, and event and movie tickets, when discussing the U.S. online general merchandise market. Source: “US e-Commerce: Five-Year Forecast and Data Overview,” Forrester Research, Inc., Oct. 2006. $ in billions $ in billions Baby Products Baby Products Apparel, Accessories & Footwear Apparel, Accessories & Footwear Consumer Consumer Electronics Electronics Music & Music & Video Video Personal Personal Care Care Jewelry Jewelry Cosmetics & Cosmetics & Frangrances Frangrances Toys & Video Games Toys & Video Games $13.8 $13.8 $5.9 $5.9 $1.6 $1.6 2006 Estimated Target Categories Worth $67.2 billion 2006 Estimated Target Categories Worth $67.2 billion $9.8 $9.8 $10.2 $10.2 $0.8 $0.8 $4 $4 $8.2 $8.2 $1.3 $1.3 $5.8 $5.8 $5.8 $5.8 Appliances & Tools Appliances & Tools Home Home Furnishings Furnishings Sporting Goods & Apparel Sporting Goods & Apparel |
![]() 6 The U.S. Online General Merchandise Market * The U.S. Online General Merchandise Market * The U.S. Online General Merchandise Market * $ in billions $ in billions $ in billions Strong Growth Projected for e-Commerce * GSI Commerce excludes automobiles and parts, food, beverage, grocery, travel, and event and movie tickets, when discussing the U.S. online general merchandise market. Source: “US e-Commerce: Five-Year Forecast and Data Overview,”Forrester Research, Inc., Oct. 2006. $50 $100 $150 $200 $250 2011E $211.3 $211.3 2010E $190.2 $190.2 2009E $168 $168 2008E $146 $146 2007E $124.5 $124.5 2006E $104.9 $104.9 |
![]() 7 Compelling Reason for Prospects to Outsource Online business is too large to ignore, but not large enough to justify the investment required to achieve in-house competency for multi- channel e-commerce. Total estimated sales of retail categories* targeted by GSI Commerce Estimated online sales of retail categories targeted by GSI Commerce expressed as a % of total sales of the same categories $ billions $ billions 2006E 2007E 2008E 2009E 2010E 2011E $1,004.2 $1,004.2 Target retail categories include apparel, accessories & footwear, appliances & tools, baby products, consumer electronics, cosmetics & fragrances, home furnishings, jewelry, music & videos, personal care, sporting goods & apparel, toys & video games. For GSI Commerce partners, online sales generally average 3% to 4% of total sales. Source: “US e-Commerce: Five-Year Forecast and Data Overview,” Forrester Research, Inc., Oct. 2006. 800 850 900 950 1,000 1,050 8.0% 8.0% 9.3% 9.3% 10.7% 10.7% 12.0% 12.0% 13.2% 13.2% 14.4% 14.4% $967.8 $967.8 $933.2 $933.2 $900.3 $900.3 $868.9 $868.9 $838.3 $838.3 |
![]() 8 GSI Offers a Strong Value Proposition A Complete Solution Increased efficiency – one vendor Improved integration – built to work together 360° understanding of business GSI Commerce is Invisible to Consumers Uncompromised Not in conflict with partner’s business Scale & Operating Leverage with Enterprise Focus Platform expertise Premium quality components Focus on Growth and Innovation International platform Marketing services New/enhanced functionality (e.g., parametric search / alternative payments / multivariate testing) Win/Win Economics Financial predictability and aligned interests through long-term contracts |
![]() 9 Platform Enables E-Commerce for Top Brands 1. Apparel, Accessories & 1. Apparel, Accessories & Footwear Footwear 2. Consumer Electronics 2. Consumer Electronics 6. Cosmetics & Fragrances 6. Cosmetics & Fragrances 7. Personal Care 7. Personal Care 5. Sporting Goods & 5. Sporting Goods & Apparel Apparel 8. Music & Video 8. Music & Video 3. Home Furnishings 3. Home Furnishings 4. Appliances & Tools 4. Appliances & Tools 9. Jewelry 9. Jewelry 10. Toys & Video Games 10. Toys & Video Games 11. Baby Products 11. Baby Products |
![]() 10 Growth Strategy Compounding effect of long-term agreements Yr. 5 Yr. 4 Yr. 3 Yr. 2 Yr. 1 Add new partners Grow transaction revenues from each partner Develop incremental revenue streams from each partner Marketing & design services International Multichannel capabilities Site enhancements |
![]() 11 Competition Web Platform IBM, ATG, Microsoft, Amazon Services Customer/Web Analytics /CRM Siebel, E.piphany, Omniture, WebSideStory, Coremetrics Order Processing /Warehouse Mgmt. /Merchandising Systems SAP, JDA, Yantra, Manhattan Assoc. Drop Ship Commerce Hub, Vcommerce Call Center West, Convergys, PRC Fulfillment & Logistics DHL/Exel, UPS Content RR Donnelly E-mail Management Experian/CheetahMail, DoubleClick/Performics, Epsilon Interactive Online Marketing aQuantive, Digitas, ValueClick, Grey Interactive, LinkShare Fraud Management CyberSource, Retail Decisions Strategic Consulting McKinsey & Co., Boston Consulting Group, Accenture System Integrator Accenture, IBM, BearingPoint, Sapient Design aQuantive/Razorfish, AKQA, Blast Radius, Digitas |
![]() 12 Growing Faster than the Industry 2001 2002 2003 2004 44% 44% GSI Commerce Merchandise Sales ** GSI Commerce Merchandise Sales ** E-Commerce Sales Total Retail Sales Total Retail Sales Percent Growth Y/Y * Percent Growth Y/Y * * E-commerce Sales and Total Retail Sales Source: Census Bureau, U.S. Department of Commerce. ** For a reconciliation of non-GAAP financial measures, see Appendices A thru B-1 and/or see our results for fiscal years 2001 - 2005 at www.gsicommerce.com/news/news.jsp. Prior to 2002, GSI Commerce did not use merchandise sales, so total net total revenue is used in this presentation for fiscal year 2001. 2005 24.6% 24.6% 7.7% 7.7% 68.0% 68.0% 24.3% 24.3% 7.1% 7.1% 58.2% 58.2% 24.7% 24.7% 4.2% 4.2% 81.4% 81.4% 31.0% 31.0% 2.3% 2.3% 3.0% 3.0% 26.1% 26.1% 135.2% 135.2% 50% 100% 150% |
![]() 13 Category & Geographic Expansion Partner Growth 10 10 20 20 1999 4 4 1 1 2000 3 3 7 7 1 1 2001 6 6 13 13 2002 10 10 23 23 2003 8 8 31 31 2004 8 8 39 39 2005 10 10 49 49 Total partners Total partners Current partners that launched or will launch Current partners that launched or will launch with GSI Commerce during that year with GSI Commerce during that year 2006 59 59 6 6 30 30 40 40 50 50 60 60 4 4 International partners International partners 1 1 4 4 6 6 7 7 9 9 11 11 Number of Categories Number of Categories GSI Commerce participates in 11 retail categories as defined by Forrester Research: apparel, accessories & footwear, appliances & tools, baby products, consumer electronics, cosmetics & fragrances, home furnishings, jewelry, music & videos, personal care, sporting goods & apparel, toys & video games. |
![]() 14 Net Revenues – Trailing Four Quarters Net Revenue $ in millions 3Q 00 3Q 01 3Q 02 3Q 03 3Q 04 4Q 99 4Q 00 4Q 01 4Q 02 4Q 03 4Q 04 2Q 00 2Q 01 2Q 02 2Q 03 2Q 04 2Q 05 1Q 00 1Q 01 1Q 02 1Q 03 1Q 04 1Q 05 3Q 05 4Q 05 1Q 06 2Q 06 $100 $100 $600 $200 $300 $400 $500 3Q 06 |
![]() 15 Business Models Provide Balanced Gross Profit Contribution Owned Owned Inventory Inventory Non-Owned Inventory 100% 100% 2005 2005 Merchandise Sales Merchandise Sales 0% 0% $682.0 $682.0 48% $326.6 48% $326.6 2005 2005 Gross Profit Gross Profit $176.6 $176.6 48% $85 48% $85 52% $91.6 52% $91.6 2005 2005 Net Revenue Net Revenue $440.4 $440.4 81% $355.4 81% $355.4 $ in millions $ in millions 19% $85 19% $85 52% $355.4 52% $355.4 For a reconciliation of non-GAAP financial measures, see Appendices A thru B-1 and/or see our results for fiscal years 2001 - 2005 at www.gsicommerce.com/news/news.jsp . |
![]() 16 $28.4 M $28.4 M $20.7 M $20.7 M $23.2 M $23.2 M Adjusted Adjusted EBITDA EBITDA G&A and G&A and Other Other Gross Gross Profit Profit $176.6 M $176.6 M $104.3 M $104.3 M Sales & Sales & Marketing Marketing Product Product Develop. Develop. 2005 Expense Breakdown - - Fulfillment Fulfillment - - Credit card proc. Credit card proc. - - Customer care Customer care - - Revenue share Revenue share - - Business mgmt. Business mgmt. - - Marketing services Marketing services - - Technology Technology - - HR HR - - Legal Legal - - Finance Finance - - Business develop. Business develop. - - Minority interest Minority interest - - Other Other For a reconciliation of non-GAAP financial measures, see Appendices A thru B-1 and/or see our results for fiscal years 2001 - 2005 at www.gsicommerce.com/news/news.jsp . |
![]() 17 Multiple Drivers of Margin Expansion Gross Gross Margin Margin Sales & Sales & Marketing Marketing Product Product Development Development G&A and G&A and Other Other Gross Profit Gross Profit 35.2% 35.2% 40.1% 40.1% Sales & Marketing Sales & Marketing 31.6% 31.6% 23.7% 23.7% Product Develop. Product Develop. 8.4% 8.4% 6.5% 6.5% G&A and Other G&A and Other 9.9% 9.9% 5.2% 5.2% 2001 2005 As a % of As a % of net revenues net revenues 790 bp 790 bp 190 bp 190 bp 470 bp 470 bp 490 bp 490 bp +1,940 basis points +1,940 basis points |
![]() 18 Cash * Cash * $156.7 $156.7 $112.2 $112.2 $103.5 $103.5 Inventory Inventory $34.6 $34.6 $34.0 $34.0 $43.3 $43.3 Net Fixed Assets Net Fixed Assets $87.9 $87.9 $86.0 $86.0 $96.7 $96.7 Total Assets Total Assets $332.6 $332.6 $276.2 $276.2 $308.4 $308.4 Debt Debt $71.2 $71.2 $71.4 $71.4 $70.8 $70.8 A/P & Accrued A/P & Accrued $101.7 $101.7 $57.3 $57.3 $74.7 $74.7 Total Liabilities Total Liabilities $179.5 $179.5 $135.0 $135.0 $157.7 $157.7 Equity Equity $153.2 $153.2 $141.1 $141.1 $150.7 $150.7 * Cash and cash equivalents and marketable securities. Strong Balance Sheet ($ millions) ($ millions) Dec. 31, 2005 Oct. 1, 2005 Sept. 30, 2006 |
![]() 19 Appendix A GSI COMMERCE, INC. AND SUBSIDIARIES ADJUSTED EBITDA AND RECONCILIATION TO GAAP RESULTS (In thousands) (Unaudited) January 1, December 31, 2005 2005 Adjusted EBITDA: Net gain (loss) excluding interest income and expense, income taxes and charges for stock-based compensation and depreciation and amortization 13,559 $ 20,736 $ Reconciliation of Adjusted EBITDA to GAAP results: Adjusted EBITDA 13,559 $ 20,736 $ Interest expense 538 2,220 Interest income (1,162) (2,944) Income taxes - 321 Stock-based compensation 3,576 3,805 Depreciation and amortization 10,944 14,635 Net income (loss) (337) $ 2,699 $ Twelve Months Ended |
![]() 20 January 3, January 1, 2004 2005 Merchandise sales (1) - (a non-GAAP financial measure): Category: Sporting goods 128,489 $ 200,394 $ Other (2) 153,537 274,586 Total merchandise sales (1) - (a non-GAAP financial measure) 282,026 $ 474,980 $ Net revenues - (GAAP basis): Net revenues from product sales: Category: Sporting goods 128,360 $ 164,530 $ Other (2) 88,150 110,458 Total net revenues from product sales 216,510 274,988 Service fee revenues 25,409 60,116 Total net revenues - (GAAP basis) 241,919 $ 335,104 $ GSI COMMERCE, INC. AND SUBSIDIARIES MERCHANDISE SALES (1) AND RECONCILIATION TO GAAP RESULTS (Dollars in thousands) (Unaudited) Appendix B December 28, 2002 96,669 $ 81,631 178,300 $ 96,669 $ 58,150 154,819 17,819 172,638 $ Fiscal Year 2004 Fiscal Year 2003 Fiscal Year 2002 Year Ended December 31, 2005 261,568 $ 420,429 681,997 $ 212,932 $ 142,442 355,374 85,018 440,392 $ Fiscal Year 2005 |
![]() 21 Appendix B . . . continued January 3, January 1, 2004 2005 Year Ended GSI COMMERCE, INC. AND SUBSIDIARIES MERCHANDISE SALES (1) AND RECONCILIATION TO GAAP RESULTS (Dollars in thousands) (Unaudited) Reconciliation of merchandise sales (1) to net revenues: Merchandise sales (1) - (a non-GAAP financial measure): Category: Sporting goods 128,489 $ 200,394 $ Other (2) 153,537 274,586 Total merchandise sales (1) - (a non-GAAP financial measure) 282,026 474,980 Less: Sales by partners (3) : Category: Sporting goods (129) (35,864) Other (65,387) (164,128) Total sales by partners (3) (65,516) (199,992) Add: Service fee revenues 25,409 60,116 Net revenues - (GAAP basis) 241,919 $ 335,104 $ (1) Merchandise sales represents the retail value of all sales transactions, inclusive of freight charges and net of allowances for returns and discounts, which flow through the GSI Commerce platform, whether or not GSI Commerce is the seller of the merchandise or records the full amount of such sales on its financial statements. (2) The "Other" categories of both merchandise sales and net revenues from product sales include $1,034 and $10 for the year ended January 3, 2004 and January 1, 2005, respectively, related to Ashford.com. (3) Represents the retail value of all product sales through the GSI Commerce platform where the inventory is owned by the partner and the partner is the seller of the merchandise. GSI Commerce records service fee revenues on these sales. December 28, 2002 96,669 $ 81,631 178,300 -- (23,481) (23,481) 17,819 172,638 $ Fiscal Year 2004 Fiscal Year 2003 Fiscal Year 2002 December 31, 2005 Fiscal Year 2005 261,568 $ 420,429 681,997 (48,636) (277,987) (326,623) 85,018 440,392 $ |