- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the Blue Apron Holdings Third Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode.

As a reminder, this call is being recorded today Monday, November 7, 2022 for replay purposes. [Operator Instructions] On this morning's call we have Linda Findley, President and Chief Executive Officer of Blue Apron; and Mitch Cohen, Interim Chief Financial Officer.

Before handing the call over to the company, we will review the safe harbor statements. provisions company and today's for XXXX. prospects of safe the future about the that Securities the plans Private expectations, constitute harbor statements may Act call experience its purpose Litigation Various Reform the of under forward-looking statements results described those by in morning earnings issued statements materially the those and other and from of this SEC a company's result risks differ filings. the factors, may forward-looking Actual indicated as including company's those release

the as company's to should company represent only subsequent In as upon and addition, statements any update any The today views not as of forward-looking obligation date. statements. disclaims specifically representing of relied these be its views any

accordance be company call, During with to this Accepted in will referring Accounting Principles. measures, which non-GAAP the Generally are prepared not

to the to filings, Linda? I With comparable to to CEO. review that, release and encouraged the call Apron's have these non-GAAP are Linda these most like would to of over Findley, now earnings refer financial measures, Blue SEC defined the measures directly the and to we turn where measures. You GAAP reconciliation

Linda Findley

and update you, the morning, Thank have pleased on business. for today everyone. you here to good an We're

the few Cohen, CFO, our is joined us who a on Interim me weeks Joining call ago. Mitch

consumer-oriented Mitch to Mitch including We Mitch like for in his a a Redbox continue comes with would are permanent and appreciate I welcome to thrilled we companies, have as ongoing on experience significant CFO. to Cerence. board our search and Blue support. Apron

quarter, our position. cash into jump address the I like I'd directly to Before

ATM covenant. completed million so in October, liquidity did our public our not covenants. The in of by offering month program tap and from net markets of our our short-term We funding of proceeds and receiving the we the enhance after resulting of end September. was made We Joe to last and other market liquidity commissions. Mr. allowed remain the liquidity short-term placement the financial shareholder the and As with $XX.X affiliates many maintain compliance minimum compliance approximately that of light us private with fees to you enhanced to Sanberg, know, our early in expected decision largest in

remain continue with a Under with million into Mr. was to agreement, the agreement granted Blue estimated with bit entered his pledge a Mitch and in active of the Sanberg, we to more one $XX.X value We of this in securities interest of excess will a discussions companies private in this. affiliates. speak be significantly Apron certain owed. on security

actions taking our position. to stabilize We further cash are also

closely alternative explore our financial working to and with are financing other advisers We manage liquidity. avenues to

including attributable and quarter-over-quarter and to was both mostly ways Over plan was on structure and the margin identify cost reduction to third and to basis. summer, a higher XX.X%, The quarter, improve to further continue we the additional our began to costs margin and savings variable expenses year-over-year manage initiatives, moving to across our beginning manage packaging several forward. In areas decline We identifying logistics. cost instituting margins. find other

Chief Supply and logistics allow background as Officer. and chain Apron of the Officer procurement. today better Operating of better and specializing supply Halkyard center centers Chain XX role center for team working. for fulfillment accountable Chief comes His ways to has of efficiency, chain years Chris with announced is cross-functional Blue fulfillment implementing decision-making operations more on supply joined over management. position Chris in operations to we His Additionally, and all our operations, that replaces and experience processes

enhancing this us that invaluable expect we our on variable attention focus expertise and quality. increasing be margin, We as our will improving to productivity

this efforts more another quarter action conference marketing. quarter area results where took update on call, a While on we we fourth all plan notable year our and is comprehensive provide in to full

reduced are spend sustainable we spend marketing, We levels, quarter, therefore, compared third in particularly in saw we rise marketing XX% search During beyond and QX adjusting by as cost the to tactics of XXXX. our accordingly.

year. We our are return are Considering looking importance business, focused the on in back are one to today improve market at conditions. we strategy, within broader on of where our programs marketing optimizing constantly our to ways pay to we balancing

business Over move the we with data Amber we past few our experience forward. that growth-oriented to decades welcomed to Amber Marketing think of as be Minson Chief invaluable comes and us two marketing weeks, Officer. as our we new will over

improvements. allow strategy also efficiently past tech performance driven. strengthening we two including shift brand more to a built in efforts parallel, marketing years, the significantly invested to have will be data us solid foundation, Over In we These key our marketing equity. our and

was from to XX disciplined Average summer, $XXX. options a be over in Order deliver over variety customer a ability ago. QX decline average We line period at XX of ahead, we increases and the success record frequency with was measures metrics. focused goal on our active drove along managing growth. at approximately The down quarterly as are new was value metrics. $XX.XX of In trends. taking year profitable per equivalent additional remain and order This from the to provide the cash. Total the with X.X%, QX, of to continually these modestly our long-term the with consistent customer company ending price was customers seasonal held X.X% revenue months implemented greater business in Looking $XXX,XXX. we steady September key menu of continued our

out quarter, and we a number seasonality. As our our more represents customer last complete XX-month active the we view of business mentioned in believe smooth customers

customers were than our on the We environment count. in of decline. pressures to were due total drove impacted a portion Similar our macroeconomic that less QX efforts For which the purchasing and year-over-year. marketing seasonal the prior efficient $XXX,XXX, to X.X% QX, customer inflationary and equally found in sequentially down quarters, X.X% quarter,

to unique with pipeline product and innovate continue to strong remains us. with ways Our shop also customers our provide new we as and

help need for offering, growing are ready-to-cook latest our quick, with These recipes meals delicious and their convenient customers. time options. our As new meal meet well resonating

Our our testing pantry. into launch introducing to a new plan, well-thought-out ingredients team culinary allowing this executed without us products

performing well So and praise customers. far, meals our these to receive from high continue are

the addition, to expanded be experience In more we subscription customer-friendly.

have as order optionality with no add-ons to they week many customers per limitation. and recipes the as want Now

also specific These date, focus We Partnerships created seasoning. occasion-based this also are a extend remain orders and hit. dietary the to boxes to customers of appeal size, customers and us. seasonal Fox] we tailor to are offerings to give party our celebrate Thanksgiving Our flexibility offerings to our to taste followed Between new preferences. now their big our for are helping season. biggest year, big the the a their [ROAS end holiday by holiday the introduced

core expand gift ecosystem, to our are We a a popularity. can to continue gift e-commerce gift beyond allows purchase customer especially customers costco.com. a bring experiences option to great our now potential base This sales. a of growing Customers on Apron in to at us pool including their presence Blue digital card wider card as gift our value,

In in stores seasonal meal boxes subscription. along popular October, starting Amazon in our a sale without selection of a are online addition, U.S. kits, for the with our

on do this year another leveraging to able earlier the we product we established are our when e-commerce introduced by so platform. process effectively We

day. by taking current are Amazon.com, with directly While Furthermore, of ship continue boxes fulfilled our the advantage our are work kits the we us sold one to boxes ability on to business within and look efforts. drive way view partners for us expand and customer and as brand a enterprise our We growth. sales build these to enterprise opportunities to for further good additional awareness revenue

report the quarter, XXXX actions continue and product Better several including focus progress each along launch of Blue first this ever three details with progress notable of developments had and on map. details also our areas. ESG We report. ESG highlights This report, map The on through the road Apron's ESG ESG key initiatives our focuses priorities: key to these our inaugural and also SASB people, and road against Living

FWD, also carbon management a leading We as companies steps partnership proactive Planet consumer goals. towards to zero net platform for we with look our take signed a

Lastly, Compact United Global the initiative. Nations we joined also

outcomes ways XX the to Development help As show role of we committed different Nations' United a our participant, the can Sustainable have support we elevating the to Goals.

to the sustainable turn achieving the I I want we over call of Mitch, towards in goal long-term to continue drive that Before growth future. reiterate to our

address are margin that, key marketing. to call fundamentals, the of I turn over designed to our financials. including Mitch? With levels, would to implementing review a PTG&A and like initiatives We for Mitch

Mitch Cohen

this and you, completed Great enhance in we with Thank good Linda, The to you aftermarket an affiliates early September our from XX. offering as expected today. covenants. October morning, to as chat in and December Linda compliance as not us keep with financial liquidity funding helped short-term everyone. To receiving offering discussed, and after by offering, start,

on $X.XX of remarks. towards Class million at and offering, my speak after sales commissions. sold current shares of the price million for end average we X.X of a cash part our approximately position As I'll more A fees sales common $XX approximately the

and an Starting the execution stock this statement our prior on With Class of we warrants. shelf million to the decline sequentially primarily $XXX.X Common was and performance A stock, presence offerings, we and quarter. with tied enterprise universal initiatives of in year. aftermarket registration a our cost-saving revenue second line, flat sequential shares subordinated the and/or we filed through with the senior down prior some The securities, shelf registration with bulk registration implemented. backdrop, the of quarter customer quarter the statement. of run exhausted million, to sale $XXX debt the with net preferred Today, of let roughly top With X% a touch was me third the seasonality

uptick $XX.XX, menu with As over X.X% declined in in increases strong at also [indiscernible] decline the new Linda to summer, sequentially their our of from per impacted over highlighted, also variety Average drove customization concerns a in and seasonal added while $XXX. our customers customer quarter. the average count all-time revenue order a along $XXX,XXX. to another paring back the the high of introduced performance. total inflationary average hit slightly drove value Customers travel in also customer per due the Price orders record spending X.X% quarter. customer to

to points margin shipping requiring add the packaging summer, a In a year-over-year. the experienced customers to us in XXX Turning Variable basis decline than The nation, packaging quarter. representing of basis keep across additional due warmer past to total was XX in to food fresh. temperatures we expenses. and was increased reduction and points usual XX.X%, alongside quarter-over-quarter the primarily decline costs

are strategic support to last one priorities. We also the million third quarter increase compared recover logistics mainly costs. year, driven million experienced and and costs $XX totaled associated consulting PTG&A a In spend to on quarter, in in the our issue issue, $XX.X an supplier same ingredient by a the we working to

and structure cost achieve and the cost we remain have initiatives forward, improving we and on identifying savings Moving have margins. implementing management believe we we through optimizing focused that will begun our

marketing was addition, back better marketing declined In to flat and expect versus marketing $XX.X XX% to relatively XXXX managed and areas million. at spend QX as the we in we pared quarter spend levels QX we the with be look expense QX, in ROI. spend invest In

EBITDA and Looking adjusted loss cash million. at million. our of $XX.X $XX negative a we loss had the fees reported was that after million quarter and end. we QX, of of million a $XX.X $XX.X ATM line, shortly At from equivalents end net bottom received cash $XX.X and of flow which Operating million, completion we approximately cash of commissions our the excludes after the

affiliate remain placement the active a us an million X, in to value of entered in assets we us his certain On with significantly of companies the estimated excess into Mr. earlier, the to agreement. under private with interest a November owed discussed private discussions funding. of be we security regarding $XX.X granted his RJB pledge under Linda agreement As which in

number cost other initiatives evaluate advisers on Additionally, with and alternatives. of a working discussions in we're financing financial and savings to

or are actions and to expect alternative month. We early we covenant we receive with to We no be of necessary our our breach as Sanberg as demonstrates to taking pledge the lenders, as the Sanberg secure an us from secure gives funding other liquidity. steps later Mr. minimum liquidity in requirement path believe assuming are to lenders also our affiliates discussions we this the funding of necessary sources, for Me. in

not Finally, growth announced Q&A, Sanberg's for to of before anticipated let have funds withdrawing from briefly revenue received XX% Mr. on full our yet we I we the turn are touch me affiliates, on target X% XXXX. the over previously to year Because outlook.

will and your Moving targets remain adjusted open let will call we focused evaluate future on profitability more achieving to have on Operator? our position. EBITDA forward, liquidity clarity the With once updated providing that, questions. up in we the us

Operator

ahead. go comes Maria question Maria. Canaccord first at Today's Instructions] [Operator Ripps from Please

Maria Ripps

morning. you Good incremental done been taking investing sort a questions of marketing. for Thanks your have Great. and great my in job diversifying Linda menu you've

you a point? at maybe little factors think can to spend year-over-year more But sort about ability we efficient bit did think trends. broadly, I of But less the in I of this talk if your some look at grow QX. influencing here mention subscribers you

Linda Findley

absolutely. Yes,

think question, that the I for by -- So very the Maria. thank way, you much

that think also about factors several managing at are when looking and looking balancing, growing I there we structure we're cost think that marketing. at our

the So what we've in our infrastructure forward. data-driven take side going in and the will place actually marketing seen off performance to as we marketing approach is that pay on put a more we

spend in they're So we've places going increase to already and ROI. have dollars highest started where our to efficiency the marketing redirect the making towards some changes

a to marketing more when make of are significant some it changes the be So spend you Also did efficient. we we which, we saw that know, in secondly, see as part can make several brand QX lot additional costs QX. opportunities comes through that to digital investments,

our those we other and of customer the plan these those nontraditional to some new brand reach we forward. Again, pools in progress bulk such some curtail to of in because get we how sales count for nature we them see with of our continue audience of great to While sales going investments, positive some don't of as what finally, those marketing use been to actions, and do the have our then that's customers. enterprise very of long-term on and of And -- some count we establishing counted customers. made expand

expand that to them card and/or increase additional channels the gift going converting we including So take subscribers customer we're we're ways forward that sales into business. and our announcement can to of nonsubscription at new looking some those by using, numbers continuing Amazon Costco channel the our

closely is, do data-driven doing while think and than efficiency. have directed see that we will the spread to channels still rather channels of which you're were spend, marketing we'll towards what going a be So of I very is going lot to increase significant that some across performance brand before,

Maria Ripps

you of then impact Got now it. Amazon, seasonal And That's you helpful. of in see are sort do expect new channels QX, like in your that a retail secondly, very to broader sort presence? given different

Linda Findley

those have in new because in difference more we impact, we have a we because our introduced boxes, of have channels, the to seeing are still very channels and to see going good question, and different at to which we're I that stage. distribution actually growth new these a trends, special seasonal see seasonal It's impact shifts and from seasonal seasonal we of these this and don't the of years. in travel know in didn't now It's I partially partially explore of driven past, offerings going lot occasion that continue in a do development additional a have you're also bit early more. we think but that previous

And a channels, that say, shift see seasonal if so in to, that's sense. the probably where additional slight you're trends compared makes going to

Maria Ripps

Got it. for color. very you the Thank much

Linda Findley

you. Thank

Operator

from our Please Benchmark. next And Dan today question Kurnos go comes ahead. at

Dan Kurnos

up Yes, questioning. of to thanks. Good just that kind line on sort of morning. Linda, of follow

not of And isn't Just you go-to-market that. necessarily value broader travel than the a Apron messaging curtailed bit about be sort think around this We've point guys prepared messaging to some here. Blue maybe ongoing of around and though is why to that elevated recognizing of know sort to as sort prey from do this trying consumer a apparently How debate a I to the philosophical at of had prices given your spend, seems to kind just spend little made better at that consumer consumer. remarks grocery fall reinforce and economic own immune the grocery. pullback? as to reevaluate continues even you of

Linda Findley

great couple a Dan, key that a question, there's think there. and actually It's I of aspects

performance reducing three spend such the the equity way spend, upper them elevate more the and messaging What funnel by is cost and because some able into brand a channels, in to been we cost to strong the marketing able do So test last reducing build -- broad of we're during the sorry, been we've and we're our actually approaching to a are by more brand able benefit. to that we've able audience quarters. around

see still store, we So be correct to are et the PPI, we recipes, depending to that you what manage below and on to in able grocery able our still are might source pricing they to below the cetera. are the consumers

And so forward. our channel of a part out actually going getting that performance in marketing strategy big message is a

going really of part value of a supply concept forward being value. our and quality The about this but from the quality a And the chain we ingredients, are is also price. not other balancing our of strategy a that's hone able of big really think have through ingredients. compared that's of message that direct we getting other quality higher perspective, advantages the to also because and They're thing cost people our to demonstrate better value only one

So of strategy able more part out in be of performance a to the way performance directly, into by channel, to lot and a to we're is critical that that going targeted it more our really but messages channels forward. audiences put reach into a tend spend marketing redirecting the

Dan Kurnos

the And had I'll We and we an guys on talked try it. I helpful. bit now by have building it like if felt were those thought now, you that, or were you announcement frankly. resolve right to might conversations would to funding momentum. have How before weigh issue Got I here. little That's solution from And does question partnership ask about a enterprise then guess this delicately. much

contemplation at moment? side So the the just equation is that that of on a

Linda Findley

all the just fair on of bulk support say enterprise the that, to customers. course, and sales, discussions, but on sort conversations to existing weigh I not Well, of continue we it's funding I our enterprise mean, think

in QX. continue also we with like Amazon didn't We continue be in new do to just And to and customers that process. in close new this channels Costco discussions enterprise launch

are clearly, and are that we on focus able our we directly. sure momentum But it. into our continuing very secure biggest So business is continue focus making the funding to the

Dan Kurnos

I discussing point, resolved, have expansion sort marketplace this underlying the doesn't just to in that some on but away from take marketplace that know -- the of of how you work expansion, to were probably get much And of Linda, terms before? you

Linda Findley

doing Correct. Yes. -- sale work on we that that a doing the extend support only quarters, we're And e-commerce previous and really the to it to most all some products we're to of in that partnerships are No, we're the in opportunity built one is, things extend steam technology us think, brand. full of expansion that marketplace ahead channels allows great that order our of not on ship the again, within the increase day we've as exciting said the those that we further. about distribution

Dan Kurnos

color. Super Thanks appreciate it. the for helpful. Got it. I

Linda Findley

so Thanks much Dan.

Operator

Please today And Meyers from Capital our next question ahead. at go Markets. comes Ryan Lake

Ryan Meyers

Thanks good my guys. taking for morning, Hi, questions.

remarks, initiatives. in reduction You the out you're called cost implementing some prepared

wondering more those detriment what of what of know guys would you on growth? of initiatives specifics doing, that understanding pull? some Just can will provide levers if through big be can sort of kind a of revenue helpful. on Just But sort what have one sort of some marketing kind you there. is are exactly us I walk you

Mitch Cohen

at again, consultants, taking we're marketing, level, We're high Well, PTG&A look fees. a hard here. professional at, looking really

go identified plan. guy I have we and ability fresh have new have of to places we -- here, the look, execute there look are our fresh forward the on As we and -- and a the

Linda Findley

Yes.

efficiency we've the to look And way spend do growth think to on we than of organization I capital real really marketing when helps necessarily gain about concept optimize is where reductions. I human business. hope where some able to rather to far at efficiency through been we're propel a opportunities applies actually that the hindrance the being similar those estate, we when think what actually the able think we so the now, the at think about right in where space of optimize a we're

cash see different the where longer. of always really talked looking opportunities margin too, save marketing an what we're to So is really addressing spend addressing important an of and because aspect board efficiency money. you're go the that's But from across at the biggest the ability going of to our this, to opportunity about we variable make

Ryan Meyers

us guys last makes Got know Have helpful any as specifics disclosing during a then it. Amazon of revenue orders demand of as partnerships. you kind you you're bit if not the I'm and be sort around quarter about Walmart.com wondering a from That of questions talked And think little but I'm it you well. of but And what I the sense. would sort give bit, there. from seen far quite that of that couple how was, sure I much can as

Linda Findley

It Yes. say very new Happy revenue on with it sort uptick, in is but of that, of early seeing our a become that Amazon I to particularly storefront. we still not has relationship. are yet. touch But the significant will portion continued

to create product continue comes compared you're offerings from and right customer now, future revenue to that we as But and year-over-year strength also necessarily in of A initiatives. the to meaning, other large that towards we ability words, number additional enough continued to would not the quarter break we year-over-year, it's majority the what out. it in so compared quarters. in pricing seeing And the look develop

Ryan Meyers

sense. Got That guys. Thanks it. makes

Operator

Please Instructions] Our comes question with next [Operator Ramgopal ahead. Sidoti. go from Mitra

Mitra Ramgopal

taking for the questions. Yes, Thanks Good morning, Linda.

wanted just still if you're relationships. subscriptions just to on seeing I Obviously, up new. the any Walmart, But very Amazon First, yet. conversion to follow it's curious

Linda Findley

is Part early. and something that's are rather potentially numbers. subscription. that what they we others it. are people subscriptions. committing is do prefer conversion But converting still And seeing actually every into to buy buying some then again, want week, they're than if to are even to very to to the the of subscription new it just of enough seeing a we're value But continue do is seeing necessarily it reveal some we So still that wouldn't we -- those nonsubscription

Mitra Ramgopal

Are still Or of Okay, costs, stabilize? midway packaging through quarter. the we to of terms lot are starting shipping, pressure thanks. And a that fourth almost in is higher seeing you et cetera?

Mitch Cohen

There slightly, down has Food a us. FedEx bit. I Labor an Shipping the cost raise have ability stabilization. believe. been prices some up little are just [indiscernible] prices to gone on remains and issue. has only

Linda Findley

seen yes, packaging difficult particularly we to in other a stabilization our course, have we packaging, hot of remember because is seasonality, some In quarter the margin the thing summer. because most QX always and had is of

in So food you're in see going as always safe to packaging, increases particular, in it order the to keep transports.

So bit we when New a a by do the in evidenced the not -- today, weather York it they're packaging. reprieve to of heat have comes on

Mitra Ramgopal

right. Right,

price No. know it's Thanks. terms delicate in increases I and trying implement customers. of Okay. then keep to And

If cetera. shipping, of implement fuel, terms it's in to terms the food maybe in more as the mentioned, in terms is you give that else the impact as of on et about trying cost? you us some packaging, cost of, color also increase, Or the that's If recapture you just can front more everything an it churn.

Linda Findley

Sure. Yes.

So we've so. reminder, price just as two increases the X.X last done or years over a

position a as going what But the this. increase logistics instances. to seeing food value like conditions then was we than price specifically as better behavior store given consumer much continue economic see we to the for shipping. we're adjust The in many necessarily you as far that seeing is aren't customer again, changes the grocery people second the coverage. resisting is, towards have do costs you first more the normal seen from to price And one directed fact when was What and

to understanding value are the I make able sure line quarter a and the careful revenue So price the this customer people that think AOV very of but in that the ingredients of has to also evidence we per were an continued we been achieve were that's quality with in and what for us, competitors, about advantage we part were remaining box. you're part increases, good of to record the and in that seeing

Mitra Ramgopal

questions. taking for the Thanks Okay.

Linda Findley

Mitra. much, Thanks so

Operator

closing conclude this question-and-answer gentlemen, to for you. the today's Thank like ladies will conference I'd And session. Linda any back turn and Findley to over remarks.

Linda Findley

Thank much. today. questions, providing Thank year you you don't have we the quarter meantime, when any directly. you so on to report early and hesitate time update look In results full us to additional reach an fourth We year. forward if out next to your our please for

Operator

you, concludes thank ma'am. Thank for all today's you call. We This presentation. attending today's conference

your and have disconnect lines, may a day. wonderful You now

Blue Apron (APRN) 7 Nov 222022 Q3 Earnings call transcript