Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the Blue Apron Holdings First Quarter 2023 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, Thursday, May 4, 2023, for replay purposes. A slide presentation has been created to accompany today's remarks and can be accessed on the Blue Apron Investor Relations website [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.

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

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

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

to filings, SEC GAAP to non-GAAP encouraged directly the release are measures, where the most it refer financial reconciliation to earnings and defined of these these to review the and You measures measures. has comparable

With ahead. would Blue please to Linda, over Apron's CEO. turn Linda go to that, the now Findley, I call like

Linda Findley

Thank update you, the morning, operator. you on business. us for and for thank joining Good an everyone,

with Apron's Cohen. is today CFO. Interim call Mitch the On me Blue

our I'll update strategy. a was on that our Given last Mitch our QX. Per financial to a few reducing a continue of last provide that start and weeks will cash quick quarter and goal go-forward just share review shift our results. call, against our towards update to profitability an ago, we performance with then deliver depth our of focused in first of burn recap more earnings are on my in we remarks

actively opportunities that and obligations. we recognize to in meet term our pursuing additional capital us we the needs to order However, all near available business are

financing color. Mitch completed significant a provide time, additional strategic or one potential the of have this or will don't including commercial this at partnerships. includes opportunities deal more other we While transactions,

we we success related to and we continue cash reduction quarter, Previously, efficiencies business, to reflecting the saw cash first further At across that more accomplished improvement approximately had reduction. burn in end XX% February, a of efforts than shared $XX was of year-over-year driving the quarter. our end the During the the burn, burn. especially in pleased annualized the quarter, in fourth I'm first as XX% report first cash flow the of to a million our even XXXX quarter to of very free down end compared

in cash move to As we vigilant managing quarter, continue greater into burn efficiencies identify remain areas and to into we bring business. the second the

continue to also to execute profitability. our We customer continued strengthen with plans key we Notably engagement of metrics. our on in QX, goal our

$XX.XX, slightly fourth approximately prior of within improvement introduced in XX% promotional The Average our strategic XXXX, earlier while the order in the year-over-year reflects up value XXXX. versus from and same sequential the in period related is spend to year investments of decline down is quarter. the some the annualization quarter increases the price

the value clearly overall of average was order promotions illustrating our Excluding offering. $XX.XX, strength

new $XXX, was customers number fourth first in the slightly also customer per as down greater quarter. a versus the revenue Average of from meal kits quarter purchased tenured

longer on customers newer they boxes, less typically reminder, a spend spending increased with their initial to but As tend Apron. the Blue are

customers ended month menu customers customer X.X Total well continued in per XX the March to our as our strong options. variety and at was XXX,XXX, XX, customization orders Finally, respond held on the to deliberate coupled a focus compared change. ago. marketing the in the spend, marketing year the like period fourth equivalent year-over-year XXX,XXX overall with quarter reductions for efficiency, drove Much to

the I XXXX, and the XXXX. to we When the much mentioned quarter compared The of you to the XXX,XXX promotional year-over-year first at results, a intentional quarter of marketing in fourth strategy, in a our performance our notable change our reflection were quarter our the look increase. in customers efforts have improvements I in sequential made earlier, of focus with XXX,XXX drove discuss Total along conversion, marketing, is to detail efficiency greater which will of moment. in spent. shift in overall more resulted in These more and in reduction a XXX,XXX to marketing decline shifts also

Now, turning outlined our strategy, on we executing strategic go-forward to against our initiatives three focused remain previously.

margin executing those profitable improvements. cost As more a management marketing disciplined customers and in Two, more one, And are acquiring taking retaining a spend. while to three, targeted managing approach PTG&A. reminder, driving

marketing. with start I'll

aimed Our to be on continue scale. efforts delivering here at and profitability

marketing cost XX% and earnings per our marketing spend call, proactively reduction towards we the acquisition. we discussed in a that have and sequentially to our deliver quarter reduced spend based channels year. first In year-over-year. improvements was seeing also As performance shifted with digital fourth $XX.X on million, a levels are periods, XX% spend, return strong payback payback the a Alongside of a far than pre-pandemic less quarter, significant

in quarter to media strong per In are building promotions investment a XXXX. taking success approach early of cost the reduced lowest working the holistic seeing in level now by XXXX. and at sequentially XX% increasing we in fourth achieved it's more quarter. our cost By we acquisition, per improvements our since approximately conversion its We by first QX simultaneously acquisition in almost and rate our this XX%, while on

while retention in allows of channels our we by scale testing marketing in of our for are our success bottom as attract is to KPIs. are promotional customer a our marketing to representative drivers customers. key us way right the us that the a focus benefits acquisition, and effective evidenced strategy These on improvements of improvements ability overlaying One know our that line,

network average we continue We limited behaviors partnerships. with along created and of a order collaboration Yeh. build incentivizing reactivation. chef of we value way we know announced have limited culinary them new without In our and with our partnership current order or and unskipped with a efforts, boxes boxes team, Molly available marketing out the on to to time Molly [ph] subscription. The Recently, our rates weeks a prospective account are deliver offering time with seasonal engage customers. great during proven to In higher offer support a

towards our As continue goal the are our profitability. this we we as pause existing activities prioritize of walmart.com to drive we to assessing partnerships. continue month, achieving profitability, our Notably, partnerships beginning all we and availability ROI products have of decided to build on and that

to work opportunities on our continue including We and with active sellers Amazon channel profitability. and closely sales pursuing third new they focus on other partnerships align party in where remain

our to period year. in the over productivity The quarter cost months. improvements to past and management prior second quarter the fourth variable in the XX% from improvements, XX.X% by in implemented the variable from the in were same driven commitment, along XX.X% with margin efficiencies margin XX.X% in increased Moving several first -- margin driving improvements, increased continued and

improvements implementing started efficiency fourth Operational the quarter in continue we business. the deliver to to benefits

a We they a efficiencies of margin increased implement reduction of lines, of trucks, order, shipments as material consolidation includes in per in labor is in recipe as and which more and This higher order, work ingredient line meals especially number improvement we coming inventory into idle smaller continued count. work opportunity an see time reduction came minutes a and boxes in per throughout the resulted pack throughput improvement year. with of tandem hour, on pack Our of handling per and management. impressive

management. third our cost commitment, to Turning

in the in as our a As achieved earlier, In are XX% term free to reduction obligations. year. compared I also prior in this period near cash flow burn QX tandem funding reduction, year-over-year noted pursuing meet additional same with external we we've the to

cost cost to efficiencies these of have ways bulk of reductions we our continue to a our the profitability. While year. efforts the we us through to-date provide path believe on course achieving evaluate to implemented, further we for continue achieve the foundation incremental Overall, been solid believe to

it With Mitch the that, to financials. go turn over through let Mitch? me to

Mitch Cohen

liquidity begin you, Thank morning for XX, first I'll position performance first everyone. update and an before quarter into quarter's good the March with the XXXX. our diving Linda, ended on

as as of to Our $XX.X fourth cash was at the balance quarter the of of end million compared XXXX. $XX.X million quarter end the the first

including down, our a to operational the from proceeds, launched November reductions. the number position of debt of quarter factors, efficiencies and offering at Our of efforts at-the-market the in cash drive our XXXX, primarily cost end and paid reflects success equity first our

Starting this resulted completed of we year, November proceeds ATM activity our commissions. offering at-the-market in which of our of in January $XX.X with million net

launched the offering provides at-the-market February the another sell us from which shares addition, made shares, to In to XXXX, substantially we time to XX million we up available. XX million option with in time new all

$X.X million secured previous million. down, our requires the balance pay debt million down outstanding paid on the notes interest principal monthly to regard noted notes have to of amount. call, The amendment four installments agreement in we of $XX XX the million equal of remaining senior March. pay $XX our purchase in as To-date our us we of With amended

amendment of the paid $X.X million first The the was million in signing in March, with installment and second in connection April. paid $X.X the

third fourth scheduled be XXXX. made due this final month payment the The and and to is in June payments

need of us the to Joe middle continues prior Sandberg funding amounts from Because outstanding we owed delayed, affiliate to additional the be will June. to

near As Linda This any transaction. or mentioned, there we significant we strategic such partnerships, transactions includes assurance available term that to more although opportunities all will can one to meet no financing including be obligations. us other opportunities commercial and/or are our actively pursuing close

a stabilize the balance Our ultimate goal profitability. sheet is and to to term to long get path

was in by revenue up net month was order The $XXX.X driven year-over-year. down customers period. in X.X% The volume growth in was increased sequentially the year-over-year period a and million, XX reduction in results, alongside X% in the driven quarter order first customers the to the by the in sequential quarter. Turning reduction and decline the increase the volume

due was spend quarter As promotional to quarter. Linda average order of XXXX mentioned from the modestly down fourth increased $XX.XX, in the value

for to quarter to and our to variety X.X, as per varying spend the respond customization. customer menu -- was customers continue well Order

and quarter. XX.X% efforts by expenses and basis to quarter -- our and reducing variable box. This labor XX food a drive operational packaging the variable Turning over the period. is to margin year points up of expense for increase margin was increase a basis better and first The prior for costs. ongoing managing sequential improvement efforts point lower was XXX our per cost efficiencies driven These the include

reflecting an The reflecting as a quarter of X.X% fourth in year-over-year by decrease late driven decision efforts costs. successful a Notably quarter well food out bonus first sequentially. were to quarter first lower the carbon our XX.X costs impact XXXX retirements quarter. as in headcount expense, year corporate was of $XX.X reductions implemented the prior PTG&A PTG&A fourth quarter. million the in in offsets, reduce of first the year-over-year represented decrease the the year pay included reduction increase In of bonuses end to XXXX significant The

the and pay net Free cash of flow first XX% of $X an was in than debt, a negative Factoring our down less million, activity was million improvement our $XX.X decrease in year-over-year. cash the quarter. at-the-market

in reported compared the Looking at loss QX. million $XX.X loss bottom first net of quarter million was In in compared $XX.X XXXX loss QX. in and loss line, million the EBITDA $X.X a QX loss quarter XXXX for a $XX.X in million loss first adjusted net to QX million and the $XX.X we a million $XX of to a

indications Our are our efficiencies working loss work significant to planned, including in margin. reductions and are drive costs and to expenses, improve cash marketing as burn manage reduce efforts reduce PTG&A adjusted our EBITDA and variable that

March. burn includes in first the of paid monthly we million As of $X.X four our impact cash paid debt quarter our first as installments down, noted the

believe provide and to goals. today to our course we evaluate efficiencies make achieve continue the said, as to profitability. additional to funds for fund incremental cost of pursue good we sufficient the Overall, further continue use a we year efforts near our that through us our operational continue path the term actively We to to -- additional solid to against funding will on foundation progress ways This achieving obligations. continue

With that, the operator to to over things open Operator? the call turn up questions. for I'll

Operator

Thank you.

Please We ahead. Instructions] question-and-answer begin Maria will question first [Operator the Ripps Our go now Canaccord. session. with comes from

Maria Ripps

my questions. and taking Good for Great. morning, thanks

maybe lower marketing you healthy net us this worked very of in behind for a more on quarter? little context give Can and especially into as And you you of the expand sort key of that? this on QX. spent. this drivers so we a slower just your bit head QX this talk the seasonality sustainability color little bit First, dynamic adds quarter, Maybe what about had

Linda Findley

much Maria. so question, the for Thanks

So a I you more definitely bit can little give color.

with a played technology year. we of all, that we established First levers of the last different for couple had

in marketing So last after to as the that into as you XXXX. into was some investment happened know, and marketing had reset year brand an we back technology lean started spend,

So say more into performance be spent. We're some after a removing activities. of some away performance-based on And put driving the brand from we strong our that and Blue branding now technology spend and to history have, the not moving of the to top channels at that we're take branding were able leverage efficient actually that some lot to advantage marketing, XX% into more that of branding was brand. a we That's funnel all. into recognition of as course, of of transitioning Apron our long branding that place of

that's one do. thing that to we So actually able were

Another thing about that in media was we promotional script that spend. with bit the versus we talked little played the spend a

to revenue. actually promotional that So we be different did tested prove some structures contra

higher at those the our quality were So as AOV. time But able out part lower we still that spend our of customers and to you saw come acquire marketing same process. some also of of that

able spend. That and promotional resulted better trade quality we and were bit a marketing in better So spend off still efficiency to between customers.

this think we this in into throughout further quarters, will something as funding see as something we discussed that's that earlier. investment can sustainable, think secure the we that is although do sustainable, do that future, But still is you that we always We lean do. seasonality the you

each So And a the than in levels in year. than are playing of we've talking paybacks other higher both some of that a to of at we some less much a in past. what efficiency we're against had about those that seeing that greater positive customers XXXX quality really way come were returning where is in

organic A this driving and make And strong more to We combination channels, technology some a as through And our the have finally very that's work tend search, being a is lot things performance-based all put towards list efficient. of of we a that of more helping are have to the to a tend like end. the as model lot and and changed more to same we traffic years which Again, well. be industry. lot drive quite improvements from that results affiliate. be in organic in affiliate able of reactivations. And email the driving place in of bit working well that

Maria Ripps

sort margin? then still could of seen helpful. you've of maybe prices food secondly, That's headwind say And inflation very is how what trends to you and with you much talk about gross a underlying would

Linda Findley

pressure, Sure, seeing we're underlying prices, in so particularly I still think inflationary some food.

continuing their to value. spend. consumers I about little we're focusing think much why cautious be we are a also That's so see bit on

responses and less tend in kits. We're seeing the coming they're People are more also dealing far but emotionally with seeing that happening I of an people feel price think to that everyone's meal with or they're kits. just are a they with uncertainty the to in, sensitive kits, in once to be climate. price people exactly what's when products spend you strong continued meal in in macro sensitive. people macro economic value we as know, seeing about environment we the continue continue are seeing work, But

we've are offset on procurement pressure, in But side able efficiencies overall, food So that. there's and to in that both the to helping drive our been costs. pricing labor our some side continuing

On just over several in the on willing that the side, to value-added see continuing years themselves. consumer we've people kits products and seeing last added kits to the we value within spend are the the being

Maria Ripps

much, so helpful. Linda. very That's Thank you it. Got

Linda Findley

you, Thank Maria.

Operator

Our The Kurnos next with question go comes Benchmark Please from ahead. Company. Dan

Dan Kurnos

want that topic. Linda, morning. I on Good thanks. Great, to stay

there than highlight and working incentivize You value I at market, are in adds, stickiness promotions way those bulk reducing that effectively reactivation if any see what color to there. to learnings kind And you to of it, that been if or obviously of a in, curious, coming reactivations, to or longer percent new have I least around directionally, the commodities think because parse you customers gave think value, on ARV there's down the if tail similarly early what of you're bringing lot behaving a in a or of good Is any from are new rather you're either have the those perspective? known from customers. are the before that historical pipeline new cohorts I'm from

Linda Findley

definitely to any miss question, I'll but answer if it. Sure, me remind try your of I part

the So reactivation. program a reactivation what I this can of of But we currently we have data new former against percentage coming and customers a on customers in testing lot current were that is the you about that our from don't customers. list of talk those launch that we we early are email year, lot very and tell where QX, did a

though data from And going to are still we've very known of seen will past said about. place, we've what the the for coming I were you're is continue with environment. new compared we've cookie first that those experiments that go powerful as reactivated into customers taking that to healthy we adds Again, to and deeper was net be become of perform customers, as put extremely of reactivation majority to advantage technology to sticky of in tend extremely extremely the party even that before, say aspects we're us. Those well new a into talking tend customers the proving entity because true list

there. progress given So opportunity our database. have seeing the to size a we but really go of lot we are of And still good

very So that's of positive a aspect it.

the there's note coming the will we other that The than doing cohorts beginning same bringing and XXXX, better while performing or of experiments, overall, lot a customer average. Again, new thing in tests cohorts tests. of we in on is, always I that are were were the different in, previous

average, But testing. on same see better little are guess the when lack I whole, for of bit you'll wobbliness, the better. a on and performing you're term, they So or a of

Dan Kurnos

substantial to your as marketing do of see alluded perhaps super where sort a balance you controversies, point, that's even -- the if downwards, I on kind to still that's, that it, can as of margins lower everybody mean, AOV as is opportunity price, AOV to you loves right? you come continues the expense. pull I on front, guess helpful. improve concept to of to down And press more needs your no, sort trickle you broader promo which media you that Yeah, put spend, back So upfront

Linda Findley

forward you to structures, So AOV. structure will should while our I that couple which stabilize continue unpack the the see things might of going than say amounts, in there's what testing test more that we dollar do of roughly a rather to question. promotional is our

So you're not down and trickle there. we that in to consistent going the still think necessarily $XX on being AOV a higher of one see That is incredibly above said, industry. an the healthy

So steady but going down. a you'll some seasonality still not there, necessarily trickle see you're see to

it's more structural specifically necessarily level that looking think dollar at do We than about levers amounts. pulling

one into important, drive So that's piece actually thing the business. because it's coming higher the quality that's really structural that customers helps that

see So something that's that there. you'll

On continued we on of heat. year challenge the lot That us. opportunities do being margin anticipate our have the ahead being highest ahead of you've opportunities of a about, because seasonality, always said, we just margin seen piece as QX a us, margin. in of of the of it, years We've previous productivity talked of lot efficiency

do variable to that So improve we continue we margin. anticipate will our

Dan Kurnos

do of evaluations Just helpful. think how are just we of a any point? partner? super of impact last this other should that that's the be -- there Walmart about going about the on how do are pause? that? And we And know we at it. it's I think And sort aware Got one, just there

Linda Findley

hours. big helped Walmart develop we've Walmart first one technology and partnership party see across and thing And let driver an about to do said profitability. our that it that now it Again we is leverage of was take The was the it of that us right ship to opportunities third partnerships. is us continue the core benefits different XX our the order within always

that So return success. to the partnership we make bring term profitability, do, most we're business in not we're long on into just always the sure end, the everything going based to each evaluating

Dan Kurnos

very Thanks Linda. Appreciate great. Okay, it. much,

Linda Findley

Thanks Dan. so much,

Operator

go Please The Street from Instructions] comes Capital Markets. with question Meyers Lake ahead. next [Operator Ryan

Ryan Meyers

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

had we've results, you a of XX% Obviously, sort this First couple cost one lowering for me, if year-over-year. quarters of reduction of effort, pretty solid OpEx now will. so about

out amount, more the you on quarters, you look at cost of continue largely As guys much side? on dollar marketing you can to take a how feel the and like remaining business, PTG&A

Linda Findley

for Ryan. so thanks So the question, much

We in the reduction year, You end didn't expected December, that than the was those QX. $XX business. so cost in on about results quite cost that early in actually we better million It's see impacts. saw reductions announced we it seeing of implemented across the

where I throughout those But first So saw seen you think impact a impact we've say QX was the come year. will of reductions us that lot really that quarter cost I together. overall, the

It million wasn't all So $XX more you'll necessarily the in just see of that throughout coming showing QX. year. up

reduction. you'll those at always So think we that to continued we're focusing on good very opportunities and them opportunities, very are We impact. do finding continuing at other additional see look I that quickly. cost and see moving for proven on we've

quarters, we find still we the positive to see But we come anything future impacts from that the reduction did So December. in in will definitely yet we implement.

Mitch Cohen

Ryan, it's evaluation, a And PTG&A. constant always

our things uncover of it keep So we'll to and subletting [ph] looking. that talked part about of We some last nature. stations on our things labor still and continue call, more

Ryan Meyers

press a partnership sort remarks, as an guys funding you in the option bring and of something What release, then like And that your in it. Got talked look then prepared financing. like? or to Mitch, more would commercial about

Linda Findley

this options something on it But addition funding at we time. other details options heavily. more any are considering give can't to in We strategic that the is and

we we'll as details. have soon as so And more update you

Ryan Meyers

for taking Got questions. it. my Thanks

Linda Findley

Absolutely.

Operator

to Findlay any over comments. I'd turn Ladies conference closing call question-and-answer Linda for and conclude to will gentleman this today's session. the like back

Linda Findley

don't directly. soon. much today. you. an time providing please our meantime, have of if in Thank forward questions, your any you update We additional to for Thank us And to out look all everyone you the so efforts to hesitate on reach

Operator

today's The presentation. concluded. Thank conference you now for attending has

You may now all disconnect.

Blue Apron (APRN) 4 May 232023 Q1 Earnings call transcript