In its first earnings call since going public, online bulk-products retailer Boxed Inc. reported an uptick in fiscal 2021 fourth-quarter net revenue but a decline for the full year.
For the quarter ended Dec. 31, net revenue totaled just over $45 million, up 4.2% from $43.2 million a year earlier, New York-based Boxed said after yesterday’s market close. Retail sales were $39.7 million, down 8.1% from the prior-year period, when the company said results were boosted by pandemic-driven consumer demand.
Boxed also turned in $5.3 million in software and service revenue, a new income stream developed as part of its plan to go public. Boxed made its public market debut on Dec. 9, following a September announcement in which the company said it would license its end-to-end e-commerce platform as a software-as-a-service (SaaS) offering. Boxed’s technology includes customer-facing front-end and back-end operational software plus homegrown automation robotics for fulfillment.
"As a public company, we’ll continue to drive additional B2B and B2C growth, enhance loyalty programs and invest in our unique, high-margin software and services business." — Chieh Huang, Boxed Inc. CEO
“I couldn’t be more pleased to be speaking with you on our first earnings call as a public company,” Boxed co-founder and CEO Chieh Huang told analysts in a conference call late Tuesday. “We’re proud to have delivered results in line with the forecast we released in October 2021.”
Fiscal 2021 net revenue came in at $177.3 million, a 5.3% decrease from $187.2 million in fiscal 2020. Retail sales for 2021 were just under $157 million, down 16.1% from the previous year. However, Boxed tallied $20.3 million in software and services revenue for 2021, an income source not present in 2020.
“We have a world-class team at Boxed that’s laser focused on maximizing both sides of our business,” Huang said. “Now as a public company, we’ll continue to drive additional B2B and B2C growth, enhance loyalty programs and invest in our unique, high-margin software and services business. It probably goes without saying, but I’m very excited about what is to come in the years ahead.”
Boxed noted that, for its retail segment, the company is focusing on quarter-to-quarter trends as it scales and sustains more consistent and higher levels of marketing investment in 2022.
"We’re really encouraged by our underlying consumer engagement trends." — Mark Zimowski, Boxed Inc. chief financial officer
“Net revenue was $45 million, an increase of $1.8 million compared to the prior-year period. The increase was due to an increase in software and services revenue, which we see as a significant growth opportunity for us as we look forward,” Chief Financial Officer Mark Zimowski said in the call, referring to fourth-quarter results. “Retail net revenue was $39.7 million, a decrease of $3.5 million compared to the prior-year period. Our year-over-year trends here continue to be impacted by tough comps resulting from COVID-related customer behavior, as we saw strength in the B2C active user accounts and organic new customer acquisition throughout 2020.
“With that said, we’re really encouraged by our underlying consumer engagement trends, with the fourth-quarter net retail revenue per active customer of $266, which was up 14% year over year and up 26% since the fourth quarter of 2019,” he added.
A pure-play online retailer, Boxed provides warehouse club-style shopping — including groceries, pantry items, household staples, health and beauty aids, office supplies, and a variety of organic and green products — through its website and mobile app. Consumers and businesses can purchase club-sized packages with free two-day delivery in the continental U.S. on purchases of over $49, without the membership fees of traditional warehouse clubs. It also offers Boxed Express, an on-demand delivery service for perishables. Boxed’s B2B customers range from small and midsize businesses to Fortune 100 enterprises.
“Our average B2C consumer is buying over $100 worth of goods and eight items per month in a single shop, while our average B2B order is more than double that,” Huang said.
B2B customer gross merchandise value (GMV) surged 59.3% in the 2021 fourth quarter, and that trend — after seven consecutive quarters of COVID-related variability in B2B customer demand — has continued in the current fiscal year, according to Boxed.
Boxed noted that it's seeing strong growth in average order value, driven in part by rising B2B orders as employees return to offices. (Photo courtesy of Boxed)
“We are pleased with the continued upward trajectory of our average order values, with fourth quarter AOV of $131, an increase of $13, or 11.5%, compared to the prior-year period. For the full-year results, AOV was $122, up $14, or 12.7%, from 2020 and up $28, or 29.3%, on a three-year basis since 2019,” Zimowski explained. “There are several factors helping support these increases. First, our units per order increased 8% year over year, the results of ongoing technology and personalization improvements and the continued expansion of our product assortment. Further, especially in the fourth quarter, we began to see an increasing mix of B2B customer orders, which have AOVs more than double that of our B2C customer orders. Finally, we implemented some price increases over the course of the year in reaction to industrywide inflationary pressures we saw across the grocery supply chain.”
Huang also cited strong sales generation from the Boxed Up paid subscriber base, which provides a loyal, recurring revenue stream.
“In the retail business, our Boxed Up loyalty program continues to be a compelling growth opportunity,” he said. “In 2021, compared to an average B2C customer, Boxed Up members order 2.2 times as frequently and spent approximately 215% more per customer, demonstrating the stickiness of that customer base.”
At the bottom line, Boxed posted a 2021 fourth-quarter net loss of $38.9 million, or $1.64 per diluted share, compared with a net loss of $7.3 million, or 82 cents per diluted share, in the 2020 quarter. The results include net costs of $20.7 million in non-cash expenses from fair value changes in warrants and other derivative liabilities plus one-time transaction costs from Boxed’s public market entry, the company said. Boxed went public via a merger with special purpose acquisition company (SPAC) Seven Oaks Acquisition Corp.
For the full-year, the e-tailer reported a net loss was $69.2 million, or $5.14 per diluted share, versus a net loss of $34.4 million, or $3.80 per diluted share, for fiscal 2020. Boxed said annual results also reflect increases in one-time transaction costs and non-cash expenses, as well as higher advertising costs.
“During the fourth quarter of 2021, we also completed our first acquisition: MaxDelivery, one of New York’s first on-demand grocery delivery services. The acquisition broadens our capabilities in fresh grocery and dark-store fulfillment. MaxDelivery will also become a client of our software and services business, adopting our proprietary commerce technology to help enable scalability of its operations and expansion into additional markets,” Huang said in the call. “We’re already integrating the MaxDelivery operations and team into the Boxed family. As of January, MaxDelivery customers are already able to purchase Prince & Spring products, which is our high-quality private brand through the MaxDelivery platform. We’re also actively pursuing and negotiating additional sites for the geographic expansion of the MaxDelivery offering.”
Boxed, too, continues to grow its third-party sellers marketplace, which has expanded its assortment fivefold from about 200 SKUs in Q4 2020.
“In adjacent categories like health and beauty care, pet, baby, home and organic, our platform is also open to third-party sellers now,” Huang said. “We’re currently selling approximately 1,000 items through those third-party sellers, which we expect to continue to expand throughout 2022 and beyond.”