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How Blue Apron’s 1Q18 Margins and Earnings Stack Up

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Margin performance

In 1Q18, Blue Apron Holdings (APRN) reported negative adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $17.2 million. That compares with adjusted EBITDA of -$46.3 million in 1Q17. The improvement was driven by operational effectiveness and aggressive cost cuts. The company stated that it has achieved significant cost efficiency in labor, food, and packaging costs at its Linden fulfillment center.

The company’s operating loss narrowed to $29.9 million compared with a loss from operations of $51.7 million in 1Q17. The main factor was a reduction of 23.6% in operating expenses on a YOY (year-over-year) basis.

Component-wise, cost of goods sold fell 23.3% to $129.3 million in 1Q18 on a YoY basis. Its marketing expenses fell 35.1% to $39.3 million, and its PTG&A (product, technology, general, and administrative) expenses declined 21.7% to $49.5 million.

The company reported a net loss of $31.7 million compared with a net loss of $52.2 million in 1Q17. Its adjusted loss per share was $0.17, which was below analysts’ estimate of a $0.24 loss per share.

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2018 outlook

For 2018, Blue Apron expects its adjusted EBITDA to be $55 million–$60 million, driven by ongoing productivity enhancement initiatives. Its net loss is projected to be $126 million–$131 million for 2018 compared with a net loss of $210.1 million in 2017.

Blue Apron set a goal of achieving break-even adjusted EBITDA by 2019. It has reiterated the possibility of adjusted EBITDA breaking even in 4Q18, driven by its ongoing restructuring initiatives.

Cost of goods sold as a percentage of revenue is projected to be 65%–66% in 2018, representing an improvement of 500–600 bps (basis points) from 2017.

For 2Q18, Blue Apron projects its net loss to be $36 million–$38 million. Its adjusted EBITDA loss could be $15 million–$20 million.

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