Low on Cash, Blue Apron Pulls FY Guidance Amid Revenue Hit And Funding Delays
Flat quarterly net revenue growth and a sequential, 11.7% revenue decline year-over-year, coupled with a delay to its $57 million private placement funding from RJB Partners LLC, has caused meal delivery service Blue Apron to pull its yearly revenue guidance, according to a Q3 earnings report Monday. The company has begun to implement short-term cost reduction initiatives and is expected to breach its minimum liquidity covenant by the end of the month if additional capital is not secured.
President and CEO Linda Findley noted the company garnered over $14 million in an at-the-market offering in October to support short term liquidity. The move was made amid continued delays from RJB to provide the funding despite a “personal guarantee of RJB’s obligations” from the firm’s director, Joseph Sanberg. The firm has not offered a cause for the delay in payment, which was originally expected in August.
“We remain in active discussions with Mr. Sanberg and on November 6, 2022, we entered into a pledge agreement with one of his affiliates which granted us a security interest… with a value estimated to be significantly in excess of the $56.5 million of outstanding private placement funding owed to the company,” Findley said in a press release. “In addition, midway through the third quarter, we began to identify and put in place cost-saving initiatives designed to manage expenses and improve margins, as we continue to drive towards our goal of long-term sustainable growth.”
The company has withdrawn its previously announced revenue growth target of 7% to 13% for full year 2022 in light of its funding challenges and said it will provide updated guidance once it has more clarity on its liquidity position. The company’s stock prices dropped 17% to $1.71 following the announcement. Findley also said the company is focused on achieving adjusted EBITDA profitability in the future and has begun working with financial advisors to assess the situation in addition to entering discussions with its other lenders.
Despite negligible revenue growth, Blue Apron’s average order values hit a record high in Q3, increasing 13.7%, according to the earnings report. While the company has strategized around growing order sizes – the impetus for its extension into breakfast, snacks and dessert categories, among other “add-ons,” – this quarter’s growth in order value has been largely attributed to the impact of price increases implemented in June.
“These metrics are supported, in part, by expanded menu variety, including Ready to Cook meals along with seasonal offerings, which continue to resonate well with customers,” said Findley in a press release. “We are working to balance the performance of our products with our response to inflation. Our focus is to provide value to our customers, while leveraging price and cost discipline to mitigate macro headwinds to target margin improvement over time.”
Last month, the company launched a subscription-free option on Amazon aimed at attracting first-time buyers by enabling one-off purchases.
