BRDR : NASDAQ : US$13.25
Target: US$18.00

Technology — Internet
Borderfree’s second quarter as a public company was another strong
one. eCommerce revenue grew by 34%, accelerating meaningfully from
19% in Q1. The key driver appears to be lower shipping costs as the
company expands local market fulfillment options, which is driving
higher conversion of shoppers into purchasers. We continue to view
Borderfree as a long-term, stable growth opportunity.
Key points
Bullish: eCommerce revenue accelerated, beat our estimate, and
guidance was raised for the year; EBITDA margin was 4.3%, 370
bps ahead of our estimate driven by stronger mix of eCommerce
revenue; Fulfillment revenue (which represents a pass-through of
the cost of fulfilling an order, so lower is better!) was lower than our
estimate as the company achieved local market fulfillment
Bearish: The company added only two net new merchants in the
quarter (however, we believe that in H1 ~8 small merchants
accounting for less than 0.3% of GMV were turned off); lower total
revenue guidance may create some noise (although this is a
significant positive operationally and eCommerce guidance was
Estimate changes: We are changing our 2014 and 2015 total
revenue non-GAAP EPS to $140M/$0.16 and $168M/$0.20 from
$142M/ $0.10 and $172M/$0.18.
Our price target remains unchanged at $18.00 and is based on 2.7x our
2015 revenue estimate of $168M (down from $172M) and 5.3x our 2015
e-commerce revenue estimate of $88M (up from $86M


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