Borderfree

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

Technology — Internet
STRONG Q2 WITH SIGNIFICANT FULFILLMENT EFFICIENCY GAINS
Summary
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
efficiency.
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
raised).
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.
Valuation
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

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s