Newegg(NEGG) - 2022 Q2 - Quarterly Report

Financial Performance - Net sales for the six months ended June 30, 2022, were $890,540, a decrease of 26.2$1,206,872 for the same period in 2021[6]. - Gross profit for the six months ended June 30, 2022, was $110,771, down 33.6$166,926 in the prior year[6]. - The company reported a net loss of $18,869 for the six months ended June 30, 2022, compared to a net income of$21,591 for the same period in 2021[6]. - The company reported a comprehensive loss of $21,311 for the six months ended June 30, 2022, compared to a comprehensive income of$23,148 for the same period in 2021[9]. - Net income for the six months ended June 30, 2022, was a loss of $18.869 million, compared to a net income of$21.591 million for the same period in 2021[16]. - The basic earnings per share for the six months ended June 30, 2022, was $(0.05), while it was$0.06 for the same period in 2021[143]. Assets and Liabilities - Total current assets decreased to $332,571 as of June 30, 2022, from$438,961 as of December 31, 2021, representing a decline of 24.2%[3]. - Total liabilities decreased to $336,152 as of June 30, 2022, from$444,300 as of December 31, 2021, a reduction of 24.4%[3]. - The company’s cash and cash equivalents decreased to $70,069 as of June 30, 2022, from$99,993 as of December 31, 2021, a decline of 30.0%[3]. - The company’s accumulated deficit increased to $33,149 as of June 30, 2022, from$14,280 as of December 31, 2021[3]. - The total stockholders' equity as of June 30, 2022, was $178,753, a decrease from$182,282 as of December 31, 2021[3]. - Total accrued liabilities decreased from $74.7 million as of December 31, 2021, to$50.8 million as of June 30, 2022[96]. Cash Flow - Cash used in operating activities increased to $49.769 million for the six months ended June 30, 2022, compared to$35.438 million for the same period in 2021, reflecting a significant increase in operational cash outflows[16]. - Cash provided by financing activities was $21.959 million for the six months ended June 30, 2022, compared to$12.597 million in the same period of 2021, showing improved financing inflows[16]. - The company reported a beginning cash balance of $104.330 million and an ending cash balance of$71.056 million for the period, indicating a net decrease of $33.274 million[16]. - As of June 30, 2022, the total cash and cash equivalents, including restricted cash, amounted to$71.1 million, a decrease from $104.3 million as of December 31, 2021[37]. Inventory and Receivables - Total inventories amounted to$61.433 million as of June 30, 2022, compared to a negative inventory change of $(28.980) million in the prior year, indicating a substantial increase in inventory levels[16]. - Accounts receivable decreased to$10.183 million as of June 30, 2022, from $23.271 million in the prior year, indicating improved collection or reduced sales[16]. - Amounts receivable related to vendor incentive programs were$31.8 million at June 30, 2022, down from $41.5 million at December 31, 2021[66]. - Accounts receivable from business customers were$19.6 million at June 30, 2022, net of allowances of $1.9 million, compared to$17.6 million at December 31, 2021[38]. Revenue and Sales - The Company primarily generates revenue through product and extended warranty sales, which exceeded 95% of consolidated net sales for the six months ended June 30, 2022[54]. - Net sales in the United States for the six months ended June 30, 2022, were $799.17 million, down 25.0$1,064.89 million in 2021[153]. - The Components & Storage product category generated $531.21 million in sales for the six months ended June 30, 2022, a decline of 22.8$688.28 million in 2021[156]. - Direct sales revenues accounted for $833.13 million, representing a decrease of 27.4$1,146.65 million in the previous year[156]. - Shipping and handling revenue was approximately $8.3 million for the six months ended June 30, 2022, compared to$14.3 million for the same period in 2021[64]. Expenses - Selling, general, and administrative expenses for the six months ended June 30, 2022, were $138,996, slightly down from$144,463 in the same period of 2021[6]. - Stock-based compensation expenses rose significantly to $16.143 million in the first half of 2022, compared to$1.569 million in the same period of 2021, reflecting increased compensation costs[16]. - Advertising and promotional expenses were $8.6 million for the six months ended June 30, 2022, down from$15.3 million in 2021[69]. - The Company incurred shipping and handling costs of approximately $22.7 million for the six months ended June 30, 2022, compared to$35.4 million in 2021[64]. Tax and Legal Matters - The Company's effective tax rate for the six months ended June 30, 2022, was 16.2%, up from 10.0% in the same period of 2021, primarily due to foreign tax rate differentials and nondeductible expenses[120]. - The Company is currently involved in legal proceedings that may materially affect its financial position, but it does not believe a loss is probable or reasonably estimable[148]. Stock and Equity - The Company has 373,184,325 shares of common stock issued and outstanding as of June 30, 2022, an increase from 369,718,680 shares as of December 31, 2021[122]. - The fair value of outstanding warrants decreased from $10.37 per share on December 31, 2021, to$3.68 per share on June 30, 2022, indicating a significant decline in market value[124]. - The Company granted 7,040,998 restricted stock units (RSUs) during the year ended December 31, 2021, with 6,501,528 RSUs unvested as of June 30, 2022[138]. - The total intrinsic value of stock options exercised during the six months ended June 30, 2022, was $17.5 million, compared to$0 for the same period in 2021[135].