ALLEN, Texas, Nov. 06, 2020 (GLOBE NEWSWIRE) -- PFSweb, Inc. (NASDAQ: PFSW), a global commerce services company, is reporting results for the third quarter ended September 30, 2020.

“We continue to experience robust eCommerce demand and significantly elevated fulfillment volumes as we support our clients through a dynamic online retail environment ahead of the holiday season,” said Mike Willoughby, CEO of PFSweb. “This led to strong growth for each business unit and double-digit year-over-year increases in consolidated SFE revenue and adjusted EBITDA for the quarter. Through a combination of our at-home professional services, contact center and corporate teams, along with our front-line fulfillment center personnel, our global workforce is operating at high levels of productivity, while closely adhering to COVID-19 protocols and precautions to enhance employee safety. I am proud of our adaptability and operational strength across both our PFS and LiveArea segments of our business.”

Q3 2020 Highlights vs. Q3 2019

• Total revenues increased 13% to $77.1 million.
• Service fee equivalent (SFE) revenue (a non-GAAP measure defined and reconciled below) increased 21% to $60.4 million.
• Service fee gross margin was 32.1% compared to 34.9%.
• Net loss was $2.8 million or $(0.14) per share, compared to a net loss of $1.6 million or $(0.08).
• Adjusted EBITDA (a non-GAAP measure defined and reconciled below) increased 10% to $3.4 million compared to $3.1 million.

“We have been making both operational and strategic investments across both business segments. Strategically, we recently announced the opening of two new PFS fulfillment centers, added key LiveaArea leadership personnel and expanded our service offerings to new geographies, all in preparation for what we anticipate will be durable eCommerce tailwinds as we head into 2021.

“Operationally, we are ramping our front-line work force across our fulfillment centers and expanding our at-home call center teams ahead of what we anticipate will be a record holiday season. While this has increased our PFS operating costs during the quarter, as expected, I believe we are well-positioned for the holiday peak fulfillment period as well as sustained long-term growth for both PFS and LiveArea as the eCommerce landscape continues to evolve.

“As a result of continued heightened PFS fulfillment volumes and strong momentum in LiveArea, we are increasing our 2020 outlook and now expect consolidated SFE revenue growth to be in the mid-teens and continue to expect adjusted EBITDA margin expansion compared to 2019.”

Third Quarter 2020 Financial Results
Total revenues in the third quarter of 2020 increased 13% to $77.1 million compared to $68.0 million in the same period of 2019. Service fee revenue in the third quarter increased 21% to $60.2 million compared to $49.6 million in the third quarter of last year. Product revenue from the company’s last remaining client under this legacy business model was $4.2 million compared to $6.6 million in the same period of 2019.

SFE revenue in the third quarter of 2020 increased 21% to $60.4 million compared to $49.9 million in the year-ago quarter. The increase was primarily driven by ongoing elevated fulfillment activity in PFS, as well as double-digit growth in LiveArea.

Service fee gross margin in the third quarter of 2020 was 32.1% compared to 34.9% in the same period of 2019. The decrease was primarily attributable to changes in revenue mix and increased fulfillment labor costs during the quarter. Gross margins for both segments continued to be within the guidance range of 25% to 30% for the PFS segment and 40% to 50% for the LiveArea segment.

Net loss in the third quarter of 2020 was $2.8 million or $(0.14) per share compared to a net loss of $1.6 million or $(0.08) in the same period of 2019. Net loss included the impact of $3.2 million of stock-based compensation expense in the third quarter of 2020 as compared to $0.9 million in the same period in the prior year.

Adjusted EBITDA in the third quarter increased 10% to $3.4 million compared to $3.1 million in the year-ago quarter. The increase was primarily due to sustained strength in SFE revenue growth, partially offset by expected increased costs in the PFS segment applicable to fulfillment-related labor costs and preparations for the holiday season. As a percentage of SFE revenue, adjusted EBITDA margin was 5.7% compared to 6.3% in the same period of 2019.

Non-GAAP net income (a non-GAAP measure defined and reconciled below) increased to $0.7 million in the third quarter of 2020 compared to $0.4 million in the third quarter of 2019.

At September 30, 2020, net debt (a non-GAAP measure defined and reconciled below as total debt, excluding operating lease liabilities, less cash and cash equivalents) was $29.1 million compared to $25.4 million at December 31, 2019.

Cash and cash equivalents at September 30, 2020 totaled $10.4 million compared to $12.4 million at December 31, 2019, and total debt was $39.5 million compared to $37.8 million at the end of last year.

2020 Outlook
In light of ongoing high demand in the company’s PFS segment, as well as LiveArea’s continued strong performance and record pipeline, PFSweb has increased its expectations for consolidated SFE revenue growth to be in the mid-teens compared to 2019 (previously expected between 9% and 12% growth), while continuing to expect growth for each of its business units in 2020. Coupled with a sustained focus on prudent cost management, PFSweb also expects adjusted EBITDA margin improvement in 2020 when compared to the prior year.

COVID-19 Response
PFSweb maintains information related to its ongoing response to the COVID-19 crisis on its corporate website at www.pfsweb.com/covid-19-response/.

About PFSweb, Inc.
PFSweb (NASDAQ: PFSW) is a global commerce services company that manages the online customer shopping experience on behalf of major branded manufacturers and retailers. Across two business units – LiveArea for data-driven marketing and omnichannel experience design through technology selection, platform implementation and orchestrated services, and PFS for order fulfillment, contact center, payment processing/fraud management, and order management services – they provide solutions to a broad range of Fortune 500® companies and household brand names such as Procter & Gamble, L’Oréal USA, ASICS, Pandora, Ralph Lauren, Shiseido Americas, the United States Mint, and many more. PFSweb enables these brands to provide a more convenient and brand-centric online shopping experience through both traditional and online business channels. The company is headquartered in Allen, TX with additional locations around the globe. For more information, visit www.pfsweb.com.