Blue Apron Impresses The Street In Q3 Report

Blue Apron Holdings, Inc. APRN reported third-quarter results Thursday before the open, sending shares higher by more than 5 percent. Granted, the stock is down more than 50 percent since its post-IPO highs, but the earnings report could be seen by some as a turning point.

Blue Apron reported that it lost 47 cents per share in the third quarter on revenue of $210.64 million, while analysts were expecting the company to lose 42 cents per share on revenue of $191.47 million.

Encouragingly, net revenue rose 3 percent year-over-year to $210.6 million in the quarter, mostly due to existing customers spending more money on the platform. Specifically, average revenue per customer in the quarter rose from $227 in the same quarter a year ago to $45, although it also marks a decline from $251 in the prior quarter.

Blue Apron ended the quarter with 6 percent fewer customers on a year-over-year basis and 9 percent fewer from the prior quarter due to a decrease in marketing spend. Overall marketing costs decreased from $49.6 million a year ago to $34.2 million, and total cost of goods sold (excluding COGS) rose 13 percent from a year ago to $164.4 million. Product, technological, general and administrative costs rose 44 percent to $65.7 million.

Heading into the earnings report, Canaccord Genuity's Michael Graham said in a Monday note that investors should expect an update on Blue Apron's Linden, NJ fulfillment center, which was believed to be "on track" to open by the end of the year. In the earnings report, the company actually confirmed that its New Jersey fulfillment center is complete and the company has fully transitioned product volumes to the new facility, Graham said. (See Graham's track record here.)

The analyst also highlighted the ongoing competitive landscape in the meal delivery kit space, which continues to evolve. HelloFresh could be the latest entrant to the space to ramp its business — which could be of concern, as it had higher customer net adds than Blue Apron over the past three quarters and spends more money on marketing, Graham said. 

Graham maintains a Buy on Blue Apron's stock with an unchanged $11 price target.

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Photo courtesy of Blue Apron.