LightInTheBox Holding Co., Ltd. Reports Fourth Quarter and Full Year 2013 Financial Results

  LightInTheBox Holding Co.,Ltd. Reports Fourth Quarter and Full Year 2013
  Financial Results

   Conference Call to be Held at 8:00 AM Eastern Time on February 26, 2014

Business Wire

BEIJING -- February 26, 2014

LightInTheBox Holding Co.,Ltd. (NYSE: LITB) (“LightInTheBox” or the
“Company”), a global online retail company that delivers products directly to
consumers around the world, today announced its unaudited financial results
for the fourth quarter and full year ended December 31, 2013.

Fourth Quarter 2013 Highlights

  *Net revenues were $78.8 million, an increase of 21.6% from $64.8 million
    in the same quarter of 2012, primarily driven by an increase of 42.5% in
    total number of customers^1 served in the fourth quarter of 2013.
  *Net loss was $5.6 million, compared to a net income of $1.1 million in the
    same quarter of 2012.
  *Revenue attributed to repeat customers accounted for 37% of total revenue
    in the quarter.
  *Net cash provided by operating activities was $3.8 million for the three
    months ended December 31, 2013, compared to $1.9 million in the same
    quarter of 2012.

Full Year 2013 Highlights

  *Net revenues were $292.4 million, an increase of 46.2% from $200.0 million
    in the prior year, primarily driven by an increase of 73.1% in total
    number of customers served in 2013.
  *Gross margin increased by 170 basis points to 43.5% from 41.8% in the
    prior year.
  *Net loss was $4.8 million, compared to a net loss of $4.2 million in the
    prior year.
  *Mobile revenue grew more than five times faster than PC business in 2013.

Mr. Alan Guo, Chairman and CEO of LightInTheBox commented, “We are pleased
that our total net revenues came in above our guidance, supported by
better-than-expected performance from our apparel category and from strong
mobile commerce sales. In the fourth quarter, we reignited growth in our
apparel category as we successfully diversified our product offerings in
ready-to-wear apparel and increased our marketing efforts to overseas
regions.”

“We are continuing to build a uniquely positioned, global cross-border,
e-commerce platform. We are investing in a series of platform capabilities
that allow us to operate locally on a global scale, including supply chain
management services, fulfillment and transportation management, and localized
merchandising, content, customer service, and payment capabilities. Finally,
we remain intensely data driven and will continue to leverage technology to
manage complexity and identify opportunities. As we move into 2014, we will
continue to focus on leveraging this platform on behalf of manufacturers and
suppliers based in China,” concluded Mr. Guo.

(1) A customer is defined as a customer account that has purchased at least
once from the Company during the relevant period.

Fourth Quarter and Full Year 2013 Financial Results

Net revenues increased 21.6% to $78.8 million for the fourth quarter of 2013,
and increased by 46.2% to $292.4 million for the full year 2013. The increases
in the quarter were driven by better-than-expected performance from the
apparel category and the contribution of the mobile commerce business.Total
orders grew 61.5% to 2 million in the fourth quarter, while average order size
declined based on changes in the product mix and softness in the wedding
business. The total number of customers purchasing in the quarter increased
42.5% to 1.6 million, while repeat customer orders accounted for 37% of the
total revenue, compared to 28% in the same quarter of 2012.

During the quarter, revenue in the apparel category grew 12.9% year over year
to $21.1 million, which reflected the success in expanding product offerings
with ready-to-wear fashion products. As a percentage of total revenues,
apparel revenue was 26.8% in the fourth quarter of 2013 as compared to 28.8%
in the same quarter of 2012.

Revenues generated from electronics and other general merchandise increased by
25.1% to $57.7 million in the fourth quarter of 2013. The Company is seeing
significant growth in particular in mobile accessories and is optimistic about
extending this offering both in terms of products and geographies.

Geographically, Europe remained the largest market with revenues of $51.4
million, representing an increase of 27.7%. As a percentage of total revenues,
revenues in Europe were 65.3%, up from 62.2% in the same quarter of 2012.

Revenues in South America increased by 25.3% to $6.3 million and constituted
8.0% of total revenues in the quarter while in North America revenues were
$13.1 million, up 8.6% year over year, representing 16.7% of total revenue
this quarter.

Gross profit for the fourth quarter of 2013 was $30.8 million, representing an
increase of 12.3% from $27.4 million in the same quarter of 2012. For full
year 2013, gross profit was $127.2 million in 2013, representing an increase
of 52.2% from $83.5 million in the prior year. Gross margin decreased to 39.1%
from 42.3% in the same quarter of 2012. This decrease was due largely to the
change in product mix within the apparel category. However,on a full year
basis, gross margin improved to 43.5% in 2013 from 41.8% in 2012, as the
Company did not see shifts in apparel product mix until later in the year.

Total operating expenses in the fourth quarter of 2013 increased by 43.9% to
$36.9 million from $25.7 million in the same quarter of 2012. As a percentage
of total net revenues, total operating expenses increased to 46.9% from 39.6%
in the same quarter of 2012.

  *Fulfillment expenses increased 48.2% to $4.7 million in the fourth quarter
    of 2013 from $3.2 million in the same quarter of 2012, primarily
    reflecting the increase in sales volume and number of orders fulfilled. As
    a percentage of total net revenues, fulfillment expenses increased to 6.0%
    from 4.9% in the same quarter of 2012. The increase was a result of
    expansion of the fulfillment facilities in China.

  *Selling and marketing expenses increased by 59.0% to $24.7 million in the
    fourth quarter of 2013 from $15.5 million in the same quarter of 2012,
    reflecting the Company’s efforts in growing its customer base. While
    selling and marketing expenses for the fourth quarter of 2013 increased by
    59.0%, the number of customers served by the Company increased by 42.5%
    and the number of total orders increased by 61.5% respectively over the
    same period of the prior year. As a percentage of total net revenues,
    selling and marketing expenses increased to 31.4% from 24.0% in the same
    quarter of 2012, due to a fall in average order size based on changes in
    the product mix. The Company continues to believe that its selling and
    marketing expenses as a percentage of total net revenues will decrease in
    the long term as the Company achieves greater economies of scale and
    utilize its selling and marketing channels more efficiently.

  *General and administrative expenses increased 8.2% to $7.5 million in the
    fourth quarter of 2013 from $7.0 million in the same quarter of 2012,
    reflecting the growth of the Company’s business. As a percentage of total
    net revenues, general and administrative expenses were 9.6%, down from
    10.8% in the same quarter of 2012.

Total operating expenses for the year were$132.1 million, an increase of 53.9%
from prior year. This was mainly due to increase in selling and marketing
costs associated with increasing number of customers and orders.

Loss from operations in the fourth quarter of 2013 increased to $6.2 million,
compared to an operating profit of $1.7 million in the same quarter of 2012.
For the full year 2013, loss from operations increased to $5.0 million,
compared to loss of $2.3 million in the prior year.

Net loss was $5.6 million in the fourth quarter of 2013,compared to a net
income of$1.1 million in the same quarter of 2012.

For the full year, net loss was $4.8 million, compared to a net loss of$4.2
million in the prior year.

Adjusted net loss (non-GAAP) (2), which excludes the impact of share-based
compensation expense, was $5.1 million in the fourth quarter of 2013, compared
to an adjusted net income (non-GAAP) of $1.5 million in the fourth quarter of
2012.

(2)Adjusted net income (loss) is a non-GAAP measure, which is defined as net
income (loss) excluding share-based compensation expenses.

Net loss per ADS was $0.11, compared total net income per ADS of$0.01 in the
fourth quarter of 2012. Each ADS represents two ordinary shares.

For the quarter ended December 31, 2013, the Company’s weighted average number
of ADS used in computing loss per ADS was 49,528,449.

As of December 31, 2013, the Company had cash and cash equivalents, term
deposit and restricted cash of $105.1 million, compared to $21.2 million as of
December31, 2012.

Net cash provided by operating activities was $3.8 million for the quarter
ended December 31, 2013,compared to $1.9 million in the same quarter of 2012,
in part due to a $2.6 million increase in customer order backlog.

Business Outlook

For the first quarter of 2014, the Company expects its net revenues to be
between $78 million and $80 million, representing a year-over-year growth rate
of approximately 6% to 9%. The Company expects that the rate of its year over
year revenue growth will increase starting in second quarter of 2014. These
forecasts reflect the Company’s current and preliminary view on the market and
operational conditions, which are subject to change.

Conference Call

The Company will hold a conference call at 8:00a.m. Eastern Time on February
26, 2014 to discuss its financial results and operating performance for the
fourth quarter and full year of 2013. To participate in the call, please dial
the following numbers:

US Toll Free: 1-866-519-4004
International: 65-6723-9381
Hong Kong: 800-930-346
China: 400-620-8038
Passcode: 59634780

A telephone replay will be available shortly after the call until March 5,
2014 by dialing:

US Toll Free: 1-855-452-5696
International: 61-2-8199-0299
Hong Kong: 800-963-117
China: 400-632-2162
Passcode: 59634780

A live and archived webcast of the conference call will be available on the
Investor Relations section of LightInTheBox's website at
http://ir.lightinthebox.com.

About LightInTheBox Holding Co.,Ltd.

LightInTheBox is a global online retail company that delivers products
directly to consumers around the world. The Company offers customers a
convenient way to shop for a wide selection of lifestyle products at
attractive prices through its www.lightinthebox.com, www.miniinthebox.com and
other websites, which are available in 27 major languages and cover more than
80% of global Internet users. In 2012, the Company ranked number one in terms
of revenue generated from customers outside of China among all China-based
retail websites that source products from third-party manufacturers. For more
information, please visit www.lightinthebox.com.

Use of Non-GAAP Financial Measures

LightInTheBox uses non-GAAP net income/(loss), non-GAAP net income/(loss) per
basic and diluted ADS, non-GAAP income/(loss) from operations, non-GAAP net
income/(loss) margin, and non-GAAP operating income/(loss) margin, each of
which is a non-GAAP financial measure. Non-GAAP net income/(loss) is net
income/(loss) excluding share-based compensation expenses. Non-GAAP net
income/(loss) per basic and diluted ADS is non-GAAP net income/(loss) divided
by weighted average number of basic and diluted ADS, respectively. Non-GAAP
income/(loss) from operations is income/(loss) from operations excluding
share-based compensation expenses. Non-GAAP operating income/(loss) margin is
non-GAAP income/(loss) from operations as a percentage of net revenues.
Non-GAAP net income/(loss) margin is non-GAAP net income/(loss) as a
percentage of net revenues. The Company believes that separate analysis and
exclusion of the non-cash impact of share-based compensation adds clarity to
the constituent parts of its performance. The Company reviews these non-GAAP
financial measures together with GAAP financial measures to obtain a better
understanding of its operating performance. It uses these non-GAAP financial
measures for planning, forecasting and measuring results against the forecast.
The Company believes that non-GAAP financial measures are useful supplemental
information for investors and analysts to assess its operating performance
without the effect of non-cash share-based compensation expenses, which have
been and will continue to be significant recurring expenses in its business.
However, the use of non-GAAP financial measures has material limitations as an
analytical tool.

One of the limitations of using non-GAAP financial measures is that they do
not include all items that impact the Company’s net income/(loss) for the
period. In addition, because non-GAAP financial measures are not measured in
the same manner by all companies, they may not be comparable to other similar
titled measures used by other companies. In light of the foregoing
limitations, you should not consider non-GAAP financial measure in isolation
from or as an alternative to the financial measure prepared in accordance with
U.S. GAAP. The presentation of these non-GAAP financial measures is not
intended to be considered in isolation from, or as a substitute for, the
financial information prepared and presented in accordance with U.S. GAAP. For
more information on these non-GAAP financial measures, please see the table
captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” at the end
of this release.

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are
made under the “safe harbor” provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as “will,” “expects,” “anticipates,” “future,”
“intends,” “plans,” “believes,” “estimates,” “potential,” “continue,”
“ongoing,” “targets” and similar statements. Among other things, statements
that are not historical facts, including statements about LightInTheBox’s
beliefs and expectations, the business outlook and quotations from management
in this announcement, as well as LightInTheBox’s strategic and operational
plans, are or contain forward-looking statements. LightInTheBox may also make
written or oral forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the “SEC”), in press releases and other
written materials and in oral statements made by its officers, directors or
employees to third parties. Forward-looking statements involve inherent risks
and uncertainties. A number of factors could cause actual results to differ
materially from those contained in any forward-looking statement, including
but not limited to the following: LightInTheBox’s goals and strategies;
LightInTheBox’s future business development, results of operations and
financial condition; the expected growth of the global online retail market;
LightInTheBox’s ability to attract customers and further enhance customer
experience and product offerings; LightInTheBox’s ability to strengthen its
supply chain efficiency and optimize its logistics network; LightInTheBox’s
expectations regarding demand for and market acceptance of its products;
competition; fluctuations in general economic and business conditions and
assumptions underlying or related to any of the foregoing. Further information
regarding these and other risks is included in LightInTheBox’s filings with
the SEC. All information provided in this press release and in the attachments
is as of the date of this press release, and LightInTheBox does not undertake
any obligation to update any forward-looking statement, except as required
under applicable law.


LightInTheBox Holding Co., Ltd.
Unaudited Condensed Consolidated Balance Sheets
(U.S. dollar in thousands, or otherwise noted)
                                                             
                                               As of December   As of December
                                               31,              31,
                                               2012             2013
ASSETS
Current Assets
Cash and cash equivalents                      19,972           23,745
Term deposit                                   —                79,958
Restricted cash                                1,217            1,360
Accounts receivable                            249              259
Inventories, net                               5,753            7,081
Prepaid expenses and other current assets      10,562           8,890
Total current assets                           37,753           121,293
Property and equipment, net                    1,792            3,002
Acquired intangible assets, net                —                266
Goodwill                                       —                690
Long-term deposit                              293              640
TOTAL ASSETS                                   39,838           125,891
                                                                
LIABILTIES
Current Liabilities
Accounts payable (including accounts payable
of the consolidated VIEs without recourse to
LightInTheBox Holding Co., Ltd. of $61 and     9,150            18,677
$36 as of December 31, 2012 and 2013,
respectively)
Advance from customers (including advance
from customers of the consolidated VIEs
without recourse to LightInTheBox Holding      7,098            9,663
Co., Ltd. of $13 and $4 as of December 31,
2012 and 2013, respectively)
Accrued expenses and other current
liabilities (including accrued expenses and
other current liabilities of the
consolidated VIEs without recourse to          12,811           16,160
LightInTheBox Holding Co., Ltd. of $524 and
$1,449 as of December 31, 2012 and 2013,
respectively)
Convertible notes (including convertible
notes of the consolidated VIEs without
recourse to LightInTheBox Holding Co., Ltd.
of nil and nil as of December 31, 2012 and     7,788            —
2013,

respectively)
Total current liabilities                      36,847           44,500
TOTAL LIABILITIES                              36,847           44,500
                                                                
Series C convertible redeemable preferred      41,471           —
shares
EQUITY
Series A convertible preferred shares          5,000            —
Series B convertible preferred shares          11,270           —
Ordinary shares                                2                7
Additional paid-in capital                     10,459           153,124
Accumulated deficit                            (65,181)         (71,621)
Accumulated other comprehensive loss           (30)             (119)
TOTAL (DEFICIT) EQUITY                         (38,480)         81,391
TOTAL LIABILITIES AND SERIES C CONVERTIBLE
REDEEMABLE PREFERRED SHARES AND (DEFICIT)      39,838           125,891
EQUITY
                                                                

                                                                             
LightInTheBox Holding Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
(U.S. dollar in thousands, except share data and per share data, or
otherwise noted)
                                                            
                     Three-month Period Ended      Twelve-month Period Ended
                     December 31,   December 31,   December      December
                                                   31,           31,
                     2012           2013           2012          2013
Net revenues         64,753         78,759         200,010       292,417
Cost of goods sold   (37,349)       (47,999)       (116,465)     (165,267)
Gross profit         27,404         30,760         83,545        127,150
Operating expenses
Fulfillment          (3,167)        (4,693)        (10,088)      (15,963)
Selling and          (15,540)       (24,702)       (53,418)      (84,245)
marketing
General and          (6,968)        (7,541)        (22,369)      (31,929)
administrative
Total operating      (25,675)       (36,936)       (85,875)      (132,137)
expenses
Income (loss) from   1,729          (6,176)        (2,330)       (4,987)
operations
Interest (expense)   (595)          552            (1,881)       237
income
Income (loss)
before income        1,134          (5,624)        (4,211)       (4,750)
taxes
Income taxes         (19)           (20)           (19)          (69)
expenses
Net income (loss)    1,115          (5,644)        (4,230)       (4,819)
Accretion for
Series C
convertible          (871)          —              (2,971)       (1,621)
redeemable
preferred shares
Net income (loss)
attributable to      244            (5,644)        (7,201)       (6,440)
ordinary
shareholders
                                                                             
Weighted average
numbers of shares
used in
calculating income
(loss) per
ordinary share
—Basic               36,009,709     99,056,898     34,316,430    71,555,449
—Diluted             36,108,966     99,056,898     34,316,430    71,555,449
                                                                             
Net income (loss)
per ordinary share
—Basic               0.01           (0.06)         (0.20)        (0.09)
—Diluted             0.01           (0.06)         (0.20)        (0.09)
                                                                             
Net income (loss)
per ADS (2
ordinary shares
equal to 1 ADS)
—Basic               0.01           (0.11)         (0.40)        (0.18)
—Diluted             0.01           (0.11)         (0.40)        (0.18)
                                                                             


LightInTheBox Holding Co., Ltd.
Unaudited Reconciliations of GAAP and Non-GAAP Results
(U.S. dollar in thousands, except share data and per share data, or otherwise
noted)
                                                             
                     Three-month Period Ended      Twelve-month Period Ended
                     December 31,   December 31,   December 31,   December 31,
                     2012           2013           2012           2013
Income (loss) from   1,729          (6,176)        (2,330)        (4,987)
operations
Share-based
compensation         425            533            2,695          4,318
expenses
Non-GAAP income
(loss) from          2,154          (5,643)        365            (669)
operations
                                                                  
Net income (loss)    1,115          (5,644)        (4,230)        (4,819)
Share-based
compensation         425            533            2,695          4,318
expenses
Non-GAAP net         1,540          (5,111)        (1,535)        (501)
income (loss)
                                                                  
Net income (loss)
attributable to      244            (5,644)        (7,201)        (6,440)
ordinary
shareholders
Share-based
compensation         425            533            2,695          4,318
expenses
Non-GAAP net
income (loss)
attributable to      669            (5,111)        (4,506)        (2,122)
ordinary
shareholders
                                                                  
Non-GAAP weighted
average numbers of
shares used in
calculating net
income (loss) per
ordinary share
—Basic               36,009,709     99,056,898     34,316,430     71,555,449
—Diluted             36,108,966     99,056,898     34,316,430     71,555,449
                                                                  
Non-GAAP net
income (loss) per
ordinary share
—Basic               0.02           (0.05)         (0.13)         (0.03)
—Diluted             0.02           (0.05)         (0.13)         (0.03)
                                                                  
Non-GAAP net
income (loss) per
ADS (2 ordinary
shares equal to 1
ADS)
—Basic               0.04           (0.10)         (0.26)         (0.06)
—Diluted             0.04           (0.10)         (0.26)         (0.06)
                                                                  

                                                                             
LightInTheBox Holding Co., Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(U.S. dollar in thousands, or otherwise noted)
                                                            
                       Three-month Period Ended    Twelve-month Period Ended
                       December       December     December       December
                       31,            31,          31,            31,
                       2012           2013         2012           2013
Net income (loss)      1,115          (5,644)      (4,230)        (4,819)
Adjustments to
reconcile net income
(loss) to net cash
provided by
operating activities
Depreciation and       294            376          1,031          1,361
amortization
Share-based            425            533          2,695          4,318
compensation
Amortization of debt   354            —            1,140          558
discount
Interest on            242            —            744            413
convertible notes
Changes in operating
assets and
liabilities
Accounts receivable    185            18           (176)          12
Inventories, net       (34)           (2,592)      (785)          (1,284)
Prepaid expenses and   (3,423)        165          (5,565)        (750)
other current assets
Accounts payable       (644)          5,246        4,020          9,508
Advance from           1,394          2,932        3,641          2,530
customers
Accrued expense and
other current          1,804          2,874        5,109          3,642
liabilities
Long-term deposit      145            (140)        (225)          (337)
Net cash provided by   1,857          3,768        7,399          15,152
operating activities
Cash flows from
investing activities
Purchase of property   (207)          (328)        (917)          (2,451)
and equipment
Purchase of term       —              (49,870)     —              (79,958)
deposit
Deposit in             (195)          (235)        (367)          (143)
restricted cash
Payment for business   —              (1,000)      —              (1,000)
acquisition
Net cash used in       (402)          (51,433)     (1,284)        (83,552)
investing activities
Cash flows from
financing activity
Proceeds from
issuance of            —              —            8,000          —
convertible notes
Proceeds from
initial public         —              —            —              75,030
offering
Proceeds from
exercise of share      —              74           —              193
options
Payment of
professional fees      (156)          (513)        (930)          (3,127)
related to initial
public offering
Net cash (used in)
provided by            (156)          (439)        7,070          72,096
financing activities
Effect of exchange
rate changes on cash   5              50           1              77
and cash equivalents
Cash and cash
equivalents at         18,668         71,799       6,786          19,972
beginning of period
Cash and cash
equivalents at end     19,972         23,745       19,972         23,745
of period
                                                                             

Contact:

Investor Relations:
LightInTheBox Holding Co.,Ltd.
Margaret Shi,Investor Relations
Tel: +86(10)5692 0099 ext 8124
ir@lightinthebox.com
or
ICR,Inc.
Bill Zima, +1 (646) 405-4933
bill.zima@icrinc.com
 
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