Blue Apron Makes Pandemic Gains in Q2

7/29/2020

Meal-kit providers face the challenge of holding onto pandemic gains after the outbreak eases.

Blue Apron has reported a 10% year-over-year revenue gain in the second quarter ended June 30, with sales hitting $131 million — a gain credited to consumers buying more meal kits during the pandemic's various stay-at-home mandates.

Average revenue per customers increased 25% in Q2 compared with the same period a year ago, reaching $331 million. Orders per customer grew by 17%, to 5.4, while average order value increased 5% to $61. Blue Apron said that it gained about 20,000 customers in the second quarter of 2020.

The New York-based company also reported Q2 net income of $1.1 million.

“Blue Apron’s strong second-quarter 2020 operating results reflect quarterly sequential and year-over-year double-digit net revenue growth and marked our return to top-line growth sooner than expected. We also expect to see year-over-year net revenue growth in the second half of 2020,” said Linda Findley Kozlowski, Blue Apron’s CEO. “Our progress with our strategic growth plan, together with the increase in demand we saw from the COVID-19 pandemic, resulted in solid and continued year-over-year growth in key customer metrics.”

In the early days of the pandemic, meal-kit services such as Blue Apron got a boost because consumers couldn't go to restaurants, and many grocers struggled to meet demand. Blue Apron said that it started to see increased demand for its meal kits at the end of March. The company reported that it added 25,000 new subscribers in the first quarter.

This latest financial report signals that the consumer habits formed early in the pandemic continue to provide fuel to meal-kit providers. Even so, the challenge for Blue Apron and other meal-kit providers will be hanging on to all of that pandemic-related demand after the pandemic is over. Meal-kit services have historically suffered from low retention rates. Fewer than 10% of new users in the United States are still around in two years, based on estimates from analytics company Second Measure.

For the second quarter, Blue Apron also reported that:

Marketing expenses were $11.6 million, or 8.8% as a percentage of net revenue, in the second quarter of 2020, compared with $9.7 million, or 8.2% as a percentage of net revenue, in the second quarter of 2019, as the company re-accelerated its marketing efforts, including an increased focus on brand awareness.
Product, technology, general and administrative (PTG&A) expenses decreased 7% year over year, from $35.1 million in the second quarter of 2019 to $32.5 million in the second quarter of 2020, reflecting the company’s continued focus on expense management, optimization of its cost structure and, in part, savings realized from the closure of its Arlington, Texas, facility in May 2020.
Net income was $1.1 million and diluted earnings per share were 8 cents in the second quarter of 2020, based on 14.0 million weighted-average common shares outstanding-diluted, compared with a net loss of $7.7 million and diluted loss per share of 59 cents in the second quarter of 2019, based on 13.0 million weighted-average common shares outstanding-diluted. Sequentially, net income improved $21.2 million quarter over quarter, from a net loss of $20.1 million in the first quarter of 2020.
Adjusted EBITDA increased 148% year over year to $11.1 million in the second quarter of 2020, compared with $4.5 million in the second quarter of 2019. Sequentially, adjusted EBITDA improved by $16.9 million quarter over quarter, from a loss of $5.8 million in the first quarter of 2020.