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Ediets Com Inc (DIET) filed Quarterly Report for the period ended 2011-09-30.
Ediets Com Inc has a market cap of $12.4 million; its shares were traded at around $0.936 with and P/S ratio of 0.5.
This is the annual revenues and earnings per share of DIET over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of DIET.
Highlight of Business Operations:
The Company establishes a reserve for refunds for digital plan and meal delivery sales. Since all digital plan subscriber payments are deferred upon receipt, at the end of each month, a portion of the deferred revenue is reclassified as a reserve for refunds. Based on historical experience, a range of between approximately 1%-3% of digital plan subscriber sales will result in a refund issued in the subsequent month after sale. All other refunds issued relate to current month digital plan subscriber sales. Because the revenue has not been recognized, refunds do not result in a reversal of digital plan subscription revenue. Instead, refunds result in a decrease to the amounts maintained in deferred revenue. Meal delivery refunds mainly result from late shipments or packaging issues. Based on historical experience, a range of between approximately 1%-3% of prior month’s meal delivery sales will result in a refund, accordingly the Company estimates a reserve based on that assumption for future refunds. The Company does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate the reserve for refunds. However, if actual results are not consistent with the estimates or assumptions stated above, the Company may be exposed to income or losses that could be material to the condensed consolidated financial statements.Revenue: Total revenue for the three and nine months ended September 30, 2011 was $4.5 million and $17.4 million, respectively, a decrease quarter over quarter of 24.5% and an increase for the nine months of 5.8% versus the $6.0 million and $16.5 million recorded in the corresponding prior year periods.
Digital plans revenue was approximately $0.6 and $2.0 million for the three and nine months ended September 30, 2011, respectively, compared to approximately $0.9 million and $3.0 million in the corresponding prior year periods. Digital plans revenue is driven by the following two factors: the average number of digital plans subscribers and the average weekly fee paid by digital plan subscribers. As of September 30, 2011, the average number of paying subscribers was approximately 33% lower than the corresponding prior year period. For the nine months ended September 30, 2011, the average weekly fees were approximately 2% lower than the corresponding prior year period. The number of overall active subscribers continues to decline. Due to cash constraints and uncertain returns from online advertising, we target more of our advertising investments to meal delivery. Increased competition, the growth of similar services that are offered for free, economic conditions, and our reduction in online advertising expenditures have all contributed to the decline in digital subscribers during the last several reporting periods and our current number of subscribers is insufficient to sustain our liquidity. Our advertising is now driving potential customers to our call center rather than visit our website. As a result of these factors and to
Meal delivery had revenues of approximately $3.5 million and $13.8 million, including shipping revenue, for the three and nine months ended September 30, 2011, respectively, compared to approximately $4.3 million and $10.8 million for the corresponding prior year periods. The 18% decrease in meal delivery revenue for the three months ended September 30, 2011 as compared to the corresponding period of the prior year is directly related to an approximately 17% decrease in meals shipped during the three months ended September 30, 2011 as compared to the same period of the prior year. The 28% increase in meal delivery revenue for the first nine months of 2011 as compared to the first nine months of 2010 is directly related to an approximately 24% increase in meals shipped during the nine months ended September 30, 2011 as compared to the same period of the prior year. We have expanded our Meal delivery promotional offerings in an effort to achieve a higher volume of shipments, but we also decreased our offline advertising expense by approximately 53% and 40% compared to the three and nine months ended September 30, 2010, respectively, in an effort to manage our customer acquisition cost and reduce our cash burn rate.
87% and 86% for the corresponding prior year periods. This increase is primarily the result of a decrease in the amount included within digital plans cost of sales relating to our call center and depreciation. Meal delivery gross margin increased to approximately 41% and 42% for the three and nine months ended September 30, 2011, respectively, compared to approximately 36% and 34% for the corresponding prior year periods. This is the result of a reduction in product costs and food production efficiencies realized with our primary food vendor, and a reduction in our shipping costs. We anticipate our total gross margin will continue to improve in the future as our efforts to improve the meal delivery margin through price increases, reduced food costs and increased shipping efficiencies continue to be realized. Business-to-business gross margin increased slightly to approximately 95% and decreased to 92% during the three and nine months ended September 30, 2011, respectively, from 94% and 95%, respectively, during the corresponding prior year periods. The increase in the blended margin overall for the three months ended September 30, 2011 is the result of a higher gross margin during the current year for digital plans, meal delivery, business-to-business and other compared to the corresponding prior year period. The slight decrease in the blended margin overall for the nine months ended September 30, 2011 as compared to the same period of the prior year is the result of the increase in lower-margin meal delivery revenue combined with the decrease in high-margin digital plans revenue and the decrease in high-margin business-to-business revenue during 2011 compared to 2010.
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