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Borderfree’s International Growth Not Helping Its Stock Move

Posted on Friday, Sep 19th 2014

Analysts estimate that today nearly 20%-30% of the traffic to US e-commerce sites comes from international IP addresses. The growing importance of international consumers is forcing US-based companies to expand their e-commerce options to global locations. Companies are exploring options of international shipping along with the ability to transact in multiple currencies. Recently-listed Borderfree is helping retailers with these decisions.

Borderfree’s Financials
New York-based Borderfree (Nasdaq: BRDR) saw second quarter revenues grow 21% over the year to $31 million. E-commerce services revenue increased 34% to $16.4 million and fulfillment services revenue increased 9% to $14.6 million. Loss per share reduced from $0.03 a year ago to $0.02 per share. The increase in losses was attributed to the continued investments in technology and research and development efforts. Borderfree’s spend on technology and operations increased 47% over the year to $3.4 million and research and development spend grew 33% to $2.2 million.

Among other operating metrics, gross merchandise value of goods transacted over the year grew from $102.96 million to $136.26 million. Their customer base has increased from 83 to 95 as they added brands like Rue La La, Juicy Couture, and Bed Bath and Beyond to their portfolio. The number of e-commerce sites that are serviced by them increased from 143 to 164.

Borderfree expects to end the current quarter with revenues of $31.1 million-$31.9 million and a non GAAP net loss of $0.01-$0.02 per share. The Street was projecting a loss of $0.02 per share for the quarter. Borderfree projected to end the year with revenues of $139 million-$141 million and an EPS of $0.14-$0.16.

Borderfree’s International Growth
During the recent quarter, Borderfree entered into several strategic tie-ups with leading credit card companies. Their recent arrangement with Visa was focused on select markets in the Middle East, including the UAE, Saudi Arabia, Kuwait, Qatar, and Bahrain. Borderfree enabled Visa customers to buy from Neiman Marcus and fashion retail brand Elie Tahari and opt for duty-free and free international express shipping of goods purchased in excess of $100.

Borderfree also entered into a similar agreement with MasterCard that let MasterCard’s Southeast Asian customers purchase from select US e-tailers and enjoy the benefits of fast doorstep delivery. Last year, Borderfree had entered into a similar arrangement for Visa’s Southeast Asian customers. Borderfree is looking to expand their e-commerce platform visibility across the regions of Middle East and Asia.

Borderfree is also driving international growth through their BoxHop service. BoxHop is a parcel forwarding service that provides international consumers from 74 countries with a shipping address in the US so that they can buy directly from American stores. The service is available at a charge based on the membership plan that the consumer chooses. The company offers two levels of membership. The Gold plan does not require a monthly payment and the consumer is expected to pay as they shop in return for Borderfree’s services of free repacking and five days free storage along with negotiated low international shipping rates. More frequent shoppers have the option to select the Platinum membership which costs $50 a year and gives them access to free repacking, consolidation, discounted international shipping fares, and 30 days of free storage. Borderfree does not disclose the subscription volumes of BoxHop.

Their stock is trading at $14.27 with a market capitalization of $448.7 million. Earlier this year, the company had raised $80 million when they sold 5 million shares at $16 each. The stock had touched a high of $21.25 soon after listing.

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