Blue Apron has released its first quarter financials and results are mixed. On one hand, first quarter net revenue decreased 28% year-over-year to $101.9 million, and the company reported a net loss of $20.1 million, likely the reason stock prices sunk Wednesday morning. On the other hand, net revenue increased 8% and customers increased 7% compared to the fourth quarter of 2019.
The meal kit service says it's seeing a significant increase in demand due to the COVID-19 pandemic, which started near the end of the first quarter, as many stay-at-home orders and restaurant restrictions are in place throughout the country.
“As we move into the second quarter of 2020, we are focused on driving customer retention and establishing longer-term consumer habits out of the heightened demand we have been seeing as a result of the impact of COVID-19," said Linda Findley Kozlowski, Blue Apron's CEO. “Our growth strategy is also helping us to address the more recent changes in our business related to the COVID-19 pandemic. Since late March, we have seen increased demand from existing, returning and new customers in response to the COVID-19 pandemic, and we are proud of our team’s quick actions taken across the business to address this increased demand, particularly after the initial spike in demand where we were unable to fully meet the increased order volume."
Blue Apron is hiring new employees and temporarily reducing variety in menu options in order to increase its capacity at fulfillment centers. The company has also taken additional safety measures including enhanced sanitation protocols and social distancing throughout these facilities.
The company has reaccelerated its marketing efforts, which it says accounts for the revenue and customer increases since the fourth quarter. Marketing expense was $15 million in the first quarter of 2020, or 14.8% as a percentage of net revenue, compared to $14.2 million, or 10% as a percentage of net revenue, in the first quarter of 2019.
Looking at reported key customer metrics, there are many positives comparing the fourth quarter of 2019 and the first quarter of 2020, but the number of orders in the first quarter of this year (1.8 million) was still substantially lower than the first quarter of 2019 (2.5 million).
Blue Apron is expecting in the second quarter that net revenue will grow year-over-year in the high single digits on a percentage basis to approximately $130 million. The company also expects to deliver a net loss of no more than $6 million.
"As more customers invite us into their homes, we believe the appreciation they have for the quality meal experience we deliver is helping to grow our connection to them and we look forward to having them continue to cook with us," Kozlowski said. "I am grateful to all our employees for their commitment and efforts in providing consumers access to our high-quality meal kits made from delicious ingredients during these unprecedented times."