PFSweb, Inc.

Q2 2023 service fee revenue increased 7% year over year to $48.2 million, versus $45.3 million in the prior-year period. Service fee gross profit margin was 24.7%, up 350 basis points from approximately 21.2% a year ago. Consolidated adjusted EBITDA was $3.3 million, compared with an adjusted EBITDA loss of $0.4 million in the year-ago quarter. SG&A declined 13% year over year. Year-to-date capital expenditures were approximately $3.1 million, and full-year CapEx is expected to be $8 million to $10 million. Cash was approximately $39.0 million with less than $60,000 in debt as of June 30. Management raised full-year 2023 service fee revenue growth guidance to 8% to 13% and reiterated adjusted EBITDA guidance at 6% to 8% of annual service fee revenue, or 8% to 10% excluding public company costs. The company said it has purchased 339,563 shares for approximately $1.4 million through June 30.

Mike Willoughby said the business is benefiting from strong fulfillment demand, record bookings, and improving operating efficiency, and he framed Q2 as evidence that the company’s reset is working. He emphasized the strong pipeline, especially in health and beauty, and said he expects another strong Q3 as deals are closed ahead of holiday season launches. He also highlighted the $25 million credit facility, the share buyback program, and the ongoing strategic alternatives review, saying the priority is maximizing shareholder value.

Tom Madden focused on the cleaner financial presentation and the company’s improving profitability profile. He cited Q2 service fee revenue of $48.2 million, gross margin of 24.7%, adjusted EBITDA of $3.3 million, and SG&A down 13% year over year, noting these gains came from productivity, pricing changes, and cost reductions. He also pointed to $39.0 million of cash, less than $60,000 of debt, $3.1 million of year-to-date CapEx, and reiterated the $8 million to $10 million full-year CapEx plan, along with the updated 8% to 13% revenue growth outlook and 6% to 8% EBITDA margin target.

An analyst asked about the gap between the market’s valuation and management’s view. Willoughby said he believes the business should trade at an 8x to 12x EBITDA multiple and reiterated that the strategic review will be completed this year with shareholder value as the focus. On transportation management, management explained that demand is being driven by carrier disruption, rising costs, and clients wanting a more integrated carrier-management solution; they said the offering can be easier to implement than traditional fulfillment and can close later in the year in time for peak season. They also said Q3 bookings strength is coming from both deals that slipped past quarter-end and new opportunities emerging during the quarter.