- Blue Apron's revenue during its latest quarter rose 3% from a year ago to $210.6 million, as an increase in average revenue per customer offset a decline in the number of people using the service, the company said in its latest earnings report. Average revenue per customer jumped to $245 from $227 a year earlier, but declined from $251 last quarter. Its customer base decreased by 6% year-over-year and decreased by 9% from the last quarter, reflecting a decrease in marketing expenses.
- Blue Apron maintained its net revenue forecast for the second half of the year to between $380 million to $400 million. According to Bloomberg, this forecast would suggest revenue during its fourth quarter to be about $189.4 million, a 12% drop from the same period a year earlier.
- During its third quarter, the meal kit provider lost $87.2 million compared to a loss of $37.4 million a year ago. It also boosted its expected loss for the year to between $131 million to $138 million, an increase from $121 million to $128 million. The company said the increase was due to a round of layoffs and a recently completed review of its facilities.
The number of customers using Blue Apron's service is dropping, a factor the company attributed to seasonal trends and a decline in marketing expenses. During the quarter, marketing expenses were $32.4 million, or 16.3% of its revenue, a decline from $49.6 million, or 24.2% a year earlier. But the good news is that individuals who stuck around are spending about a dollar more per order than they did in the third quarter of 2016. The trick for Blue Apron is to figure out how to keep more of these customers, a hurdle it does not appear to have conquered yet.
The meal-kit provider also faced a 44% increase in product, technology, general and administrative costs and a 13% jump in the cost of goods sold. The company attributed this to its new distribution facility in Linden, New Jersey, expanded product offerings and the addition of premium ingredients for recipes that are more in line with customer preferences.
While Blue Apron's revenue increase topped analysts' forecasts, it continues to spend a lot of cash to keep the business running and attract new customers. It seems that without marketing, the company struggles to increase the number of people using its service and grow its revenue base. But at the same time, those higher expenses erode its cash stockpile and contribute to ever-mounting losses.
It's a challenge for Blue Apron to figure out what to do to get to a point where it ultimately becomes profitable — a benchmark the company warned before it went public that it may never achieve. Blue Apron's future is looking increasingly difficult as more grocery stores unveil their own meal kits and other competitors in the space — most notably its European rival HelloFresh — increase their presence in the U.S. Then there’s e-commerce giant Amazon, which is currently testing its own meal kits.
Last month, Blue Apron laid off 6% of its workforce — or about 300 people — following a temporary hiring freeze and the firing of part of its recruiting team this summer. In a letter to employees, CEO Matt Salzberg called the company-wide realignment painful but necessary in order to focus on future growth and achieving profitability.
In late September, Albertsons bought meal kit company Plated, giving the supermarket giant the brand recognition and expertise of a leading meal kit company, while the meal kit maker gains access to 2,300 stores and the financial backing of one of the largest supermarkets in the U.S. For Blue Apron, which has seen its stock drop more than 50% since its June IPO, an outright purchase by private equity or a major grocery chain with deeper pockets might be its best path forward, especially if it expects to bleed cash for the foreseeable future.