Bidz.com, Inc. Announces Strong Financial Results for the Second Quarter 2008 and...

Bidz.com, Inc. Announces Strong Financial Results for the Second Quarter 2008 and Exceeds Guidance

-- Second quarter revenues increase 40.5% year-over-year to $55.0
million

-- Second quarter pre-tax income increases 70.3% year-over-year
to $6.3 million

-- Exceed guidance for sixth consecutive quarter

-- Raise revenue guidance to $240-$245 million and profit before
tax guidance to $26.0-27.5 million for full year 2008

-- Raise EPS guidance by $0.04 to $0.56-$0.59 for full year 2008
LOS ANGELES--(Business Wire)--
Bidz.com, Inc. (NASDAQ:BIDZ), a leading online retailer of jewelry
today reported strong financial results for the three months ended
June 30, 2008, exceeding its previous guidance and continuing a trend
of exceeding its forecasts. The Company has demonstrated its ability
to provide good guidance and have visibility into its business.

Net revenues for the second quarter of 2008 were $55.0 million, a
40.5% increase compared with $39.1 million reported in the second
quarter of 2007. The substantial increase was due to the continued
demand for the Company's jewelry products, and increases in the number
of new buyers, selling price per order, average items sold per day,
customer traffic, and gross margin dollars per order. The Company also
strategically sold $8.4 million of wholesale (B2B) merchandise in the
second quarter of 2008. The Company expects that it will continue to
primarily sell inventory through its online auctions, but will
continue to have some B2B revenues as well.

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Three months ended
June 30,
--------------------
Auction Metrics 2008 2007 Change
------------------------------------------------- ------ ------ ------
Number of new buyers 64,882 53,637 21.0%
Average selling price per order (gross) $183 $171 7.0%
Average orders per day 3,023 2,678 12.9%
Average items sold per day 10,082 8,678 16.2%
Acquisition cost per new buyer $48 $38 26.3%
Gross Margin $ per average order $51 $48 7.4%
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"We are extremely pleased with our continued very strong financial
performance, as well as the progress we have made in our key metrics,
such as average selling price per order, average orders per day,
average items sold per day, and number of new buyers, all of which
have improved on a year over year basis," said David Zinberg,
President and Chief Executive Officer of Bidz.com. "Our core auction
business continues to see significant organic and profitable growth,
both domestically, and especially internationally. Additionally, we
were able to successfully win a significant bankruptcy auction, and
add some incremental B2B sales. We remain intensely committed to
meeting our profit objectives."

David Zinberg continued, "There is still a tremendous opportunity
for us to capture a larger share of the global jewelry market, which
is expected to reach $213 billion worldwide by 2010. We have many
initiatives in place for growth, including additional translations of
our website into other languages and further development of our newer
initiatives, such as Buyz.com, our online retail store. We believe
that these new initiatives will provide a foundation for even stronger
revenue and earnings growth once the economy begins to improve."

Recent Key Developments:

-- As of July 31, 2008 the Company spent a total of $8.8 million
to repurchase 1,024,000 shares at an average price of $8.58

-- In the second quarter of 2008, the Company spent approximately
$3.2 million to repurchase 351,000 shares at an average price
of $8.99

-- The Company launched a Spanish language version of its online
auction site in May

-- The Company was added to the Russell 2000, 3000, Microcap and
Global Indices on June 27, 2008

-- The Company acquired a $23.9 million lot of finished jewelry
in the bankruptcy auction of LID Ltd., one of the world's
largest manufacturers of diamond jewelry

-- The Company increased its second quarter international sales
by 55.7% to $13.8 million

In the second quarter, gross profit increased 40.9% to $15.3
million from $10.9 million in the second quarter of 2007. Gross margin
in the second quarter of 2008 was 27.9%, compared with 27.8% in the
same period of 2007.

Operating expenses in the second quarter 2008 increased to $9.0
million compared to $7.1 million in the prior year period. Operating
expenses leveraged positively as a percentage of sales and decreased
to 16.3% compared with 18.2% in the prior year period. The absolute
dollar increases were primarily due to the overall growth of the
business and include increases in marketing campaigns, as well as
payroll related expenses.

The Company's pre-tax income for the second quarter of 2008 was
$6.3 million, significantly exceeding its revised guidance of
$4.5-$5.0 million, and compared to $3.7 million in the prior year
period in 2007, an increase of 70.3%. The Company's income tax expense
increased to $2.7 million in the second quarter of 2008, from $763,000
in prior year period, and the effective tax rate increased to 42.3%
from 20.7%. During 2007, the Company utilized all of its loss carry
forwards and therefore became fully taxable in 2008. Net income for
the second quarter of 2008 increased to $3.6 million, or $0.14 per
fully diluted share on 25.7 million weighted average shares
outstanding, compared to net income of $2.9 million, or $0.12 per
fully diluted share on 24.1 million weighted average shares
outstanding in the same period of 2007.

The Company's revenues for the six months ended June 30, 2008 were
$116.9 million, a 39.4% increase compared with $83.8 million reported
for the six months ended 2007. Gross profit increased 51.6% to $33.4
million from $22.0 million in the six months ended June 30, 2007.
Gross margin for the first half of 2008 was 28.5% versus 26.2% in the
first half of 2007. Operating expense leverage improved for the first
six months of 2008 as operating expenses were $19.3 million, or 16.5%
of sales. In the same period in 2007, operating expenses were $14.6
million, or 17.4% of sales. Income from operations in the first six
months of 2008 was $14.1 million or 12.0% of sales as compared to $7.4
million or 8.8% of sales in the same period a year ago.

The Company's pre-tax income for the six months ended June 30,
2008 was $14.0 million, nearly double the $7.2 million in the prior
year period. The Company's income tax expense income tax expense
increased to $5.8 million in the six months ended June 30, 2008 from
$858,000 in the prior year period, and the effective tax rate
increased to 41.4% from 11.9%. Net income for the six months ended
June 30, 2008 was $8.2 million, or $0.32 per fully diluted share on
25.8 million weighted average shares outstanding, compared to $6.4
million, or $0.27 per fully diluted share on 23.9 million weighted
average shares outstanding, in the same period of 2007.

As of June 30, 2008, the Company had $618,000 in cash.
Additionally, the Company has working capital of $31.7 million and no
long-term debt. The company had $6 million outstanding on its $25
million line of credit, taking into account the purchase of $24
million of finished jewelry in the bankruptcy auction of LID Ltd. The
Company believes it has more than sufficient liquidity to continue to
successfully operate and grow its business for the foreseeable future.

The Company's board of directors earlier approved a share
repurchase program in the amount of $20 million and the Company has
purchased and intends to continue to purchase shares of its stock from
time to time whenever, in its opinion, the share price does not
properly reflect the Company's business results and future prospects.
There is approximately $11.2 million remaining on the Company's
approved share repurchase plan.

Business Outlook/Guidance

The Company is introducing new revenue guidance for the third
quarter of 2008 of $55-$58 million, pre-tax income of approximately
$4.8-$5.2 million and, fully taxed GAAP EPS of $0.10-$0.11.

For the full year 2008, the Company is increasing its revenue and
profit guidance. The Company's revenue guidance range is increasing to
$240-245 million from $225-$230 million, pre-tax income guidance to
$26.0-$27.5 from $25.0-$26.0 million, fully taxed GAAP EPS to
$0.56-$0.59 from $0.52-$0.55 and expects gross margins to remain at
approximately 27-28%. The Company expects its effective tax rate for
the full year of 2008 to be approximately 41%, and expects to end the
year with approximately 27.5 million fully diluted shares outstanding.

Investor Conference Call

Bidz.com's quarterly earnings conference call is scheduled to
begin later today (August 5, 2008) at 1:30 p.m., Pacific Time. The
call will be open to all interested investors through a live audio Web
broadcast via the Internet on the investor relations section of the
Company's website at http://investors.bidz.com/.

For those unable to participate during the live broadcast, the
webcast will be archived for 90 days and a replay will be available
beginning Tuesday, August 5, 2008 at 7:30 p.m. ET, through August 19,
2008 at 12:00 a.m. ET. To access the replay, dial 800-406-7325 (U.S.)
or 303-590-3030 (International), and use passcode: 3900896.

Bidz.com Inc.

Bidz.com, founded in 1998, is an online retailer of jewelry. Bidz
offers its products through a live auction format. To learn more about
Bidz.com visit its website at www.bidz.com.

Safe Harbor Statement

This press release includes forward looking statements about the
Company's estimated revenue and earnings within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements other
than statements of historical facts contained in this release,
including statements regarding the Company's future financial
position, business strategy and plans and objectives of management for
future operations, are forward looking statements. The words
"believe," "may," "will," "estimate," "continue," "anticipate,"
"intend," "expect," and similar expressions, as they relate to the
Company, are intended to identify forward looking statements. We have
based these forward-looking statements largely on current expectations
and projections about future events and financial trends that we
believe may affect the Company's financial condition, results of
operations, business strategy and financial needs. Risks and
uncertainties include that our common stock is subject to short
selling and trading, and prices of our stock may be volatile; that we
are subject to "prank" bidding; that we may face increasing costs to
acquire new customers; the ability of the Company to attract customers
to its website and offer attractive products; the ability to maintain
profit levels while expanding international sales; the ability to
detect fraud if we fail to maintain an effective system of internal
controls; the ability to maintain our website, electronic data
processing systems, and systems hardware; the ability to forecast
accurately net revenue and plan for expenses; that we do not have a
guaranteed supply of jewelry products and that we have a heavy
concentration of inventory purchase from our top two suppliers; the
ability to protect our intellectual property rights; and potential
litigation and government enforcement actions that may result from our
prior securities offerings. Please refer to Bidz.com's reports and
filings with the Securities and Exchange Commission for a further
discussion of these risks and uncertainties. Readers are cautioned not
to place undue reliance on forward-looking statements, which speak
only as of the date they are made. Bidz.com undertakes no obligation
to update publicly any forward-looking statements to reflect new
information, events or circumstances after the date they were made or
to reflect the occurrence of unanticipated events.

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Bidz.com, Inc.
Condensed Balance Sheets
(In thousands, except share and per share data)

December 31, June 30,
2007 2008
------------ -----------
(Unaudited)
Assets
Current assets:
Cash $ 4,808 $ 618
Accounts receivable 2,275 1,452
Inventories, net of reserves of $1,075 and
$509 at December 31, 2007 and June 30,
2008, respectively 56,686 54,732
Other current assets 5,958 4,118
------------ -----------
Total current assets 69,727 60,920
Property and equipment, net 1,323 1,401
Intangible asset 161 161
Deposits 104 104
------------ -----------
Total assets $71,315 $62,586
============ ===========

Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit line $ 5,924 $ 5,597
Accounts payable (includes related party
amounts of $5,050 and $2,336 at December
31, 2007 and June 30, 2008, respectively) 26,400 18,362
Accrued expenses 4,509 3,421
Deferred revenue 2,900 1,663
------------ -----------
Total current liabilities 39,733 29,043

Commitments and contingencies (note 10)

Stockholders' equity:
Preferred stock: par value $0.001;
authorized 4,000,000 shares; none issued
and outstanding at December 31, 2007 and
June 30, 2008, respectively -- --
Common stock: par value $0.001; authorized
100,000,000 shares; issued and
outstanding 24,556,354 and 23,708,057 at
December 31, 2007 and June 30, 2008,
respectively 25 25
Additional paid in capital 35,875 29,232
Shares held in treasury, at cost; 100,000
and 54,000 shares at December 31, 2007
and June 30, 2008, respectively (886) (502)
Retained earnings (accumulated deficit) (3,432) 4,788
------------ -----------
Total stockholders' equity 31,582 33,543
------------ -----------

$71,315 $62,586
============ ===========
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Bidz.com, Inc.
Condensed Statements of Income (Unaudited)
(In thousands, except share and per share data)

Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2007 2008 2007 2008
----------- ----------- ----------- -----------

Net revenue:
Merchandise sales $ 39,049 $ 54,815 $ 83,688 $ 116,626
Other revenue 74 171 159 289
----------- ----------- ----------- -----------
39,123 54,986 83,847 116,915
Cost of revenue 28,249 39,668 61,845 83,561
----------- ----------- ----------- -----------
Gross profit 10,874 15,318 22,002 33,354
----------- ----------- ----------- -----------
Operating expenses:
General and
administrative 4,985 5,680 9,828 11,587
Sales and marketing 2,019 3,131 4,619 7,330
Depreciation and
amortization 113 172 187 334
----------- ----------- ----------- -----------
Total operating
expenses 7,117 8,983 14,634 19,251
----------- ----------- ----------- -----------
Income from operations 3,757 6,335 7,368 14,103
Other income -
interest income 3 10 4 23
Other expense -
interest (expense) (82) (80) (164) (91)
----------- ----------- ----------- -----------
Income before income
tax expense 3,678 6,265 7,208 14,035
Income tax expense 763 2,650 858 5,815
----------- ----------- ----------- -----------
Net income $ 2,915 $ 3,615 $ 6,350 $ 8,220
=========== =========== =========== ===========

Net income per share
available to common
shareholders - basic $ 0.13 $ 0.15 $ 0.27 $ 0.34
=========== =========== =========== ===========
Net income per share
available to common
shareholders -
diluted $ 0.12 $ 0.14 $ 0.27 $ 0.32
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - basic 23,272,386 23,828,186 23,259,260 24,183,225
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - diluted 24,147,118 25,739,058 23,892,554 25,822,351
=========== =========== =========== ===========
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Bidz.com, Inc.
Condensed Statements of Cash Flows (Unaudited)
(In thousands)

Six Months Ended
June 30,
------------------
2007 2008
--------- --------

Cash flows provided by (used for) operating
activities:
Net income $ 6,350 $ 8,220

Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 187 334
Change in inventory reserve 329 (566)
Stock-based compensation 250 534
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 413 823
Inventories 8,832 2,520
Other current assets 231 1,840
Increase (decrease) in liabilities:
Accounts payable (8,893) (8,038)
Accrued expenses 427 (1,088)
Deferred revenue (2,125) (1,237)
-------- --------
Net cash provided by operating
activities 6,001 3,342
-------- --------

Cash flows provided by (used for) investing
activities:
Capital expenditures (1,019) (431)
Disposal of fixed assets - 19
-------- --------
Net cash (used for) investing activities (1,019) (412)
-------- --------
Cash flows provided by (used for) financing
activities:
Revolving credit line (3,625) (327)
Repurchase of common stock - (6,965)
Proceeds from exercise of stock options 67 130
Tax benefit from exercise of stock options - 42
-------- --------
Net cash (used for) financing activities (3,558) (7,120)
-------- --------

Net increase (decrease) in cash 1,424 (4,190)
Cash, beginning of period 359 4,808
-------- --------
Cash, end of period $ 1,783 $ 618
======== ========

Supplemental disclosure of cash flow information:
Interest paid $ 164 $ 91
======== ========
Income taxes paid $ 492 $ 6,472
======== ========
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Investor Relations:
ICR
Andrew Greenebaum or Patricia Dolmatsky, 310.954.1100
or
Media Relations:
ICR
Stephanie Sampiere, 646-277-1222
Rich Layne, 646-277-1219
or
Bidz.com, Inc.
Lawrence Kong, CFO, 310-280-7373

Copyright Business Wire 2008