Liquidity Services (LQDT) Misses Q3 EPS by 2c, Miss on Revenues; Offers 4Q EPS Guide Below Consensus... 'Near-Term Outlook Remains Cautious'

Liquidity Services (NASDAQ: LQDT) reported Q3 EPS of ($0.27), $0.02 worse than the analyst estimate of ($0.25). Revenue for the quarter came in at $65.5 million versus the consensus estimate of $76.73 million.

Business Outlook

Our near-term outlook remains cautious. FY17 results continue to benefit from growth in our GovDeals and RSCG segments. We continue to invest in our strategy to unify our business processes, global sales organization, and e-commerce marketplace platform. While the RSCG segment is showing overall improvement, we anticipate our CAG segment will be adversely impacted by decreased activity within its industrial verticals and lower service fee revenues and inferior property mix under our Surplus contract, impacting growth in FY17. We anticipate continued investments in the design and deployment of our new LiquidityOne e-commerce platform across our remaining marketplaces. Our expenses will remain elevated throughout the remainder of FY17 as we continue this transformation.

The following forward-looking statements reflect the following trends and assumptions for Q4-17:

(i) increased investment spending under our LiquidityOne transformation initiative as we ready our remaining marketplaces for migration onto our new platform;

(ii) increased cost of sales, lower volume of goods received, lower margins, and declining service fee revenue as we anticipate inferior product mix and pricing declines for the services we provide under our DoD Surplus contract;

(iii) continued strength in our GovDeals segment and steady year-over-year growth;

(iv) a mix shift to more consignment accounts in our RSCG segment; and

(v) new pricing for services provided under out DoD Scrap contract and continued variability in commodities pricing, volumes of goods received, and mix of commodities.

For Q4-17 our guidance is as follows:

GMV - We expect GMV for Q4-17 to range from $145 million to $165 million.

GAAP Net Loss - We expect GAAP Net Loss for Q4-17 to range from $(11.5) million to $(8.5) million.

GAAP Diluted EPS - We expect GAAP diluted Loss Per Share for Q4-17 to range from $(0.37) to $(0.27).

Non-GAAP Adjusted EBITDA -We expect non-GAAP Adjusted EBITDA for Q4-17 to range from $(8.0) million to $(5.0) million.

Non-GAAP Adjusted Diluted EPS - We expect non-GAAP Adjusted Loss Per Diluted Share for Q4-17 to range from $(0.32) to $(0.22). This guidance assumes that our diluted weighted average number of shares outstanding for the quarter of 31.5 million and that we will not repurchase shares during the quarter with the approximately $10.1 million available under the share repurchase program.

GUIDANCE:

Liquidity Services sees Q4 2017 EPS of ($0.32)-($0.22), versus the consensus of ($0.13).

For earnings history and earnings-related data on Liquidity Services (LQDT) click here.

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