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Blue Apron earnings: 'We are very committed to a path of profitability,' CEO says

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Blue Apron CEO Linda Findley joins Yahoo Finance to discuss the company's marketing efforts following disappointing earnings.

Video Transcript

ALEXIS CHRISTOFOROUS: It's been a tough couple of days for Blue Apron. The stock is lower one day after suffering its biggest sell-off in about a year and a half after the meal kit pioneer reported a wider loss and a drop in revenue. Joining me now, Blue Apron CEO Linda Finley. Linda, good to see you again. I dug in a little bit more. I saw orders decline 4.7%, and customers were down about 4% last quarter. What drove those results? And are you seeing some signs of improvement this quarter?

LINDA FINDLEY: Yeah, so what actually happened was-- it's pretty intentional-- we guided to a slight reduction in 2021 because of the fact that we were able to close this funding in November at the end of last year, where we said we were actually turning our investment to 2022 and starting to build out more of the long-term marketing infrastructure for customer growth. And in the first five weeks, we're seeing early signs of success with that with more than 10% growth in registrations and reactivation of our customer base above last year, which was a pretty big quarter lap.

But we expected a certain amount of transition in Q4 because of the fact that we were lapping a pre-COVID or a during COVID time before. And so what we were looking at was on the two-year stack, as we come out of the pandemic, how did we do? And so we grew significantly in revenue over a two-year stack, as we're leaning into this investment going into Q1 and 2022 and beyond.

ALEXIS CHRISTOFOROUS: I want to ask, though, about food inflation because we found out yesterday in the CPI that food prices overall are up about 7 and 1/2% over the past year. And I saw that average revenue per customer grew by nearly 2% last quarter. Was that really a symptom of you needing to raise prices? What was behind that?

LINDA FINDLEY: Well, actually, we've had seven consecutive quarters of, you know, of higher revenue per customer, average order of value, and orders per customer. And that was really driven by product innovation. A big part of the strategy was before, when we couldn't quite lean into as much marketing, we leaned heavily into product innovation to create value per customer and started wanting to increase retention and engagement of each of those customers by increasing that value.

So we're pretty proud of the fact that we hit a higher AOV number, even with some additional promotions that we started to launch going into 2022, and continuing to just aggressively think about laying the right foundation for long-term sustainable growth. So it's less about food inflation, which, actually, we have a decent amount of insulation in our business model about how we manage food inflation, and less about price increases. We did increase our prices, but most of what you're seeing is actually based on the value-added products that we've been putting in to further engage customers as we now layer customer growth on top of it.

ALEXIS CHRISTOFOROUS: Mm-hmm. So look, early in the pandemic, you and I talked when Blue Apron turned that surprise profit, its first as a publicly traded company. And since then, the company has struggled to repeat that performance. Are you putting any kind of a timetable on return to profitability?

LINDA FINDLEY: So we haven't put in a specific timetable, but we are very committed to a path to profitability. And we've said that in every quarter every time we've been talking about our investment levels. We now have the opportunity to drive significant investment because of the funding that we raised at the end of the year into layering customer growth on top of these really great customer engagement metrics that we've been putting up for seven quarters in a row. With that growth in the top line, then we'll be able to continue to scale into that level of profitability.

So what we've said is very intentionally, this year is going to be a year of investment, but a year of smart investment. And we're going to make sure that we're really focusing on growing that customer number, which has been less of a focus the last few years, on top of that strong value. And we will continue to update the markets as we look towards guiding, towards when we turn to profitability. But it's definitely still a priority for us.

ALEXIS CHRISTOFOROUS: You mentioned that $78 million capital raise back in November. I know a good chunk of that money is going to go towards your big push moving forward into marketing. I know your background-- heavy marketing coming from Etsy and Alibaba. Why is that the right place to focus money and attention, as opposed to other areas in the business, as opposed to other ways of acquiring customers?

LINDA FINDLEY: Well, first of all, we're actually fairly lucky. Because of some of the previous building of the company, we have a great, robust operation structure that allows us to scale with very little capital investment there. So that is actually ripe for this expansion. And it's been great in helping us handle this complexity as we introduce new products. But we are going to be investing some in technology as well because both marketing technology and the site in general has a lot of opportunity to expand and increase our accessibility to partners and other places for growing our customer base.

But marketing is where we can put our most efficient dollars going forward. Because of the fact that we've built this great product that has these engagement levels, this is the right time to lean into, again, efficient marketing spend, which we know how to do, on top of that great product that we've been evolving to scale marketing going forward. So we've been lucky that we have a lot of infrastructure that already works for us. And now this is really the time to say go on marketing.

ALEXIS CHRISTOFOROUS: Linda, what would you say, though, to some shareholders who are concerned, you know, about the viability of the company going forward? I mean, is a strategic merger or even a buyout by a larger food-related company something that you and the board would consider?

LINDA FINDLEY: Well, I think it's really important to think, first of all, about that profitability question and also about the comment you made earlier about when we hit profitability in 2020. It was great to hit profitability. That's fantastic. There was a lot happening in the pandemic at that particular time. But a big part of what we're focused on right now is leaning into growth that's sustainable and long-term for the long-term vision of the company. And what we've seen even in Q4-- we've put additional investment in, in Q4 and in Q1-- yes, it creates a cash burn, and we are guiding to a cash burn.

But that is not actually an ongoing cash burn. You can't take some of the metrics from Q4 and say, this is what it's going to look like going forward. There's actually going to be several quarters where we have seasonal levels of cash burn that are significantly lower. So it all blends into a right level of investment for growing the company. As for thinking beyond that, it's really about how do we bring the most value to shareholders? And we're going to make sure that we're always paying attention to what in the market is going to do the best for us and for our shareholders and continue to grow the business.

ALEXIS CHRISTOFOROUS: All right, Linda Finley, CEO over at Blue Apron, always good to see you. Thanks for stopping by.