Enable Holdings, formerly known as uBid.com Holdings, announced earnings for the period ended September 30, 2008. Net revenues decreased from $9.720 million in the third quarter of 2007 to $8.917 million in the third quarter of 2008. The company reported a net loss for the quarter of $ 4.685 million, compared to a net loss of $2.193 million in the third quarter of 2007.
Total Gross Merchandise Sales declined from $23.7 million in Q3-2007 to $17.4 million in Q3-2008. Total auction success rate increased from 10.9% to 25.7%. Gross Merchandise Sales for the uBid Certified Merchant (UCM) program (third-party sellers) decreased from $14.4 million in Q3-2007 to $9.7 million in Q3-2008. The number of approved UCM vendors increased from 3,321 in Q3-2007 to 3,948 in Q3-2008.
In the first quarter of 2008, Enable Holdings began transforming its business model from a seller marketplace to an asset recovery solution, or "excess inventory solutions company." Enable Holdings said its financial results for the nine months ended September 30, 2008, were negatively impacted by the planned restructuring and the severe economic downturn.
As part of the restructuring efforts, it significantly reduced its marketing spending while realigning the marketing and advertising resources to better position them to each new operating division. The result was a significant decline in the visitor traffic to its website and decreased revenue volume. The visitor traffic in the quarter ended September 30, 2008 decreased 11.4% compared to the same period of the prior year.
The company also made the strategic decision to eliminate outside advertisement on its website. Historically, advertisement sales added a revenue stream, but negatively impacted overall sales by redirecting visitor traffic from the company's website to competing websites. As a result of the elimination of advertisement sales, outside advertisement revenues decreased 78.8% in the nine months ended September 30, 2008 compared to the same period in 2007.
Enable Holdings said its uBid Certified Merchant (UCM) sales and gross profit, for the three and nine months ended September 2008, decreased compared to the previous periods. The number of UCM orders decreased to 72,000 in the quarter ended September 2008 as compared to 101,000 in the quarter ended September 2007. "This decrease is also attributable to the change in strategy undertaken by the Company. During the first six months of 2008, the Company realigned the marketing efforts and eliminated the unprofitable auctions and vendors, resulting in lower sales and gross profit but an improved auction success rate and a high bidder to visitor percentage. The Company added additional certified merchants in our UCM program as the number of vendors increased to 3,948 in the quarter ended September 2008 from 3,321 in the quarter ended September 2007."
The full filing is available on the SEC website
