Blue Apron May Need to Raise More Money Soon After Shrunken IPO
bloomberg.com
bloomberg.com
Take Blue Apron, for instance.
They stated their blended Cost Per Customer is $94 in their prospectus, this # has been parroted all over the place.
This little piece of "hope the Analysts dont dig in" masks their most recent quarter costs which exploded to $460 per customer. (1)
This is a classic, groupon-like example of somebody figuring out a really profitable niche that's easily duplicate and relies almost entirely on paid media to drive acquisition.
The efficiency and sheer scale of todays' online advertising market means that if you're armed with a shit ton of cash you can buy your way into public-market growth.
Sustainable it is not.
No wonder they don't bother reporting a pesky little detail like "churn" in their prospectus (2)
I wonder how much longer companies will be able to get away with this game.
(1) https://www.recode.net/2017/6/1/15727182/blue-apron-ipo-s1-a...
(2) https://www.forbes.com/sites/neilstern/2017/06/05/meal-prep-...
I don't have any context for those figures though, does anybody know of a common cost per customer acquisition across industries/products? Maybe my intuition as a humble programmer is way off, but that seems incredibly high.
In a 'goods' business it costs you $X to make the good and sell it (COGS) and people who buy it (after averaging sales, incentives, etc) as the average selling price (ASP), so to the extent that ASP > COGS you make money selling your widgets.
A service business like this (or cable TV or whatever) has a customer acquisition cost (CAC), or the cost to get someone to sign up. and a life time value (LTV) which is the amount that customer will spend with you over the lifetime of their relationship with you. To the extent that LTV > CAC it tells you whether or not the business is viable.
In both cases, when the ratios are wrong, the company loses money faster by either selling more widgets or getting more customers.
Nutrisystem pays $140 to affiliates per new customer and gets about $12 in revenue daily from the customer. That is sort of relevant.
I wouldn't personally put any money into Blue Apron. They are hiding their churn and dressing up their numbers. I suspect they will blow up or fizzle out.
I'm just not sure what people want. They show cohorts and give a lot of data on aggregate performance, but I agree, the lack of clarity is a bit alarming. Is there some kind of precedent people are comparing this to, a membership-style S-1 with clearer statement of what's going on?
I'm guessing it would take the form of higher prices.
The magnitude of CAC and LTV are only meaningful together. A ferrari dealership might have a $5000 cost to acquire a customer and that would be a bargain, because their LTV is $250k+.
You give people their first shipment free, which you'd normally charge $60
1-in-3 people continue after that, so your cost to acquire 1 customer was $90. Tack on an extra $4 for the ads that got them to sign up.
If 1-in-7 people continue, you get into the 400s.
Those numbers seem pretty believable to me.
Which, for an expensive service like this, where very few people are interested, seem significant.
It could be $5,000.00!
All that matters is you make money from the customer after all the expenses are taken into account.
It's like the old adage: would you give me a quarter if I give you a dollar?
From the S-1, this is a 68% COGS business, meaning their unit margins are 32%. You can debate whether some of their opex belongs above or below the line, but let's assume the 32% number is baseline credible.
The business had 4.1 orders/customer last quarter with an average order value of $57.23, meaning 73.21 of gross profit per customer. That means they recoup their marketing spend in 6 quarters.
The big questions, in my mind, are (1) will people continue to be customers after a period of time and (2) will CAC stay the same, rise, or fall? I think there's more room for disagreement here than people admit. I haven't looked too closely at their IPO pricing, but there is some amount I would pay for a share of stock in this company - it's >$0. I'm just not sure how that number compares to the current share price.
Where the value falls down is in how much of a time sink it is. These meals take a fair amount of prep, and in exchange for all that time you only get two meals.
When I cook on my own I usually batch enough to have at least another 2-3 meals worth of leftovers. If they set it up as a channel for weekly meal prep rather than 3 fun new recipes to try we'd be much more inclined to stick with it, but as it is it's just too much work for busy people to do every week.
If they provided larger meal sizes it would probably come closer. They'd be able to provide you one meal's type of food (less variety, fewer things to measure, and fewer types of ingredients = easier supply chain management) and you could get 5 or so meals out of one cooking session's worth of prep.
It probably still wouldn't come down to $7. But I assume there are people more willing to pay than me out there who would be happy with it.
But Blue Apron, as it is now, isn't cheaper or easier than what I do now and it's a nightmare of wasted packaging.
Three fancy-ish meals during a typical week tends to seem like a bit much. I'm also cooking for one at least some of the time. On the one hand this usually gives me leftovers. On the other hand, I don't have the portion control I'd have if I bought the ingredients in the store and not all their recipes lend themselves well to leftovers.
On the other hand, I look at some of the services that more explicitly try to simplify. Those that do more of the pre-prep make sense to me but I also see recipes that make me go: "Umm, I could grab the three ingredients for that in 5 minutes at the store."
All that said, I'll probably give these things a try again when I have some periods at home. I don't actually have a good grocery delivery option where I live so it's easier to justify these services on that basis given that they can cut out a visit to the store.
Added: Interesting. I originally read orders as meals but it does seem be a typically $60-ish order. Which means that their typical customer does seem to be someone who uses the service as an ongoing subscription.
I'm not sure if I'm surprised or not but, assuming I'm reading their S-1 correctly, their customers seemingly tend to be all-in or they drop the service.
This is also a bit different from that HBO subscription that you know in the back of your head you're not using all that much but the pain doesn't reach the threshold of calling up and canceling. These are groceries either rotting in your refrigerator or guilting you into spending a fair bit of time to prepare food when you don't really want to.
You also need to be wary about how they exactly calculate CPAs based on ad buys. For instance, if they just comissioned a large scaled TV ad buy, that's millions of dollars they have to pay now. TV advertising has a long tail of user acq as it takes time for the message it wear in to a user.
So if those millions hit in the billed quarter, they could still get customers in a later period and the CAC would change.
Things like display, TV, etc. are notoriously difficult to measure the exact impact of. Thus, looking at all marketing expenses rolled up is really the only safe way to capture all that value for this sort of math.
Also this:
> [W]e anticipate adding additional products and increasing the portion of our marketing expenses focused on brand awareness and customer retention in order to drive increased customer engagement and growth in our net revenue from existing customers
When marketing is for "brand awareness" and "customer retention" that reads "we don't know how to acquire new customers profitably so the problem must be our brand". And brand awareness marketing is _very_ expensive.
Trust me. If I want to send you $60 for some pre-kitted meals, you'll be the first to know. I absolutely do not want to have to remember to opt-out of some subscription service.
However spending to build brand awareness is what helps you reduce costs long term. If your brand is synonymous with the category, you win. It gets you more direct, referral and organic traffic, gets the press writing about you, gets review sites comparing you, etc.
It is most definitely expensive, but can be critical to the long term success of a company once they reach a certain size.
This is also doubly important in commoditized markets since brand is really the only thing that distinguishes you.
An interview goes both ways.
You can both (a) cash out shares and (b) leave without an IPO.
Heck, normally the company itself will buy back the shares. If they don't, they're not bullish on their future and I wouldn't be either.
If they had a plan to use their valuation to purchase, automate and control the whole farm-to-table product chain, all while building up advanced technical services that can be sold to other tech companies and startups, that might be a different story. But I'm very skeptical that's the case.
Blue Apron and its dozen or more competitors just seem like such a niche [standalone] offering. I'm pretty darn close to their target demographic and they still don't quite fit my needs. Developing a platform to serve this market presupposes that it's a viable size of market to serve as standalone businesses and I'm not convinced it is.
"To me, trying to dole out improvements in a just-in-time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in. More fundamentally, I think long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align. "
[1] https://www.sec.gov/Archives/edgar/data/1018724/000119312513...
...which is owned by a human. not to mention the ambiguity between a tool and a robot. can we expect SaaS companies to be taxed because their servers are "robots"? that is not to say i'm against UBI, but the justification of "it's okay because we're taking it from robots!" doesn't hold.
Don't see why UBI has to be in cash instead of services.
- While it makes sense to restrict some free money to healthcare and retirement (because many people don't plan long-term), for most other services it would be adding complexity and waste. Individuals can allocate money between their basic needs better than state bureaucracy can. Or phrased in another way - UBI in services significantly restricts your authonomy as a person by making all spending decisions basically for you. If you were getting food stamps, you couldn't e.g. decide to eat ramen for two months in order to save up money for fixing your car or buying a computer.
- Service-specific welfare usually implies means testing, which is inefficient, requires huge bureaucracy to work, and - most importantly - it's incredibly dehumanizing. It's no fun when, in order to get additional $50 a month, you have to subject yourself, your family and your extended family to interviews from social workers, who'll surveill and comment on the most private aspects of your life. UBI is a popular concept because it means to be universal, i.e. no means testing.
- Freedom: UBI gives individuals more freedom in how to spend their subsidies.
- Privacy: By eliminating means-testing, we eliminate the governments intrusive accounting of an individual's life.
- Efficiency - Spending: People can allocate their UBI more efficiently than the government can allocate funds on services.
- Efficiency - Means-Testing: The process of means-testing is expensive and a bureaucratic drain on resources.
The first two I entirely agree with; the third I'm not sure about, but the last I'm almost certain is untrue. Means-testing is expensive overhead, but that process is definitely less expensive than giving everyone the benefit. If it weren't, the government would already be giving everyone Medicaid. I suspect the real proponents of UBI are advocating for freedom and privacy more than anything else.
I haven't seen anyone advocate a "exclusive universal basic income", where other forms would not exist.
On the other hand, cash means that nobody is entitled to receive it except the recipient, which spurs competition to get their money, resulting in better services and lower costs.
My answer was of course a simplification, but yes, fundamentally I think as we step into the future, we not only should but need to be taxing the owners of automation. Because if we don't, inevitably, wealth will become so concentrated within the hands of a minority that the overall functioning of our economies will simply stop working at some point. The current capitalistic based systems we have set up depend on continuous and increasing spending/consumption in order to function.
There's nothing inherently wrong with following this method. In fact, I personally think it's fine. The issue, however, is in the fact that as automation continually replaces humans, money starts getting "stuck" as allocated spending pools from consumers increasingly diminishes. Sure, in the beginning, it'll look great on paper as corporations and businesses enjoy massive cost savings/increased net profits. But at some point, there will come a tipping point where there literally won't be enough money in circulation to support the economy. Think about it, what happens when 30+% of the human population becomes unemployed due to automation? And 30 is honestly a very optimistic number in my opinion. I could easily see unemployment rising to 50, 60, 70, 80, even 90+%. Do you realize how few people we actually need to be working? 99% of the work done today by humans both blue collar and white collar can and will be automated.
Sure, I guess when no one has money to spend, corporations/businesses will inevitably be forced to lower their prices to near zero values, and the “invisible hand of the market will have made all good”. But think about how ugly and messy that transitionary period will be. No profit driven entity will just willingly lower their prices like that. And in the meantime, people will starve starting from the bottom up, from those with the least privilege, opportunity, and means to escape the encroaching unemployment that awaits them. All a Universal Basic Income does is speed up the inevitable while circumventing the mass starvation, rioting, and violence that will occur without it.
And if you can think of a better solution too, I would honestly love to hear it because this isn't some far away issue. We're going to see massive upheaval in the next 5-10 years, starting with self-driving as it decimates the rural American population. Huge swaths of small towns all across America are almost 100% dependent on the trucking industry and the inflow of truckers that stop along the way to spend their income there. When truckers lose their jobs, those small towns go with them. If your answer is to tell them to move somewhere else or find a new job, what about those who can't? For example, how is a 50 year old truck driver who has spent his entire life driving trucks supposed to, on zero income mind you as they no longer have a job, go back to school and learn how to code when he or she likely barely finished high school 30 years ago? And no, even if you choose to completely disregard the inherent value of a human life opting to let people who are unable to successfully transition starve as a solution, you still aren't scot free. Because, what do you know, angry restless starving people riot and protest!
Though I personally think it's important that everyone has the right to fundamental basic standards of living, even if you could care less about whether the person next to you starves to death tomorrow, the purely selfish individual still supports a Universal Basic Income. Any other move is a losing play.
You can't properly price the service into your economic activity if it's forced onto you.
Couldn't agree more. The ONLY way to price AT ALL is through willful participation. With government services, this is not the case and that explains why they're often exorbitantly priced and suck at the same time; two components that are mutually exclusive in a laissez-faire environment.
I understand balking at governments paying for services the private sector can deliver on (though oftentimes that still requires a level of regulation to ensure that monopolies don't develop), but not when it comes to services that the private sector either can't, or at least -really really shouldn't- be handling. And there are a lot of those, even things that the private sector currently handles (such as pharmaceuticals, where without a monopoly there's no reason to invest in drug research, but as you move toward a monopoly you get price gauging a la Epipen, Shkreli, etc; taxes funding drug research without seeking to maximize shareholder profit seems a much better approach).
If the government tells you "give me your money or we will lock you up in a cage for years with people who will likely rape you", and you give it without any fight, did the government take it forcefully?
I would argue that even though force was not used, the threat of force is enough to say it was taken forcefully.
No consumers no business no rich people. Economy comes crashing down.
Just like Ford increased people's wages and lowered work hours so they had time and money to buy Ford cars ;)
Taxes are already pretty divorced from use of the services they pay for. People with more money than you have had more of it "forcefully" taken from them to pay for the roads, emergency services, and so on that you use.
You're going to be awfully disappointed when you learn how wealthy developed nations were built.
Conflicts hold growth down only when you don't win them.
For some context for anyone curious about this, my summary of the tables at https://en.wikipedia.org/wiki/Budget_of_NASA is the following: It appears that the average annual budget of NASA in both of the periods 1960--1992 and 1992--present is just under $20 billion present-USD per year (ie after adjusting for inflation).
The time series behavior is that NASA's budget peaked in the 1960s for the Apollo program at over $40 billion present-USD/year (and so over 4% of the federal budget at the time), then was relatively smaller during the 1970s and 1980s, and finally slightly larger and relatively flat since 1990. Beginning in 1971, the annual budget may be summarized as within 25% of the aforementioned ~$19 billion present-USD/year, noting that the wide range primarily hides growth since then, rather than a decrease.
(I have not looked into space investment other than NASA.)
-Gandhi
Don't get me wrong, there is a certain base demand for advertising where it adds value to an economy, but beyond that it is just zero sum redistribution. I do like my ad-money and the skills I maintain working for it, but like much of the services economy it is mostly a redistribution scheme, one where everybody attacks the pie with a vastly different size of spoon. Massive amounts of resources (at the end of the chain: limited natural resources) are spent on those spoons.
Warren Buffet once said most hedge funds were compensation schemes disguised as investment vehicles.
The same can be said for the average VC.
Fancy definition of "universal" you got there.
(Webvan, though, was a good idea. They just botched the rollout, with 3% market share in 30 cities, instead of 30% market share in 3 cities. Their VCs pushed them into that. Webvan's former fulfillment people quietly went to work, developed Kiva distribution center robots, sold them to many online commerce companies, got bought by Amazon, and are now involved with Amazon's grocery delivery operation.)
Another thing with Webvan--and we'll have to see how this plays out in the Food Delivery 2.0 phase we're in now--is that fresh food delivery really was a premium offering. But it wasn't clear how many people were willing to pay a premium for it. There are a lot of services people will buy if you sell them below cost.
Logistics, scale, and just learning what works and what doesn't may change all that. On the other hand, high-quality food delivered to your door is probably not going to appeal to your typical coupon-clipping Walmart shopper however efficient your operation is.
Another thing with Webvan [...] is that fresh food
delivery really was a premium offering. But it wasn't
clear how many people were willing to pay a premium
for it.
In the UK, Ocado can deliver a full range of supermarket groceries without needing to mark up the goods, and with a delivery charge below ~$5 with a ~$50 minimum order. And they make a profit while doing it.
I'd probably use Instacart if I could get it. I just didn't find Peapod all that compelling when I was using it because of an injury.
That said, it pretty much defines squeaking through the exit. Interested to read the reorganization they did last year in the S-1 [1] presumably to normalize all of the various rights clauses from previous funding rounds and to dump some otherwise undesirable baggage on what was left, aka "Opco". That they had a 1:10 and 1:5 splits on their early stock and have not done a reverse split prior to the IPO suggests the employees will do ok, assuming they can sell their stock at some point. It seems healthier than the Silverspring Networks IPO (SSNI) which was anemic at best and just got worse over time.
Let's hope that they keep their expenses in line and can crack the nut of acquiring new customers more cheaply than their competitors.
[1] https://www.sec.gov/Archives/edgar/data/1701114/000104746917...
• I have 10,000 shares
• GOOG is $1,000
• We're going to be the next GOOG
• 10,000 * $1,000
• I'm worth $10m
I don't see how anything related to % of ownership or intrinsic value would change with a reverse split.
The other thing that happens is your strike price goes up in proportion. So if it cost you $1/share to exercise your 50,000 share option its going to cost you $50 a share to exercise your 1,000 share option.
[1] of course it has to be above water.
This trick doesn't work when dilution results from someone calling options but that's pretty standard and usually doesn't have much impact.
There is no "I hope they don't fuck me" involved.
Splits are financially meaningless. They're just done to keep the per share price in the range of what people consider "normal."
Prior to being publicly traded, stock options at a start up are essentially worthless. If you exercise them you have to pay tax on them, and generally if you did exercise them nobody would buy them from you. So worthless. And while it is perfectly fun to say "everyone says" or "at the last raise" this company is worth $x and my share of that would be $y, if you've been around you know that that number is also grossly inaccurate. Because really there are things like liquidation preferences, assignment to creditors, and all sorts of other legal maneuvers that do one thing, they convert unvested incentive stock options for common stock into a value slightly less than the recycled paper they are printed on.
So when you transition from the realm of 'privately held' to 'publicly traded', two magical things happen. First, all shares convert to common stock (although possibly separate classes of stock), and you can sell those shares that you either already own, or you become the owner of by paying the 'strike' price on your vested options and taking possession of them.
Always, in that last moment, and Blue Apron was no exception, as the cap table is re-balanced and the company prepares to be a 'real' publicly traded entity, employee stock options get dealt with. In part because there is going to be a new option pool allocated for giving out to new employees or refreshing grants of existing employees, and because sometimes the bankers taking the company make it part of their terms and conditions in order to take the company public.
The grand result, the finale if you will, is that on the day the company you work for goes public, you get crystal clarity on exactly how many shares you have options to buy, when you will be able to buy them, and what you will pay for them to buy them. And if that day comes, and on the other side of the opening bell of the NYSE or NASDAQ that day you have more than 10,000 shares in options, with a strike price that is lower than the current price, there is a big psychological pump attached to your brain.
I've seen it happen to literally hundreds of my peers as they and I made that switch. And now, while watching the ticker tape on CNBC or the headline news, occasionally the new ticker symbol for your company will go across the bottom with either a +nn or -nn next to it for going up or down in price. And if you own at least 10,000 shares in options it is like watching a car appear and disappear in your future as it goes up and down, or a house down payment, or a college fund. It is potential wealth made actual right in front of your eyes and sometimes it is impossible to take your eye off the ticker.
And since movements of a few dollars is common in freshly traded companies it can drive you nuts. During the dot.com days a friend of mine and I would joke about being "up two Porsche's today", "oops, we've lost about a Porsche and a half today" where we had chosen $50,000 to represent the value of one Porsche sports car.
And so, if you are in that context (and a bunch of Blue Apron employees are today, just like SNAP employees were earlier) and if this is suddenly your single largest "investment" because yesterday your stock was unsaleable and today you could sell it[1] what happened in that twilight moment between private and pubic can get oddly personal and twisted.
That is especially true if there was a big reverse split or if the entire company sort of stepped from one place to another and converted your vested options in the old company into unvested options in the new company.
It is also perversely irrelevant what percentage of the company you own if your current option value, after paying the strike price, is more money than you've ever had at one time before.
[1] Often there are restrictions and lock ups and black out periods and all sorts of constraints, except as many people know if you don't work for the company. So in the dot com days people would quit, exercise, and sell because once they quit the restrictions came off.
But it doesn't have anything to do with splits. Having 50,000 shares and seeing the price go up $1 is the same as having 10,000 shares and seeing the price go up $5.
I can own 0.18 dollars. I should be able to own 0.18 shares.
I didn't get this part of the prospectus either, the language was pretty thick. It's probably some kind of cleanup/recapitalization? Probably wanted to shed some protective provisions or something. Please do comment if you find out more.
And then in ice-cold IPOs like Blue Apron's ... what? Blue Apron cut its valuation by a billion dollars -- and cut the amount of money it was raising by $100 million -- when it repriced this IPO from $15-$17 down to $10. What do you think the discussions were around the voting rights? Did any investor say "I'll pay $10, or $12 if you scrap the triple-class structure"? Did any banker say to the company "this deal is not going well, and we'll need to reprice, but you might get a better price without the triple-class structure"? Or is there just no tradeoff at all between governance and economics: Hot deals get done with bad governance, and cold deals get done with bad governance, but no one can just move a slider to increase valuations by improving governance?"
https://www.bloomberg.com/view/articles/2017-06-29/stress-te...
That's crazy they only have a year's worth of runway. I'd imagine that today's tepid IPO is going to make it that much harder to raise additional private capital. Looks like they'll have to take on additional debt financing just to keep the lights on, let alone fuel more growth.
That seems to be backed up by the final paragraph:
With its reduced IPO, Blue Apron no longer intends to pay down existing debt with the proceeds, according to its deal filing. Instead, the funds will all go toward working capital, capital expenditures and general corporate purposes.
If you didn't catch it, there was an excellent discussion about Blue Apron the other day: https://news.ycombinator.com/item?id=14646679
Blue Apron (1):
We believe that our existing cash and cash equivalents, together with cash generated from operations and available borrowing capacity under our revolving credit facility, will be sufficient to meet our anticipated cash needs for at least the next 12 months.
Apple (2):
The Company believes its existing balances of cash, cash equivalents and marketable securities will be sufficient to satisfy its working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations over the next 12 months.
(1) https://www.sec.gov/Archives/edgar/data/1701114/000104746917...
(2) https://www.sec.gov/Archives/edgar/data/320193/0001628280160...
Message: You're not ready to float if you're not floating, i.e. have a viable business model and can fund operations with revenues.
Also, having a down round after going public likely rained hard on a lot of people's options situations.
I trust you mean currently existing ops, if frozen as is. Lots of companies go public while still taking on debt because their ROI in expanding operations is significantly higher than the interest rates. Amazon wasn't profitable for years because of this.
https://www.sec.gov/Archives/edgar/data/1701114/000104746917...
This seems more like a liquidity raise to fund future growth that just happened to be timed incorrectly with respect to the Amazon / Whole Foods announcement.
I don't know anyone that has stuck with the program long term but boy do I hear about how great it is on the ads on all my podcasts.
I'm having blue apron tonight and I think it's a great product. Add salt and pepper to taste.
Perhaps once this IPO brings in much needed capital, Blue Apron can start bringing aboard celebrity chefs in promotional deals. Get Gordon Ramsay or Bobby Flay to contribute a recipe, ingredients and a couple YouTube videos and you might have something people will pay for. I'm sure they've thought of this already.
I suppose there's an argument to be made that none of these services have really broken out because no one has wrapped sexy celebrity-based marketing around their offering. (Added: And some of them have paired with celebrity chefs.) But I'm skeptical. Most of them do the localvore farm to table thing in spades. I doubt that celebrity chef endorsements and videos and a major missing ingredient.
But they need to get the customer acquisition costs down enough that they make good profit in that first year. After that, people will either lose interest in cooking or get so interested that they do their own shopping and recipes.
To get a lot of long-term customers would require a cultural shift. They are probably a bit early, but it might happen.
But, as you say, there's all this growth pressure to win the land grab and dominate the category which puts customer acquisition costs through the roof.
[Added: Having said that, I think churn is always going to be a problem with a business like this once the novelty wears off.]
You realise that isn't a chore, right? It's supposed to be fun.
If the ipo was not enough, I doubt they will be able to raise any more money at any reasonable valuation. They have a tough road ahead.
If your stock isn't publicly traded, you can't issue shares to buy new companies. Most acquisitions aren't all cash, they're a mix of cash and stock.
Wait, what? Between the ICO craze, the amazing levitating stock market, and things like a company that admits it probably won't ever make a dime of profit being able to IPO, I've been feeling like nothing in the financial world has made any sense for so long that I barely remember when it did.
[T]he Company believes that it will incur substantial operating losses for the foreseeable future, and that the rate at which such losses will be incurred will increase significantly from current levels. Although the Company has experienced significant revenue growth in recent periods, such growth rates are not sustainable and will decrease in the future. In view of the rapidly evolving nature of the Company's business and its limited operating history, the Company believes that period-to-period comparisons of its operating results are not necessarily meaningful and should not be relied upon as an indication of future performance.
http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=3847...
(edit:format)
The former is fairly common for companies to acknowledge in IPO documents, the latter would be noteworthy, but isn't the issue here