Bidz Q1 SEC Filing: Revenues Rose 67% to $34.6 Million, Cartier Sues Bidz

[mandy]

full first quarter SEC filing: http://www.sec.gov/Archives/edgar/data/1...8_110q.htm

Highlights:

Results of Operations

Comparison of Three Months Ended March 31, 2005 with Three Months Ended March 31, 2006

Net Revenue

Net revenue increased 67.4% to $34.7 million in the three months ended March 31, 2006 from $20.7 million in 2005. This increase in net revenue was due to the increase in both the number of orders and the increase in the average dollar amount per order. The increase in the number of orders was primarily the result of the 63,618 new buyers we attracted during the three months ended March 31, 2006.

Gross Profit

Gross profit increased 145% to $9.2 million  in the three months ended March 31, 2006 from $3.7 million in 2005. Gross profit as a percentage of net revenue increased to 26.5% in the three months ended March 31, 2006 from 18.1% in 2005. The increase in gross profit as a percentage of net revenue resulted primarily from a combination of our ability to attract additional buyers to our website, our ability to manage the supply of items being sold, implementation of a 3% auction transaction fee in November 2005, and increased margin on shipping and handling charges. We expect the 3% auction transaction fee will have a significant impact on the gross margin in 2006 compared with 2005, as there are no significant additional costs associated with this fee.

We anticipate that the gross profit as a percentage of revenue will be lower for the second and third quarter periods of 2006 compared to the three months ended March 31, 2006 as the second and third quarters are seasonally weak periods for jewelry sales.

Cartier v. Bidz.com

We are a defendant in a lawsuit filed by Cartier, and Cartier International, B.V., in the United States District Court Southern District of New York in April 2006. The lawsuit alleges that Cartier has proprietary rights, including trade dress, patents, trademarks, copyrights and others, in watch designs known as a Tank, Tank Francaise, Tank Americaine, Panthere and Pasha De Cartier Grille, and Tank Devan, and further alleges that we have infringed upon those rights by selling watches bearing copies of one or more of the watch designs. We intend to defend the lawsuit vigorously. We do not believe the outcome of the case will have a materially adverse effect on our financial position.