Last10K.com

Blue Apron Holdings, Inc. (APRN) SEC Filing 10-Q Quarterly Report for the period ending Thursday, March 31, 2022

Blue Apron Holdings, Inc.

CIK: 1701114 Ticker: APRN

Exhibit 99.1

Blue Apron Holdings, Inc. Reports First Quarter 2022 Results

Customer Growth Accelerates Quarter over Quarter

Post-Quarter Financings Strengthen Balance Sheet

New York, NY – May 9, 2022 – Blue Apron (NYSE: APRN) announced today financial results for the first quarter ended March 31, 2022 (1Q22).

First Quarter 2022 Highlights

Net revenue increased 16% from the pre-pandemic first quarter of 2020 (1Q20)(1) to $118 million, and 10% from the fourth quarter of 2021 (4Q21), as the company gains traction on its growth strategy
Key customer engagement metrics performed at elevated levels for the eighth quarter in a row
As planned, marketing expenses rose 40% year-over-year to $28 million as the company continues to drive growth in FY2022
The company achieved carbon neutrality as of March 31, 2022, through the purchase and retirement of carbon offsets
Following the end of 1Q22, the company announced a $70.5 million capital infusion through debt and equity financings; extending debt maturity through 2027
The company will host its inaugural investor day on May 10, 2022, at its fulfillment center in Linden, New Jersey

Linda Findley, Blue Apron’s President and Chief Executive Officer, commented, “The first quarter was another period of strong execution for the Blue Apron team. We continue to make progress on the foundational work we started back in 2019, and then accelerated in the fourth quarter of last year as we look to scale the business and drive customer growth. Targeted marketing investments aimed at improving brand awareness and reach, along with our innovative menu, strong product offering, and seasonality, drove a 9.2% quarter-over-quarter increase in customers, and we expect to continue to grow customers in the second quarter.”

Findley added, “we continue to expand our product and menu selection, recently launching a new breakfast offering while adding new four-serving menu options and Add-ons to meet evolving customer preferences. We also successfully met our commitment to become carbon neutral by March 31, 2022, offsetting, through the purchase of carbon offsets, our estimated Scope 1, Scope 2 and Scope 3 emissions. We are now focused on implementing systematic reductions to achieve our longer-term goal of achieving Net Zero. We look forward to providing more information on this and many other parts of the business at our inaugural investor day tomorrow, May 10, 2022.”

Randy Greben, Blue Apron’s Chief Financial Officer, commented, “We continued to build on the momentum generated in 4Q21 to propel our first-quarter performance, including material investments in marketing and our people while navigating a challenging inflationary environment. Total net revenue grew 10% over the fourth quarter of 2021 to $118 million, and we saw continued strength in our key customer engagement metrics including, Average Order Value, Average Revenue per Customer and Orders per Customer. Variable margin was a challenge at the beginning of the quarter but rebounded in the month of March. After the end of the quarter, we also successfully refinanced our senior secured term loan and announced a $40.5 million equity capital raise. When we complete the expected remaining $20.0 million private placement transaction at the end of this month, we expect to have approximately $80 million in cash, and we expect positive operating cash flow

1


The following information was filed by Blue Apron Holdings, Inc. (APRN) on Monday, May 9, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

Commission file number 001-38134

Blue Apron Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

    

81-4777373

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

28 Liberty Street, New York, New York

10005

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code (347) 719-4312

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

Trading Symbol

Name of Exchange on Which Registered

Class A Common Stock, $0.0001 par value per share

APRN

New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer 

Accelerated filer 

Smaller reporting company 

Emerging growth company 

Non-accelerated filer  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   No 

Indicate the number of shares outstanding of each class of the issuer’s common stock as of the latest practicable date.

Class

Number of Shares Outstanding

Class A Common Stock, $0.0001 par value

34,368,935 shares outstanding as of April 30, 2022

Class B Common Stock, $0.0001 par value

0 shares outstanding as of April 30, 2022

Class C Capital Stock, $0.0001 par value

0 shares outstanding as of April 30, 2022

BLUE APRON HOLDINGS, INC.

TABLE OF CONTENTS

    

 

PART I

FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements (unaudited)

4

Consolidated Balance Sheets

4

Consolidated Statements of Operations

5

Consolidated Statements of Stockholders’ Equity

6

Consolidated Statements of Cash Flows

7

Notes to Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

36

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

71

Item 4.

Mine Safety Disclosures

71

Item 5.

Other Information

71

Item 6.

Exhibits

72

SIGNATURES

73

1

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans, and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:

our ability, including the timing and extent, to successfully support the acceleration and execution of our growth strategy (including the ability to successfully increase marketing and technology improvements on our planned timeline), cost-effectively attract new customers and retain existing customers, including our ability to sustain any increase in demand resulting from both our growth strategy and the COVID-19 pandemic, and our ability to continue to expand our product offerings and distribution channels, and to continue to execute operational efficiency practices;
our expectations regarding our expenses and net revenue, including the impact of our planned price increase for our meal kit and wine products, our increased marketing expenditures, and our ability to grow revenue and adjusted EBITDA and to achieve or maintain profitability;
our expectations regarding, and the stability of, our supply chain, including potential shortages, interruptions and/or continued increased costs in the supply or delivery of ingredients, and parcel and freight carrier interruptions or delays and/or higher freight or fuel costs, as a result of inflation or otherwise;
changes in consumer behaviors, tastes, and preferences that could lead to changes in demand, including as a result of, among other things, the impact of and inflation or other macroeconomic factors¸ and to some extent, long-term impacts on consumer behavior, on consumer spending habits;
our ability to attract and retain qualified employees and personnel in sufficient numbers, both generally and in light of nationwide labor shortages as a result of COVID-19 or otherwise;
any material and adverse impact of the COVID-19 pandemic or any future surges, including as a result of new variants and subvariants of the virus, on our operations and results, such as challenges in employee recruiting and retention, any prolonged closures, or series of temporary closures, of one or both of our fulfillment centers, supply chain or carrier interruptions or delays, and any resulting need to cancel or shift customer orders;
our ability to effectively compete;
our ability to maintain and grow the value of our brand and reputation;

2

our ability to achieve our environmental, sustainability and corporate governance goals on our anticipated timeframe or at all;
our ability to maintain food safety and prevent food-borne illness incidents and our susceptibility to supplier-initiated recalls;
our ability, including the timing and extent, to sufficiently manage costs and to fund investments in our operations in amounts necessary to maintain compliance with financial, environmental, social, and governance (“ESG”), and other covenants under our indebtedness while continuing to support the execution and acceleration of our growth strategy;
our ability to comply with modified or new laws and regulations applying to our business, or the impact that such compliance may have on our business;
our vulnerability to adverse weather conditions, natural disasters, wars, and public health crises, including pandemics; and
our ability to obtain and maintain intellectual property protection.

While we may elect to update these forward-looking statements at some point in the future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the extent required by applicable law.

3

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

BLUE APRON HOLDINGS, INC.

Consolidated Balance Sheets

(In thousands, except share and per-share data)

(Unaudited)

March 31, 

December 31, 

2022

2021

ASSETS

  

 

  

CURRENT ASSETS:

  

 

  

Cash and cash equivalents

$

55,991

$

82,160

Accounts receivable, net

 

112

 

234

Related party receivables

9,000

Inventories, net

 

25,034

 

24,989

Prepaid expenses and other current assets

 

13,264

 

12,249

Total current assets

 

103,401

 

119,632

Property and equipment, net

 

104,195

 

108,355

Other noncurrent assets

 

4,328

 

3,719

TOTAL ASSETS

$

211,924

$

231,706

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

CURRENT LIABILITIES:

 

  

 

  

Accounts payable

$

39,675

$

27,962

Related party payables

3,000

Accrued expenses and other current liabilities

 

24,738

 

31,951

Current portion of long-term debt

571

3,500

Deferred revenue

 

14,437

 

7,958

Warrant obligation

3,848

8,001

Total current liabilities

 

86,269

 

79,372

Long-term debt

28,200

25,886

Facility financing obligation

35,859

35,886

Other noncurrent liabilities

 

8,854

 

10,509

TOTAL LIABILITIES

 

159,182

 

151,653

Commitments and contingencies (Note 10)

 

  

 

  

STOCKHOLDERS’ EQUITY:

 

  

 

  

Class A common stock, par value of $0.0001 per share — 1,500,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 32,660,579 and 31,694,400 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

3

3

Class B common stock, par value of $0.0001 per share — 175,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

Class C capital stock, par value of $0.0001 per share — 500,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021

Additional paid-in capital

 

757,702

 

746,564

Accumulated deficit

 

(704,963)

 

(666,514)

TOTAL STOCKHOLDERS’ EQUITY

 

52,742

 

80,053

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

211,924

$

231,706

The accompanying notes are an integral part of these Consolidated Financial Statements.

4

BLUE APRON HOLDINGS, INC.

Consolidated Statements of Operations

(In thousands, except share and per-share data)

(Unaudited)

Three Months Ended

March 31, 

2022

    

2021

Net revenue

$

117,751

$

129,706

Operating expenses:

Cost of goods sold, excluding depreciation and amortization

 

79,490

 

81,592

Marketing

 

27,914

 

19,940

Product, technology, general and administrative

 

43,257

 

36,551

Depreciation and amortization

5,404

5,620

Total operating expenses

 

156,065

 

143,703

Income (loss) from operations

 

(38,314)

 

(13,997)

Interest income (expense), net

(1,770)

(1,708)

Other income (expense), net

 

1,646

 

Income (loss) before income taxes

 

(38,438)

 

(15,705)

Benefit (provision) for income taxes

 

(11)

 

(16)

Net income (loss)

$

(38,449)

$

(15,721)

Net income (loss) per share attributable to Class A and Class B common stockholders:

Basic

$

(1.19)

$

(0.88)

Diluted

$

(1.19)

$

(0.88)

Weighted-average shares used to compute net income (loss) per share attributable to Class A and Class B common stockholders:

Basic

32,288,424

17,939,682

Diluted

32,288,424

17,939,682

The accompanying notes are an integral part of these Consolidated Financial Statements.

5

BLUE APRON HOLDINGS, INC.

Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

Class A

Class B

Additional

Total

Common Stock

Common Stock

Paid-In

Accumulated

Stockholders'

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Equity

2022

Balance — December 31, 2021

31,694,400

$

3

$

$

746,564

$

(666,514)

$

80,053

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

120,981

0

0

Issuance of common stock upon exercise of warrants

488,055

0

4,096

4,096

Issuance of common stock from the February 2022 Private Placement, net of issuance costs

357,143

0

4,809

4,809

Share-based compensation

2,233

2,233

Net income (loss)

(38,449)

(38,449)

Balance — March 31, 2022

32,660,579

$

3

$

$

757,702

$

(704,963)

$

52,742

2021

Balance — December 31, 2020

 

14,365,664

$

1

3,493,791

$

1

$

642,106

$

(578,133)

$

63,975

Conversion from Class B to Class A common stock

100,000

0

(100,000)

(0)

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

191,595

0

0

Share-based compensation

2,366

2,366

Net income (loss)

(15,721)

(15,721)

Balance — March 31, 2021

 

14,657,259

$

1

3,393,791

$

1

$

644,472

$

(593,854)

$

50,620

The accompanying notes are an integral part of these Consolidated Financial Statements.

6

BLUE APRON HOLDINGS, INC.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

March 31, 

2022

    

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

(38,449)

$

(15,721)

Adjustments to reconcile net income (loss) to net cash from (used in) operating activities:

Depreciation and amortization of property and equipment

 

5,404

 

5,620

Loss (gain) on disposal of property and equipment

 

135

 

Changes in fair value of warrant obligation

(1,646)

Changes in reserves and allowances

 

20

 

131

Share-based compensation

 

2,173

 

2,319

Non-cash interest expense

260

215

Changes in operating assets and liabilities:

Accounts receivable

 

122

 

(54)

Related party receivables

(9,000)

Inventories

 

(107)

 

(4,550)

Prepaid expenses and other current assets

 

(1,348)

 

(1,793)

Accounts payable

 

11,722

 

8,051

Related party payables

3,000

Accrued expenses and other current liabilities

 

(7,169)

 

(7,828)

Deferred revenue

 

6,479

 

968

Other noncurrent assets and liabilities

 

(394)

 

691

Net cash from (used in) operating activities

 

(28,798)

 

(11,951)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

 

(1,321)

 

(1,746)

Proceeds from sale of property and equipment

55

54

Net cash from (used in) investing activities

 

(1,266)

 

(1,692)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from February 2022 Private Placement, net of issuance costs

4,809

Repayments of debt

(875)

(875)

Payments of debt issuance costs

(69)

Principal payments on capital lease obligations

 

(38)

 

(53)

Net cash from (used in) financing activities

 

3,896

 

(997)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

(26,168)

 

(14,640)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period

 

83,597

 

45,842

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period

$

57,429

$

31,202

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest

$

1,469

$

1,490

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:

Non-cash additions to property and equipment

$

67

$

70

Purchases of property and equipment in Accounts payable and Accrued expenses and other current liabilities

$

429

$

326

The accompanying notes are an integral part of these Consolidated Financial Statements.

7

BLUE APRON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization and Description of Business

When used in these notes, Blue Apron Holdings, Inc. and its subsidiaries are collectively referred to as the “Company.”

The Company designs original recipes with fresh, seasonally-inspired produce and high-quality ingredients, which are sent directly to customers for them to prepare, cook, and enjoy. The Company creates meal experiences around original recipes every week based on what’s in-season with farming partners and other suppliers. Customers can choose which recipes they would like to receive in a given week, and the Company delivers those recipes to their doorsteps along with the pre-portioned ingredients required to cook those recipes.

In addition to meals, the Company sells wine through Blue Apron Wine, a direct-to-consumer wine delivery service. The Company also sells a curated selection of cooking tools, utensils, pantry items, and add-on products for different culinary occasions through Blue Apron Market, its e-commerce market.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The unaudited interim Consolidated Financial Statements (the “Consolidated Financial Statements”) have been prepared on the same basis as the audited Consolidated Financial Statements, and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2022 and December 31, 2021, results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2022 (the “Annual Report”). There have been no material changes in the Company's significant accounting policies from those that were disclosed in Note 2, Summary of Significant Accounting Policies, included in the Annual Report, except those additional significant policies as described within the accompanying notes to the Consolidated Financial Statements.

The accompanying Consolidated Financial Statements include the accounts of Blue Apron Holdings, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company prepares its Consolidated Financial Statements and related disclosures in conformity with accounting principles generally accepted in the United States (“GAAP”).

Use of Estimates

In preparing its Consolidated Financial Statements in accordance with GAAP, the Company is required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs, and expenses, and disclosure of contingent assets and liabilities which are reported in the Consolidated Financial Statements and accompanying disclosures. The accounting estimates that require the most difficult and subjective judgments include revenue recognition, inventory valuation, leases, the fair value of share-based awards, the fair value of the Blue Torch warrant obligation, recoverability of long-lived assets, and the recognition and measurement of contingencies. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from the Company’s estimates and assumptions.

8

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act. This classification has allowed the Company to elect to take advantage of the extended transition period afforded for the implementation of new or revised accounting standards. The Company expects to lose its emerging growth company status on December 31, 2022, and as a result, will adopt all accounting pronouncements currently deferred under the emerging growth company election according to public company standards beginning with its Annual Report on Form 10-K for the year ending December 31, 2022, including interim period disclosures within that filing. The adoption dates for the new accounting pronouncements disclosed below have been presented accordingly.

Smaller Reporting Company Status

The Company is a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, and therefore qualifies for reduced disclosure requirements for smaller reporting companies.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued its standard on lease accounting, Accounting Standards Update No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases. Subsequent to February 2016, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, ASU No. 2019-01, Leases (Topic 842): Codification Improvements, ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, to improve and clarify certain aspects of ASU No. 2016-02, as well as to defer its effective date for certain entities, and ASU No. 2021-05, Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments. For the Company, the new standard is effective for annual periods beginning January 1, 2022, and interim periods beginning January 1, 2023. Upon adoption of this standard, the Company expects to recognize, on a discounted basis, its minimum commitments under non-cancelable operating leases on the Consolidated Balance Sheets resulting in the recording of right-of-use assets and lease obligations. The Company is currently evaluating any additional impacts this guidance will have on its Consolidated Financial Statements.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standard is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, as well as improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For the Company, the amendments in ASU 2019-12 are effective for annual periods beginning January 1, 2022, and interim periods beginning January 1, 2023. The Company is evaluating the impact this new guidance may have on its Consolidated Financial Statements.

In March 2020, the FASB issued Accounting Standards Update No. 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard is intended to provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The guidance was effective upon issuance, and may be applied prospectively through December 31, 2022. The application of the guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

9

3. Inventories, Net

Inventories, net consist of the following:

March 31, 

December 31, 

    

2022

    

2021

(In thousands)

Fulfillment

$

2,077

$

1,879

Product

 

22,957

 

23,110

Inventories, net

$

25,034

$

24,989

Product inventory primarily consists of bulk and prepped food, containers, products available for resale, and wine products. Fulfillment inventory consists of packaging used for shipping and handling. Product and fulfillment inventories are recognized as components of Cost of goods sold, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations when sold.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

March 31, 

December 31, 

    

2022

    

2021

(In thousands)

Prepaid insurance

9,206

6,929

Other current assets

 

4,058

 

5,320

Prepaid expenses and other current assets

$

13,264

$

12,249

5. Restricted Cash

Restricted cash reflects pledged cash deposited into savings accounts that is used as security primarily for fulfillment centers and office space leases.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts reported in the Consolidated Statements of Cash Flows:

March 31, 

December 31, 

2022

    

2021

(in thousands)

Cash and cash equivalents

$

55,991

$

82,160

Restricted cash included in Prepaid expenses and other current assets

330

608

Restricted cash included in Other noncurrent assets

1,108

829

Total cash, cash equivalents, and restricted cash

$

57,429

$

83,597

March 31, 

December 31, 

2021

    

2020

(in thousands)

Cash and cash equivalents

$

29,556

$

44,122

Restricted cash included in Prepaid expenses and other current assets

536

610

Restricted cash included in Other noncurrent assets

1,110

1,110

Total cash, cash equivalents, and restricted cash

$

31,202

$

45,842

10

6. Property and Equipment, Net

Property and equipment, net consists of the following:

March 31, 

December 31, 

2022

    

2021

(In thousands)

Computer equipment

$

11,919

 

$

11,556

Capitalized software

24,498

 

24,163

Fulfillment equipment

51,866

 

52,058

Furniture and fixtures

2,730

 

2,730

Leasehold improvements

32,687

 

32,507

Buildings(1)

114,877

114,877

Construction in process(2)

2,203

 

1,746

Property and equipment, gross

240,780

 

239,637

Less: accumulated depreciation and amortization

(136,585)

 

(131,282)

Property and equipment, net

$

104,195

$

108,355

(1)Buildings includes a build-to-suit lease arrangement in Linden, New Jersey where the Company is considered the owner for accounting purposes, and as of March 31, 2022 and December 31, 2021, contained $31.3 million of the capitalized fair value of the building, $80.8 million of costs incurred directly by the Company relating to this arrangement, and $2.8 million of capitalized interest for related construction projects. The Company capitalized the cost of interest for the related construction projects based on the applicable capitalization rate for the project.
(2)Construction in process includes all costs capitalized related to projects that have not yet been placed in service.

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

March 31, 

December 31, 

    

2022

    

2021

(In thousands)

Accrued compensation

$

11,119

$

14,848

Accrued credits and refunds reserve

 

1,215

 

1,258

Accrued marketing expenses

3,271

7,095

Accrued shipping expenses

 

2,151

 

1,344

Other current liabilities

 

6,982

 

7,406

Accrued expenses and other current liabilities

$

24,738

$

31,951

8. Deferred Revenue

Deferred revenue consists of the following:

March 31, 

December 31, 

2022

2021

(In thousands)

Cash received prior to fulfillment

$

3,388

$

4,861

Gift cards, prepaid orders, and other

11,049

3,097

Deferred revenue

$

14,437

$

7,958

Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company has two types of contractual liabilities: (i) cash collections from its customers prior to delivery of products purchased, which are included in Deferred revenue on the Consolidated Balance Sheets, and are recognized as revenue

11

upon transfer of control of its products, and (ii) unredeemed gift cards and other prepaid orders, which are included in Deferred revenue on the Consolidated Balance Sheets, and are recognized as revenue when gift cards are redeemed and the products are delivered. Certain gift cards are not expected to be redeemed, also known as breakage, and are recognized as revenue over the expected redemption period, subject to requirements to remit balances to governmental agencies.

Contractual liabilities included in Deferred revenue on the Consolidated Balance Sheets were $14.4 million and $8.0 million as of March 31, 2022 and December 31, 2021, respectively. During the three months ended March 31, 2022, the Company recognized $6.1 million to Net revenue from the Deferred revenue as of December 31, 2021.

9. Debt

On October 16, 2020, the Company entered into a financing agreement which provided for a senior secured term loan in the aggregate principal amount of $35.0 million that matured in March 2023 (the “2020 Term Loan”).

On May 5, 2021, the Company amended the financing agreement relating to the 2020 Term Loan (the “Amendment”), which modified certain provisions of the financing agreement, as well as provided for a $5.0 million term loan, that was funded into an escrow account (the “2021 Term Loan”) and was considered qualified cash for purposes of the minimum liquidity covenant as described below. The 2021 Term Loan bore interest at a rate equal to LIBOR (subject to a 1.50% floor) plus 10.00% per annum and matured at the same time as the 2020 Term Loan. The Amendment also increased the interest rate margin on the 2020 Term Loan by 1.00% per annum. Pursuant to the Amendment, the 2021 Term Loan was released in full from the escrow account to the lenders upon the Company’s completion of an underwritten public offering in June 2021. As of March 31, 2022, the 2020 Term Loan bore interest at a rate equal to LIBOR (subject to a 1.50% floor) plus 9.00% per annum.

In connection with the Amendment, the Company agreed to prospectively grant warrants (the “Blue Torch warrant obligation”) to the lenders. Under the terms of the Blue Torch warrant obligation, so long as the 2020 Term Loan remained outstanding, on the first day of each quarter beginning on July 1, 2021, the Company issued a warrant to the lenders to purchase at an exercise price of $0.01 per share such number of shares of Class A common stock of the Company as equaled 0.50% of the then outstanding shares of common stock of the Company, on a fully-diluted basis.

The Blue Torch warrant obligation was accounted for in accordance with ASC 815-40, Contracts in an Entity’s Own Equity, as a liability recognized at fair value as of the closing date, due to certain settlement provisions within the corresponding warrant obligation provisions under the financing agreement that did not meet the criteria to be classified in stockholders’ equity. The Blue Torch warrant obligation was remeasured to fair value at each balance sheet date, with changes in fair value recorded in Other income (expense), net in the Consolidated Statements of Operations.

On May 2, 2022, the Company’s lenders exercised their April 1, 2022 warrant issuance, resulting in the issuance of 235,329 shares of the Company’s Class A common stock and no further liability-classified warrants outstanding. See Note 15 for further discussion.

In addition, on May 5, 2022, the Company fully repaid the 2020 Term Loan with the proceeds of its senior secured notes and cash on hand and terminated its financing agreement effective as of the same date, which also resulted in the termination of the warrant obligation. See Note 15 and Note 16 for further discussion.

12

In accordance with ASC 835-30, Imputation of Interest, the Company amortizes debt issuance costs as interest expense using the interest method over the life of the debt. The following table summarizes the presentation of the Company’s debt balances in the Consolidated Balance Sheets as of the dates indicated below:

2020 Term Loan

Debt issuance costs, net

Net

(In thousands)

March 31, 2022

Current portion of long-term debt

$

1,550

$

(979)

$

571

Long-term debt

28,200

28,200

Total

$

29,750

$

(979)

$

28,771

December 31, 2021

Current portion of long-term debt

$

3,500

$

$

3,500

Long-term debt

27,125

(1,239)

25,886

Total

$

30,625

$

(1,239)

$

29,386

The borrower under the 2020 Term Loan was the Company’s wholly-owned subsidiary, Blue Apron, LLC. The obligations under the 2020 Term Loan were guaranteed by Blue Apron Holdings, Inc. and its subsidiaries other than the borrower, and secured by substantially all of the assets of the borrower and the guarantors. The 2020 Term Loan contained certain restrictive covenants, financial covenants, and affirmative and financial reporting covenants restricting the Company and the Company’s subsidiaries’ activities. Restrictive covenants included limitations on the incurrence of indebtedness and liens, restrictions on affiliate transactions, restrictions on the sale or other disposition of collateral, and limitations on dividends and stock repurchases. As of March 31, 2022, financial covenants included a requirement to maintain a minimum aggregate liquidity balance of $20.0 million at all times and a minimum subscription count (defined in the 2020 Term Loan as the number of all active customers on the Company’s internal account list) of 320,000 on any determination date.

As of March 31, 2022, the Company was in compliance with all of the covenants under the 2020 Term Loan.

Facility Financing Obligation

As of March 31, 2022 and December 31, 2021, the Company had a facility financing obligation of $35.9 million and $35.9 million, respectively, related to the leased facility in Linden under the build-to-suit accounting guidance.

13

10. Commitments and Contingencies

The Company records accruals for loss contingencies associated with legal matters when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. If the Company determines that a loss is reasonably possible, the Company discloses the matter, and, if estimable, the amount or range of the possible loss in the notes to the Consolidated Financial Statements.

In addition, from time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Although the results of such litigation and claims cannot be predicted with certainty, the Company currently believes that there are no ordinary course matters that will have a material adverse effect on its business, operating results, financial conditions, or cash flows.

11. Stockholders’ Equity

February 2022 Private Placement

On February 14, 2022, the Company entered into a purchase agreement with RJB Partners LLC (“RJB”), an affiliate of Joseph N. Sanberg, an existing stockholder of the Company, under which the Company agreed to issue and sell to RJB units consisting of Class A common stock and warrants to purchase shares of Class A common stock in a private placement (the “February 2022 Private Placement”) which closed concurrently with the execution of the purchase agreement for an aggregate purchase price of $5.0 million (or $14.00 per unit). In the aggregate, RJB received (i) 357,143 shares of Class A common stock, and (ii) warrants to purchase 500,000 shares of Class A common stock at exercise prices of $15.00 per share, $18.00 per share, and $20.00 per share, resulting in approximately $4.8 million of proceeds, net of issuance costs.

The shares of Class A common stock and warrants were issued separately and constitute separate securities. The Company conducted an assessment of the classification of the warrants issued in the February 2022 Private Placement and, based on their terms, concluded the warrants were equity-classified. Accordingly, the net proceeds were recorded within Additional paid-in capital.

Each equity-classified warrant issued by the Company has a term of seven years from the date of issuance. Each such warrant may only be exercised for cash, except in connection with certain fundamental transactions, and no fractional shares will be issued upon exercise of the warrants. The warrants are non-transferable, except in limited circumstances, and have not been and will not be listed or otherwise trade on any stock exchange. The number of shares issuable upon exercise of the warrants and the applicable exercise prices is subject to adjustment upon the occurrence of certain events.

As of March 31, 2022, the equity-classified warrants issued by the Company were as follows:

Exercise Price

Issued

Exercised

Outstanding as of
March 31, 2022

$

15.00

6,525,714

-

6,525,714

$

18.00

3,262,857

-

3,262,857

$

20.00

1,631,429

-

1,631,429

14

12. Share-based Compensation

The Company recognized share-based compensation for share-based awards in Cost of goods sold, excluding depreciation and amortization, and Product, technology, general and administrative expenses as follows:

Three Months Ended

March 31, 

2022

  

2021

(In thousands)

Cost of goods sold, excluding depreciation and amortization

$

2

$

16

Product, technology, general and administrative

2,171

2,303

Total share-based compensation

$

2,173

$

2,319

In February 2022, the Company granted 247,161 shares of performance-based restricted stock units of its Class A common stock to certain employees, including the Company’s executive officers. Such units are subject to vesting conditions that are tied to the performance of the Company's stock price relative to the performance of a peer group of publicly traded companies’ stock price over a performance period beginning February 25, 2022 through February 25, 2025. The Company utilized the Monte Carlo simulation valuation model to value the grant as it was determined to include a market condition. The total grant date fair value was $1.3 million, and will be recognized on a straight-line basis over the performance period of three years.

13. Related Party Transactions

Due to their status as beneficial owners of more than 10 percent (10%) of the voting power of the outstanding capital stock of the Company, Joseph N. Sanberg and his affiliate, RJB, meet the definition of “related parties” per ASC 850, Related Party Disclosures.

Gift Card Sponsorship Agreements

On March 11, 2022, the Company entered into a Gift Card Sponsorship Agreement with an affiliate of Joseph N. Sanberg, pursuant to which the Sanberg affiliate agreed to pay the Company a $9.0 million sponsorship fee to support a marketing program through which the Company would distribute unredeemed gift cards to customers, at the Company’s sole discretion, in order to support its growth strategy, and was included in Deferred revenue on the Consolidated Balance Sheet as of March 31, 2022.

On May 5, 2022, the Company entered into an additional Gift Card Sponsorship Agreement with an affiliate of Mr. Sanberg. See Note 16 for further discussion.

Sustainability and Carbon Credit Agreement

On March 31, 2022, the Company entered into a Sustainability and Carbon Credit Agreement with an affiliate of Joseph N. Sanberg. Under the terms of the agreement, the Company purchased and subsequently retired $3.0 million of carbon offsets, which were recognized in Product, technology, general and administrative expenses during the three months ended March 31, 2022.

The affiliate of Mr. Sanberg also performed the assessment of the Company’s carbon footprint that provided it with the basis for determining the amount of carbon offsets the Company needed to purchase. The fee for these services was waived as a condition of entering into the Sustainability and Carbon Credit Agreement.

2022 Private Placements

On February 14, 2022, the Company entered into a purchase agreement with RJB, under which the Company agreed to issue and sell to RJB units of Class A common stock and warrants to purchase shares of Class A common stock in the February 2022 Private Placement, for an aggregate purchase price of $5.0 million (or $14.00 per unit). See Note 11 for further discussion of the February 2022 Private Placement.

15

On April 29, 2022, the Company entered into additional respective purchase agreements with RJB and Linda Findley, a director of the Company and its President and Chief Executive Officer. See Note 16 for further discussion of the April 2022 Private Placements.

14. Earnings per Share

Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period.

Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of common shares, including potential dilutive common shares assuming the dilutive effect of outstanding common stock options, restricted stock units, and warrants. For periods in which the Company has reported net loss, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Three Months Ended March 31, 

2022

2021

Class A

  

Class B

Class A

Class B

(In thousands, except share and per-share data)

Numerator:

  

 

  

Net income (loss) attributable to common stockholders

$

(38,449)

$

$

(12,707)

$

(3,014)

Denominator:

 

 

 

 

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders—basic

 

32,288,424

 

 

14,500,335

 

3,439,347

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders—diluted

 

32,288,424

 

 

14,500,335

 

3,439,347

Net income (loss) per share attributable to common stockholders—basic (1)

$

(1.19)

$

$

(0.88)

$

(0.88)

Net income (loss) per share attributable to common stockholders—diluted (1)

$

(1.19)

$

$

(0.88)

$

(0.88)

(1)Net income (loss) per share attributable to common stockholders — basic and net income (loss) per share attributable to common stockholders — diluted may not recalculate due to rounding.

The following have been excluded from the computation of diluted net income (loss) per share attributable to common stockholders as their effect would have been antidilutive:

Three Months Ended March 31, 

2022

2021

  

Class A

  

Class B

  

Class A

  

Class B

Stock options

35,970

51,897

Restricted stock units

2,216,920

1,994,341

Warrants

11,420,000

Total anti-dilutive securities

13,672,890

1,994,341

51,897

15. Fair Value Measurements

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs are developed using market data, such as publicly available

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information about actual events or transactions, and reflect the assumptions that market participants would use when pricing the asset or liability. Unobservable inputs are inputs for which market data is not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.

The fair value hierarchy consists of the following three levels:

Level 1 — Quoted market prices in active markets for identical assets or liabilities.

Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

The Company uses observable market data when available, and minimizes the use of unobservable inputs when determining fair value.

The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):

March 31, 2022

    

Level 1

    

Level 2

    

Level 3

    

Total

(In thousands)

Assets:

 

  

 

  

 

  

 

  

Cash and cash equivalents:

Money market accounts

$

2,636

$

$

$

2,636

Total assets measured at fair value

$

2,636

$

$

$

2,636

Liabilities:

 

  

 

  

 

  

 

  

Warrant obligation

$

$

$

3,848

$

3,848

Total liabilities measured at fair value

$

$

$

3,848

$

3,848

December 31, 2021

    

Level 1

    

Level 2

    

Level 3

    

Total

(In thousands)

Assets:

 

  

 

  

 

  

 

  

Cash and cash equivalents:

Money market accounts

$

2,635

$

$

$

2,635

Total assets measured at fair value

$

2,635

$

$

$

2,635

Liabilities:

 

  

 

  

 

  

 

  

Warrant obligation

$

$

$

8,001

$

8,001

Other noncurrent liabilities:

Warrant obligation

1,588

1,588

Total liabilities measured at fair value

$

$

$

9,589

$

9,589

Money market accounts

Money market accounts are classified within Level 1 of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets. The carrying amount of the Company’s money market accounts approximates fair value due to their short-term maturities.

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Warrant obligation

The Blue Torch warrant obligation issued in conjunction with the Amendment, as discussed in Note 9, was accounted for in accordance with ASC 815-40, Contracts in an Entity’s Own Equity, as a liability recognized at fair value, and is remeasured as of each balance sheet date with changes in fair value recorded in Other income (expense), net in the Consolidated Statements of Operations. The amount of each warrant to be issued under the obligation set forth in the financing agreement was based upon 0.50% of the then-outstanding shares of the Company’s common stock on a fully-diluted basis on the first day of each quarter, beginning on July 1, 2021, so long as the 2020 Term Loan remained outstanding. As such, the fair value of the Blue Torch warrant obligation was calculated using the estimated amount of warrants to be issued over the life of the financing agreement multiplied by the price of the Company’s stock as of the closing date, less $0.01 per share to represent each warrant’s exercise price. The estimated amount of shares to be issued was derived from the Company’s estimate of shares of the Company’s common stock on a fully-diluted basis over the life of the financing agreement.

On May 2, 2022, the Company’s lenders exercised their April 1, 2022 warrant issuance, resulting in the issuance of 235,329 shares of the Company’s Class A common stock and no further liability-classified warrants outstanding. See Note 9 for further discussion.

In addition, on May 5, 2022, the Company fully repaid the 2020 Term Loan with the proceeds of its senior secured notes and cash on hand and terminated its financing agreement effective as of the same date, which also resulted in the termination of the warrant obligation. See Note 9 and Note 16 for further discussion.

The following table summarizes the changes of the Blue Torch warrant obligation as of March 31, 2022 and December 31, 2021:

Balance as of December 31, 2021

Loss (gain) on changes in stock price

Loss (gain) on changes in estimated common stock on a fully-diluted basis

Exercise of warrants

Balance as of March 31, 2022

(In thousands)

Warrant obligation

$

9,589

$

(1,755)

$

110

$

(4,096)

$

3,848

16. Subsequent Events

April 2022 Private Placements

On April 29, 2022, the Company entered into a purchase agreement with RJB, an affiliate of Joseph N. Sanberg, an existing shareholder. The purchase agreement provided for, among other things (i) in a private placement which closed concurrently with the execution of the purchase agreement, the issuance and sale to Long Live Bruce, LLC, an affiliate of Joseph N. Sanberg, which was assigned RJB’s rights to purchase the foregoing shares, 1,666,666 shares of Class A common stock for an aggregate purchase price of $20.0 million (or $12.00 per share), and (ii) in a separate private placement, which is expected to close by May 30, 2022, the sale and purchase by RJB of 1,666,667 shares of Class A common stock for an aggregate purchase price of $20.0 million (or $12.00 per share).

In addition, on April 29, 2022, the Company entered into a purchase agreement with Linda Findley, a director of the Company and its President and Chief Executive Officer, under which the Company agreed to issue and sell to Ms. Findley in a separate private placement, which closed concurrently with the execution of the purchase agreement, 41,666 shares of Class A common Stock for an aggregate purchase price of $0.5 million (or $12.00 per share)(collectively, the “April 2022 Private Placements”).

Gift Card Sponsorship Agreement

On May 5, 2022, the Company entered into a Gift Card Sponsorship Agreement with an affiliate of Joseph N. Sanberg, pursuant to which the Sanberg affiliate agreed to pay the Company a $20.0 million sponsorship fee during the

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second quarter of 2022 to support a marketing program through which the Company will distribute unredeemed gift cards to customers, at the Company’s sole discretion, in order to support its growth strategy.

Note Purchase Agreement and Financing Agreement Termination

On May 5, 2022 (the “issue date”), the Company entered into a Note Purchase and Guarantee Agreement (the “note purchase agreement”), which provides for, among other things, the issuance of $30.0 million in aggregate principal amount of senior secured notes due May 5x, 2027 (the “senior secured notes”) at a purchase price equal to 94.00% thereof. The proceeds of the senior secured notes were used, together with cash on hand, to repay in full the outstanding amount under the 2020 Term Loan and pay fees and expenses in connection with the transactions contemplated by the note purchase agreement. The Company subsequently terminated its financing agreement, effective as of the same date.

Subject to the terms of the note purchase agreement, the senior secured notes bear interest at a rate equal to 8.875% per annum, payable in arrears on June 30 and December 31 each calendar year, with a step-up to 11.875% in the event the senior secured notes are rated below “B3” from Moody’s, “B(low)” from DBRS, or “B-” from S&P or Fitch. In addition, if the senior secured notes are rated below “B3” from Moody’s, “B(low)” from DBRS, or “B-” from S&P or Fitch after the issue date, the Company will be required to pay a true-up fee equal to 3.00% per annum from the issue date to the next succeeding interest payment date of June 30, 2022. The senior secured notes will amortize semi-annually in equal installments of $1.5 million beginning on December 31, 2025, with the remaining unpaid principal amount of the senior secured notes due on May 5, 2027.

The note purchase agreement contains two financial maintenance covenants:

a minimum liquidity covenant of:
i.for any date ending prior to or ending on June 30, 2022, $15.0 million;
ii.for any date thereafter:
$15.0 million if the Company’s Asset Valuation (as defined in the note purchase agreement) is greater than $25.0 million;
$20.0 million if its Asset Valuation is greater than $20.0 million but less than $25.0 million; or
$25.0 million if its Asset Valuation is less than or equal to $20.0 million; and
a covenant requiring it to maintain a minimum Asset Coverage Ratio (as defined in the note purchase agreement) of at least 1.25 to 1.00.

The Company has also agreed to use commercially reasonable efforts to cause 90% of the packaging for its meal kit boxes to be recyclable, reusable, or compostable (the “ESG KPI Goal”); the failure to achieve the ESG KPI Goal prior to the date on which the senior secured notes are due will require the Company to pay a fee equal to 1% of the principal amount of the senior secured notes.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is meant to provide material information relevant to an assessment of the financial condition and results of operations of our company, including an evaluation of the amounts and certainty of cash flows from operations and from outside resources, so as to allow investors to better view our company from management’s perspective. You should read the following discussion of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled “Risk Factors” under Part II, Item 1A, below. In this discussion, we use certain financial measures that are considered non-GAAP financial measures under Securities and Exchange Commission rules. These rules require supplemental explanation and reconciliation, which is included elsewhere in this Quarterly Report on Form 10-Q. Investors should not consider non-GAAP financial measures in isolation from or in substitution for financial information presented in compliance with U.S. generally accepted accounting principles (“GAAP”). In the below discussion, we use the term basis points to refer to units of one-hundredth of one percent.

Overview

Blue Apron’s vision is “better living through better food.” Founded in 2012, we are on a mission to spark discovery, connection, and joy through cooking. We offer fresh, chef-designed recipes that empower our customers to embrace their culinary curiosity and challenge their abilities to see what a difference cooking quality food can make in their lives.

Our core product is the meal experience we help our customers create. These experiences extend from discovering new recipes, ingredients, and cooking techniques to preparing meals with families and loved ones to sharing photos and stories of culinary triumphs. Central to these experiences are the original recipes we design with fresh, seasonally-inspired produce and high-quality ingredients sent directly to our customers. We do this by employing technology and expertise across many disciplines – demand planning, recipe creation, procurement, recipe merchandising, fulfillment operations, distribution, customer service, and marketing – to drive our end-to-end value chain.

We offer our customers four weekly meal plans—a Two Serving Signature Plan, a Two-Serving Vegetarian Plan, a Two-Serving Wellness Plan, and a Four-Serving Signature Plan. In addition, customers can add up to two Add-ons recipes to each box, which includes appetizers, side dishes or desserts, and/or Heat & Meat meals, which are pre-made meals ready to heat and eat in minutes. We also sell wine, which can be paired with our meals, through Blue Apron Wine, our direct-to-consumer wine delivery service. Through Blue Apron Market, our e-commerce market, we sell a curated selection of cooking tools, utensils, pantry items, add-on products for different culinary occasions, which are tested and recommended by our culinary team, and à la carte wine offerings. Our products are available to purchase through our website and mobile app.

Key Financial and Operating Metrics

We use the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. You should read the key financial and operating metrics in conjunction with the following discussion of our results of

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