April 25, 2008, 12:00 AM

E-commerce platform provider GSI reports revenue up 34% in first quarter

GSI Commerce reported net revenue of $195.5 million, up from $146.3 million in the same quarter a year ago. The company reiterated its projection of $1 billion in sales for 2008, which would be a 33% increase from $750 million in 2007.

E-commerce platform provider GSI Commerce Inc. has reported a 34% increase in first quarter revenue and reiterated its earlier projection of $1 billion in revenue in 2008, which would be a 33% increase from $750 million in 2007.

For the first quarter ended March 29, GSI reported net revenue of $195.5 million, up from $146.3 million in the same quarter a year ago. The company reported a net loss of $9.6 million, compared with a $2.3 million loss in the first quarter last year.

The results reflected GSI’s acquisition of three companies in the past nine months: e-commerce platform provider Accretive Commerce, e-mail service provider e-Dialog and UK-based fulfillment and customer service provider Zendor.com. GSI spent $275 million to buy those companies.

“We are pleased with the momentum of our business, the performance of our three acquisitions and the strength of our new business pipeline,” says Michael G. Rubin, chairman, president and CEO. “We remain optimistic regarding our outlook going forward.”

Rubin told financial analysts the company is in a position to do well in spite of the weakness in the national economy. “Even in a really difficult retail climate, I think people are looking to lead with their Internet strategy,” Rubin said, according to a transcript provided by Seeking Alpha, www.seekingalpha.com.

He noted that product development expenses increased 63% in the first quarter, from $8.7 million a year ago to $22.4 million, with about half the increase due to the three acquisitions and the cost of stock-based compensation. He says GSI is focusing product development efforts on site search, search engine optimization, customer self-service, the customer checkout experience and site-management tools for client retailers. The company also is investing in deepening its ties to such partners as analytics vendor Omniture Inc. and PowerReviews, a provider of customer review services for e-retailers.

Organic growth of e-commerce sales on the GSI platform is running at about 20%, and e-Dialog’s business is growing at about the same rate, Rubin said. He noted that e-Dialog plans to increase its headcount this year by about 150%, hiring 150 additional employees.

GSI operates the e-commerce businesses of about 85 online retailers, and provides marketing and other services to a total of more than 200 companies, GSI says.

GSI executive vice president Fiona Dias is speaking at the Internet Retailer Conference & Exhibition, June 9-12 in Chicago, in a session entitled Organizing for e-commerce success, 2:30-3:15, June 10.

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