Meal-kit service Blue Apron going public

Published 5:46 am Thursday, June 8, 2017

Blue Apron was a pioneer in delivering food kits to customers for assembling meals at home. Now, it is beating a path to an initial public offering.

The 5-year-old company filed Thursday to go public, moving to become one of the most prominent consumer startups in recent years to pursue a stock listing. It plans to trade under “APRN.”

Blue Apron is seeking to go public as it faces intensifying competition from a host of rivals, including HelloFresh, Sun Basket and the vegetarian-focused Purple Carrot. And its filing sheds light on some of the high costs of that race: Even as the company’s revenue grew, its losses and marketing costs soared.

A successful public offering would make Blue Apron one of the most recognizable names to enter the public markets since Snap, the parent of Snapchat, began trading on the New York Stock Exchange in March.

Founded in 2012, Blue Apron was one of the earliest purveyors of meal kits, which provide subscribers with mostly prepared ingredients that they cook at home, following an accompanying recipe. The premise: home cooking, without the trips to the grocery store or the hassle of deciding what to make.

The size of Blue Apron’s offering has yet to be determined. The prospectus listed a $100 million fundraising target, a preliminary number used to determine filing fees.

The filing highlighted the enormous growth that Blue Apron has enjoyed since starting. Its sales have risen 10-fold from 2014 to 2016, reaching $795.4 million last year.

But its net loss grew 16 percent last year from 2015, to $54.8 million, according to the filing. Using the company’s preferred measure of adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, which excludes expenses like stock-based pay and taxes, it lost $43.6 million in 2016, up 32.5 percent from the year before, the filing shows.

Some of the increased loss stemmed from the rising cost of ingredients and from spending on marketing, which jumped 10-fold from 2014 to 2016, to $144.1 million.

Blue Apron has shown signs of stalled growth in other ways. Its average order value for the first three months of 2017 shrank slightly from the same period a year ago, to $57.23. Both the number of orders per customer and the average revenue per customer also fell slightly in the first quarter of this year compared with the first quarter of 2016.

The company has made moves to grow, including acquiring BN Ranch, one of its beef suppliers.

Going public does not mean that Blue Apron’s management is intent on giving up control of the company. The startup will have three classes of stock: Class A shares that will be sold to the public and will carry one vote per share; Class B shares, which the founders and early investors own, which carry 10 votes per share; and Class C shares, which come with no voting rights and will be used for purposes such as acquisitions.

As of now, the company’s biggest shareholders are Matthew B. Salzberg and Ilia M. Papas, the founders, who together own just under 40 percent of the class B shares, and the venture capital firms Bessemer Venture Partners and First Round Capital.

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