EL MONTE, Calif. - GigaCloud Technology Inc (NASDAQ:GCT), a provider of B2B technology solutions for large parcel merchandise, has launched a share repurchase program to buy back up to $46 million of its Class A ordinary shares within the next 12 months. The decision, as stated by the company's board of directors, is based on the belief that the current share price represents a compelling investment opportunity.
Larry Wu, the CEO of GigaCloud, expressed confidence in the long-term growth of the company and the potential for the digitization of the global supply chain for large parcel merchandise despite expected short-term economic challenges. The repurchase plan is seen as a value-enhancing move for both the company and its shareholders.
In the previous fiscal year, GigaCloud generated $133.5 million in cash from operations and concluded the year with $46.9 million unspent after allocating $86.6 million for strategic acquisitions. Erica Wei, the interim CFO, highlighted the company's strong financial position, with over $200 million in cash, cash equivalents, and liquid investments, and no external debt. This financial stability enables the company to proceed with the share repurchase program while focusing on long-term shareholder value.
The repurchases may be executed through open market transactions, privately negotiated transactions, block trades, or other legally permissible means, following market conditions and in compliance with SEC rules, including Rule 10b5-1 and Rule 10b-18. The number and timing of repurchases will depend on various factors such as share price, market conditions, and the company's capital needs.
The board of directors will regularly review the share repurchase program and may adjust, suspend, or discontinue it as deemed necessary. The program will be funded from GigaCloud's existing cash balance.
GigaCloud Technology, which launched its marketplace in January 2019, focuses on providing a comprehensive B2B ecommerce platform for large parcel merchandise, connecting manufacturers primarily in Asia with resellers in the U.S., Asia, and Europe.
The information in this article is based on a press release statement from GigaCloud Technology Inc.
In other recent news, GigaCloud Technology has reported a record revenue growth for the sixth consecutive quarter. The company's Q2 total revenue more than doubled year-over-year to $311 million, and its marketplace Gross Merchandise Value (GMV) exceeded $1 billion over the past 12 months. This growth was bolstered by the addition of Noble House related SKUs and the launch of its BaaS offering.
Despite a decline in US retail furniture sales, GigaCloud's diverse strategies and efficient supply chain management have positioned it for continued growth. However, the company anticipates a sequential decline in Q3 revenue due to seasonality and industry headwinds.
In terms of future plans, GigaCloud expects continued growth from both organic and inorganic sources, including further integration of the Noble House business and expansion of the B2B marketplace. The company is also focusing on strategic mergers and acquisitions to drive volume growth and expand its ecosystem.
However, the company is experiencing gross margin pressure due to new warehouse additions, which typically take four to six months to become fully operational. Despite these challenges, GigaCloud's marketplace has seen a significant increase in buyer and seller base, contributing to its sustained profitability. The integration of Noble House SKUs and the launch of the BaaS offering have been successful, with the latter receiving strong interest from sellers. These are recent developments that reflect GigaCloud Technology's capacity for sustained growth and profitability.
InvestingPro Insights
In light of GigaCloud Technology Inc's (NASDAQ:GCT) recent announcement of its share repurchase program, insights from InvestingPro suggest that the company's current valuation and stock performance may indeed make it an attractive investment opportunity. With a market capitalization of approximately $804.07 million and operating with a low earnings multiple, as indicated by its P/E ratio of 7.25, GigaCloud's stock appears to be trading at a discount relative to its earnings. This aligns with the company's belief that its shares are currently undervalued.
InvestingPro data also shows that GigaCloud has experienced substantial sales growth, with an impressive revenue increase of 84.25% over the last twelve months as of Q2 2024. This growth trajectory is supported by analysts' expectations of continued sales growth in the current year. Furthermore, the company's ability to generate strong cash flows, which can sufficiently cover interest payments, suggests financial resilience and operational efficiency.
However, it is worth noting that GigaCloud's stock has experienced significant volatility, with a price total return of -50.73% over the last six months, and a -23.94% return over the last month. This volatility may present risks as well as potential buying opportunities for investors considering the stock. Additionally, the company's liquid assets exceed its short-term obligations, providing further evidence of its solid financial footing.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available, which can offer further insights into GigaCloud's financial health and stock performance. These tips can be found at InvestingPro's dedicated page for GigaCloud: https://www.investing.com/pro/GCT.
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