Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What's happening: Shares of Liquidity Services (NASDAQ:LQDT) jumped more than 20% Thursday after the company announced better-than-expected fiscal-first-quarter 2015 results.
Quarterly revenue climbed 2.6% year over year to $125.1 million, helped by a 4.6% increase in gross merchandise volume to $245.3 million. That translated to a GAAP net loss of $64.1 million, or $2.14 per diluted share. But keep in mind that includes an impairment of goodwill and long-lived assets of $96.2 million recorded during the quarter, primarily related to the December termination of Liquidity Services' contract with Wal-Mart. On an adjusted basis, Liquidity Services achieved net income of $0.38 per diluted share, or an increase of 18.8% over the same year-ago period. Analysts, on average, were only expecting revenue of $110.3 million to result in adjusted earnings of $0.16 per share.
Why it's happening: "Given the transition of our legacy businesses with the DoD and Walmart," noted Liquidity Services CEO Bill Angrick, "we are pleased with our Q1 results which were well above our guidance on both the top and bottom line led by a strong quarter in our commercial capital assets group, which performed above expectations during a seasonally high quarter." To be sure, Liquidity's commercial sales team added over 40 new clients and programs during the quarter.
That said, Angrick elaborated that Liquidity Services expects the combination of the ongoing transition of its legacy business, and heavy investments in IT, product development and marketing to "dampen our growth and earnings results in the near-term." Specifically, for the current quarter gross merchandise volume should be in the range of $175 million to $200 million, with adjusted earnings per diluted share of $0.05 to $0.10. By contrast, analysts were modeling earnings of $0.15 per share on revenue of $109.1 million. But in the end, given Liquidity Services' long awaited outperformance, it's no surprise investors are happy to forgive its cautious near-term guidance in favor of focusing on long-term results.