SOURCE: Bidz.com, Inc.

August 23, 2005 09:00 ET

Bidz.com, Inc. Announces Second Quarter 2005 Financial Results

LOS ANGELES, CA -- (MARKET WIRE) -- August 23, 2005 --

--  Second quarter revenues of $18.1 million, up 13.3% from the prior year
--  Net income of $370,000 in the second quarter versus $23,000 a year ago
--  EPS of $0.02 per diluted share in the second quarter compared to
    breakeven in 2004
    
Bidz.com, Inc., a leading online auctioneer of jewelry, art and collectibles, reported financial results on August 22, 2005, for the second quarter ended June 30, 2005.

Net revenue for the three months ended June 30, 2005 was $18.1 million, a 13.3% increase compared with $15.9 million reported for the second quarter 2004. The increase was primarily due to growth in demand for the Company's jewelry products from a greater number of registered buyers on the Company's website. The Company's net income for the three months ended June 30, 2005 was $370,000, or $0.02 per diluted share on 23.8 million average diluted shares. This is a more than fifteen-fold increase over the $23,000 in net income reported in the second quarter of the prior year. On a per share basis, earnings were breakeven in the second quarter 2004, based on 28.0 million average diluted shares outstanding. The higher net income was primarily due to increased sales of higher margin product.

Net revenue for the six months ended June 30, 2005 was $38.8 million, a 25.7% increase compared with $30.8 million reported for the comparable period in 2004. The Company's net income for the six months ended June 30, 2005 increased 13.3% to $613,000, or $0.02 per diluted share based on 25.9 million average diluted shares outstanding. In the six months ended June 30, 2004, net income was $541,000 and earnings per diluted share were flat at $0.02, based on 28.0 million average diluted shares outstanding. The increase in net income was a result of higher sales, partially offset by larger online marketing costs.

"Bidz.com, Inc. delivered strong sales and earnings growth in the quarter, reflecting the continued execution of our differentiated business model," said David Zinberg, Chief Executive Officer. "These results demonstrate our ongoing ability to drive top-line growth while delivering strong profitability to our shareholders. We are pleased with our results for the first half of the year, and are well positioned to deliver on our 2005 goals."

Mr. Zinberg added, "Through the balance of 2005, we will continue to focus on building our brand and expanding our market share in the jewelry and collectibles business in the U.S., as well as expand our international presence. Lastly, we continue to focus on profitable growth."

In the second quarter, gross profit increased 33.5% to $3.6 million compared to $2.7 million in the prior year period. Gross margin improved to 20.1% in the quarter versus 17.0% in the same period a year ago. The higher margin is primarily attributable to increased sales of higher margin product. Gross profit fluctuates historically based on product acquisition costs, product mix and pricing decisions. The Company expects gross profit margins to remain at approximately 20% over the next 12 months. Operating expenses in the second quarter increased approximately $560,000 to $3.3 million from $2.7 million in the second quarter 2004. As a percentage of sales, operating expenses increased to 18% versus 17% a year ago.

For the six months ended June 30, 2005, gross profit increased 29.3% to $7.4 million from $5.7 million in the six months ended June 30, 2004. Gross margin for the first half of 2005 was 19.0% versus 18.5% in the first half of 2004. Operating expenses for the first six months of 2005 increased by approximately $1.6 million to $6.8 million, or 37.4% of sales. In the same period in 2004, operating expenses were $5.2 million, or 32.4% of sales. The increase is primarily attributable to higher online marketing expenses including spending on search engines, email campaigns and contextual marketing.

About Bidz.com Inc.

Bidz.com, founded in 1998, is an online auctioneer of jewelry, art and collectibles. Bidz offers its products through a live auction format requiring only a $1 minimum opening bid. Bidz has about 3.7 million registered users who participate in more than 300,000 auctions per month. To learn more about Bidz.com visit its website at www.bidz.com.

Safe Harbor Statement

This press release includes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this release, including statements regarding the Company's future financial position, business strategy and plans and objectives of management for future operations, are forward looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions, as they relate to the Company, are intended to identify forward looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect the Company's financial condition, results of operations, business strategy and financial needs. Please refer to Bidz.com's reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. Bidz.com undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.


Bidz.com, Inc.
Condensed Statements of Operations (Unaudited)


                             (In Thousands, except per share numbers)


                           Three Months Ended         Six Months Ended
                          June 30,     June 30,     June 30,     June 30,
                            2005         2004         2005         2004
                         -----------  -----------  -----------  -----------

Net revenues:
  Merchandise sales and
   shipping              $    17,997  $    15,743  $    38,625  $    30,460
  Commissions                     55          183          146          347
  Advertising                      1           10            2           27
                         -----------  -----------  -----------  -----------

                              18,053       15,936       38,773       30,834

Cost of revenues              14,429       13,222       31,404       25,136
                         -----------  -----------  -----------  -----------

Gross Profit                   3,624        2,714        7,369        5,698
                         -----------  -----------  -----------  -----------


Operating expenses:
  General and
   administrative              2,502        2,050        5,091        3,990
  Sales and marketing            714          605        1,589        1,102
  Depreciation and
   amortization                   38           36           76           65
                         -----------  -----------  -----------  -----------

Total operating
 expenses                      3,254        2,691        6,756        5,157
                         -----------  -----------  -----------  -----------

Income from operations           370           23          613          541

Other expense -
 Interest expense                  -            -            -            -
                         -----------  -----------  -----------  -----------

Income before income
 taxes                           370           23          613          541

Income taxes                       -            -            -            -
                         -----------  -----------  -----------  -----------

Net income               $       370  $        23  $       613  $       541
                         ===========  ===========  ===========  ===========

Net income per share
 available to common
 shareholders - basic    $      0.02  $         -  $      0.02  $      0.02
                         ===========  ===========  ===========  ===========

Net income per share
 available to common
 shareholders - diluted  $      0.02  $         -  $      0.02  $      0.02
                         ===========  ===========  ===========  ===========

Weighted average number
 of shares outstanding
 - basic                  23,312,500   27,472,290   25,361,819   27,475,853
                         ===========  ===========  ===========  ===========

Weighted average number
 of shares outstanding
 - diluted                23,834,780   28,022,737   25,887,719   28,031,643
                         ===========  ===========  ===========  ===========


Bidz.com, Inc.
Condensed Balance Sheets

                                       (In Thousands, except share numbers)

                                               June 30,     December 31,
                                                 2005           2004
Assets                                       (Unaudited)
                                              ----------     ----------

Current assets:
  Cash                                        $       10     $        5
  Accounts receivable, net                           462            561
  Inventories, net of reserves of $238 and
   $309 at June 30, 2005 and December 31,
   2004, respectively                              7,096         10,733
  Other current assets                               524            107
                                              ----------     ----------

          Total current assets                     8,092         11,406

Property and equipment, net                          393            344

Intangible asset                                     150            150
Deposits                                             590            590
                                              ----------     ----------

                                              $    9,225     $   12,490
                                              ==========     ==========

Liabilities and Stockholders' Deficit

Current liabilities:
  Bank overdraft                              $    4,780     $    6,503
  Accounts payable                                 3,263          4,903
  Accrued expenses                                   837          1,105
  Deferred revenue                                   712          1,059
                                              ----------     ----------

          Total current liabilities                9,592         13,570
                                              ----------     ----------

Commitments and contingencies                          -              -

Stockholders' deficit:
  Common Stock; no par value; authorized
   50,000,000 shares; issued and outstanding
   23,312,500 and 11,922,500 shares at June
   30, 2005 and December 31, 2004,
   respectively                                   28,814         28,388
  Class B Common Stock; no par value;
   authorized 25,000,000 shares; issued and
   outstanding 0 and 15,534,689 shares
   at June 30, 2005 and December 31, 2004,
   respectively                                        -            426
  Deferred stock-based compensation                 (200)          (300)
  Accumulated deficit                            (28,981)       (29,594)
                                              ----------     ----------

          Total stockholders' deficit               (367)        (1,080)
                                              ----------     ----------

                                              $    9,225     $   12,490
                                              ==========     ==========

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