Aterian Reports Third Quarter 2024 Results
Aterian (ATER) reported Q3 2024 results showing mixed performance. Net revenue declined 34% to $26.2 million, primarily due to SKU rationalization efforts. However, gross margin improved to 60.3% from 49.4% year-over-year, and contribution margin increased to 17% from 3%. The company reduced its net loss by 71.7% to ($1.8) million and achieved positive adjusted EBITDA of $0.5 million, marking a $4.9 million improvement year-over-year. Cash balance stood at $16.1 million. For Q4 2024, management expects revenue between $22.5-25.5 million with break-even adjusted EBITDA.
Aterian (ATER) ha riportato i risultati del terzo trimestre 2024 mostrando una performance mista. I ricavi netti sono diminuiti del 34% a $26,2 milioni, principalmente a causa degli sforzi di razionalizzazione degli SKU. Tuttavia, il margine lordo è migliorato al 60,3% rispetto al 49,4% dell'anno scorso, e il margine di contribuzione è aumentato al 17% rispetto al 3%. L'azienda ha ridotto la sua perdita netta del 71,7%, portandola a ($1,8) milioni e ha raggiunto un EBITDA rettificato positivo di $0,5 milioni, segnando un miglioramento di $4,9 milioni rispetto all'anno precedente. La liquidità era di $16,1 milioni. Per il quarto trimestre 2024, la direzione prevede ricavi tra $22,5 e $25,5 milioni con un EBITDA rettificato in pareggio.
Aterian (ATER) reportó resultados del tercer trimestre de 2024 mostrando un desempeño mixto. Los ingresos netos disminuyeron un 34% a $26,2 millones, principalmente debido a los esfuerzos de racionalización de SKU. Sin embargo, el margen bruto mejoró al 60,3% desde el 49,4% del año pasado, y el margen de contribución aumentó al 17% desde el 3%. La compañía redujo su pérdida neta en un 71,7% a ($1,8) millones y logró un EBITDA ajustado positivo de $0,5 millones, marcando una mejora de $4,9 millones año tras año. El saldo de efectivo se situó en $16,1 millones. Para el cuarto trimestre de 2024, la dirección espera ingresos entre $22,5 y $25,5 millones con un EBITDA ajustado en el punto de equilibrio.
Aterian (ATER)은 2024년 3분기 결과를 발표하며 혼합된 성과를 보였습니다. 순수익은 SKU 합리화 노력으로 인해 34% 감소하여 $26.2 백만에 달했습니다. 그러나 총 마진은 전년 대비 49.4%에서 60.3%으로 개선되었고, 기여 마진은 3%에서 17%로 증가했습니다. 이 회사는 순손실을 71.7% 줄여 ($1.8) 백만을 기록했으며, 조정된 EBITDA는 $0.5 백만으로 긍정적인 성과를 달성하여 전년 대비 $4.9 백만 개선되었습니다. 현금 잔고는 $16.1 백만에 달했습니다. 2024년 4분기에는 매출이 $22.5-25.5 백만 사이로 예상되며, 조정된 EBITDA는 손익 분기점을 목표로 하고 있습니다.
Aterian (ATER) a annoncé des résultats pour le troisième trimestre 2024 montrant une performance mitigée. Le chiffre d'affaires net a diminué de 34 % pour atteindre $26,2 millions, principalement en raison des efforts de rationalisation des SKU. Cependant, la marge brute s'est améliorée à 60,3% contre 49,4 % l'année précédente, et la marge de contribution a augmenté à 17 % contre 3 %. L'entreprise a réduit sa perte nette de 71,7 % à ($1,8) millions et a atteint un EBITDA ajusté positif de $0,5 millions, marquant une amélioration de $4,9 millions par rapport à l'année précédente. Le solde de trésorerie s'élevait à $16,1 millions. Pour le quatrième trimestre 2024, la direction s'attend à des revenus compris entre $22,5 et $25,5 millions avec un EBITDA ajusté à l'équilibre.
Aterian (ATER) hat die Ergebnisse des dritten Quartals 2024 veröffentlicht und dabei eine gemischte Leistung gezeigt. Der Nettoumsatz ist um 34% auf $26,2 Millionen gefallen, hauptsächlich aufgrund von SKU-Rationalisierungsmaßnahmen. Der Bruttomargenverbesserung jedoch stieg der Bruttomargin auf 60,3%, von 49,4% im Vorjahr, und die Beitragsmarge stieg auf 17% von 3%. Das Unternehmen konnte seinen Nettoverlust um 71,7% auf ($1,8) Millionen reduzieren und erzielte ein positives bereinigtes EBITDA von $0,5 Millionen, was einem Anstieg von $4,9 Millionen im Vergleich zum Vorjahr entspricht. Der Bargeldbestand betrug $16,1 Millionen. Für das vierte Quartal 2024 rechnet das Management mit einem Umsatz zwischen $22,5 und $25,5 Millionen und einem ausgeglichenen bereinigten EBITDA.
- Gross margin significantly improved to 60.3% from 49.4% YoY
- Contribution margin increased to 17% from 3% YoY
- Net loss reduced by 71.7% to ($1.8M) from ($6.3M)
- Achieved positive adjusted EBITDA of $0.5M vs ($4.4M) loss YoY
- Operating loss improved by 73.4% to ($1.7M) from ($6.5M)
- Revenue declined 34% YoY to $26.2M
- Projected Q4 2024 revenue decline to $22.5-25.5M
- Continued operating losses expected in upcoming quarters
Insights
The Q3 2024 results show a complex transformation story. While revenue declined
Third Quarter Net Loss Improved by
Achieved Adjusted EBITDA Profit for the Second Consecutive Quarter, Marking a
SUMMIT, N.J., Nov. 11, 2024 (GLOBE NEWSWIRE) -- Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”) today announced results for the third quarter ended September 30, 2024.
Third Quarter Highlights
- Third quarter 2024 net revenue declined
34.0% to$26.2 million , compared to$39.7 million in the third quarter of 2023, primarily reflecting a reduced product portfolio as a result of our previously announced SKU rationalization efforts. - Third quarter 2024 gross margin improved to
60.3% , compared to49.4% in the third quarter of 2023, primarily reflecting the positive impact of our SKU rationalization efforts and less liquidation of high-cost inventory compared to the prior period. - Third quarter 2024 contribution margin improved to
17.0% from3.0% in the third quarter of 2023, primarily reflecting the positive impact of our SKU rationalization efforts and less liquidation of high-cost inventory compared to the prior period. - Third quarter 2024 operating loss of (
$1.7) million improved compared to an operating loss of ($6.5) million in the third quarter of 2023, reflecting an improvement of73.4% . Third quarter 2024 operating loss includes ($1.8) million of non-cash stock compensation while third quarter 2023 operating loss includes ($1.2) million of non-cash stock compensation, and restructuring costs of ($0.4) million . - Third quarter 2024 net loss of (
$1.8) million improved from a ($6.3) million loss in the third quarter of 2023, reflecting an improvement of71.7% . Third quarter 2024 net loss includes ($1.8) million of non-cash stock compensation and a gain on fair value of warrant liability of$0.2 million while third quarter 2023 net loss includes ($1.2) million of non-cash stock compensation, restructuring costs of ($0.4) million , and a gain on fair value of warrant liability of$0.6 million . - Third quarter 2024 adjusted EBITDA improved to
$0.5 million from a loss of ($4.4) million in the third quarter of 2023, reflecting an improvement of111.0% . - Total cash balance at September 30, 2024 was
$16.1 million .
Fourth Quarter Outlook
For the fourth quarter of 2024, Aterian Management believes that net revenue will be between
Non-GAAP Financial Measures
For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Non-GAAP Financial Measures'' section below. The most directly comparable GAAP financial measure for EBITDA and adjusted EBITDA is net loss and we expect to report a net loss for the three months ending September 30, 2024 and December 31, 2024, due primarily to our operating losses, which includes stock-based compensation expense, change in fair value of warrant liability, and interest expense. We are unable to reconcile the forward-looking statements of EBITDA and adjusted EBITDA in this press release to their nearest GAAP measures because the nearest GAAP financial measures are not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort.
Webcast and Conference Call Information
Aterian will host a live conference call to discuss financial results today, November 11, 2024, at 5:00 p.m. Eastern Time, which will be accessible by telephone and the internet. To access the call, participants from within the U.S. should dial (888) 596-4144 and participants from outside the U.S. should dial (646) 968-2525 and ask to be joined into the Aterian, Inc. call or use conference ID 4711775. Participants may also access the call through a live webcast at https://ir.aterian.io. The archived online replay will be available for a limited time after the call in the Investors Relations section of the Aterian website.
About Aterian, Inc.
Aterian, Inc. (Nasdaq: ATER) is a technology-enabled consumer products company that builds and acquires leading e-commerce brands with top selling consumer products, in multiple categories, including home and kitchen appliances, health and wellness and air quality devices. The Company sells across the world's largest online marketplaces with a focus on Amazon and Walmart in the U.S. and on its own direct to consumer websites. Our primary brands include Squatty Potty, hOmeLabs, Mueller Living, Pursteam, Healing Solutions and Photo Paper Direct.
Forward Looking Statements
All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements regarding our projected fourth quarter net revenue and adjusted EBITDA, and the current global environment and inflation. These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties and other factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to our ability to continue as a going concern, our ability to meet financial covenants with our lenders, our ability to maintain and to grow market share in existing and new product categories; our ability to continue to profitably sell the SKUs we operate; our ability to maintain Amazon’s Prime badge on our seller accounts or reinstate the Prime badge in the event of any removal of such badge by Amazon; our ability to create operating leverage and efficiency when integrating companies that we acquire, including through the use of our team’s expertise, the economies of scale of our supply chain and automation driven by our platform; those related to our ability to grow internationally and through the launch of products under our brands and the acquisition of additional brands; those related to consumer demand, our cash flows, financial condition, forecasting and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; our ability to disrupt the consumer products industry; our ability to generate profitability and stockholder value; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue; acquisitions of other companies and technologies and our ability to integrate such companies and technologies with our business; our ability to continue to access debt and equity capital (including on terms advantageous to the Company) and the extent of our leverage; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov.
Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
ATERIAN, INC. Consolidated Balance Sheets (in thousands, except share and per share data) | |||||||
December 31, 2023 | September 30, 2024 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 20,023 | $ | 16,071 | |||
Accounts receivable, net | 4,225 | 3,259 | |||||
Inventory | 20,390 | 16,561 | |||||
Prepaid and other current assets | 4,998 | 4,968 | |||||
Total current assets | 49,636 | 40,859 | |||||
Property and equipment, net | 775 | 749 | |||||
Intangible assets, net | 11,320 | 10,148 | |||||
Other non-current assets | 138 | 383 | |||||
Total assets | $ | 61,869 | $ | 52,139 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Credit facility | $ | 11,098 | $ | 6,738 | |||
Accounts payable | 4,190 | 5,621 | |||||
Seller notes | 1,049 | 467 | |||||
Accrued and other current liabilities | 9,110 | 8,438 | |||||
Total current liabilities | 25,447 | 21,264 | |||||
Other liabilities | 391 | 249 | |||||
Total liabilities | 25,838 | 21,513 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Common stock, | 9 | 9 | |||||
Additional paid-in capital | 736,675 | 741,483 | |||||
Accumulated deficit | (699,815 | ) | (710,379 | ) | |||
Accumulated other comprehensive loss | (838 | ) | (487 | ) | |||
Total stockholders’ equity | 36,031 | 30,626 | |||||
Total liabilities and stockholders' equity | $ | 61,869 | $ | 52,139 | |||
(*) The number of shares and per share amounts have been retroactively restated to reflect the one for twelve (1 for 12) reverse stock split, which was effective on March 22, 2024.
ATERIAN, INC. Consolidated Statements of Operations (in thousands, except share and per share data) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2023 | 2024 | 2023 | 2024 | ||||||||||||
Net revenue | $ | 39,668 | $ | 26,239 | $ | 109,811 | $ | 74,438 | |||||||
Cost of goods sold | 20,085 | 10,411 | 56,236 | 28,550 | |||||||||||
Gross profit | 19,583 | 15,828 | 53,575 | 45,888 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and distribution | 20,921 | 13,912 | 61,704 | 42,288 | |||||||||||
Research and development | 852 | — | 3,808 | — | |||||||||||
General and administrative | 4,326 | 3,646 | 16,566 | 13,812 | |||||||||||
Impairment loss on intangibles | — | — | 39,445 | — | |||||||||||
Total operating expenses | 26,099 | 17,558 | 121,523 | 56,100 | |||||||||||
Operating loss | (6,516 | ) | (1,730 | ) | (67,948 | ) | (10,212 | ) | |||||||
Interest expense, net | 359 | 189 | 1,076 | 741 | |||||||||||
Change in fair value of warrant liabilities | (567 | ) | (161 | ) | (2,410 | ) | (730 | ) | |||||||
Other expense, net | (128 | ) | 225 | 101 | 275 | ||||||||||
Loss before income taxes | (6,180 | ) | (1,983 | ) | (66,715 | ) | (10,498 | ) | |||||||
Provision for income taxes | 90 | (210 | ) | 142 | 66 | ||||||||||
Net loss | $ | (6,270 | ) | $ | (1,773 | ) | $ | (66,857 | ) | $ | (10,564 | ) | |||
Net loss per share, basic and diluted | $ | (0.95 | ) | $ | (0.25 | ) | $ | (10.30 | ) | $ | (1.51 | ) | |||
Weighted-average number of shares outstanding, basic and diluted (*) | 6,600,485 | 7,166,612 | 6,493,852 | 6,977,262 | |||||||||||
(*) The number of shares and per share amounts have been retroactively restated to reflect the one for twelve (1 for 12) reverse stock split, which was effective on March 22, 2024.
ATERIAN, INC. Consolidated Statements of Cash Flows (in thousands) | |||||||
Nine Months Ended September 30, | |||||||
2023 | 2024 | ||||||
OPERATING ACTIVITIES: | |||||||
Net loss | $ | (66,857 | ) | $ | (10,564 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Depreciation and amortization | 3,416 | 1,279 | |||||
Provision for sales returns | (215 | ) | 86 | ||||
Amortization of deferred financing cost and debt discounts | 321 | 160 | |||||
Stock-based compensation | 6,771 | 6,394 | |||||
Change in deferred tax expense | — | (5 | ) | ||||
Change in inventory provisions | 213 | (1,653 | ) | ||||
Change in fair value of warrant liabilities | (2,410 | ) | (730 | ) | |||
Impairment loss on intangibles | 39,445 | — | |||||
Allowance for credit losses | 59 | — | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 1,186 | 966 | |||||
Inventory | 11,960 | 5,482 | |||||
Prepaid and other current assets | 1,942 | 486 | |||||
Accounts payable, accrued and other liabilities | (4,289 | ) | 273 | ||||
Cash (used in) provided by operating activities | (8,458 | ) | 2,174 | ||||
INVESTING ACTIVITIES: | |||||||
Purchase of fixed assets | (80 | ) | (42 | ) | |||
Purchase of Step and Go assets | (125 | ) | — | ||||
Purchase of minority equity investment | — | (200 | ) | ||||
Cash used in investing activities | (205 | ) | (242 | ) | |||
FINANCING ACTIVITIES: | |||||||
Repayments on note payable to Smash | (518 | ) | (633 | ) | |||
Borrowings from MidCap credit facilities | 63,978 | 44,386 | |||||
Repayments for MidCap credit facilities | (71,165 | ) | (48,976 | ) | |||
Insurance obligation payments | (788 | ) | (498 | ) | |||
Insurance obligation proceeds | 986 | — | |||||
Cash used in financing activities | (7,507 | ) | (5,721 | ) | |||
Foreign currency effect on cash and restricted cash | 42 | 313 | |||||
Net change in cash and restricted cash for the year | (16,128 | ) | (3,476 | ) | |||
Cash and restricted cash at beginning of year | 46,629 | 22,195 | |||||
Cash and restricted cash at end of year | $ | 30,501 | $ | 18,719 | |||
RECONCILIATION OF CASH AND RESTRICTED CASH: | |||||||
Cash | 27,955 | 16,071 | |||||
Restricted Cash—Prepaid and other current assets | 2,417 | 2,519 | |||||
Restricted cash—Other non-current assets | 129 | 129 | |||||
TOTAL CASH AND RESTRICTED CASH | $ | 30,501 | $ | 18,719 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||
Cash paid for interest | $ | 1,457 | $ | 966 | |||
Cash paid for taxes | $ | 90 | $ | 151 | |||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||
Non-cash consideration paid to contractors | $ | 321 | $ | 620 | |||
Non-cash minority equity investment | $ | — | $ | 50 | |||
Non-GAAP Financial Measures
We believe that our financial statements and the other financial data included in this press release have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the U.S. (“GAAP”). However, for the reasons discussed below, we have presented certain non-GAAP measures herein.
We have presented the following non-GAAP measures to assist investors in understanding our core net operating results on an on-going basis: (i) Contribution Margin; (ii) Contribution margin as a percentage of net revenue; (iii) EBITDA (iv) Adjusted EBITDA; and (v) Adjusted EBITDA as a percentage of net revenue. These non-GAAP financial measures may also assist investors in making comparisons of our core operating results with those of other companies.
As used herein, Contribution margin represents gross profit less e-commerce platform commissions, online advertising, selling and logistics expenses (included in sales and distribution expenses). As used herein, Contribution margin as a percentage of net revenue represents Contribution margin divided by net revenue. As used herein, EBITDA represents net loss plus depreciation and amortization, interest expense, net and provision for income taxes. As used herein, Adjusted EBITDA represents EBITDA plus stock-based compensation expense, changes in fair-market value of warrant liability, impairment on intangibles, restructuring expenses and other expenses, net. As used herein, Adjusted EBITDA as a percentage of net revenue represents Adjusted EBITDA divided by net revenue. Contribution margin, EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to loss from operations or net loss, as determined under GAAP.
We present Contribution margin and Contribution margin as a percentage of net revenue, as we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to gross profit, provides useful supplemental information for investors. Specifically, Contribution margin and Contribution margin as a Non-GAAP Financial Measure percentage of net revenue are two of our key metrics in running our business. All product decisions made by us, from the approval of launching a new product and to the liquidation of a product at the end of its life cycle, are measured primarily from Contribution margin and/or Contribution margin as a percentage of net revenue. Further, we believe these measures provide improved transparency to our stockholders to determine the performance of our products prior to fixed costs as opposed to referencing gross profit alone.
In the reconciliation to calculate contribution margin, we add e-commerce platform commissions, online advertising, selling and logistics expenses (“sales and distribution variable expense”) to gross profit to inform users of our financial statements of what our product profitability is at each period prior to fixed costs (such as sales and distribution expenses such as salaries as well as research and development expenses and general administrative expenses). By excluding these fixed costs, we believe this allows users of our financial statements to understand our products performance and allows them to measure our products performance over time.
We present EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue because we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to net loss, provide useful supplemental information for investors. We use these measures with financial measures prepared in accordance with GAAP, such as sales and gross margins, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance and to compare our performance to that of our peers and competitors. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue are useful to investors in assessing the operating performance of our business without the effect of non-cash items.
Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue should not be considered in isolation or as alternatives to net loss, loss from operations or any other measure of financial performance calculated and prescribed in accordance with GAAP. Neither EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue should be considered a measure of discretionary cash available to us to invest in the growth of our business. Our Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue may not be comparable to similar titled measures in other organizations because other organizations may not calculate Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue in the same manner as we do. Our presentation of Contribution margin and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from such terms or by unusual or non-recurring items.
We recognize that EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue, have limitations as analytical financial measures. For example, neither EBITDA nor Adjusted EBITDA reflects:
- our capital expenditures or future requirements for capital expenditures or mergers and acquisitions;
- the interest expense or the cash requirements necessary to service interest expense or principal payments, associated with indebtedness;
- depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, or any cash requirements for the replacement of assets;
- changes in cash requirements for our working capital needs; or
- changes in warrant liabilities
Additionally, Adjusted EBITDA excludes non-cash stock-based compensation expense, which is and is expected to remain a key element of our overall long-term incentive compensation package.
We also recognize that Contribution margin and Contribution margin as a percentage of net revenue have limitations as analytical financial measures. For example, Contribution margin does not reflect:
- general and administrative expense necessary to operate our business; •research and development expenses necessary for the development, operation and support of our software platform;
- the fixed costs portion of our sales and distribution expenses including stock-based compensation expense; or
- changes in warrant liabilities.
Contribution Margin
The following table provides a reconciliation of Contribution margin to gross profit and Contribution margin as a percentage of net revenue to gross profit as a percentage of net revenue, which are the most directly comparable financial measures presented in accordance with GAAP:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2023 | 2024 | 2023 | 2024 | ||||||||||||
(in thousands, except percentages) | |||||||||||||||
Gross Profit | $ | 19,583 | $ | 15,828 | $ | 53,575 | $ | 45,888 | |||||||
Less: | |||||||||||||||
E-commerce platform commissions, online advertising, selling and logistics expenses | (18,379 | ) | (11,364 | ) | (51,572 | ) | (33,709 | ) | |||||||
Contribution margin | $ | 1,204 | $ | 4,464 | $ | 2,003 | $ | 12,179 | |||||||
Gross Profit as a percentage of net revenue | 49.4 | % | 60.3 | % | 48.8 | % | 61.6 | % | |||||||
Contribution margin as a percentage of net revenue | 3.0 | % | 17.0 | % | 1.8 | % | 16.4 | % | |||||||
Adjusted EBITDA
The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable financial measure presented in accordance with GAAP:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2023 | 2024 | 2023 | 2024 | ||||||||||||
(in thousands, except percentages) | |||||||||||||||
Net loss | $ | (6,270) | $ | (1,773 | ) | $ | (66,857 | ) | $ | (10,564 | ) | ||||
Add: | |||||||||||||||
Provision for income taxes | 90 | (210 | ) | 142 | 66 | ||||||||||
Interest expense, net | 359 | 189 | 1,076 | 741 | |||||||||||
Depreciation and amortization | 452 | 421 | 3,416 | 1,279 | |||||||||||
EBITDA | (5,369 | ) | (1,373 | ) | (62,223 | ) | (8,478 | ) | |||||||
Other expense, net | (128 | ) | 225 | 101 | 275 | ||||||||||
Impairment loss on intangibles | — | — | 39,445 | — | |||||||||||
Change in fair market value of warrant liabilities | (567 | ) | (161 | ) | (2,410 | ) | (730 | ) | |||||||
Restructuring expense | 417 | (10 | ) | 1,633 | 565 | ||||||||||
Stock-based compensation expense | 1,232 | 1,806 | 6,771 | 6,394 | |||||||||||
Adjusted EBITDA | $ | (4,415 | ) | $ | 487 | $ | (16,683 | ) | $ | (1,974 | ) | ||||
Net loss as a percentage of net revenue | (15.8 | )% | (6.8 | )% | (60.9 | )% | (14.2 | )% | |||||||
Adjusted EBITDA as a percentage of net revenue | (11.1 | )% | 1.9 | % | (15.2 | )% | (2.7 | )% | |||||||
Each of our products typically goes through the Launch phase and depending on its level of success is moved to one of the other phases as further described below:
- Launch phase: During this phase, we leverage our technology to target opportunities identified using AIMEE (Artificial Intelligence Marketplace e-Commerce Engine) and other sources. This phase also includes revenue from new product variations and relaunches. During this period of time, due to the combination of discounts and investment in marketing, our net margin for a product could be as low as approximately negative
35% . Net margin is calculated by taking net revenue less the cost of goods sold, less fulfillment, online advertising and selling expenses. These primarily reflect the estimated variable costs related to the sale of a product. - Sustain phase: Our goal is for every product we launch to enter the sustain phase and become profitable, with a target of positive
15% net margin for most products, within approximately three months of launch on average. Net margin primarily reflects a combination of manual and automated adjustments in price and marketing spend. - Liquidate phase: If a product does not enter the sustain phase or if the customer satisfaction of the product (i.e., ratings) is not satisfactory, then it will go to the liquidate phase and we will sell through the remaining inventory. Products can also be liquidated as part of inventory normalization especially when steep discounts are required.
The following tables break out our second quarter of 2023 and 2024 results of operations by our product phases (in thousands):
Three months ended September 30, 2023 | |||||||||||||||||
Sustain | Launch | Liquidation/ Other | Fixed Costs | Stock Based Compensation | Total | ||||||||||||
Net revenue | $ | 32,315 | $ | 395 | $ | 6,958 | $ | — | $ | — | $ | 39,668 | |||||
Cost of goods sold | 14,999 | 207 | 4,879 | — | — | 20,085 | |||||||||||
Gross profit | 17,316 | 188 | 2,079 | — | — | 19,583 | |||||||||||
Operating expenses: | |||||||||||||||||
Sales and distribution expenses | 14,279 | 224 | 3,876 | 2,212 | 330 | 20,921 | |||||||||||
Research and development | — | — | — | 574 | 278 | 852 | |||||||||||
General and administrative | — | — | — | 3,702 | 624 | 4,326 | |||||||||||
Three months ended September 30, 2024 | |||||||||||||||||
Sustain | Launch | Liquidation/ Other | Fixed Costs | Stock Based Compensation | Total | ||||||||||||
Net revenue | $ | 24,704 | $ | 603 | $ | 932 | $ | — | $ | — | $ | 26,239 | |||||
Cost of goods sold | 9,923 | 169 | 319 | — | — | 10,411 | |||||||||||
Gross profit | 14,781 | 434 | 613 | — | — | 15,828 | |||||||||||
Operating expenses: | |||||||||||||||||
Sales and distribution expenses | 10,557 | 318 | 489 | 2,091 | 457 | 13,912 | |||||||||||
Research and development | — | — | — | — | — | — | |||||||||||
General and administrative | — | — | — | 2,297 | 1,349 | 3,646 | |||||||||||
Nine months ended September 30, 2023 | |||||||||||||||||
Sustain | Launch | Liquidation/ Other | Fixed Costs | Stock Based Compensation | Total | ||||||||||||
Net revenue | $ | 91,931 | $ | 595 | $ | 17,285 | $ | — | $ | — | $ | 109,811 | |||||
Cost of goods sold | 43,182 | 319 | 12,735 | — | — | 56,236 | |||||||||||
Gross profit | 48,749 | 276 | 4,550 | — | — | 53,575 | |||||||||||
Operating expenses: | |||||||||||||||||
Sales and distribution expenses | 41,473 | 376 | 9,723 | 8,041 | 2,091 | 61,704 | |||||||||||
Research and development | — | — | — | 2,674 | 1,134 | 3,808 | |||||||||||
General and administrative | — | — | — | 13,020 | 3,546 | 16,566 | |||||||||||
Impairment loss on intangibles | — | — | — | 39,445 | — | 39,445 | |||||||||||
Nine months ended September 30, 2024 | |||||||||||||||||
Sustain | Launch | Liquidation/ Other | Fixed Costs | Stock Based Compensation | Total | ||||||||||||
Net revenue | $ | 69,211 | $ | 1,482 | $ | 3,745 | $ | — | $ | — | $ | 74,438 | |||||
Cost of goods sold | 26,476 | 508 | 1,566 | — | — | 28,550 | |||||||||||
Gross profit | 42,735 | 974 | 2,179 | — | — | 45,888 | |||||||||||
Operating expenses: | |||||||||||||||||
Sales and distribution expenses | 30,388 | 778 | 2,543 | 6,877 | 1,702 | 42,288 | |||||||||||
Research and development | — | — | — | — | — | — | |||||||||||
General and administrative | — | — | — | 9,120 | 4,692 | 13,812 |
FAQ
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