Upexi Reports Fiscal Second Quarter 2024 Financial Results
- None.
- GAAP Net loss of $2.4 million and decreased Adjusted EBITDA signal financial challenges.
- The company's decision to reduce re-commerce inventory risk led to a revenue decrease.
- Despite positive aspects like increased gross profit margins and Brand Products revenue growth, the overall financial performance shows room for improvement.
- The net loss, reduced Adjusted EBITDA, and lower revenue compared to previous quarters raise concerns about the company's financial health.
- Management's strategic decisions to cut costs may impact sales and marketing efforts, potentially affecting revenue growth.
Insights
The reported decrease in Upexi's revenue from $26.7 million in fiscal Q2 2023 to $21.8 million in fiscal Q2 2024, alongside a sequential drop from $27.3 million in fiscal Q1 2024, indicates a potential contraction in the company's business operations. However, the increase in gross profit margins from 31.8% to 38% suggests effective cost management. The strategy to avoid excess inventory in the re-commerce business reflects a cautious approach to cash flow and inventory management, which is particularly prudent in an economic climate that may be facing uncertainties.
The positive Adjusted EBITDA, despite reduced revenues, demonstrates operational efficiency and the company's ability to maintain profitability in core operations. The planned $2 million reduction in general and administrative expenses could further improve the company's financial health. Yet, the GAAP net loss widening from $1.4 million in fiscal Q1 2024 to $2.4 million in fiscal Q2 2024 raises concerns about the sustainability of current strategies and the need for close monitoring of future financial performance.
The strategic focus on high-margin Brand Products, which saw a 16.7% increase in revenue, indicates Upexi's intent to differentiate and strengthen its product offerings. The successful launch of the Disney Frozen Kit by Tytan Tiles and its impressive ranking on Amazon could be a sign of strong brand recognition and consumer demand. The growth in subscription revenue across Health and Wellness, with a substantial increase in subscribers, suggests a positive consumer response to Upexi's offerings in this segment.
However, the overall decrease in revenue, particularly from re-commerce, may reflect broader market challenges or shifts in consumer behavior. The company's ability to pivot and adapt to these changes will be critical in maintaining its competitive edge and ensuring long-term growth. The anticipated benefits from consolidating manufacturing facilities should be weighed against the potential risks associated with operational changes.
Upexi's financial results reflect broader economic trends, such as the need for companies to optimize operations amidst fluctuating market conditions. The decrease in sales and marketing expenses by 18% aligns with a strategic shift towards more efficient customer acquisition and retention strategies, which is essential in a market where consumer spending may be tightening.
The company's cash position of $1.8 million, while sufficient in the short term, requires careful financial stewardship to ensure liquidity for ongoing operations and investment in growth initiatives. The commitment to reducing general and administrative expenses is a positive step, but it is imperative to balance cost-cutting measures with investments that drive innovation and revenue growth.
TAMPA, FL / ACCESSWIRE / February 14, 2024 / Upexi, Inc. (NASDAQ:UPXI) (the "Company" or "Upexi"), a multi-faceted Amazon and Direct to Consumer brand owner and innovator in aggregation, today reported its financial results for the fiscal second quarter 2024 ending December 31, 2023.
"During the quarter we continued to focus on optimizing and streamlining our operations, investing in our higher margin Brand Products and generating positive Adjusted EBITDA. While revenue for the most recent fiscal second quarter decreased sequentially, the operating measures we took allowed us to increase gross profit margins to
Fiscal Second Quarter 2024 Financial Highlights
- Revenue was
$21.8 million , compared to$26.7 million in fiscal Q2 2023 and$27.3 million in fiscal Q1 2024. - Branded Product revenue was
$7.7 million , an increase of16.7% as compared to$6.6 million in fiscal Q1 2024. - Branded Product revenue as a percentage of total revenue was
35.1% as compared to24% in fiscal Q1 2024. - Cost of revenue was
$13.6 million , compared to$16.7 million in fiscal Q2 2023 and$18.6 million in fiscal Q1 2024. - Gross Profit Margin was
38% , compared to38% in fiscal Q2 2023 and31.8% in fiscal Q1 2024. - GAAP Net loss attributable to Upexi, Inc. was
$2.4 million , compared to net income of$2.7 million in fiscal Q2 2023 and net loss of$1.4 million in fiscal Q1 2024. - Adjusted EBITDA from continuing operations was
$29,111 in fiscal Q2 2023, compared to$557,019 in fiscal Q2 2023 and$750,000 in fiscal Q1 2024. - Cash at December 31, 2023 was
$1.8 million . - Total stockholders' equity at December 31, 2023 was
$25.5 million .
Fiscal Second Quarter 2024 and Subsequent Operational Highlights
- Tytan Tiles Toy Brand launched its first licensed Disney Frozen Product on Amazon through its partnership with The Walt Disney Company.
- In one month during the quarter, since Tytan Tiles launched its Disney Frozen Kit on Amazon on October 17, 2023, it rose to #1 for Amazon's New Releases in Preschool Building Sets, #3 top seller in Magnetic Building Sets, and broke into the top 400 in all Toys and Games on Amazon.
- Subscription revenue across Health and Wellness grew approximately
5% per month. - Closed quarter with over 5,000 subscribers across Health and Wellness, up approximately
80% for 2023.
Financial Highlights for the Fiscal Second Quarter 2024 Ended December 31, 2023
Revenue for the fiscal second quarter 2024 totaled
Cost of revenue for the fiscal second quarter 2024 totaled
Gross profit margin for the fiscal second quarter of 2024 and 2023 was approximately
Sales and marketing expenses for the fiscal second quarter 2024 decreased
General and administrative expenses for the fiscal second quarter 2024 totaled
Adjusted EBITDA was approximately
The Company had a net loss from continued operations for the fiscal second quarter 2024 of
As of December 31, 2023, the Company had cash of
As of February 14, 2024, there are 20,889,384 shares of common stock outstanding.
Financial Results Conference Call
| Event: | Fiscal Second Quarter 2024 Financial Results Conference Call |
| Date: | Wednesday, February 14, 2024 |
| Time: | 4:30 p.m. Eastern Time |
| Live Call: | 1-877-407-9716 (U.S. Toll-Free) or 1-201-493-6779 (International) |
| Webcast: | https://ir.upexi.com/news-events/ir-calendar |
For those unable to join the conference call, a dial-in replay of the call will be available until February 28, 2024 and can be accessed by dialing + 1-844-512-2921 (U.S. Toll Free) or + 1-412-317-6671 (International) and entering replay pin number: 13744405. Additional details are available under the Investor Relations section of the Company's website: https://upexi.com/investors.
About Upexi, Inc.:
Upexi is a multi-faceted brand owner with established brands in the health, wellness, pet, beauty and other growing markets. We operate in emerging industries with high growth trends and look to drive organic growth of our current brands. We focus on direct to consumer and Amazon brands that are scalable and have anticipated, high industry growth trends. Our goal is to continue to accumulate consumer data and build out a significant customer database across all industries we sell into. The growth of our current database has been key to the year over year gains in sales and profits. To drive additional growth, we have and will continue to acquire profitable Amazon and eCommerce businesses that can scale quickly and reduce costs through corporate synergies. We utilize our in-house, SaaS programmatic ad technology to help achieve a lower cost per acquisition and accumulate consumer data for increased cross-selling between our growing portfolio of brands.
FORWARD LOOKING STATEMENTS:
This news release contains "forward-looking statements" as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this press release which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with business strategy, potential acquisitions, revenue guidance, product development, integration and synergies of acquiring companies and personnel. These forward-looking statements are made as of the date of this news release, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although we believe that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-K and other periodic reports filed from time-to-time with the Securities and Exchange Commission.
Adjusted EBITDA | ||||||||
| Three Months Ended | ||||||||
| 30-Sep-23 | 31-Dec-23 | |||||||
Net income (Net loss) GAAP | (1,356,388 | ) | (2,437,919 | ) | ||||
Interest expense, net | 874,185 | 1,077,084 | ||||||
Depreciation and amortization | 1,472,905 | 1,485,648 | ||||||
Income Tax | (472,367 | ) | (694,807 | ) | ||||
Stock Compensation | 421,887 | 330,584 | ||||||
Gain on sale of asset | (380,624 | ) | 39,691 | |||||
Change in derivative liability | - | - | ||||||
Lease Impairment | - | 228,830 | ||||||
Loss from discontinued operations | 193,040 | - | ||||||
Loss attributable to non-controlling interest | - | - | ||||||
| $ | 752,638 | $ | 29,111 | |||||
Adjusted EBITDA | ||||||||
| Three Months Ended | ||||||||
| 30-Sep-22 | 31-Dec-22 | |||||||
Net income (Net loss) GAAP | $ | (2,597,515 | ) | $ | 2,669,679 | |||
Interest expense, net | 161,970 | 1,789,299 | ||||||
Depreciation and amortization | 1,063,492 | 1,204,628 | ||||||
Income Tax | (708,201 | ) | 755,253 | |||||
Stock Compensation | 927,326 | 1,052,847 | ||||||
Gain on sale of asset | - | (7,564,363 | ) | |||||
Change in derivative liability | (1,770 | ) | 3,540 | |||||
Loss from discontinued operations | 644,615 | 731,717 | ||||||
Loss attributable to non-controlling interest | (148,005 | ) | (85,581 | ) | ||||
| $ | (1,409,397 | ) | $ | 557,019 | ||||
Use of Non-GAAP Financial Measures
The Company discloses and uses the above-mentioned non-GAAP financial measures internally as a supplement to GAAP financial information to evaluate its operating performance, for financial planning purposes, to establish operational goals, for compensation plans, to measure debt service capability, for capital expenditure planning and to determine working capital needs and believes that these are useful financial measures also used by investors. Non-GAAP adjusted EBITDA is defined as GAAP net income or net loss before interest, taxes, depreciation and amortization (EBITDA) adjusted for the non-cash stock compensation and stock option expense, acquisition, integration & restructuring expenses, charges and gains or losses from extinguishment of debt and other non-cash items. Non-GAAP EBITDA and non-GAAP adjusted EBITDA are not terms defined by GAAP and, as a result, the Company's measure of non-GAAP EBITDA and non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above, however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss as reported for GAAP on the Consolidated Statements of Operations, cash and cash flows on the Consolidated Statement of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company's financial statements prepared in accordance with GAAP. These non-GAAP financial measures are not a substitute for or presented in lieu of financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP should be read to obtain a comprehensive and thorough understanding of the Company's financial results. The reconciliations of non-GAAP EBITDA and non-GAAP adjusted EBITDA to GAAP operating income (loss) and/or GAAP net income (net loss) referred to in the highlights or elsewhere are provided in the schedules that are a part of this document.
Company Contact
Andrew Norstrud, Chief Financial Officer
Email: andrew.norstrud@upexi.com
Phone: (702) 332-5591
Investor Relations Contact
KCSA Strategic Communications
Valter Pinto
Email: Upexi@KCSA.com
Phone: (212) 896-1254
UPEXI, INC. | ||||||||
CONDENSED CONSOLDIATED BALANCE SHEETS (UNAUDITED) | ||||||||
| December 31, | June 30, | |||||||
| 2023 | 2023 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 1,844,420 | $ | 4,492,291 | ||||
Accounts receivable | 5,377,244 | 7,163,564 | ||||||
Inventory | 14,663,908 | 11,557,128 | ||||||
Due from Bloomios | - | 845,443 | ||||||
Prepaid expenses and other receivables | 697,559 | 1,307,299 | ||||||
Current assets of discontinued operations | - | 89,989 | ||||||
Total current assets | 22,583,131 | 25,455,714 | ||||||
Property and equipment, net | 7,600,398 | 7,526,463 | ||||||
Intangible assets, net | 11,298,110 | 13,571,960 | ||||||
Goodwill | 11,808,571 | 10,251,281 | ||||||
Deferred tax asset | 6,771,230 | 5,604,056 | ||||||
Other assets | 441,844 | 96,728 | ||||||
Assets held for sale | - | 936,054 | ||||||
Right-of-use asset | 1,657,463 | 410,811 | ||||||
Total other assets | 39,577,616 | 38,397,353 | ||||||
Total assets | $ | 62,160,747 | $ | 63,853,067 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 3,017,764 | $ | 3,969,746 | ||||
Accrued compensation | 495,228 | 533,842 | ||||||
Deferred revenue | 104,149 | - | ||||||
Accrued liabilities | 2,658,347 | 3,365,562 | ||||||
Acquisition payable | 300,000 | - | ||||||
Current portion of notes payable | 4,206,474 | 1,302,021 | ||||||
Current portion of convertible notes payable | - | 1,254,167 | ||||||
Current portion of acquisition note payable | 8,483,028 | 5,656,620 | ||||||
Current portion of related party note payable | - | 1,429,356 | ||||||
Line of Credit | 4,167,377 | 882,845 | ||||||
Current portion of operating lease payable | 823,702 | 419,443 | ||||||
Current liabilities of discontinued operations | - | 792,408 | ||||||
Total current liabilities | 24,256,069 | 19,606,010 | ||||||
Operating lease payable, net of current portion | 1,162,687 | 163,359 | ||||||
Related party note payable | 1,459,630 | - | ||||||
Convertible notes payable | 2,150,000 | 895,833 | ||||||
Acquisition notes payable, net of current | 3,199,683 | 7,605,085 | ||||||
Notes payable, net of current portion | 4,470,017 | 7,746,157 | ||||||
Total long-term liabilities | 12,442,017 | 16,410,434 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | 500 | 500 | ||||||
Common stock, | 20,307 | 20,216 | ||||||
Additional paid in capital | 52,437,336 | 51,522,229 | ||||||
Accumulated deficit | (26,995,482 | ) | (23,201,175 | ) | ||||
Total stockholders' equity attributable to Upexi, Inc. | 25,462,661 | 28,341,770 | ||||||
Non-controlling interest in subsidiary | (505,147 | ) | ||||||
Total stockholders' equity | 25,462,661 | 27,836,623 | ||||||
Total liabilities and stockholders' equity | $ | 62,160,747 | $ | 63,853,067 | ||||
UPEXI, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||
| Three Month's Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
Revenue | ||||||||
Revenue | $ | 21,827,827 | $ | 26,741,562 | ||||
Cost of Revenue | 13,556,574 | 16,655,117 | ||||||
Gross profit | 8,271,253 | 10,086,445 | ||||||
Operating expenses | ||||||||
Sales and marketing | 2,691,368 | 3,297,144 | ||||||
Distribution costs | 3,247,554 | 3,575,545 | ||||||
General and administrative expenses | 2,303,220 | 2,517,651 | ||||||
Share-based compensation | 330,584 | 1,052,847 | ||||||
Amortization of acquired intangible assets | 1,157,029 | 1,102,756 | ||||||
Depreciation | 328,619 | 240,958 | ||||||
| 10,058,374 | 11,786,901 | |||||||
Loss from operations | (1,787,121 | ) | (1,700,456 | ) | ||||
Other income (expense), net | ||||||||
Change in derivative liability | - | (3,540 | ) | |||||
Interest (expense) income, net | (1,077,084 | ) | (1,789,299 | ) | ||||
Other income (expense), net | (1,077,084 | ) | (1,792,839 | ) | ||||
Income (loss) on operations before income tax | (2,864,205 | ) | (3,493,295 | ) | ||||
Gain on sale of Infusionz and select assets | - | 7,564,363 | ||||||
Gain (loss) from the sale of Interactive Offers | (39,691 | ) | - | |||||
Lease settlement, California facility | 61,138 | - | ||||||
Lease impairment, Delray Beach facility | (289,968 | ) | - | |||||
(Loss) income from discontinued operations | - | |||||||
Income tax benefit (expense) | 694,807 | (755,253 | ) | |||||
Net income (loss) from continuing operations | (2,437,919 | ) | 3,315,815 | |||||
(Loss) income from discontinued operations | - | (731,717 | ) | |||||
Net loss attributable to non-controlling interest | - | 85,581 | ||||||
Net income (loss) attributable to Upexi, Inc. | $ | (2,437,919 | ) | $ | 2,669,679 | |||
Basic income (loss) per share: | ||||||||
Income (loss) per share from continuing operations | $ | (0.12 | ) | $ | 0.15 | |||
(Loss) income per share from discontinued operations | $ | - | $ | (0.04 | ) | |||
Total income (loss) per share | $ | (0.12 | ) | $ | 0.15 | |||
Diluted income (loss) per share: | ||||||||
Income (loss) per share from continuing operations | $ | (0.12 | ) | $ | 0.17 | |||
(Loss) income per share from discontinued operations | $ | - | $ | - | ||||
Total income (loss) per share | $ | (0.12 | ) | $ | 0.17 | |||
Basic weighted average shares outstanding | 20,306,871 | 17,540,427 | ||||||
Fully diluted weighted average shares outstanding | 20,306,871 | 19,030,705 | ||||||
SOURCE: Upexi, Inc.
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