Grove laborative (US:GROV)2024-08-12 21:09Financial Performance - Revenue for Q2 2024 was $52.1 million, a decrease of 21.2% compared to $66.1 million in Q2 2023[11] - Gross profit for Q2 2024 was $28.1 million, down from $34.3 million in Q2 2023, reflecting a gross margin of 53.9%[11] - Operating loss for Q2 2024 was $6.9 million, an improvement from a loss of $9.6 million in Q2 2023[11] - Net loss attributable to common stockholders for Q2 2024 was $10.2 million, compared to a net loss of $10.9 million in Q2 2023[11] - The company experienced a net loss of $13.5 million for the six months ended June 30, 2024, compared to a net loss of $23.9 million for the same period in 2023, representing a 43.5% improvement[20] - Net loss for Q2 2024 was $10,061,000, a slight improvement from a net loss of $10,867,000 in Q2 2023[153] - Adjusted EBITDA for Q2 2024 was $1,058,000 compared to a loss of $2,610,000 in Q2 2023, indicating improved operating performance[153] - Adjusted EBITDA Margin improved to 2.0% in Q2 2024 from a loss of 3.9% in Q2 2023, reflecting better cost management[153] Assets and Liabilities - Total current assets decreased to $113.3 million as of June 30, 2024, down from $124.2 million at the end of 2023[8] - Total liabilities decreased to $121.1 million as of June 30, 2024, compared to $132.6 million at the end of 2023[9] - Cash and cash equivalents were $78.8 million as of June 30, 2024, down from $86.4 million at the end of 2023[8] - The total stockholders' equity as of June 30, 2024, was $686,000, a decrease from $21.1 million as of June 30, 2023[18] - The total debt, net of discounts, increased to $73,404,000 as of June 30, 2024, compared to $71,662,000 as of December 31, 2023[68] Cash Flow - The company utilized $10.8 million in cash for operating activities during the first half of 2024, compared to $5.6 million in the same period of 2023, indicating increased cash outflow[20] - Cash and cash equivalents at the end of the period were $78.8 million, down from $81.1 million at the end of June 30, 2023[23] - The company incurred net cash used in operating activities of $10.8 million for the six months ended June 30, 2024, compared to $5.6 million for the same period in 2023[195] - Net cash used in operating activities increased by $5.2 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to a $14.1 million increase in outflow related to changes in net operating assets and liabilities[196] Revenue Breakdown - Grove Brands revenue for the three months ended June 30, 2024, was $21.4 million, down 28.1% from $29.8 million in 2023[50] - Third-party products revenue for the three months ended June 30, 2024, was $30.7 million, a decrease of 15.6% from $36.3 million in 2023[50] - Grove Brands % Net Revenue decreased to 42% in Q2 2024 from 45% in Q2 2023, attributed to a decline in existing customer orders and new customer orders[144] Operating Expenses - Operating expenses decreased due to lower fulfillment costs and absence of charges related to becoming a publicly traded company[162] - Advertising expenses decreased by $2.2 million, or 48%, for the three months ended June 30, 2024, compared to the same period in 2023[173] - Selling, general and administrative expenses decreased by $8.0 million, or 23%, for the three months ended June 30, 2024, compared to the same period in 2023[176] Inventory and Purchases - Inventory, net was $27.8 million as of June 30, 2024, slightly down from $28.8 million at the end of 2023[8] - The Company’s top five suppliers represented approximately 40% of total inventory purchases for the six months ended June 30, 2024, down from 50% in the same period of 2023[42] - As of June 30, 2024, the company had merchandise purchase commitments of $10.3 million, down from $14.1 million as of December 31, 2023[77] Strategic Initiatives - The company anticipates continued focus on product development and market expansion strategies moving forward[5] - The company is pursuing partnerships with a variety of retailers to expand its distribution and increase the number of retail products offered[137] - The company plans to optimize customer acquisition costs while improving conversion rates on its DTC platform, with a strategy to increase advertising spend as conversion improves[138] Stock and Equity - The company issued 872 common shares upon settlement of restricted stock units, net of tax withholdings, during the first half of 2024[16] - The total shares of common stock reserved for future issuance amounted to 23,266,254 as of June 30, 2024[101] - The Company granted 2,460,954 Restricted Stock Units (RSUs) during the six months ended June 30, 2024[115] Debt and Financing - The Structural Debt Facility has an outstanding principal of $72,000,000 with an effective interest rate of 21.11%[72] - The Company must maintain a minimum of $57,000,000 in unrestricted cash to comply with the covenants of the Structural Debt Facility[70] - The company entered into a subscription agreement on August 11, 2023, raising gross proceeds of $10.0 million through the issuance of Series A Redeemable Convertible Preferred Stock[183] Accounting and Compliance - The company is currently evaluating the impact of recently issued accounting standards on its consolidated financial statements and disclosures[53] - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to delay the adoption of new accounting standards[201] - The company is classified as a "smaller reporting company," with a market value of stock held by non-affiliates below $250 million[202]