Financial Performance - For the three months ended June 30, 2024, the company reported a net loss of $3,388 and used cash in operations of $3,880, with an accumulated deficit of $52,365 as of June 30, 2024[18]. - Total revenues for the three months ended June 30, 2024, were $974, a decrease from $988 for the same period in 2023, with wholesale revenues at $52 and ecommerce revenues at $922[23]. - Gross profit for the three months ended June 30, 2024 was $356 million, a decrease of $126 million or 26% from $482 million in the prior year, with gross margins dropping to 36.5% from 48.8%[79]. - Adjusted EBITDA for the three months ended June 30, 2024, was a loss of $2,907 million, compared to a loss of $1,963 million in the same period of 2023[125]. - The company recorded a net loss of $3,388 for the three months ended June 30, 2024, compared to a net loss of $2,673 in the same period in 2023[138]. Cash Flow and Liquidity - As of June 30, 2024, cash and cash equivalents totaled $1,102, with restricted cash of $2,850, and an accumulated deficit of $52,365[129]. - Cash balances decreased to $3,465 million as of June 30, 2024, from $7,187 million at March 31, 2024[63]. - Net cash used in operating activities for the three months ended June 30, 2024 was $3,880, compared to $803 for the same period in 2023[137]. - The company had no cash flows from financing activities in Q2 2024, while Q2 2023 provided $1,242 mainly from common share issuance[142]. - The company plans to alleviate going concern doubts by exploring short-term loans, long-term funding sources, and improving margins in the next financial year[19]. Inventory and Supply Chain - The company experienced a significant supplier concentration, with Toray International Inc. supplying 52% of the fabric used in manufacturing for the three months ended June 30, 2024[28]. - The total inventories, net as of June 30, 2024, were $2,018,000, down from $2,230,000 as of March 31, 2024, indicating a decrease of about 9.5%[48]. - The Company periodically reviews its inventories and makes provisions for obsolete, damaged, or quality-issue goods, adjusting the provision based on market conditions and future demand[153]. Revenue Breakdown - The company operates primarily in one business segment, product sales, with geographic revenue distribution as follows: U.S. (38%), U.K. (25%), Europe (excluding U.K.) (18%), and Rest of the World (19%) for the three months ended June 30, 2024[26]. - Ecommerce revenue decreased by $35 million or 3.7% to $922 million, while wholesale revenue increased by $21 million or 67.7% to $52 million[111]. - The return rate on discounted products increased to 49% for the three months ended June 30, 2024, compared to 34% for the same period in 2023[75]. Expenses and Cost Management - Selling, general and administrative (SG&A) expenses rose by $816 million or 33% to $3,298 million, driven by increased stock compensation and personnel costs[116]. - Marketing and advertising expenses decreased by $256 million or 36% to $453 million, attributed to lower stock compensation and reduced photoshoot costs[117]. - Cost of goods sold increased by $112 million or 22% to $618 million, primarily due to increased import duty and freight[114]. Strategic Initiatives - The company plans to shift towards direct-to-consumer revenue, expecting a double-digit percentage point improvement in gross margin over time due to channel mix[82]. - The company aims to broaden its product offering, including expanding into activewear, loungewear, and swimwear, to reduce seasonality and increase revenues[99]. - The company is exploring entry into the Chinese market, projected to become the largest winter sports market, with a small inventory test on Tmall planned for November 2024[93]. - The company plans to open pop-up stores in strategic locations starting in fiscal year 2025, with a six-month lease already executed for a pop-up in SOHO, New York[102]. Stock and Compensation - The Company had 1,616,550 options to acquire common stock as of June 30, 2024, compared to 299,957 in the previous year[37]. - The total stock compensation expense recognized for the three months ended June 30, 2024, was $293 million, compared to $10 million for the same period in 2023[57]. - The intrinsic value of the outstanding options under the 2021 Plan was $350 million as of June 30, 2024[57]. Market and Economic Conditions - The company has substantial doubt about its ability to continue as a going concern, as noted by its independent registered public accounting firm[136]. - The Company is beginning to observe increases in costs of goods sold, particularly in transportation, which may affect financial performance if inflation persists[159]. - Revenue is primarily generated in U.S. dollars, U.K. pounds, and euros, exposing the Company to foreign exchange risk due to currency fluctuations[161].
Perfect Moment(PMNT) - 2024 Q2 - Quarterly Report