Grove laborative (US:GROV)2024-11-13 21:54Financial Performance - Revenue for the three months ended September 30, 2024, was $48.28 million, a decrease of 22% compared to $61.75 million for the same period in 2023[13]. - Gross profit for the three months ended September 30, 2024, was $25.60 million, down from $33.23 million in the prior year, reflecting a gross margin decline[13]. - Operating loss for the three months ended September 30, 2024, was $(6.75) million, compared to $(4.10) million for the same period in 2023[13]. - Net loss attributable to common stockholders for the three months ended September 30, 2024, was $(1.51) million, compared to a net loss of $(10.87) million in the prior year[13]. - The net loss for the three months ended September 30, 2023, was $33.7 million, compared to a net loss of $14.8 million for the same period in 2024[21]. - The company reported a net loss of $1,336,000 for the three months ended September 30, 2024, compared to a net loss of $9,811,000 in the same period of 2023[172]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $2,919,000, compared to a loss of $9,320,000 in the same period of 2023, indicating improved operational performance[172]. Cash and Liquidity - Cash and cash equivalents decreased to $50.8 million as of September 30, 2024, down from $86.1 million in the previous year[24]. - Total cash, cash equivalents, and restricted cash at the end of the period was $55.6 million, down from $94.7 million a year earlier[24]. - As of September 30, 2024, the company had $50.8 million in unrestricted cash and cash equivalents, with negative cash flows from operating activities of $10.0 million for the nine months ended September 30, 2024[205]. - The company has an accumulated deficit of approximately $635.9 million as of September 30, 2024, funded primarily through stock financings and debt[205]. - Total outstanding indebtedness was $32.2 million, net of debt issuance costs, as of September 30, 2024[205]. Expenses and Cost Management - Advertising expenses for the three months ended September 30, 2024, were $2.82 million, while product development expenses were $4.80 million[13]. - The company incurred stock-based compensation expenses of $11.9 million in Q3 2023, compared to $9.3 million in Q3 2024[21]. - Selling, general and administrative expenses decreased from $29.7 million in 2023 to $24.7 million in 2024 for the three months ended September 30[187]. - Interest expense for the three months ended September 30, 2024, was $2.9 million, down from $4.1 million in 2023[183]. - The company has implemented significant expense reductions since the second half of 2022, particularly in advertising, which have led to a substantial decline in revenue[151]. Revenue Breakdown - Grove Brands revenue for the three months ended September 30, 2024, was $18.61 million, down 33% from $27.65 million in the same period of 2023[54]. - Third-party products revenue for the three months ended September 30, 2024, was $29.67 million, a decline of 13% from $34.10 million in the same period of 2023[54]. - Grove Brands % Net Revenue decreased from 46% in September 2023 to 41% in September 2024, reflecting a shift towards third-party offerings[164]. Future Outlook and Strategy - Future outlook remains cautious due to potential risks and uncertainties affecting operations and financial performance[6]. - The company plans to continue focusing on product development and market expansion strategies to drive future growth[6]. - The company plans to exit the sale of Grove Co. products through brick and mortar retail channels by 2025, expecting minimal impact on revenue but improved profitability[145]. - The company is transitioning its ecommerce platform to Shopify, which is expected to enhance scalability and user experience[161]. - Operating expenses are expected to increase as the company plans to invest more in advertising to optimize customer acquisition costs[179]. Debt and Financing - The total debt as of September 30, 2024, is $32.166 million, a decrease from $71.662 million as of December 31, 2023[78]. - The Company entered into a revolving line of credit (Siena Revolver) with an initial commitment of $35.0 million, with an outstanding principal balance of $7.5 million as of September 30, 2024[86][89]. - The interest rate on the outstanding balance of the Siena Revolver was 9.18% as of September 30, 2024, with additional borrowing capacity of $6.8 million[89]. - The Company must prepay $10.0 million of the principal amount on the Structural Debt Facility on or before November 30, 2024[85]. Stock and Equity - The Company had cash equivalents of $48.514 million as of September 30, 2024, down from $83.431 million as of December 31, 2023[69]. - The Company has 29,028,103 shares of common stock reserved for future issuance as of September 30, 2024, including various warrants and stock options[118]. - The Company issued 396,825 shares to HCI Grove LLC for aggregate proceeds of $2.5 million under the HGI Subscription Agreement, with a registration statement filed on July 14, 2023[113]. - The Series A Preferred Stock Subscription Agreement with Volition Capital raised gross proceeds of $10.0 million for 10,000 shares, along with warrants to purchase 1,579,778 shares at an exercise price of $6.33[119]. Operational Metrics - DTC Total Orders decreased from 2,988 in September 2023 to 2,213 in September 2024, primarily due to a lower advertising spend strategy[165]. - DTC Active Customers remained stable at 1,019 in September 2023 but decreased to 710 in September 2024, indicating a decline in customer acquisition[166]. - DTC Net Revenue Per Order increased from $64 in September 2023 to $67 in September 2024, attributed to a favorable product mix and strategic price increases[167].