PetMed Express(PETS) - 2025 Q3 - Quarterly Report

Financial Performance - For the three months ended December 31, 2024, the net loss was $707,000, a significant improvement from a net loss of $2,027,000 for the same period in 2023, representing a 65% decrease [101]. - Gross profit margin increased to 28.1% for the three months ended December 31, 2024, compared to 27.4% for the same period in 2023 [94]. - Adjusted EBITDA for the three months ended December 31, 2024, was $2,002,000, a 116% increase from $925,000 in the same period of 2023 [101]. - The company reported a net income of $5,373,000 for the nine months ended December 31, 2024, compared to a net loss of $2,448,000 for the same period in 2023 [102]. - Gross profit decreased by approximately $3.0 million, or 16.6%, to approximately $14.9 million for the quarter ended December 31, 2024, from approximately $17.9 million for the same quarter in 2023 [112]. Sales and Customer Metrics - Net sales decreased by approximately $12.3 million, or 18.9%, to approximately $53.0 million for the quarter ended December 31, 2024, compared to approximately $65.3 million for the same quarter in 2023 [103]. - Reorder sales decreased by approximately $9.0 million, or 16.6%, to approximately $45.1 million for the quarter ended December 31, 2024, compared to approximately $54.1 million for the same quarter in 2023 [104]. - New order sales decreased by approximately $2.7 million, or 31.0%, to approximately $6.1 million for the quarter ended December 31, 2024, compared to $8.8 million for the same quarter in 2023 [105]. - The company acquired approximately 63,000 new customers for the quarter ended December 31, 2024, compared to approximately 97,000 new customers for the same quarter in 2023 [106]. - Recurring net sales, including AutoShip & Save subscriptions and membership revenue, as a percentage of total gross sales was 56.2% for the quarter ended December 31, 2024, up from 52.2% for the same period last year [109]. Cost Management - Total operating expenses decreased to 29.0% of sales for the three months ended December 31, 2024, down from 32.1% in the prior year [94]. - Cost of sales as a percentage of sales decreased to 71.9% for the three months ended December 31, 2024, from 72.6% in the same period of 2023 [94]. - Advertising expenses as a percentage of sales decreased to 5.6% for the three months ended December 31, 2024, from 8.8% in the same period of 2023 [94]. - General and administrative expenses decreased by approximately $2.6 million, or 19.7%, to approximately $10.8 million for the quarter ended December 31, 2024, from approximately $13.4 million for the same quarter in 2023 [113]. - Advertising expenses decreased by approximately $2.8 million, or 48.2%, to approximately $3.0 million for the quarter ended December 31, 2024, from approximately $5.8 million for the same quarter in 2023 [115]. Economic Outlook - The company expects macroeconomic factors, including inflation and rising interest rates, to continue impacting revenue growth rates for the remainder of fiscal 2025 [92]. Cash and Capital Management - The company believes that its cash and cash equivalents will be sufficient to continue operations for at least the next twelve months [121]. - As of December 31, 2024, the company held $50.1 million in cash and cash equivalents, which generate interest income based on prevailing interest rates [126]. - A significant change in interest rates could impact the interest income generated from excess cash and cash equivalents [126]. - The company has no debt obligations as of December 31, 2024 [126]. - The primary source of working capital is cash from operations, with no alternative sources currently available [125]. - The company anticipates funding future capital expenditures from working capital funds [125]. Corporate Governance - The Board of Directors has elected to suspend the quarterly dividend indefinitely to focus on growth initiatives and higher return projects [123]. - The company has no material long-term or short-term commitments for capital expenditures, relying on working capital for necessary additions [125]. - As of December 31, 2024, the company had $1.1 million in outstanding lease commitments from the PetCareRx acquisition [124]. - Cash and cash equivalents are managed by a limited number of outside professional managers under investment guidelines set by the Board of Directors [126]. - The company does not hold any derivative financial instruments that could expose it to significant market risk [126].