Hour Loop(HOUR) - 2025 Q2 - Quarterly Results

Executive Summary & Management Discussion Hour Loop achieved its best Q2 performance with nearly doubled net income despite revenue decline, driven by efficiency and margin resilience, but provides no full-year guidance due to uncertainty Second Quarter 2025 Performance Highlights Hour Loop reported a strong Q2 2025, with net income nearly doubling despite a modest revenue decline, marking its best second quarter performance to date - Cash used in operating activities for the six months ended June 30, 2025, was $0.9 million, compared to cash provided of $0.9 million in the year-ago period[5] Key Financial Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($) | Q2 2024 ($) | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Net revenues | $27.1 million | $28.1 million | -3.4% | | Gross profit percentage | 57.2% | 55.7% | +1.5 pp | | Operating expenses as % of net revenues | 51.2% | 52.3% | -1.1 pp | | Net income | $1.2 million | $0.6 million | +100.0% | | Diluted EPS | $0.04 | $0.02 | +100.0% | Balance Sheet Highlights (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($) | Dec 31, 2024 ($) | Change ($) | | :-------------------------- | :------------ | :----------- | :------- | | Cash and cash equivalents | $0.3 million | $2.1 million | -$1.8 million | | Inventories | $20.9 million | $14.6 million | +$6.3 million | Management Commentary CEO Sam Lai acknowledged significant retail sector disruption from new U.S. trade actions and supply chain uncertainty - The retail sector faced "meaningful disruption" in Q2 2025 due to new U.S. trade actions targeting Chinese imports, which reshaped sourcing dynamics, pressured margins, and introduced heightened uncertainty across global supply chains[2] - Hour Loop delivered a strong quarter with net income nearly double compared to the same period last year, even as revenue declined modestly, marking its best second quarter performance to date[3] - The positive outcome was attributed to focused investments over several years to improve operating efficiency, streamline the cost base, and build margin resilience, resulting in expanded margins and reduced operating expenses[3] Full Year 2025 Financial Outlook Hour Loop is currently unable to provide forward-looking guidance for the full year 2025 due to ongoing economic uncertainty, primarily influenced by current tariff conditions - Hour Loop is not able to provide forward-looking guidance for the full year 2025 due to ongoing economic uncertainty, primarily influenced by current tariff conditions[8] Company Overview Hour Loop is a U.S. online retailer primarily on Amazon, managing over 100,000 SKUs, with plans for rapid expansion About Hour Loop, Inc. Hour Loop is a U.S. online retailer primarily operating as a third-party seller on Amazon.com, with a presence on its own website and other marketplaces like Walmart, eBay, and Etsy - Hour Loop is an online retailer engaged in e-commerce retailing in the U.S. market, primarily operating as a third-party seller on www.amazon.com, with negligible revenue from its own website and other marketplaces like Walmart, eBay, and Etsy[9] - The company manages more than 100,000 stock-keeping units (SKUs) across product categories including home/garden décor, toys, kitchenware, apparel, and electronics[9] - Hour Loop plans to expand its business rapidly in upcoming years by increasing the number of business managers, vendors, and SKUs[9] Consolidated Financial Statements This section presents Hour Loop's consolidated balance sheets, statements of operations, and cash flows, detailing the company's financial position and performance Consolidated Balance Sheets As of June 30, 2025, Hour Loop's total assets increased to $22.96 million from $19.97 million at December 31, 2024, primarily driven by a significant increase in inventory Consolidated Balance Sheet (June 30, 2025 vs. December 31, 2024) | ASSETS | June 30, 2025 ($) | December 31, 2024 ($) | | :---------------------------------- | :-------------- | :---------------- | | Cash | $325,354 | $2,119,581 | | Accounts receivable, net | $477,955 | $1,650,547 | | Inventory, net | $20,940,746 | $14,640,632 | | Prepaid expenses and other current assets | $525,287 | $327,894 | | Total current assets | $22,269,342 | $18,738,654 | | Property and equipment, net | $40,574 | $56,797 | | Deferred tax assets | $513,152 | $1,060,104 | | Operating lease right-of-use lease assets | $137,465 | $111,409 | | Total non-current assets | $691,191 | $1,228,310 | | TOTAL ASSETS | $22,960,533 | $19,966,964 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $8,584,090 | $4,176,305 | | Credit cards payable | $2,980,539 | $3,389,880 | | Short-term loan | $683,760 | $610,967 | | Operating lease liabilities-current | $75,897 | $114,540 | | Accrued expenses and other current liabilities | $732,367 | $2,322,535 | | Due to related parties | $2,660,418 | $4,192,995 | | Total current liabilities | $15,717,071 | $14,807,222 | | Operating lease liabilities-non-current | $61,334 | - | | Deferred tax liabilities | $19,464 | - | | Total non-current liabilities | $80,798 | - | | Total liabilities | $15,797,869 | $14,807,222 | | Common stock | $3,516 | $3,514 | | Additional paid-in capital | $5,832,685 | $5,802,686 | | Retained earnings (accumulated deficit) | $1,236,343 | $(595,175) | | Accumulated other comprehensive income (loss) | $90,120 | $(51,283) | | Total stockholders' equity | $7,162,664 | $5,159,742 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $22,960,533 | $19,966,964 | Consolidated Statements of Operations and Comprehensive Income For Q2 2025, net revenues decreased by 3.4% YoY to $27.1 million, but net income significantly increased to $1.18 million from $0.65 million in Q2 2024 Consolidated Statements of Operations (Three Months Ended June 30, 2025 vs. 2024) | Metric | Q2 2025 ($) | Q2 2024 ($) | | :---------------------------------- | :---------- | :---------- | | Revenues, net | $27,103,106 | $28,070,707 | | Cost of revenues | $(11,605,754) | $(12,445,297) | | Gross profit | $15,497,352 | $15,625,410 | | Selling and marketing | $11,715,571 | $12,843,697 | | General and administrative | $2,160,930 | $1,844,517 | | Total operating expenses | $13,876,501 | $14,688,214 | | Income from operations | $1,620,851 | $937,196 | | Income before income taxes | $1,582,681 | $929,912 | | Income tax expense | $(405,680) | $(280,762) | | Net income | $1,177,001 | $649,150 | | Foreign currency translation adjustments | $154,939 | $(8,058) | | Total comprehensive income | $1,331,940 | $641,092 | | Basic and diluted income per common share | $0.04 | $0.02 | Consolidated Statements of Operations (Six Months Ended June 30, 2025 vs. 2024) | Metric | H1 2025 ($) | H1 2024 ($) | | :---------------------------------- | :---------- | :---------- | | Revenues, net | $52,940,196 | $52,751,829 | | Cost of revenues | $(23,297,546) | $(22,674,213) | | Gross profit | $29,642,650 | $30,077,616 | | Selling and marketing | $22,962,568 | $24,017,888 | | General and administrative | $4,138,366 | $3,584,360 | | Total operating expenses | $27,100,934 | $27,602,248 | | Income from operations | $2,541,716 | $2,475,368 | | Income before income taxes | $2,518,617 | $2,432,850 | | Income tax expense | $(687,099) | $(717,886) | | Net income | $1,831,518 | $1,714,964 | | Foreign currency translation adjustments | $141,403 | $(24,591) | | Total comprehensive income | $1,972,921 | $1,690,373 | | Basic and diluted income per common share | $0.06 | $0.05 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, Hour Loop reported net cash used in operating activities of $0.93 million, a significant shift from $0.95 million provided in the prior year period Consolidated Statements of Cash Flows (Six Months Ended June 30, 2025 vs. 2024) | Metric | H1 2025 ($) | H1 2024 ($) | | :---------------------------------- | :---------- | :---------- | | Net income | $1,831,518 | $1,714,964 | | Net cash (used in) provided by operating activities | $(925,430) | $949,175 | | Net cash used in investing activities | $(801) | $(34,593) | | Net cash used in financing activities | $(839,000) | - | | Effect of changes in foreign currency exchange rates | $(28,996) | $(51,838) | | Net change in cash | $(1,794,227) | $862,744 | | Cash at beginning of the period | $2,119,581 | $2,484,153 | | Cash at end of the period | $325,354 | $3,346,897 | - Net cash used in operating activities for the six months ended June 30, 2025, was $(925,430), a significant change from $949,175 provided in the prior year period, primarily driven by a $6,716,310 increase in inventory[16][7] Legal & Investor Information This section outlines important disclaimers regarding forward-looking statements and provides contact information for investor inquiries Forward-Looking Statements This section advises that the press release contains forward-looking statements regarding Hour Loop's business strategy, product development, and industry trends, which are subject to numerous conditions and risks beyond the company's control - This press release contains forward-looking statements regarding Hour Loop's business strategy, product development, and industry trends, which are subject to numerous conditions, many of which are beyond the control of Hour Loop[10] - Undue reliance should not be placed on any such forward-looking statements, which are based upon current estimates and assumptions and are subject to various risks and uncertainties, meaning actual results could be materially different[10] - Hour Loop undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, after the date of this release, except as required by law[10] Investor Contact Investors can contact Hour Loop, Inc.'s Finance Department via email at finance@hourloop.com for inquiries - Investor inquiries can be directed to the Finance Department of Hour Loop, Inc. via email at finance@hourloop.com[11]