Xcel(XELB) - 2025 Q2 - Quarterly Results

Executive Summary and Key Highlights Xcel Brands reported stable Q2 2025 revenue despite a year-over-year decline, strengthened its balance sheet, and projects break-even Adjusted EBITDA by year-end - The CEO highlighted the stability of current revenue streams and a strengthened balance sheet from recent financing, which will support the launch of new creator/influencer brands starting later in the year and in 2026[3] - The company's brand portfolio social media following increased from 5 million to 43 million in the second quarter, driven by new influencer brand announcements[8] Q2 2025 Key Metrics | Metric | Value | Note | | :--- | :--- | :--- | | Total Revenue | $1.3 million | Essentially flat compared with Q1 2025 | | GAAP Net Loss | $4.0 million | Includes non-cash charges related to debt refinancing | | YTD Adjusted EBITDA (2025) | -$1.0 million | A 38% improvement from -$1.6 million in the first six months of 2024 | - The company projects it will approach break-even monthly Adjusted EBITDA by the end of 2025[8] Financial Performance Analysis Q2 2025 financials were heavily impacted by brand divestiture, leading to a 55% revenue fall and net loss, but costs were reduced and six-month Adjusted EBITDA improved Second Quarter 2025 Financial Results Q2 2025 revenue decreased 55% to $1.3 million due to brand divestiture, resulting in a $4.0 million net loss, though Adjusted EBITDA improved 45% excluding the divested brand Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1.3M | $2.9M | -55% | | Net (Loss) Income | ($4.0M) | $0.2M | N/A | | (Loss) Earnings Per Share | ($1.66) | $0.08 | N/A | | Adjusted EBITDA | ($0.3M) | ($0.04M) | -650% | - The year-over-year revenue decrease was driven by a decline in net licensing revenue following the June 30, 2024 divestiture of the Lori Goldstein brand[4] - Direct operating costs and expenses decreased by 39% to $1.9 million, reflecting cost reductions and the impact of an employee retention tax credit, with a target annual run rate of less than $10 million for these expenses[5] - The company recognized a $1.9 million loss on the early extinguishment of debt related to refinancing its term loan[6] Six Month 2025 Financial Results H1 2025 revenue decreased 48% to $2.7 million due to brand divestiture, resulting in a $6.8 million net loss, while Adjusted EBITDA improved 38% to negative $1.0 million Six Months 2025 vs 2024 Performance | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2.7M | $5.2M | -48% | | Net Loss | ($6.8M) | ($6.1M) | +11.5% | | Loss Per Share | ($2.84) | ($2.78) | +2.2% | | Adjusted EBITDA | ($1.0M) | ($1.6M) | +38% | - Direct operating costs and expenses for the six-month period decreased by 41% to $4.2 million, primarily due to management's cost reduction and restructuring initiatives[10] - A $1.9 million loss on early extinguishment of debt was recognized during the six-month period[11] Financial Position and Liquidity As of June 30, 2025, Xcel Brands reported $22.5 million in equity, $1.0 million cash, and $11.8 million debt, with liquidity enhanced by a $2.6 million post-quarter equity offering Balance Sheet As of June 30, 2025, the balance sheet showed $22.5 million in equity, $1.0 million cash, $0.7 million working capital, and $11.8 million debt, bolstered by $2.6 million August equity offerings Key Balance Sheet Items (June 30, 2025) | Item | Value (approx.) | | :--- | :--- | | Stockholders' Equity | $22.5 million | | Unrestricted Cash & Equivalents | $1.0 million | | Working Capital | $0.7 million | | Long-Term Debt | $11.8 million | - In August 2025, the company closed public and private placement equity transactions for combined gross proceeds of approximately $2.6 million, which increased liquidity[15] Cash Flow H1 2025 net cash used in operations increased to $3.8 million, while financing activities provided a $4.5 million net cash inflow, resulting in a $0.7 million net increase in cash Six-Month Cash Flow Summary (in thousands) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $(3,798) | $(2,883) | | Net Cash from Investing Activities | $(10) | $(104) | | Net Cash from Financing Activities | $4,524 | $1,652 | | Net Change in Cash | $716 | $(1,335) | Company Overview and Forward-Looking Statements Xcel Brands is a media and consumer products company specializing in social commerce and livestream shopping for its lifestyle brands, with future results subject to risks and uncertainties - Xcel Brands engages in designing, licensing, marketing, and selling consumer products through livestreaming, social commerce, and traditional retail channels[17] - The company's brand portfolio includes owned brands like Halston and Judith Ripka, co-branded collaborations, and licensed brands like Isaac Mizrahi, reaching over 43 million social media followers[17][19] - The press release includes forward-looking statements regarding future financial performance and strategic plans, which are subject to various risks and uncertainties as detailed in the company's SEC filings[20] Appendix The appendix provides unaudited consolidated financial statements for Q2 and H1 2025, including key financial statements and detailed reconciliations of non-GAAP measures to GAAP equivalents Non-GAAP Financial Measures This section defines and reconciles non-GAAP measures like Adjusted EBITDA to GAAP equivalents, used by management for consistent performance comparison by excluding non-core items - The company uses non-GAAP measures like Adjusted EBITDA and non-GAAP net loss to provide supplemental information to investors by adjusting for costs and events not representative of core business operations[24] Reconciliation of Net Loss to Adjusted EBITDA (Q2) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net (loss) income attributable to Xcel | $(3,988) | $195 | | Adjustments (Interest, Taxes, D&A, etc.) | $3,689 | $45 | | Adjusted EBITDA | $(299) | $(40) | Reconciliation of Net Loss to Non-GAAP Net Loss (Q2) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net (loss) income attributable to Xcel | $(3,988) | $195 | | Adjustments (Amortization, stock comp, etc.) | $3,092 | $(104) | | Non-GAAP net loss | $(896) | $(299) | Consolidated Financial Statements This section presents detailed unaudited financial tables, including Q2 2025 Statement of Operations with a $4.0 million net loss, Balance Sheet with $47.2 million assets, and Cash Flows showing $3.8 million net cash used in operations Consolidated Statement of Operations Highlights (Q2) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net revenue | $1,321 | $2,954 | | Gross profit | $1,321 | $2,916 | | Operating loss (income) | $(1,654) | $307 | | Net (loss) income | $(3,991) | $161 | Consolidated Balance Sheet Highlights | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $47,189 | $53,756 | | Total Liabilities | $24,693 | $25,358 | | Total Stockholders' Equity | $22,496 | $28,398 | Consolidated Statement of Cash Flows Highlights (Six Months) | (in thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,798) | $(2,883) | | Net cash provided by financing activities | $4,524 | $1,652 | | Net increase (decrease) in cash | $716 | $(1,335) |