Aterian(US:ATER)2025-11-13 21:39Revenue Performance - Net revenue decreased by $7.2 million, or 27.5%, to $19.0 million for the three months ended September 30, 2025, compared to $26.2 million for the same period in 2024[143]. - Net revenue decreased by $20.6 million or 27.7% to $53.8 million for the nine months ended September 30, 2025, compared to $74.4 million for the same period in 2024[155]. - Direct net revenue fell by $7.3 million, or 28.4%, primarily due to increased costs from newly implemented tariffs, leading to higher retail prices and reduced consumer demand[143]. - Direct net revenue decreased by $22.4 million or 30.4% due to newly implemented tariffs and a reduction in consumer demand[155]. Cost and Expenses - Cost of goods sold decreased by $2.1 million, or 19.8%, to $8.3 million for the three months ended September 30, 2025, compared to $10.4 million for the same period in 2024[145]. - Cost of goods sold decreased by $5.4 million or 18.8% to $23.2 million for the nine months ended September 30, 2025, compared to $28.6 million for the same period in 2024[157]. - Sales and distribution expenses decreased by $4.1 million, or 29.3%, to $9.8 million for the three months ended September 30, 2025, compared to $13.9 million in 2024[141]. - Sales and distribution expenses for the nine months ended September 30, 2025, were $31.9 million, down from $42.3 million in the prior year, a decrease of $10.4 million or 24.7%[159]. - General and administrative expenses decreased by $767,000, or 21.0%, to $2.9 million for the three months ended September 30, 2025, compared to $3.6 million in 2024[141]. - General and administrative expenses decreased by $4.76 million, or 34.5%, to $9.05 million for the nine months ended September 30, 2025, primarily due to a reduction in stock-compensation and headcount expenses[162]. Profitability - Gross profit margin declined to 56.1% for the three months ended September 30, 2025, down from 60.3% in the same period of 2024, primarily due to product mix and higher costs from tariffs[146]. - Gross profit margin decreased to 56.9% for the nine months ended September 30, 2025, down from 61.6% for the same period in 2024[158]. - The Company reported a gross profit of $10.7 million for the three months ended September 30, 2025, compared to $15.8 million for the same period in 2024, representing a decrease of 32.8%[200]. - Contribution margin for the three months ended September 30, 2025, was $2.96 million, which is 15.5% of net revenue, down from 17.0% in the same period of 2024[200]. - Adjusted EBITDA for the three months ended September 30, 2025, was $(0.43) million, compared to $0.49 million for the same period in 2024, indicating a decline in operational performance[201]. Losses - The company experienced an operating loss of $2.0 million for the three months ended September 30, 2025, compared to an operating loss of $1.7 million in the same period of 2024[141]. - Net loss increased by $508,000, or 28.7%, to $2.3 million for the three months ended September 30, 2025, compared to a net loss of $1.8 million in 2024[141]. - The net loss for the three months ended September 30, 2025, was $(2.28) million, compared to $(1.77) million for the same period in 2024[201]. - The company incurred a net loss of $11.0 million and used net cash flows from operations of $9.9 million during the nine months ended September 30, 2025[174]. Cash Flow and Liquidity - Net cash used in operating activities was $9.9 million for the nine months ended September 30, 2025, driven by net cash losses from operations of $7.9 million and a $2.0 million outflow from changes in working capital[166]. - As of September 30, 2025, the company had unrestricted cash of $7.6 million and an accumulated deficit of $722.7 million[174]. - The Minimum Credit Party Liquidity covenant was reduced to $5.0 million, contingent upon the delivery of a Liquidity Certificate evidencing liquidity of at least $6.8 million[186]. - The company is required to remain in compliance with financial covenants under the MidCap Credit Facility and was in compliance as of September 30, 2025[175]. - As of September 30, 2025, the outstanding balance on the MidCap credit facility was $6.2 million, down from $6.9 million as of December 31, 2024[187]. Strategic Initiatives - The company is exploring alternative sourcing outside of China to mitigate the impact of tariffs on its supply chain and margins[136]. - The company announced a fixed cost reduction plan on May 14, 2025, which included a workforce reduction affecting approximately 20 employees, expected to generate annualized savings of approximately $5 to $6 million[177][178]. - The company plans to continue exploring additional sources of outside capital to fund its operations and growth strategy, particularly for potential M&A opportunities[173]. - The Company has temporarily suspended its share repurchase program, which was authorized to acquire up to $3.0 million of common stock[188]. Market Conditions - The new U.S. tariff policies could materially increase import costs, potentially leading to higher prices and reduced consumer demand[189]. - The change in fair market value of warrant liabilities was a loss of $0.161 million for the three months ended September 30, 2025, compared to a gain of $0.143 million in the prior year, reflecting an 88.8% change[152]. - The change in fair market value of warrant liabilities increased by $0.622 million, or 85.2%, for the nine months ended September 30, 2025, primarily due to a reduced share price[164]. Estimates and Judgments - Estimates of recoverability of asset groupings are subject to uncertainty, including judgments on market growth rates and future sales price increases[207]. - Key factors influencing estimates include fluctuations in exchange rates, raw material prices, discount rates, and operating efficiencies[207]. - The company will closely monitor actual results versus expectations and any significant changes in current events that may affect future estimated cash flows[206].