Aterian(US:ATER)2020-03-10 04:46Financial Data and Key Metrics Changes - For the full year 2019, revenue increased approximately 56% to $114.5 million from $73 million in 2018 [6][24] - Fourth quarter revenue increased approximately 30% to $25.6 million from $19.7 million a year ago [6][18] - Gross margin for the fourth quarter decreased to 35.4%, down 773 basis points sequentially [18] - Adjusted EBITDA for the fourth quarter decreased to a loss of $7.6 million from a loss of $2.7 million in the third quarter [23][24] - Full-year EBITDA improved to a loss of $19.5 million from a loss of $28.6 million in 2018 [27] Business Line Data and Key Metrics Changes - Fourth quarter sustain revenue was approximately $20.3 million, down from $36.2 million in Q3 [21] - Launch revenue for Q4 was approximately $3 million, compared to $2.8 million in Q3 [21] - SaaS revenue remained flat at approximately $0.3 million for both Q4 and Q3 [21] - Liquidation and other revenue increased to approximately $2 million in Q4 from $1.4 million in Q3 [22] Market Data and Key Metrics Changes - The company launched 32 new products in 2019, compared to 11 in 2018 [6] - In Q4, 18 new products were launched, with 14 being non-environmental products [6] - The company aims to launch up to 20 new products in Q1 2020, with plans to double the number of launches in 2020 compared to 2019 [30] Company Strategy and Development Direction - The company is focused on disrupting the traditional CPG model through technology and supply chain optimization [7][11] - Plans to build a large and profitable company while maintaining a commitment to its vision [14] - The strategy includes vertical integration of technology with agile sourcing and supply chain [11][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in scaling the business model and overcoming skepticism from external observers [7][8] - The company expects net revenue for 2020 to be in the range of $160 million to $170 million, despite potential inventory constraints [31] - Management is cautious about the impact of COVID-19 on supply chain and product launches, particularly in the second half of 2020 [30][31] Other Important Information - The company may need to refile financial statements for Q2 and Q3 of 2019 due to changes in stock-based compensation expense recognition [15][16] - Cash used in operating activities for Q4 was $12.1 million, compared to cash provided by operating activities of $3.1 million in Q3 [28] - Total debt as of December 31, 2019, was $37.9 million, an increase from $30.1 million at the end of Q3 [28] Q&A Session Summary Question: Impact of Amazon's one-day shipping on the company - The company is working to move to one-day shipping to enhance service quality and reduce fulfillment costs, aligning with Amazon's strategy [34][35] Question: Reconsideration of China's role in the supply chain due to tariffs and coronavirus - The company is diversifying its supply chain and sourcing some products outside of China to mitigate tariff impacts and improve consumer value [36] Question: Clarification on expected revenue from successful product launches - The company maintains that successful product launches are expected to generate $1.5 million in annual revenue, despite referencing a lower figure for comparability [39] Question: Early successes of non-environmental products - The company reports an 80% success ratio for products that have exited the launch phase, with a focus on non-environmental products [42] Question: Potential inventory shortages due to shipment difficulties - The company has built up inventory for new products, but delays in manufacturing could lead to shortages in Q2 and Q3 if capacity does not normalize [45] Question: Impact of increased e-commerce demand on shipping times - The company has not experienced significant shipping delays despite increased demand for e-commerce purchases [49] Question: Revenue guidance for 2020 and product launch expectations - The revenue guidance of $160 million to $170 million for 2020 accounts for potential delays in product launches and replenishment issues [51][56] Question: SaaS business outlook and potential changes - The company is actively engaging with 46 different companies regarding SaaS opportunities, indicating a focus on growth in this area [78]