Arcadia Biosciences(RKDA) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2024, total revenues were approximately $1.3 million, a 32% sequential increase and flat compared to the same period last year [14] - Zola sales increased 86% sequentially and 42% year-over-year, representing about 90% of total revenues [14] - Q2 gross profit was$ 673,000, a 30% increase compared to the previous quarter and a 4% increase year-over-year, resulting in a gross margin of 52% [15] - The loss from discontinued operations was $789,000, a decrease of 47% compared to Q1 2024 and a decrease of 61% compared to Q2 2023 [17] Business Line Data and Key Metrics Changes - The GoodWheat business has been classified as discontinued operations, and its historical results are no longer included in the P&L [5] - Zola Coconut Water has shown strong growth, with sales outpacing the category growth of 16% in Q2 2024 [10][11] Market Data and Key Metrics Changes - According to Nielsen data, the coconut water category sales increased 16%, while Zola sales increased 27% in the 13-week period ending June 29, 2024 [10] - Zola's sales growth continued into Q2, with expectations of further growth due to new distribution gains [11] Company Strategy and Development Direction - The company aims to become cash flow positive by reducing costs and growing the Zola brand [3][12] - The strategy includes monetizing wheat IP and exiting underperforming brands to streamline operations [20] - The focus for the remainder of 2024 is on reducing costs and accelerating Zola's growth, with expectations of revenues in line with 2023 levels [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Zola's growth potential and the impact of new product offerings and distribution [11][20] - The company expects to achieve a 50% decrease in cash usage in 2024 compared to 2023 [12] Other Important Information - The company completed two significant transactions in Q2 2024, monetizing parts of its wheat IP for a total of$ 10 million [4][5] - The company ended Q2 with $8.1 million in cash and short-term investments, a decrease from$ 8.5 million in the previous quarter [18] Q&A Session Summary Question: Are there any remaining crop trait assets that can be monetized? - Management confirmed that there are still a few traits in their library that are being worked on for potential monetization [21] Question: What is the timing for introducing additional Zola flavors? - Management indicated that pineapple and lime flavors just started shipping in Q2, with potential new flavors being explored for 2025 [22] Question: What market share is needed for sustainable profitability? - Management stated that they currently hold about 1% of the market and need to reach a low single-digit percentage to achieve breakeven [23] Question: Clarification on revenue makeup in Q2? - Management confirmed that there were no one-time revenues driving the outperformance in Q2 [25] Question: GLA revenue percentage in Q1 and Q2? - GLA represented 30% of revenue in Q1 and 10% in Q2, with expectations to sell through remaining inventory by the end of 2024 [26] Question: Expected cash burn exiting 2024 into 2025? - Management expects cash burn to be in the $7 million to$ 7.5 million range for 2024, with additional cost savings identified for 2025 [27][28]