Upexi(US:UPXI)2022-11-16 20:46Financial Data and Key Metrics Changes - Revenue for the first fiscal quarter ending September 30, 2022, totaled $11.6 million, an increase of 199% compared to $3.9 million for the same period the prior year, driven by growth across most product categories and sales platforms [9][20] - Cost of revenue during the quarter was $5.5 million, an increase of 334% compared to $1.3 million for the same period the prior year, primarily related to acquisitions [21] - Gross profit for the quarter was $6 million, an increase of $3.4 million compared to the same period in the prior year, with gross margins declining to 52% due to increased discounts and distributor sales [22] - Operating expenses totaled $9 million, an increase of 159% compared to $3.5 million for the same period in the prior year, driven by increased sales and marketing, distribution costs, and general administrative costs [23] - The company reported net losses from continuing operations of $2.7 million compared to net income of approximately $511,000 for the same period the previous year [24] - Cash and cash equivalents were $3.3 million, with stockholder's equity at $27 million as of the end of September 2022 [25] Business Line Data and Key Metrics Changes - The company has successfully closed several acquisitions, including Cygnet Online, VitaMedica Corporation, Interactive Offers, and LuckyTail, contributing to revenue growth [10][11][12] - VitaMedica has been a leading revenue driver with triple-digit growth year-over-year, primarily from Amazon sales [11] - LuckyTail entered the $200 billion pet market, showing double-digit year-over-year growth [12] Market Data and Key Metrics Changes - The company is focusing on high-margin growth areas and dependable sales visibility, particularly in health, wellness, pet, beauty, and toys [7][10] - The sale of select CBD assets for approximately $23.5 million is aimed at streamlining the business and focusing on essential consumer goods [13] Company Strategy and Development Direction - The company aims to project over $100 million in revenues for calendar 2023, reflecting effective execution of its business model and management expertise [9][33] - The strategy includes a balanced approach of growth with a focus on cost control while investing more in marketing and brand advertising for future growth [30] - The company is strategically positioned for success in various markets, with a focus on recession-resistant products [31] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic challenges but remains optimistic about strong direct-to-consumer sales [10] - The company expects to see continued growth in revenue across its brands and business segments, with a leaner operational structure post-CBD asset sale [29][31] - Management anticipates that acquisition opportunities are improving, with valuations aligning with strategic guidelines [32] Other Important Information - The company obtained a $3 million mortgage at an interest rate of 4.8% to reduce outstanding short-term acquisition loans, increasing available funds for future acquisitions [26] - The elimination of a $15 million senior secured debt facility is expected to reduce annualized interest expenses by approximately $900,000 [27] Q&A Session Summary Question: Capital allocation priorities post-CBD asset divestiture - Management is considering reinvesting in the business and sees more attractive acquisition multiples, indicating a preference for acquisitions over stock buybacks at this time [35][38] Question: Competitive landscape in the brand aggregator space - Management notes that competitors with high debt are struggling, creating more acquisition opportunities with favorable valuations [41][42] Question: Potential for revenue guidance exceeding $100 million - The guidance includes current operations, with potential for additional revenue from future accretive acquisitions [43]