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Digital Brands Group(DBGI) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenue increased by 69.6% in Q2 2023 to $4.5 million compared to $2.6 million a year ago [26] - Gross profit margins improved to 52% from 42% a year ago, with gross margins increasing by 40.4% to $2.2 million [26] - Net income attributable to common stockholders was $5 million or $0.38 per diluted share, compared to a loss of $9.5 million a year ago [27] Business Line Data and Key Metrics Changes - Sales and marketing expenses decreased by 20.1% to $1.1 million compared to $1.4 million a year ago, with a sales and marketing expense ratio of 50.9% compared to 89.3% a year ago [6] - General and administrative (G&A) expenses decreased by 4% to $4.1 million compared to $4.2 million a year ago, with G&A as a percent of revenue declining to 90.7% from 160.1% a year ago [16] Market Data and Key Metrics Changes - The company is experiencing strong feedback from wholesale bookings for Q3 and Q4, indicating higher revenue expectations [4][24] - The company is back in the wholesale market with Bailey 44, receiving its first license income check soon [15] Company Strategy and Development Direction - The acquisition of Sundry is viewed as a tipping point for scaling revenue faster, reducing overhead, and generating positive EBITDA and cash flow [17] - New revenue channels, including a proprietary affiliate program and multi-brand retail stores, are set to launch in the fall [4][28] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the near and long-term future, indicating that the company has turned a corner and is experiencing significant momentum [18] - The company anticipates additional cost savings and synergies in Q3 and Q4, driven by layoffs and operational efficiencies [14] Other Important Information - The company expects to generate internal free cash flow on a weekly basis in October, which is seen as transformative [5] - The company has visibility into wholesale bookings, which are expected to drive higher revenues in the upcoming quarters [24] Q&A Session Summary Question: What are the expectations for revenue growth in the upcoming quarters? - Management indicated that based on current wholesale bookings and e-commerce trends, revenues for Q3 and Q4 will be meaningfully higher than Q2 [24] Question: How is the affiliate program performing? - The affiliate program has already created a waiting list due to its success, with past experiences showing significant revenue growth potential [25] Question: What impact has the Sundry acquisition had on the business? - The acquisition is seen as a game changer, providing the necessary scale to accelerate revenue growth and improve operational efficiencies [30]