Upexi(US:UPXI)2024-02-15 01:43Financial Data and Key Metrics Changes - Revenue for fiscal second quarter 2024 totaled $21.8 million, down from $26.7 million year-over-year and $27.3 million sequentially [19] - Adjusted EBITDA was approximately $29,000, a decrease from $557,000 year-over-year and $750,000 sequentially [25] - Gross profit margins increased to 38% from 31.8% in the previous quarter [13][21] Business Line Data and Key Metrics Changes - Brand product sales increased 16.7% sequentially to $7.7 million, compared to $6.6 million in the prior quarter [15][20] - Sales and marketing expenses decreased by 18% year-over-year, reflecting a strategic focus on long-term recurring sales growth [22] - Cost of revenue decreased to $13.6 million from $16.7 million year-over-year and $18.6 million sequentially [21] Market Data and Key Metrics Changes - Subscription revenue across health and wellness grew approximately 5% month-over-month [16] - The company is focusing on high-margin recurring revenue brand businesses amid challenging market conditions [14] Company Strategy and Development Direction - The company is prioritizing investments in higher-margin brand products and reducing reliance on re-commerce revenue [15][18] - Consolidation of manufacturing facilities is expected to save $450,000 to $550,000 per quarter, totaling approximately $2 million annually in G&A expenses [17] - Management aims to increase brand revenue as a percentage of overall sales, focusing on higher gross margin businesses [38] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive long-term growth and profitability despite current market challenges [18] - The company anticipates that gross margins will continue to improve in the coming quarters [38] Other Important Information - As of December 31, 2023, the company had cash of $1.8 million and total stockholders' equity of approximately $25.5 million [26] - There are 20,889,384 shares of common stock outstanding as of February 14, 2024 [26] Q&A Session Summary Question: Insights on the re-commerce business and inventory issues - Management indicated that the decrease in re-commerce revenue was due to timing and a focus on maintaining margin profiles, leading to a build-up in inventory [29][30] Question: Margin hurdles in the re-commerce business - Management clarified that while there are good opportunities, the focus has shifted more towards brand business, which has higher margins [33] Question: Growth in brand sales and channel strategy - Management confirmed that brand sales growth was led by health and beauty products, with a continued focus on direct-to-consumer channels for higher margins [35]