Q3 2021 Charles & Colvard Ltd Earnings Call
[music].
Good day and welcome to the Charles <unk> Colvard third quarter fiscal year 2021 earnings conference call and webcast. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask the question. You May Press Star then one on your Touchtone zone to withdraw. Your question you May Press Star then two.
This earnings call may contain forward looking statements as defined in section 27, a of the Securities Act of 1933 as amended including statements regarding among other things the companys business strategy and growth strategy expressions, which identify these forward looking statements speak only as of the date the.
And is made these forward looking statements are based largely on the company's expectations and are subject to a number of risks and uncertainties some of which cannot be predicted or quantified and are beyond our control.
Future developments and actual results could differ materially from those set forth in contemplated by or underlying before looking statements in light of these risks and uncertainties. There can be no assurance that the forward looking information the proved to be accurate.
Company today's call is the supporting Powerpoint slide deck, which is available in the Investor Relations section of the company's website at IR Dot trials in call of our dot com slash of events.
<unk> will be hosting of Q&A session at the conclusion of prepared remarks should you have questions and you'd like to submit please email I are at Charles on Cologuard Dot Com. Please note. This event is being recorded I would now like to turn the conference over to Don O'connell, President and Chief Executive Officer. Please go ahead Sir.
Welcome everyone. Good afternoon today, we are going to report Charles <unk> Colvard, the fiscal 2021 third quarter results.
I'm excited to share with you that the company's momentum continues.
In Q3 fiscal 2021, we were able to deliver $9 $4 million on revenue.
With a meaningful gross margin of 46% achieving of net income of $1 million or <unk> <unk> per diluted share.
We increased our cash cash position by the 65% from a year ago quarter.
$19 $7 million, which is the 17% increase over our cash position from the prior quarter.
Our strong performance of the result of our continued execution of our strategic initiatives.
Look forward to discussing this in more detail later during the call, but now I'll turn the call over to our CFO Clint Pete on wrap the numbers for you.
Thanks, Don.
Today I'll provide a summary of key financials for Q3 fiscal 2021.
The detail can be found on our earnings press release that we issued this afternoon.
The form 10-Q, which we expect to file the season.
Please note that.
That all percentage comparisons are to the year ago quarter unless specified otherwise.
Let's start with revenue.
And total net sales for Q3, 2021 totaled $9 4 million versus $6 $5 million or an increase of 45%.
Net sales for the online channel segment, which includes Charles a cohort of Dot com.
Outlet dot com marketplaces drop ship retail and other per play outlets totaled $5 $6 million for the quarter or an increase of 45%.
Representing 59% of total net sales.
More specifically net sales of our transaction of website Charles on cohort Dot com increased by 65%.
Net sales for our traditional segment, which consists of wholesale and brick and mortar customers totaled $3 $8 million per the quarter.
Or an increase of 45%.
Representing 41% of total net sales.
Finished jewelry net sales increased 79% for the quarter as we continued to see strong demand for our premium jewelry.
On our online direct to consumer channels, and with our brick and mortar retail customers.
Yeah.
Loose jewel net sales increased 7% for the quarter.
This is due to increased demand from our domestic and international distributors.
Overall international net sales increased 38%.
Cross border trade sales on our transactional website Charles on the cohort of Dot com increased 15%. Additionally.
Additionally, we saw an increase in demand from our Asian distributors as they began to rebound from the impacts of COVID-19.
Moving on we delivered a gross margin of 46%.
The year ago quarter included a write off totaling approximately $5 $3 million of legacy material inventory, which led to a negative 41% gross margin for the year ago quarter.
For Q3, 2021 total operating expenses decreased 6%.
Representing 35 percentage of total net sales compared to 54% in the year ago quarter.
Sales and marketing expenses decreased 12% to $2 $2 million at.
G&A expenses increased 10% to $1 $1 million per the quarter.
We reported net income for Q3 2021 of $1 million.
<unk> <unk> per basic share and <unk> <unk> per diluted share.
Compared with a net loss of approximately $6 $2 million.
Or a loss of 21 per diluted share in the year ago period.
Our weighted average shares outstanding used in the calculation of <unk>.
Alluded earnings per share.
Approximately 35 million shares at March 31, 2021.
Compared to 29 million shares at June 30 of 2020.
This increase was driven by the issuance of approximately 800000 shares related to stock option exercises during the quarter.
Along with the dilutive effect of outstanding stock options based on our stock price as of March 31 2021.
Now, let's move on to the snapshot of our balance sheet.
Our liquidity and capital position remains solid as we ended the quarter of $19 $7 million of total cash.
<unk> to $14 $6 million at our last fiscal year end June 32020.
Our cash flow from operations was $2 $3 million for the quarter.
Compared to a negative $1 3 million in the year ago quarter.
Our working capital at March 31 increase on June 32020 by $12 $2 million to $29 $7 million.
In terms of other sources of liquidity, we continue to have access to a $5 million asset based credit facility with white Oak commercial finance.
As of March 31, 2021, we are not excess funds this credit facility.
In January of this year, we extended the lease on our corporate headquarters for an additional five years.
This amendment, which required a re measurement for accounting purposes did not have a material impact on our income statement or cash flow.
Balance sheet impact resulted in an increase in our right of use assets of $3 $9 million and lease liability of approximately $4 $4 million.
Inventory as of March 31, 2021, and totaled $28 9 million.
Compared to $36 million as of June 32020.
Loose jewels inventory was $16 9 million compared to $20 $8 million as of June 32020.
Finished jewelry inventory was $12 million compared to $9 $7 million as of June 32020.
To maintain stock levels of our growing demand requirements.
In conclusion.
We believe we had a strong quarter.
From both the net sales of profitability perspective.
With that I'll turn the call back over to dawn.
Thanks, Glenn These positive results are a reflection of our team's ability to execute and deliver on our strategic initiatives and business goals.
We continue to make strides in building robust reporting tools, furthering our ability to make measurable data driven decisions.
Operationally.
We expanded our capacity in order to meet the growing demand all the while decreasing operating expenses by 6%.
Overall, we believe we become more efficient, allowing us to successfully flex all areas of the business, especially.
Especially during the important Valentine's day season.
For example from January one to February 14th our online channel segment revenue increased 21% in.
And the demand on our transactional website, Charles <unk> Colvard Dot com grew by 38% over the same period last year.
And as our full quarter results reflect we continue to see significant topline growth beyond that holiday period.
As Colin stated also in January we renewed the lease on our corporate headquarters ensuring business continuity <unk>.
Included in the lease amendment.
We negotiated an allowance for leasehold improvements for up to $545000 and a rent abatement of approximately $214000.
These building improvements will allow us to support ongoing initiatives scaled distribution and manufacturing.
And expand sales and marketing functional areas to increase our digital and video capabilities.
Our sales and marketing teams continue to enhance our digital functionality and build out our digital roadmap.
This positions us to capitalize on innovative technology that is creating new digital commerce opportunities to generate new sources of revenue for the company.
Merchandising and product development continue to play an integral role in our success.
During the quarter, we were able to introduce new KD of lab grown diamond offerings as well as expanded on our patented signature collection with new new designs, featuring additional forever, one more tonight gem shapes and sizes.
Our <unk> business grew 49% over the year ago quarter, and Arcadia lab grown diamond business grew by 34% over Q2 fiscal 2021.
We believe this proves the value of our product line expansion and validates our belief that we're not experiencing cannibalization.
We were pleased.
<unk> the see significant growth in our traditional segment with a 45% increase of revenue.
As our distribution and brick and mortar retail partners continue to gain momentum post COVID-19 related impacts.
Our product brand strategy to elevate forever, one is resonating with the consumers and thus driving higher demand for our products.
Additionally, we expanded our Macy's in store program.
Adding nearly 20 more tonight jewelry styles within the quarter.
Our online channel segment remained strong with of 45% growth in revenue over the year ago quarter.
Which was largely fueled by increased net sales on our transactional website and from our drop ship retail partners.
Also during the quarter, we expanded product assortments with our online retailers to support their growing voice of the night demand.
Based on these positive results. We believe our current marketing strategy is working we continue to gain traction and building and elevating the Charles <unk> Colvard brand and our product lines forever, one moist tonight at Acadia lab grown diamonds.
Our more immersive shopping experiences such as live virtual consultations and live videos create a stronger bond with the consumer.
This allows us to be part of their buying journey in a meaningful way.
Looking forward, it's important for us to build out our internal video capabilities to educate and engage with our customers in real time and on demand.
Livestream shopping is of $66 billion business in China, and gaining popularity now in the U S. We expect to be well positioned to capitalize on this digital transformation and other opportunities in order to increase our market share.
We will continue to elevate the Charles on call of our brand <unk>.
Expand product offerings with forever, one <unk> 90 of Acadia lab grown diamonds engage with the consumers and shareholders to ensure we're meeting their expectations.
The support our retail and distribution partners as they experienced positive trends with more Tonight.
And.
Exploring new opportunities to expand Kt of lab grown diamonds into our sales and operations pipeline.
We're proud of the meaningful growth we've experienced over the past three quarters, but we will not grow complacent, we will be diligent in our quest to capture greater market share drive brand equity and further increase shareholder value.
With that I'd like to turn it back over to you for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone zone, if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two please limit yourselves to one question and one follow up if you have further questions.
The re enter the question queue at this time, we will pause momentarily to assemble our roster.
Our first question comes from Orion Cole of Cole capital.
Good afternoon, gentlemen, thank you for doing the conference call today.
One question.
As your press release shows your sales and marketing expenses of $2 2 million declined.
<unk> percent year over year.
Remarkably your sales grew by 45% year over year.
Explain what youre doing differently from a marketing perspective that you are spending less money, but it's still generating very healthy growth.
Yes, sure Ryan and thanks for pointing that out.
So strategically during what we call the transition into Q1, and Q2 and we've been speaking to it is we changed our entire marketing methodology of the strategy. So more focused on the mid to lower funnel type of conversion based model.
That's really critical for US also we can measure the ROI. We have also expanded on our analytics side of the business for.
Really just knowing where that consumer is in getting to those consumers that are predisposed to buying lab grown products in general or for example, moist tonight or lab grown diamonds specific to their needs.
In conjunction with that our marketing team has kind of had a complete transformation from personnel across the board.
We did decrease some of the <unk>.
Marketing spend just related to salaries and so forth. So.
Of that actually helped the cause of little bit and we were able to kind of meaningfully deploy some of those dollars into direct to paid and search. We also adopted of peso model, which is paid earned shared and owned.
Marketing strategy, so focusing more on shared content through our PR firm also through our marketing team earned media content and exposure further building awareness.
Has really helped the cause.
And actually the marketing team is doing a phenomenal job.
Of changing the aesthetic of the brand the look and feel.
And really just targeting those consumers.
That are effectively converting so they're doing a great job there so we.
We will we will look into the future to be able to kind of capitalize and expand on the spend to be able to increase topline growth too as well now.
Got it so given your successful of marketing this quarter do you have enough confidence on what Youre doing in terms of its repeatability that you would have confidence in.
Materially increasing your marketing dollars spend and have confidence that it will result in.
<unk>.
Even faster sales growth as the marketing.
Traction takes place and convert some of the sales.
Yes.
In short, yes, absolutely, but we will also add to that debt. We also expanded our product offerings to as well. So what does that do for us that gives us the opportunity to buy keywords in the lab grown diamonds space market more towards the lab grown diamond consumer to be able to kind of lift the overall business on both sides of the house now that we offer the consumer.
The the choice prior we weren't able to do that so so really that also helps the cause and also increases our market ability and our total Tam effect for the business.
Okay and last question as you know de beers of entered the space with their Lightbox brand on their selling through Blue Nile.
How do you go about trying to compete effectively with them I know there's room occupancy for multiple players, but the beer is evidently the investing large amounts of money like a $100 million plus.
Yes.
Nice shelf space of Blue Nile on on exclusive basis on the question. Then is how do you go about trying to compete and hopefully maybe even grow faster than it might box.
Well, that's a tough question. So the way we look at the beer as we look at the beers.
As the.
Probably 30000 pound gorilla, so to speak in the natural mind business right.
Testament to the lab grown movement that they've actually ventured into that business too as well and really.
We're spending a tremendous amount of capital in that space. So that validates the overall entire market and then also you're looking at Diamond Foundry, who just recently had a capital raise of two.
$200 million with the evaluation of $1 8 billion of 171 8 billion.
So that also further.
Elevate is kind of the overall awareness of lab grown.
Stones of whole so we're pleased with that the.
Early on estimates of the lab grown diamonds space was $5 2 billion. So we believe that there is plenty of room, but the answer your question specifically as it relates to Lightbox.
We.
They're doing more of a basic type of product right now and they are actually they have introduced colored diamonds to their product.
Colors of Assortments, but really just focusing on core basics our businesses is going after.
The fashion side to the bridal and we believe that our product mixes of premium grade of gemstones, So what differentiates us from them as we're specifically focused on net premium consumer that wants to do E F and G color grades and qualities that are <unk> or better.
Better they actually come to market they do they.
They do nice good they do do come to market with good quality and good standards, but we believe there is plenty of room for all of us.
Alright. Thank you congratulations and best of luck. Thank you very much of a high we appreciate the call.
Again, if you have a question. Please press Star then one of our next question comes from Richard Malinski.
Don Congratulations great quarter.
Loved the momentum and if you could give us your thoughts on the big news that came out yesterday.
<unk> about the I'm doing strictly lab grown diamonds.
The fact, you guys do you think of positive negative light and also.
Are you looking at the other teams like of Macy's that you could start up program first maybe on the Internet with them and then get into the stores because the success you've had with Macy's of using that for other chain, possibly in the next six to 12 months.
Yes, hi, Richard Thanks for the call. So let's address the Pandora conversation because it's all over the news right now absolutely of positive.
Move not only on their part, but overall it just solidifies the fact of what we've been saying for 25 years of the lab grown company.
It's really important to be mindful of the Earth and mindful of kind of what we're bringing into market, so sustainable and ethically sourced products. So certainly we do recycle and responsible metals all the time, which is really critical for our business and certainly the moist tonight is totally sustainable and ethically sourced and manufactured.
Sure.
The the Pandora model for them to shift completely to lab grown diamonds is very significant its significant for us that's significant for the movement and I believe that we will all capture greater market share because of it.
Certainly we're excited about it they have a different type of business too as well like I was referring prior to the protocol.
On.
With the ARIA that.
Certainly there are more gift, giving and they do some nice.
<unk> fashion product too as well, but they have a very unique and distinct product and we believe there's plenty of room for us of where we're excited about their entry and therefore, a and really the overall awareness that it's creating right now even for US. So we will believe will going to get a lot of lift from that too as well.
Yes. Thank you so much.
Second question is Jeff the other retailers like Macy's debt, possibly we could sign up with.
Yes.
Kind of loosened a little bit of kind of.
Lead you a little bit there that we're going to expand Kt of lab grown diamonds into our sales and distribution pipeline you don't want to get into the specifics right now, but it's not the comprehensive mortar it could be our drop ship partners.
It could be in multiple areas of the business right now were specific to Charles <unk>, <unk> Dot com, which we've experienced debt 34% growth over the quarter now mind you.
Last quarter was our holiday quarter. So the have a 34% growth in the diamond space on the lab grown diamonds space.
We believe it is meaningful.
But also I just wanted to call out too as well of 49% increase in the voice of night business too as well. So we will look to expand different channels for the Katy lab grown diamonds here shortly and we'll be talking about that in the coming quarters.
Thank you so much appreciate it great job again keep up thank you Sir appreciate it.
Okay.
Our next question comes from Edward Gilmore.
Hi, Don Congrats on the quarter just a quick question on the inventory position I wondered if you could add a little color as to whats in inventory.
The inventory currently and then also do you have the target number that youre looking to kind of get that down to you. Thank you.
You know we get this question a lot, but really the makeup of the inventory is real critical so our inventory levels of actually decreased all the while increasing our product offering between the lab grown diamonds all of the while increasing our position in store with macys on our consignment program and all of our asset programs.
So we need to support those businesses those are critical for us and also we need to understand that the supply chain constraints are affecting a lot of folks around the world and our industry certainly you've heard the news with India and so forth. So I wanted to be mindful of that I want to be ahead of it I want to be able to make sure that of my sales and operations pipeline team.
Forecasting teams have what they need to support kind of this momentum and this growth trajectory that we're on.
The composition of of.
Of the inventory is largely based on the finished jams and finished jewelry and those percentages. We feel we're very consistent with where we are on.
On our finished jewelry side, we probably have what $12 million whats just the.
This.
At $12 million right, we're right at $12 million on the finished jewelry side, which we think thats important.
Let's keep in mind, the DSL lays in the requirements for the Amazons the marketplaces.
Customers as well as our drop ship partners are very very stringent we need to ship either that day, if the order within a certain period of time, and we need to be able to execute and with the largest portion of our business driving to the online customer base and we need to make sure that we have adequate inventory to be able to support that costs as far as the gemstone raw.
<unk> and stuff, we've actually decreased debt number significantly. So we're real pleased with that and the makeup of those goods are really active and we're real pleased with that we also want to note too as well add debt. There is there is of cycle related to our cutting and fastening of our gemstones too as well so we have to be mindful of that.
And we have to be mindful of when we're going to go to market with the giving goods and what our strategy is for the holiday season, coming up which we generally start to begin now to to build out too. So we're pleased with that inventory will also look to be mindful and really kind of drive down where it needs to be driven keep in mind. We also launched.
Our moist outlet dot com, which is our disposition strategy and our direct to consumer website.
Debt is absolutely under its own label under more Tonight outlet Dot Com and then we will be moving any inactive or nonperforming goods throughout debt, which we spoke to in the last quarter and I have been speaking to the investor community. So we'll be.
We will be pushing what we can through those channels and through that channel to be able to kind of maintain the level of inventory thats critical to the business and critical to the growth that we anticipate the business going to.
Alright, Thank you and congrats again to you on the team on a good quarter. Thank you sort of appreciate it.
Our next question comes from Paul of the Mesquite of Pega.
Yeah.
Okay, and then could you maybe talk a little bit about how you see growing the two primary products the moist night and the diamonds and if he's the one of those is you know of greater priority than the other as far as investment you know in the category in the near in in the medium term.
Yeah. So that's a great question, Paul I mean, it's thoroughly the motion of your business you know we've been in business for 25 years, we've been make of strategic investments. We believe that now that we have the diamond choice. It's it's actually kind of building more awareness of the moist tonight that those who didn't know about voice and I've never even heard about it are actually driving to our website and they're learning about it and.
They're making that purchase as far as the the investments, we're continuing our straightforward trajectory and the momentum and the investments and are more Tonight, which is our house product and forever, one and we are actually working towards making meaningful investments into the diamond space and continue to grow that certainly in the lab.
Or on Diamond, we believe that the market opportunity is is tremendous probably more so than the moist tonight.
So I mean, you can you can probably read between the lines there that will see significant growth on both sides, but for right now what we're seeing of the most of my business is growing at a higher level on a higher paste on the diamond business, but again worst we're deploying capital towards marketing spend.
That speaks to both sides and we're letting that consumer choose so in the coming quarters he'll be able to kind of tell you where that customer is and what that customers choosing.
Thank you very much. Thank you I appreciate it Paul.
Our next question comes from Eric Landry of BMO capital.
Hi, Thanks.
Hi, Eric.
So the high.
[laughter].
Indeed, you'd say about the gross margin down a couple of hundred basis points.
Sure.
Wait for the queue.
No I mean sure we could talk about it so 46% margin is pretty strong right. We're we're we're still excited about that we're delivering 46%.
From time to time have to make certain decisions within the business from certain melts and different things like that and we certainly had an opportunity to do that and there was some impact related to that there was also some impact related to.
Valentine's day of sales right. So we had on beautiful Valentine's day of sales event, and we were able to.
Really capitalize on kind of the marketing plan and everything related to that and we did forego a little bit of margin creep on that but for the most part it's it's type of the milk.
Tied to the milk something to do with the medals yeah. So let's talk about that a little bit for the sorry about that sometimes people don't understand what that means so.
And every course of business you get returns you get.
The effective product from.
Out of the the shops in the factories and even customers returns or even.
[noise] broken stones, or whatever that is and we take down we compiled that and it goes into a bucket for all intensive purposes and net bucket starts to the.
To be comprised of loose gemstones that we can actually dismount and use those gemstones to be able to re cut those gemstones into fresh new product and then as far as the metals were able to take those metals and we're able to recycle of those metals because.
Because we are recycled company. So we liked the recycle of those metals and put it back the production, but there is some losses associated with with those metals in the shrinkage and so forth. So.
Does that cleared up for you a little bit of.
A little bit so it sounds like there may be of small element of of of one timer in the.
Sort of <unk> you are right. So we do that periodically rights of our responsibility we've got to look at that and if it gets too big we want to manage that we don't want it to get too big to where it actually has a material effect on the business all.
All of the while we're delivering great EPS here.
Or a nice we believe to be a nice ETS and we believe a nice strong profit of of $1 million.
Times, when it's more meaningful to be able to take those.
Okay.
I gotcha, okay. So without that event that may or may not be.
Kind of be termed at one time or the gross margin would of been a little bit higher who knows how much growth.
I mean, you can come per year conclusion, but certainly that's specific to what I addressed.
Okay, great so here's.
Here's the question that you probably can't answer, but I'll go ahead and ask anyways okay.
[laughter], what how much I mean, the growth was fantastic.
Off the charts can't complain with of how much of that growth.
You think you could attribute suggest a pent up demand effect.
And how much is sort of the secular growth story, while you take share from from the the the mind diamonds. So to speak anything you can say about that and the any thoughts or anything would be would be very helpful.
Sure. So I'd like to believe that that's the secular effect right from adding the product brand of lab grown diamonds from changing the marketing strategy.
Really kind of the overall culture of the business and the shift and what we're doing and and the effectiveness of that I know for free.
For sure.
That there is some pent up demand COVID-19 wise out there there's.
Stimulus happening there's things like that so that's why it's really important that we kind of keep the foot on the throttle and we kind of watch every single thing that's going on within the business.
But for US we're confident in kind of the growth, where we are and what we've accomplished.
But certainly the added product mix in the attic added product offering certainly helps the business certainly drives more awareness to us as of brand and really are overall positioning is just different right and we will continue to.
Focus on capitalizing on that.
Okay.
Here's the last one.
How much do you think the the growth can be attributed to your your designs. The the the designs that only you have and nobody else has as opposed to.
Just the popularity of lab grown and and moist Tonight.
Kind of.
Yeah, that's actually a fantastic question.
So we.
We've been speaking about it over several quarters and even prior or launch of signature collection, which is our own proprietary patented collection patented designs and is having a significant impact.
We believe within our business and actually of the consumer understand debt red thread in that theme that it is Charles and called bar specific to the brand furthering bolstering.
Our brand equity and who we are and what we bring to market. So we.
We don't actually disclose the percentages of numbers on that but.
Also climbing as well and it's of value add to everything we do here.
Alright, great. Thanks.
Keep it up keep kicking <expletive>.
We appreciate your man.
Our next question comes from Jason Europe, you're saying, there's some bumbershoot holdings.
Congratulations on a another strong quarter here, Jason redo the <unk>.
First question the the PPP alone obviously still had it through the end of the quarter of can you talk about forgiveness on that or.
Where it stands today or or when you're expecting that sure.
Sure I'll, let the clintons right, Thanks, Hey, Jason.
We are currently on that filed for our application.
[noise] for forgiveness today.
Our lender of recently told us that we could probably they'll start taking the applications in the fourth quarter. We expect maybe around June 1st of all be able submit and.
And then follow.
Follow the process of that forgiveness approval process of both SBA, Nevada.
Okay, and then just to go back to to <unk>, just I guess I need clarity not so so what you're saying on the growth rate in lab grown so excluding all of the moist tonight.
Cute three grew 34% sequentially on top of the holiday period, physical queue to or versus the initial launch on area. So it's versus Q too.
So that is specific so both the.
The moist night and the Katie lab grown diamond grew within this quarter, but it's specific to the queue to sales versus the Q3 sales.
So so you grew on top of of the holiday period.
So we grew 49% on the moist tonight over the year ago quarter, but.
But on the lab grown diamonds, we only launch the end of Q3. So we've been generated of revenue at the end of Q3, whatever those sales were were there but.
But it was nominal because we basically had eight days in that quarter, when we launched it or whatever reporting days. There was and then from there we went into Q2 holiday, where we when we launched the program. So we generated sales and Q2 right out of the gate and we continue to kind of increase the velocity of the sales and the lab grown.
Katie of brand and then from there we stopped at at the end of Q2, we took those numbers of revenue and then we actually just used all of Q3 sales against those numbers and that's where we had the 34% increase over Q2 fiscal 2000 to one got.
Got it fantastic and so then we just with the Latin or of diamonds.
How vertically integrated or technical know how that piece I know in moist night, there's very deep roots in.
In the company.
Versus the lab wrong with the <unk> are you developing that or is it more of the sourcing and branding.
Aspect.
So, let's talk about that a little bit so I mean I've been in the industry for over three and a half decades. So from the transfer of knowledge in the Diamond World.
It's second nature to me so that's really my.
Of my Forte as diamonds, and Gems, and then I came to Charles and Colbert and then we know only do lab grown voice night and lab grown diamonds. So for me of Diamond as of Diamond and certainly our lab grown diamond Katie as of Diamond. So same into the same entire language in conversation and dialogue of marketing strategy on.
Plans and designs that everything is exactly the same some of the differentiators between Katie on others as we only bring the market the premium grades of gemstones.
So that's really important really all of the gemstones of Iga certified or G cow or even gia for that matter.
So basically we would allow the third.
[noise] resident experts out there to third party.
Confirmation to be able to do that certainly the styling is important certainly the signature collection, bringing Katie of lab grown diamonds mounted in our proprietary signature patented collections is critical on that to the delineation from others.
And you'll look to us to try to become more vertically integrated.
As the road.
[noise] kind of continues in the business keeps case continues and we continue to grow the business.
In terms of the technology for for making it or expanding the brand from from the sales perspective.
Expanding the brand from the sales per perspective as of Givon. That's that's the natural progression of that consumers there that consumers buying we have the capacity we have the infrastructure. We have all elements in place to grow this thing as big as it wants to grow as far as the actual cutting in fastening, we do that with our moist of night gemstones, we do not do that on the.
The lab grown diamonds at this time right. So the progression could be one could think that we could actually be more vertically integrated on the diamond as the business starts to evolve in growth.
Alright awesome appreciate the answers there thanks.
Okay, Great I appreciate it.
This concludes our question and answer session I would like to turn the conference back over to Dawn O'connell President and CEO for closing remarks.
So we appreciate your time today on behalf of the entire Charles and call of our team I want to thank you for your continued interest.
And support for see THR, we look forward to the next calls keep in mind that if you want to reach out and have a one on one certainly you can go to IR at Charles in Khobar Dot com.
Requested appointment and Clint on myself will get on that call and we'll be happy to be as transparent as we can to answer any questions or comments, but thanks again, we enjoyed the time you'll be well.
The conference is now of included thank you for attending today's presentation you may now disconnect.
[noise].