Q3 2021 Aterian Inc Earnings Call
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Good day, Thank you for standing by and welcome to the atone.
And again in Q3 earnings report conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during that session you will need to press star one on your telephone keypad.
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Q.
I would now like to hand, the conference over to your Speaker today, Mr. Gozofsky director of Investor Relations and corporate development.
Floor is yours.
Thank you for joining us today to discuss <unk> third quarter 2021 earnings results.
Today's call are <unk>, <unk> co founder and CEO and are truly Rodriguez, our chief financial Officer.
A copy of today's press release is available on the Investor Relations section of <unk> website at <unk> Dot IL.
I would like to remind you that certain statements. We will make in this presentation are forward looking statements and these forward looking statements reflect <unk> judgment and analysis only as of today and actual results may differ materially from current expectations based on a number of factors affecting <unk> business.
Accordingly, you should not place undue reliance on these forward looking statements.
For a more thorough discussion of the risks and uncertainties associated with the forward looking statements to be made on this conference call and webcast. We refer you to the disclaimer regarding forward looking statements that is included on our third quarter earnings release, as well as our filings with the SEC.
We do not undertake any obligation to update or alter any forward looking statements, whether as a result of new information future events or otherwise.
In addition, the company may refer to certain non-GAAP metrics on this call.
Explanation of these metrics can be found in the earnings release filed earlier today.
With that I will turn the call over to Jenny.
Yeah.
Thank you.
And thank you everyone for joining us today.
Our third quarter was marked by continued global supply chain disruption and pressure on our business due to selling cost of everything from raw material to international shipping rates.
Okay.
We may take on many challenges daily, including supply chain infrastructure product and brand launches M&A integration global expansion and software development.
But of all the things we build we cultivate a relentless culture of growth and adaptability.
The obstacles and view the failure of the stepping stones on our path to building, a leading consumer product platform.
We welcome challenges as opportunities to strengthen our business and that.
We need to reap the benefits also have left in the wake up a crisis.
This past quarter.
We brought an opportunity to improve our supply chain resilience by adopting how we move shipping containers from our manufacturers to our fulfillment centers.
Want to thank our logistic teams for their perseverance their ability to create strategic relationships with our logistics partners.
I'm glad to share that we've specifically seen Amazon stepping in to assist us and its ecosystem of third party sellers in general.
Grateful for their help to asterias.
Thanks to various programs provided to us by Amazon Global logistics, we've been able to secure a very competitive shipping rates were approximately 50% of our projected revenue in the next 12 months.
We also secured reduced rates would flex board.
And <unk>.
Other partners on logistics side.
As well as some other manufacturing partners in China, which will help us leverage their relationships with Chinese shipping companies.
In addition to securing better rates for shipping we ran on intends to three months process to rebuild our internal plan around an optimized manufacturing and shipping strategy.
Designed to mitigate additional distribution disruptions going into next year.
In parallel we reached an agreement with our lender to reduce our debt facility from $92 million to $25 million.
This important process as well it directly by myself under an all hands on deck mentality and overseen by the board of directors.
I wanted to take the opportunity to thank our entire team for all the hard work that went into mitigating the impact of the global supply chain disruptions on our company with.
We presented to our board a strong conservative based internal plan that we feel can drive sustainable growth for the company it's important to emphasize.
But while some aspects of the plan are still being worked on and not yet finalized we believe that the more challenging parts are behind us.
We are closely following the impact.
The supply chain price than our competitors.
While we consider ourselves to have a high degree of sportsmanship and which many of our competitors a lot of success with that again the current shipping prices.
We're also excited by our belief that there will be ample consolidation opportunities on the outside of this crisis, we believe that excluding any kind of black Swan events, we can't foresee.
It's going to be in a strong position to reignite our M&A strategy.
As of today approximately $10 billion in total have been investing into aggregators looking to build a leading e-commerce platform for consumer brands on marketplaces and.
In the third quarter alone aggregated raised approximately $1 2 billion.
We're really excited to see that the investment community is paying attention to our vision, we pioneered in 2014.
And we continue to believe that our years of investment in infrastructure technology and expertise put US ahead of the pack.
With regards to execution.
Most of our competitors are financially engineered access to abundant low cost capital, but im not treated the efficiency required for long term sustainable execution at scale.
One data point that investors should pay close attention to when evaluating the execution of companies in the space is revenue per employee.
<unk> revenue per employee is approximately.
Based on our current TTM results and that is a direct result of our investment in our software platform and agile supply chain infrastructure.
And the long term, we believe our proprietary technology to automate the tedious manual processes performed by target SMB brand being aggregated. It is critical for the model to succeed.
The macro number around.
Around supply chain normalizes in the dust settles it will be important for us to continue to push our M&A strategy forward in 'twenty two and beyond.
We'll speak in more detail about our strategy for 2022, and we'll have some exciting new initiatives to share with our shareholders. In the next few months Directionally. Our priorities include diversifying our owned and operated brands by looking at launching more.
And leveraging supply chain based in the U S South America and Eastern Europe.
We're also going to put a lot of focus on organic growth through additional channels direct to consumer sales through our website and international expansion. We've heard concerns from investors regarding the organic growth of our core business.
I want to remind those who started to follow up more recently, but before.
We started investing in our M&A strategy, we grew the business organically through launching products.
I'll take a 50% between 2017 and 2020.
Like many other ecommerce companies ourselves were boosted in 2020 by the COVID-19 pandemic.
<unk> suffered from a decline in the growth of our organic business in 2021 as compared to 2020.
Amazon itself seemed a little disappointing effect this year.
Combination of reopening the traditional brick and mortar readout increase in shipping cost inflation and tapering of government assistance created a perfect storm for ecommerce when comparing year over year results.
It's been very challenging to generate growth organically in 2021, especially when compared to the previous year.
And the dramatic shift in the macro level environment at the same time.
It is important to realize that most of our competitors are dealing with similar issues. Although our core organic business is uniquely impacted because it is led by several oversized Adam who have been more adversely impacted by the shipping cost and smaller products in the long term, we strongly believe that our investment in our proprietary fulfillment network gives us a strategic advantage in category is dominated by <unk>.
Besides good.
Our organic business as well as our recent acquisitions have a strong based on our product that will allow us to continue to build and grow our brand over many years through continuous investment in channel expansion and additional products.
This past quarter. We also made a decision to open to the seller community our internal affiliates platform called deal Mojo.
In the past few years, we've seen web publishers take a bigger role in E. Commerce ecosystem as you invest in content designed to promote products and channels, such as Amazon and Walmart.
Typically these publishers benefits from affiliate marketing revenue paid by the owner.
Retail platform directly.
Large seller ourselves, we felt that streamlining collaboration with publishers around discovering opportunities to promote product was an important part of a holistic ecommerce strategy.
Their module was designed to allow us to promote our products to publishers and offer them potentially additional revenue share for creating content that drive sales for our products.
<unk>.
We're already working through the black one with several publishers with a total aggregate monthly traffic of more than 300 million monthly visitors, we believe that making our platform available to other third party sellers will allows the photo scale the number of publishers and influencers, using yet and benefit ourselves while generating additional revenue stream for us in the short term most of the revenue driven by the module.
Reflected in the sales of our own products.
Or do you always continue agenda continues to push forward, our ambitious vision and we have a lot more work to do this as a marathon not a sprint and we believe we're turning another corner and on our way to become the leading consumer product platform in ecommerce.
With that I'll pass it onto <unk> to walk you through the financial results for the quarter.
Yeah.
Thanks, Steve and good day, everyone here are the financial performance details of our third quarter.
Third quarter of 2021, net revenue increased 16% to $68 1 million from $58 8 million in the year ago quarter from an increase in net revenue from our acquisitions offset primarily by a decrease in our organic business net revenue and reduction in wholesale.
The current quarter net revenue of $68 1 million is comprised of $35 4 million of our organic business, which is the revenue from our adult brands acquired brands after one year purchase.
$30 7 million of net revenues from our mergers and acquisitions wholesale $1 9 million and <unk> 1 million of our Paas business.
The year ago quarter net revenue of $58 8 million was comprised of $46 9 million of organic business $1 4 million of net revenue from our mergers and acquisitions $10 million of wholesale which was predominantly PPE.
And $3 million a path as a reminder, our first material acquisition happened in the third quarter of 2020.
The decrease in our organic business of $11 5 million is related to a decrease in our sustained faced products of approximately $11 1 million to $29 1 million from $40 2 million when excluding M&A revenue due to an increased pricing of our products affected by global supply chain disruptions, which has led to reduced sales velocity.
Opening a retail and changing consumer habits in the initial phase of COVID-19 reopening.
And impacts from products, which sold well during the initial COVID-19 phase last year, but did not have the same repeat performance due to demand on pricing, which represents approximately $5 million of 11 5 million decrease.
Our organic business also saw a slight increase in launch phase revenue of <unk> 3 million to $5 3 million. We did we launched zero products in this quarter versus eight in last year's quarter year to date, we have launched 40 products versus 30 to the same prior year to date period.
Even though the rate of year to date product launches grew we did not have the same success as market conditions and our need to raise pricing due to supply chain disruptions has led to a decrease in demand and performance of certain of our recently introduced products. This has also led our products staying longer in their launch phase than originally planned as.
As mentioned previously we have decided to pause the launching of our products for the time being until supply chain normalized.
Our M&A revenue of $30 7 million is in line with expectations for smash in PPD.
And Squatty potty outside of the seasonality and the timing of the closing of those acquisitions as previously mentioned healing solutions is off our expectations due to supply chain difficulties in our ship from sellers manufacturers' capabilities can use to party third party vendors as previously planned.
That said, we are still pleased with appealing solutions acquisition and the long term strength of its brand and products. We still believe the upfront purchase price falls within an acceptable acquisition purchase multiple.
Finally on net revenue, we suffered from inventory shorts in the quarter, which we estimate to be an impact of approximately 3 million in the current period as compared to inventory sorts of approximately 7 million in the prior year ago period.
Overall gross margin for the third quarter increased to 52% from 47, 8% in the year ago quarter and increased from 48.0% in Q2 2021.
Quarter over sequential quarter increase in gross margin is primarily due to product mix and pricing our gross margin improvement versus last year is probably in the favorable product mix from the inclusion of our acquired brands pursuant to M&A.
We believe the increased cost of shipping containers impacted gross margin by approximately 1.15% in the third quarter alone, we expect to see a slightly larger impact in Q4.
Our overall Q3 2021 contribution margin is 12, 1% when excluding noncash charges from inventory step up impact from our acquisitions, which decreased compared to prior year <unk> of 19, 1%.
Within CRM, our sales and distribution costs were negatively impacted by global supply chain disruptions, which drove higher costs in last minute mile fulfillment, given the carrot tightness in the quarter.
Our Q3 variable sales and distribution expenses as a percentage of net revenue increased to 39, 4% as compared to $28 7 million a year ago quarter, we expect to see these impacts continue in the current quarter.
Q3, 2020, once our sustained products contribute margin.
Apologies Q3, 2020 saw sustained parks contribution margin decreased to 15, 9% versus 23, 6% in Q3 2020.
Outside of the action items discussed we believe we will continue to CCM pressures for the remainder of 2021 digit global supply chain disruptions and increased last mile cost.
Adjusted EBITDA as defined in our earnings release for the third quarter of 2021 was <unk> 7 million compared to $5 $1 million in third quarter of 2020.
Our operating loss for the quarter includes $9 6 million of stock based compensation expense and also includes income from change in fair value contingent liabilities of $4 3 million, which is primarily related to a decrease in the share price of our.
At September 30 versus June 30 of 2021.
Our net loss for the quarter has been impacted by our acquisition of the majority of the hydrogel debt, leading to an extinguishment loss of $107 million offset by income from our change in warrant valuations due to stock price fluctuations of $8 1 million.
Turning to the balance sheet as of September 30, we had cash we had cash of $37 5 million compared to 61 9 million at the end of June 30.
The decrease in cash is predominately driven by previously reported 10 million cash payment to our lender cash net loss and working capital.
As we previously disclosed in order to navigate through the global supply chain disruption, we will need to increase our inventory on hand and purchase inventory earlier than initially anticipated. This will put pressure on our minimum liquidity requirements. During the early part of 2022 as we build for our summer 2022 seasonal products, such as Acs and humidifiers.
As previously mentioned, we <unk> the majority of our high yield debt by issuing approximately nine 3 million shares on September 23 under the terms of the loan agreement, leaving $25 million in loan debt with a bullet maturity in April 2023.
We are in compliance with all covenants as of September 30.
We continue to be impacted by COVID-19, and the global supply chain disruptions and we will be believed that these issues are temporary they caused us to have diminished visibility and our ability to forecast our results we.
We will resume giving guidance as soon as the visibility improves having said that our fourth quarter is our third strongest quarter and we believe the fourth quarter will have revenues closer to $60 million.
In closing.
Our business has been impacted by the global supply chain disruptions in our year over year figures are very difficult COVID-19 comparable.
Uniquely difficult environment.
As previously stated organic products continue to be some of the best sellers on Amazon, we have a very strong organic brand and product portfolio overall, our acquired brands and products that perform well and we remain confident in their future successes.
We believe the current pressure on the profitability of acutely related to the global supply chain disruption. The actions, we have taken and continue to progress on our key for us to help navigate through this difficult environment help us direct us back towards profitability.
For example, assuming 2020 normative contribution margins, which we still believe can be achieved in the future.
And with our typical disclosed adjustments the company believes its Q3 2021, adjusted EBITDA would it be similar if not better than the prior year speaker.
So we have been impacted by the COVID-19, pandemic and the related global supply chain disruptions, we continue to be very confident and proud of our business.
One that we built we're proud of our product.
Both organic and acquired.
Our technology, our logistic network and most importantly, our dedicated and hard working people across the globe together, we believe it too will overcome these challenges and continue to be a leader in an industry with.
That I will turn it to the operator to open the call to questions.
As a reminder to ask a question really surpass star one on your telephone keypad.
That is star one on your telephone keypad to withdraw your question press the pound key.
Your first question comes from the line of Brian Nagel from Oppenheimer. Your line is now open.
Hey, guys good evening.
Hey, good evening, thanks for all the detail.
So a couple of questions a couple of questions here nice look a nice rebound as it begins to rebound the business here in the third quarter.
Q2, so the first question I have and recognize that youre not.
Giving official guidance, but given the trajectory we've seen here I mean, how should we think about just the.
Continued rebound on the heels of a lot of internal actions you've taken to stabilize the business over the last few months even.
Several weeks into year end.
Yes, Brian Thanks for the question I'll speak a little bit of it is going to kind of revert to Audi also but in general all look I mean, this quarter was all about stabilization and bringing back the business to healthier I can point to.
<unk>, while the storm still rages right the storm is not.
It would be gone right. So I think everyone is holding their breath, a little bit to understand what is it going to be another COVID-19 wave and other impacts come in and we've taken every possible measure that I think we could have where we can control to get through that I believe as well as possible again, Unbeknownst to me any type of other black Swan event that could still happen but.
We really think that we've done.
Everything in our power and.
What's extremely hard in the last few months to get to a place that we're happy with and it's stable right.
So in general I think we're being cautious.
Until the storm completely buses were convinced that it will right. We're convinced that it's just a matter of time before the loss potential wave here in other.
There is a stabilization that will happen to supply chains over time and.
And so that's we approached us with a lot of caution and just.
Going up the ground floor for future growth, but already do you want to add more to this.
Yes, I think Brian mentioned.
And what I said there was I think Q4 is typically our strongest quarter. So you always see a little bit of a step down from Q3, So I think in some aspects.
Lower range revenue of $60, what kind of we pointed to and listen I think from a timing of how we injected our goods in containers youll see a little bit maybe of a softer <unk> than we saw in the previous quarters, just because of timing, but that said, we're still very excited in the sense of what Q4 has in front of US. It's our first Christmas season, with sorry holiday season.
With smash and healing solution a few others. So we're still very optimistic that.
It's still going to be good season, even though.
Going through the storm.
Okay. That's helpful. And then just a follow up question also kind of generally bigger bigger picture in nature, but we're talking mostly about the supply chain issues and the shipping costs and how are you.
More successfully here lately navigate through those what are you seeing from a demand.
And for spectrum, so as we look across consumer as you're pulling away from the Covid crisis lease here in the United States. There has been this trend for some type of trend where consumers returning to stores. That's impacted some of the online only players. So what are you seeing behind all the supply chain. What are you seeing from a demand perspective.
And Brian Thanks for the question I think in general.
Theres a lot of factors here that are not always easy to take into account, obviously the macro level between government subsidizing.
A lot of a lot of the buying power that we've seen I think in 2020 plus the reopening.
Just of stores, but also of travel.
A lot of factors that play here overall, we're very convinced that e-commerce is.
Starting right and it's not going to stop growing them soon and as we look at the scope of our of the marathon that we're on right where nothing has changed from our perspective. It does maybe some.
Waves.
And current that are changing direction recently, but there.
Rob perspective, they look like blips on the radar right in the long term. We believe the Congress is going to continue to be.
Continuous acceleration in terms of adoption and growth and that we're extremely well positioned to benefit from that in the long term rates and so what.
What happens with demand in the short term.
We get it because it's across different categories youll see different behaviors that can probably be explained by again a lot of the macro level event.
We're focusing I guess on the longer term right and how do we set ourselves up for success.
2022, and beyond and I think that's the work that we've been doing.
The last few months.
I don't know if you want to add anything on that but I think.
It's the best technology, that's hurting you in terms of like immediate.
Yes.
Alright, guys I appreciate it thank you.
Thanks, Thanks, Brian.
Your next question comes from the line of Matt Koranda from Roth Capital You May ask your question.
Hey, guys. This is Mike <unk> on for Matt Koranda, Thanks for taking my questions.
So in terms of paneling shipping costs on a go forward basis last court last quarter, you guys had an average cost per container, peaking out about 20000, and now youre highlighting having secured competitive shipping rates could you help us try to quantify what exactly those competitive kind of competitive rates are and how to think about those in terms of growth.
Margin.
Okay.
Yes, so although we talk about certain.
Partners on the logistics sides that I have been quite helpful and I'm sure there'll be hell of a lot of other companies, it's tough for us to share exactly what price we pay for competitive reasons, but we're very very happy given the macro but level environment on how competitive the rates are.
And.
Again, we believe that.
The relationship we built with these companies over time has been an increase.
<unk> will be important piece of getting done getting this done right and in this quarter.
So again tough for us to really show the numbers because.
And for competitive reasons, but.
We're very satisfied given all of the macro level events that are surrounding us.
But.
The recent prices, we've been paying I would say so.
Yes.
Got it.
Sure.
Could you guys also talk about your sort of plan of attack and how you are thinking about FDA aggregation on the restart there given the amount of cash on hand, and what you anticipate being the source of funds for M&A activity on a go forward basis.
Sure. So yes, so look I mean, I think as I said earlier right. We think the storm is not completely passed but we again when I believe spending any type of black Swan event, we can foresee right that the worst is behind us and we've taken the right.
Okay.
Steps to prepare the company to.
To go back on the I'd say.
On its growth path on the M&A side I think that also on the other side of this storm as I mentioned also in my in my remarks earlier, I think there'll be a lot of opportunities because.
Obviously, a lot of other companies have been affected.
But this I believe there is opportunity to consolidate.
Out of the industry and we're just setting ourselves up again in the context of the marrow.
Its own rights for that to be something that we will pounce on as soon as the stability of the supply chain is restored but it's tough for us to do is to go out there and try to execute on this.
Before we have good clarity on on the stability of that supply chain otherwise.
Those deals can also burdened further right.
And then in terms of the sources of capital.
Again.
We obviously when it when it comes to M&A.
If it comes to M&A right, we'll definitely need.
Additional capital to do that right.
There's no doubt, but I think that overall, if you look at the industry and if you look at the amount of interest in the amount of excitement that there is in the investment community for the aggregator business model I believe that once the supply chain crisis.
Asked us a lot of investors that I hope will realize that we are one of the best companies to execute on this and I think that.
And we give a thought or opportunity hopefully to pursue those.
Those type of deals.
That makes sense thanks, guys.
Thank you.
Your next question comes from the line of Brian Kevin Sterling from Alliance Global Partners You May ask your question.
Great. Thanks, so much for taking my questions great to see profitability return quicker than we all thought.
First can you.
Maybe talk about in terms of the shipping containers that you are getting to partners like Amazon.
Was there a benefit to the margin profile in the third quarter and will it be much more of a benefit down the road and some of that inventory turns is turning quickly I'm just trying to get a sense for how much of the better than expected bottom line results was because of that or if it's a much bigger impact in quarters in the future.
Okay.
Yes.
Yes Ali do you want to address that yes, yes, I can address that I would say that.
The rates that we've been able to achieve in the deals that we've gotten with these partners. We can create I think thats kind of a bigger impact as we approach 2022, and just the timing of containers keep in mind.
Like over 90 days then so the reality is the bookings container today, the goods aren't coming in until January right rough math, right or something like that so so definitely the things and the impacts that.
We secured is more of a focus towards 2022.
If that answers your question.
Of course, yeah Thats great.
You did better without that benefit really yet.
And then I'm curious as you are able to secure.
These lower price shipping containers. It opens up so much for you so I'm curious how that.
Changes in management's timing and strategy a new SKU launches do you think three to six months three to six months from now that might be the timing if things hold or stabilize or is a longer timeframe to think about SKU launches again in the context of the economics being better on shipping container.
Yes.
Yes, it's a great question.
The important thing to remember is.
Having a stable price that you can plan correctly, the P&L of your product and the amount of marketing dollars that are going to go into launching it in all these other factors is critical to the business model right and so.
Just about but it's not just about the price right. It's not just about getting the P&L at the timing of those are very important right. There is still a lot of <unk>.
Plays right and complexities are on getting goods on time and that can have a pretty meaningful effect, especially when our launch does well you need to have continuity to preserve.
The success that it had and so.
As you've mentioned.
We'll take some time before we felt comfortable to be in a place to launch.
Thanks.
Yes, Theres exceptions here and there where we're looking at it again as I said also in my previous remarks right. There's other potential tests that we can do with supply chain is coming from.
Some other geographies, but at a high level I'd say that.
We should expect to see us going back to launching product in a meaningful way once the stability comes back because.
Before that it's just.
It's just too risky.
To go and invest in something that doesn't really materialize.
Does it make sense.
Yep, absolutely one more and then I'll get back in the queue. Thanks, Alright wrote down the numbers fast enough I think you've touched on it but can you talk about the pricing trends in the past.
And others have talked about not being able to increase as fast as either components increase or containers are increasing the prices because you don't want to get too far ahead of the market to price yourself out. So can you talk about the pricing increases you have been able to achieve maybe over the last three to six months and how do you see that going forward.
Okay.
Yes, and I think is another very good question, it's a very delicate.
Part of the business right.
As we explained I think in previous calls as well right. We can obviously, we need to obviously increase our prices and we've done that but the sensitivity around it as you can.
Because of out of the market.
<unk> for example might have longer inventory at a lower cost basis in and really hurt you a long term market share and performance in the marketplace, which is very important in our model. The good news is we mentioned also in the past we believe that overall, we've been able to kind of find that middle ground between increases pricing too much.
And losing too much market share.
Which is obviously a dangerous thing versus finding kind of that sweet spot where you're getting.
Another margin you wanted but enough margin to sustain the business, while that without losing market share and I think overall, we've done quite well navigate through the storm around that we're also seeing a little bit of starting to see upward pressure on that competitors.
And there and it's very difficult to say exactly what's going to happen, we can't predict that so we're taking a conservative view on things, but overall I think that we've done somewhat quite well all things considered in terms of navigating that.
Great. Thanks, so much guys.
Thank you.
Your next question comes from the line of this target genes from D. A Davidson you may ask your question.
Thanks for taking my call. So my question is what are your current thoughts on your capital structure and are we past the point of needing to issue additional shares to pay down debt.
Yes.
Yes.
So.
We're already I'll, let you take that and maybe I'll add a few more thoughts on the end, but already why don't you give us some thoughts on this.
Sure.
Sure. Thanks Denise.
Listen we appreciate a lot of work, we're down to $25 million in debt and where compliance with that we're in compliance with our covenant I think at these levels of debt we've made significant progress on.
Debt leverage in.
The acquisitions behind Us that said I think.
We're working and we continue to work on ways to improve our debt profile over time, that's been the plan and continues to be the long term plan and I think.
We will continue to move forward on that and if something was on that we'll update accordingly.
Thank you.
Does that answer the question or do you want to add any more detail.
We will proceed to the next question.
Marvin Fong from BPI Angie Your line is now open.
Oh, great. Good evening, everyone I apologize I only hopped on the call a few minutes ago, but.
Just curious.
And if you've mentioned it already perhaps you could expand on just the.
M&A side of the business, we've seen more capital raising from some of the big players just.
Your thoughts about that side of the business and.
How active you.
You might be in terms of the pipeline.
And a second part to that question I saw that there was an earn out earned by a bite squad Parti just maybe you could update us on how that transaction has been doing and any of the other recent transactions. Thank you.
Yep. Thanks.
So as we mentioned earlier.
Earlier right right now M&A is on pause until the supply chain crisis.
Passes by that storm pass the volume, we see stability again, otherwise there's definitely the chance of Encumbering the company, even further with M&A that.
It is not performing as we expect given the pressure of the supply chain costs right. So.
So now that's on pause.
As I said earlier as well, we're very excited about being on the outside of the storm because we think the opportunities are going to be immense and I think as you mentioned.
In the private equity World a lot of capital has been raised I believe.
By other companies in the same mindset right to go after additional M&A acquisitions, and again I think that the market itself will probably create better opportunities for us to do so as well as the risk of the supply chain crisis.
Is removed.
And a two one is and again in a great position to go and execute because.
Going back again to what you said right a lot of these companies out there raising a lot of money a very early stage companies and I think they are all benefiting from a lot of the excitement thats going on.
At the end of the day I continue to believe that we're the best.
Executing on this vision and we have more experience with.
Battle tested and have more infrastructure and have taken a different approach that I think is going to be.
Long term the winning approach and so time will tell if were right, but we're very very excited and what's on the outside of this in reigniting the M&A strategy as soon as soon as the market.
Market conditions permit.
And sorry, you had a second piece of your question was 20 party right now is the second Pete.
Yes.
Go ahead, yes, I think I got the question I'll go ahead.
Yes, so yes, it's quality body doing doing really well from our perspective.
And we will continue to invest and continue to think about.
How to continue to scale and grow it but we're happy with the acquisition.
Again overall.
Given all the different.
Different factors right Smile squad party PPD are doing quite well sitting solutions as already mentioned.
A little bit a little bit hindered also by some supply chain issues, but overall, we're really happy with the basis of that brand and think it has.
Potential and so as we mentioned earlier trial really is the one acquisition that.
Gone.
Not the way we wanted obviously for reasons that we explained.
Issues, there that we're still trying to solve but overall again when I look at all the conditions and all the different macro level things that affect the brands that we acquired were.
Quite happy with the performance and believe there is enormous opportunity in the long term for these brands.
Great.
I'll take the rest of my questions offline. Thanks, so much indeed.
<unk>.
Thank you Marvin.
Again to ask a question. Please press star one on your telephone keypad again that is star one on your telephone keypad.
Yes.
It looks like we have no further questions on the line. So as part of our recently launched shareholder Perks program, which investors can sign up for at <unk> Dot Io Slash parks participants have the option to ask management questions on our earnings call I wanted to thank all of the shareholder.
Participants for their loyalty and their questions.
Picked a few relevant questions that they have asked.
Yes.
This one it looks like its for you.
Please update us on your platform as a service efforts.
Thanks Julia.
So.
As we said also in earlier calls we recently have been focusing on our platform as a service solution around brand carrying oversized products specifically.
Okay.
Larger brands that are looking to potentially transition from vendor to seller and as I mentioned earlier, so far are showing a lot of promise and I think that the.
A few clients that we have are overall quite happy with it we definitely are going to want to continue to invest in at this point the resources are still.
Limited, but very promising results at this point there.
And again in the longer term definitely.
We'll look to continue to invest in that side of the business.
Thanks. Another question that came in was.
What is the outlook for international sales and what regions do you find most interesting.
Yes, so we've we've started.
Spending into Europe, but also those efforts have been somewhat put on hold because of the supply chain crisis affecting that region of the world as well potentially even more than then.
The U S, but in general I think with the amount of work we've already done.
<unk> is probably the top priority for us and.
Definitely something that we'd like to see continue to accelerate in 2022 other supply chain crisis unfolds hopefully.
But in general there is.
Opportunity around the world.
Beyond Europe, I believe that in.
China, India, Japan, a big ecommerce markets that have a lot of potential where we can replicate.
Our strategy so in the long term, we will look at it as well, but for now the focus is on Europe.
Great and then last question from the Perks program do you need the share price to be at a certain level tourism M&A.
Yeah.
Yes.
No.
We're on the M&A side in general large deals of course.
We're going to be holding off.
And really be opportunistic right.
We've clearly seen that.
Smaller companies are excited about potentially.
Imaging our shares right, that's something that we could potentially look at.
But at this point again, we're taking this approach cautiously and we're going to continue the M&A when the conditions are right.
Yes.
Great.
It from the purchase side and think.
Thank you to all the participants for joining us on the call today in terms of the upcoming calendar Terrien management will be participating in the 10th annual Roth Technology Conference on November 17th and 18th.
And the 10th annual Roth Deer Valley Conference December eight to 11, we look forward to speaking with you on future calls. This ends our call you may now disconnect. Thank you.
That concludes today's conference call. Thank you all for participating you may now disconnect.
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