Q1 2024 BARK Inc Earnings Call
Okay.
Good morning, good afternoon, or good evening My name is Robert Mcarthur and I'll be your conference operator today at this time I'd like to welcome to everyone's two barks fiscal first quarter 2024 conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer session if you'd like to ask questions. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question Press Star and number one again.
Hugh.
And now I'll turn the call over to Mike.
Mike Mujeres, Vice President Investor Relations.
Good afternoon, everyone and welcome to box first quarter fiscal year 2024 earnings call. Joining me today are mapmaker co founder and CEO and say here Abraham Chief Financial Officer.
Today's conference call is being webcast in its entirety on our website and a replay of the webcast will be made available shortly after the call <unk>.
Additionally, a press release covering the company's financial results was issued this afternoon and can be found in our Investor Relations website.
Boy I pass over to Matt I would like to remind you. The following information regarding forward looking statements. The statements made on today's call are based on management's current expectations and are subject to risks and uncertainties that could cause actual future results and outcomes to differ please.
Please refer to our SEC filings for more information on some of the factors that could affect our future results and outcomes.
Also during today's call, we will discuss certain non-GAAP financial measures reconciliation to a non-GAAP financial measures is contained in this afternoon's press release and with that let me now pass it over to Matt.
Thanks, Mike and good afternoon, everyone.
Our last call we discussed the substantial progress we made in improving our unit economics and strengthening the long term financial health of our business.
These efforts coupled with our continued expansion in the large tam categories like consumables and the progress we made unifying our platform made us a stronger and more dynamic company as we entered fiscal 'twenty four.
I'm pleased to report that the year is off to a solid start.
At a headline level, we delivered $121 million total revenue and recorded a 280 basis point improvement in our gross margin, reaching 61% in the quarter, our first quarter exceeding 60% as a public company.
Our adjusted EBITDA loss was $7 million.
43% improvement compared to last year and ahead of our guidance.
All in all the work we have done over the past 18 months is beginning to materialize in a notable way.
We continue to expect to be in the neighborhood breakeven adjusted EBITDA, while also generating positive free cash flow for the full year.
As a result, we're able to drive growth in a much more meaningful way.
Going a level deeper on revenue, we generated $81 million from toys and $40 million from consumables.
If we exclude revenue from our subscription boxes are consumables category grew 39% year over year to over $5 million.
And remember this is prior to us generating any consumables revenue in the wholesale channel, which is where we'd expect meaningful gains in the future.
Our confidence comes from our partnering with virtually every major retailer in the U S. It's spanning over 40000 retail doors today.
Simply put we have the relationships and track record to introduce new products across the $40 billion plus consumables category.
Furthermore, while we can't discuss specifics today, we are confident that Bart treats will be carried nationally in fiscal 2025, and possibly as early as the end of this fiscal year. This is exciting as it will contribute meaningfully to our top line. Given these partnerships are typically large in nature.
Moreover, it will help build awareness of parks presence in consumables.
The millions of people that will see our new treat offerings on a daily basis.
Treats are also just the tip of the sphere.
In the spring of 'twenty 'twenty, four we intend to pitch our retail partners on our full consumables product line, including dental toppers and food.
In light of these opportunities we expect our commerce segment to grow considerably over the next three to five years.
We're often asked how this will affect our gross margin long term. So let me address that directly.
Our gross margin in the Commerce segment is lower at roughly 40%.
Paired with a 60% plus we enjoy on our direct to consumer business.
So our retail expansion will have a drag on our consolidated gross margin long term. However.
Remember that our commerce segment has far fewer cost by way of shipping and fulfillment and marketing.
From a contribution standpoint commerce is in line, if not slightly higher than our direct to consumer margin when factoring in operating expenses.
Put simply growth in our commerce segment will be an important driver of our long term profitability. We are very excited about our opportunity and the $40 billion consumables category.
Another opportunity is expanding our direct to consumer channel within our unified channel, which now features all of our consumables products alongside our huge twice subscription box products.
I'm happy to announce this unified site, which can be found at shopped at FERC Darko is growing rapidly.
We are still improving and iterating. However, our conversion rates on the new site have improved significantly and have remained consistently higher than our legacy box sites over the past few months.
This is happening as we ramp up the advertising spend which is leading to adding more new customers at highly efficient rates.
This is great news and it underscores the need for us to invest more aggressively pushing perspective customers to it.
Furthermore, not only are customers on the new site converting at a higher rate, but they are also shopping across categories to a greater degree.
Overall, I'm thrilled with how we've been able to diversify our direct to consumer business in a relatively short amount of time.
Shopped at Burke Darko is the future of direct to consumer at park and it's available to everyone today.
In our core business on the choice side of the house, we've seen this category stabilized a bit over the last few months, but still experiencing headwinds this.
This is the case in both our direct to consumer and Commerce segment, we see signs of this improving especially in retail.
For example inventory levels at our retail partners have come down to more normalized levels and we are beginning to deliver new orders in the current quarter with more to come in fiscal Q3.
Overall, we continue to expect growth in this category to be largely consistent with overall industry growth long term.
And our direct consumer core channels, we continue to improve our cross selling capabilities, which generated $10 million in revenue last quarter and.
From an average order value standpoint, we signed 82 cent increase compared to last year.
On that note, we have two initiatives that impacted our <unk> growth last quarter.
First we ran a really successful or 'twenty promotion, whereby we lowered the base price of our candidates themed box $4 20.
And second we reduced the base price of Super Tour as we saw the gross margin improvements coming in we wanted to drive growth in box subscriptions.
As a result, we do expect more moderate <unk> growth in this channel fiscal 2024 compared to last year.
As we balance our margin expansion with our focus on driving long term growth.
Turning to gross margin last quarter, we achieved a fantastic gross margin of 61%.
<unk> 280 basis point improvement in our consolidated gross margin over last year.
And our first quarter over 60% as a public company.
Looking at our direct to consumer segment, our gross margin improved by 200 basis points to over 62%.
These are notable improvements and we expect our gross margin to improve even further as the year progresses improvements like these power our drive for profitability and open up options for us to pass price breaks onto the customer in order to fuel growth.
As a great position to be in and we expect continuous improvement throughout the year.
Furthermore, we are also becoming more efficient across our G&A lines.
First shipping and fulfillment expense was 31% of revenue last quarter, and 130 basis point improvement compared to the same period last year.
<unk> gross margin and shipping and fulfillment, that's up 410 basis point improvement year over year.
In addition, we've taken out approximately $19 million of annual head count over the last few months. These are always difficult decisions. However, we believe that these initiatives will enable us to do more with less that'd, becoming a simpler more nimble organization and we saw some of the benefits flow through the P&L this quarter.
For example, other G&A as a percentage of revenue improved by 160 basis points to 27, 5% with more improvements to count bringing.
Bringing all of that together, our adjusted EBITDA loss was $7 million, a 43% improvement compared to last year.
Looking ahead, we anticipate our collective adjusted EBITDA over the next three quarters to be breakeven or better.
We also reduced our cash burn by more than $8 million compared to Q1 last year, ending the quarter with $164 million in cash on hand.
In the last nine months, we've generated $3 million in positive free cash flow.
This presents us with many opportunities to put this cash to work, including paying down debt buying back stock.
M&A opportunities and enjoying the high rate of interest that we are collecting on that balance today.
We don't expect significant revenue growth for the full year. We are confident that Q1 marked the bottom as we expect our topline to gain momentum in subsequent quarters.
Particularly as we grow our consumables footprint across our direct to consumer and wholesale channels overall I'm feeling very good about our position in the quarters ahead.
Looking back when I returned to the CEO role 18 months ago, we faced a number of challenges in our pursuit of growth. We lost sight of our core vision lack the capital discipline that has been ingrained in the organization. During my first 10 years running the company.
In light of this it was paramount that we prioritized returning to a simpler more nimble organization and stabilize our cash burn.
During the course of fiscal 2023, we took decisive steps to simplify our supply chain.
<unk> vendors and leveraging our scale.
We also improved our fulfillment network and streamlined our people needs collectively these actions are benefiting our unit economics in a meaningful way.
To help quantify all of this on a similar revenue base to last year, we expect to be in the neighborhood of breakeven adjusted EBITDA. This year.
This would reflect a $31 million improvement in 12 months.
In the nearly $60 million improvement in the last two years.
In light of this progress we can once again direct our focus towards driving long term growth.
In conclusion, I'm very pleased with our progress our new consumables products are growing at a healthy clip our gross margin is improving with each passing quarter. Our unified platform is ramping up and we are quickly approaching breakeven adjusted EBITDA in sustainable free cash flow generation.
And while we do not expect topline growth to be the standout this fiscal year.
We do expect our topline to gain momentum from what we believe is the low point here in Q1.
Furthermore, we have even greater confidence in our ability to deliver high single to low double digit top line growth in fiscal 'twenty five given all of our recent progress with that I will turn the call over to the here.
Thanks, Matt and good afternoon, everyone, having spent seven months in the CFO seat of gained a much deeper understanding of our business.
Im increasingly optimistic about our long term prospects with significant opportunities for market expansion in new and exciting categories like consumables importantly, these prospects can now be pursued with a profitability focus framework in place.
To that end, our overarching focus over the past year has been improving our unit economics on establishing a solid foundation for long term profitability plan.
Clearly we're seeing this come through in our recent results, which now enables us to begin redirecting our focus towards driving long term top line growth, particularly in consumables, where we have a massive runway both in DTC and retail.
With that said, let's jump into our financial results for the quarter, which are playing out largely as we anticipated coming into the year.
Beginning at the top of the P&L, we delivered total revenue of $120 6 million broadly in line with the low end of our guidance range.
Total revenue was down 8% compared to last year, which was primarily driven by an 8% decline in total orders, partially offset by an 82% or approximately 3% increase in our app.
Average order value.
It is worth noting while total orders were down our customer base today is of a much higher quality compacted this point last year.
Nonetheless, as we mentioned on our Q4 call, we expected revenue to be down year over year in the first half and then begin to gain momentum in the second half. So these dynamics were largely anticipated coming into fiscal 'twenty four.
From a segment basis, we delivered $111 9 million of DTC revenue and $8 7 million of Commerce revenue.
Within our DTC segment, approximately 64% of the revenue was derived from toys and accessories, while 36% of the revenue was driven by consumables.
Moving on we delivered $73 million of gross profit in the quarter versus $75 8 million last year.
Highlighted earlier, we achieved healthy margin expansion last quarter.
But we're trying to continue throughout the year.
Our consolidated gross margin was up 280 basis points.
DTC gross margin improved 200 basis points versus last year.
For the full year, we continue to expect our consolidated gross margin to improve between 200 300 basis points, where we fall in this range will come down to how much margin, we choose to give back to customers to help drive top line growth.
Moving down the P&L total G&A was $69 4 million in the first quarter down nearly $10 million compared to Q1 last year looking at our G&A line in more detail shipping and fulfillment expense was $36 2 million, while other G&A was $33 2 million factoring in volume impacts.
Shifting from fulfillment was down 130 basis points and G&A was down $5 3 million compared to Q1 last year, reflecting the tangible progress we have made in reducing expenses throughout the P&L.
As many of you are aware, we took out roughly $19 million of annualized other G&A expenses, primarily related to head count costs through the two cost reduction initiatives that we announced earlier this year.
To provide some more color on the announcement, we made last month, we reduced our net head count by approximately 8%, which is expected to generate roughly $7 million of annual savings. These are always difficult challenging decisions was not discussed the organization has grown more complex over the last two years on this initiative was launched.
The aimed at simplifying our organizational structure, allowing us to become more efficient and nimble.
It's also worth mentioning that this initiative was in the works during our fourth quarter call and was included in the adjusted EBITDA guidance. We had previously provided.
We anticipate that these initiatives will help bring us to the neighborhood of breakeven adjusted EBITDA for the year on a similar revenue base to FY 'twenty, two and FY2023.
It will reflect a significant improvement from the $58 million and $31 million adjusted EBITDA losses, we have recorded in those fiscal years respectively.
We also anticipate the operating leaner organization will allow us to gain greater leverage as we scale moves.
Moving on.
<unk> expense for the quarter was $17 6 million $1 3 million above last year as I mentioned on the Q4 call. The progress we've made in improving the financial health of the business affords us the opportunity to invest more in areas like marketing, including driving more traffic to our new unified site, which as Matt mentioned.
Is converting at a very encouraging right of course, we will remain disciplined with respect to our marketing investment. However, we do not expect this line to be up for the full year compared to last year.
And lastly, our adjusted EBITDA loss was $7 4 million Proximately 3 million invested in the midpoint of our guidance range. We did benefit from some timing related items in the quarter and therefore do not expect to all of the beat this quarter to flow through to the full year.
Compared to last year, adjusted EBITDA was $5 6 million better reflecting the significant strides we have taken to improve our unit economics and cost structure throughout the P&L.
Let me turn to our balance sheet for a moment as we articulated on our last call. We expected negative free cash flow for the first two quarters of FY 'twenty four followed by a transition to positive cash flow for the second half and for the full year.
And while we're still early into the fiscal year. This is largely how we see it playing out during the first quarter free cash flow was negative $14 million, resulting in a quarter end cash balance of $164 million about half of the 14 million outflow was timing related as our accounts payable balance run off in Q4, okay.
Down in fiscal Q1.
On the inventory front, we reduced our balanced by an additional $12 million versus the fourth quarter. Overall, we've been very pleased with our ability to consistently reduce inventory levels, which in turn has lowered logistics costs. While also freeing up working capital to put this progress in perspective, our total inventory is down nearly $50 million.
From its peak in Q2 of fiscal 'twenty, three and we continue to expect further progress during the remainder of the year.
Let me now turn to guidance for the second quarter and full year.
Starting with the full year, we are reiterating the top and bottom line guidance. We had originally provided on our fiscal fourth quarter coal from a revenue standpoint, we expect total revenue to be flat to down 5% compared to fiscal 'twenty three the bookends of this range are essentially where we land in FY 'twenty, two and FY2023.
However, we expect significant profitability improvements compared to the prior two years from an adjusted EBIT loss standpoint, we expect to be in the range of negative $8 million to positive $2 million for the full year.
Beyond FY 'twenty four we expect to deliver high single to low double digit revenue growth in FY 'twenty five as we continue to make progress in growing our consumables footprint in both DTC and retail channels.
For this year's fiscal second quarter, we expect total revenue of 123 million to $127 million. The midpoint of this range would reflect a year over year decline of around 13% part of the decrease is due to see while for commerce. We are comping a significant pull forward of revenue associated with the holiday period in Q2.
Last year, which inflated our topline in the quarter. This year, we expect more evenly distributed commerce revenue between the second and third quarters.
From an adjusted EBITDA standpoint, we currently expect an adjusted EBITDA loss of $3 million to $1 million, the midpoint of which would be in line with our EBITDA loss for the year. Despite a difficult top line comp, which again benefited from the holiday commerce pull forward last year.
In conclusion fiscal 'twenty four is off to a strong start we continue to see step change improvements in our unit economics, a trend we expect to continue as the year progresses, and while we face difficult top line comps in the first half we expect to have top line to gain momentum as we entered the second half, particularly as our consumable product lines gained tracks.
<unk> across our DTC and retail channels overall, we've made a lot of progress in this area and there are a number of exciting things in the pipeline that give us confidence in our ability to return to growth in.
I am growth, which will be supported by a much more profitable infrastructure.
With that I will turn the call over to the operator for Q&A.
Thank you for that ladies and gentlemen, we're going to transition into our Q&A session of today's call and your first question comes from the line of Maria <unk> from Canaccord.
<unk> go ahead.
Great. Thanks, so much for taking my questions first could you maybe just talk about your assumptions behind your Q2 guidance, what kind of consumer engagements you have seen on the platform. If you exclude the pull forward.
From last year.
And can you maybe just expand on some of the growth drivers that you're assuming for the second half of this year.
Sure.
Thanks for that question Maria So you mentioned in that question there is fee.
Our retail comp to last year, where we had the big pull forward. So that takes care of the retail side.
The drivers for the second quarter. It is this continued rotation away from the core or the legacy platforms that we have onto the unified platform and as I mentioned.
Now all of our products are there at shop that bark Doc how that conversion rates and performance there are <unk>.
Strong and improving month by month, so we're very encouraged by it.
And it is more consumables heavy almost exclusively consumables up until recently, so there's a different dynamic to it and it's just rotating into that and building the customer base on that site as we maintain.
The core platforms. So we're going to continue that rotation three or for the rest of the year.
And then rotate out of those core sites, probably sometime next year.
Got it. Thank you for that and then I just wanted to ask you about your food business.
Maybe just talk about sort of the second slate of breeds.
And could you set up last year.
And at this point what are you actively investing in as it pertains to that segment of your business is it is it sort of <unk>.
Investing is sort of expanding your existing blades are working towards rolling out more blades.
Just maybe talk about that a little bit.
Expanding more with the existing but also viewing the customer more holistically.
And again everything centered around that bark dock whole platform.
Where are we.
We're trying to have every customer engage with a wider set of products. So one of the one of the reasons for going to the unified platform is that and are in our core platforms. There is really the opportunity to only engage with a single product at a time.
Can't have 1.2 items per order you can only have one item per order.
So we're trying to to have the customer engage with more products and doing so quite successfully thereby raising the average order value.
Food being one of those and.
And have more recurring relationships as often as we can or whenever it makes sense.
So, thereby stretching out the lifetime value of that customer or the life of that customer.
Just to give you. An example, we love a customer who comes in subscribes to a bark box also puts puts food in their cart subscribe and save on that and throw stoppers and just as a one off purchase that customer might normally last or the bark box for 15 months and churn, but now because they've got food in the basket, they're going to.
Extend out several more months or years beyond and we have the ability to add things to their shipments as they are coming in like the toppers, we know theyre die already enjoyed our treats our new products, that's the perfect customer and Thats the profile word developing so the food is obviously an important component of it but that's all.
One component of the whole the whole mix.
Got it thanks, so much Matt.
Okay.
Yes.
Your next caller comes from the line of Ryan Meyers from Lake Street Capital markets. Ryan Your line is open.
Hey, guys. Thanks for taking my questions.
First one for me just wondering if you can highlight what you guys are doing to currently market the consumables business.
And on top of that the new shop that bark dot cole platform and kind of how you've seen customers respond to that.
While the marketing of consumables and the marketing of the shop Dark dark <unk> platform are.
I'm very tightly coupled today because that is the main place where we are selling all of our consumables <unk> and <unk>.
Well they start to hit retail channels I'll play later this fiscal year are definitely next year.
<unk>.
So those two those two are coupled tightly together.
Up until.
Very recently up until I would say like through the end of June we were doing very little outbound marketing, our media spend against that platform and promoting those individual consumable products.
Mainly pulling from our.
Our installed user base on the core or legacy side of our business.
We were doing that in order to constantly learn and test and optimize and improve our conversion rates and get the behavior of that customer where we wanted it to be.
We accomplish that we saw enough of a trend that we felt that was permanent.
And therefore, the media spend starting in July has really ramped up.
It's as you might expect with us in that in the early days here. It's a lot of digital it's a lot of direct response.
Social media search that type of thing, but we're going to add much more to that mix.
As we go forward, but that's the start of it right now and.
Super encouraged by what we've seen in terms of the results.
Got it that's helpful.
And then can you talk a little bit about how you are prioritizing the use of cash when you talked about paying back debt.
Going into some buybacks and then M&A you know just some more color there would be helpful.
Hi, Ryan.
And then.
Options aren't mutually exclusive given our strong balance sheet, we could choose to take out some or all of the convertible and buy back shares and still have plenty of cash on hand to run the business.
Hey.
Got it thanks for taking my questions.
Neil.
Your next question comes from the line of Yigal of Varian from Citigroup.
Your line is now open.
Okay.
Hey, Good afternoon, guys next more on for Yigal.
I guess looking at the consumables business.
Interesting growth opportunity I guess could you.
Kind of a multi parter.
Could you tell us where you are with the investment side do you have to do you think you have to do more on food business that treat side to get into retail.
What are the sales cycles to get in there.
Yes, I think maybe by the end of the year, but I guess, what's the process to get into retail that retail stores with dose.
And then longer term.
How do you see this impacting the mix of the business and the unit economics.
Is that believe the retail segment has lower gross margins than DTC.
Yes.
Thanks for the question Max.
The consumables area in terms of a lot of the press.
Prep work that you are talking about is something we've been investing in for.
Certainly the past year and a half since I've returned to the business.
You start with the base product development of the actual consumable itself that treat the topper the food in the bag or the dental product.
And we've got a really strong product development team.
Who have create backgrounds.
And just a lot of experience in this area.
Both.
Move to our our offerings forward in a material way, but also simplified it and now we've restructured all of our our agreements with a few key suppliers on that side.
Bringing our costs down on a unit basis in a pretty material as well. So that is to say we've done the hard work of getting the products developed really well got the right partners lined up the right cost structure lined up.
And.
On the retail side, a big push for us was well a push with a pole or.
Our retail partners, where we were being very successful with our toy business. They were pulling us and say can you. Please bring fund to our treat aisle can you. Please bring the fund to consumables.
So that was encouraging for us and I would say fueled our enthusiasm and development around that.
And we did that with the idea of go into those same partners. This past spring.
Pitching them on what we'd come up with to bring fun to their aisles.
And started those pitches and like I said in the spring March April .
Our feeling is that there is.
The response, we've had is very encouraging.
Yeah, we're pretty happy with the response in the back and forth. So.
Like we said in the script.
As much as tripling that so.
Call it in mid thirties, even low forties percent of our business on the wholesale channel and that would be powered by consumables, bringing that that's a major major market opportunity over $40 billion.
Consumer spending there and a lot of that obviously through the wholesale or retail channel versus our toy business only being 3 billion. So we've demonstrated the success in the toy business through that channel.
We've got the consumable products line up we feel like the margins are and and a great place for success started the conversations and.
So if we've done our job well you see a big evolution.
Away from or towards consumables going from about 30% of our total revenue last year to more than half over the next five years and the wholesale channel going from 12% to say mid thirties percentage over the next three to five years.
Well.
Okay, Great Super helpful. And then just one click on the macro.
What are you guys seeing we'd be consumer discretionary spending you know, maybe just told me a little bit.
Unexpected, but still kind of under pressure.
If there's any difference between like the D T C in the retail seconds.
Yeah, I I think you I think you described it while they're aware.
We're starting to see our retail partners, taking more inventory. So that's a positive sign for us and we we sort of expected that we had that pull forward a year ago in in the second quarter for us.
And then quite the slowdown in the headwinds and now we're starting to see that loosen up a bit as our partners clear their inventory.
Mm.
The direct side.
The retention on our new customers in our cohorts look fantastic as good as they ever have looked.
If not the best they've ever locked so very very strong on retention.
Certainly headwinds in acquiring new customers there on the direct side relative to the toy or subscription box business.
But that's really the only headwind and even that we're starting to see loosen up a little bit so.
I think the way you described at the top was was pretty spot on.
Perfect. Thanks, guys.
And our final caller today comes from the line of Max.
Rocklin co from T D Cowan your.
Your line is open.
Great. Thanks, a lot guys. So I know, it's early but you've spoken a bit about a framework for physical twenty-five retinue grill. So I was hoping if you could speak maybe directionally <unk> channel next year, and then just to keep pushing cage that could get you to the low <unk> guidance.
Mhm.
Hey, Rob How's How's it Goin' so in terms of the.
General direction as Max.
In terms of revenue profile of this year.
<unk> about 88% Commerce is 12% of our business.
And then looking at the product breakdown.
70% toys, and other and around 30% consumables.
Start to see consumables in retail exiting this year.
And then going in a network wide with a couple of customers. During 2025 am then branching out to other customers. During the course of the year as well as introducing new product lines like dental products and installed to introduce cable as well into retail we expect retail to have a meaningful step up next year.
I'm probably <unk>.
<unk> the majority of that high single digit double digit growth that we're expecting on I'll top line.
As we continue to invest.
Invest in a unified platform, we expect consumables to drive growth there as well so and a majority of our growth will not high single digit double digit overall top line coming from retail, but with strong performance also on the D C side.
Got it that's helpful. And then as we think about EBITDA margin expansion over the longer term what are the job opportunities within G. In a turnaround more efficiently and then the cost structure and then what do you think G and H per cent of sales each to go in order for you to reach your longer term profitability targets.
Yeah, I'll, maybe start this one maybe Z here, well chime in as well but.
On the on the G N a side.
There's really there's opportunity to still be more efficient overall.
We've got.
As we talked about where where you can move now to this unified platform at shop that bark Doc how it's it's.
It's powered by Shopify. So the development effort. If you will around that is far less than running one rail site.
Let alone four of them simultaneously. So that means you just don't need the development firepower in order to advance that platform at the same rate now that gives us the opportunity to use the <unk>. The strong development resources, we have to advance it at faster racing and.
<unk> get more utility out of out of it.
Or advance our revenue from that platform or it has the opportunity to redeploy does those people into new revenue opportunities and build new products.
But overall, you're operating more efficiently so that.
That per cent of spend on TNA just from the team perspective should continue to come down, especially as I mentioned this quarter is R.
What we expect to be are low point in terms of revenue from here on so just from that we should grow into that per cent of spend on <unk> to come down.
Yeah sure. So a couple of things one within a G. N. I, obviously, we have shipping them fulfillment in there as well we've made great progress on that over the last 12 to 15 months, we continue to see improvements over the course of this year I'm going and connect you just to give you a sense of that.
Reducing I'll warehouse footprint with consolidating the number of the policy service providers as well and both of those are just driving efficiencies in carrier right.
And that what planning for us and just reduce the overall cost one shipping them fulfillment. So we expect that to continue going into 2025, and then just a match point on other gana, obviously, we've taken with two measures. We have recently, so we feel good about whether I overall.
From the other G&A perspective will look at opportunities in some areas of spend like consultancy span professional services and so forth, but a lot of the upside I think <unk> now comes from scaling the top line. We've got a strong base that that we can mass scale off.
Got it it's very helpful. Thanks, a lot guys.
Thank you.
Ladies and gentlemen that concludes today's conference calls you may now disconnect.
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