Q4 2023 ChromaDex Corporation Earnings Call
Operator: Ladies and gentlemen, thank you for standing by, and welcome to ChromaDex Corporation's fourth quarter 2023 earnings conference call. My name is Mondeep, and I will be the conference operator today.
Ladies and gentlemen, thanks for standing by and welcome to Chroma Dax Corporation's fourth quarter 2023 earnings Conference call.
My name is Martin deep and I'll be the conference operator today at.
Operator: At this time, all participants are in a listen-only mode, and as a reminder, this conference call is being recorded. This afternoon, ChromaDex issued a news release announcing the company's financial results for the fourth quarter of 2023. If you have not reviewed this information, it is available in the Investor Relations section of ChromaDex's website at www.chromadex.com. I would now like to turn the conference call over to Kendall Knysch, Head of Public Relations and Partnerships. Please go ahead, Ms. Kinnick.
At this time all participants are in a listen only mode and as a reminder, this conference call is being recorded.
This afternoon Chroma Dec issued a news release announcing the company's financial results for the fourth quarter of 2023.
If you have not reviewed this information both are available within the Investor Relations Zac.
Shin Oak Chroma Dax's website at Www Dot chroma Dax Dot com.
I would now like to turn the conference call over to Kendall Knish head of public relations and partnerships. Please go ahead Ms Kihn ish.
Kendall Knysch: Thank you. Good afternoon, and welcome to ChromaDex Corporation's fourth quarter 2023 results investor call. With us today are ChromaDex's Chief Executive Officer, Rob Fried, Chief Financial Officer, Brianna Gerber, and Senior Vice President of Scientific and Regulatory Affairs, Dr. Andrew Shao, who will join the call for Q&A. Forward-looking statements, including statements related to ChromaDex's research and development and clinical trial plans and the timing and results of such trials, the timing of future regulatory filings, the expansion of the sale Forward-looking statements represent only the company's estimates at the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.
Thank you good afternoon, and welcome to the next Corporation's fourth quarter 2023 results Investor call.
Today are <unk>, Chief Executive Officer, Rob Fried Chief Financial Officer, Brianna, Gerber and senior Vice President of scientific and regulatory Affairs, Dr. Andrew Shao, who joined the call for Q&A. Today's conference call May include forward looking statements, including statements related to <unk> research.
And development and clinical trial plans and the timing and results of such trials.
The timing of future regulatory filings the expansion of the sale of June Igen, and new market business development opportunities future financial results.
Cash needs operating performance investor interest and business prospects and opportunities as well as anticipated results of operations.
Forward looking statements represent only the company's estimates on the date.
This conference call and are not intended to give any assurance to actual future results.
Forward looking statements relate to matters that have not yet occurred. These statements are inherently subject to risks and uncertainties.
Kendall Knysch: Many factors could cause ChromaDex's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These risk factors include those contained in ChromaDex's annual report on Form 10-K, most recently filed with the SEC, including results of operations, financial conditions, cash flows, as well as global market and economic conditions affecting our business. Please note that ChromaDex assumes no obligation to update any forward-looking statement after the date of this conference call to conform to the forward-looking statement's actual results or changes in its expectations. In addition, certain of the financial information presented in this call references non-GAAP financial measures.
Many factors could cause <unk> actual activities or results to differ materially from the activities and results anticipated in forward looking statements. These risk factors include those contained in <unk> annual report on Form 10-K, most recently filed with the SEC, including results of operation finding.
We'll condition.
<unk> flows as well as global market and economic conditions on our business.
Please note that <unk> assumes no obligation to update any forward looking statements. After the date of this conference call to conform with the forward looking statements actual results or to changes in its expectations.
In addition, certain of the financial information presented in this call references non-GAAP financial measures. The company's earnings presentation and earnings press release, which were issued this afternoon and are available on the company's website.
Robert N. Fried: The company's earnings presentation and earnings press release, which were issued this afternoon and are available on the company's website, present reconciliations to appropriate GAAP measures. Finally, this conference call is being recorded via webcast. The webcast will be available in the Investor Relations section of our website at www.chromadex.com. With that, it is now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried. Good afternoon, everyone, and thank you for joining us on today's investor call. I'm proud to announce that we delivered a strong fourth quarter with solid revenues and excellent bottom line improvement. We delivered $21.2 million in revenue and a positive adjusted EBITDA of $1.2 million. Additionally, the fourth quarter marked an important milestone with the company achieving positive net income of $0.1 million. Furthermore, we generated net positive operating cash flows of $650,000, ending the year with $27.3 million in cash and no debt.
Reconciliations to appropriate GAAP measures. Finally, this conference call is being recorded via webcast. The webcast will be available at the Investor Relations section of our website at Www Dot <unk> Dot com.
With that it is now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried.
Good afternoon, everyone and thank you for joining us on today's investor call.
I'm proud to announce that we delivered a strong fourth quarter with solid revenues and excellent bottom line improvement, we delivered $21 $2 million in revenue and positive adjusted EBITDA of $1 2 million. Additionally, the fourth quarter marked an important milestone with the company achieving positive net income of <unk> 1 million.
Further we generated net positive operating cash flows of $650000 ending the year with $27 3 million in cash and no debt.
Robert N. Fried: In 2023, we had full year net revenues of $83.6 million, a 16% increase year over year, and full year positive adjusted EBITDA of $1.9 million. Brianna will soon provide detailed financials and the outlook for 2024. But as I look at the progress the business has made to date and look at the landscape of market opportunities, I'm very encouraged and optimistic about our process and the NRC 2024, with continued growth from existing channels and partnerships and through some new ones as well. We expect to surpass last year's 16% growth rate while remaining financially disciplined in our investments and in our spending. Our largest and most reliable revenue stream continues to be our e-commerce platform. E-commerce sales for the fourth quarter were up 20% year over year as our marketing team continues to execute on initiatives and campaigns that drive direct and efficient returns and growth.
In 2023, we had full year net revenues of $83 6 million.
A 16% increase year over year.
And full year of positive adjusted EBITDA of $1 9 million.
Rihanna will soon provide detailed financials and the outlook for 2024, but as I look at the progress. The business has made to date and look at the landscape of market opportunities I am very encouraged and optimistic about our prospects.
I see 2024 with continued growth from existing channels and partnerships and through some new ones as well.
We expect to surpass last year's 16% growth rate, while remaining financially disciplined in our investments and in our spending.
Our largest and most reliable revenue stream continues to be our e-commerce platform.
E Commerce sales for the fourth quarter were up 20% year over year as our marketing team continues to execute on initiatives and campaigns that drive direct and efficient returns and growth.
Robert N. Fried: While not a major contributor to the growth in the fourth quarter, Watson's continues to be a valuable strategic partner for Chroma. We're very happy with their sell-through trend, and we're working closely with them to develop new ways to expand the business. In November, we made the clinical strength dose product, TruNiogen Pro 1000 milligrams, available on Amazon and on our website, truniogen.net.
A major contributor to the growth in the fourth quarter Watson's continues to be a valuable strategic partner for chrome at X, we're very happy with their sell through trends.
We are working closely with them to develop new ways to expand the business.
In November we made the clinical strength dose product the <unk> Pro 1000 milligrams available on Amazon and on our website <unk> Dot com.
Robert N. Fried: This addition to the TrueNigin product portfolio offers consumers a safe, more efficient, and more efficacious way to improve NAD levels and cellular health. Since the launch of the TrueNigent Pro 1000 milligram product, we have seen high consumer demand. The product has sold out twice, but is now back in stock on both Amazon and our website as we increase our purchase orders to reflect higher demand.
This addition to the tune igen product portfolio offers consumers, a safe more efficient and more efficacious way to improve NAD levels and cellular health.
Since the launch of the <unk> Pro 1000 milligram product, we have seen high consumer demand.
The product is sold out twice, but is now back in stock on both Amazon and our website as we increased our purchase orders to reflect higher demand.
Robert N. Fried: We also announced last quarter that our partner, Zest-a-Pause, had launched the Healthy Aging NAD Plus precursor to benefit healthy aging for dogs. We're pleased thus far with the launch. We're seeing solid demand for the product based on their reorders of Niagen, and we are excited to continue to work with Zest-Deposit to develop future innovations in the pipeline to bring healthy aging to the pet supplement. We also announced that Nestle Health Science launched its Solgar Cellular Nutrition line of supplements, which features a multi-ingredient product that incorporates nitrogen to support cell energy repair and vitality.
Also announced last quarter that our partners Zesty pause had launched the healthy aging NAV plus precursor to benefit the healthy aging for dogs.
We're pleased thus far with the launch we're seeing solid demand for the product based on their reorders of nitrogen and we're excited to continue to work with Zephyr paused to develop future innovations in the pipeline to bring healthy aging to the supplement space.
We also announced that Nestle health Science launched its full glory cellular nutrition line of supplements, which features a multi ingredient product incorporates nigel to support sell energy repair and vitality.
Robert N. Fried: Cellular energy product launches are still in the early launch phase, but we are encouraged by the trends early on. We look forward to future product launches with other brands under the Nestle Health Sciences portfolio, one of which is planned for later this year, and I would like to mention our new partnership with Neuro Hacker Collective, who launched Qualia NAD Plus last December. Qualia NAD Plus is a multi-ingredient supplement that combines three NAD precursors, notably niagen, with 11 other ingredients to support additional aspects of NAD production.
The cellular energy product launch is still in the early launch phase, but we are encouraged by the trends early on.
We look forward to future product launches with other brands under the Nestle Health Sciences portfolio, one of which is planned for later this year.
And I would like to mention our new partnership with neuro Hacker collective launch Qualia NAV plus last December.
<unk> plus is a multi ingredient supplement that combines three NAD precursors, notably nitrogen with 11 other ingredients to support additional aspects of NAV plus production.
Robert N. Fried: So far, so good, and we are hopeful that they will be another successful and responsible addition to our partner base. I'm very proud of our team partnerships with companies like H&H and Zestipause and Nestle Health Science and Neurohacker and Life Extension Row and a few others, all of whom share a deep passion to promote expanded health and that do so in a responsible manner. I look forward to announcing future product launches and perhaps some new trusted partners as well. We continue to cement our scientific foundation as the world's leading NAD company by furthering research on how Niogen can benefit longevity and healthy aging. Since the last quarter, there were a few key clinical studies completed. The first study was one that I referenced in the last earnings call, the NR-SAFE study, which was published in November and examined the safety of high-dose NR supplementation at 3,000 milligrams per day and the impact of NAD and clinical severity in patients with Parkinson's.
So far so good and we are hopeful that there will be another successful and responsible edition.
Our partner base.
I am very proud that our team partnerships with companies like HMH zesty cause and Nestle health science in neuro Hacker life extension ROE and a few others.
All of whom share a deep passion to promote expanded health span.
And that do so in a responsible manner.
I look forward to announcing future product launches and perhaps some new trusted partners as well.
We continue to cement our scientific foundation as the world's leading company by furthering research on how nitrogen can benefit longevity and healthy aging.
Since the last quarter there were a few key clinical studies completed the first study was one that I referenced in the last earnings call. The NR Safe study, which was published in November and examine the safety of high dose NR supplementation at 3000 milligrams per day, and the impact of <unk> and.
Clinical severity in patients with Parkinson's disease.
Robert N. Fried: The study concluded that high-dose NR supplementation is indeed safe and well-tolerated with no related adverse events. Additionally, NR was found to improve clinical symptoms of PD patients, measured by the Movement Disorder Society Unified Parkinson's Disease Rating Scale, suggesting that improving NAD levels may have a symptomatic anti-Parkinson's effect. A second completed study investigated the effects of NR supplementation with and without resveratrol Studies concluded that NR supplementation had beneficial effects on the walking performance of patients with PAD and suggested that the addition of resveratrol did not provide for further improvements in the effects of NR. Another notable study that was recently completed examined the effects of NR supplementation and metabolic dysfunction in Wernersen, a rare genetic disorder that causes premature aging characterized by metabolic abnormality. This Phase 1 study is the first clinical study involving NR supplementation in Werner syndrome.
The study concluded that high dose NR supplementation is indeed, safe and well tolerated with no related adverse events.
Additionally, <unk> was found to improve clinical symptoms of PD patients.
As measured by the movement disorder Society unified Parkinson's disease rating scale.
Justin that improving NAD levels may have a symptomatic anti Parkinson's effect.
Our second completed study investigated the effects of NR supplementation, with and without <unk> virtual and individuals with peripheral artery disease.
The study concluded that NR supplementation and beneficial effects on the walking performance of patients with PID and suggested that the addition of risk virtual did not provide for further improvements in the effects of NR.
Another notable study that was recently completed examine the effects of NR supplementation in metabolic dysfunction, and Warner syndrome, a rare genetic disorder that causes premature aging characterized by metabolic abnormalities.
This phase one study is the first clinical study involving NR supplementation in Warner syndrome patients.
Robert N. Fried: We eagerly await publication of the results, which are anticipated later this year. While the preliminary findings from the PAD clinical study and the pending publication of the Werner Syndrome clinical study will warrant further investigation in larger clinical trials, we're very excited about the potential of NIGEN to offer therapeutic benefits for individuals with different ailments and orphan diseases. At ChromaDex, we believe TrueNigin continues to be the best NAD boosting product in the market, and pride ourselves as a leader in an industry aiming to improve the lives of people with over 30 peer-reviewed published human studies and over 100 published scientific studies for its numerous health benefits. We believe Niagin has boundless potential to improve the health of all individuals.
Really await publication of the results, which are anticipated later this year.
While the preliminary findings from the <unk> clinical study and the pending publication of the Warner syndrome clinical study will warrant further investigation and larger clinical trials.
We're very excited about the potential of nitrogen to offer therapeutic benefits for individuals with different elements and orphan diseases.
At <unk>, we believe <unk> continues to be the best.
Boosting product in the market and we pride ourselves as a leader in an industry aiming to improve the lives of others.
With over 30 peer reviewed published human studies in over 100 published scientific studies for its numerous health benefits.
We believe <unk> has boundless potential to improve the health of all individuals.
Robert N. Fried: ChromaDex, We are all deeply passionate about bringing knowledge to consumers in innovative ways to benefit their lives, as we have alluded to in the past. There are innovations that will result in new NR verticals that are close to launch. For the last two years, we have invested heavily in these innovations, including proper safety and efficacy studies, proper compliance with regulatory bodies, and planning appropriately for commercial law. But we know that doing things by the book takes more time.
The <unk> X.
All deeply passionate about bringing <unk> to consumers in innovative ways to benefit their lives.
As we have alluded to in the past.
There are innovations that will result in new NR verticals that are close to launching.
Over the last two years, we have invested heavily in these innovations, including proper safety and efficacy studies proper compliance with regulatory bodies and planned appropriately for commercial launch.
We know that doing things by the book takes more time.
Robert N. Fried: We are confident that these innovations will yield great long-term value to our shareholders. We look forward to sharing more details on these updates in the very near future. Our position as the global leader in NAD science is built on a foundation of trust and Integra. However, as I discussed in my recent op-ed published in Natural Products Insider, Not all companies in the dietary supplement industry hold themselves to the same standard due to insufficient enforcement resources and Lower Barriers to Entry with the Explosion of Commercial Interest. There is a proliferation of companies selling supplements with false health claims and mislabeled products. Using illegal ingredients and not conducting clinical studies necessary to properly validate safety and efficacy. Furthermore, there are limitations of the well-intended Deshaies law that restrict communication of research due to concerns over implied disease states.
I am confident that these innovations will yield great long term value to our shareholders.
Look forward to sharing more details on these updates in the very near future.
Our position as the global leader in Science is built on a foundation of trust and integrity.
However, as I discussed in my recent op, Ed published in natural products inside or not.
Not all companies in the dietary supplement industry hold themselves to the same standard.
Due to insufficient enforcement resources and lower barriers to entry with the explosion of the commercial internet.
There's a proliferation of companies selling supplements with false health claims mislabeled products using illegal ingredients and.
And not conducting clinical studies necessary to properly validated safety and efficacy.
Furthermore, there are limitations of the well intended to Shay law that restrict communication of research due to concerns over implied disease state clients.
Robert N. Fried: This provides a disincentive to develop novel ingredients and perform studies proving safety and efficacy, as we have done with our over 30 published clinical studies on Niagina. As most of you may know, since FDA's announcement that NMN may not be sold as a supplement, NMN is still prevalent in the marketplace. Companies that continue to sell NMN are being disingenuous to consumers. NMN continues to have a presence despite numerous studies validating NR being superior as an NAD precursor.
This provides a disincentive to develop novel ingredients and performed studies proving safety and efficacy as we have done with our over 30 published clinical studies on <unk> to date.
As most of you may know since Fda's announcements at NMM may not be sold as a supplement and a man is still prevalent in the marketplace.
And companies that continue to sell <unk> are being disingenuous to consumers.
And then continues to have a presence despite numerous studies validating NR being superior.
NAD precursor.
Robert N. Fried: We have seen some businesses start discontinuing NMN products on their websites and platforms, which is iHerb most recently, and other online businesses beginning to cease promotions on NMN products. But yet, NMN companies prevail. Indeed, some new ones are emerging. The call to action is to form a consortium to self-regulate the industry, to foster trust and true innovation for the betterment of human health through supplementation. Finally, with regard to litigation, on the last earnings call, I mentioned that the U.S. District Court of Appeals in New York affirmed that our settlement with Elysium was in force. We look forward to collecting on what is rightfully owed to the company. Additionally, our exclusive supplier, W.R. Grace, won a jury verdict on patent infringement against Elysium, and we now await the judge's decision on follow-up matters, including damage.
We are seeing some businesses start discontinuing <unk> products on their websites and platforms such as I heard most recently and other online businesses beginning to six promotions on <unk> products.
But yet <unk> company's prevail.
Some new ones are emerging.
The call to action is to form a consortium to self regulate the industry.
To Foster trust and true innovation for the betterment of human health through supplementation.
Finally, with regard to litigation last earnings call. You had mentioned that the U S District Court of Appeals in New York affirm that our settlement with Elysium was enforceable.
We look forward to collecting on what is rightfully owed to the company.
Additionally, our exclusive supplier WR Grace won a jury verdict on patent infringement against Elysium and now wait the judge's decision on follow up matters, including damages.
Robert N. Fried: ChromaDex continues to be the leader in NAD science and as a trusted partner to researchers, regulatory authorities, and world-class business partners, driving innovation to improve as many lives as possible. The True Believer mentality extends from everyone at ChromaDex, to our network of business partners, our investors, and to our valuable consumer base. We are grateful to all of you who have assisted us in responsibly spreading the word. I would now like to turn the call over to Brianna to discuss the quarter's results in greater detail, and then on to Q&A and then closing remarks. Brianna?
<unk> continues to be the leader in NAD science in as a trusted partner to researchers regulatory authorities and world class business partners to drive innovation to improve as many lives as possible.
True believer mentality extends from everyone at chrome at X to a network of business partners, our investors and to our valuable consumer base.
We are grateful to all of you.
To assist us in responsibly spreading the word.
I would now like to turn the call over to <unk> to discuss the quarter's results in greater detail.
And then onto Q&A and then closing remarks.
<unk>.
Brianna Gerber: Thank you, Rob. It is a pleasure to speak to our investors, partners, and employees who have joined us today. ChromaDex delivered on our full year 2023 financial outlook to investors across all metrics and exceeded our targets for gross margin and GNA expense. For the full year, we delivered total net sales of $83.6 million, a 16% year-over-year increase, gross margins of 60.8%, selling and marketing expense down approximately 770 basis points as a percentage of net sales, a modest increase in R&D investment of $0.1 million, and a We also delivered a positive operating cash flow of $7.1 billion.
Thank you Rod it is a pleasure to speak to our investors partners and employees, who have joined us today.
IDEXX delivered on our full year 2023 financial outlet to investors.
And exceeded our targets for gross margin and G&A expense for.
For the full year, we delivered total net sales of $83 6, million% to 16% year over year increase gross margins of 68%.
And marketing expense down approximately 770 basis points as a percentage of net sales.
A modest increase in R&D investment of $1 1 million.
And a decrease in general and administrative expense of $3 $3 million year over year better than our outlook of flat to down $1 million.
<unk> also delivered positive operating cash flow of $7 1 million.
Brianna Gerber: Our underlying business, as measured by adjusted EBITDA, a non-gap metric, delivered approximately break-even or positive adjusted EBITDA each quarter throughout 2023, ending the full year with a positive $1.9 million, an improvement of $11.9 million compared to the prior year. We have provided a reconciliation to the appropriate gap measure in our earnings release material. We achieved these strong financial results while investing in important strategic initiatives that will extend our business beyond dietary supplements. We expect to launch at least one of these initiatives soon and believe they will have a larger lasting impact in 2025 and beyond. The financial and strategic achievements in 2023 underscore our commitment to balance growth and profitability. It also speaks volumes about the dedication of our amazing ChromaDex team, who continuously drive improvements and approach the business with innovation and adaptability. With that, let's turn to the fourth quarter of 2023 financial results. Highlighting the key metrics of our fourth quarter performance, ChromaDex delivered total net sales of $21.2 million, a strong gross margin of 61%, slightly positive net income of $0.1 million, and maintained positive operating cash flow for a fourth consecutive quarter driven by improvements in working capital.
Our underlying business as measured by adjusted EBITDA, a non-GAAP metric delivered approximately breakeven or positive adjusted EBITDA each quarter throughout 2023 and in the full year with a positive $1 9 million an improvement of 11 9 million compared to the prior year.
We have provided a reconciliation to the appropriate GAAP measure in our earnings release materials.
We achieved these strong financial results, while investing in important strategic initiatives that will extend our business beyond dietary supplement we expect to launch at least one of these initiatives soon I believe they will yield a larger lasting impact in 2025 and beyond.
The financial and strategic achievements in 2023 underscores our commitment to balance growth and profitability. It also speaks volumes about the dedication of our amazing from IDEXX team.
Can you actually drive improvement and approach the business with innovation and adaptability.
With that let's turn to the fourth quarter of 2020 financials.
Highlighting the key metrics of our fourth quarter performance from IDEXX delivered total net sales of $21 2 million as John gross margin of 61% slightly positive net income of $1 million and maintain positive operating cash flow for the fourth consecutive quarter driven by improvements in working capital.
Brianna Gerber: The underlying business, as measured by adjusted EBITDA and non-gap metrics, was a positive $1.2 million in the fourth quarter, an improvement of $0.9 million from the prior year quarter. Moving on to the P&L details. As I said, total net sales were $21.2 million, up 1% year-over-year, compared to the fourth quarter of 2022. A 9% increase in TrueNiagen, driven by 20% growth in e-commerce, partially offset by a 14% decrease in combined Watsons and other B2B sales. Watsons sales were lower due to a challenging comparison in the prior year, which benefited from a catch-up in shipments from Other B2B sales were also down modestly due to the timing of partner sales, which are less predictable. As expected, Niogen ingredient net sales were down 30% year over year, largely due to the absence of the upfront minimum purchase of $2 million from Nestle Health Science in the prior year.
The underlying business as measured by adjusted EBITDA, a non-GAAP metric was a positive $1 2 million in the fourth quarter, an improvement of <unk> 9 million from the prior year quarter.
Moving to the P&L details.
Total net sales were $21 2 million.
Up 1% year over year compared to the fourth quarter of 2029.
9% increase in your nitrogen driven by 20% growth in ecommerce, partially offset by a 14% decrease in combined Watson's another VW sales.
Watson sales were lower due to a challenging comparison in the prior year, which benefited from the catch up on shipments from earlier quarters as the <unk>.
Business gradually recovered post COVID-19.
Other <unk> sales were also down modestly due to the timing of partner sales, which are less predictable.
As expected <unk> ingredient net sales were down 30% year over year, largely due to the absence of the upfront minimum purchase of $2 million from Nestle health science in the prior year.
Brianna Gerber: Including this one-time Nestle driver from the prior year quarter, nitrogen ingredient sales were up 42%, largely aligned with growth for the full year. Gross margins improved by 380 basis points to 61% compared to 57.2% in the fourth quarter of 2022, largely attributable to shifts in business and customer mix, as well as benefits from economies of scale. Selling and marketing expense as a percentage of net sales increased 130 basis points to 30.8%, compared to 29.5% in the fourth quarter of 2022, as we began to scale our spend from the low levels last year and have a higher mix of true Niagen sales, which requires more marketing investment than Niagen partner sales. As reported, general and administrative expense decreased by $0.6 million, driven by lower legal and royalty expense.
Excluding this one time lastly driver from the prior year COVID-19 in <unk>.
<unk> sales were up 42% largely aligned with <unk> for the full year.
Gross margins improved by 380 basis points to 61% compared to 57, 2% in the fourth quarter of 2022, largely attributable to shift in business and customer mix as well as benefits from economies of scale.
Marketing expense as a percentage of net sales increased 130 basis points to 38% compared to 29, 5% in the fourth quarter of 2022, as we began to scale our spend from the low levels last year and had a higher mix of true nitrogen sales, which requires more marketing investment.
Partner sales.
As reported general and administrative expense decreased by <unk> 6 million driven by lower legal and royalty expense.
Brianna Gerber: Finally, our operating loss improved by 1.3 million year-over-year, as higher sales and initiatives to optimize our spending across the organization were slightly offset by higher marketing investments. Moving to the balance sheet and cash flow, our balance sheet remains strong. We ended the quarter with $27.3 million in cash and no debt.
Finally, our operating loss improved by $1 $3 million year over year as higher sales and initiatives to optimize our spending across the organization were slightly offset by higher marketing investments.
Moving to the balance sheet and cash flow our balance sheet remains strong we ended the quarter with $27 $3 million in cash and no debt.
For full year 2023, our net cash provided by operations was $7 1 million versus a use of cash of $15 1 million in the prior year.
Brianna Gerber: For full year 2023, our net cash provided by operation was $7.1 million versus a use of cash of $15.1 million in the prior year. The difference this year was driven by improvements in our net loss and positive impacts from changes in working capital. The changes in working capital were driven by reductions in trade receivables, inventories, and prepaid and other assets, paired with increases in accrued expenses and accounts payable.
The difference this year was driven by improvements in our net loss and positive impacts from changes in working capital. The changes in working capital were driven by reductions in trade receivables inventory and prepaid and other assets tarred with increases in accrued expenses and accounts payable we continue to optimize the key drivers of working capital such as inventory.
We do not anticipate a similar benefit in 2024, as we invest to scale the business.
Lastly, we have provided details on key P&L metrics for 2020 for full year outlook in our earnings press release, along with the slide presentation.
Brianna Gerber: While we continue to optimize the key drivers of working capital, such as inventory, we do not anticipate a similar benefit in 2024 as we invest to scale the business. Lastly, we have provided details on key P&L metrics for our 2024 full-year outlook in our earnings press release along with the slide presentation. As it relates to our full-year 2024 net sales, we expect a higher rate of revenue growth compared to the 16% growth seen in 2023. This outlook assumes continued growth through our e-commerce business and established partnerships. It also assumes upside through opportunities with new partners, new channels, and new product launches. Over the last year, the company has invested in R&D initiatives that are close to commercialization. As such, we are including estimated revenue from new launches in our outlook.
As it relates to our full year 2020 for net sales, we expect a higher rate of revenue growth compared to the 16% growth seen in 2023.
This outlook assumes continued growth through our e-commerce business and established partnerships. It also assumes upside through opportunities with new partners, new channels and new product launches.
The last year. The company has invested in R&D initiatives that are close to commercialization.
As such we are including estimated revenue from new launches in our outlook. There is still some uncertainty around launch timing and ramp up but we are confident in the long term revenue potential as we enter a new market vertical.
We anticipate that our gross margin will improve slightly year over year as we build on supply chain optimization efforts and cost savings that were put in place during 2023 and benefit from overall scale.
Further we expect that selling and marketing expense will increase year over year in absolute dollars, but will remain stable as a percentage of net sales.
Brianna Gerber: There is still some uncertainty around launch timing and ramp-up, but we are confident in the long-term revenue potential as we enter new market verticals. We anticipate that our growth margin will improve slightly year over year as we build on supply chain optimization efforts and cost savings that were put in place during 2023 and benefit from overall scale. In addition, we expect that selling and marketing expenses will increase year over year in absolute dollars but will remain stable as a percentage of net sales.
We continue to pursue a focused customer acquisition strategies and further optimize our digital marketing investments.
At the same time, we plan to invest in resources to execute on our e-commerce growth plans and new market launches, including investing more in Influencer marketing and building our internal team.
We expect that R&D will be up year over year as we continued to invest in new innovations that are close to launch along with new NAD precursor development, which we believe hold the potential for applications in new market categories and other future uses <unk>.
Brianna Gerber: We continue to pursue focused customer acquisition strategies and further optimize our digital market. At the same time, we plan to invest in resources to execute on our e-commerce growth plans and new market launches, including investing more in influencer marketing and building our internal team. We expect that R&D will be up year over year as we continue to invest in new innovations that are close to launch, along with new NAD precursor development, which we believe holds the potential for applications in new market categories and other future uses. We expect that this increase will be more meaningful than in recent years. Finally, we expect reported GNA to be up 1.5 million to 2.5 million year-over-year, driven by investments in infrastructure to support our current growth trajectory and anticipated new market launches. As always, we will remain disciplined in our approach while we ramp up investments in these areas.
We expect that this increase will be more meaningful than in recent years.
Finally, we expect reported G&A to be up one five to $2 $5 million year over year, driven by investments in infrastructure to support our current growth trajectory and anticipated new market launches.
As always we will remain disciplined in our approach while we ramp investments in these areas.
We are confident in our full year 2024 financial outlook for a stronger top and bottom line.
Since the third quarter of 2022, we have consistently been managing the business to approximately cash flow breakeven and we expect to continue to operate with this discipline, while scaling our revenue.
We do anticipate that the first half of the year will include heavier investments, particularly in R&D to prepare for new launches Accordingly revenues will ramp in the second half at the same time R&D investments will moderate.
Furthermore, we recorded our highest quarterly revenue in the first quarter of 2023 and do not expect the first quarter of 2024 can be the highest of this year.
Brianna Gerber: We are confident in our full year 2024 financial outlook for a stronger top and bottom line. Since the third quarter of 2022, we have consistently been managing the business to approximately cash flow breakeven, and we expect to continue to operate with this discipline while scaling our revenue. We do anticipate that the first half of the year will include heavier investments, particularly in R&D, to prepare for new launches. Accordingly, revenues will ramp up in the second half. At the same time, R&D investments will moderate.
While we are actively cultivating new partnerships and have recently secured promising deal the full impact of these endeavors will take time to scale.
In summary, as I reflect on the past 18 months as CFO and incredibly proud of the significant strides we have made in reshaping our company into a leaner more efficient and focused organization.
Also driving accelerated revenue growth.
We successfully delivered on our immediate business and financial objectives positioning ourself for a promising 2024.
Certain new launches experienced delays, we are increasingly optimistic about our ongoing initiatives and partnerships.
I'm consistently impressed by the unwavering passion and dedication shown by the <unk> team.
Brianna Gerber: Furthermore, we recorded our highest quarterly revenue in the first quarter of 2023 and do not expect the first quarter of 2024 to be the highest for this year. While we are actively cultivating new partnerships and have recently secured promising deals, the full impact of these endeavors will take time to scale. In summary, as I reflect on the past 18 months as CFO, I'm incredibly proud of the significant strides we have made in reshaping our company into a leaner, more efficient, and focused organization while also driving accelerated revenue growth. We successfully delivered on our immediate business and financial objectives, positioning ourselves for a promising 2024. Though certain new launches experience delays, we are increasingly optimistic about our ongoing initiative and partnership.
Looking ahead, we are excited for investors to see meaningful new innovation from <unk> further solidifying our position as the gold standard.
<unk> this year.
Operator, we are now ready to take questions.
The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.
We ask that you please limit yourself to one question and one follow up question.
We will now take a moment to compile a roster.
Our first question comes from the line of Jeffrey Cohen.
With Ladenburg.
Thalmann. Please go ahead.
Oh, Hey, Robyn Brown or how are you.
Hey, Jeff.
So I guess firstly for us can you dig into true origin pro a little bit and perhaps walk us through.
The margin profile and what youre seeing from customers out there.
Brianna Gerber: I'm consistently impressed by the unwavering passion and dedication shown by ChromaDex. Looking ahead, we are excited for investors to see meaningful new innovation from ChromaDex, further solidifying our position as the gold standard NAD company this year. Operator, we are now ready to take questions. The floor is now open to your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.
New customers and existing customers and conversions from existing customers and new customers give us a little further into the landscape. Please.
Well as you know most of the studies that have been conducted have been at a 1000 Graham dosage.
1000 milligram dose dosage.
So we had many requests over the years from consumers, who wanted us to sell at that comparable dose level.
Operator: We ask that you please limit yourself to one question and one follow-up question. We'll now take a moment to compile our... Our first question comes from the line of Jeffrey Cohen, with Blattenberg. Solman. Please go ahead. Oh, hey Robin, Brianna, how are you?
So we decided to create this formulation and we put it out in the marketplace I believe in November.
And it sold out in two weeks time now what took us by surprise is that many of those customers customers, who are actually new to brand customers. We expected it to be an upgrade from existing customers getting to the dosage that was comparable to the studies.
Jeffrey Scott Cohen: Hey Jeff, so I guess firstly for us, can you dig into True Knowledge and Pro a little bit and perhaps walk us through the margin profile and what you're seeing from customers out there? new customers and existing customers and conversions from existing customers and new customers. Give us a little flavor of the landscape, please. Well, as you know, most of the studies that have been conducted have been at a 1,000 gram dosage, or 1,000 milligram dosage.
We race to get any new supply and we got that out I think.
January was at our December Hello, a couple of weeks ago.
That was the third one.
But we had the first one in November then we had a second one I think in December or January that's sold out also in three weeks and now two weeks ago, we came out with our third.
Robert N. Fried: So, we had many requests over the years from consumers who wanted us to sell it at that comparable dose level. So we decided to create this formulation, and we put it out in the marketplace, I believe in November, and it sold out in two weeks. Now, what took us by surprise is that many of those customers were actually new to the brand. We expected it to be an upgrade from existing customers getting to the dosage that was comparable to the study. We raced to get a new supply in. We got that out, I think, in January, was it, or December? A couple weeks ago, yep.
Right.
Last couple of weeks, it's been our number one SKU.
Hugh.
So it appears that our consumers are seeing the benefits of the higher dose, which as you know we've shown to be not only more efficacious, but also safe.
Ill defer to John on the margin question.
Sure gross margins are similar.
Idea behind it is as a slightly lower price for on a dosage equivalent basis, but the idea is to upgrade consumers to take more nitrogen. So it's still a good profit profile for us and I would say very similar maybe slightly lower gross margin as we encourage trade ups.
Robert N. Fried: That was the third one. Right. We had the first one in November, then we had a second one, I think, in December or January. That sold out also.
Okay got it that's helpful. And then just follow up with regard to a couple of your partners any comments on.
Watson's and perhaps talk about some of the sell through trends that youre seeing and also nationally perhaps talk about some other areas of interest.
Robert N. Fried: And now, two weeks ago, we came out with our third. We see it right now. In the last couple of weeks, it's been our number one skew. So it appears that our consumers are seeing the benefits of the higher dose, which, as you know, we've shown to be not only more efficacious but also safe. I'll defer to Brianna on the margin question. Sure. Gross margins are similar. The idea behind it is a slightly lower price on a dosage equivalent basis, but the idea is to persuade consumers to take more Niagen.
<unk>.
Sure.
As you know Watson has been.
Excellent partner for us for many years now.
It continues to be one of the most if not the most important single skus in the Watson's chain in Hong Kong, It's also in Macao and Singapore.
And they are extremely interested in expanding the relationship we have added a couple of other skus.
Yes.
<unk> beauty product and they are beginning to sell our <unk> immune product.
Brianna Gerber: So it's still a good profit profile for us, and I'd say it's very similar, maybe slightly lower gross margin as we encourage trade-ups. Okay.
But also of late we have been having meetings with Watson is about expanding into other verticals with them. So it's been a steady and consistent partner an important partner partner really truly a tent pole in the business of chrome IDEXX.
Jeffrey Scott Cohen: That's helpful. And then, as a follow-up, with regard to a couple of your partners, any comments on... Watson's and perhaps talk about some of the sell-through trends that they're seeing and also on Nestle, perhaps talk about some of their areas of interest. Thank you.
But we have expectations that in the even within 2024, certainly by 2025, we will have some interesting expansion opportunities with watson's as a partner.
Our next question comes from the line of Mitch Pinheiro with sort of an <unk> company. Please go ahead.
Robert N. Fried: Sure. As you know, Watson's has been an excellent partner for us for many years now, and continues to be one of the most, if not the most important single SKUs in the Watson's chain in Hong Kong. It's also in Macau and Singapore.
Yes, good afternoon.
Yes.
This is my first question.
Is around guidance and sales guidance so.
In the the greater than 16% guidance you have.
<unk> said you've assumed.
Robert N. Fried: And they are extremely interested in expanding the relationship. So, we have added a couple of other SKUs. There's a TruNiogen beauty product, and they're beginning to sell our TruNiogen immune product. But also, of late, we've been having meetings with Watson about expanding into other verticals with them. So it's been a steady and consistent partner, an important partner, really, truly a tentpole in the business of ChromaDex. But we have expectations that even within 2024, certainly by 2025, we'll have some interesting expansion opportunities with Watson's as a partner. Our next question comes from the line of Mitch Pinheiro with Sturdivant and Company. Please go ahead. Yeah, good afternoon.
New products or maybe new partners and I guess when you included in the guidance.
Obviously, you have decent visibility to be able to say that I am curious I D.
Should we expect this to be mostly in.
Your own products.
New precursors that type of thing or is this are these partners is going to be in.
No.
Either other b to b or ingredients.
New ingredient.
Well, thank you Mitch.
<unk> isn't really an interesting position as you know because we've developed our own consumer brand.
Our own.
Good robust international distribution platform for that consumer brand.
But at the same time, we have a well developed <unk> wholesale business, where we supply our ingredients to other bands and other partners.
Mitchell Brad Pinheiro: I guess. This is my first question, which is around guidance and sales guidance. So in the greater than 16% guidance, you said you've assumed some new products or maybe new partners. And I guess when you include it in the guided... Obviously, you have decent visibility to be able to say that.
And in addition, as you mentioned to nicotinamide Riboside chloride, we have a significant portfolio of other precursors.
Each have different attributes to nicotinamide riboside, but all are precursors to NAV.
Mitchell Brad Pinheiro: I'm curious, are the... Should we expect this to be mostly in your own products, like new precursors, that type of thing? Or are these partners gonna be in, you know, either other B2B or an ingredient? A new ingredient. Well, thank you, Mitch.
And it is a deep and vast portfolio.
As you also probably know we've endeavored.
To get into certain verticals with nicotinamide riboside, but have experienced some difficulties because of its stability when exposed to liquid what we know about nicotinamide riboside is when it's exposed to water.
Robert N. Fried: You know, ChromaDex is in a really interesting position, as you know, because we've developed our own consumer brand and a good, robust international distribution platform for that consumer brand. But at the same time, we have a well-developed B2B wholesale business where we supply our ingredient to other brands and other partners. And in addition, as you mentioned, to nicotinamide riboside chloride, we have a significant portfolio of other precursors, which have different attributes to nicotinamide riboside, but all are precursors to NAD, and it is a deep and vast portfolio. As you also probably know, we've endeavored to get into certain verticals with nicotinamide riboside, but we What we know about nicotinamide riboside is that when it's exposed to water, or any aqueous solution for a long period of time, the nicotinamide and the ribose tend to separate.
Or any aqueous solution for a long period of time, the nicotinamide and the ribose tends to separate it's not it's not harmful in any way, but it is less efficacious.
Certain of our other.
Precursors have less sensitivity to water and therefore might be more conducive to some of those other verticals.
But if we were to pursue a different vertical some of them require.
Testing safety testing efficacy testing for claims, but also regulatory approvals not just in the U S, but other countries as well.
Chrome, but this is chrome IDEXX his area of expertise now I understand that it takes a long time to do things right well that's the way it is in the health care business.
We recognize that there are a lot of companies in the dietary supplement space that just raised products to market with no testing and no regulatory approvals.
Robert N. Fried: It's not harmful in any way, but it's less efficacious; certain of our other precursors have less sensitivity to water and therefore might be more conducive to some of those other verticals... But if we were to pursue a different vertical, some of them require testing, safety testing, efficacy testing for claims, but also regulatory approvals, not just in the U.S. but other countries as well. This is ChromaDex's area of expertise. Now, I understand that it takes a long time to do things right. Well, that's the way it is in healthcare. We recognize that there are a lot of companies in the dietary supplement space that just race products to market with no time limit and No Regulatory Approval, and indeed, mislabel or make false claims. ChromaDex doesn't do any of those things.
Deed, even mislabel or make false claims from an X doesn't do any of that so if we are going to get into a new vertical it's going to take time and it does take time and.
And we've worked on several over the past few years, but the reason why briana and I have alluded to one in particular of late is because we believe it's very close.
We believe it's very close but there are obviously some details that still need to be taken care of some of those details are not within our control we have partners or regulatory agencies that we need to hear from and interact with we believe it's close.
Enough for us to talk about but it's not quite yet there.
Yes, we did bake it into the cake of our projections for this year, we were conservative in those projections, yes, but they are still in there and if.
Robert N. Fried: So if we are going to get into a new vertical, it's going to take time, and it does take time, And we've worked on several over the past few years, but the reason why Brianna and I have alluded to one in particular of late is that we believe it's very close. We believe it's very close, but there are obviously some details that still need to be taken care of. Some of those details are not within our control. We have partners or regulatory agencies that we need to hear from and interact with.
Something would happen that would delay this launch even further that would impact the projections that we're making.
Okay, I don't really want to get into further detail about what it is though if thats okay.
Okay.
Hi.
And then sort of a follow up to that so.
With the margins on the business this new business be similar.
Would you be spending more.
Sales and marketing to support a launch that could impact margins negatively.
And then.
Related to ecommerce sort of an aside but.
Your E Commerce marketing efficiency continues to improve is that something that we should expect and model.
Robert N. Fried: We believe it's close, close enough for us to talk about, but it's not quite there yet. Yes, we did bake it into the cake of our projections for this year. We were conservative in those projections, yes, but they're still in there. Something would happen that would delay this launch even further, that would impact the projections that were made. I don't really want to get into further detail about what it is, though, if that's okay.
For 2024.
I do expect that in the first quarter of 2024, Youre going to see an increase in some R&D expenses and marketing expenses as we prepare for this launch.
But overall for the year, but overall for the year I do not expect it to have a meaningful impact on margins or even bottom line for the entire company, including marketing efficiency.
Mitchell Brad Pinheiro: Okay. That's fine. And then sort of a follow-up to that, so... Um, would the margins on the business, this new business, be similar? Would you be spending more on sales and marketing to support a launch that could impact margins negatively? And then, related to e-commerce, sort of an aside, but your e-commerce marketing efficiency continues to improve. Is that something that we should expect and model for 2024? I do expect that in the first quarter of 2024, you're going to see an increase in some R&D expenses and marketing expenses as we prepare for this launch. But overall for the year, but overall for the year, I do not expect it to have a meaningful impact on margins or even the bottom line for the entire company, including marketing efficiency. Okay, so you're comfortable.
Okay. So youre comfortable we should expect we should expect marketing efficiency to continue at the current rate or better.
In the coming year.
But not necessarily for the first quarter.
We've seen fairly consistent.
Getting efficiency on the e-commerce business since we dramatically reduced in the third quarter of 2022.
<unk> seen that play out fairly consistently since then aside from the Amazon homepage takeover last year in the first quarter and then the overall business to Rob's point, there are some investments but for the full year. Our outlook is that as a percentage of sales selling and marketing overall, including ecommerce and these other investments will be stable.
Okay, all right well. Thank you for the questions I'll get back in the queue.
Thanks, Nick bench.
Okay.
Our next question comes from the line of Sean Mcgowan with Roth MKS. Please go ahead.
Brianna Gerber: We should expect marketing efficiency to continue at the current rate or better in the coming year, but not necessarily for the first quarter. Yeah, we've seen fairly consistent marketing efficiency on the e-commerce business since we dramatically reduced it in the third quarter of 2022, so we've seen that play out fairly consistently since then, aside from the Amazon homepage takeover last year in the first quarter. And then the overall business, to Rob's point, there are some investments, but for the full year, our outlook is that, as a percentage of sales, design and marketing overall, including e-commerce and these other investments, will be stable. All right. Well, thank you for the questions. I'll get back to you in the Q&A. Thanks Mitch. Our next question comes from the line of Sean McGowan with Roth MKM. Please go ahead.
Thank you guys.
It looks like based on my expectations anyway revenue at gross margin upside in the quarter seems to be more in ingredients and consumer.
Am I correct in reducing that.
What can we draw from that for expectations going forward.
John what I would say is quarter to quarter, there's always some lumpiness in that but if you step back on a full year basis. The consumer products is in the mid sixties. The ingredient is in the mid fifties and so we blend to a little better than 60% gross margin as a business, which we think as we said in our outlook, we will see a slight improvement.
On a full year basis. This year the mix will sometimes skew it a bet, we do get some nice leverage on the business for nitrogen ingredient. If you think about leveraging our fixed supply chain costs, including the teams that are here, whereas ecommerce theres, a little bit more investment in shipping and some other things that are variable.
Sean Patrick McGowan: Thank you, guys. It looks like, based on my expectations, anyway, the revenue and gross margin upside in the quarter seems to be more in ingredients than in consumer. Am I correct in deducing that, and what can we draw from that for expectations going forward? Sean, what I'd say is, you know, quarter to quarter, there's always some lumpiness in that. But if you step back on a full year basis, the consumer products are in the mid-60s, and the ingredient is in the mid-50s.
Thank your take is right on the quarter, but I would think about it on a full year more of the same continuation.
Okay. So we're not like I looked at the fourth quarter and it looked like.
Gross profit in ingredients.
Almost 61.
Got it an anomaly like we Shouldnt expect a sort of a permanent step up in that.
Gross margin in that segment.
I look at it yes, because the timing of ingredient sales margin ingredient sales are to partners that can be lumpy quarter to quarter. So I would think about it on a full year basis and look at it that way.
Brianna Gerber: And so we blend to a little better than 60% growth margin as a business, which we think, as we said in our outlook, we'll see flight improvement on a full year basis this year. The mix will sometimes skew it a bit, but we do get some nice leverage on the business for Niagen Ingredients if you think about leveraging our fixed supply chain costs, including the teams that are here, whereas e-commerce, there So I think your take is right about the quarter, but when I think about it over a full year, it's more of the same continuation. Okay, so we're not like I look at the fourth quarter, and it looks like gross profit and ingredients are almost 61.
Okay.
And then to the extent that you want to talk about this at all.
A wide range of.
Possible outcomes, when you say above 16%.
Looking about potentially meaningfully closer to 20 or like what.
Or is it just.
Should that be the starting point that maybe it would be a little bit better I'm, just trying to bracket that a bit.
So part of that has to do with this new product launch that we're talking about.
Brianna Gerber: Is that an anomaly, like we shouldn't expect a sort of a permanent step up in the gross margin in that segment? I look at it yes, because the timing of ingredient sales, NIAGIN ingredient sales are to partners, can be lumpy quarter to quarter. So I think about it on a full year basis and look at it that way. Okay, and then to the extent that you don't want to talk about this at all, you know, there's a wide range of possible outcomes when you say above 16 percent.
Obviously, it's very difficult to make projections on something thats not in the market yet.
But we think we've been conservative in our projections. So we don't yet know we know that if it does very poorly we still think that we will be.
<unk> 2023.
You may be needed in total sales a dividend growth rate.
And growth rate okay.
Okay. That's helpful Alright, Thank you.
Our next question comes from the line of Matt Dane with T. Upon capital management. Please go ahead.
Sean Patrick McGowan: I mean, are we talking about potentially meaningfully closer to 20 or something, or should that be the starting point and maybe it'd be a little bit better? I'm just trying to figure out the range. So, part of that has to do with this new product launch that we're talking about. You know, obviously, it's very difficult to make projections on something that's not in the market yet.
Thank you.
I did want to ask about the <unk> Dot Com website, I know you folks have been going through an optimization process. There since it had been underperforming over the last year or so just curious where you're at in that journey of optimizing and improving the website and what youre starting to see from it.
Robert N. Fried: But we think we've been conservative in our projections, so we don't yet know. We know that if it does very poorly, we still think that we will beat 2023. Do you mean beaded in total sales or beaded in growth? feed it and growth rate.
We have improved the return on AD spend but it's still below what wed like it to be.
Our retention is always pretty strong with.
Robert N. Fried: A lot. Our next question comes from the line of Matt Dane with Teuton Capital Management. Please go ahead. Thank you. I did want to ask about the trueninogen.com website.
True Nigel, particularly after the first reorder cycle.
So the long term value is still very good for our website orders.
But we still have some work to do to improve the new to brand return on advertising.
Matthew W. Dhane: I know you've been going through an optimization process there since it had been underperforming over the last year or so. I'm just curious where you are on that journey of optimizing and improving the website and what you're starting to see. We have improved the return on ad spend, but it's still below what we'd like it to be. Retention is always pretty strong with Trunigin, particularly after the first reorder cycle.
Advertising dollars.
Okay is that something you expect to.
Have dialed in here in the next quarter or two Rob or is it going to take longer than that.
It's.
Iterative process, it is improving and it's improving each quarter, we're seeing a better return on our advertising spend in the optimization process.
Robert N. Fried: So the long-term value is still very good for our website orders, but we still have some work to do to improve the new-to-brand return on advertising dollars. Is that something you expect to have dialed in here in the next quarter or two, Rob, or is it going to take longer than that? It's an iterative process. It is improving, and it's improving each quarter. We're seeing a better return on our advertising spend through the optimization process. By the way, you know, we're not alone in this process. This is a process that's pervasive throughout e-commerce companies, particularly since iOS made its algorithmic changes and made it more difficult for social media companies to retarget companies or target individuals based on their personal preferences. So it's been more challenging for many companies over the last couple of years to efficiently spend their digital marketing dollars to convert visitors up front.
By the way you know we're not alone in this process.
This is a process its present pervasive throughout e-commerce companies, particularly since iOS.
It's algorithmic changes and made it more difficult for social media companies to re target companies or target individuals based on their personal preferences. So it's been more challenging for many companies over the last couple of years to efficiently spend their digital marketing dollars to convert upfront.
But still.
Our marketing spend as.
Relative to new to brand customers is still too high each quarter. It is getting better and I think next quarter will be better and we will continue to get better, but it's still not good enough.
Okay. Okay. That's helpful. I did also want to ask one additional question around the new product launch that you've referenced several times during this call.
As you sit here today I know you referenced that you are going to be ramping up spending on R&D and marketing around that here in Q1.
Robert N. Fried: But still, our marketing spend as a relative to new to brand customers is still too high. Each quarter, it's getting better, and I think next quarter will be better. And we'll continue to get better. But it's still not good enough.
Is your expectation that this new product is going to be launched here in the first half of 'twenty. Four is that is that a fair expectation at this point in time or is it still really up in the air.
I would say it's possible.
Okay.
Okay I appreciate it.
Sure. Thanks, Matt.
Yeah.
Matthew W. Dhane: Okay. That's helpful. I did also want to ask one additional question around the new product launch that you've referenced during this call, ramping up spending on R&D and marketing around that here in Q1. Is your expectation that this new product is going to be launched here in the first half of 24? Is that a fair expectation at this point in time, or is it still really up in the air? I would say it's possible.
There are no further questions at this time I would now like to turn the call over to Brianna Gerber for closing remarks.
Thank you Mandy there will be a replay of this call beginning at 730 PM Eastern time today. The replay number is one 870 702030 and the replay.
Is 8584 to <unk>. Thank you everyone for joining us today and for your continued support of <unk>.
This concludes today's call you may now disconnect.
Robert N. Fried: I appreciate it. Sure. Thanks, Matt. There are no further questions at this time. I would now like to turn the call over to Brianna Gerber for closing remarks. Thank you, Mandeep.
Please wait the conference will begin shortly.
[music].
Brianna Gerber: There will be a replay of this call beginning at 7:30 pm Eastern time today. The replay number is 1-800-770-2030, and the replay ID is 858-4242. Thank you, everyone, for joining us today and for your continued support of ChromaDex. This concludes today's call. You may now disconnect.
Okay.
Yes.
[music].
Yes.
Yes.
Yes.
[music].
Operator: Please wait. The conference will begin shortly. Please wait. The conference will begin shortly. Please wait. The conference will begin shortly. Please wait. The conference will begin shortly.