Q4 2024 Aterian Inc Earnings Call
Alex Fuhrman, Ilya Grozovsky, Ilya Grozovsky
Demi: Thank you for standing by, my name is Demi, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Aterian Inc. Fort Gorder and Fulio 2022-24 earnings conference call. All lines have been placed on mute to prevent any background noise.
Demi: After this because remarks, there will be a question and answer session. If you would like to ask a question during these times, simply press star, follow with a number one on your telephone
Speaker Change: If you would like to withdraw your question, again, press the star 1. Thank you. I would not like to turn the conference over to Devon Sullivan of the Equity Group. Peace go ahead, sir.
Devin Sullivan: Thank you, Demi. Thank you everyone for joining us today for a to discuss Aterians 4th quarter in full year 2024 financial results.
Arturo Rodriguez: On today's call are Arturo Rodriguez, our CEO and Josh Feldman, the company CFO . A copy of today's press release is available on the Investor Relations section of Aterian's website at Aterian.io.
Arturo Rodriguez: Before we get started, I want to remind everyone that the remarks on this call may contain forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995 that are based on current management expectation.
Arturo Rodriguez: He's may include without limitation, predictions, expectations, targets or estimates, including regarding our anticipated financial performance, business plans and objectives, future events and developments, and actual results could differ materially from those mentions.
Arturo Rodriguez: These forward-looking statements also involve substantial risks and uncertainties, some of which may be outside of our control, and that could cause actual results to differ materially from those expressed or implied by such statements.
Arturo Rodriguez: These risks and uncertainties, among others, are discussed in our filings with the SEC. We encourage you to review these findings for a discussion of these risks, including our annual report on Form 10K when it is available on the Investors' portion of our website at aturian.io.
Arturo Rodriguez: You should not play some due reliance on these forward-looking statements. These statements are made only as of today and we undertake no obligation to update or revise them for any new information except as required by law.
This call will also contain certain non-GAAP financial measures.
including Adjusted EBITDA, and Adjusted EBITDA Margin.
which we believe are useful supplemental measures.
Arturo Rodriguez: that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past performance, and facilitate period to period comparisons of our core operating results.
Arturo Rodriguez: Reconciliation of these non-GAAP measures to the most comparable GAAP measures and definitions of these indicators are included in our earnings release, which is available on the Investors portion of our website at Aterian.io.
Arturo Rodriguez: Please note that our definition of these measures may differ from similarly titled metrics presented by other companies.
Arturo Rodriguez: We are unable to provide a reconciliation of non-GAAP adjusted EBITDA margin to net income margin, the most directly comparable GAAP financial measure on a forward-looking basis without unreasonable efforts because items that impact this GAAP financial measure are not within the company's control and cannot be reasonably predicted.
Artie: With that said, I will now turn the call over to Arti, Arti, please go ahead.
Artie: Since 2014, we have either organically launched or purchased brands and today. Our focus is on operating six amazing brands.
Artie: Our number one homeland, which currently focuses on dehumidification in refrigeration and best selling leader of human fires on the Amazon.
Artie: Number two pure seed and other best selling brand on Amazon, which leverages the natural power steam to clean your home with its the mobs or reduce wrinkles and you're close with its steam irons.
Speaker Change: He only solution a collection of essential oil brands provides consumers a great essential oil experience.
Speaker Change: Photo paper direct our DIY or do it yourself iron on transfer and photo paper provides joy and fulfillment to all consumers, who love, making their own T shirts arts and crafts and printing their own photos from home.
Speaker Change: Number five you're living which focuses on innovative quality products for your kitchen and has multiple top selling products on Amazon.
Speaker Change: And number six and finally Squatty party.
Speaker Change: The original tool is still the leader in the category Squatty Party is the number one way to go number two as it continues to help people daily around the world, who easier and better.
Speaker Change: With these six foundational brands that Terry is well positioned to grow and consistently deliver high quality affordable products to consumers.
Now briefly to our fourth quarter performance. We are pleased with our fourth quarter results as we delivered our net revenue at the high end of our guidance.
Speaker Change: Adjusted EBITDA for the fourth quarter, Atlanta to essentially a breakeven in line with guidance and an improvement of $5 5 million versus the same year ago quarter.
Speaker Change: And we reduced our net losses by approximately $6 4 million to $1 3 million for the quarter.
Speaker Change: The fourth quarter now closer to 2024, which has been a year of achievement for <unk>.
Speaker Change: As we have delivered on key strategic objectives of focusing stabilizing simplifying our company.
Speaker Change: Here are the five key highlights.
Speaker Change: One streamlining our product portfolio to six highly regarded foundational brands I. Just mentioned this focused approach ensures that we are concentrating our efforts on those products that deliver the highest ROI, while retaining our ability for diversification with our brands as we grow and evolve.
Speaker Change: To optimize our go to market strategy by simplifying our marketplace account structure, which improved efficiency marketing effectiveness and conversion rates.
Speaker Change: Three strengthening supply chain through diversified partnerships reduce warehouse footprints and expanding the volume of our shipping contracts, making our operations more agile and resilient.
Speaker Change: Enhance our technology stack, our transition to a best in class Third Party Tech platform has improved efficiency reduce costs and enable faster expansion into new channels and geographies.
Speaker Change: And five improves our financial position by right sizing, our inventory renegotiating and extending our credit facility and strengthening our working capital setting a solid foundation for our future growth.
Speaker Change: These actions along with the support of a remarkable team produced significant improvements in 2024 and years of margin expansion narrowed losses, and an improved financial position.
Speaker Change: We believe the foundational work we accomplished in 2024 will allow all of us to grow and scale more predictably and efficiently starting in 2025 and beyond.
Speaker Change: We believe our momentum from 2024 will carry over to 2025 and drive a resumption of growth and improved adjusted EBITDA.
Speaker Change: We expect our net revenue for 2025 will increase between 5% and 7% from net revenues of $99 million in 2024.
Speaker Change: Excluding approximately 4 million of net revenue from discontinued Skus that occurred in 2024 net revenues is expected to increase on a pro forma basis by 9% to 12%.
Speaker Change: Further we are targeting 2025 be essentially breakeven, including the impacts of tariffs representing a significant improvement from the 2020 Four's adjusted EBIT loss of $2 1 million.
Speaker Change: Our 2025 growth will be driven by two key elements, one channel and Geo expansion and two new product launches.
Speaker Change: Channel expansion, along with Omnichannel approach is a natural progression for any product company, whether they started on Amazon direct to consumer our brick and mortar.
Speaker Change: With our third party best in class software model and more nimble supply chain adhering is poised to expand channels, which we believe will allow us to grow our top line in.
Speaker Change: In 2024, we started our expansion with Mockado Libre in Mexico in late in Q4 with target plus.
Speaker Change: 2025 growth on channels will continue with further expansion on our portfolio within target plus as well as further growth to other Mercado Libre marketplaces.
Speaker Change: We also expect to add at least two more well known channels in the second half of 2025.
Speaker Change: In 2025, we expect to expand further into brick and mortar and Atlanta select group of products into a national retailer sometime in the second quarter.
Speaker Change: For Geo expansion, our focus in 2025 will be the U K late in 2024, we qualified or accounts, where Amazon seller fulfilled prime in the U K, which will allow us to expand many of our U S products in the U K in the second half of 2025.
Speaker Change: As it relates to new product launches, we restarted this engine in 2024 and late in 2024, we launched three new products across our pure <unk> Mueller living brands.
Speaker Change: As we look into 2025, we expect to launch approximately five new categories across brands.
Speaker Change: With our focus brands were being very thoughtful on ensuring the products. We launch are in tune with our brand vision and strengths.
Speaker Change: This includes consumable based products.
Speaker Change: We believe our product portfolio.
Speaker Change: Rounding it out with consumer based products.
Speaker Change: We will allow.
Speaker Change: Consumers to buy repeatedly in Austin and will help us grow our topline improve margins long term.
Speaker Change: Further consumable products will allow us to pursue broader sourcing opportunities, including products sourced within the United States.
Speaker Change: Along these lines we are very excited about the launch of our squad party flexible lives in.
In 2025, these waste will be sourced from Italy with the intention to begin sourcing them from the United States sometime in 2026.
Speaker Change: When launched we believe these 100% plant based wipes will be amongst the best in the market delivering on great cleaning experience for users, while still being safer sensitive and eczema prone skin.
Speaker Change: H balanced alcohol free and up to the latest plumbing aseptic standards for both the U S and the U K.
Speaker Change: <unk> will be a natural fit to the squad party family and we'll continue to iterate the brand's dedication to improving the bathroom experience we.
Speaker Change: We expect these wipes to be available in early fall and will be launched practically simultaneously in both the U S and the UK markets.
Speaker Change: As to our profitability in 2025, as we continue to grow we expect to realize improved leverage and associated profits as our growth rates outpace our fixed cost investments after factoring the impacts of recently announced tariffs.
Speaker Change: This will be further enhanced over time as we expand our push into consumable products.
Speaker Change: Which with the achievement of certain volumes will on average had better contribution margin than many skus in our current portfolio.
Speaker Change: As the tariffs this has been a very sensitive and volatile talking for the world.
Speaker Change: Our expectation and guidance does factor the latest Harris, the 20% on China sourced imports and to a lesser extent Canada.
Speaker Change: We are planning to raise prices to offset as best as possible the impacts amongst other actions.
Speaker Change: We do believe further increased tariffs on Chinese goods will be impactful in the short term and we would see pressure on our groceries and leverage <unk>.
Speaker Change: During 2024, we have made efforts with our manufacturing partners to find alternative regions to source and manufacture our key products.
Speaker Change: Today, we source approximately 75% of our net revenues from China, and we are working with our manufacturer partners to have that number reduced by 50% by the end of 2026.
Speaker Change: Once the previously announced for cyclical tariffs are communicated we will be able to more definitively understand the impacts to our cost of goods.
If we're to move manufacturing away from China, and revise these sourcing targets as necessary, we feel confident that we have the ability to further diversify our supply chain away from China over the coming years on our existing products if the cost structure makes sense.
Speaker Change: Further as previously mentioned as we continue to expand our product launches into consumable base. Good we naturally will see a diversification away from China.
Speaker Change: With our strong balance sheet, we believe we can navigate these challenges, allowing us to adapt as needed while continuing to focus on long term growth and profitability.
Speaker Change: As to our capital deployment, we are excited to announce that our board of directors has approved a two year share repurchase program, allowing us at our discretion to repurchase up to $3 million of shares of our common stock on the open market over the next two years. This buyback reflects our collective confidence in the company's future the strength and flexibility of our financial.
Speaker Change: Profile and our commitment to shareholders.
Speaker Change: We firmly believe that <unk> stock is significantly undervalued and this repurchase program underscores our conviction in the long term value we are creating.
Speaker Change: Finally.
Speaker Change: We continue to consider M&A and we still believe this may help our growth opportunistically.
Speaker Change: However, given the opportunity landscape for organic growth. This is not a primary focus in.
Speaker Change: In closing <unk>.
Speaker Change: <unk> is a turnaround story that is evolving into a growth story.
Speaker Change: Our passionate talented and tenacious people worldwide have worked and address a variety of issues that impeded our success in the past.
Speaker Change: And have reconstructed a foundation that we believe will allow us to grow and deliver long term shareholder value.
Speaker Change: It was just about 12 months ago that we reported an adjusted EBIT loss of more than $22 million for 2023.
Speaker Change: In just one year's time, we've improved that figure by more than $20 million.
Speaker Change: And now we are proud to report our expectation for even further progress in 2025, including our first year of growth in a very long time.
Speaker Change: So a lot of work to do.
Speaker Change: While we are excited for the challenges ahead.
Speaker Change: We are confident that we have the balance sheet strength and operational agility to navigate this environment, including tariffs.
Speaker Change: Allowing us to continue to grow at period, while improving our operating performance.
Speaker Change: And most importantly.
Speaker Change: We remain grateful for the continued support of our shareholders.
Speaker Change: I am looking forward to a successful 2025 and with that I will pass the call to Josh.
Josh: Thanks Arnie good evening, everyone. We are pleased to report that our efforts to focus simplify and stabilize our business have produced positive results. These initiatives have led to improve key metrics and we're proud to report that we have reduced our adjusted EBITDA losses in 2024 to $2 1 million compared to an adjusted EBITDA.
Josh: <unk> loss in the prior year of $22 3 million, while Theres still work to be done a 91% reduction in our adjusted EBITDA losses is a testament to the effectiveness of our strategic initiatives and the meaningful progress we have made towards strengthening our business.
Josh: Now, let's take a closer look at our overall fourth quarter performance net revenue for the fourth quarter of 2024 declined 25% to $24 6 million from $32 8 million in the year ago quarter, primarily reflecting our SKU rationalization and lower liquidation levels of high cost inventory.
Josh: Adjusting for the impact of SKU rationalization net revenue would have only declined approximately 4%.
Josh: Our launch revenue was <unk> 3 million during Q4 2024 compared to <unk> 4 million in Q4 2023.
Josh: As planned we had three new products and one new variation launched in the fourth quarter as already mentioned, we expect to continue launching new products in 2025.
Josh: Overall gross margin for the fourth quarter increased to 63, 4% from 51% in the year ago quarter. The year over year improvement was driven by the positive impact of our SKU rationalization efforts product mix and less liquidation of high cost inventory compared to the prior period.
Josh: Our overall Q4 2020 for contribution margin as defined in our earnings release was 19, 4% a significant improvement from last year's negative <unk>, 8% and up from 17% in Q3 2024.
Josh: The year over year increase in contribution margin was driven by the positive impact of our SKU rationalization efforts and less liquidation of higher cost inventory compared to the prior period.
Looking deeper into our contribution margin for Q4 2024, our variable sales and distribution expenses as a percentage of net revenue decreased to 44, 1% as compared to 52, 8% in the year ago quarter. This decrease in sales and distribution expenses as a person.
Josh: <unk> revenue is primarily due to product mix and a reduction in logistics costs as a percentage of revenue.
Josh: Our operating loss of one 6 million in the fourth quarter of 2024 narrowed from a loss of $8 2 million in the year ago quarter, an improvement of approximately 84% primarily driven by the improvement in <unk> and the reduction of fixed costs due to our cost cutting initiatives.
Josh: Our fourth quarter 2020 for operating loss includes $1 1 million of noncash stock compensation expense, while our fourth quarter 2023 operating loss included $1 6 million of noncash stock compensation expense a reserve for BARDA credits of <unk> 3 million and a noncash loss.
Josh: Loss on impairment of intangibles of $3 million.
Our net loss for the fourth quarter 2024 of $1 3 million improved from a loss of $7 7 million in the year ago quarter up approximately 83, 1%.
Josh: Driven by the improvement in cm and reduction in fixed costs.
Josh: Our adjusted EBITDA loss of $2 1 million as defined in our earnings release improved by 98, 5% from an adjusted EBITDA loss of $5 6 million in the fourth quarter of 2023, primarily driven by the improvements and the reduction of fixed costs.
Josh: Moving on to the balance sheet at December 31, 2024, we had cash of approximately $18 million compared with $16 1 million at September 32024.
Josh: Borrowings on our credit facility went from $6 7 million as of the end of the third quarter of 2024 to $6 9 million at the end of the fourth quarter of 2020 for the credit facility balances down from $11 1 million in the prior year period.
Josh: At December 31, 2024, our inventory level was at $13 7 million down from $16 6 million at the end of the third quarter of 2024 and down from $24 million in the year ago quarter ends.
Josh: As we look at 2025, considering our new product launches and expansion into more channels. We believe that net revenue will be between $104 million and 106 million using the middle of the range. This would be an approximately 6% increase from the 2024 annual.
Josh: <unk> of $99 million.
Josh: Adjusting for approximately $4 million of net revenue from discontinued skus in the prior year revenue at the midpoint is expected to increase by 11% compared to last year. The primary drivers of the sales increase year over year is new product launches and Omnichannel and Geo expansion.
Josh: Our sales seasonality remains largely consistent with prior years with the exception of Q1, which we expect to contribute approximately 15% of full year sales slightly lower than historical trends. This shift is anticipated to be offset by stronger sales in Q4, while Q2 and Q3.
Josh: <unk> are expected to align with typical seasonal patterns.
Josh: Our current guidance reflects the impact of recently implemented tariffs based on the current 20% tariff on Chinese imports and to a lesser extent the 25% tariff on Canadian imports. We estimated the total impact on our 2025 cost of sales to be approximately $3 5 million.
Josh: We believe we can mitigate approximately 50% of these additional costs through price increases however, any future changes to tariff policies or unforeseen macroeconomic factors could affect our operating results. We will continue to monitor these developments and adapt our strategy is needed to manage.
Josh: Essential risks.
Josh: For 2025, we are targeting essentially breakeven adjusted EBITDA, incorporating the estimated $3 5 million effect of tariffs on our cost of goods sold this represents an approximate $2 million improvement from 2024 as trends evolves, we will continue to assess the impact and update our plans.
Josh: Accordingly.
Josh: We remain committed to driving long term sales growth and improving our operating performance over time.
Josh: Our improved financial and operational foundation, combined with a well respected product portfolio exciting new product introductions and strong vendor relationships and given us the confidence to provide longer term sales growth goals for.
Josh: For the three year period between 2025, and 2027, we expect to deliver a CAGR of at least 10% to 12%. We believe this will be achievable through a combination of factors, including launching new products to expand our portfolio frankly, our omnichannel presence through deeper retail and e-commerce penetration.
Josh: <unk> and entering new international markets.
Josh: Alongside these growth drivers our focus on operational efficiencies and cost discipline will support improved leverage positioning us for sustainable profitability over time.
Josh: We also continue to believe based on our current forecast that we have sufficient cash above our covenants to achieve our goal of consistent adjusted EBITDA profitability without raising additional capital as previously stated if we pursue additional financing it will be predominantly for accretive material M&A.
Josh: As already noted we are also pleased to announce that our board of directors had authorized a two year $3 million share repurchase program.
Josh: <unk> reflects our confidence in the company's long term prospects and our belief that our stock is undervalued. We see this as a strategic use of capital reinforcing our commitment to driving shareholder value, while continuing to invest in growth opportunities.
Josh: Excluding the buyback and factoring in our breakeven adjusted EBITDA guidance interest costs and working capital, we anticipate ending 2025 with approximately 16 million to $17 million of cash on hand.
Josh: In closing I am very proud of our team's efforts in stabilizing the business and positioning it for future success, we are confident that with our products strong balance sheet and our balance our principles are focused simplification and stabilization we have turned the corner as a company.
Josh: Forward with optimism as we continue our journey towards revenue growth sustained adjusted EBITDA profitability and ultimate aim to maximize long term shareholder value with that I'll turn it back to the operator to open up the call for questions.
Josh: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to Asia and China.
Josh: To withdraw your question simply press Star one again, if you are called upon to ask your question and I'm listening via loudspeakers device. Please pick up your handset and ensure that your phone is not on mute when asking a question again press star one to trying to queue.
Brian Kingston: And your first question comes from the line of Brian Kingston.
Speaker Change: Alliance Global partners. Your line is open.
Brian Kingston: Hi, good evening, thanks for taking my questions.
Speaker Change: The first question I have is.
Brian Kingston: Can you discuss the performance of the Skus added a target price.
Brian Kingston: Black Friday, which was the beginning in the fourth quarter and then have you seen to adding more skus do you plan to if not add a number of more skus throughout the year.
Brian Kingston: Just trying to understand the timeframe and execution on that platform.
Brian Kingston: Okay.
Brian Kingston: Hey, Brian already here I'll handle that one.
Brian Kingston: Listen I think in some aspects and I'll I'll answer it in different order so.
Speaker Change: The way, we looked at target plus and ultimately all of these other channels that we want to get into.
Speaker Change: We're really looking at this kind of marquee SKU concept I think it works well for us some of these channels, though we are a lot more nimbler, especially with our tech platform to sort of expand on to these channels. They are different than Amazon and so it's a little bit of a learning curve at the same time, especially in this environment and sometimes hard to forecast. So we want to focus on our best Skus get the best.
Speaker Change: Use up on these platforms and theoretically see how they perform and then over time, we want to sort of expand that outside of the marquee Skus and ultimately eventually have all of our skus on their right I would say most of our Skus you know keep in mind that when you back out roughly.
Speaker Change: Say like some 1300 skus between our papers and oils were probably at roughly 100 skus that are kind of like the key marquee skus.
Speaker Change: As the rest of the brands, which would be like healing solution, sorry would you be home labs, and <unk> and ULA and Squatty.
Speaker Change: I think in some aspects that's our approach. So we are it's a little bit more conservative than perhaps in the past or in others, where people will just shock on these things and we think it's a lot better to be a lot more focused and patient make sure of the skus are successful understand the nuances of those and then continuing to hit the gas and Thats what were doing with target and obviously the.
Speaker Change: Rest of the channels or expand through 2025 is the Q4 performance. We were pleasantly pleased I think we saw that the steam off did very well on target plus I think that was probably our lead SKU.
We're excited for the second half of this year as we ramp up some of those skus around the Cmos around what you're seeing but also.
Speaker Change: Hitting the second half of this year with the seasonal products like a unifier. So we're very very pleased with the performance so far.
Speaker Change: Great.
Speaker Change: The way is the cautious nature.
Speaker Change: Plan to learn.
Speaker Change: You have to commit that inventory to that platform is it or does.
Speaker Change: Does it matter where you sell.
Speaker Change: Inventory can at all.
Speaker Change: These sourced from different platforms with the same skus.
Speaker Change: So it makes them like Amazon.
Speaker Change: No I totally <unk>. So so I think unlike Amazon like these other channels that we're expanding to you don't have to necessarily lock that inventory into SBA like the Torrey Plaza isn't in FBA model right. So.
Speaker Change: Because we set up our supply chain in the appropriate way and we have you know national warehouses across the continent, roughly nine we can actually still distributor inventory nationally and then as we expand channels like target plus if it doesn't sell in target plus yeah. We can still sell those products are in our other channels like Walmart DTC.
Speaker Change: And some other things we're looking at so unlike Amazon if it's an SBA product like the steam up is you'd have to send that in and you can kind of stuck that inventory and there were a lot more flexible because of our national footprint and the fact that we actually are the ones fulfilling for target plus in some of these other channels so that makes sense.
Speaker Change: Okay.
Speaker Change: Then.
Speaker Change: Yeah.
Speaker Change: I'm wondering on the guidance, if you could dig in a little bit more and describe the dynamics.
Speaker Change: At our leading to probably what youre seeing so far.
Speaker Change: As a weaker relatively weaker first quarter and the annual basis.
Speaker Change: What gives you confidence that the second and third quarter will be typical seasonality and the fourth is relatively strong what are those dynamics that.
Speaker Change: You see that tightening playing out like that.
Speaker Change: Hey, Brian its Josh I think what's what's driving that really is that our new product launches.
Speaker Change: Predominantly be launched in the second half of the year as well as our expansion into.
Speaker Change: Two new marketplaces, as well as brick and mortar expansion is happening in the second quarter. So we're kind of we're about more Q4 heavy than we are Q1 heavy.
Speaker Change: Versus prior years.
Speaker Change: And then the first quarter just seeing volatile.
Speaker Change: Weakness just in volume.
Speaker Change: We wait for those things to play out is that right.
Speaker Change: I don't I Wouldnt say its weakness I just think that there are our sales growth that we've that we've described in our guidance is being driven by these new products and new marketplaces, which will be in full effect in the back half of the year.
Speaker Change: Okay. The last question I have the underlying growth is known in the 12% making adjustments it sounds like you've got eight new skus expansion in target and Mercado.
Speaker Change: And I thought right on the 75% of products sourced from.
Speaker Change: China I Couldnt misunderstood I thought you said you were increasing prices by 20%.
Speaker Change: So maybe that's wrong, but if all of that is right what are you expecting.
Speaker Change: What are your expectations on transaction volume with all of those things moving in the right direction.
Speaker Change: Obviously tariff prices for terex, but.
Speaker Change: I'm just trying to understand how you think the impact that the transaction volume.
Speaker Change: So.
Brian Kingston: So I guess I'll start off a little bit with Brian.
Brian Kingston: Tariffs were 20% and then theoretically if you back off like cost of goods sold when you actually look at the <unk>, which is the actual tariff impact thing thats roughly anywhere from a 7% to 10% price increase now be the the reality is not every single one of our products went up 20% right. There is some price elasticity across certain of our categories.
Brian Kingston: And certain of our brands. So some of them might have gone a little bit higher where other ones Couldnt go the whole way.
Brian Kingston: So I think in some aspects, we do feel that.
Brian Kingston: We've been able to adjust through the tariffs at this level.
Brian Kingston: And feel pretty confident of our plan going forward I think.
Brian Kingston: When it comes to.
Brian Kingston: No.
Brian Kingston: The pull through of that.
Brian Kingston: There'll be some pressure on gross margin comparable year over year, right, but you'll still see a healthy cm and so we do feel pretty bullish that we can hit those growth targets.
Brian Kingston: Even with increased pricing considering some of the channels, we're launching two and some of the activity. We're seeing some of the performance. We're seeing in Q4 on those on some of those channels at the same time, we are very confident in our product launches that are going to help us drive that that revenue, even though its second half weighted so.
Brian Kingston: You're right there is a limit to the tariff exercise and so.
Brian Kingston: As we said in the prepared remarks, if those keep going up and you know we'll have to revisit some of those those plans, but certainly right now we do feel pretty pretty bullish even though there's been a lot of noise in the economy about consumer confidence, reducing we still feel that the product areas. We've picked on and this is why we've been a bit cautious and thoughtful these are products that are going to.
Brian Kingston: Multi years and multi skus over time right. This is not like one off products. So we still feel very bullish even with the some of the headwinds there.
Brian Kingston: Okay. Thank you.
Speaker Change: Again, if you would like to ask a question press star one on your telephone keypad.
Your next question comes from the line of Alex Fuhrman with Craig Hallum. Your line is open.
Alex Fuhrman: Hey, guys. Thanks for taking my question and congratulations on all the progress that you made in 2024 already wanted to ask about the longer term kind of three year growth targets, obviously that implies some.
Speaker Change: Kind of acceleration in 2026 and beyond.
Speaker Change: Mostly just driven by the fact that youre going to have a lot of new products launching in the second half of the year Youre going to feel the full impact of that next year.
Speaker Change: Would love to hear a little bit more about how you kind of build into that multi year CAGR.
Speaker Change: Yeah, no. Thanks, Alan I appreciate it.
Speaker Change: Yes, that's part of it I think you know.
Speaker Change: Theoretically you didn't have an exit velocity concept right, if you're if you're launching a product in.
Speaker Change: Sometime in the second half that's not really the full run rate impact in the year. So that's one number two we're going to continue to launch products right just because I'm doing five this year, we're going to do more in 2006 and more in 2027. So you can get a little bit of a flywheel effect that helps get to that CAGR that Josh talked about in that range I think the other side. It's also the channel expansions right were adding two well known channels.
Speaker Change: Sometime in the second half of this year and we do have visions into more channels over time in 2026 and 10 in 2027 also other geos. So I think the combination of all of that is why you see that uplift.
Speaker Change: Yes at some point Youll see an acceleration in the growth of everything hits right. If that's technically 2026, I think a lot of it depends on timing of some of the things I just mentioned, but certainly it is it is kind of heading that way.
Speaker Change: Okay. That's really helpful. Thanks, and then you mentioned consumer.
Speaker Change: Consumer confidence obviously, there's been signs that that is.
Speaker Change: Declining just across the country and it sounds like your brand you are better positioned that.
Speaker Change: Then most to weather the storm are there any areas that you have been seeing a different consumer behavior. The last couple of months either in terms of basket size or certain products that are gravitating towards.
Speaker Change:
Speaker Change: Honestly no I think so far things are relatively on pace to our plan and we've had some out of stocks and to other things that have been kind of natural progressions. After a pretty good Q4.
Speaker Change: So I don't I don't think we're seeing a tremendous amount of softness coming directly because of consumer confidence or anything like that I think some of it is just the reset of Q1. After Q4 that you naturally have a little bit of noise that way.
Speaker Change: I think from our perspective, we look.
Speaker Change: It's one thing it's like a blessing and of course, we're pretty diversified REIT were across six brands they sell totally different things.
Speaker Change: And I think because of that we have a lot of different price points. So in some aspects if we aren't seeing a shift towards more value play we do have brands that perhaps could play really well into that and take up some of the lions share of growth and offset maybe more premium brands and maybe struggling a little bit and so I do think we're well positioned to sort of.
Speaker Change: You kind of handle this kind of pending volatility or storm, that's going out there, but so far we haven't seen it particularly across our brands.
Speaker Change: But I do like the fact and this type of scenario I do like being diversified because it gives us a lot of opportunities and things to think about with our revenue team and supply chain team to sort of see how we handle softness if we see any you know at the same time take opportunity.
Speaker Change: Take advantage of the opportunity if we see more value play going.
Speaker Change: Great. That's really helpful. Thank you very much.
Speaker Change: Seeing no further questions and I will turn the call back over to getting Teresa. Please go ahead.
Teresa: Thank you Debbie as part of its hearings shareholder Perks program.
Teresa: Which as a reminder, investors can sign up for at <unk> Dot Io slashed parks.
Teresa: Participants have the ability to ask management questions on our earnings calls we want to thank all of our shareholder perks participants for their loyalty their participation in the program and their questions.
Teresa: Picked two of the most popular questions that have been submitted by shareholders and I'll read them now for Rd and.
Josh to respond the first question.
Teresa: <unk> brands have a lack of presence on ebay is there a reason behind letting third party sellers sell our products on ebay instead of creating our direct from brand accounts like other companies such as Ninja kitchen and Dyson.
Speaker Change: I'll grab that Josh.
Speaker Change: So Kevin Thank you for that and thank you for the shareholder who submitted that one ebay as an interesting channel I mean, we do sell certain IV items on ebay, particularly some open box and return.
Speaker Change: We primarily handle Refurbishments currently through liquidators and other wholesale partners versus direct selling if you look at the Dyson and Ninja kitchen, and when you look at those particular brands and others, that's where like a direct refurbishment program that they do so they take a lot of their returns back and open boxes and things they actually certified refurbished and they sell through ebay, it's not like brand new items.
Speaker Change: It's certainly something the company has discussed and has looked at in the past, but right now we don't think it's a priority for US we think there's a lot more upside when we look at other channels like target plus as we mentioned in some of the ones. We're planning to launch in the future, but it's an interesting thing we'll continue to monitor it but certainly I think there is better.
Speaker Change: Upsides procuring in the newer products or brand new products on target plus in other channels like that.
Speaker Change: Alright. Thank you already are the next question why are you not engaged on social media platforms.
Kevin: Thanks, Kevin again, thank you to the shareholders submitted that question's a good one.
Speaker Change: Done a lot of foundational work over the last 18 months.
Speaker Change: We've relaunched view, our brands' websites, including our corporate site and currently right now we're ramping up our social media posting for our brands. This is for sure an area of opportunity for <unk> and its part of our roadmap. We do think there is the power of social media will definitely be part of a tiered strength in the future and something we continue to invest in and improve on.
Speaker Change: So people get be clear you know a lot of that work right now is going through our brand pages right. We are focused on.
Speaker Change: The investments, we're making there and the additional postings are doing is very focused on our brand pages and not be adhering corporate website, just to be clear on that or the tier incorporate.
Speaker Change: Social media pages, though we are improving those communications with posting our press releases and other 40 communications through those channels. The main focus is really on our brand pages.
Speaker Change: Great. Thank you Marty.
Speaker Change: With those two questions being answered. This concludes the Q&A portion of today's call in terms of upcoming calendar <unk> management will be participating in the planet Microcap showcase in Las Vegas April 20.
Speaker Change: To the 24th.
Speaker Change: We look forward to speaking with you on our next.
Speaker Change: Earnings call.
Speaker Change: This ends our call for today. Thank you again for your participation and you may disconnect.
Speaker Change: This concludes today's conference call you may now disconnect.
Speaker Change: [music].