Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Eyecare product sales reached $4.8 million for the first half of 2024, showing strong growth.
- Sales and marketing expenses decreased by 13% compared to the previous year, indicating improved efficiency.
- Avenova Subscribe & Save customers on Amazon increased by 16% in the first six months of 2024.
- Gross margin on net product revenue improved to 66% in Q2 2024 from 49% in Q2 2023.
- Record Amazon Prime Day sales for Avenova products, with a 17% increase over Prime Day 2023.
Negative Points
- Total sales for Q2 2024 were $2.4 million, down from $3.5 million in Q2 2023.
- Net loss attributable to common stockholders for Q2 2024 was $1.6 million.
- Cash and cash equivalents were only $0.8 million as of June 30, 2024.
- Sales of wound care products, which contributed significantly in 2023, are expected to be lower in 2024.
- General and administrative expenses remained consistent at $1.6 million, showing no reduction.
Q & A Highlights
Q: I know in the comparable period, you did have some revenue based on the wound care product. Should we expect any other kind of stocking orders?
A: We should see some orders in the remainder of the year, but they won't be as material or as large as they were in 2023. We'll continue to see some orders later this year and into 2025. - Justin Hall, CEO
Q: Can you give us more color on the changes in efficiencies for your marketing strategy?
A: We shifted our strategy about a year ago to focus on our Subscribe & Save customers. This approach is more efficient as it reduces customer acquisition costs. We now focus on converting existing customers into subscribers, which provides predictable revenue without additional marketing spend. - Justin Hall, CEO
Q: What portion of your revenue is now generated from the Subscribe & Save program? How often are customers receiving products?
A: About one-fourth of all our online revenue comes from Subscribe & Save. Most customers receive a bottle every month, though some stretch it to every 45 or 60 days. - Justin Hall, CEO
Q: With Prime Day being in the third quarter, will we see a bump in Q3 compared to Q2 and Q4?
A: We normally have a stronger Q4 due to a push in our physician-dispensed channel and back-to-school promotions. We expect incremental increases in Q3 with a strong Q4. - Justin Hall, CEO
Q: Can you talk more about the physician-dispensed channels?
A: The physician-dispensed channel is crucial for brand building and introducing new customers to our online sales channel. It has the lowest customer acquisition cost and creates sticky customers. While it generates revenue, the online sales channel dwarfs it in terms of volume. - Justin Hall, CEO
Q: Can you tell us more about any changes in your supply chain and at what revenue level you achieve optimal economy of scale?
A: There haven't been significant changes in our supply chain. Our margins improved this year due to the absence of a large low-margin wound care order. Our eyecare unit margins remain steady around 65%. - Justin Hall, CEO and Tommy Law, Interim CFO
Q: Can you talk about the agreement with Eyenovia and any international market expansions?
A: We don't anticipate expanding internationally on our own due to the heavy investment required. We are focusing on partnerships and strategic transactions for the remainder of the year. - Justin Hall, CEO
Q: Has there been any change in distribution costs or advertising on Amazon?
A: Industry-wide, advertising costs are increasing, but we haven't seen much of an increase. We monitor Google and Meta ads closely and adjust spend as needed. Most of our customer acquisition comes from the physician-dispensed channel and Amazon advertising. - Justin Hall, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
