Digital Brands Group, Inc. Q1 FY2023 earnings call

• Sundry acquisition led to significant operating leverage; operating loss excluding non-cash expenses would've been $250,000. - E-commerce revenue in Jan and Feb was half of March's as transitioning to performance marketing agency; e-commerce has high gross margin. - Excited for fall with e-commerce in full force, higher price point items (leathers, sweaters, outerwear), Bailey 44 wholesale revenue, and distilled product assortment. - Two new revenue channels launching fall: proprietary affiliate program (soft launch in Aug) and multi-brand retail store strategy (expect 50+ stores in Tier 1 locations). - Membership program launching in late June to drive customer retention. - Plan to use free cash flow to ramp store growth and potentially buy back shares.

Net revenues for Q1 2023 increased 48.4% to $5.1 million compared to $3.4 million a year ago. Gross margin profit for Q1 2023 was $2.4 million, a 113.9% increase from $1.1 million a year ago. Gross profit margin went from 33.2% a year ago to 47.9% in Q1 2023. G&A expenses, including noncash items, increased 8.4% to $4.6 million, but as a percentage of revenue declined to 91% from 124.6% a year ago. Excluding noncash items, G&A was $1.6 million compared to $2.5 million a year ago. Sales and marketing expenses increased 7.2% to $1.1 million. Loss from operations declined to $3.6 million from $5.6 million a year ago. Net loss attributable to common stockholders was $6.2 million or a loss of $1.08 per diluted share compared to $7.8 million or $59.18 per diluted share a year ago.

• Expect EBITDA positive this fall. - Forecast monthly free cash flow over $500,000 starting after last MCA payment in early October. - Intend to use free cash flow for accelerated growth channels and possible share buyback.

• Forward-looking statements subject to conditions beyond the company's control, as outlined in the Risk Factors section of the 10-Q.