Digital Brands Group, Inc. Q2 FY2023 earnings call

• Acquisition of Sundry in December 2022 led to significant revenue growth and operating leverage in Q2 2023.
• Third and fourth quarter revenues expected to be meaningfully higher than Q2 based on wholesale bookings.
• Cost savings from layoffs and redundancies will continue in third and fourth quarters.
• Launching two new revenue channels in fall: proprietary affiliate program and multi-brand retail store; affiliate program already has a waiting list.
• Bailey 44 is back in the wholesale market with new reps receiving orders, and first license income check for Bailey 44 next week; discussions ongoing for another license deal.

Net revenue in the second quarter of 2023 increased 69.6% to $4.5 million compared to $2.6 million a year ago. Gross margins for the second quarter of 2023 increased to $2.2 million compared to $1.5 million a year ago, with gross profit margins jumping to 52% from 42% a year ago. G&A expenses, including noncash items, decreased 4% to $4.1 million compared to $4.2 million a year ago. Sales and marketing expenses decreased 20.1% to $1.1 million compared to $1.4 million a year ago. Income from operations was $9 million compared to a loss of $10.6 million a year ago. Net income attributable to common stockholders was $5 million or $0.38 per diluted share compared to a loss of $9.5 million a year ago.

• Third and fourth quarter revenues will be meaningfully higher than the second quarter based on wholesale bookings.
• Continued cost savings in third and fourth quarters due to layoffs and redundancies.
• Launch of proprietary affiliate program and multi-brand retail store in fall.

• Forward-looking statements are subject to risks and uncertainties beyond the company's control; future developments and actual results could differ materially from forward-looking statements.