NEXGEL, Inc. Q2 FY2024 earnings call

• Acquired Silly George in May 2024, which boasts a large social media following (88,000 Facebook and 83,000 Instagram followers) and over 250,000 unique customer emails. Launched new products like Pop-On Lashes and implemented new marketing strategies.
• Completed expansion of contract manufacturing facility in Texas, with $209,000 in capital expenditures during the quarter, though revenue was impacted temporarily by the facility move.
• Partnered with STADA for Histasolv (sold as DAOSIN in Europe), a top-selling diamine oxidase enzyme supplement, and launched it on Amazon.
• Entered into a supply agreement with Cintas Corporation for SilverSeal, with the first order expected in Q4 2024.
• Recently closed a $1.11 million financing led by insiders to replenish the balance sheet and support marketing for Silly George.

In the second quarter of 2024, NEXGEL achieved a record revenue of $1.44 million, representing a 23.4% year-over-year increase and 13.8% sequential increase. Branded Consumer Products were a key growth driver, totaling $968,000, which was a significant jump from $259,000 in Q2 2023. This includes revenue from the acquired Silly George, with July 2024 sales on Shopify alone exceeding $380,000. Contract manufacturing revenue saw a decrease due to the facility move in Texas but is expected to normalize in the coming quarters. Branded Consumer Products contributed substantially to the overall revenue, with the acquisition of Silly George playing a pivotal role in this growth.

• Anticipates Q3 2024 revenue of $2.2 million (an 83% year-over-year increase) and Q4 2024 revenue of $2.6 million (over 140% year-over-year increase).
• Revenue from the AbbVie partnership, initially expected in Q3, is now slated to start in Q1 2025 due to delays related to AbbVie's console.
• Cintas partnership is expected to contribute multiple hundreds of thousands of dollars in Q4 with potential for reorders.

• Fluctuations in consumer product sales, which are inherently unpredictable.
• Uncertainties surrounding market acceptance of new products, such as Pop-On Lashes.
• Potential delays or issues with partnerships and acquisitions, as seen with the AbbVie timeline adjustment.

Q: Bill Odenthal inquired about Silly George's July sales impact on the second half, Cintas revenue timing, and AbbVie status.

A: Adam Levy responded that Silly George's growth is strong and if sustained, will positively impact the second half; Cintas revenue will start in Q4 with multiple hundreds of thousands of dollars in potential; AbbVie revenue was delayed due to AbbVie's console issues and is now expected to start in Q1 2025.

Q: Eric Ramos asked about Silly George's evolution with Amazon and gross margins, and AbbVie pricing and margins.

A: Adam Levy stated Amazon's impact on Shopify sales is unclear but expected to be accretive, with margins managed via advertising costs; for AbbVie, gross margins are expected to exceed 50% due to contract manufacturing and gel sales dynamics.