Algorhythm Holdings, Inc. Q4 FY2023 earnings call

• Successfully uplisted to NASDAQ in May 2022, executed capital raises with simple capital structure. - Expanded distribution with Walmart, sold incremental orders to Walmart, and Walmart will carry 14 Singing Machine products in toys and electronics departments. - Doubled down on Canadian market growth. - Identified four global karaoke segments: in-home, high end commercial, automotive, hospitality; leading in-home market in North America but facing challenges.

Revenues for fiscal 2023 were approximately $39.3 million, a decrease from $47.5 million in fiscal 2022. Gross profit was $9.2 million (23.4% of revenues) compared to $10.8 million (22.8% of revenues) in fiscal 2022. The decrease in sales was due to excess inventory from supply chain issues and economic concerns leading retailers to be more conservative. Co-op promotion incentives increased to $2.3 million in fiscal 2023.

• Anticipate gross margins to improve due to lower co-op costs and cleaner distribution channels. - Confident in holiday season due to cleaner distribution pipelines compared to last year. - Expect continued efforts in expanding with Walmart, Amazon, and automotive/hospitality markets.

• Supply chain issues and logistics challenges experienced in prior years, though container costs have decreased. - Economic factors like inflation, interest rate hikes, and retail inventory concerns impacting sales. - Dependence on holiday retail demand for in-home karaoke segment.

Q: Was there anything about the holiday season that was unprepared for and how supply chains are evolving?

A: Retailers delayed orders longer, this year distribution pipelines are cleaner; container prices down, supply chains settling down.

Q: Excitement about automotive and hospitality opportunities?

A: Automotive due to carpool karaoke experience and interest from brands; hospitality for disrupting fragmented venue market with innovative concepts.