SenesTech, Inc. Q2 FY2025 earnings call

• Record quarterly revenue, gross profit, and adjusted EBITDA. Evolve sales up 94% y-o-y and 36% q-o-q, making up 83% of revenue. - Gross margins at 65.4% in Q2, up from 54.2% y-o-y and 64.5% q-o-q. Gross profit $409,000, up 64% y-o-y. - E-commerce over 50% of quarterly sales, up 78% y-o-y. Brick-and-mortar retail saw nearly 500% q-o-q growth with ~$65,000 sales from Bradley Caldwell deal. - City and government verticals with trials in NYC, Chicago, Baltimore, etc., showing strong results. - International opportunities with reorders and regulatory approvals in Australia/New Zealand. - Completed move to new larger facility in Phoenix for increased production capacity.

Total revenue for the second quarter was $625,000, up 36% y-o-y and 29% q-o-q. Evolve revenue increased 94% y-o-y, 36% q-o-q, accounting for 83% of Q2 sales. ContraPest decreased ~45% y-o-y but was up 3% q-o-q, making up 17% of Q2 sales. E-commerce was the largest contributor at 56% of Q2 sales, up 78% y-o-y and 18% q-o-q. Municipal sales saw a 538% increase y-o-y. Brick-and-mortar sales were over $65,000 in Q2. International sales were ~$20,000 in Q2.

• Expect margins to stay consistent with potential improvement in coming quarters. - Plan to accelerate e-commerce growth with digital marketing spend. - Cities/govt trials expected to grow as results prove Evolve's effectiveness. - Manufacturing capacity expansion to meet future demand. - Cash flow breakeven expected around $6.5 million revenue by late 2026.

• Forward-looking statements subject to numerous risks and uncertainties. - Lengthy process for retail adoption of products. - Regulatory approvals needed for international sales expansion. - Execution risks for growth plans in various market verticals.

Q: Should we expect incremental improvements to gross margins in the coming quarters?

A: Joel Fruendt says margins are expected to stay consistent with potential improvement in coming quarters.

Q: Is there room to accelerate e-commerce growth with additional digital marketing spend?

A: Joel Fruendt states it's in the plans to accelerate e-commerce growth with digital marketing spend.

Q: Should we expect higher volumes from cities like New York City, Chicago, etc., where the product has been launched?

A: Joel Fruendt expects continued growth as trials prove Evolve's effectiveness and its adoption into regular pest management practices.

Q: What is the potential capacity in terms of dollars of the expanded manufacturing facility?

A: Joel Fruendt says current capacity with one shift is ~1 million pounds translating to ~$10 million revenue, with plans to add shifts and lines.

Q: What is the new basic share count as of today?

A: Thomas Chesterman states it's 4,724,340 shares outstanding.

Q: Are you planning to do more in the future capital raises?

A: Thomas Chesterman says the financing overhang has been addressed, and no further significant financings are anticipated in the near future.

Q: Would a New York City full-scale expansion require a big capital investment?

A: Joel Fruendt says full-scale NYC expansion wouldn't require significant immediate capital, with CapEx in $300,000 to $400,000 range for additional lines.

Q: Talk about the breakeven point, both from a cost and a revenue standpoint, and when is the earliest we could flip to profitability?

A: Joel Fruendt says cash flow breakeven is ~$6.5 million revenue, expected in late 2026.

Q: Do you need to hire additional people?

A: Joel Fruendt says they are hiring salespeople, manufacturers reps, and expanding field teams to support growth.

Q: Are there any active trials that have not been announced?

A: Joel Fruendt says there are active trials, including small scale and some in agriculture not yet announced.

Q: Is there any utilization of the ATM on a go-forward basis?

A: Thomas Chesterman says the ATM is not active currently, with enough cash for now but potential in future if stock price and volume surge.

Q: How long before you are in store with Tractor Supply?

A: Joel Fruendt says they hope to have news on that in the coming months.

Q: Can you specify how OpEx will be cut? How much will come out of SG&A versus R&D?

A: Thomas Chesterman says cuts were a mixture of in-sourcing marketing and reducing R&D for additional species, with no specific plans for further OpEx cuts currently; Joel Fruendt adds focus on Evolve for now.

Q: Would you please clarify your statement about marketing through major brick-and-mortar retailers?

A: Joel Fruendt says there are ongoing discussions with major brick-and-mortar retailers, with hopes for announcements in coming months.