Sow Good Inc. Q2 FY2025 earnings call

• Claudia noted 2025 marked an important step forward despite near-term operational challenges, with encouraging signs from innovation, brand resonance, and retail partnerships. Demand rebounded but was impacted by short-term supply chain and labor constraints resolved in July.
• Donna walked through Q2 financials, highlighting revenue decline, gross margin drop, and changes in operating and net losses.
• Near-term priorities: 1) Optimizing cost structure and conserving cash, having taken steps to rightsize cost base and align production with demand. 2) Expanding distribution of candy products, with demand returning, new Halloween products shipped, partnership growth with retailers like Five Below and progress with a major national grocer. 3) Disciplined execution to build on regained momentum, focusing on stabilizing supply chain and seizing new opportunities.

In the second quarter of 2025, Sow Good's revenue was $1.9 million compared to $15.6 million in the same period of 2024. Gross loss was $0.1 million in Q2 2025 versus gross profit of $9 million in 2024. Gross margin was negative 7% in Q2 2025 compared to 58% in the year-ago period. Operating expenses in Q2 2025 were $3.9 million compared to $4.1 million in 2024. Net loss in Q2 2025 was $4.2 million or negative $0.36 per diluted share compared to net income of $3.3 million or $0.29 per diluted share in 2024. Adjusted EBITDA in Q2 2025 was negative $2.7 million compared to $6.2 million in 2024. Cash and cash equivalents ended the quarter at $1 million.

• Expect Q3 operations to normalize as delayed shipments issue resolved in July. - Anticipate continued expansion of candy product distribution, with positive feedback from retailers and optimism about increasing demand in the Middle East starting October. - Continue investing in innovation, exploring private label and adjacent categories. - Focus on disciplined execution to build on regained momentum and drive sustainable growth.

• Short-term supply chain and labor constraints in Q2 that affected shipments. - Need to resolve the speed of securing export health certificates in the Middle East. - Competitive pressure from large market entrants impacting demand in Q2.

Q: Can you just talk to your inventory levels as well as your need for future financing?

A: From an inventory perspective, still have quite a bit of finished goods from last year with long shelf life, selling through it, and 2 SKUs moving through discount channels. In regards to future financing, with current run rate fine, but would evaluate further R&D or adjacent category expansion if needed; currently business is stabilized.

Q: How long until your cash flow breakeven at this point, do you think?

A: I would say before the end of the year, and we're making really good progress right now from a cash perspective.