UPEXI, INC. Q1 FY2023 earnings call

• Upexi is a vertically integrated brand owner in high growth industry verticals like health, wellness, pet, beauty, and toys, using direct-to-consumer and Amazon sales channels.
• Completed several acquisitions in recent months: Cygnet Online, VitaMedica, Interactive Offers, and LuckyTail.
• Sold select CBD assets in late 2022 for ~$23.5 million to focus on high-margin growth areas.
• Fiscal Q1 2022 revenue was $11.6M, up 199% y-o-y, driven by brand growth across categories and sales platforms.
• Expect revenue to increase in 2023 through organic growth, completed 2022 acquisitions, and strategic acquisitions.

For the fiscal quarter ending September 30, 2022, revenue totaled $11.6 million, a 199% increase from $3.9 million in the same period the prior year. Key product segments include health, wellness, pet, beauty, and toys. Acquisitions played a significant role in growth: in April 2022, acquisition of Cygnet Online, LLC; in August 2022, asset purchase of VitaMedica Corporation; in October 2022, acquisition of Interactive Offers; and entry into the pet vertical with LuckyTail in 2022. The sale of select CBD assets in late 2022 helped streamline the business for focus on high-margin growth areas.

• Management projects over $100 million in revenues for calendar 2023 through organic growth of core business, acquisitions from 2022, and additional strategic acquisitions.
• Fiscal second quarter ending December 31, 2022 will focus on transitioning select CBD assets and consolidating recent acquisitions.
• Brands have good margins and opportunity to grow direct-to-consumer and Amazon sales in double digits through 2024.

• Macroeconomic challenges such as pullback in average total cart value due to consumer discretionary income and inflation.
• Competition in the brand aggregator space, with some competitors struggling with high debt loads and interest payments.

Q: Ben Piggott asks about capital allocation priorities given the stronger balance sheet from divestiture of CBD assets and M&A opportunities.

A: Andrew Norstrud responds that multiples are more attractive now, acquisitions may make more sense than buying back stock currently, but they are open to making the best use of capital as opportunities arise.

Q: Unidentified Analyst asks about competition in the brand aggregator space and if Upexi is in a strong position.

A: Allan Marshall states that some competitors are struggling with high debt loads and high interest payments, and multiples are coming down, creating more attractive M&A opportunities for Upexi.

Q: Unidentified Analyst asks about potential for 2023 revenue to be greater with additional acquisitions.

A: Allan Marshall says the $100M guidance includes current operations, and additional accretive acquisitions would increase that number, with updates provided as needed.