UPEXI, INC. Q1 FY2024 earnings call

• Operational efficiencies: Streamlining operations has bolstered margins and is projected to continue improving balance sheets. - Brand investments: Significant spending on brands like Tytan Tiles (Disney Frozen launch), VitaMedica (subscription growth strategy), and LuckyTail (pet shoes launch) as investments in future growth. - Financials: Q1 2024 revenue grew 140% Y/Y and 53.5% sequentially. EBITDA margins were impacted short term by brand investments but are seen as beneficial for long-term growth. - Cost-cutting: General and administrative expenses as a percentage of revenue decreased to 8.2% from 19% in the prior year, and operating expenses as a percentage of revenue decreased 29% from 56.5% in the prior year. - Balance sheet: Restructured debt, paying down a portion and extending the remainder, with no material impact on the business.

In fiscal Q1 2024, Upexi's revenue grew 140% year-over-year and 53.5% sequentially. Branded products segment: Tytan Tiles saw strong growth post-Disney Frozen launch, with a run rate of over 115 units per day on Amazon within a month of launch. VitaMedica invested in ad spend for subscription growth, and LuckyTail launched pet shoes. Re-commerce segment: Cygnet Online's revenue increased by approximately $1.5 million sequentially, with gross profit margin rising from 44% to 48% due to volume purchases. NETi's revenue increased by approximately $6.3 million sequentially, but average gross profit declined from 17% to 10% due to inventory liquidation. Revenue contribution: Branded products and re-commerce (including NETi acquisition) contributed to the overall growth.

• Reiterated calendar 2023 revenue guidance of $100 million. - Expect growth to accelerate for VitaMedica with new product launches like acne treatments. - Anticipate margin improvement as cost-cutting measures and brand growth take effect, with plans to see margins closer to desired ranges as brands grow and cost-cutting continues.

• Market-related risks: Share price performance is influenced by broader market conditions beyond the company's control. - Inventory management risks: NETi's margin decline was due to liquidation of excess inventory amid slowing consumer purchasing. - Debt risks: Restructured debt and interest rate changes could impact the balance sheet if not managed properly.

Q: Nice to see growth sequentially in sales slightly above guidance, and questions on gross margin and focus on growth vs profitability.

A: Allan Marshall discussed that brand investments like in VitaMedica were upfront costs to build subscription funnels for long-term growth, with expectation margins to improve as brands grow.

Q: Question on timing of additional product launches.

A: Allan Marshall mentioned they aim to launch couple of products in first half of 2024, waiting to see how the Disney Frozen launch with Tytan Tiles performs first.

Q: Holistic balance sheet question regarding cash, debt, and credit facility.

A: Allan Marshall stated they are comfortable with the credit facility and balance sheet position, planning to manage debt and cash to minimize interest costs.

Q: Question on Bloomios assets.

A: Allan Marshall said business as usual with Bloomios, using it to produce products at lower cost and evaluating its future but it's not a drag on the business