• Total Revenue: $1.5 million, an 18% increase year-over-year.
• Zola Coconut Water Sales: Increased 55% compared to Q3 of last year, representing about 86% of total revenues.
• SG&A Expenses: Approximately $2.2 million, including $380,000 of transition costs related to the sale of GoodWheat, a 20% increase from last year.
• Cash Usage: Declined to $1.5 million, the lowest level since going public, including $430,000 related to discontinued operations.
• Cash and Short-term Investments: $6.6 million at the end of Q3, down from $8.1 million at the end of Q2.
• Inventory Balance: $835,000, a 15% decrease from the end of Q2.
• Cost of Revenues: Approximately $1 million, including a $150,000 write-down related to hemp and GoodWheat seed.
• Research and Development Costs: $24,000, an increase of $9,000 compared to Q3 of last year.
• Loss from Discontinued Operations: $430,000, a 77% decrease compared to the same period last year.

• Warning! GuruFocus has detected 6 Warning Signs with RKDA.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Arcadia Biosciences Inc (NASDAQ:RKDA) reported an 18% year-over-year increase in total revenues for Q3 2024.
• Zola coconut water sales surged by 55% compared to the same period last year, contributing significantly to revenue growth.
• The company achieved the lowest level of cash usage in a quarter since going public, indicating improved financial management.
• Zola's retail store count increased by 68% year-over-year, marking the largest quarterly distribution gain in the company's history.
• Zola outpaced the coconut water category growth, with a 73% increase in the latest four-week period compared to the industry's 28% growth.

Negative Points

• Selling, general, and administrative expenses increased by $380,000 due to severance and transition-related fees.
• Sales of GLA oil continued to decline, with Q3 sales being about half of what they were in the same period last year.
• The company experienced a $150,000 write-down related to hemp and GoodWheat seed.
• There is uncertainty in forecasting due to the timing of initial shipments and the size of new distribution gains.
• The company did not provide forward-looking guidance, citing challenges in forecast accuracy due to recent distribution changes.

Q & A Highlights

Q: Can you clarify the $150,000 write-down mentioned in the financial results? Was it entirely within this quarter and associated with the legacy hemp business? A: Yes, the $150,000 write-down was entirely in this quarter and related to both hemp and GoodWheat seed. - Mark Kawakami, CFO

Q: What are your expectations for margins going forward, excluding the write-down and the GLA business? A: Excluding those items, margins are around 33%. Historically, we've communicated a long-term outlook for Zola margins in the low to mid-30s, and we're currently in the middle of that range. - Thomas Schaefer, CEO

Q: Do you expect any more one-time operational expenses in the fourth quarter? A: Most severance and related issues are behind us, so we expect any further expenses related to those transactions to be minimal. - Thomas Schaefer, CEO

Q: With the rapid growth in Zola's distribution, how confident are you in Arcadia's infrastructure to support this growth? A: We are comfortable with our infrastructure. Zola is manufactured in Thailand, and we receive finished goods at the port, making it an asset-light business model. We are managing inventory carefully, especially as lead times have increased, and we plan to rebuild safety stock during the softer season. - Thomas Schaefer, CEO

Q: Can you provide guidance on future financial performance given the recent distribution gains? A: We are not providing forward-looking guidance due to the challenges in forecasting initial sell-in versus ongoing reorder patterns. However, we are optimistic about our growth trajectory. - Thomas Schaefer, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.