Release Date: November 14, 2024

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

Positive Points

• XWELL Inc (NASDAQ:XWEL) reported a revenue increase to approximately $8.4 million for the third quarter of 2024, up from $7.5 million in the prior year period.
• The company successfully reduced total operating expenses by approximately 35% compared to the same nine-month period in 2023.
• XWELL Inc (NASDAQ:XWEL) is expanding its out-of-airport brand strategy, with plans to operate up to 10 properties by mid-2025, starting with a new location in Naples, Florida.
• The company's new tech-forward spa concept at Philadelphia International Airport has shown promising customer traction and performance indicators.
• XWELL Inc (NASDAQ:XWEL) has maintained a solid liquidity position with $4.4 million in cash and cash equivalents and $11.7 million in marketable securities, with no long-term debt.

Negative Points

• The company reported an operating loss of $4.8 million for the third quarter of 2024, although this was an improvement from the $12.1 million loss in the prior year.
• General and administrative expenses increased to approximately $4.5 million, including over $2 million in extraordinary legal expenses.
• Salaries and benefits costs were approximately $1.9 million, higher than the $1.2 million in the same period in 2023, partly due to the absence of a non-recurring employee retention credit.
• Despite revenue growth, the net loss attributable to common shareholders was $4.8 million for the third quarter.
• The company faces ongoing challenges in aligning its operational processes and cost management to achieve profitability.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with XWEL.

Q: Can you provide more details on the company's strategic initiatives for growth? A: Ezra Ernst, Executive Vice President, highlighted the company's focus on expanding its out-of-airport brand strategy, which is expected to contribute significantly to top-line growth. XWELL plans to expand into several markets in Florida and aims to operate up to 10 properties by mid-2025. The company is also exploring opportunities to align additional properties with existing in-airport markets to enhance competitive positioning.

Q: How is the company leveraging technology in its operations? A: Ezra Ernst mentioned that the recently opened Express Spa at Philadelphia International Airport is the first to fully leverage a tech-forward concept. The spa features autonomous massage chairs and robotic nail systems, which have shown promising performance indicators. The company plans to open a similar tech-forward spa at Penn Station next year.

Q: What are the financial highlights from the third quarter of 2024? A: Suzanne Scrabis, Chief Financial Officer, reported total revenue of approximately $8.4 million, up from $7.5 million in the prior year period. The operating loss was reduced to $4.8 million from $12.1 million in the previous year. The company also reported a net loss attributable to common shareholders of $4.8 million, compared to $11.5 million in the prior year.

Q: How is XWELL managing its operating expenses? A: Suzanne Scrabis noted that total operating expenses were approximately $6.8 million, down from $13.2 million in the previous year. The company has been focused on optimizing its business structure and holding labor costs constant while delivering more revenue, which should benefit the bottom line as they move into 2025.

Q: What is the company's current liquidity position? A: Suzanne Scrabis stated that XWELL's liquidity remains solid, with cash and cash equivalents totaling $4.4 million and $11.7 million in marketable securities. The company has no long-term debt, and total current assets were approximately $19.5 million.

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