• Total Net Sales: $5.1 million for Q1 fiscal 2025, a 5% decrease year-over-year and a 12% increase from Q4.
• E-commerce Sales: $3.9 million, representing 77% of total net sales, a 10% year-over-year decrease.
• Wholesale Sales: $1.1 million, up 22% from the comparative quarter in fiscal 2024.
• Gross Profit Margin: 66% for Q1 fiscal 2025.
• SDNA Expenses: $3.4 million, down from $4.6 million in the prior year comparative quarter.
• Net Income: $15,000 compared to a loss of $977,000 in Q1 fiscal 2024.
• Non-GAAP Adjusted EBITDA: $214,000 profit for Q1 fiscal 2025, compared to a $698,000 loss in Q1 fiscal 2024.
• Cash and Cash Equivalents: Approximately $2 million as of December 31, 2024.
• Working Capital: Approximately $2.8 million as of December 31, 2024, compared to a deficit of $2.2 million on September 30, 2024.
• Debt Status: Company is now debt-free, excluding ordinary liabilities and accrued dividends.

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

Release Date: February 13, 2025

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

Positive Points

• cbdMD Inc (YCBD) achieved positive net income and a positive non-GAAP adjusted EBITDA for the first time in company history.
• The company reported a sequential revenue growth over the fourth quarter, indicating a rebound in sales.
• Gross margins remained strong at 66%, showcasing the durability of the business model.
• The company successfully reduced SG&A expenses by focusing on payroll, professional fees, marketing fees, and eliminating the HQ lease.
• cbdMD Inc (YCBD) is debt-free after converting all remaining convertible notes to common stock, freeing up cash for working capital.

Negative Points

• Total net sales for the first quarter of fiscal 2025 decreased by 5% compared to the prior year quarter.
• E-commerce sales, which represent a significant portion of total sales, saw a 10% year-over-year decrease.
• The wholesale margin for the new Oasis social tonic line is expected to be lower than other wholesale products.
• The company anticipates slight increases in operating costs related to warehouse and office lease extensions and marketing expenses.
• The capital structure remains a challenge, with a proposal for converting Series A preferred shares to common stock still pending shareholder approval.

Q & A Highlights

Q: Can you provide more details on the progress of the Herbal Oasis Social Tonics, including revenue and margin expectations? A: Ronan Kennedy, CEO, stated that the product has been well-received, although wholesale distribution is progressing slower than desired. The wholesale margin is expected to be lower than other products, but it represents incremental revenue. Some revenue was booked in the December quarter, but specific figures were not disclosed.

Q: How do the direct-to-consumer (DTC) margins for Oasis compare to the rest of the product portfolio? A: Ronan Kennedy, CEO, mentioned that DTC margins for Oasis are tighter than other products but still viable. The category is growing profitably, though not as profitable as higher-end SKUs.

Q: What is the total number of common stock shares outstanding after the conversion of convertible notes? A: Ronan Kennedy, CEO, confirmed that there are just over 6.2 million total shares outstanding following the conversion.

Q: Do you still expect a liquidity runway of at least eight quarters, extending to the end of fiscal 2026? A: Ronan Kennedy, CEO, affirmed confidence in their liquidity position, emphasizing ongoing efforts to maintain profitability and generate cash.

Q: Are you seeing a broader category turnaround in the beverage market, or is the interest specific to your products? A: Ronan Kennedy, CEO, noted significant growth in the beverage market, particularly in 2024, and expects this trend to continue. The national retailer's interest adds credibility, and they are focused on advancing their core CBD business profitably while leveraging the Oasis beverage line for growth.

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