First Organic Revenue Growth quarter since Q4 2020. Improved Profitability.
TORONTO, Aug. 27, 2024 /CNW/ - EMERGE Commerce Ltd. (TSXV:ECOM) ("EMERGE" or the "Company") today announced results for its three months ended June 30, 2024. Copies of the interim financial statements and MD&A are available on the Company's profile on SEDAR at www.sedar.com.
Q2 2024 Financial Highlights
Q2 GMS1 increased by 5% to $8.4M compared to $8.0M in Q2 2023
Q2 Revenue increased by 9.4% to $5.2M compared to $4.7M in Q2 2023. Excluding Carnivore Club, a brand that is actively eliminating loss-making revenue, EMERGE revenue growth was 14%, driven by truLOCAL and the golf business.
Q2 Gross Profit increased by 13% to $2.1M compared to $1.9M in Q2 2023
Q2 Gross Margin improved to 41% compared to 39% in Q2 2023
Q2 Adjusted EBITDA1 improved to $(73K) compared to $(346K) in Q2 2023
Q2 Net loss improved to $(549K) compared to $(2.0M). The majority of the net loss was attributable to a one-time non-cash modification expense related to the restructured convertible note. Excluding the one-time charge, Net loss for Q2 2024 would have been $(251K)
Cash on hand at June 30, 2024 was $2.2M
Ghassan Halazon, Founder and CEO, EMERGE commented, "Q2 was a major turning point for EMERGE, as we delivered our first quarter of positive organic revenue growth since late 2020, following a multi-year comedown from the artificially high pandemic levels. Across the spectrum, we delivered materially improved metrics, including year-over-year growth in GMS, Revenue, Gross Profit, Adjusted EBITDA and Net Income. We remain focused on delivering on the "return-to-revenue-growth" plan that we articulated earlier in the year, and see continued momentum in Q3 to date. Both truLOCAL and our golf business saw healthy YoY organic revenue growth. Meanwhile, Carnivore Club, our smallest brand, is a business we have actively been optimizing for profitability, while shrinking "loss-making" revenue. Excluding Carnivore Club, our Q2 revenue grew 14% year over year. Our more streamlined portfolio strategy this year has meant that most of management's time and energy has been spent on optimizing the existing brands directly, re-igniting growth, and improving profitability. Finally, I would like to take this opportunity to offer my sincere gratitude to our unrelenting team, Board, shareholders and trusted partners as we deliver this breakthrough quarter, and look to build on this momentum for the balance of 2024 and beyond."
Brand-Level Commentary
truLOCAL, our premium meat subscription service, and EMERGE's largest business by revenue, saw healthy organic growth in Q2.
Management believes truLOCAL represents an outsized strategic opportunity for the Company with a large total addressable market. We view it as an anchor asset that we can build around in the food tech space at large where we have big ambitions. truLOCAL's future growth is expected to come from a mix of consumer subscription revenue growth (core business), B2B initiatives & partnerships, geographical expansion, and acquisition opportunities down the line.
The golf vertical, which includes UnderPar and JustGolfStuff, continues to perform well. The golf business has gained from the weakening macro climate which has resulted in more golf courses returning to the marketplace platform, in some cases for the first time in years, offering more aggressive deals to seek customers.
Carnivore Club, EMERGE's smallest business, continues to be optimized for profitability, which includes the elimination of loss-making revenue.
Excluding Carnivore Club, EMERGE's Q2 2024 revenue increased by approximately 14%.
Outlook
EMERGE is seeing strong sales momentum through Q3 to date, and continues to execute towards a return to organic revenue growth plan in 2024, with a substantially improved profitability profile and reduced overall debt levels.
The recent interest rate cuts, as well as the highly anticipated upcoming rate reductions, are expected to result in meaningful cash savings for the business.
Top Priorities
The Company's top priorities in the near-term are to i) continue to drive organic growth, ii) extract further operational efficiencies, and iii) opportunistically explore avenues to further pay down debt and reduce interest expense.
Voluntary Option Cancellations
EMERGE announces the voluntary cancellation of certain stock options (the "Options") pursuant to the Company's omnibus equity incentive plan.
A total of 2,334,390 Options were voluntarily cancelled by certain directors and officers of the Company. The Options were previously issued with an effective price of between $0.11 and $0.79 per share. Prior to this cancellation, each vested Option entitled the holder to receive one common share of the Company.
Management Transition
As part of the Company's strategy to operate a leaner HQ team to support our more streamlined brand portfolio, Fazal Khaishgi will be stepping down from his role as Chief Operating Officer by November 2024. EMERGE has no plans to replace this position.
"On behalf of the EMERGE team, I'd like to extend our sincere gratitude to Fazal for his true partnership over the years, having played an instrumental role from our foundational stages until this point. We will continue to work closely with Fazal throughout the transition period, and wish him nothing but the best in his future endeavours," commented Halazon.
Conference Call
Management will host a conference call on Tuesday, August 27 at 8:30 am ET to discuss its second quarter results. To access the conference call, please dial (437) 900-0527 or (888) 510-2154 and provide conference ID 21130.
Alternatively, the conference call can be accessed online at: https://app.webinar.net/37Ao90x9G2v
Selected Financial Highlights
The tables below set out selected financial information and should be read in conjunction with the Company's consolidated financial statements and MD&A for the three months ended June 30, 2024, which are available on SEDAR.
Three monthsended June 30,
Three monthsended June 30,
Six months
ended June 30,
