Reports Second Quarter 2023 Net Revenue of $35.3 Million
NEW YORK, Aug. 08, 2023 (GLOBE NEWSWIRE) -- Aterian, Inc. ( ATER) (“Aterian” or the “Company”) today announced results for the second quarter ended June 30, 2023.
Second Quarter Highlights
- Second quarter 2023 net revenue declined 39.5% to $35.3 million, compared to $58.3 million in the second quarter of 2022.
- Second quarter 2023 gross margin declined to 42.2%, compared to 53.8% in the second quarter of 2022, primarily reflecting the impact of our strategy of liquidating high-cost inventory.
- Second quarter 2023 contribution margin declined to (3.6)% from 9.7% in the second quarter of 2022, primarily reflecting consumer softness and higher competitive pricing pressure in cooling and air quality product categories and an increased inventory obsolescence reserve.
- Second quarter 2023 operating loss of ($36.4) million increased compared to a loss of ($10.1) million in the second quarter of 2022. Second quarter 2023 operating loss includes ($3.2) million of non-cash stock compensation, a non-cash loss on impairment of intangibles of ($22.8) million, and restructuring costs of $(1.2) million, while second quarter 2022 operating loss included a gain of $1.7 million from the change in fair value of earn-out liabilities and ($6.0) million of non-cash stock compensation.
- Second quarter 2023 net loss of ($34.8) million increased from ($6.3) million loss in the second quarter of 2022. Second quarter 2023 net loss includes ($3.2) million of non-cash stock compensation, a non-cash loss on impairment of intangibles of ($22.8) million, restructuring costs of ($1.2) million, and a gain on fair value of warrant liability of $2.2 million, while second quarter 2022 net loss included ($6.0) million in net charges from the changes in fair value of warrants, ($6.0) million of non-cash stock compensation and a gain of $1.7 million from the net change in fair value of earn-out liabilities.
- Second quarter 2023 adjusted EBITDA loss of ($8.0) million increased from ($3.7) million in the second quarter of 2022.
- Total cash balance at June 30, 2023 was $28.9 million.
Third Quarter 2023 Outlook
For the third quarter, taking into account the current global environment and inflation, we believe that net revenue will be between $32.5 million and $37.5 million and expect an adjusted EBITDA loss of between ($4.5) million to ($5.5) million.
The Company’s third quarter 2023 guidance is based on a number of assumptions that are subject to change, many of which are outside the Company’s control. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
Non-GAAP Financial Measures
For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Non-GAAP Financial Measures” section below. The most directly comparable GAAP financial measure for EBITDA and adjusted EBITDA is net loss and we expect to report a net loss for the three months ending September 30, 2023, due primarily to our operating losses, which includes stock-based compensation expense, and interest expense. We are unable to reconcile the forward-looking statements of EBITDA and adjusted EBITDA in this press release to their nearest GAAP measures because the nearest GAAP financial measures are not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort.
Webcast and Conference Call Information
Aterian will host a live conference call to discuss financial results today, August 8, 2023, at 5:00 p.m. Eastern Time, which will be accessible by telephone and the internet. To access the call, participants from within the U.S. should dial (833) 636-1351 and participants from outside the U.S. should dial (412) 902-4267 and ask to be joined into the Aterian, Inc. call. Participants may also access the call through a live webcast at https://ir.aterian.io. The archived online replay will be available for a limited time after the call in the Investors Relations section of the Aterian website.
About Aterian, Inc.
Aterian, Inc. ( ATER) is a leading technology-enabled consumer product company that builds, acquires, and partners with leading e-commerce brands by harnessing proprietary software and an agile supply chain to create top selling consumer products. The Company’s cloud-based platform, Artificial Intelligence Marketplace Ecommerce Engine (AIMEE™), leverages machine learning, natural language processing and data analytics to streamline the management of products at scale across the world's largest online marketplaces with a focus on Amazon, Shopify and Walmart. Aterian owns and operates a number of brands and sells its products in multiple categories, including home and kitchen appliances, health and wellness, beauty and consumer electronics.
Forward Looking Statements
All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements regarding our projected third quarter revenue and adjusted EBITDA, the current global environment and inflation. These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties and other factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to our ability to continue as a going concern, our ability to meet financial covenants with our lenders, our ability to create operating leverage and efficiency when integrating companies that we acquire, including through the use of our team’s expertise, the economies of scale of our supply chain and automation driven by our platform; those related to our ability to grow internationally and through the launch of products under our brands and the acquisition of additional brands; those related to consumer demand, our cash flows, financial condition, forecasting and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; our ability to disrupt the consumer products industry; our ability to maintain and to grow market share in existing and new product categories; our ability to continue to profitably sell the SKUs we operate; our ability to generate profitability and stockholder value; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue; acquisitions of other companies and technologies and our ability to integrate such companies and technologies with our business; our ability to continue to access debt and equity capital (including on terms advantageous to the Company) and the extent of our leverage; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov.
Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
| ATERIAN, INC. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in thousands, except share and per share data) | ||||||||
| December 31, 2022 | June 30, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 43,574 | $ | 28,867 | ||||
| Accounts receivable, net | 4,515 | 4,782 | ||||||
| Inventory | 43,666 | 36,683 | ||||||
| Prepaid and other current assets | 8,261 | 5,326 | ||||||
| Total current assets | 100,016 | 75,658 | ||||||
| Property and equipment, net | 853 | 839 | ||||||
| Other intangibles, net | 54,757 | 12,429 | ||||||
| Other non-current assets | 813 | 543 | ||||||
| Total assets | $ | 156,439 | $ | 89,469 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Credit facility | $ | 21,053 | $ | 15,748 | ||||
| Accounts payable | 16,035 | 11,821 | ||||||
| Seller notes | 1,693 | 1,206 | ||||||
| Accrued and other current liabilities | 14,254 | 11,978 | ||||||
| Total current liabilities | 53,035 | 40,753 | ||||||
| Other liabilities | 1,452 | 1,556 | ||||||
| Total liabilities | 54,487 | 42,309 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.0001 par value, 500,000,000 shares authorized and 80,752,290 and 88,014,844 shares outstanding at December 31, 2022 and June 30, 2023, respectively | 8 | 9 | ||||||
| Additional paid-in capital | 728,339 | 733,878 | ||||||
| Accumulated deficit | (625,251 | ) | (685,838 | ) | ||||
| Accumulated other comprehensive loss | (1,144 | ) | (889 | ) | ||||
| Total stockholders’ equity | 101,952 | 47,160 | ||||||
| Total liabilities and stockholders' equity | $ | 156,439 | $ | 89,469 | ||||
| ATERIAN, INC. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Net revenue | $ | 58,268 | $ | 35,264 | $ | 99,941 | $ | 70,143 | ||||||||
| Cost of good sold | 26,917 | 20,368 | 44,982 | 36,151 | ||||||||||||
| Gross profit | 31,351 | 14,896 | 54,959 | 33,992 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and distribution | 31,866 | 20,557 | 54,840 | 40,783 | ||||||||||||
| Research and development | 1,730 | 1,709 | 2,877 | 2,956 | ||||||||||||
| General and administrative | 9,571 | 6,281 | 19,112 | 12,240 | ||||||||||||
| Impairment loss on goodwill | — | — | 29,020 | — | ||||||||||||
| Impairment loss on intangibles | — | 22,785 | — | 39,445 | ||||||||||||
| Change in fair value of contingent earn-out liabilities | (1,691 | ) | — | (4,466 | ) | — | ||||||||||
| Total operating expenses | 41,476 | 51,332 | 101,383 | 95,424 | ||||||||||||
| Operating loss | (10,125 | ) | (36,436 | ) | (46,424 | ) | (61,432 | ) | ||||||||
| Interest expense, net | 338 | 346 | 1,138 | 717 | ||||||||||||
| Gain on extinguishment of seller note | — | — | (2,012 | ) | — | |||||||||||
| Loss on initial issuance of equity | — | — | 5,835 | — | ||||||||||||
| Change in fair value of warrant liability | 6,014 | (2,197 | ) | 7,893 | (1,843 | ) | ||||||||||
| Other (income) expense, net | — | 176 | (25 | ) | 229 | |||||||||||
| Loss before income taxes | (16,477 | ) | (34,761 | ) | (59,253 | ) | (60,535 | ) | ||||||||
| Provision (benefit) for income taxes | (168 | ) | 26 | (168 | ) | 52 | ||||||||||
| Net loss | $ | (16,309 | ) | $ | (34,787 | ) | $ | (59,085 | ) | $ | (60,587 | ) | ||||
| Net loss per share, basic and diluted | $ | (0.26 | ) | $ | (0.45 | ) | $ | (0.94 | ) | $ | (0.78 | ) | ||||
| Weighted-average number of shares outstanding, basic and diluted | 63,947,069 | 77,625,304 | 62,749,520 | 77,181,388 | ||||||||||||
| ATERIAN, INC. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| Six Months Ended June 30, | ||||||||
| 2022 | 2023 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (59,085 | ) | $ | (60,587 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Depreciation and amortization | 3,894 | 2,964 | ||||||
| Provision for sales returns | ||||||||
