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Aterian Reports Fourth Quarter & Full Year 2022 Results

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Achieved Substantial Progress Selling Through High Cost Inventory to Drive Margin Expansion Starting In the First Quarter of 2023

Reaffirms Second Half 2023 Adjusted EBITDA Profitability Target

NEW YORK, March 09, 2023 (GLOBE NEWSWIRE) — Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”) today announced results for the fourth quarter and full year ended December 31, 2022. 

Fourth Quarter Highlights

  • Fourth quarter 2022 net revenue declined 13.3% to $54.9 million, compared to $63.3 million in the fourth quarter of 2021.
  • Fourth quarter 2022 gross margin declined to 37.1%, compared to 45.6% in the fourth quarter of 2021, primarily reflecting the impact of our strategy of liquidating high cost inventory.
  • Fourth quarter 2022 contribution margin declined to (11.5)% from 7.9% in the fourth quarter of 2021, primarily reflecting the impact of our strategy of liquidating high cost inventory.
  • Fourth quarter 2022 operating loss increased to $(22.8) million compared to a loss of $(3.3) million in the fourth quarter of 2021. Fourth quarter 2022 operating loss includes a reserve for barter credits of ($1.6) million and ($2.7) million of non-cash stock compensation, and a non-cash loss on impairment of goodwill of ($0.5) million, while fourth quarter 2021 operating loss included a net gain of $14.4 million from the net change in fair value and settlement of earn-out liabilities and $(7.7)million of non-cash stock compensation.
  • Fourth quarter 2022 net loss of $(20.3) million increased from $(6.6) million in 2021. Fourth quarter 2022 net loss includes a reserve for barter credits of ($1.6) million, ($2.7) million of non-cash stock compensation, a non-cash loss on impairment of goodwill of ($0.5) million, and a gain on fair value of warrant liability of $2.8 million, while fourth quarter 2021 net loss included a net gain of $14.4 million from the net change in fair value and settlement of earn-out liabilities, $(7.7) million of non-cash stock compensation and loss on extinguishment of debt of $(2.1) million.
  • Fourth quarter 2022 adjusted EBITDA loss increased to $(16.2) million from $(3.0) million in the fourth quarter of 2021.
  • Total cash balance at December 31, 2022 was $43.6 million.

Full Year 2022 Highlights

  • Full year 2022 net revenue declined 10.7% year over year to $221.2 million, compared to $247.8 million in the full year of 2021.
  • Full year gross margin declined to 47.7% compared to 49.2% in 2021, primarily reflecting impacts from global supply chain disruptions and related inflation and our strategy of liquidating high cost inventory.
  • Full year 2022 contribution margin declined to 1.8% from 10.1% in 2021, primarily reflecting impacts from global supply chain disruptions and related inflation and our strategy of liquidating high cost inventory.
  • Full year 2022 operating loss of $(178.2) million increased from $(34.1) million in 2021. Full year operating loss includes a gain of $5.2 million from the change in fair value of contingent earn-out liabilities, ($14.6) million of non-cash stock compensation, a non-cash loss on impairment of goodwill of ($120.4) million, and a non-cash loss on impairment of intangibles of ($3.1) million, while full year 2021 operating loss included a net gain of $26.4 million net change in fair value and settlement of earn-out liabilities and $(29.0) million of non-cash stock compensation.
  • Full year 2022 net loss of $(196.3) million improved from $(236.0) million in 2021. Full year net loss includes a gain of $5.2 million from the change in fair value of contingent earn-out liabilities, ($14.6) million of non-cash stock compensation, a non-cash loss on impairment of goodwill of ($120.4) million, a non-cash loss on impairment of intangibles of ($3.1) million, a gain on extinguishment of seller note of $2.0 million, a loss on initial issuance of equity of ($18.7) million and gain of $0.5 million relating to the change in fair value of warrant liability, while full year 2021 net loss included change in fair value of derivative liability of $(3.3) million, loss on extinguishment of debt of $(138.9) million, change in fair value of warrant liability of $(26.5) million, loss on initial issuance of warrant of $(20.1) million, a net gain of $26.4 million net change in fair value and settlement of earn-out liabilities, and $(29.0) million of non-cash stock compensation.
  • Full year 2022 adjusted EBITDA loss increased to $(33.5) million from $(7.2) million in 2021.

Yaniv Sarig, Co-Founder and Chief Executive Officer, commented, “While consumer demand was softer year on year, we successfully executed on our strategy to cycle through expensive inventory. Due to the exorbitant shipping costs in bringing in this inventory, we applied discounts to excess inventory across the board, including some of our best products, to make room for inventory at a lower cost basis. This is not due to weakness in our portfolio but rather with international shipping rates normalizing we can restock our inventory at a lower cost basis. Combining this with our portfolio’s strong market share position, we remain on track to achieve adjusted EBITDA profitability in the second half of 2023.”

First Quarter 2023 & Second Half of 2023 Outlook

For the first quarter of 2023, taking into account the current global environment and inflation, we believe that net revenue will be between $32 million and $36 million. For the first quarter of 2023, the Company expects Adjusted EBITDA to remain in the range of $(4.8) million and $(5.8) million.

The Company also is reconfirming its prior guidance of expecting to be Adjusted EBITDA profitable in the second half of 2023.

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 March 31, 2023 and the second half of 2023, due primarily to interest expense and stock-based compensation expense.

Webcast and Conference Call Information
Aterian will host a live conference call to discuss financial results today, March 9, 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. (Nasdaq: ATER), is a leading technology-enabled consumer products platform that builds, acquires, and partners with best-in-class 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, including Amazon, Shopify and Walmart. Aterian has thousands of SKUs across 14 owned and operated brands and sells 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 strong market share position, goal to achieve adjusted EBITDA profitability in the second half of 2023 and international shipping rates normalizing. 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 the global shipping disruptions, 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 the impact of COVID-19, including its impact on 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 grow market share in existing and new product categories; 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,
2021
    December 31,
2022
 
ASSETS            
CURRENT ASSETS:            
Cash   $ 30,317     $ 43,574  
Accounts receivable—net     10,478       4,515  
Inventory     63,045       43,666  
Prepaid and other current assets     21,034       8,261  
Total current assets     124,874       100,016  
PROPERTY AND EQUIPMENT—net     1,254       853  
GOODWILL—net     119,941        
OTHER INTANGIBLES—net     64,955       54,757  
OTHER NON-CURRENT ASSETS     2,546       813  
TOTAL ASSETS   $ 313,570     $ 156,439  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
CURRENT LIABILITIES:            
Credit facility   $ 32,845     $ 21,053  
Accounts payable     21,716       16,035  
Seller notes     7,577       1,693  
Contingent earn-out liability     3,983        
Accrued and other current liabilities     17,621       14,254  
Total current liabilities     83,742       53,035  
OTHER LIABILITIES     360       1,452  
CONTINGENT EARN-OUT LIABILITY     5,240        
Total liabilities     89,342       54,487  
COMMITMENTS AND CONTINGENCIES            
STOCKHOLDERS’ EQUITY:            
Common stock, par value $0.0001 per share—500,000,000 shares authorized and
55,090,237 shares outstanding at December 31, 2021; 500,000,000 shares authorized
and 80,752,290 shares outstanding at December 31, 2022
    5       8  
Additional paid-in capital     653,650       728,339  
Accumulated deficit     (428,959 )     (625,251 )
Accumulated other comprehensive income     (468 )     (1,144 )
Total stockholders’ equity     224,228       101,952  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 313,570     $ 156,439  

ATERIAN, INC. 
Consolidated Statements of Operations 
(in thousands, except share and per share data) 

    Three Months Ended 
December 31,
    Year-Ended 
December 31,
    2021     2022       2021     2022  
NET REVENUE   $ 63,321     $ 54,902       $ 247,767     $ 221,170  
COST OF GOODS SOLD     34,440       34,534         125,904       115,652  
GROSS PROFIT     28,881       20,368         121,863       105,518  
OPERATING EXPENSES:                              
Sales and distribution     30,653       32,507         127,369       121,139  
Research and development     2,617       1,430         9,837       6,012  
General and administrative     13,292       8,758         45,099       38,239  
Impairment loss on goodwill           468               120,409  
Impairment loss on intangibles                         3,118  
Settlement of a contingent earn-out liability     4,164               4,164        
Change in fair value of contingent earn-out liabilities     (18,580 )             (30,529 )     (5,240 )
TOTAL OPERATING EXPENSES:     32,146       43,163         155,940       283,677  
OPERATING LOSS     (3,265 )     (22,795 )       (34,077 )     (178,159 )
INTEREST EXPENSE—net     778       560         12,655       2,603  
GAIN ON EXTINGUISHMENT OF SELLER NOTE                         (2,012 )
LOSS ON INITIAL ISSUANCE OF EQUITY                         18,669  
CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY                   3,254        
LOSS ON EXTINGUISHMENT OF DEBT     2,096               138,859        
CHANGE IN FAIR VALUE OF WARRANT LIABILITY           (2,835 )       26,455       (470 )
LOSS ON INITIAL ISSUANCE OF WARRANTS                   20,147        
OTHER EXPENSE (INCOME)—net     2       (83 )       45       (281 )
LOSS BEFORE INCOME TAXES     (6,141 )     (20,437 )       (235,492 )     (196,668 )
PROVISION (BENEFIT) FOR INCOME TAXES     468       (133 )       532       (376 )
NET LOSS   $ (6,609 )   $ (20,304 )     $ (236,024 )   $ (196,292 )
Net loss per share, basic and diluted   $ (0.13 )   $ (0.27 )     $ (6.67 )   $ (2.95 )
Weighted-average number of shares outstanding, basic and diluted     50,159,967       75,824,531         35,379,005       66,529,565  

ATERIAN, INC.
Consolidated Statements of Cash Flows
(in thousands)

    Year-Ended December 31,  
    2021       2022  
OPERATING ACTIVITIES:            
Net loss   $ (236,024 )     $ (196,292 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:            
Depreciation and amortization     7,326         7,521  
Provision for sales returns     43         56  
Amortization of deferred financing cost and debt discounts     7,742         429  
Stock-based compensation     28,987         14,594  
Gain from increase of contingent earn-out liability fair value     (30,529 )       (5,240 )
Loss in connection with settlement of earn-out     4,164        
Loss (Gain) in connection with the change in warrant fair value     26,455         (470 )
Gain in connection with settlement of note payable           (2,012 )
Loss on initial issuance of warrants     20,147        
Issuance of common stock             43  
Loss on initial issuance of equity           18,669  
Loss from extinguishment of High Trail December 2020 and February 2021 Term Loan     28,240        
Loss from extinguishment of High Trail April 2021 Term Loan     106,991        
Loss from extinguishment of High Trail Term Loan     2,096        
Loss from extinguishment of Credit Facility     1,532        
Provision for barter credits     1,000         1,643  
Loss from derivative liability discount related to term loan     3,254        
Impairment loss on goodwill           120,409  
Impairment loss on intangibles           3,118  
Allowance for doubtful accounts and other     4,200         367  
Changes in assets and liabilities:            
Accounts receivable     (4,554 )       5,596  
Inventory     (19,303 )       19,438  
Prepaid and other current assets     (7,856 )       5,564  
Accounts payable, accrued and other liabilities     14,120         (10,910 )
Cash provided (used) by operating activities     (41,969 )       (17,477 )
INVESTING ACTIVITIES:            
Purchase of fixed assets     (32 )       (82 )
Purchase of Healing Solutions assets     (15,250 )      
Purchase of Photo Paper Direct, net of cash acquired     (10,583 )      
Purchase of Squatty Potty assets     (19,040 )      
Purchase of Step and Go assets           (595 )
Cash used in investing activities     (44,905 )       (677 )
FINANCING ACTIVITIES:            
Proceeds from warrant exercise     9,085        
Proceeds from cancellation of warrant     16,957        
Proceeds from issuance of common stock from follow-on public offering, net of issuance costs     36,735        
Proceeds from equity offering, net of issuance costs           46,834  
Proceeds from exercise of stock options     9,033        
Repayments on note payable to Smash     (10,495 )       (3,423 )
Payment of earnout to Squatty Potty     (7,971 )       (3,983 )
Borrowings from MidCap credit facilities     48,750         136,687  
Repayments from MidCap credit facilities     (28,274 )       (148,907 )
Debt issuance costs from MidCap credit facility     (849 )      
Repayments for High Trail April 2021 Note     (10,139 )      
Repayments for High Trail December 2021 Note     (27,500 )      
Repayments for High Trail December 2020 Note and February 2021 Note     (59,500 )      
Borrowings from High Trail February 2021 Note     14,025        
Borrowings from High Trail April 2021 Note     110,000        
Debt issuance costs from High Trail February 2021 Note     (1,462 )      
Debt issuance costs from High Trail April 2021 Note     (2,202 )      
Insurance financing proceeds     2,424         2,099  
Insurance obligation payments     (3,048 )       (2,311 )
Cash provided by financing activities     95,569         26,996  
EFFECT OF EXCHANGE RATE ON CASH     (477 )       (528 )
NET CHANGE IN CASH AND RESTRICTED CASH FOR THE YEAR     8,218         8,314  
CASH AND RESTRICTED CASH AT BEGINNING OF YEAR     30,097         38,315  
CASH AND RESTRICTED CASH AT END OF YEAR     38,315         46,629  
RECONCILIATION OF CASH AND RESTRICTED CASH            
CASH     30,317         43,574  
RESTRICTED CASH—Prepaid and other current assets     7,849         2,926  
RESTRICTED CASH—Other non-current assets     149         129  
TOTAL CASH AND RESTRICTED CASH   $ 38,315       $ 46,629  
             
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION            
Cash paid for interest   $ 5,611       $ 1,875  
Cash paid for taxes   $ 41       $ 100  
Non-cash consideration paid to contractors   $       $ 1,137  
Modification of warrants between equity and liability   $ 75,828       $  
Non-cash consideration paid to contractors   $ 7,289       $  
NON-CASH INVESTING AND FINANCING ACTIVITIES:            
Original issue discount   $ 2,475       $  
Fair value of contingent consideration   $ 20,971       $  
Discount of debt relating to warrants issuance   $ 51,284       $  
Notes Payable of acquisition   $ 16,550       $  
Issuance of common stock in connection with Healing Solutions and Photo Paper Direct acquisitions   $ 50,529       $  
Issuance of common stock – debt repayment   $ 125,562       $  
Issuance of common stock – Healing Solutions earnout settlement   $ 7,914       $  
Issuance of common stock related to exercise of warrants   $       $ 767  
Fair value of warrants issued in connection with equity offering   $       $ 18,982  
Issuance of common stock   $       $ 43  
Exercise of prefunded warrants   $       $ 15,039  

Non-GAAP Financial Measures

We believe that our financial statements and the other financial data included in this Annual Report have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the U.S. (“GAAP”). However, for the reasons discussed below, we have presented certain non-GAAP measures herein.

We have presented the following non-GAAP measures to assist investors in understanding our core net operating results on an on-going basis: (i) Contribution Margin; (ii) Contribution margin as a percentage of net revenue; (iii) EBITDA (iv) Adjusted EBITDA; and (v) Adjusted EBITDA as a percentage of net revenue. These non-GAAP financial measures may also assist investors in making comparisons of our core operating results with those of other companies.

As used herein, Contribution margin represents gross profit less amortization of inventory step-up from acquisitions (included in cost of goods sold), reserve on barter credits and e-commerce platform commissions, online advertising, selling and logistics expenses (included in sales and distribution expenses). As used herein, Contribution margin as a percentage of net revenue represents Contribution margin divided by net revenue. As used herein, EBITDA represents net loss plus depreciation and amortization, interest expense, net and provision for income taxes. As used herein, Adjusted EBITDA represents EBITDA plus stock-based compensation expense, changes in fair-market value of earn-outs, settlement of earn-outs, amortization of inventory step-up from acquisitions (included in cost of goods sold), reserve for barter credits, profit and loss impacts from the issuance of common stock and/or warrants, changes in fair-market value of warrant liability, professional fees and transition costs related to acquisitions, litigation settlements, impairment on goodwill and intangibles,loss from extinguishment of debt and other expenses, net. As used herein, Adjusted EBITDA as a percentage of net revenue represents Adjusted EBITDA divided by net revenue. Contribution margin, EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to loss from operations or net loss, as determined under GAAP.

We present Contribution margin and Contribution margin as a percentage of net revenue, as we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to gross profit, provides useful supplemental information for investors. Specifically, Contribution margin and Contribution margin as a percentage of net revenue are two of our key metrics in running our business. All product decisions made by us, from the approval of launching a new product and to the liquidation of a product at the end of its life cycle, are measured primarily from Contribution margin and/or Contribution margin as a percentage of net revenue. Further, we believe these measures provide improved transparency to our stockholders to determine the performance of our products prior to fixed costs as opposed to referencing gross profit alone.

In the reconciliation to calculate contribution margin, we add e-commerce platform commissions, online advertising, selling and logistics expenses (“sales and distribution variable expense”), and the reserve for barter credits to gross profit to inform users of our financial statements of what our product profitability is at each period prior to fixed costs (such as sales and distribution expenses such as salaries as well as research and development expenses and general administrative expenses). By excluding these fixed costs, we believe this allows users of our financial statements to understand our products performance and allows them to measure our products performance over time.

We present EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue because we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to net loss, provide useful supplemental information for investors. We use these measures with financial measures prepared in accordance with GAAP, such as sales and gross margins, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance and to compare our performance to that of our peers and competitors. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue are useful to investors in assessing the operating performance of our business without the effect of non-cash items.
Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue should not be considered in isolation or as alternatives to net loss, loss from operations or any other measure of financial performance calculated and prescribed in accordance with GAAP. Neither EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue should be considered a measure of discretionary cash available to us to invest in the growth of our business. Our Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue may not be comparable to similar titled measures in other organizations because other organizations may not calculate Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue in the same manner as we do. Our presentation of Contribution margin and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from such terms or by unusual or non-recurring items.

Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue should not be considered in isolation or as alternatives to net loss, loss from operations or any other measure of financial performance calculated and prescribed in accordance with GAAP. Neither EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue should be considered a measure of discretionary cash available to us to invest in the growth of our business. Our Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue may not be comparable to similar titled measures in other organizations because other organizations may not calculate Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue in the same manner as we do. Our presentation of Contribution margin and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from such terms or by unusual or non-recurring items.

We recognize that EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue, have limitations as analytical financial measures. For example, neither EBITDA nor Adjusted EBITDA reflects:

  • our capital expenditures or future requirements for capital expenditures or mergers and acquisitions;
  • the interest expense or the cash requirements necessary to service interest expense or principal payments, associated with indebtedness;
  • depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, or any cash requirements for the replacement of assets;
  • changes in cash requirements for our working capital needs; or
  • changes in fair value of contingent earn-out liabilities, warrant liabilities, and amortization of inventory step-up from acquisitions (included in cost of goods sold).

Additionally, Adjusted EBITDA excludes non-cash expense for stock-based compensation, which is and is expected to remain a key element of our overall long-term incentive compensation package.

We also recognize that Contribution margin and Contribution margin as a percentage of net revenue have limitations as analytical financial measures. For example, Contribution margin does not reflect:

  • general and administrative expense necessary to operate our business;
  • research and development expenses necessary for the development, operation and support of our software platform;
  • the fixed costs portion of our sales and distribution expenses including stock-based compensation expense; or
  • changes in fair value of contingent earn-out liabilities, warrant liabilities, and amortization of inventory step-up from acquisitions (included in cost of goods sold).


Contribution Margin

The following table provides a reconciliation of Contribution margin to gross profit and Contribution margin as a percentage of net revenue to gross profit as a percentage of net revenue, which are the most directly comparable financial measures presented in accordance with GAAP.

    Three Months Ended
December 31,
    Year-Ended
December 31,
 
    2021     2022       2021     2022  
    (in thousands, except
percentages)
    (in thousands, except
percentages)
 
Gross Profit   $ 28,881     $ 20,368       $ 121,863     $ 105,518  
Add:                                
Amortization of inventory step-up from acquisitions (included in cost of goods sold)     542               5,458        
Reserve on barter credits     1,000       1,643         1,000       1,643  
Less:                                
E-commerce platform commissions, online advertising, selling and logistics expenses     (25,413 )     (28,331 )       (103,283 )     (103,258 )
Contribution margin   $ 5,010     $ (6,320 )     $ 25,038     $ 3,903  
Gross Profit as a percentage of net revenue     45.6 %     37.1 %       49.2 %     47.7 %
Contribution margin as a percentage of net revenue     7.9 %     (11.5 )%       10.1 %     1.8 %


Adjusted EBITDA

The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable financial measure presented in accordance with GAAP:

    Three Months Ended
December 31,
    Year-Ended
December 31,
    2021       2022       2021       2022  
    (in thousands, except
percentages)
    (in thousands, except
percentages)
Net loss   $ (6,609 )     $ (20,304 )     $ (236,024 )     $ (196,292 )
Add:                              
Provision for income taxes   468       (133 )     532       (376 )
Interest expense, net     778         560         12,655         2,603  
Depreciation and amortization     2,569         1,758         7,326         7,521  
EBITDA     (2,794 )       (18,119 )       (215,511 )       (186,544 )
Other expense (income), net     2         (83 )       45         (281 )
Change in fair value of contingent earn-out liabilities     (18,580 )               (30,529 )       (5,240 )
Settlement of a contingent earn-out liability     4,164                 4,164          
Impairment loss on goodwill             468                 120,409  
Impairment loss on intangibles                             3,118  
Gain on extinguishment of seller note                             (2,012 )
Amortization of inventory step-up from acquisitions (included in cost of goods sold)     542                 5,458          
Change in fair market value of warrant liability             (2,835 )       26,455         (470 )
Derivative liability discount related to term loan                     3,254          
Loss on original issuance of equity                             18,669  
Loss on extinguishment of debt     2,096                 138,859          
Loss on initial issuance of warrants                     20,147          
Professional fees related to acquisitions                     1,450          
Transition costs from acquisitions     762                 2,076          
Professional and legal fees related to Photo Paper Direct acquisition     890                 1,586          
Litigation reserve     1,300                 1,300         2,600  
Reserve on dispute with PPE supplier                     4,100          
Reserve on barter credits     1,000         1,643         1,000         1,643  
Stock-based compensation expense     7,657         2,740         28,987         14,594  
Adjusted EBITDA   $ (2,961 )     $ (16,186 )     $ (7,159 )     $ (33,514 )
Net loss as a percentage of net revenue     (10.4 )%       (37.0 )%       (95.3 )%       (88.8 )%
Adjusted EBITDA as a percentage of net revenue     (4.7 )%       (29.5 )%       (2.9 )%       (15.2 )%

                                                                                                                                                                                                                                 

Each of our products typically goes through the Launch phase and depending on its level of success is moved to one of the other phases as further described below: 

i.     Launch phase: During this phase, we leverage our technology to target opportunities identified using AIMEE (Artificial     Intelligence Marketplace e-Commerce Engine) and other sources. This phase also includes revenue from new product variations and relaunches. During this period of time, due to the combination of discounts and investment in marketing, our net margin for a product could be as low as approximately negative 35%. Net margin is calculated by taking net revenue less the cost of goods sold, less fulfillment, online advertising and selling expenses. These costs primarily reflect the estimated variable costs related to the sale of a product.

ii.     Sustain phase: Our goal is for every product we launch to enter the sustain phase and become profitable, with a target of positive 15% net margin for most products, within approximately three months of launch on average. Net margin primarily reflects a combination of manual and automated adjustments in price and marketing spend.

iii.     Liquidate phase: If a product does not enter the sustain phase or if the customer satisfaction of the product (i.e., ratings) is not satisfactory, then it will go to the liquidate phase and we will sell through the remaining inventory. Products can also be liquidated as part of inventory normalization especially when steep discounts are required.

The following tables break out our fourth quarter and full year 2021 and 2022 results of operations by our product phases (in thousands):

    Three Months Ended December 31, 2021  
    Sustain     Launch   Liquidation/
Other
  Fixed Costs     Stock based compensation expense   Total  
                           
NET REVENUE   $ 52,669     $ 2,570     $ 8,082     $     $   $ 63,321  
COST OF GOODS SOLD     24,090       2,813       7,537                 34,440  
GROSS PROFIT   $ 28,579     $ (243 )   $ 545     $     $   $ 28,881  
                                           
OPERATING EXPENSES:                                          
Sales and distribution expenses     20,117       1,623       3,673       3,399       1,841     30,653  
Research and development                       1,158       1,459     2,617  
General and administrative                       8,935       4,357     13,292  
Settlement of a contingent earn-out liability                       4,164           4,164  
Change in earn-out liability                       (18,580 )         (18,580 )
       
   
Three Months Ended December 31, 2022
 
    Sustain     Launch   Liquidation/
Other
  Fixed Costs     Stock based compensation expense   Total  
                           
NET REVENUE   $ 40,831     $ 963     $ 13,108     $     $   $ 54,902  
COST OF GOODS SOLD     17,550       236       16,748                 34,534  
GROSS PROFIT   $ 23,281     $ 727     $ (3,640 )   $     $   $ 20,368  
                                           
OPERATING EXPENSES:                                          
Sales and distribution expenses     19,902       316       8,113       3,390       786     32,507  
Research and development                       976       454     1,430  
General and administrative                       7,258       1,500     8,758  
Impairment loss on goodwill                                 468  
    Year-Ended December 31, 2021  
    Sustain     Launch   Liquidation/
Other
  Fixed Costs     Stock based compensation expense   Total  
                           

NET REVENUE

  $ 216,135     $

14,862

    $ 16,770     $     $   $ 247,767  
COST OF GOODS SOLD     98,263       11,004       16,637                 125,904  
GROSS PROFIT   $ 117,872     $ 3,858     $ 133     $     $   $ 121,863  
                                               
OPERATING EXPENSES:                                              
Sales and distribution expenses     87,163       8,038       8,083       17,276       6,809     127,369  
Research and development                       4,498       5,339     9,837  
General and administrative                       28,260       16,839     45,099  
Settlement of contingent earn-out liability                       4,164           4,164  
Change in earn-out liability                       (30,529 )         (30,529 )
    Year-Ended December 31, 2022  
    Sustain     Launch     Liquidation/
Other
    Fixed Costs     Stock based compensation expense   Total  
                             
NET REVENUE   $ 187,039     $ 4,766     $ 29,365     $     $   $ 221,170  
COST OF GOODS SOLD     82,909       2,332       30,411                 115,652  
GROSS PROFIT   $ 104,130     $ 2,434     $ (1,046 )   $     $   $ 105,518  
                                               
OPERATING EXPENSES:                                              
Sales and distribution expenses     83,198       2,287       17,773       12,867       5,014     121,139  
Research and development                       4,141       1,871     6,012  
General and administrative                       30,530       7,709     38,239  
Impairment loss on goodwill                                 120,409  
Impairment loss on intangibles                                 3,118  
Change in earn-out liability                                 (5,240 )

 


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Artificial Intelligence

Gilbarco Veeder-Root champions fuel efficiency, clean fuels and diesel rebate solutions in mining

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JOHANNESBURG, March 28, 2024 /PRNewswire/ — Global leader in technology solutions OEM Gilbarco Veeder-Root (GVR) is dedicated to enhancing operational performance by delivering comprehensive end-to-end wetstock, industrial, mining, and business-to-business solutions, all tailored to meet the specific needs of the customer.

 
 
By encompassing every aspect of mining operations, GVR commercial and industrial Middle East and Africa director Westtar Kapito says, “the company is setting new benchmarks for fuel efficiency, safety and sustainability within the mining industry”.
As part of a holistic approach to mining excellence, Kapito explains that Gilbarco’s integrated fuel and fleet management technology solutions are designed to address the multifaceted challenges of the mining industry.
Some of these facets include wetstock control, equipment maintenance and management, fleet management and automation, compliance monitoring and environmental sustainability, as well as driving productivity and profitability through innovation.
In addition, the introduction of Gilbarco’s clean fuel solution exemplifies the company’s commitment to maintaining equipment integrity and performance.
This technology, GVR says, monitors in real-time the status of up to 16 “clean fuels” key performance matrices, thereby ensuring that dirty fuel is flagged and not transferred into mining equipment which would affect engines and injectors and thus lower productivity.
Gilbarco’s comprehensive site automation solutions empower mining companies with critical data analytic insights, facilitating efficient monitoring and management of fleet and fuel inventory. Gilbarco’s dataFLEX360 platform plays a pivotal role, offering near real-time reporting and analytics to drive informed decision-making and operational agility.
dataFLEX360 is a Web-based, cloud-hosted strategic operational insights platform. The system ensures accurate, reliable and relevant reporting of all fuel, fleet and asset transactions, and provides for proactive corrective measures to reduce complex reporting and gives a consolidated and comprehensive view across all sites and assets.
With reconciliations at its core, dataFLEX360 provides solution accuracy on operational data.
Integral to the company’s solutions is compliance with Global Industry Standards and environmental stewardship, from leak detection to vapour recovery and clean fuel technologies. Gilbarco’s products are designed to ensure compliance and minimise the carbon footprint of mining operations.
Additionally, through the company’s innovative telematics technology and the data generated, it can systematically and seamlessly generate South African Revenue Services- (SARS-) compliant fuel rebate reports for any selected tax period.  
GVR’s technology provides a full audit trail required for eligibility for SARS rebates, and its reporting platform simplifies logbook and data gathering required, enabling successful rebate claims and return on investment.
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Invoca Wins CX Today Award for Best Conversational Intelligence Solution of 2024; Launches European Data Centre and Adds UK Sales Leader

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CX Today recognises Invoca as the foremost visionary in the Conversational Intelligence category. Additionally, expands its European presence with a new Data Centre and the appointment of Duncan MacPherson as UK Director of Sales.
LONDON, March 28, 2024 /PRNewswire/ — Invoca, the leading revenue execution platform for revenue teams, has won the CX Today Award for ‘Best Conversational Intelligence Solution’ of 2024. CX Today, the leading international news publication honouring excellence in CX technology, hosted the CX Awards to honour excellence in CX leadership, technology innovation, and industry success.

“Invoca’s exceptional work in conversational intelligence has helped push the category forward, and we are thrilled to see their accomplishments acknowledged at CX Awards 2024,” said Charlie Mitchell, Senior Editor at CX Today and host of the awards.
The award recognises Invoca’s strength in empowering revenue teams across marketing, contact centre sales, and customer experience to enhance buying experiences, increase high-value leads, and boost revenue. For businesses that acquire customers over the phone, Invoca enables these digital marketing and contact centre teams to collaborate to drive revenue growth. Invoca stands out for capturing deep insights from consumer calls and digital interactions and ingesting revenue driven by calls and other metadata from CRM and contact centre solutions, making Invoca the source of truth for consumer engagements.
“We’re thrilled to be named the Best Conversational Intelligence Solution of 2024 by CX Today as we highlight our longstanding vision to help brands acquire customers and grow their revenue,” said Gregg Johnson, CEO of Invoca. “As AI pioneers in this space, having first introduced our broad base of patented AI technologies in 2015, artificial intelligence and machine learning are core to helping companies improve the customer experience and connect the buyer journey.”
The CX Awards’ judging panel, including Dan Miller, Lead Analyst at Opus Research, reviewed hundreds of applications for their organisation’s ability to improve overall customer experience through innovation and high-impact features.
“Invoca continues to demonstrate that they are a clear leader in conversational intelligence AI. We recognised Invoca for their ability to employ a sophisticated blend of AI technologies — including patented machine learning, generative AI, voice biometrics, and deep learning neural networks, to drive revenue,” said Dan Miller, CX Awards judge and Lead Analyst at Opus Research.
Invoca Launches New European Platform and Data Centre Amid U.K. Sales Leadership Expansion
Invoca continues to reinforce its commitment to maintaining data excellence with unwavering reliability and strict adherence to security standards. Protecting customer data privacy remains a top priority, particularly given the heightened concerns surrounding security and privacy. Invoca’s new European platform and localised data centres support its growing customer base by ensuring all customers can adhere to the highest level of enterprise-grade data privacy, and GDPR compliance standards. Invoca’s powerful EU-based infrastructure enables its customers to recreate the same Invoca experience using the full feature suite while maintaining the highest standards of quality.
Invoca has also welcomed Duncan MacPherson as UK Director of Sales. MacPherson brings extensive experience with large companies and start-ups selling customer engagement solutions. This is part of an overall expansion in the UK market, which includes hiring a localised sales and customer success team, sales development, and marketing support.
More Information:
See the results you can get with Invoca’s award-winning conversation intelligence: https://www.invoca.com/customersInvoca’s GDPR Compliance: Everything You Need to Know: https://www.invoca.com/blog/invocas-gdpr-compliance-everything-you-need-to-knowWatch the CX Today Awards winners revealed on demand: www.cxtoday.com/cxawardsJoin Invoca’s talented team today: https://www.invoca.com/company/careersAbout InvocaInvoca is a revenue execution platform that connects marketing and sales teams to help them track and optimise the buying journey to drive more revenue. By using a comprehensive revenue execution platform with deep integrations with leading technology platforms, revenue teams can better connect their paid media investments directly to revenue, improve digital engagement, and deliver the best buyer experiences to drive more sales. With Invoca, top consumer brands, including AutoNation, DIRECTV, Mayo Clinic, Mutual of Omaha, and Verizon, experience unbelievable results powered by undeniable data. Invoca has raised $184M from leading venture capitalists, including Upfront Ventures, Accel, Silver Lake Waterman, H.I.G. Growth Partners, and Salesforce Ventures. For more information, visit www.invoca.com.
About CX AwardsHosted by CX Today, the awards ceremony has become the beacon of recognition for companies and professionals pushing the envelope in the CX technology sphere.
The CX Awards 2024 is here for its fourth year and is bigger and better than ever before! Winners of the 2023 awards included Vonage, Calabrio, and UJET and more. Then, the ceremony included exclusive streams from our people winners, Jay Patel from Webex and Kimberley Wood from Ultimate. Yet, this year’s event featured many more CX leaders who shared their unique takes on the space.
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ASC Achieves Certification for Webex Calling

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ASC announces compliance recording and AI-driven analytics tool for Webex Calling
HÖSBACH, Germany, March 28, 2024 /PRNewswire/ — ASC Technologies, a leading provider of comprehensive recording and analytics tools, announces its successful certification for Webex Calling with Webex by Cisco, a leading provider of collaboration technologies powering hybrid work and customer experience. This certification distinguishes ASC as one of the few global vendors who are authorized to provide record capabilities for Webex Calling communications. This capability is essential for organizations in regulated industries that must adhere to strict compliance standards.

A key benefit of the ASC solution is the simple and fast configuration in the Webex Control Hub, which ensures a high level of user-friendliness. In addition, ASC enables the migration of on-premise solutions to the cloud by seamlessly transferring recordings to the cloud environment. This step enables organizations to accelerate their digital transformation and take advantage of cloud-based services. In addition, AI-driven analytics, powered by ASC’s solutions, help organizations gain a comprehensive view of their communications, enrich customer relationships, and streamline compliance and risk management processes.
“As a stable company that has been established in the market for 60 years, we see the certification for Webex Calling not only as a confirmation of our technological expertise, but also as a promise to our customers and partners,” says Dr. Gerald Kromer, CEO of ASC. “We are committed to providing innovative and reliable solutions that meet the demands of today’s communications technologies while ensuring our customers’ compliance requirements.”
This certification is a further milestone in ASC’s successful partnership with Cisco, which has already existed for 20 years. ASC will be exhibiting at Enterprise Connect in Gaylord Palms, and Cisco Live in Las Vegas, showcasing its innovative recording and analytics solutions and demonstrating the results of its collaboration with Cisco. These events offer a glimpse into how ASC’s solutions drive efficiency and insight.
About ASC
ASC is a worldwide leading provider of software and cloud solutions in the field of omni-channel recording, quality management, and analytics. Among our target groups are all companies that record their communications, especially financial service providers, contact centers, and public safety organizations. We offer solutions for recording as well as AI-based analysis and evaluation of all communications – with full flexibility as a cloud service, on-premise or as a hybrid solution. Headquartered in Germany with subsidiaries in 14 countries and experienced system integration partners in over 60 countries, ASC is the #1 Europe-based player in its industry.
About Webex by Cisco
Webex is a leading provider of cloud-based collaboration solutions which includes video meetings, calling, messaging, events, customer experience solutions like contact center and purpose-built collaboration devices. At Webex, we start with people and their experiences first. This focus on delivering inclusive collaboration experiences fuels our innovation, which leverages AI and Machine Learning, to remove the barriers of geography, language, personality, and familiarity with technology. Our solutions are underpinned with security and privacy by design. We work with the world’s leading business and productivity apps – delivered through a single application and interface. Learn more at webex.com.
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