Kidpik Corp. (NASDAQ:PIK) Q1 2023 Earnings Call Transcript
Kidpik Corp. (NASDAQ:PIK) Q1 2023 Earnings Call Transcript May 16, 2023
Kidpik Corp. misses on earnings expectations. Reported EPS is $-0.25 EPS, expectations were $-0.21.
Operator: Greetings. Welcome to the Kidpik First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I would now turn the conference over to your host, Ezra Dabah. You may begin.
Ezra Dabah: Thank you, operator. We are pleased to welcome everyone to today's call, where we will review Q1 2023 results and provide an update on the business. We will begin with a review of our financial and business highlights, followed by a financial review, which Adir, our CFO, will take us through. Then we will open the call to Q&A. I'd like to start by sharing that we have continued executing our plan to reduce inventory and generate cash flow. We have substantially reduced purchases of new inventory and are focused on increasing sales, utilizing our existing inventory, which we believe will support our cash flow needs in the short-term. As a result, during the first quarter, our inventory was reduced by $1.5 million from $12.6 million to $11.1 million, while maintaining a consistent gross margin of about 60%.
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In addition, we are taking action to reduce our go-forward operating costs and improve efficiency. We continually upgrade our proprietary technology platform with the goal of enhancing our customer experience, retention and to grow our sales. As we look ahead, our focus is on several key areas. We are focused on improving our conversion rate across three key channels, enhancing our brand awareness, implementing efficiency initiatives, and increasing the average dollar sale per subscription box. We are strategically migrating our affiliate program to a new platform in order to enhance our dual focus on both our subscription service and e-commerce shop, while expanding our affiliate network. These strategies we believe will further strengthen our foundation for long-term growth.
Additionally, we remain focused on acquiring new customers through performance-based digital channels, including affiliate content and social media marketing. The strength of our complimentary styling service is rooted in its affordability, convenience, and ability to deliver personalized outfits from head to toe, continually attracting long-term members. This appeals to parents and grandparents seeking convenience and style support when getting their kids dressed. Our service evolves with their children's style as they grow, while providing the excitement of a fun unboxing experience. Owning our unique Kidpik brand enables us to expand beyond the box. We are focused on increasing sales and brand exposure through our e-commerce website and collaboration with third-party channels like Amazon and Walmart.
Notably, our direct online e-commerce sales increased by 112% compared to last year's first quarter. We witnessed the joy and happiness we bring to children every day. We look forward to more parents discovering the benefits of our service. Thank you for your interest and support. With that, I will turn over the call to Adir to detail the quarter's financial highlights. Adir?
Adir Katzav: Thank you, Ezra. Q1 revenue was $4 million, a decrease of 6.9% year-over-year. The decrease in revenue during the first quarter was mainly due to a decrease in subscription box sales. Looking at Q1 revenue by channel. Subscription sales were approximately $3 million, a decrease of 14.7% year-over-year. Third-party website sales decreased by 20.6% to $436,000. Online website sales increased by 112.4% to $622,000. Moving to revenue by subscription for the quarter. Active subscription for recurring boxes decreased by 23.5% to $2.4 million. New subscriptions of first box increased by 64.3% to $571,000. Total subscription decreased by 14.7% to $3 million. That represents 74% of total revenue. Turning to gross margin.
Gross margin for the quarter was 59.8% compared to 59.9% last year. Shipped items for the first quarter decreased by 8.4% to $340,000 compared to $371,000 last year. Keep rate for the first quarter was 68.1% compared to 70.4% last year. On the bottom line, net loss for the quarter was approximately $1.95 million, or a loss of $0.25 per share compared to a net loss of $1.8 million or a loss of $0.24 per share last year. Speaking to non-GAAP adjusted EBITDA for the quarter was a net loss of $1.7 million compared to a net loss of $1.5 million last year. Now to the balance sheet, cash flow. Cash at the end of the quarter was approximately $265,000 compared to $601,000 at the end of the fiscal year 2022. We used $261,000 in operating activities during the first quarter compared to $2.2 million cash used in the first quarter last year.
To improve our cash position, we have reduced purchases of new inventory and may enter into a debt financing arrangement. As of April 2023, we had $12.5 million in total current assets, $5.9 million in total current liabilities and a working capital of a $6.6 million. With that, I will turn the call back to the operator for Q&A. Operator?
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