Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online
retailer, announces its financial and operational results for the
quarter ended March 31, 2023.
Financial Highlights for First Quarter
2023:
- Net revenues increased 70.5% to
$21.1 million, compared to $12.4 million in the year-ago
period;
- Net loss totaled $1.2 million,
compared to net income of $0.6 million in the year-ago period;
and
- Cash used for operating activities
was $3.1 million, compared to $7.9 million in the year-ago
period.
Management Commentary
“We are pleased to report our first quarter 2023
results, in which we delivered great performance in terms of
revenue growth,” said Sam Lai, CEO of Hour Loop. “The revenue
growth rate for the first quarter was 70.5%, compared with the
year-ago period, and outperformed most peers that we know.
“However, our gross margin was negatively
impacted by the challenging e-commerce environment and intense
competition caused by high inventory levels across the industry.
Our operating expenses percentage, on the other hand, decreased
because of efforts made for expenses management. Overall, we
believe we’ve built a solid foundation to continue generating
strong growth. We also aim to make improvements on
profitability.”
“Looking forward, we’re cautiously optimistic.
Despite an uncertain economy, we continue to see strong demand for
our products so far in 2023. We are confident in our ability to
continue delivering values to our vendors, customers, and
shareholders.”
First Quarter 2023 Financial
Results
Net revenues in the first quarter of 2023 were
$21.1 million, compared to $12.4 million in the year-ago period.
The increase was primarily due to continued growth and maturity in
our personnel and operating model, despite the overall e-commerce
traffic slowdown and intense competition.
Gross profit percentage decreased 6.7% to 45.6%,
compared to 52.3% of net revenues in the comparable period a year
ago. The decrease was a function of increased market competition,
overstocked inventories, and higher Amazon fees.
Operating expenses percentage decreased 5.0% to
53.3%, compared to 58.3% of net revenues in the year-ago period.
The decrease reflected better management of shipping, labelling,
and preparation costs, as well as legal and professional fees.
Net loss in the first quarter of 2023 was $1.2
million, or $0.04 per diluted share, compared to $0.6 million, or
$0.02 per diluted share, in the comparable year-ago period. The
increase was driven by increased costs as a result of the reasons
mentioned above despite efforts made for expenses management.
As of March 31, 2023, the Company had $1.3
million in cash and cash equivalents, compared to $4.6 million as
of December 31, 2022. This decrease was driven by the payments made
to vendors when due.
Inventories as of March 31, 2023, were $13.6
million, compared to $18.8 million as of December 31, 2022. The
decrease represented strong sales momentum in the first quarter of
2023.
Full Year 2023 Financial
Outlook
For the full year 2023, Hour Loop maintains its
guidance for gross revenue to be in the range of $112 million to
$122 million, representing 10% to 20% year-over-year growth. Hour
Loop expects 2023 net income to be in the range of $0.5 million to
$4 million.
About Hour Loop, Inc.Hour Loop
is an online retailer engaged in e-commerce retailing in the U.S.
market. It has operated as a third-party seller on www.amazon.com
and has sold merchandise on its website at www.hourloop.com since
2013. Hour Loop further expanded its operations to other
marketplaces such as Walmart, eBay, and Etsy. To date, Hour Loop
has generated practically all its revenue as a third-party seller
on www.amazon.com and only a negligible amount of revenue from its
own website and other marketplaces. Hour Loop manages more than
100,000 stock-keeping units (“SKUs”). Product categories include
home/garden décor, toys, kitchenware, apparel, and electronics.
Hour Loop’s primary strategy is to bring most of its vendors’
product selections to the customers. It has advanced software that
assists Hour Loop in identifying product gaps so it can keep such
products in stock year-round including the entirety of the last
quarter (holiday season) of the calendar year. In upcoming years,
Hour Loop plans to expand its business rapidly by increasing the
number of business managers, vendors, and SKUs.
Forward-Looking Statements This
press release contains statements that constitute "forward-looking
statements" including with respect to Hour Loop’s business
strategy, product development and industry trends. Forward-looking
statements are subject to numerous conditions, many of which are
beyond the control of Hour Loop. While Hour Loop believes these
forward-looking statements are reasonable, undue reliance should
not be placed on any such forward-looking statements, which are
based on information available to Hour Loop on the date of this
release. These forward-looking statements are based upon current
estimates and assumptions and are subject to various risks and
uncertainties, including, without limitation, those set forth in
Hour Loop’s filings with the Securities and Exchange Commission, as
the same may be updated from time to time. Thus, actual results
could be materially different. Hour Loop undertakes no obligation
to update these statements whether as a result of new information,
future events or otherwise, after the date of this release, except
as required by law.
Investor ContactFinance
Departmentfinance@hourloop.com
|
|
HOUR LOOP, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS(In U.S. Dollars, except for share
data)As of March 31, 2023 (Unaudited) and December
31, 2022 |
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,274,791 |
|
|
$ |
4,562,589 |
|
Accounts receivable, net |
|
|
343,288 |
|
|
|
352,379 |
|
Inventory, net |
|
|
13,570,879 |
|
|
|
18,801,529 |
|
Prepaid expenses and other current assets |
|
|
833,848 |
|
|
|
741,243 |
|
Total current assets |
|
|
16,022,806 |
|
|
|
24,457,740 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
245,148 |
|
|
|
274,195 |
|
Deferred tax assets |
|
|
974,276 |
|
|
|
549,320 |
|
Right-of-use lease assets |
|
|
394,301 |
|
|
|
450,721 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
17,636,531 |
|
|
$ |
25,731,976 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Short-term loan |
|
$ |
657,895 |
|
|
$ |
652,316 |
|
Accounts payable |
|
|
6,024,606 |
|
|
|
11,883,253 |
|
Accrued expenses and other current liabilities |
|
|
724,123 |
|
|
|
1,583,930 |
|
Operating lease liabilities-current |
|
|
340,677 |
|
|
|
385,216 |
|
Total current liabilities |
|
|
7,747,301 |
|
|
|
14,504,715 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Operating lease liabilities-non-current |
|
|
46,951 |
|
|
|
64,945 |
|
Due to related parties |
|
|
4,226,996 |
|
|
|
4,329,460 |
|
Total non-current
liabilities |
|
|
4,273,947 |
|
|
|
4,394,405 |
|
Total liabilities |
|
|
12,021,248 |
|
|
|
18,899,120 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Preferred stock: $0.0001 par value, 10,000,000 shares authorized,
none issued and outstanding as of March 31, 2023 and December 31,
2022 |
|
|
- |
|
|
|
- |
|
Common stock: $0.0001 par value, 300,000,000 shares authorized,
35,052,833 and 35,047,828 shares issued and outstanding as of March
31, 2023 and December 31, 2022, respectively |
|
|
3,506 |
|
|
|
3,506 |
|
Additional paid-in capital |
|
|
5,691,652 |
|
|
|
5,675,320 |
|
Retained earnings |
|
|
(58,172 |
) |
|
|
1,177,072 |
|
Accumulated other comprehensive loss |
|
|
(21,703 |
) |
|
|
(23,042 |
) |
Total stockholders’
equity |
|
|
5,615,283 |
|
|
|
6,832,856 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
17,636,531 |
|
|
$ |
25,731,976 |
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
|
|
HOUR LOOP, INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(In
U.S. Dollars, except for share data)For the three
months periods Ended March 31, 2023 and
2022(Unaudited) |
|
|
|
|
|
Three MonthsEndedMarch
31,2023 |
|
|
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
Revenues, net |
|
$ |
21,067,609 |
|
|
$ |
12,353,983 |
|
Cost of revenues |
|
|
(11,451,907 |
) |
|
|
(5,897,269 |
) |
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
9,615,702 |
|
|
|
6,456,714 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
9,506,971 |
|
|
|
5,526,102 |
|
General and administrative |
|
|
1,713,186 |
|
|
|
1,675,964 |
|
Total operating expenses |
|
|
11,220,157 |
|
|
|
7,202,066 |
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(1,604,455 |
) |
|
|
(745,352 |
) |
|
|
|
|
|
|
|
|
|
Other (expenses) income |
|
|
|
|
|
|
|
|
Other expense |
|
|
(12,279 |
) |
|
|
(5,450 |
) |
Interest expense |
|
|
(61,096 |
) |
|
|
(83,558 |
) |
Other income |
|
|
17,630 |
|
|
|
6,939 |
|
Total other expenses, net |
|
|
(55,745 |
) |
|
|
(82,069 |
) |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(1,660,200 |
) |
|
|
(827,421 |
) |
Income tax benefit |
|
|
424,956 |
|
|
|
182,533 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(1,235,244 |
) |
|
|
(644,888 |
) |
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
1,339 |
|
|
|
(2,416 |
) |
|
|
|
|
|
|
|
|
|
Total comprehensive loss |
|
$ |
(1,233,905 |
) |
|
$ |
(647,304 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per
common share |
|
$ |
(0.04 |
) |
|
$ |
(0.02 |
) |
Weighted-average number of
common shares outstanding |
|
|
35,052,666 |
|
|
|
35,032,753 |
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
|
|
HOUR LOOP, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(In U.S.
Dollars)For the three months periods Ended March
31, 2023 and 2022(Unaudited) |
|
|
|
|
|
Three Months |
|
|
Three Months |
|
|
|
Ended |
|
|
Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,235,244 |
) |
|
$ |
(644,888 |
) |
Adjustments to reconcile of net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation expenses |
|
|
34,662 |
|
|
|
8,396 |
|
Amortization of right-of-use lease assets |
|
|
95,635 |
|
|
|
57,186 |
|
Deferred tax assets |
|
|
(424,956 |
) |
|
|
(182,533 |
) |
Inventory allowance reversal |
|
|
(200,118 |
) |
|
|
(21,404 |
) |
Stock-based compensation |
|
|
16,332 |
|
|
|
31,012 |
|
Interest expense -due to related party |
|
|
56,578 |
|
|
|
83,558 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
9,091 |
|
|
|
3,456 |
|
Inventory |
|
|
5,430,768 |
|
|
|
(4,703,465 |
) |
Prepaid expenses and other current assets |
|
|
(92,605 |
) |
|
|
(375,935 |
) |
Accounts payable |
|
|
(5,858,647 |
) |
|
|
(1,930,917 |
) |
Accrued expenses and other current liabilities |
|
|
(859,807 |
) |
|
|
(218,344 |
) |
Operating lease liabilities |
|
|
(101,723 |
) |
|
|
(30,593 |
) |
Net cash used in operating
activities |
|
|
(3,130,034 |
) |
|
|
(7,924,471 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(3,379 |
) |
|
|
(125,468 |
) |
Net cash used in investing
activities |
|
|
(3,379 |
) |
|
|
(125,468 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
Repayments from related parties |
|
|
(159,042 |
) |
|
|
(1,024,188 |
) |
Prepaid expenses and other current assets |
|
|
- |
|
|
|
576,168 |
|
Proceeds from issuance of shares |
|
|
- |
|
|
|
5,580,192 |
|
Net cash (used in) provided by
financing activities |
|
|
(159,042 |
) |
|
|
5,132,172 |
|
|
|
|
|
|
|
|
|
|
Effect of changes in foreign
currency exchange rates |
|
|
4,657 |
|
|
|
(10,710 |
) |
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents |
|
|
(3,287,798 |
) |
|
|
(2,928,477 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of the period |
|
|
4,562,589 |
|
|
|
10,592,572 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
end of the period |
|
$ |
1,274,791 |
|
|
$ |
7,664,095 |
|
|
|
|
|
|
|
|
|
|
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
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