• Hour Loop Reports Second Quarter 2023 Results

    Source: Nasdaq GlobeNewswire / 09 Aug 2023 16:30:39   America/Chicago

    Demonstrates Strong Revenue Growth Despite Challenging e-Commerce Environment

    Revises up Full Year 2023 Revenue Guidance

    REDMOND, Wash., Aug. 09, 2023 (GLOBE NEWSWIRE) -- Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the quarter ended June 30, 2023.

    Financial Highlights for Second Quarter 2023:

    • Net revenues increased 51.5% to $22.4 million, compared to $14.8 million in the year-ago period;
    • Net loss totaled $0.8 million, compared to $0.3 million in the year-ago period; and
    • Cash used for operating activities was $3.4 million and $12.7 million for the six months ended June 30, 2023 and 2022, respectively.

    Management Commentary

    “We are pleased to report our second quarter 2023 results, in which we continue to deliver significant revenue growth,” said Sam Lai, CEO of Hour Loop. “The revenue growth rate for the second quarter was 51.5%, compared with the year-ago period, and outperformed most peers that we know.”

    “However, our gross margin, compared with the year-ago period, was negatively impacted by the challenging e-commerce environment and intense competition caused by high inventory levels across the industry. Nevertheless, we had some success with the QoQ margin improvement to 50.7% from 45.6%.

    Our operating expenses percentage remains at a similar percentage to the first quarter because of efforts made for expenses management this year. Overall, we believe we’ve built a solid foundation to continue generating strong growth. We also aim to continue making 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.”

    Second Quarter 2023 Financial Results

    Net revenues in the second quarter of 2023 were $22.4 million, compared to $14.8 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 5.8% to 50.7%, compared to 56.5% 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 4.8% to 54.4%, compared to 59.2% 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 second quarter of 2023 was $0.8 million, or $0.02 per diluted share, compared to $0.3 million, or $0.01 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 June 30, 2023, the Company had $1.1 million in cash, 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 June 30, 2023, were $14.4 million, compared to $18.8 million as of December 31, 2022. The decrease represented strong sales momentum in the first half of 2023.

    Full Year 2023 Financial Outlook

    For the full year 2023, Hour Loop revises up its guidance for gross revenue to be in the range of $132 million to $145 million, representing 30% to 40% year-over-year growth. In the meantime, the Company maintains its guidance for 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 Contact
    Finance Department
    finance@hourloop.com 


    HOUR LOOP, INC.
    CONSOLIDATED BALANCE SHEETS
    (In U.S. Dollars, except for share data)
    As of June 30, 2023 (Unaudited) and December 31, 2022

      June 30,  December 31, 
      2023  2022 
      (unaudited)    
    ASSETS        
    Current assets        
    Cash $1,118,671  $4,562,589 
    Accounts receivable, net  322,334   352,379 
    Inventory, net  14,417,742   18,801,529 
    Prepaid expenses and other current assets  871,771   741,243 
    Total current assets  16,730,518   24,457,740 
             
    Property and equipment, net  208,297   274,195 
    Deferred tax assets  1,095,258   549,320 
    Right-of-use lease assets  294,678   450,721 
    Total non-current assets  1,598,233   1,274,236 
    TOTAL ASSETS $18,328,751  $25,731,976 
             
    LIABILITIES AND STOCKHOLDERS’ EQUITY        
    Current liabilities        
    Short-term loan $643,294  $652,316 
    Accounts payable  7,448,841   11,883,253 
    Accrued expenses and other current liabilities  929,294   1,742,972 
    Operating lease liabilities-current  266,672   385,216 
    Total current liabilities  9,288,101   14,663,757 
             
    Non-current liabilities        
    Operating lease liabilities-non-current  15,508   64,945 
    Due to related parties  4.170,418   4,170,418 
    Total non-current liabilities  4,185,926   4,235,363 
    Total liabilities  13,474,027   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 June 30, 2023 and December 31, 2022  -   - 
    Common stock: $0.0001 par value, 300,000,000 shares authorized, 35,070,776 and 35,047,828 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively  3,507   3,506 
    Additional paid-in capital  5,709,652   5,675,320 
    (Accumulated deficit) retained earnings  (827,540)  1,177,072 
    Accumulated other comprehensive loss  (30,895)  (23,042)
    Total stockholders’ equity  4,854,724   6,832,856 
             
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $18,328,751  $25,731,976 


    The accompanying footnotes are an integral part of these unaudited consolidated financial statements.


    HOUR LOOP, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
    (In U.S. Dollars, except for share and per share data)
    For the Three and Six Months Ended June 30, 2023 and 2022
    (Unaudited)

      Three Months  Three Months  Six Months  Six Months 
      Ended  Ended  Ended  Ended 
      June 30,  June 30,  June 30,  June 30, 
      2023  2022  2023  2022 
                 
    Revenues, net $22,417,448  $14,800,518  $43,485,057  $27,154,501 
    Cost of revenues  (11,059,899)  (6,443,910)  (22,511,806)  (12,341,179)
    Gross profit  11,357,549   8,356,608   20,973,251   14,813,322 
                     
    Operating expenses                
    Selling and marketing  10,245,912   6,480,625   19,752,883   12,006,727 
    General and administrative  1,957,975   2,275,642   3,671,161   3,951,606 
    Total operating expenses  12,203,887   8,756,267   23,424,044   15,958,333 
                     
    Loss from operations  (846,338)  (399,659)  (2,450,793)  (1,145,011)
                     
    Other (expenses) income                
    Other expense  (2,438)  (3,944)  (14,717)  (9,394)
    Interest expense  (62,392)  (20,567)  (123,488)  (104,125)
    Other income  20,818   13,754   38,448   20,693 
    Total other expenses, net  (44,012)  (10,757)  (99,757)  (92,826)
                     
    Loss before income taxes  (890,350)  (410,416)  (2,550,550)  (1,237,837)
    Income tax benefit  120,982   97,009   545,938   279,542 
                     
    Net loss  (769,368)  (313,407)  (2,004,612)  (958,295)
                     
    Other comprehensive loss                
    Foreign currency translation adjustments  (9,192)  (9,497)  (7,853)  (11,913)
                     
    Total comprehensive loss $(778,560) $(322,904) $(2,012,465) $(970,208)
                     
    Basic and diluted loss per common share $(0.02) $(0.01) $(0.06) $(0.03)
    Weighted-average number of common shares outstanding  35,055,293   34,939,695   35,056,510   33,300,000 


    The accompanying footnotes are an integral part of these unaudited consolidated financial statements.


    HOUR LOOP, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In U.S. Dollars)
    For the Six Months Ended June 30, 2023 and 2022
    (Unaudited)

      Six Months  Six Months 
      Ended  Ended 
      June 30,  June 30, 
      2023  2022 
           
    Cash flows from operating activities        
    Net loss $(2,004,612) $(958,295)
    Reconciliation of net loss to net cash used in operating activities:        
    Depreciation expenses  68,634   22,498 
    Amortization of right-of-use lease assets  179,774   124,570 
    Deferred tax assets  (545,938)  (279,542)
    Inventory allowance  211,979   169,192 
    Stock-based compensation  34,333   61,013 
    Changes in operating assets and liabilities:        
    Accounts receivable  30,045   (25,616)
    Inventory  4,171,808   (7,745,521)
    Prepaid expenses and other current assets  (130,528)  191,294 
    Accounts payable  (4,434,412)  (4,180,324)
    Accrued expenses and other current liabilities  (813,678)  48,803 
    Operating lease liabilities  (191,845)  (98,930)
    Net cash used in operating activities  (3,424,440)  (12,670,858)
             
    Cash flows from investing activities:        
    Purchases of property and equipment  (5,881)  (164,174)
    Net cash used in investing activities  (5,881)  (164,174)
             
    Cash flows from financing activities:        
    Payments to related parties  -   (1,024,188)
    Deferred IPO expenses  -   (576,167)
    Proceeds from issuance of shares  -   6,156,360 
    Net cash provided by financing activities  -   4,556,005 
             
    Effect of changes in foreign currency exchange rates  (13,597)  (7,115)
             
    Net change in cash  (3,443,918)  (8,286,142)
             
    Cash at beginning of period  4,562,589   10,592,572 
             
    Cash at end of period $1,118,671  $2,306,430 
             
    Supplemental disclosures of cash flow information:        
    Cash paid for interest $167,017  $- 
    Cash paid for income tax $-  $- 
    Noncash investing and financing activities:        
    Right-of-use of assets and operating lease liabilities recognized $28,407  $606,443 


    The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

     


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