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Hour Loop Reports Third Quarter 2024 Results
Source: Nasdaq GlobeNewswire / 12 Nov 2024 08:00:02 America/New_York
Profitability Continues Despite Warning Signs for the Overall Economy
Redmond, WA, Nov. 12, 2024 (GLOBE NEWSWIRE) -- Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the quarter ended September 30, 2024.
Financial Highlights for Third Quarter 2024:
- Net revenues in the third quarter increased 6.6% to $31.1 million, compared to $29.1 million in the year-ago period;
- Net income in the third quarter totaled $0.5 million, compared to net loss of $0.02 million in the year-ago period; and
- Cash used in operating activities for the nine months ended September 30, 2024, was $1.2 million, compared to $3.9 million in the year-ago period.
Management Commentary
“We are pleased to report our third quarter 2024 results, in which we continued to deliver good revenue growth, despite low active inventory level due to challenges from severe congestion in the inbound logistics,” said Sam Lai, CEO and interim CFO of Hour Loop. “The revenue growth rate for the third quarter was 6.6%, compared with the year-ago period.”
“Our gross margin and operating margin were both improved, compared with the year-ago period, because of efforts made for inventory quality and efficiency enhancement, operation efficiency improvement, as well as expenses management. Overall, we believe we’ve built a solid foundation to continue generating satisfactory growth while maintaining profitability.”
“Looking forward, we’re cautiously optimistic. Despite an uncertain economy, we continue to see good demand for our products so far in 2024. We are confident in our ability to continue delivering value to our vendors, customers, and shareholders.”
Third Quarter 2024 Financial Results
Net revenues in the third quarter of 2024 were $31.1 million, compared to $29.1 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, intense competition and congested inbound logistics.
Gross profit percentage in the third quarter increased 2.2% to 54.8%, compared to 52.6% of net revenues in the comparable period a year ago. The increase was a function of improved product costs, enhanced inventory quality and efficiency, and efforts made on margin increase.
Operating expenses as a percentage of net revenues in the third quarter decreased slightly, by 0.1%, to 52.5%, compared to 52.4% of net revenues in the year-ago period. The decrease reflected better management of normal and long-term storage fees despite a significant increase in inbound placement fees.
Net income in the third quarter of 2024 was $0.5 million, or $0.01 per diluted share, compared to net loss of $0.02 million, or $0.001 per diluted share, in the comparable year-ago period. The increase was driven by reduced costs as a result of the reasons mentioned above and efforts made for expenses management.
As of September 30, 2024, the Company had $1.2 million in cash and cash equivalents, compared to $2.5 million as of December 31, 2023. This decrease was mainly from an increase in inventory purchases for the upcoming holiday season.
Inventories as of September 30, 2024, were $29.1 million, compared to $14.3 million as of December 31, 2023. The increase was due to growth in inventory in view of the upcoming holiday season.
Full Year 2024 Financial Outlook
For the full year 2024, Hour Loop maintained its guidance for net revenue to be in the range of $165 million to $250 million, representing 25% to 89% year-over-year growth. The Company also maintained its guidance for net income in 2024 to be in the range of $4 million to $6 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, Hour Loop, Inc.
finance@hourloop.comHOUR LOOP, INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except for share and per share data)
As of September 30, 2024 and December 31, 2023
(Unaudited)September 30, December 31, 2024 2023 ASSETS Current assets Cash $ 1,194,239 $ 2,484,153 Accounts receivable, net 548,224 747,650 Inventory, net 29,081,306 14,276,555 Prepaid expenses and other current assets 759,391 504,973 Total current assets 31,583,160 18,013,331 Property and equipment, net 80,081 148,788 Deferred tax 567,347 1,304,215 Operating lease right-of-use lease assets 173,786 83,946 Total non-current assets 821,214 1,536,949 TOTAL ASSETS $ 32,404,374 $ 19,550,280 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 15,453,334 $ 3,812,954 Credit cards payable 4,229,677 4,404,445 Short-term loan 632,911 652,422 Operating lease liabilities-current 178,746 82,269 Accrued expenses and other current liabilities 1,050,363 1,972,512 Total current liabilities 21,545,031 10,924,602 Non-current liabilities Operating lease liabilities-non-current - 2,363 Due to related parties 4,170,418 4,170,418 Total non-current liabilities 4,170,418 4,172,781 Total liabilities 25,715,449 15,097,383 Commitments and contingencies - Stockholders’ equity Preferred stock: $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding as of September 30, 2024 and December 31, 2023 - - Common stock: $0.0001 par value, 300,000,000 shares authorized, 35,132,480 and 35,082,464 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 3,513 3,508 Additional paid-in capital 5,787,687 5,727,650 Retained earnings (accumulated deficit) 931,989 (1,252,622 ) Accumulated other comprehensive loss (34,264 ) (25,639 ) Total stockholders’ equity 6,688,925 4,452,897 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 32,404,374 $ 19,550,280 The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
HOUR LOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In U.S. Dollars, except for share and per share data)
For the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited)Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2024 2023 2024 2023 Revenues, net $ 31,075,498 $ 29,152,360 $ 83,827,327 $ 72,637,417 Cost of revenues (14,036,187 ) (13,819,798 ) (36,710,400 ) (36,331,604 ) Gross profit 17,039,311 15,332,562 47,116,927 36,305,813 Operating expenses Selling and marketing 14,585,652 13,632,333 38,603,540 33,385,216 General and administrative 1,731,816 1,631,484 5,316,176 5,311,323 Total operating expenses 16,317,468 15,263,817 43,919,716 38,696,539 Income (loss) from operations 721,843 68,745 3,197,211 (2,390,726 ) Other (expenses) income Other expense (516 ) (3,527 ) (6,449 ) (7,470 ) Interest expense (62,862 ) (62,476 ) (186,958 ) (185,964 ) Other income 28,933 19,750 116,444 56,102 Total other expenses, net (34,445 ) (46,253 ) (76,963 ) (137,332 ) Income (loss) before income taxes 687,398 22,492 3,120,248 (2,528,058 ) Income tax (expense) benefit (217,751 ) (37,548 ) (935,637 ) 508,390 Net income (loss) 469,647 (15,056 ) 2,184,611 (2,019,668 ) Other comprehensive loss Foreign currency translation adjustments 15,966 (12,032 ) (8,625 ) (19,885 ) Total comprehensive income (loss) 485,613 (27,088 ) 2,175,986 (2,039,553 ) Basic and diluted income (loss) per common share $ 0.01 $ (0.00 ) $ 0.06 (0.06 ) Weighted-average number of common shares outstanding 35,130,677 35,058,340 35,111,844 35,061,286 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 Nine Months Ended September 30, 2024 and 2023
(Unaudited)Nine Months Nine Months Ended Ended September 30, September 30, 2024 2023 Cash flows from operating activities Net income (loss) $ 2,184,611 $ (2,019,668 ) Reconciliation of net income (loss) to net cash used in operating activities: Depreciation expenses 98,624 100,441 Amortization of operating lease right-of-use lease assets 157,520 262,913 Deferred tax 736,868 (508,390 ) Stock-based compensation 60,042 34,333 Inventory allowance 578,622 972,582 Changes in operating assets and liabilities: Accounts receivable 199,426 (384,775 ) Inventory (15,383,373 ) (5,896,260 ) Prepaid expenses and other current assets (254,418 ) (412,309 ) Accounts payable 11,640,380 5,439,274 Credit cards payable (174,768 ) (412,770 ) Accrued expenses and other current liabilities (922,149 ) (842,318 ) Operating lease liabilities (153,270 ) (280,333 ) Net cash used in operating activities (1,231,885 ) (3,947,280 ) Cash flows from investing activities: Purchases of property and equipment (35,031 ) (14,024 ) Net cash used in investing activities (35,031 ) (14,024 ) Effect of changes in foreign currency exchange rates (22,998 ) (38,673 ) Net change in cash (1,289,914 ) (3,999,977 ) Cash at beginning of the period 2,484,153 4,562,589 Cash at end of the period $ 1,194,239 $ 562,612 Supplemental disclosures of cash flow information: Cash paid for interest $ 15,266 $ 172,964 Cash paid for income tax $ 210,811 $ 362 Noncash investing and financing activities: Operating lease right-of-use of assets and operating lease liabilities recognized $ 248,917 $ 27,330 The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
