MWK - Earnings call transcript Q1 2020

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Operator

Ladies and gentleman, thank you for standing by. And welcome to the Mohawk Group Holdings Incorporated Q1 Earnings Report Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

to conference like speaker, to now Grozovsky. Ilya would hand over the your I ahead. go Please

Ilya Grozovsky

for you quarter first today earning Thank us results. joining to discuss Mohawk's

CEO Financial today Fabrice the call Yaniv Co-Founder On are Hamaide, Officer. and Chief Sarig, and

A Investor website section the available Relations today’s copy of press of mohawkgp.com. is on release at Mohawk’s

of remind results that judgment statements forward-looking forward-looking forward-looking you statements. differ reflect Mohawk’s we reliance And would undue current on statements. make in I expectations these on actual you not should factors a like will analysis today only materially from number as and these place to Accordingly, may affecting are certain and this presentation based business. Mohawk’s statements of

forward-looking webcast, release, statements call as is be this with more conference refer statements regarding first in we quarter to a earnings as discussion risks thorough and the For made and to the in our that forward-looking the well of the you included SEC. disclaimer filings uncertainties with our associated

We any obligation new or as or statements update do not forward-looking otherwise. a of events future information, undertake alter whether result any to

In these addition, reconciliation and refer the in found non-GAAP metrics certain release can earlier the of metrics U.S. be metrics to GAAP a Explanation call. earnings company on this non-GAAP filed may of to today.

turn With Yaniv. over will call that, I to the

Yaniv Sarig

for working I time. Mohawk and whom have Ilya at of to like would this first last remotely call. their us good entire several during challenging and during this team the Thanks, afternoon thank Many for everyone. joining Thank hard for been today months. foremost our work you all

our who suppliers also number incredibly ensure our in have like helping have and to other Keeping to our safe continues partners one continuity. priority. business people I we us supportive been business would vendors, thank be

hope and we ones safe loved are you family those and that call, healthy. your and the on For

up driving leveraging rooted data to in crisis. for clear to essential and your a end adapt been reminder vision our reality mindset limiting our particular and that culture times the month of of all in granted quickly model important is can't agility test. put to to and I adapt we a events products. us retake to is last our don't has needs, The without chain to of of opportunity COVID-XX category business that Mohawk’s to were supply market an ourselves

consumer products very case proud Identifying crisis. through is consumers has meet products. We for feed less black pandemic team we magnitude. in protection adaptability of swan last Holonix demand to a that the our this personal through week need new data, that this type I’m of brand of during the announced have launched demonstrated the of a a called the of a event a

within find in model and market, very, validate nevertheless spaces AIMEE, was useful. very used market which we than white research market size more Our to competition to the

Based for on to our partners reaction brand. marketing right supply new products that for our side, and required was identify our chain roadmap and set swift operation the

for Holonix company. launching top a priority was While the

equipment, in ability effort. and have cross-functional We need also this to PPE, dedicated recognize protection personal a assist have we for those the to team that great

essential the thank for for clock team need. effort are making to are the in I want members to many, help secure to of working with around the the we many who and this product others workers

responsibility. our strong to against that join the can we we It categories, ethics step required maintaining situation. current importing company assist commercially continue in pieces do the in involved and manufacturing, to fight company and therefore everything products our moving COVID-XX. believe all do we a to and And is will are have way so selling for responsibility As across various is in we up to a viable while the

ever in forward in the capabilities our role dramatically that building SaaS in and first growth moved increase has for it's revenues demand believe main versus has our operated We incredibly played brands now the we that services, through accelerating COVID-XX been of our as announced of sales valuable. managed through whether an business. an Amazon channel, in approximately or core E-commerce accelerated quarter our XXXX its we've our also its than seeing adoption, With company's owned are massive first of XXXX. our XX% during model. quarter more the

first chain few AIMEE integration partners the platform, pandemic. during valuable technology with and XPL supply weeks Our warehousing proven of the

delivering able high were levels other of we logistics to delays and to services where items maintain delivery and service in As consumers. disruptions saw

to press our we're month in April. in as at same growth continuing the April last year overall versus closed acceleration earlier in improvements seeing today, announced of an margin approximately contribution well. we As witness in while release We our growth XX%

in time, QX. adjusted show positive as pending in disruptions, QX as this well or events that unforeseen will At EBITDA an of maintain expectation as the any we this in year, as well company as – QX

disruption healthy strategic could related we at perspective, need adjusted on while forward COVID-XX, level estimates, secure surrounding the cautioning further uncertainty or convinced interfere incidents we to with global EBITDA the take call that to our those including COVID-XX other chain management put supply statement the growth. the is to that reading unforeseen are Given profitability events these maintaining Mohawk plans. Group’s steps macro From a

last powerful a and We've platform years. supply few technology in in the company built incredible an chain

looking model CPG Now all year team years. the Mohawk to entire essential have make more for future. turning our to want Group. our work XXXX mission the than execution hard point I ever, through company of we and of for the thank the our We're building a to on dedication is shown our

company. thank our his welcome the for the Shenzhen. the excited in strategic from June cultivating Datos years. is to executive K leadership for believe X Mohawk’s at in I'd past Asia COO operational tenure We're We to starting important Peter new like in as based Finally, C COO Pramod our level that investment an as

procurement, development, background in well product choice up experience overseeing technical strong as China. control, of bring Mohawk XXX engineering, experience, which leadership his team. XX management management an senior to to years electromechanical joins teams We're operations quality product in making and over executive department. run to supply employees as ideal operations sourcing Pramod our His thrilled in includes Pramod to chain our consumer of development, across and

that, pass I'll it onto With Fabrice our discuss to results. financial

Fabrice Hamaide

afternoon Thanks Yaniv and good everyone.

information COVID-XX would providing like discussing to to decided a who uncertainty significant to want our Before QX. and have such companies the monthly of impact results visibility. business on workers and to give thank through and the also note responders, COVID-XX revenue front-lines providing I for are I of as creates will that thoughts monthly that we medical outsiders the been results in results, We our are healthcare first opportunity to with the take those situation as our information course. providers and first the battle, the on monthly QX on revenue we'll have other reevaluate need plan better its provide for and impacted

our Now the quarter. performance details of moving reviewing first to operational

April. our For net ago revenue XX.X% in quarter to the of with period year million in first $XX.X increased line XXXX, $XX.X was pre-announcement million in and early positive from the

of sales The existing increase in half $X.X volume of of growth to attributable was XX.X% the launched or direct products increased as second XXXX. products new primarily as well million

back the overall began QX with mid-March spending to consumer COVID-XX Our the accelerated to as pull experience from the also shift even outbreak spending due performance benefited to that pandemic. of online

on XX.X% the XX% XXXX. with quarter a we picked was product and a write-off increase to inventory launch increased on sustained economics revenue, XXX first as due price Gross was quarter. to versus promotions in year-over-year QX improved our increasing sequential of net unit and points for in ago Following basis impacted excluding in our margin as basis, trend up fourth XXXX a net margin moved as the coupons the the April revenue March pace up products gross basis improvement into year-over-year products, from products. The XX% well XXX expired lower points that April approximately year

As of products. and net revenue phase reporting our each we're now by our mentioned last our owned on operated call,

on rebates spend a negative launch phase, in product SaaS, coupons, last a as – to with foothold which of We three in As approximately a are and other. liquidation the sustain, are have reminder, brand we where defined that launch, they advertising aggressively average, margin time order the in gain the marketplace. period investing to marketing on the or contribution being months pricing,

revenue is margin contribution variable costs. all defined, of minus As our

After contribution the that a are phase, target phase. XX% expected products launch to the We enter have these will more. or of margin sustain products positive

be by relationship, a inventory, can status excess charges related related impacted charges all contribution or target UPS and Amazon few. to name to FedEx prime margin to exceptional and Our logistics

moved to that do decide not to we reach products phase. sustain for or liquidation our they Finally, that exit,

liquidation The include maybe and other SaaS and other. categories

million $XX.X approximately of was revenue XXXX sustain our d million. first XXXX, quarter sustain $XX.X revenue first our For versus quarter

QX $X.X launch $X our XXXX, versus to XXXX, products revenue launch due of and million our related million, trailing products, approximately QX QX our the in a primarily which XX itself revenue we million is launch QX on basis. In For than less launched expected was XX was revenue $X.X COVID-XX delays.

in revenue QX. quarter was also raise were launch to in launches in in late launch QX, still the increase The their in due which

million Our approximately XXXX. $X.X and was revenue million SaaS our in $X.X SaaS of million versus $X.X QX QX QX XXXX revenue

in quarter XXXX. versus and was liquidation XXXX, of QX first QX million, and $X other revenue other Finally, and approximately our million of $X.X million liquidation revenue $X.X the

X.X% an QX the overall improvement Our the margin and of XXXX negative prior versus XXXX QX was X.X%, X.X%. contribution year

QX trailing by margin the contribution probably drag year’s offset And was over X.X% driven than on X.X%. results liquidation and QX our negative in On basis, The and as improvements expansion significantly year launch more revenue. phase, the our which contained inventory our the prior the was by write-offs. a versus the unit sustain improved economics impacts driven year was from revenue, the sustain of margin margin certain X.X% increase a improvement XXXX quarter

now related margin were costs note our by XX% $X.X for such as now in or we million our to compared or of first company in million our at $X.X one-time public fulfillment of I costs. insurance. quarter The the as costs, of million over and lower XX% was of revenue, sales the XX% would our additional Fixed to incurred increase day and D&O revenue to net auditories driven $X.X sustain were QX opening delivering operational costs one customers are of was warehouses, warehouses a contribution nine at impacted net XXXX. XXXX

Our headcount XXXX. XXX end was of end at versus, of XXXX the XXX the at QX QX

a our products cost costs flat. highlights The improvement percentage in while revenue, from of to XX% revenue new fixed as net ability keeping essentially launch grow to XX% fixed and

significant company the from benefit as automation expect reductions public operational in cost half, fixed costs our by continue both provided of our of as platform. to we well costs the We second as our

a from from in million On quarter EBITDA for first additional fourth and sequential to of XXXX. by quarter company driven launch a of of first loss $X.X of XXXX, adjusted the the new $X.X public EBITDA million as decreased improved loss in $X.X million of Adjusted the basis, of products. well quarter loss XXXX of costs a as the

sustain a the to sustain continued automate optimize to Our through cost of and reaching any of path improvement in we fixed phase, as revenue to is adjusted margin our expansion EBITDA. lead continue function to profitability more continuing or structure products and

Turning to the balance sheet.

of working March, and we at cash the by first used to in risk QX December cash had $XX.X was for Year, increased as used Cash compared million, which XXXX New loss Chinese hand, million QX chain quarter and operating on activities of inventory cash, capital, the well. on the Based in as the impact traditional operating well in result as with $XX.X million activities of we usage our in cash million As due seasonality the expect impacted cash in compared increased in to on fourth and from generate of as increased of historical to tariff XXst, QX. was XXXX trends, operating we the to $XX.X $XX.X that supply as quarter working XXXX, XXXX. COVID-XXXX of a end capital

working in to compared the of in burn fourth spending. cash million, $X.X to quarter due the significant was XXXX, capital $XX.X increase Overall million

of our increased credit and of direct revolving XXst, compared as of $XX.X to total increases $XX planned million, under XXXX, debt our as March consisting loan, XXst, total of borrowing December Our our a XXXX of as reflection inventory. debt million, was million facility $XX.X term

China. as discussed relates QX had COVID-XX our the on impact to of of manufacturing in January it our key unfavorable coronavirus, some in an partners on As outbreak call,

are addition things. for team In work for our who development to negatively operations among responsible product Shenzhen, impacting sourcing and other in

many outbreak March U.S., over early Our given increasingly the XXXX. became across temporary In in and the U.S., increase a spending spending, China in products categories and of key and its a closures reopened February significant including across our larger much capacity shelter-in-place online. we seen despite March demand consumers manufacturing of XXXX, the partners decrease impact on COVID-XX XX, multiple quickly and the other widespread in overall reached spending governmental XX% are for share regulations in an consumer in businesses, have of their

that a profitability current is would impact shopping. step at seems in of I shift note spending adoption trend the the on uncertain to consumer longer-term revenues, the the though and increase in and spending, time position function financial overall indicate far outweighs the our likely is contraction this to online that online

in our slowing the expect approximately second complex provides we outlook or QX XXXX, In for profitability our to to which the consumer products process, as half. during down on into behavior, environment in We're for our reaching data quarter launch our we and focus XX terms new in launch see well more of volatility approximately launch rate a XX second QX. the as

currently we outlook be net products portfolio $XXX $XXX XXXX, range improved primarily million This new continued $XXX driven of XXXX. product our from positive guidance is For $XXX by expect million, in increase stated growth million of to an revenue previously contribution of in our to launched the million. from the and existing to

to impacts plan of contraction COVID-XX and overall into existing of launches, spending, potential the inventory product consumer commerce in products, our new incorporated constraints and have in delays guidance. We terms the for online shift

ratio we the EBITDA, due expect adjusted growth of further to spending. positive we adjusted EBITDA part well, higher the leverage adjusted in fourth now driven improvement fixed XXXX quarter of to of third the the with revenue continue as adjusted EBITDA accelerated by in quarter EBITDA and cost in to and online in our respect achieve to expect expect positive adoption XXXX We

turn to operator it I'll you. for Thank back that, With questions.

Operator

[Operator with D.A. Instructions] Forte Davidson. comes first of Our Tom from question the line

Your line open. is

Tom Forte

my is taking for you and Thank well hope well. stay Great. doing everyone question. I

biggest question in the the wanted address is and comes is So misunderstanding it's what I of role had when the to Amazon. story your it I investors I think to

and for particular, Group when what create for leaned did Mohawk in what essentials, that create did Group? challenges Amazon So Mohawk opportunities into it

Yaniv Sarig

me let one. Fabrice, that thanks Tom, for the question. take Hey

demand infrastructure work continue. consumers, the XX% we obviously another retail to crumbling at impacted our load. And that fulfillment through course, obviously anticipated So as I some their software, today closed up has investment Amazon their uptake revenue I with under was know, Amazon Mohawk as large being and products of everyone on of when of warehouses at the to that fact lot infrastructure where been people that infrastructure fulfillment. out this, to aware the that almost own the made think seen on a they've literally tried do Amazon situation hire a by still XXX,XXX us, a warehouses think side on channel of has building started flowing were through. cross We is people retail rely the incredible call own to our ago and Amazon going But for in platform. were the with three to point to the our same Logistics own technology time, fulfillment years And over our our is the

own the sellers an without to during be and consumers product but mitigate advantage right? them products of of our that core delays any day allowed period in as to only with kind were there who shipping, and continue able effects that that other products, on Logistics just shipping around were help the need, pretty And right? operate revenue time to or not had third-party Amazon much put for using this were our one we they We we the saw us so most within still that given shipping two platform, completely really on on Mohawk interruptions to the

So, and in has the right? the perspective, over-dependent see reliant very the being investment in be from has example to unique not so on on the we that. but here of a Amazon great And a place really technology proved significant been sales platform then useful and that a to again Mohawk, be well, uptake time, in to continue same hand for how one is as unique positioning saw us at

of because shelves, the just categories line thing Another that showed part announcement shelves at more planning, home cause saw course We and certain mention of stay the the saw a items actually in regular we at should some to in fly right? that of kind the is freezer get to our going significant of coincidentally started off home. in and A absolutely category. in when of opportunity was launched that fly lot then of those categories off with specifically, freezers to we the have decided COVID-XX a couple we consumerism first the data that knobs items days chest really of the people to we

like when in products like so back and the share, So traditional of standing first products they're of more kind showing due also we to sales had to the increase were demand pandemic able the as going desk for we the the massive looking the people that freezers, office, trimmers, be that and items brought can buy during these to days stores. into in like type not market of them take home knowing the go us products hair products for data market

situation so unknown say of the say ahead to still company think us there. in and environment able that cautiously. pretty well. the and every infrastructure, technology that the I’d we through investments COVID-XX challenging So is overall, out our I a were navigate for But is that still

Tom Forte

the queue. back you. I’m in going Thank Thanks. to step

Operator

line from our Kinstlinger Partners. with Brian And question the of comes you. next Alliance Global Thank

Your is line open.

Brian Kinstlinger

Thanks Hi. guys. Great.

two the the And you for where significant top going making you while guide market, also to money there products? as trying – use equipment sellers on post this demand, I'm those responsible, understand socially make wellness the three you to As for sand same is example? past your a sorry, expanded look going example, being sanitizer, to protective are or way is if curious, in be hand I'm to comments, you

Yaniv Sarig

right ago. So We, supplies on a equipment. on few much hand is bring that that unique really with on all product product low that's to launched we consumers by in in of and One these launch do. related traditional Holonix to sanitizers traditional are form patches a and that's Those business to travel. anywhere. particular was two needs, can more where, demand with initiatives pretty that unique take call the example, kind first and very is again of And more just to way our data now these more that decided on model the data first to are spoke products, PPE we go that for portable, those are set increased you from the wanted us brand decided are specifically that we for that focused searches right, perspective the little about to the you and of case that those market our just that type minutes is in the showing on focus specifically type a software this the of core use I core the business a in going zoom the on really factor to

market. and help to all felt help a pieces opportunity well again more time, business real – with that the moving we allocate data type and the lot Just say we to would business, do that team to the the At will we'll cross we my to to a for we in kind place to the at both functional I same we across so of decided look do have all right, also core PPE with in BXB bring a of the like BXB, more this particularly all business increases is that some that's but would to I go We effort, products that earlier on continue as government put entire out us moving as that and what do mentioned again, where as market as so. was that the in an comments, states, resources, the we and at of demand as needs there given specifically how demand time effort a typically again, purely based responsibility for importantly an pieces do do with have – again it same with PPE something that, that the brand. on for hospitals. the category. And opportunity our And continue the Holonix way sustainable given to that have and

Brian Kinstlinger

the you Great. yet. this I know in you be that an many second, Thanks, third and give fourth you you quarter? if from the Yaniv. this new products or category? can will Do Can have idea XX – – introduce of don't third know to expect How

Yaniv Sarig

question. great a it’s Yes,

As we that Fabrice right, you have for one it. on quickly demand is interesting react to you're data which mentioned all quite explosive chain to and have before, able the to capture when exciting on exponentially and supply data PPE, hand, the

come to that to still there's – take earlier, of year – the volatility XX kind want category. quarter again, traditional out happening in of advantage go Fabrice an we those a there other go figure pan other category. will goods, really the the things how momentum coming you try for those go time, as take are we to going inclination At the lot much into those of into exactly to and how category this out consumer products or I'd since more that's demand in, next So products so of in that the to definitely say that in see mentioned products say in same will so products know, is probably mentioned up and much

the to opportunities opinion that across and demand for of share that, the more sides fluid. data PPE, market related the the and we quite items of going to equation, a stay in, lot items. So PPE strong of convinced quickly course. right, with looking take the to this day-to-day sense the is it two at the again, have run, crisis obviously this a We're does on We're and the and Holonix and where can traditional different not our both supply situation is just the we go the of leverage in and lot in awhile make to long the chain react to

So again, the situation answer is definitely end part Holonix probably still fluid, we're evaluating, data. in we're under always allocation prioritizing the to But brand should question. up on-the-go, that the, based on significant the the your of

Brian Kinstlinger

Great. that One are the sure the that a in for inventory significant, April? Fabrice. of amount products was you cash. I'll queue in build driving last and growth question, Are Can quite good I'm that you March easily replacing The talk get for used back about inventory?

Fabrice Hamaide

really yes, So to back normal. chain fulfillment – is things the a supply perspective side completely from of

we still products some ended that we it having running up – I actually actually as think because we mean, changed, we out own confinements, up course indicated, actually ended loan actually I position, inventory. compared astronomical, levels, started them our talking inventory of growth example, a across running about the almost growing, standard a of for layers so with ended are are and see our those right, of to and and freezers can mention I products freezers, honest but up it. was despite And not over you was exploding, right, our growth be to of all as Now, Yaniv, I out

and nothing got then do which about you've So so place that cycle after shipping you can and that, on, there right. so takes manufacturing is on and

to purifiers, the right. not of they air here it after the when moved After third that, week after it to moved that and to confinement could realized trimmers, people that go barbershop,

or after fifth had get being jumping on actually week tools out So the house, everything that they totally actually and bored of gotten confinements of it. up ended in needing to then the

growth massive we exceptional that shift rate spending, normal run have – loan disruption. So the but actually seen all across those our we've layers to for out are at and short that are products significant replenish not thanks significant normal inventory able the basis, position, to actually we out to any without around from online

Brian Kinstlinger

one want build freezer, – Fabrice. it can. inventory How that end, just as Sorry, or others, refrigerator back that people up much product to consumers now another food that a all To have acquired? another completely for long as does like and to to follow-up are that take that around right right they getting

Fabrice Hamaide

Yes. blip The growth you volume, in here to the permanent in issue separate have of is the real from e-commerce. the increase

portion on on example, massive food. of up a lines saw, for disruptions. a blip e-commerce growth a you the of therefore fear that I'm one So and extra time And is pulling the food demand. chain supply That's disruptions food on

year. be long market permanent that or but most of total freezer The more will that short lived, in the second a part part time is a the of the online bigger that of channel the chest increase demand is it online, share acceleration take a permanent means or every of is – will lived, sold

the not being forever. And not you want inventory based then the end the if last to You for for a blip long blip itself, actually reorder the time, disappears. on up reorder because you, blip, the actually blip is for right, in that long movement, as you

from freezers, the always chest actually the in blip gain – the factor the or it's the permanent versus spending share factor today is overall in increase time challenge consumer inventory the in market right. So side demand the on parse to one

making on focus easy, a we are not profitability. always it’s strong So

being freezers that the chest and data higher than to the actually before, not see after you carrying was factor. one are it between the short the of if blip products the don't will period correctly advantage inventory on overall not instead still a So that you level low can but that's can as of long overall and going [indiscernible] we right, see parse some But we change actually down, before. afterwards the before, of time, be extra inventory back the driven for potentially occasion right, of on permanent that demand to growth

the spending overall And can built assess when the actually of and market you share inventory. correctly, your is that see online that, you what and gain actually that's on consumer you then long-term that basis

Brian Kinstlinger

Great. get back I'll in Thanks so queue. the much.

Yaniv Sarig

Yes.

Operator

you. Thank

comes of line question Allen National from next Our the Securities. Klee with

Your line is open.

Allen Klee

then, now, if contribution hi. this you the – the costs little be there know think and Is to get rate it it other revenue $XX way assumed margin address Yes, terms employ of made in a you run profitable? way talk said how this And could what that the you the blended I fixed of think look you up if sustainable about some and don't mean, fixed there. Could that at is you revenue, to $X.X be? perhaps costs, you we from of if get just to, I way Thank said you. you about margin would of contribution I should around would that or quarter, you million million X%, I a

Fabrice Hamaide

That's the yes. very Allen question. So, a for Thanks important question.

launch, degrades a our also ones December, products a So massive as of had by you QX, of we – impacted were we that new significantly in we in parts number so saw that in remember launched And launched actually and massively course that number or made that record which of your of the QX, of is products blended right, we number was all right. is also contribution – CM. margin the of launched actually very

gaining on a down through doing then the changes the And is, – CM. launches, And improve you're the with that nail slowing itself, sustain little the which overall new QX. implemented CM bit platform we so warehousing on by the a new will we're here our that

now deal new UPS. that right the XX.X% we now, weeks by that our weeks operational ago, and three fully of with is shipped four are UPS grids now ago And signed

starting a going the intention actually to expansion margin the to That operational one moving You’re new see was that flow. quite happen of bit. to of

in CM especially that's increase, you’re because you so our going CM So the to sustained of numbers, and and being proportion QX will the will sustain dollars. seasonally to actually expansion on revenue with CM high CM overall the contribution a seeing the bigger – see positive start QX side, a on

of then benefit of our it a portion platform, us one we in platform on the of back go the investment costs, indicated, fixed At to is, allows example. the automated we the same time, as as for because down automate I things, new

fixed on in in be a much, are significantly it's one not much year that actually the anymore. our some company D&O also significantly the quite pay the that but of all are year our on listing. means thinking little you one high QX down extremely that can so in is QX, year, in and are million, going So go bit year public first to first it's not XX year extremely and starting more the same will go $X.X – that And fact there because that company not insurance, where back to the costs high, two June rates so actually but from then down year I'm example, two. that your you're on for go on QX, linked of And cost down QX.

So our go fixed as costs well. will down

of that margin number of actually in sales of to business, the combination the have QX business, the margin in higher the lower you proportion sustain the on well. expansion CM cost business get fixed total and and way – QX. on profitability sustain expansion the level as you that's on And So

Allen Klee

logistics at how of a and That's because I to going how any to benefit them your there that you're very and second, e-commerce. up those what costs provide higher they significantly running costs to to about first with risk just safety do do opportunity their then And along companies businesses with for warehouse Thank you've you? is like you. if there? Amazon, And going others, if big look social because of of think did their It's just we cover have logistics with what measures. the turning helpful. deal get are new and then And was traction And off, that you I you said interesting to wondering actually passed of a could just distance had an sell to third-party opportunity just your UPS. to

Fabrice Hamaide

So SaaS to side. and talk side I'll will Yaniv? Yaniv take cost That the the works,

Yaniv Sarig

Okay, perfect.

Fabrice Hamaide

Great.

that so we having of have costs warehousing most extra those where on nine right. cost warehouse distributed companies, and benefit But actually of of our the out are that's having is on we by actually the workers the side, So platform so because you distancing, that on side, social of are of advantage warehouses, the and on. in less actually so have six supported the different the

having So all actually the different always elements needing play of extra state-by-state. The COVID-XX – right. and of implementation into actually actually we can are the of and distancing different is social those of not And different state-by-state. the course, a situation rules by workers are

providers carried So by extra carrying not as cost significant. our the on on, is

one what the actually reason second is the The the very oversized. platform that logistics, the are simple so warehousing and process process. a on and revenue of complex we where from fulfilling network our They other from have pick not on going through call we FBM most pack are It crossing derived into right. person is so multiple aisles, multiple you on, each people and and or

person a for One puts the deck picked order UPS. was the by multiple be you on up There the gets it, dehumidifier, ready very label dehumidifier, interactions When is it's goes, the people. to buy on with little dehumidifier.

single we don't those type of because the by single we costs by definition, actually carried are already products aisle, extra have sell in being distancing that social a actually right. person a in So

a person the suffering case that's in So of we're one from course the reason why UPS, the And there's in then – not that. of finally truck.

up, of X.X through network. itself to last but our fulfillment own the actually UPS FBM UPS really shipped year, very orders. million up happy through right. pick our So We is actually increased ourselves Approximately going orders, not is cost in volume, individual very,

wants that had Everybody still But reason purchasing would of year they less benefit short XXX,XXX. And the why that's actually growth power, we that. we're the and from, shipped having which of before, than make money, less making That's cost from update with Yaniv have they margin SaaS doing I'll than the a were with were before let respond gain us because on a they on the are side. they us. less volume them perspective.

Yaniv Sarig

Yes. Thank you, Fabrice.

terms the oversized is we've advantage, fulfillment, Amazon optimizations we done comes mentioned, offering of yes, platform that Fabrice the categories with independence So the to particularly right. giving when around of Platform-as-a-Service the call us also the and coupled what the of a logistics it unique in are as

at the I that but and of a is and item past, price their in competing mean, platform I lot are platform of logistics the they oversized logistics are ship therefore basically the that a we to the they're infrastructure items warehouse doing larger challenges the for through potentially other think shipping of it FBA quite or Amazon could typically the platforms one have have talked portfolio. lot items, of that smaller in about And cost is other when asked they high.

roadmap right, can so the be fulfillment strategy is gone to to we're our products, here very, on optimized also and size the platform efficient. categories higher significantly And see you as taking from our very we've cost we've

typically other most it In fact, efficient comes competitors to cost than product. oversized when

type revenue, so well. that lot is after put of from a initially of probably on to categories And the these as going strategy perspective, of in the SaaS category this going focus

industrial selling items are furniture, So of who companies that appliances, out sorts there typically size. all are larger other

right. when it their value economics a very have shipping purely from them for to comes items, We a unit just compelling

them of should but platform going fulfillment, advantage we're the these with is else huge right. so economics we're over but give including we're also And just the is that that first, quite given the anyone that companies strong giving, capabilities the after, marketing, doing unit the focusing what and on that is a automation, us not other anchor

So that service. competing against with we're the

on to built way what's the that owned legs so that able about the platforms unique ability with want and to that, between to have bring this think we the e-commerce vendors and two benefit our in we is prime, operated. that. from focus, the is with we we'll fulfill And that be sellers very And business

third-party contribution infrastructure, the to operated the through customers, which revenue it's through we're the to them to scale? affect and both more fulfillment margin flow the SaaS, of give and from our right. keep the increase rates, players SaaS which in on and continue logistics the on better put different partners, we well logistics own of us us an whether our hopefully economies to And the all volumes then Because of products continue own as and give some appetite same side as would as or on able more then platform, platform, should better

a it's play. volume So

to on add on in itself but we business, its operated and with offering our help of SaaS also and side value I owned terms player negotiate already volumes sides as any that TM, continue them the better would in pricing. a significant are and of operated think owned client that better Mohawk we us should the in both the businesses already both we

Allen Klee

average last metrics success helpful. question Thank Very there My sold? the any been revenue rates changes per you. product and of in have of your the is, launches the

Fabrice Hamaide

success all are ratio where through comes significant perspective. the actually price them when of products this, chest actually the December products variable obviously So ticket a value like a that the it higher per that course March, of end phase. average launch revenue dehumidifiers, we or products will a sell. launched are the in line from is which When product to still we of some the a from all way sold – you items to analyze freezers of majority a mean, of launch I

So it's so and on. success too on early and update ratio an to actually the so give on

ratio By early And they have but the late cycle QX by to we'll we example, in sustain QX better get entire success provide July move a actually visibility announce right. for we of or then actually when either they move the the to them, completed launches, or the liquidate, to to actually then numbers August.

Allen Klee

much. so you Thank Okay.

Fabrice Hamaide

Yes.

Operator

with Partners. Roth next Thank comes you. line question of Capital our from Koranda And the Matt

open. line Your is

Scott Searle

the stepping Matt. on Scott quarter. Hi, it's Congrats on for

guide, by lockdown? the partially to Or help also building understand falling of do the we so tie you is out XX%. that April it just about like that you guys come that Kind March of First, $XX launches? is million. being us the And consumers product new also XX%, to raised up guide like talked being up demand how blocks after as

Yaniv Sarig

products seven be. Yes, to we're so down right. long a month, seven in products mean, of launch see a until the right. on less to launch we're really stability first, And taking how products – I six going overall, itself, the as pace course, know it going we we data actually to products we're for to And moment don't more it's right.

the us But course, year, in a QX, of and decide perspective the situation is products, taking cautious a approach the rest nobody from right. the very accelerate, slowdown prudent of have that the actually going of we're opportunity should moment, for number new the to wait to planning very to knows well conditions So change, impact right. or on of rest we we're QX market may how saying even for and or the we QX, COVID

So to we're that. approach cautious a taking

on the that's a view top negative actually line. So

I On mean, right side, we're acceleration now the in significant said, as other we seeing a sales.

that straight As XX% say, know you take only we XX% and increasing don't if XX%, line or noted, a portion – in they're by April will guys that because growing we those were stay. $XX million know to you of so where a are they

once the adoption disappears, thing will actually retail Once know we as of side the that remain. other things is blip spending open, of that online the well stores

increase they're bigger consumer know spending, their it or online. How We overall, spending will spending. share will of sooner a Overall yet. don't much? later, increase stay as So will consumer

some advantage short-term, on So a for factors, uncertainty so to we into example. adoption number. that baked lot lot And the positive of online, long-term like which delivery fulfillment there's and of dates our came of strong like a very

of slowing QX a XXX line be we to course in new reason some the top if when And negative increasing QX. with that we'll rate announced down growth $XX million. why by came products. the of to And And that's due our guidance need and revisit provide we

Scott Searle

who walking then straight just go through and seeing That's and on it. managed PPE go SaaS any of think SaaS? FBA kind managed you just that? to XPL, ones just XPL are are software like by And you for enough. Thank of the Mohawk's us do the customers using about Got than the that. straight, your going rather the fair you How

Yaniv Sarig

offering, you not the advise would at that our unless client be offering managed on offer the Amazon right. for a take say to right, side, it, of there's – items, when So FBA you right, interruptions service, of there right. Fulfillment smaller would SaaS but related, because like COVID-XX. is SaaS managed example, somewhat either network is we part leverage them look makeup when - the of SaaS categories and network more the We

the other them type short would don't to fairly on advise of the fulfillment period a items, an these not costs, modules, time we have yet advantage use use our have of necessarily We fulfillment in but right. because will for been or

we And so in where really client SaaS it depends managed some of offer would fulfillment. the including a cases, on them nature lot all the the modules

selling just And cases, be might it products. in for some

because focus looking So it's to approach. type little But these the in look if we're la make at oversize, of on course categories. mentioned of is a But of right interested bit that our the others terms with as on more a an then à come focus outbound carte in an And and from the companies. look now well. them Does those as fulfillment, larger the sense? obvious economics before, perspective, of of I regardless offering, oversized on unit we'll more quite in of advantage the are

Scott Searle

Thanks. it Yes, does. Very helpful.

Operator

from our of comes Davidson. question Tom D.A. the And you. Thank next line Forte with

Your line is open.

Tom Forte

thanks. Hi,

me well. So a stay follow-up question then from and everyone

from future to Would innovative another years is a on call, this agree? Shopify beneficial the Mohawk their how XX Group? standpoint. suggested tech company, earnings So And that moved that essentially COVID-XX you in technology

Fabrice Hamaide

Tom? assume a right, Did of mean right, correctly? from When I from you perspective, consumer technology question get technology e-commerce. that that a you say I adopting perspective, Is the

Tom Forte

Both of companies of it because standpoint, and from a advanced. the more adoption technological to technologically requires importance an increasing digital standpoint from be

Fabrice Hamaide

sense. Yes. makes I say Yes. that with much the would statement. very I agree mean, That I

door side. they something have again both leap And effort certainly go there's make on we think effort that sides, is of that to anymore, potentially consumer adoption. adopting adoption I acceleration and online of be once continue of forward of see we'll believe the and on e-commerce the to online shows who that don't that we'll an their the achieved previously, at you're defense probably right to up were and stores a is convenience in the going to consumers right,

to right, to as future at companies also companies, that a digitalize comes going e-commerce that A of to. of approach kind maybe for companies adapt as product to themselves it the path business to going a Mohawk path quite suited are and they the a that When – now. lot like better a are for to side, consumer as in we the seek more benefit them become accelerate that to for slower their critical see took look of CPG need lot a online,

really I think think exit e-commerce. that kind for it better we're an this when offer turnkey well our them of uniquely to as software. are us consumer end-to-end to And as a solution offer as again just comes I advantage the be managed positioned that if think opportunity for that that opposed an we that I solutions become offering, companies And to could more look should us, to become SaaS to at

now CPG to their online. on the leveraging well for Mohawk execution. again, is hopefully, demand think operated all on time have business as products the really either side, consumers place the capabilities higher online an at on when only companies right been depends the that as accelerate in So looking right that our well But at doing ends, on it's of I retail both

the well, side. – manage could it could you SaaS If partners on significant become

Tom Forte

for taking Thanks my questions.

Fabrice Hamaide

Tom. you, Thank

Operator

time. I'd showing Thank to now questions turn your speakers. like any you. the And at to back I'm further call not this

Yaniv Sarig

time you look you. appreciate in the will we Thank to the I on call speaking and again you Thank your time forward next the for everyone today. to call. earnings

Operator

gentlemen, you. participation. this call. and Ladies Thank your Thank conference for you today's concludes

have now disconnect. Everyone may You great a day.

Aterian (ATER) 11 May 202020 Q1 Earnings call transcript