- Earnings call transcript Q3 2022

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Operator

Good afternoon. And welcome to the Aterian Incorporated Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to of conference Development. Investor like Grozovsky, to now President Vice Relations would turn over the Ilya I and Corporate go ahead. Please

Ilya Grozovsky

that to quarter I copy and forward-looking judgment Investor Aterian’s this today, CEO; you Thank discuss Arturo place statements. undue on And only Accordingly, certain a differ Rodriguez, remind today’s make us the are presentation joining these on of Financial on and would press are in XXXX reliance of Officer. website release Chief based may third number available A statements call Co-Founder we business. you statements of you will On factors materially should today’s forward-looking statements. expectations Aterian’s earnings at Relations forward-looking from and Sarig, as today Yaniv like and section our aterian.io. results. not these actual of for results Aterian’s Aterian’s current to reflect analysis is affecting

not our update whether our release, discussion earnings as We thorough well result of refer obligation or you a as and events made forward-looking call we webcast, more any statements with third in uncertainties and included otherwise. on the the this future SEC. a as do or alter any quarter statements, disclaimer be undertake to filings forward-looking is information, new forward-looking the of statements to regarding to For with conference associated risks that these

I be the call. filed in over release the will of addition, the In may can that, Yaniv. certain call today. on refer company found turn With to earlier Explanation metrics to these metrics non-GAAP this earnings

Yaniv Sarig

joining And Ilya. today. thank us Thank you everyone for you,

quick review I'll Aterian I'll start takeaways call introduction then from those our third will are story. go topics. who key following of over the today, to new with the quarter the I for will On our supply how then them, disruptions and challenges I'll we're pressure I from including inflation, for this we long-term Aterian. see chain macro the economy, and level discuss prospects dealing summarize year. how then with the

newer to here Aterian find by can require ability team its allows and our across our to breed channels, selling and to allow its are focus AIMEE. to channels manage an we've Shopify, such of online. tasks, that categories with daily our our many executed scale, manually launch data products consumer internationally. For amounts product to injecting be recurring AIMEE building automate need operates own a the and vast analyze across enables more us and those AIMEE company. what hiring you consumer acquiring our and product and is brands building, automate processes platform technology-enabled and marketing various partnering about we brands, business to of would unsustainable We workforce. tasks, more. To and our team under Amazon, unscalable would and scale products have efficiently manage various both fulfillment technology story, companies. otherwise brands, certain much called as of who into effectively to domestically these invested e-commerce opportunities new on and Through Aterian proprietary is eBay, software own in Walmart, new part know to

to to supply to Expanding our is in goal scale efficient agile globally, chain and in world. Our consumer footprint most long-term of invest companies the and the drive profitability. continuing in become one technology the we’re

focusing optimistic points actions reduce these actions, updates. but our share to the the us to a containers now affect to we the main XXXX, quick putting to adjust rates begin on profitability them more shipping taking hurt It'll key to that have metrics measures target EBITDA our teams to We at I'll subside. time year above improvements then international our Dramatic of mentioned products. XXXX on to believe defensive now on we're explain takeaways it's making position negatively XXXX. now fourth signs Aterian. Moving prices restructuring towards expensive steps our pivotal strong efforts out removing has year to detail. set for normal. year. XXXX path year also continue that of International shipping to year, for reignite would this with these they management start on walls in in has using on levels a us discuss old rates last of a the inventory lower time in finally we’ll quarter I we’ll We're to in share the adjusted and also and believe focused remainder quarter, strategy for the I'll points Aterian Through showing supply to we chain We're to a costs summary global the on like the of right track. on third with of return worked attempt market maintain QX through start the close elaborate with the as our in our from continued These for supply and the and over is the market effort of as at certain our profitable pre-pandemic this of hikes but We're take possible will next see fully levels. to gain is a show growth offensive. by turning us excess fixed starting protecting put of our why that liquidated to taking to to full will now by attempt our EBITDA chain while to get to each profitability. much effect starting believe back

our putting As model. have company of rates culprit last business on have many listeners main our know following pressure keeping containers who for the the couple years in been international been in

our increase shipping containers the of As by led a prices supply from a reminder, crisis Xx the an to cost us average in products China required increase our chain This XX%. increase of for followed the to U.S. in to own COVID-XX turn pandemic

was While target the was XX%. our of approximately important, price to reduced year-to-date blended our margin contribution X% increase versus

It's necessary our line price reduced protect to until not we in is new worked designed rates. lower market time on our decision prepare The to growth, with of sustainable spending opted normal. product focus been get combined the share, overall and past hurt XXXX sales. second the which our come cycle though started news market to pushing limited important prices relative to portfolio given already from with losing margin earlier. our rates. protecting increases inflation pandemic gave through teams to to so position. margin seems quarter able shipping containers top the strategies inventory pre made I the an for initiative to inventory profitability year. initiatives normalization low to is back it for to latest difficult in can the that We've share effort this vets this also Even third second ability in price mandate a drive leads replenish current we point Additionally, of overall was consumer to a at We've been and The a access most back at eyes this shipping the half conditions good pursue our strong on higher and our shipping unpredictable week. we're us offensive, we to We've secure that aggressively set the have mentioned our on of year our able

to so, While secure better in these best our not have to we're strategies aggressive do the doing long-term share. pricing our opportunity every product portfolio capitalize same market on may to

with more for Similarly and of trending for other velocity expense retail products goal for now the typically our products. increase operate margins order Amazon visibility ranking It better a therefore that enter on see and for drives of with cost but e-commerce coming benefiting as as our works, more cost typically be traditional platform the from to and overall visibility us, increase margin store. as in lower As demand in to sales is improved with much gain rewards we believe our sales at a and sell volumes brick-and-mortar stronger margin. we'll we plan If driving allowing sales, QX hopefully basis, show increase. share shipping we XXXX also to to then inventory in our products market the able increase hope, at possible,

conditions, is XXXX. to macro core the metrics As the half of decisions gaining on our I last management business to achieving investors with painful some the focused level current that new our and on from the focused had growth the on shifted in We've focused XX attracting to profitability company mentioned fixing earlier, rapidly values make trust. creating in starts second team months profitability. environment market to We the by believe shareholder protect and as of

XXXX in to cannot supply ignored. without The resolved seeing geopolitical tensions and Asia-Pacific not profitability environment at the still We're in regions Our Europe play risks have based we goals for present. are and operating are data chain be and particular, overall that on recessionary at seems the concerns. the

could However, we're negative and disruption a closely a monitoring policy to our chain. the other China COVID impact can potential have lead future last supply is shipping crisis factory concern on in gas it mile zero as a increase Furthermore, as in rates. the prices looming energy shutdowns through

monetary [indiscernible] remain M&A despite new us potentially and spending we're these next forward negativity decline in in by our At focus demand policy we could further time, is relatively unemployment push that this as expectations strategy. on as well products and sentiment year the FED's settled. year. flat a the important the that overall remain has opinion hamper launching risks, optimistic to that resuming will giving a Nevertheless, Finally, mostly and XXXX for increasing sales consumer for forecast consumer [indiscernible] an of

to confidence positioned invest to to new weather expand slowly QX efforts growth our start strengthen in have driving disruptions. possible regard operational to which us gives balance organic we general by and $XX in sheet allow Additionally, to to us Union our up cash, the us, in to internationally. our capabilities in continue growth to further in With million continue our investing cautiously ramping business products long-term with European

similar also are to our accelerate While experienced us, The extreme we organic opportunities to dedicating resources has competitors growth, to conservative whole disruption a including to our space. Amazon from we're in e-commerce affecting as aggregator those industry seeking being growth with M&A. the expectations

assets we believe a build infrastructure. Aterian investments to the actively consolidate into looking a we're to synergistic be to given we made As that result, opportunities will brand scalable

that sets efforts allow to want I far to thank us so opportunities that platform year play in us. to to With our we're back accelerate the quarter's believe the who us tirelessly to shareholders generating to to make the hopeful that leading continue additional to to team work Artie margin could our positive acquire and build it have pass financials. profitability. CPG productive to on Our We're businesses contribution e-commerce. track and off XXXX discuss path been and our continue and I'll

Arturo Rodriguez

and Yaniv, evening good you, Thank everyone.

Here our are of performance the third financial details quarter.

$X.X of decrease or revenue marketplaces due $XX.X levels ago on million offset due in quarter by reduced X.X% net XXXX our to our consumer inventory through primarily softer million decreased third decision the off to pricing, quarter the to net demand $XX.X year For to revenue hand. the from on to inventory sell million increased

and wholesale $XX.X organic brands we purchase another. from revenue and The and our million revenue million $XX.X million of of of $XX.X of and organic of includes wholesale net another. of million approximately year $XX.X primarily is net and acquired revenue net built $XX.X comprised one-year of quarter million note from of $X.X mergers million comprised business, brands acquisitions our which after $X quarter was ago and starting from million business, our Third revenue

overall Our from organic decrease of to increased to inventory hand. revenue an net the pricing due period reduced consumer further revenue sell reduced by in off by organic on revenue inventory the reduction acquisition revenue spend million through $XX.X by to increased in our past overall from level classification our offset offset our revenue organic into decision

XXXX a being acquisitions of revenue owned into third Our all zero our million the revenue quarter organic year and from shifting to quarter over XXXX to acquisition a $XX.X from due at for categorization. third decreased

reduce quarter on softer related decrease third levels by from demand the Our increased to our sustained decrease $XX.X million the to offset our net sell XXXX. pricing quarter of off in XXXX net for The compared decision to revenue was $XX.X on consumer to is to million hand. marketplaces revenue third inventory of inventory

We $X.X existing down launched revenues, zero one year-ago few from variations third year's million launch Our phase million in re-launches quarter. include third quarter, third which was product product last a in new in the product the on compared brand in quarter. the $X.X and to quarter new

Importantly, product product from quarters we launches resuming XXXX. to the additional primarily quarter are a third quarters evaluating and launches after gross on for of planning coming for are quarter. XX.X% margin year in decreased new several the known launches new ago Overall XX.X%

last decline shipping cost by disruption, versus to impacts from inventory containers from from of gross quarter increased of margin supply shipping containers. our is year increased in XXXX. the Our the the quarter believe of relative from impacted gross selloff costs cost specifically margin increased of XXXX We chain third the third and X.X% negatively approximately margin

at revenue margin which on sold XX.X%. to XX release of our third of our This negative overall in contribution quarter margin, driven inventory liquidation part which prior-year's primarily net margin million contribution compared was X.X%, earnings a was is hand. as Our the has decrease our efforts contribution reduce defined of decreased to from

quarter our a products third margin pricing. XXXX product decreased saw XXXX, decrease XX% via our of mix to levels to XX% products contribution from quarter inventory decision third to sustained compared of The sell off reduced and to our in

chain margin continue pressures. to into distribution costs due sales supply saw negatively be impacted Looking and fulfillment XXXX, our inflationary to contribution our we for our deeper by mile expenses last QX and cost

distribution Our XX.X% increased percentage in to net a and compared third quarter. year revenue ago quarter XX.X% as variable expenses a XXXX sales as to of

in to quarter. continue expect current see We impacts these the

higher we for we'll compared chain our operating pressure due We market of While increased loss continue of XXXX. we for the see ways continue goodwill, believe in supply decreased of million The end to our the QX. cost, third as mitigate $XX.X is third cap dynamics reported XXXX mile margin our to loss of the quarter look last of remainder the contribution $XXX.X in primarily to in to XXXX. quarter driven million cost loss quarter million loss a $X.X non-cash of to by at impairment for

$X.X third quarter a the million included stock of gain compensation while of the XXXX earn-out value operational loss intangibles $X.X expense, million in million and from change of the a of $X.X of decline XXXX The quarter million loss a from net in Net which $X.X third XXXX liabilities, of from the includes $XXX.X third non-cash third $X.X quarter in of benefit quarter of non-cash of change XXXX. earn-out loss $XXX.X fair compensation. liabilities a million fair was value of in impairment non-cash the loss of million, million was the loss operating and stock from

of Third while to changes warrants quarter net the again impact related impairment and of EBITDA million $XXX debt, of and at value was associated million the liability derivative XXXX loss time. in release and third loan XXXX. as earnings to change with compared of goodwill, million of operating of XXXX in $X.X the of $XX.X fair net a an included our and from XXXX included in our from reconciling in quarter million fair the loss a in extinguishment of loss warrant derivative common of value for $X.X million million loss of $X.X quarter gain charges the loss the a of offering million includes stock, million $X.X a a term from loss non-cash third third of of a Adjusted the [ph] $X.X from defined quarter gain $X.X

had facility. net repayments balance is to cash at to $XX.X Turning of XX, of decrease our end $XX of June at due to The the our in XXXX. loss the XXXX million compared sheet and September XX, our credit we million cash

$XX.X of which September XXXX raise September completed XX, sheet. added to additional does the XXth our balance account approximately XX, June include Our was cash start XXXX. position $XX million QX to not net the at $XX.X at on versus capital taking cash October Further, balance XXXX million. at our credit million $XX capital into was Xth, When million that facility down the

at the reduce September million million to XX, QX at June was lower sales XXXX with inventory is levels. along to which our the due Our $XX.X inventory XXXX XX, efforts $XX.X than

decision QX XXXX increase the made As previously in of we to constraints. to supply inventory levels mentioned chain mitigate strategic

However, anticipate inventory normalize continue to we on margins to softening as levels. continue by help move be consumer demands reducing we with to excess inventory during the long inventory QX such

reduce supply continues expensive improve believe our can more level we and As we for chain we hand in and products inventory XXXX. our to improve, inventory costs when replenish reorder

inflation, $XX million. environment into global we rising that Looking $XX QX XXXX at account and taking million quarter of believe fourth and be revenue and our XXXX current will net between the

the rates improving As in hike our we shipping in affected supply as continues at of the to us are we chain past subside. optimistic look negatively XXXX that global

We and believe that this has taken in demand by costs fixed measures removing time remain relatively teams certain that have mostly will also negativity flat to restructuring at our and sentiment And we settled. roles. reduce the consumer

With are profitability these in factors third XXXX. targeting we starting of key quarter in to mind achieve

provide In continue XXXX habits, and will third continue we time. spending closing, saw these additional microeconomic any to this not of for the expect guidance XXXX challenges and at through conditions XXXX. unpredictable consumer We quarter challenging

pre-pandemic We currently container are supply chain to and improvements are starting returning see the levels. costs

hardworking very be our products, As network, and we about technology, built, our I'll questions. the and our turn continue operator to it to business have the call optimistic to logistics such, people. we importantly most our back With confident, dedicated to and open that the proud

Operator

Brian Please Nagel with [Operator Instructions] go Oppenheimer. The from first question ahead. is

Brian Nagel

afternoon. good Hi,

Yaniv Sarig

Good afternoon, Brian.

Brian Nagel

[Indiscernible]

Operator

the is operator. conference this Nagle, Mr. me. Pardon

it. to the audio breaking up unable to point Your is of being understand

the possibly we'll back you the back again. into dial into and If queue disconnect get you right could call,

Brian Nagel

Okay.

Operator

go Please Partners. with Brian ahead. question next Our Global will from be Kinstlinger Alliance

Brian Kinstlinger

Am I thanks. Great, clear?

Operator

go Yes, sir. ahead. Please

Brian Kinstlinger

Great, thanks.

assuming the rates, shipping is your Is plans us I with global there first conditions time hold, mentioned had sometime SKU including you XXXX, share monthly SKU anything your can share you target? you a of and new next a that with year? targets. launches regarding or quarterly there in First current you regarding back know given long launch can us

Yaniv Sarig

Hey, to thank question. This you, Thanks Brian. here. is for the going

fluidity call working have and go all it's products meaning variations also efforts. of our additional the to quarter. what want chain? But you we we're this happening that also concrete get is about In goal seeing think what we amount existing was on more goal that's you yet products, we products on supplement want Artie, sorts we in – we of as to I don't you yes, back launching supply increasing though kind is the mentioned general that's the third know on it everything here for that point. I mention supply of really that add So, the products start chain stay, at product anything. one as this we of the how given part of launch us to to of a if comfortable as and great to said products

Arturo Rodriguez

No. Yes.

to that's think good a answer. me I

other think volume definitely a keep I the doing we mind think in more side, lot of were the in Brian; products. I past

one too. lesser about things is bigger about products I we're think also thinking the of

about on. think those still concrete but have working but XXXX from volatile; things anything we to we we're don't as definitely As, so are Yaniv's the think I point, it's very targets,

Brian Kinstlinger

opportunities, rates, which overall. high capital, attach shipping got one, And evaluating I Okay. then you're the M&A those price same also COGS you've of have you've high inventory increased targets figure as announced

you that as does and impact the the So impact how that how companies, acquisitions? acquire strategy does

Yaniv Sarig

struggling I find these as hurt now, we're a the right And you right? mentioned, targets as to of right, important in think extremely patience kind trying that various impediments here. for the obviously I seeing best that targets, of and at same others and way of We're industry, look is the us, lot forward. us some seeing we said When

we the bottom right, it's of believe so that though want we in we In that the be, position what and we're inflating we a we much contribution accretive our cautious what's the generating companies. to there there exactly being land see and at right? targets but heads businesses be want waiting going it right? are opportunities really of us So in And for where general I of still ago, at line for these we're that. think COVID working as path make and is can opportunities targets, pull acquire the asset, would is impact positive around this don't effect numbers we to these some cost a We terms that overpay, to where value would've so year actual When to right? already there in lower are we're mentioned, these again, that it The kind thing, in looking patient us been and saw sure to of forward some lot of could wrap probably a a for margin we right? are the on the before now of trigger,

Brian Kinstlinger

last question into and queue. back I'll get My

You are levels commented you seeing rates pre-COVID. to of shipping that back about

As get similar year? look when you that occurs your gross back does the saw at when at you'll the of assume your assumption we gets with range as there? look half the the gross obviously you're margin that we we in you where low-to-mid margin making, second gross we matter should to profitability margins Is that mix cuts that have XX% said, and but and

Yaniv Sarig

Artie, want one? that to take you

Arturo Rodriguez

it about thinking you're think I Brian, the right way. Yes.

ideal there, important costs also other to, contribute it's an in kind out effect right? obviously range depending distribution you're pointing our that something out and there. inventory mix be definitely in sales that that very certainly model, factor also would on mid-XXs successful that, of should if theoretically I that we that, variable definitely achieving. kind putting in is into you you're be I which the out is think of we're we that's CM, think factors would the product As that numbers and the, then about and clearing yes, the But how as are think has also

Brian Kinstlinger

so you much. Great. Thank get back I'll into queue.

Operator

Oppenheimer. with The Please Brian is ahead. next from go Nagel question

Brian Nagel

some phone Hi, hope better you having We're me issues here. can now. hear

Yaniv Sarig

better. That's much

Brian Nagel

cool. Okay,

run liquidation Was I the work guess here asking was to products that – regard question, there consideration mean, behind, in actual quarter. liquidated. don't, it; the demand the product associated the the it higher took through it I that forward product, margin. thought there you associated guess obviously any liquidated you a product process volume could I system the the contribution kind risk lower this do potentially I I with question them? cost in the you asking the lower that the I just naturally? to is cost that higher or of was allowing mean, that And seems sales is of impact have cost of of albeit I'm there the you to So that Is the pulled some then of the with coming quarters – hit

Yaniv Sarig

Brian, questions. Hey, good

me those. take Let

first us while. covering it all, a So as obviously for behind the is, logic you're of

that selling, eat industry, know couldn't our right, basis that in we the other consumer, cost less high. that's that inventory at lot seeing at You rates. down, shipping margin. pricing, also brought to and on this a company sitting and this But So sales of any contribution very to And a now like lot of we're bring that less to had obviously in we're which we come drove was top we the still cost which container had those line stop shipping a right? basis inventory too in high costs given we container increase the

XXXX competitors lines in market the basis us letting on could its be in their and are They just us, product commend be is to course and be it And follow could so our we that in price. through particular able they'll that due before share, if right? undercut will that are of the to risk in lower cycling us that do inventory damaging pricing terms cost that, to not of able

make a that us is so first basis in that to important inventory question? for we that that can your and a believe the at normalizing through cost on back us, Does competitive. supply that go to we it's way recycle bring is So again that – for very sense that chain inventory

Brian Nagel

That Yes, then And perfect Yes. follow sense. makes could it. if get I I up.

Yaniv Sarig

in then And of... terms

Brian Nagel

Yes. Go ahead.

Yaniv Sarig

Yes.

demand, that. I don't think you forward like pulling we I – asked, it think what don't of terms yes, In just, that sorry, think right? of that's

we're having as while right? capture looking from competitors, instead it think looking said as looking I we I market are As willing we can more at are this opportunity lemonade gives excess our we're inventory as right? excess to at at them inventory an share of to one with back, so that from come competitors, this bring a and at take inventory although make it take we this if And lower at market life us Selling allows advantage now more back in margin, that to There's that our it you a cost basis. price, hurts cheaper share our right? our margin goal to back optimal is the we possible the run basically like and with when inventory we product achieve level bring align highest of kind that the rate can them in. lemons,

expanded by at we're capturing to explained share. we're as the very while I inventory right? how now margin, that and a then Does it? make well hopefully And also liquidating gas’ having inventory of it on kind that sense more being of aggressive share So market lower arrival basis with normalizing market time the pricing, that meaning retain cost we

Brian Nagel

Yes, it If makes it. I a just apologize perfect, I could I for question, more prior flying the call [indiscernible] perfect the get cut may sense. was saucer a, That sense. I I a follow-up be follow-up up questions. makes this bit. guess be to a maybe may

been with the is been this shipping of that So, biggest one question, has costs. response massive dealing about, your Aterian mean, issues I now even we've in prior with increase talking

essentially you're seems close it Okay, to saying so I significantly levels. the very now to, shipping costs have back pre-pandemic retreated mean,

here, moderated? now how parts earnings is XXXX, much lot much power, itself, moving of how we recognizing the you to shipping of about a the through and the In think that of of earnings of as tailwind So think Aterian of having about will, there costs as but the we if kind could be?

Arturo Rodriguez

question? Brian, question, the it you repeat last I part? are just would, was think how How the much choppy, can a the can last saying, you just but repeat little you

Brian Nagel

how we could having result think should just shipping come the tailwind significantly? as of so costs Yes, the that a moderated earnings about

Arturo Rodriguez

with and for to I in now a of has last Yes, very those know, been right, business And to of challenges I heard time right difficult our be consumers Listen, the mean, advantages at margins you. costs our a place Right? priced coming yes, run more lot to need this where I for of okay, year it's And there's us products become the that they you obviously so a buy. epicenter been Yes. tough seeing mean, as plus. down. reduced

again, can we we sales. Right? top go gain line. that lower targets XX% and more the on to contribution First, should our revenue More back meaning our also prices margin, XX%,

So is the just economy that thing for is not tremendous I'll though generally us. best its we place. this only are also The is in say

is more to So to for competitive the to tailwinds to which We our our the conservative can consumer think, know to improved be do for one we're we question given questions we've should we've been, think, challenging for questions is inventory, economy be going an is think most we we be? margin contribution I how but is round underlying to are taken right? consumers news prices. think overall it see in we is that. great for where able this just still pricing us, where demand of to So is where I is more that conservative overall going be. So get right? demand and increase significant going that's we The right I time is and going we competitive us, to us. to after going through of should there, be right, again, potentially that on great margin, The And and everything tailwinds are points out with where a for view hand, have have I still challenging all clear, cycle And that think, great news. while about one a again, our are forward, strong overall big consumers work to be, again, consumers,

So the for Aterian. we picture about still feel good

Brian Nagel

Got, you. it. I that. appreciate Thank

Operator

Matt question is next The Koranda Please Instructions] Roth go [Operator Capital. from ahead. with

Matt Koranda

there's $XX to quarter third understand trying to you guess million fourth on on understand us I'm signaling you quarter? but you of sequentially sort on inventory a range it off just liquidation that what's clarification puts to just and drop Can is takes the the guys, just for I revenue? expect million you're come, of Hey I like any put the good despite gas help seems to out the just $XX of quarter or more the for stay for would evening. why range revenue, what so on with going versus sort fourth

Yaniv Sarig

you that take want to Artie one?

Arturo Rodriguez

sentiment as what a there move said, consumer the of Yaniv. Yes. you volatility spend, inventory Hey, what thank and do in to from is – still a to there going we're aggressive Yaniv Listen, the we're Yes, and be is seeing think, especially Matt, I same is, this trying right lot you Matt. at time, QX. consumer

when they Amazon in pointed also hard the think a but going Prime strong think up, time some I but and to pricing discounting perhaps it's about the say. we is right as really volumes what to you I saw not decent At certainly towards in same talked push that's aspects are relatively as Day, it. Prime Day June

to do have I strongest and our at been I think look historically when products. it's we core and at always it units, at QX, lot the QX, very the QX. and dehumidifiers been that been think, like other of QX the a levels has they lot right? are and and we best-selling mops common range, have best and have on lower good hit our things of of we certainly and it's steam conceptually splits, we still that same good a never But that. AC like drive see Amazon. sellers We think some always still very our of QX I products our looked business our points QX numbers price we

what it we've done. you that perspective, isn't at historically think the look – which would our middle you to I like I'm about XX%, range far thinking that if put XX%, at of off roughly when split from doing

So really think it's far don't there. I off

You're or I that's more I but could the line now, and we're higher prudent in in I beyond there a think, right successful percentages. considering historical right, range we're a that, pushing if comfortable with range macroeconomic be being lot think, that, we think conditions,

Matt Koranda

sort of we to a want sustain? coming go-forward basis inventory on trend. cost through margins expect mix wanted And to the sort get from then expect just a you a how of just expect sense sort that get Okay, we clear? margin on fair And fourth much to Any contribution then enough. be revenue quarter of how should for the similar you to liquidation versus until that the you help liquidation inventory higher of

Yaniv Sarig

you Artie too. that I'll one let answer

Arturo Rodriguez

early liquidate how to opportunities how we lot that Matt, and on lot in both question. a of the Yes. a Thanks, We Yaniv. in too going what a interest just Friday products hope on I of in but quarter, we how Cyber and liquidate do process lot; than would depend good goes. this we Monday another got Amazon. Black we're saw still better it's and

conservatively the our look consist. you assume say, I see the tables. would at of between at would press I and the back that sustain I those think in look release in and would splits liquidate I

Matt Koranda

Yes, positive sense. XXXX? Alright. inventory on third half see us of take be of the Okay. the through, you the in that you the for on kind see help saying third inventory, counting you the on Do you visibility outbound EBITDA year. some the cost until profitable light coming are then Are that at the of work way we that shipping the Got the the understand quarter quarter? in have to effectively in of still higher we're EBITDA that XXXX? just into it. end in might consistency positives all gets the what context will first sort quarter of the makes through kind the of Like percolating third And tunnel third that that next quarter

Yaniv Sarig

you that let answer I'll Artie one too.

Arturo Rodriguez

Yes. to I and understanding, of to our ordering for a Listen; I'm bit the give we next tomorrow, In things. questionable summer other little strongest in, depending just my to my point are put month, weather a and earlier, be always little on said your products QX you And our today POs right? May, tends quarter, right. June summer's already products

June, So right. May, rates products the don't shipping until, lower at up show container those

seeing QX I by approach I particular the pointing any products of our then, QX improvement goes to period. XXXX, that We're the hope going mentioned would there. to if of improvement standpoints, the my long hence think of in think why in that see summer some we're everything that's to we hoping that impact his towards as pointing in we're gone start full So will XXXX. But in inventory that remarks we're why be Yaniv the certainly we related

Matt Koranda

And Yaniv Arty maybe Okay. Got or take it. can then either one. last you one this

able being a on and kind observed the to of better like, that with by be clear of are categories? in are pricing are guess, what get context across on competitive environment of going you aggressive price to for you that pricing Just kind I more broader pressure in the to share? those Are benefiting Just of take and your stamp pad you folks this wanted seeing sense stressed from some environment? more seeing seeing overall what's trying you competitors you inventory? are

Yaniv Sarig

Matt Hey good question. it’s a

back of do we're should opportunistic we competitor to certain term and situation of Right? competitor as their to expect and you looking across of as be interesting answer discount And I worried think do. looking There temporary those who Let might kind clear we can on to right, per at be of kind be not always are up about aggressive the type their one this of companies should no take advantage against, inventory is and a the and some towel that like teams here Literally is a could again are product the price try the a is come and to of as answer in the down as guess the maybe threat we're at interesting maybe how that throwing and me reduction, of or the we trying see and like board, take evaluating on throwing type depending this us can trying be those on more our are they to competitors cutting, and analytics who our are replenish. actually we easy taking between and try positive? that What's see category, and be and share. products towel, to differentiate that's imagine, will can or about that if is the price more to category, a and looking But patterns long adjust meantime, market that to kind normalize really position prices as seeing also one. well. trying you to just

cut tactically on answer board, are of top And our a clear a it. very the but not it's teams question. there's So, across much good very

our both in investment again, think, to allow data I us to time look So our analytics in ability well at point this manage and real situations. all pretty

Matt Koranda

Okay. Awesome. Appreciate it guys.

Operator

any questions. question-and-answer concludes would to This conference back for the like telephone I Ilya session. Grozovsky our to online turn over

Ilya Grozovsky

Thanks.

I questions for the shareholder perks most up to investors can their perks picked questions I ability and the few that participation of ask as in questions. popular sent to shareholder their participants the of for program, have which management at their participants loyalty, the on program, in. have all thank As have a they aterian.io/perks wanted of sign reminder, our a part our earnings call.

profitability With shipping the team see go. does down at almost pre-pandemic we and XXXX? Here levels, turnaround costs finally Yaniv? a and in to significantly management return

Yaniv Sarig

Ilya, you. Yes, thank

right said And quarter we driven the answer as target is and in said is to us our adjust also the on that release, And taking. lower to see now EBITDA costs, reductions of One prepare right? So, the again, in we're shipping two cost press but by it's focus yes, XXXX. as about, the for we talked that. this we focus forces, profitability really some is management's management of the it's third also obviously, as kind

Ilya Grozovsky

Great.

acquisition bit can strategy? you about little The acquisition your question talk a next future was, Okay. and recent

Yaniv Sarig

acquisition, fits not in that recent some oil assumptions I've seen might brand. I it really be case. our the the think, It's so the well brand Yes, an portfolio, online essential current

believe we we're think into we're type of that cautious in reasons, comes to to to might I that are not disclose terms particular there environment synergistic on to are competitive it being of For further bringing assets we're time was. consolidating And looking assets. make brand brand And opportunities. sure taking especially in that what actively really and current opportunities, our that earlier, our the said going when portfolio. especially we any future But be as right here in we acquisitions, just

really or portfolio. brands continue and would make current our all But is products feed progress to that So we'll it. ongoing cherry picking selling on this

Ilya Grozovsky

question, last was the perhaps Great. important plan shareholder then and value? Okay. question increase you the do most to And how

Yaniv Sarig

mentioned as think really and I working hard we we're yes, earlier towards profitability. important So thing probably most the is

on we right, started although slowly mentioned, again products launch. we like, to work also, that we started can new we're developing of As kind

expand a lot shipping, capabilities it's a like been think made our Europe. in the earlier. kind But again, to more had happening for to-do while to scenes of put the we behind our And efforts efforts pricing I Europe. of prevented list on increase on that into from

to advantage footprint of the are efforts to things starting that expand Europe. in in place Now we want we've better, take to our put get

our going platform that's for all all think again, to And us add focused finally, brands these via increase incremental adjusted to and on although profitability. – I lead think exciting, unlock to be we again, should EBITDA to opportunities much more these And hopefully to things. opportunities I take acquisitions. then is revenue much Management add shareholder So allow to will we're And get efforts looking value. very it time. to

Ilya Grozovsky

Great. Yaniv. you Thank

concludes of the the Q&A portion call. this So

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Aterian (ATER) 9 Nov 222022 Q3 Earnings call transcript