Arcadia Biosciences (RKDA) Q2 2024 earnings summary

Executive summary

• Monetized wheat IP through a $4M sale to Corteva and exited underperforming brands, including the sale of GoodWheat assets to Above Food for a $6M promissory note and $4M over three years.

• Achieved net income of $1.1M for Q2 2024, up 30% year-over-year, driven by asset sales and reduced losses from discontinued operations.

• Zola Coconut Water sales grew 42% year-over-year, outpacing the category, with new flavors launched and expanded distribution.

• CEO transition: Thomas J. Schaefer appointed following Stan Jacot's departure.

• Focus remains on reducing operating costs and accelerating Zola growth.

Financial highlights

• Q2 2024 revenues were $1.3M, up 1% year-over-year, driven by Zola sales; H1 2024 revenue was $2.3M, down 4% year-over-year.

• Q2 2024 net income attributable to stockholders was $1.1M ($0.78/share), up from $823K ($0.61/share) in Q2 2023.

• Q2 gross profit was $673,000, up 30% sequentially and 4% year-over-year; gross margin at 52%.

• SG&A expense was $2.7M, including $500,000 in M&A fees; operating expenses fell by $3.4M in Q2.

• Ended Q2 with $8.1M in cash and short-term investments.

Outlook and guidance

• 2024 revenues expected to be in line with 2023's $5.3M, as Zola growth offsets GoodWheat exit.

• Gross margins projected in the low 40s for 2024, with over $2M in gross profit.

• Operating expense run rate targeted at $2M per quarter.

• Management expresses substantial doubt about ability to continue as a going concern due to insufficient liquidity.

• Plans to seek additional funding through debt, equity, or partner arrangements; may reduce spending or delay product launches if funding is not secured.