EMERGE Commerce (ECOM) Q3 2024 earnings summary

Executive summary

• Q3 2024 marked the third quarter of reporting with a streamlined business focused on truLOCAL and the golf vertical, following the sale of non-core businesses to pay down debt in 2023 and early 2024.

• EMERGE Commerce operates a premium e-commerce portfolio focused on grocery and golf verticals in Canada and the U.S., with a $20M annual revenue run rate and 32 employees as of Q3 2024.

• GMS grew 10% year-over-year to $7.4M, the highest growth rate of the year, and revenue increased 5% to $4.6M, with 8% organic growth excluding Carnivore Club.

• The company achieved its second consecutive quarter of positive organic revenue growth and improved profitability, with adjusted EBITDA loss narrowing to $(0.28M) from $(0.56M) YoY.

• Key brands include truLOCAL (premium meat subscription), Carnivore Club, UnderPar (golf experiences), and JustGolfStuff (golf products/apparel).

Financial highlights

• GMS for Q3 2024 was $7.4M, up from $6.8M in Q3 2023; revenue was $4.6M, up from $4.4M.

• Gross profit improved to $1.8M from $1.7M, with gross margin rising to 39.3% from 38.9% YoY.

• Adjusted EBITDA loss reduced to $(0.28M) from $(0.56M) YoY.

• Net loss from continuing operations was $(0.74M), down from $(0.78M) in Q3 2023.

• Cash on hand at September 30, 2024, was $1.6M.

Outlook and guidance

• Management expects the $500,000 in annualized cost reductions actioned in Q3 and early Q4 to positively impact Q4 and 2025 profitability, with full impact expected in Q1 2025.

• The company is focused on driving organic growth, operational efficiencies, and reducing interest expense.

• Q4, the peak holiday season, is expected to be the strongest quarter.

• Plans to pursue tuck-in acquisitions in 2025 and beyond, with no additional debt to be incurred for future acquisitions.

• A directional annual revenue run rate baseline is around $20M, based on the past three quarters.