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spk02: Good day, thank you for standing by, and welcome to the Ethereum Inc. Q3 Earnings Report Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. Thank you. I would now like to hand the conference over to your speaker today, Mr. Ilya Gazovsky, Director of Investor Relations and Corporate Development. The floor is yours.
spk06: Thank you for joining us today to discuss Atarian's third quarter 2021 earnings results. On today's call are Yaniv Sarig, co-founder and CEO, and Arturo Rodriguez, our Chief Financial Officer. Copy of today's press release is available on the investor relations section of Atarian's website at atarian.io. I would like to remind you that certain statements we will make in this presentation are forward-looking statements, and these forward-looking statements reflect Atarian's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Atarian's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made on this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included on our third quarter earnings release as well as our filings with the SEC. Thank you. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, the company may refer to certain non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today. With that, I will turn the call over to Yannick.
spk04: Thank you. and thank you everyone for joining us today. Our third quarter was marked by continued global supply chain disruptions and pressure on our business due to soaring costs of everything from raw material to international shipping rates. At Ethereum, we take on many challenges daily, including supply chain infrastructure, product and brand launches, M&A integration, global expansion, and software development. But above all the things we build, we cultivate a relentless culture of growth and adaptability that will comes obstacles and views failures as stepping stones on our path to building a leading consumer product platform. We welcome challenges as opportunities to strengthen our business and adapt properly to reap the benefits often left in the wake of a crisis. In this past quarter, it brought an opportunity to improve our supply chain resilience by adapting how we move shipping containers from our manufacturers to our fulfillment centers. I want to thank our logistics teams for their perseverance, their ability to create strategic relationships with our logistics partners, I'm glad to share that we've specifically seen Amazon stepping in to assist us and its ecosystem of third-party sellers in general, and we're very grateful for their help to Ethereum. Thanks to various programs provided to us by Amazon Global Logistics, we've been able to secure very competitive shipping rates for approximately 50% of our projected revenue in the next 12 months. We also secured reduced rates with Flexport and XPO, two other partners on the logistics side, as well as some other manufacturing partners in China, which have helped us leverage their relationships with Chinese shipping companies. In addition to securing better rates for shipping, we ran an intense three-month process to rebuild our internal plan around an optimized manufacturing and shipping strategy designed to mitigate additional disruptions going into next year. In parallel, we reached an agreement with our lender to reduce our debt facility from $92 million to $25 million. These important processes were left directly by myself under an all hands on deck mentality and overseen by the board of directors. I want to take the opportunity to thank our entire team for all the hard work that went into mitigating the impact of the global supply chain disruptions on our company. We presented to our board a strong yet conservative base internal plan that we feel can drive sustainable growth for the company. It's important to emphasize that while some aspects of the plan are still being worked on and not yet finalized, we believe that the most challenging parts are behind us. We're closely following the impact of the supply chain crisis on our competitors. While we consider ourselves to have a high degree of sportsmanship, and we wish many of our competitors a lot of success with navigating the current shipping crisis, we're also excited by our belief that there will be ample consolidation opportunities on the other side of this crisis. We believe that excluding any kind of black swan events we can foresee, we should soon be in a strong position to reignite our M&A strategy. As of today, Approximately $10 billion in total have been invested into aggregators looking to build a leading e-commerce platform for consumer brands and marketplaces. In the third quarter alone, aggregator raised approximately $1.2 billion. We're really excited to see that the investment community is paying attention to a vision we pioneered in 2014. And we continue to believe that our years of investment in infrastructure, technology, and expertise put us ahead of the pack with regards to execution. Most of our competitors have financially engineered access to abundant low-cost capital, but have not treated the efficiency required for long-term sustainable execution at scale. One data point that investors should pay close attention to when evaluating the execution of companies in the space is revenue per employee. Ethereum's revenue per employee is approximately $1 million based on our current TTM results, and that is a direct result of our investment in our software platform and agile supply chain infrastructure. In the long term, we believe that proprietary technology to automate the tedious manual processes performed by target SMB brands being aggregated is critical for the model to succeed. As the macro environment around supply chain normalizes and the dust settles, it will become important for us to continue to push our M&A strategy forward in 2022 and beyond. We'll speak in more detail about our strategy for 2022, and we'll have some exciting new initiatives to share with our shareholders in the next few months. Directionally, our priorities include diversifying our own and operated brands by looking at launching more products and leveraging supply chains based in the U.S., South America, and Eastern Europe. We're also going to put a lot of focus on organic growth through additional channels, direct-to-consumer sales through our websites and international expansion. We've heard concerns from certain investors regarding the organic growth for our core business. It's important to remind those who started to follow us more recently that before we started investing in our M&A strategy, we grew the business organically through launching products at a CAGR of 50% between 2017 and 2020. Like many other e-commerce companies, our sales were boosted in 2020 by the COVID-19 pandemic. Likewise, we've suffered from a decline in the growth of our organic business in 2021 as compared to 2020. Amazon itself saw a similar disappointing effect this year as a combination of reopening the traditional brick-and-mortar retail, increasing shipping costs, inflation, and tapering of government assistance created a perfect storm for e-commerce when comparing sales year-over-year results. It's been very challenging to generate growth organically in 2021, especially when compared to the previous year and the dramatic shift in the macro-level environment. At the same time, it's important to realize that most of our competitors are dealing with similar issues. Although our core organic businesses are uniquely impacted because it is led by several oversized items who have been more adversely impacted by the shipping costs and smaller products, in the long term, we strongly believe that our investment in our proprietary fulfillment network gives us a strategic advantage in categories dominated by oversized goods. Our organic business, as well as our recent acquisitions, have a strong baseline of products that will allow us to continue to build and grow our brand over many years through continuous investment in challenge expansion and additional products. This past quarter, we also made a decision to open to the seller community our internal affiliate platform called DealMojo. In the past few years, we've seen web publishers take a bigger role in the e-commerce ecosystem as they invest in content designed to promote products and channels such as Amazon and Walmart. Typically, these publishers benefit from affiliate marketing revenue paid by the online retail platforms directly. As a large seller ourselves, we felt that streamlining collaboration with publishers around discovering opportunities to promote products was an important part of our holistic e-commerce strategy. DealModule was designed to allow us to promote our product to publishers and offer them potential leads additional revenue share for creating content that drives sales for our products. Today, we're already working through the platform with several publishers with a total aggregate monthly traffic of more than 300 million monthly visitors. We believe that making the platform available to other third-party sellers will allow us to further scale the number of publishers and influencers using it and benefit ourselves by generating additional revenue stream for us. In the short term, most of the revenue driven by Dealmojo will be reflected in the sales of our own products. Ethereum continues to push forward our ambitious vision, and we have a lot more work to do. This is a marathon, not a sprint, and we believe we're turning another corner on our way to become the leading consumer product platform in e-commerce. With that, I'll pass it on to Ari to walk you through the financial results of the quarter.
spk09: Thanks, Genevieve, and good day, everyone. Here are the financial performance details of our third quarter. For the third quarter of 2021, net revenue increased 16% to $68.1 million and from $58.8 million in the year-ago quarter, from an increase in net revenue from our acquisitions, offset primarily by a decrease in our organic business, net revenue and reduction in wholesale net revenue. The current quarter net revenue of $68.1 million is comprised of $35.4 million of our organic business, which is the revenue from our built brands and acquired brands after one year of purchase, $30.7 million of net revenues from our mergers and acquisitions, wholesale of $1.9 million, and $0.1 million of our past business. The year-ago quarter net revenue of $58.8 million was comprised of $46.9 million of organic business, $1.4 million of net revenue from our mergers and acquisitions, $10 million of wholesale, which was predominantly PPE, and $0.3 million of pass. As a reminder, our first material acquisition happened in the third quarter of 2020. The decrease in organic business of $11.5 million is related to a decrease in our sustained phase products of approximately 11.1 million to 29.1 million from 40.2 million when excluding M&A revenue, due to an increased pricing of our products affected by global supply chain disruptions, which has led to reduced sales velocity, the opening of retail and changing consumer habits in the initial phase of COVID-19's reopening, and impact from products which sold well during the initial COVID-19 phase last year. but did not have the same repeat performance due to demand on pricing, which represents approximately $5 million of the $11.5 million decrease. Our organic business also saw a slight increase in launch phase revenue of $0.3 million to $5.3 million. We launched zero products in this quarter versus eight in last year's quarter. Year-to-date, we have launched 40 products versus 32 the same prior year-to-date period. Even though the rate of year-to-date product launches grew, we did not have the same success as market conditions and our need to raise pricing due to supply chain disruptions has led to a decrease in demand and performance of certain of our recently introduced products. This has also led our products staying longer in their launch phase than originally planned. As mentioned previously, we have decided to pause the launching of our products for the time being until supply chain normalizes. RM&A revenue of $30.7 million is in line with expectations for SMASH and PPD and squatty potty outside of the seasonality and the timing of the closing of those acquisitions. As previously mentioned, Healing Solutions is off our expectations due to supply chain difficulties and our shift from seller's manufacturer's capabilities to new third-party vendors as previously planned. That said, we are still pleased with Healing Solutions' acquisition and the long-term strength of its brand and product. We still believe the upfront purchase price falls within an accessible acquisition purchase multiple. Finally, on net revenue, we suffered from inventory shorts in the quarter, which we estimate to be an impact of approximately $3 million in the current period as compared to inventory shorts of approximately $7 million the prior year-ago period. Overall, gross margin for the third quarter increased to 50.2% from 47.8% in the year-ago quarter and increased from 48.0% in Q2 2021. The quarter-over-sequential quarter increase in gross margin is primarily due to product mix and pricing. Our gross margin improvement versus last year is predominantly in the favorable product mix from the inclusion of our acquired brands pursuant to M&A. We believe the increased cost of shipping containers impacted our gross margin by approximately 1.5% in the third quarter alone. We expect to see a slightly larger impact in Q4. Our overall Q3 2021 contribution margin is 12.1% when excluding non-cash charges from inventory step-up impacts from our acquisitions, which decreased compared to a prior year CM of 19.1%. Within CM, our sales and distribution costs were negatively impacted by global supply chain disruptions, which drove higher costs than last-minute mile fulfillment given the carry tightness in the quarter. Our Q3 variable sales and distribution expenses as a percentage of net revenue increased to 39.4% as compared to 28.7% in the year-ago quarter. We expect to see these impacts continue in the current quarter. Q3 2021 saw our sustained products contribute margin – apologies – Q3 2020 saw our sustained products contribution margin decrease to 15.9% versus 23.6% in Q3 2020. Outside of the action items discussed, we believe we'll continue to see CM pressures for the remainder of 2021 due to global supply chain disruptions and increased last-mile costs. Adjusting EBIT as defined in our earnings release for the third quarter of 2021 was $0.7 million compared to $5.1 million in the third quarter of 2020. Our operating loss for the quarter includes $9.6 million of stock-based compensation expense and also includes income from change and fair value contingent liabilities of $4.3 million, which is primarily related to a decrease in the share price at September 30th versus June 30th, 2021. Our net loss for the quarter has been impacted by our equitization of the majority of the high-trail debt, leading to a distinguishing loss of $107 million, offset by income from our change in warrant valuations due to stock price fluctuations of $8.1 million. Turning to the balance sheet, as of September 30th, we had cash of $37.5 million compared to $61.9 million at the end of June 30th. The decrease in cash is predominantly driven by previously reported $10 million cash payment to our lender, cash net loss, and working capital. As we previously disclosed, in order to navigate through the global supply chain disruption, we will need to increase our inventory on hand and purchase inventory earlier than initially anticipated. This will put pressure on our minimum equity requirements during the early part of 2022 as we build for our summer 2022 seasonal products, such as ACs and humidifiers. As previously mentioned, we equitized the majority of our high-trail debt by issuing approximately 9.3 million shares on September 23rd, under the terms of the loan agreement, leaving $25 million in loan debt with a bullet maturity in April 2023. We are in compliance with all our covenants as of September 30th. We continue to be impacted by COVID-19 and the global supply chain disruptions, and while we believe that these issues are temporary, they cause us to have diminished visibility in our ability to forecast our results. We will resume giving guidance as soon as the visibility improves. Having said that, our fourth quarter is our third strongest quarter, and we believe the fourth quarter will have revenues closer to $60 million. In closing, our business has been impacted by the global supply chain disruptions, and our year-over-year figures are against the very difficult COVID-19 comparables in a uniquely difficult environment. As previously stated, our organic products continue to be some of the best sellers on Amazon. We have a very strong organic brand and product portfolio. Overall, our acquired brands and products have performed well, and we remain confident in their future successes. We believe the current pressure on the profitability is acutely related to the global supply chain disruption. The actions we have taken and continue to progress are key for us to help navigate through this difficult environment and will help direct us back towards profitability. For example, assuming 2020 normative contribution margins, which we still believe could be achieved in the future, And with our typical disclosed adjustments, the company believes its Q3 2021 adjusted EBITDA would be similar, if not better, than the prior year's figure. Although we have been impacted by the COVID-19 pandemic and the related global supply chain disruptions, we continue to be very confident and proud of our business, one that we've built. We're proud of our products, both organic and acquired, our technology, our logistic network, and most importantly, our dedicated and hardworking people across the globe. Together, we believe Ethereum will overcome these challenges and continue to be a leader in our industry. With that, I'll turn it to the operator to open the call to questions.
spk02: As a reminder, to ask a question, you will need to press star 1 on your telephone keypad. Again, that is star 1 on your telephone keypad. To withdraw your question, you may press the pound key. Your first question comes from the line of Brian Nagel from Oppenheimer. Your line is now open.
spk03: Hey, guys. Good evening. Good evening. Thanks for all the detail. So a couple questions here. Look, a nice rebound, the beginnings of a rebound in business here in the third quarter versus Q2. So the first question I have, and recognizing you're not giving official guidance, but given the trajectory we've seen here, I mean, how should we think about just the continued rebound on the heels of a lot of the internal actions you've taken to stabilize the business over the last few months, even several weeks into year end?
spk04: Yeah, Brian, thanks for the question. I'll speak a little bit of it and then I'll kind of probably revert to Artie also. But in general, look, I mean, this quarter was all about stabilization and bringing back the business to as healthy as it can possibly be while the storm still rages, right? The storm is not completely gone, right? I think everyone is holding their breath a little bit to understand is there going to be another COVID wave, another impact coming, and we've taken every possible measure that I think we could have, where we can control to get through that, I believe, as well as possible. Again, unbeknownst to me, any type of other Black Swan event that could still happen, but we really think that we've done everything in our power and worked extremely hard in the last few months to get to a place that we're happy with and is stable, right? You know, so in general, I think we're being cautious until the storm completely passes. We're convinced that it will, right? We're convinced that it's just a matter of time before the last potential wave here and other, you know, there's a stabilization that will happen to the supply chains over time. And so that's, you know, we approach this with a lot of caution and just setting up the ground for future growth, right? Artie, do you want to add more to this?
spk09: Yeah, and I think, Brian, you know, I mentioned in what I said there is I think Q4 is typically our third strongest quarter. So you always see a little bit of a step down from Q3. So I think in some aspects, you know, lower range revenue is 60 is what kind of we pointed to. And listen, I think from a timing of how we ingested our goods and containers, you'll see a little bit maybe of a softer CM than we saw in this previous quarter just because of timing. But that said, you know, we're still very excited in the sense of what Q4 has in front of us. It's our first Christmas season with, sorry, holiday season with Smash and Healing Solutions and a few others. So we're still very optimistic that, you know, it's still going to be a good season even though we're going through the storm. Okay, that's helpful.
spk03: Just a follow-up question. I mean, also kind of generally bigger picture in nature, but we're talking mostly about the supply chain issues and the shipping costs and how you've more successful here lately navigate through those. What are you seeing from a demand perspective? So as we look across consumer, as you're pulling away from the COVID crisis lease here in the United States, you know, there has been this trend for some type of trend where consumers are returning to stores, you know, that's impacted some of the online only players. So what do you see behind all the supply chain? What do you see from a demand perspective?
spk04: And Brian, thanks for the question. You know, I think in general, um, there's a lot of factors here that are not always easy to take into account, right? Obviously, at the macro level, between government subsidizing, you know, a lot of the buying power that we've seen, I think, in 2020, plus the reopening, not just of stores, but also of travel. There's a lot of factors that play here. Overall, you know, we're very convinced that e-commerce is just starting, right, and it's not going to stop growing anytime soon. As we look at the scope of a of the marathon that we're on, right? Nothing has changed from our perspective. And there's maybe some, you know, waves and, you know, currents that are changing direction recently, but they're, from our perspective, you know, they look like blips on the radar, right? In the long term, we believe e-commerce is going to continue to be, continues to be acceleration in terms of adoption and growth, and that we're extremely well positioned to benefit from that in the long term, right? And so what happens to the men in the short term it's complicated because it's across different categories. You'll see different behaviors that can probably be explained by, again, a lot of the macro-level events. But we're focusing, I guess, on the longer term, right, and how do we set ourselves up for success in 2022 and beyond. And I think that's the work that we've been doing the last few months. Artie, I don't know if you want to add anything on that, but I think that's the best I can give in terms of like immediate. Yep. Thanks.
spk03: All right, guys. Well, I appreciate it. Thank you.
spk04: Thanks, Brian. Thanks, Brian.
spk02: Your next question comes from the line of Matt Caranda from Roth Capital. You may ask your question.
spk07: Hey, guys. This is Mike Zabrin on for Matt Caranda. Thanks for taking the questions. So in terms of handling shipping costs on a go-forward basis, last quarter you guys highlighted average cost per container peaking out about $20,000, and now you're highlighting – having secured competitive shipping rates, could you help us try to quantify what exactly those competitive rates are and how to think about those in terms of gross margin?
spk04: Yes. So, you know, although, you know, we talk about certain partners on the logistics sides that have been quite helpful and, you know, I'm sure they've been helpful to a lot of other companies, it's tough for us to share exactly, you know, what price we pay for competitive reasons. But we're very, very happy given the macro level environment on how competitive the rates are. And, you know, again, we believe that the relationship we've built with these companies over time has been an incredibly important piece of getting this done right in this quarter. And so, again, tough for us to really share the numbers because of competitive reasons, but we're very satisfied given all the macro level events that are surrounding us with but the recent prices we've been paying, I would say.
spk07: Got it. Yeah, that's fair. Could you guys also talk about your sort of plan of attack and how you're thinking about FBA aggregation and the restart there, given the amount of cash on hand and what you anticipate being the source of funds for M&A activity on a go-forward basis?
spk04: Sure. So, yeah, so, look, I mean, I think as I said earlier, right, we think the storm is not completely past, but We, again, want to believe, depending on any type of Black Swan event we can foresee, that the worst is behind us and we've taken the right steps to prepare the company to go back on its growth path on the M&A side. I think that also on the other side of the storm, as I mentioned also in my remarks earlier, I think there will be a lot of opportunities because obviously a lot of other companies have been affected by I believe there's opportunities to consolidate a lot of the industry, and we're just setting ourselves up, again, in the context of the marathon, right, for that to be something that we will pounce on as soon as the stability of the supply chain is restored, which is tough for us to do, is to go out there and try to execute on this, you know, before we have good clarity on the stability of that supply chain. Otherwise, you know, those deals can also burden further, right? And then in terms of the sources of capital, you know, Again, obviously when it comes to M&A, if it comes to M&A, we'll definitely need additional capital to do that. There's no doubt. But I think that overall, if you look at the industry and if you look at the amount of interest and the amount of excitement that there is in the investment community for the aggregator business model, You know, I believe that once the supply chain crisis is past us, a lot of investors, I hope, will realize that we are one of the best set companies to execute on this. And I think that it will give us a lot of opportunity, hopefully, to pursue those type of deals.
spk07: That makes sense. Thanks, guys.
spk04: Thank you.
spk02: Your next question comes from the line of Brian from Alliance Global Partners. You may ask your question.
spk08: Great. Thanks so much for taking my questions. Great to see profitability return quicker than we all thought. First, can you maybe talk about in terms of the shipping containers that you're getting through partners like Amazon, was there a benefit to the margin profile in the third quarter And will it be much more of a benefit down the road as some of that inventory turns? Is it turning quickly? I'm just trying to get a sense for how much of the better than expected bottom line results was because of that, or if it's a much bigger impact in quarters in the future.
spk04: Yeah, Artie, do you want to address that? Yeah. Yeah.
spk09: Yeah, Yaniv, I could address that. I would say that, you know, the rates that we've been able to achieve and the deals that we've gotten with these partners have been great. I think that's kind of a bigger impact as we approach 2022. And just for the timing of containers, keep in mind, you know, it's taking like over 90 days to get your goods in. So the reality is if I'm booking a container today, the goods aren't coming in until January, right, rough math, right, or something like that. So definitely the things and the impacts that we've secured is more of a focus towards 2022. If that answers your question?
spk08: Of course. Yep, that's great. It means that you did better without that benefit really yet. And then I'm curious, as you're able to secure these lower-priced shipping containers, I mean, it opens up so much for you. So I'm curious how that changes management's timing and strategy on new SKU launches. Do you think three to six months from now that might be the timing if things hold or stabilize? Or is it a longer time frame to think about SKU launches, again, in the context of the economics being better on shipping containers?
spk04: That's a great question. And, you know, the important thing to remember is Having a stable price that you can plan correctly, the P&L of your product and the amount of marketing dollars that are going to go into launching it and all these other factors is critical to the business model. It's not just about the price. It's not just about getting the P&L right. The timing is also very important. There's still a lot of delays and complexities around getting goods on time. And that can have a pretty meaningful effect, especially when a launch does well. You need to have continuity to preserve the success that it had. And so, you know, as you mentioned, it will take some time before we feel comfortable to be in a place to launch a lot of products. We, you know, there's exceptions here and there where we're looking at it again, as I said, also in my previous remarks, right? There's other potential tests that we can do with supply chains coming from other geographies. But at a high level, I'd say that we should expect to see us going back to launching products in a meaningful way once the stability comes back. Because before that, it's just too risky to go and invest in something that doesn't really materialize as you expect, right? Does that make sense?
spk08: Yep, absolutely. One more. Thanks. And then I'll get back in the queue. I'm not sure I wrote down the numbers fast enough. I think you touched on it. But can you talk about the pricing trends in the past? You've and others have talked about not being able to increase as fast as either components increase or containers are increasing the prices because you don't want to get too far ahead of the market to price yourself out. So, A, talk about the pricing increases you've been able to achieve maybe over the last three to six months, and, you know, how do you see that going forward?
spk04: Yeah, and I think it's another very good question. It's a very delicate, you know, part of the business, right? As we explained, I think, in previous calls as well, right? We need to obviously increase our prices, and we've done that, but the sensitivity around it is you can out-price out of the market if other competitors, for example, might have longer inventory at a lower-cost basis and really hurt your long-term market share and performance in the marketplace, which is very important in our model. The good news, as we mentioned also in the past, is that we believe that overall we've been able to kind of find that middle ground between increases pricing too much and losing too much market share, which is obviously a dangerous thing, versus finding kind of that sweet spot where you're getting not the margin you wanted, but enough margin to sustain the business without losing market share. And I think overall we've done quite well navigating through the storm around that. We're also seeing a little bit of starting to see upward pressure on competitors here and there, and it's very difficult to say exactly what's going to happen. We can't predict that, so we're taking a conservative view on things. But overall, I think that we've done somewhat quite well, all things considered, in terms of navigating that thought.
spk08: Great. Thanks so much, guys. Thank you.
spk02: Your next question comes from the line of Victoria James from D.A. Davidson. You may ask your question.
spk01: Thanks for taking my call. So my question is, what are your current thoughts on your capital structure, and are we past the point of needing to issue additional shares to pay down debt?
spk04: Yeah. So, you know, Artie, I'll let you take that, and maybe I'll add a few more thoughts in the end. But, Artie, why don't you give us your thoughts on this?
spk09: Sure. Thanks, Yaniv. Yeah, listen, we did a lot of work. We're down to $25 million in debt, and we're in compliance with our covenant. I think at these levels of debt, we've made significant progress on our debt leverage, and the equitization is behind us. That said, I think We're working and we continue to work on ways to improve our debt profile over time. That's been the plan and continues to be the long-term plan. I think we'll continue to move forward on that. If something moves on that, we'll update accordingly.
spk01: Thank you.
spk04: Does that answer the question or do you want any more details?
spk02: We'll proceed to the next question with the line of Marvin Fong from BTIG. Your line is now open.
spk05: Great. Good evening, everyone. I apologize. I only hopped on the call a few minutes ago. But just curious, even if you've mentioned it already, perhaps you could expand on just the M&A side of the business. You know, we've seen more capital raising from some of the big players just recently. your thoughts about that side of the business and how active you might be in terms of pipeline. And a second part to that question, I saw that there was an earn-out earned by Squatty Potty. Maybe you could update us on how that transaction has been doing and any of the other recent transactions. Thank you.
spk04: Yep. Thanks. Yeah, so, Marvin, as we mentioned, And also earlier, right now, M&A is on pause until the supply chain crisis passes by, that storm passes by, and we see stability again. Otherwise, there's definitely a chance of encumbering the company even further with M&A that is not performing as we expect, even the pressure of the supply chain costs, right? So for now, that's on pause. As I said earlier as well, we're very excited about being on the other side of the storm because we think the opportunities are going to be immense. And I think, as you mentioned, In the private equity world, a lot of capital has been raised, I believe, by other companies in the same mindset to go after additional M&A acquisitions. And again, I think that the market itself will probably create better opportunities for us to do so as well as the risk of the supply chain crisis is removed. And Ethereum is, again, in a great position to go and execute because You know, going back again to what you said, right, a lot of these companies out there raising a lot of money are very early-stage companies, and I think they're all benefiting from a lot of the excitement that's going on. At the end of the day, I continue to believe that we're the best at executing on this vision, and we have more experience, we're more battle-tested, and have more infrastructure, and have taken a different approach that I think is going to be, in the long term, the winning approach. And so... Time will tell if we're right, but we're very, very excited on what's on the other side of this and reigniting the M&A strategy as soon as the market conditions permit, right? And so you had the second piece of your question on Squatty Potty, right? That was the second piece. Yeah.
spk05: Go ahead. Yeah, I think you got the question. Go ahead.
spk04: Yeah, so yeah, so Squatty Potty doing really well from our perspective and you know, and we'll continue to invest and continue to think about how to continue to scale and grow it, but we're happy with the acquisition. You know, again, overall, given all, you know, the different factors, right, Smash, Wadipati, PPD are doing quite well. Healing Solutions, as already mentioned, you know, a little bit hindered also by some supply chain issues, but overall, we're really happy with the basis of that brand and think it has enormous potential. And as we mentioned earlier, Truero really is the one acquisition that has gone not the way we wanted, obviously for reasons that we explained with issues there that we're still trying to solve. But overall, again, when I look at all the conditions and all the different macro-level things that affect the brands that we acquired, we're quite happy with the performance and believe there's enormous opportunity in the long term for these brands.
spk05: Great. I'll take the rest of my questions offline. Thanks so much, Indy.
spk04: Thank you, Marvin.
spk02: Again, to ask a question, please press star 1 on your telephone keypad. Again, that is star 1 on your telephone keypad.
spk06: It looks like we have no further questions on the line. So as part of our recently launched shareholder perks program, which investors can sign up for at etarian.io slash perks. Participants have the option to ask management questions on our earnings call. I wanted to thank all of the shareholder perks participants for their loyalty and their questions. I've picked a few relevant questions that they have asked. This one looks like it's for you, Yaniv. Please update us on your platform as a service efforts.
spk04: Thanks, Ilya. As we said also in earlier calls, we recently have been focusing our platform as a service solution around brand carrying oversized products, specifically larger brands that are looking to potentially transition from vendor to seller. And as we mentioned earlier, so far it's showing a lot of promise and I think the few clients that we have are overall quite happy with it. We definitely are going to want to continue to invest in it. At this point, the resources are still limited, but very promising results at this point there. And again, you know, in the longer term, definitely we'll look to continue to invest in that side of the business.
spk06: Thanks. Another question that came in was, what is the outlook for international sales and what regions do you find most interesting?
spk04: Yeah, so we've started expanding into Europe, but also those efforts have been somewhat put on hold because of the supply chain crisis affecting that region of the world as well, potentially even more than the U.S. But in general, I think with the amount of work we've already done, Europe is probably the top priority for us. And it's definitely something that we'd like to see continue to accelerate in 2022 as the supply chain crisis unfolds, hopefully. But in general, you know, there is opportunity around the world, beyond Europe. I believe that, you know, in China, India, Japan, big e-commerce markets that have a lot of potential where we can replicate our strategy. So in the long term, we will look at these as well. But for now, the focus is on Europe.
spk06: Great. And then last question from the PERCS program. Do you need the share price to be at a certain level to resume M&A?
spk04: Yeah, so, of course, you know, we're on the M&A side, you know, in general, large deals, of course, you know, we're going to be holding off and really be opportunistic, right? We've previously seen that, you know, if smaller companies are excited about potentially leveraging our shares, right, that that's something that we could potentially look at. But at this point, you know, again, we're taking this approach cautiously, and we're going to continue the M&A when the conditions arise.
spk06: Great. That's it from the PERC side. And thank you to all the participants for joining us on the call today. In terms of the upcoming calendar, Atarian Management will be participating in the 10th Annual Roth Technology Conference on November 17th and 18th. and the 10th Annual Roth Deer Valley Conference, December 8th to 11th. We look forward to speaking with you on future calls. This ends our call. You may now disconnect. Thank you.
spk02: That concludes this conference call. Thank you all for participating. You may now disconnect.
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