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spk01: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chromadex Corporation third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. We ask that you please limit yourself to one question and one follow-up. I would now like to turn the conference over to Kendall Knish, Head of Public Relations and Partnerships. Please go ahead.
spk08: Thank you. Good afternoon, and welcome to Chromadex Corporation's third quarter 2023 results investor call. With us today are Chromadex's Chief Executive Officer, Rob Fried, Chief Financial Officer, Brianna Gerber, and Senior Vice President of Scientific and Regulatory Affairs, Dr. Andrew Hsiao, who will join the call for Q&A. Today's conference call may include forward-looking statements, including statements related to Chromadex's research and development and clinical trial plans and the timing and results of such trials, the timing of future regulatory filing, the expansion of the sale of TruNiagen in new markets, business development opportunities, future financial results, cash needs, operating performance, investor interests, and business prospects and opportunities, as well as anticipated results of operations. Forward-looking statements represent only the company's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause Chromadex's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These risk factors include those contained in Chromadex's quarterly report on Form 10-Q, most recently filed with the SEC, including results of operations, financial condition, cash flows, as well as global market and economic conditions on our business. Please note that the company assumes no obligation to update any forward-looking statements after the date of this conference call to conform with the forward-looking statement's actual results or to changes in its expectations. In addition, Certain of the financial information presented in this call references non-GAAP financial measures. The company's earnings presentation and earnings press release, which were issued this afternoon and are available on the company's website, present reconciliation to the appropriate GAAP measures. Finally, this conference call is being recorded via webcast. The webcast will be available at the Investor Relations section of our website at www.chromadex.com. With that, it is now my pleasure to turn the call over to our Chief Executive Officer, Rob Fried.
spk04: Thanks, Kendall. Good afternoon, everyone, and thank you for joining us on today's investor call. For the third quarter, we delivered another solid quarter with $19.5 million in revenue, a 14% increase year over year, coupled with another quarter of positive adjusted EBITDA of $500,000, and net positive operating cash flow of $400,000. Year-to-date revenues are up 22%, and we have generated $6.5 million of positive cash flow from operations. We ended the third quarter with $26.8 million in cash and no debt. These continued achievements are a testament to our commitment in maintaining fiscal discipline and in driving profitable growth for the business. The e-commerce business continues to be our largest and most consistent source of revenue. E-commerce net revenue is up 13% year over year as our marketing team continues to focus on initiatives and campaigns that drive direct and efficient returns. For the total company, sales and marketing expense was 31% of net revenues, which was down sequentially and a significant reduction from 34.4% in the prior year quarter. We recognize that building a strong subscription base on our own website is critical to driving long-term customer value, and we have identified important fundamental changes to rebuild this growth engine for the business. To deliver on this key objective for 2024, We will look to increase resources to optimize our retention strategy, our content, and our social media presence beginning in the fourth quarter. We will also look to increase resources to support the launch of new innovations in 2024. Of course, with any transition, it will take time for the improvements in strategy and execution to be reflected in the net revenues and further efficiencies. We remain committed to being disciplined in our investments And we believe that the resources we are investing in will amplify our message and our vision that Chromadex is the gold standard in the NAD space and TruNigin continues to be the best NAD product on the market. Turning to our strategic partnerships, Watson's remains a strong contributor to growth with third quarter revenues of $3.1 million, a 19% increase year over year. As I mentioned last quarter, Watson's has been promoting the stacking concept, which involves combining true nitrogen with true nitrogen immune and or true nitrogen beauty. This continues to be an effective message for consumers. We're exploring the opportunity to better implement the stacking concept in other markets to similarly promote the true nitrogen immune product. The partnership with Sinopharm in China remains one of great opportunity and importance. The process to pursue Blue Hat approval continues to take longer than anticipated, but that is not stopping our teams from continuing to work closely with Sinopharm to execute campaigns and initiatives to capture the market opportunity in the country. Encouragingly, last month, TruNiogen was featured as the best NR supplement in 2023, in an article through Health Products Association China. Last quarter, I highlighted our new partnership with iHerb. While the partnership is still in the early stages of growth, we have been pleased with the performance so far. As expected, around 80% of TrueNides in sales through iHerb have been to international consumers. We continue to be optimistic in the partnership with iHerb, to drive expanded international presence for TruNiagen and are actively working with them on campaigns to feature our brand more prominently on the platform. With our Niagen ingredient partners, there are two significant milestones I'd like to announce. First, we are partnering with Zesty Paws, the number one selling pet supplement brand in the U.S., to make Niagen available to benefit the healthy aging for dogs with the launch of the Healthy Aging NAD Plus Precursor. We are proud to partner with Zesty Paws to extend the benefit of Niogen to all members of our families, including our canine companions. As the global authority on NAD and healthy aging research, this is a breakthrough in the company's mission to improve as many lives as possible with the transformative power of Niogen. While we are in the early stages of the first product launch, we look forward to future innovations in the pet supplement space in partnership with Zesty Paws, who placed the second order of Niagen last month. Second, Nestle Health Science launched its Solgar cellular nutrition line of supplements, featuring a multi-ingredient product that incorporates Niagen to support cell energy repair and vitality. The cellular energy product combines Niagen with sources of vitamin C and B to support energy metabolism, immune heart, and nerve health. It is inspiring and encouraging to continue to work with the passionate teams at Nestle to launch innovative products to optimize cellular health and promote longevity. I look forward to announcing future innovative product launches under the Nestle Health Science portfolio of well-known brands. And finally, we are pleased to announce the launch of our TruNiagen Pro 1000 milligram product line, introducing a clinical strength dose. that empowers consumers to improve their NAD levels in a more efficient and more efficacious way. Among published clinical studies to date, the most extensively researched daily dose of Niagen is 1,000 milligrams, with 2,000 milligrams as the highest dose with established safety. 1,000 milligram dosage has been clinically proven to be safe, elevating NAD levels up to 150% after just two weeks. compared to 40 to 50% improvement in NAD levels with the 300 milligram daily dosage. We're excited to introduce this new addition to our product portfolio, aimed at consumers looking to take aging into their own hands and improve their livelihoods. Cromadex continues to be in its strongest financial position to date, and we're building momentum toward growth opportunities. While certain commercial opportunities are taking more time to unlock, I am impressed with the progress in our innovation pipeline. Brianna will touch on the updated outlook for 2023, but I am increasingly confident that we are setting the stage for further growth opportunities in 2024 and beyond. We are building on our powerful scientific foundation as the world's leading NAD company, maintaining our position as a paragon of scientific integrity. Through the Chromadex External Research Program, or SERP, We continue to foster our relationship of trust and integrity in the scientific community, and we continue to drive scientific innovation. Since our last update, four additional human trials on nicotinamide riboside have been registered, one of which I want to highlight. It aims to explore how NR affects the energy and immune-related features of specific immune cells, myeloid cells, in different populations. Inflammation, or the concept of inflammaging, remains an important area of research on how NR can play an active and beneficial role in reducing inflammation as a healthy aging benefit. In August, the results of a clinical study published in the peer-reviewed journal Cell Reports indicated that NR was successful in reducing inflammation in both healthy subjects and in cells derived from psoriasis patients. This marks a significant achievement in NAD research as it further validates NR as a proactive safeguard against inflammatory cytokines in healthy individuals and in those with inflammation-related disorders. To further emphasize the magnitude of this study, Helio, a leading medical media company and trusted platform physicians and healthcare professionals, featured the results of the study along with commentary from Dr. Charles Brenner. In addition, The results of a clinical study that investigated the safety benefits of long-term NR supplementation in individuals with ataxia, a rare genetic neurodegenerative disorder, were published in October. Previous studies have shown that NAD deficiency plays a role in disease mechanisms underlying DNA repair disorders, such as AT. The results of this clinical study build on those from a previously published short-term trial. and confirmed that long-term supplementation of NR was safe and well-tolerated and improved motor coordination and eye movements in the patients with AT of various ages. CERP remains committed to conducting research to uncover different ways Niagen can benefit consumers, including therapeutic benefits for consumers coping with different ailments. Today, we have announced two published peer-reviewed clinical studies on Parkinson's disease, by a group of researchers led by Dr. Tzouzoulis, one of our esteemed SERP investigators. A third study of Parkinson's disease by Dr. Tzouzoulis' lab was recently completed. This study investigated the safety of supplementing 3,000 milligrams per day of NR to PD patients, the highest dose studied to date. We eagerly await publication of the study results and are excited to share more. in future updates. At Chromadex, we continue to work with esteemed leaders in the field of aging. Earlier this year, we announced the appointment of leading aging and neurodegenerative disease researcher Dr. Wilhelm Bohr to our scientific advisory board. Dr. Bohr joins a distinguished board, which includes two chemistry Nobel Prize winners and Dr. Roger Kornberg and Professor Sir John Walker. and includes the world's foremost authority on NAD metabolism, Dr. Charles Brenner. In October, the National Academy of Medicine announced that Dr. Rudolph Tanzi, another member of our Scientific Advisory Board, was elected as a member of the Academy, recognizing his contributions as a pioneer and leader in research in Alzheimer's disease. We applaud this achievement as the election to the Academy is recognized as one of the highest honors in the field of health and medicine. We continue to defend our achievements and inventions and to take action to prevent infringement. As mentioned in our prior calls, last year we were granted a series of new critical patents, which in combination with existing IP and patents from W.R. Grace, who has supplied to Chromadex exclusively for the last decade, would protect our NRIP for at least the next decade. Last month, a jury in the U.S. District Court of Delaware decisively found that Elysium Health willfully infringed on WR Grace patents, protecting NR supplied exclusively to Chromadex. Additionally, I'm proud to announce that we have extended our 10-year collaboration with WR Grace to continue delivering the highest quality NAD precursor in the world. Finally, I want to briefly comment on the recent favorable decision to Chromadex in the U.S. District Court of Appeals in New York. The court affirmed that our settlement with Elysium is enforceable. We look forward to collecting the $2.5 million that Elysium owes, plus the terms of the settlement and putting this behind us. At Chromadex, we are all true believers and are extremely passionate about bringing NR to consumers in innovative ways to benefit their lives. The partnership with Zesty Paws, as I mentioned, is a start for our company to extend NR as a benefit beyond human supplementation. We also continue to have untapped potential in NAD precursors beyond NR, which are protected by Cromedex's deep intellectual property portfolio. Some of these novel NAD precursors may have significant prophylactic and therapeutic value in the pharmaceutical space. We will continue to use our position as the global authority in NAD science and as a trusted partner to researchers, regulatory authorities, and world-class business partners to drive innovation and improve as many lives as possible. While certain R&D innovations have been in development for quite some time and may take a little bit longer to commercialize, we are excited as we look to the future. We look forward to sharing more details on future updates. I would now like to turn the call over to Brianna to discuss the quarter's results in more detail, and then on to Q&A and closing remarks. Brianna?
spk09: Thank you, Rob. Now that we've covered the broader strategic landscape and operational overview, I'm excited to delve into the specifics of our third quarter financial results, which showcase our commitment to balance top and bottom line growth and overall operational discipline. Highlighting the key metrics of our third quarter performance, Chromadex delivered total net sales of $19.5 million, up 14%, robust gross margins of 61.4%, a reduction in overall operating expenses, and a net loss of only $1 million. Additionally, our adjusted EBITDA, a non-GAAP metric, was a positive $0.5 million, a $1.7 million improvement year-over-year. Net sales are up 22% year-to-date with an adjusted EBITDA of $0.7 million and positive operating cash flow of $6.5 million. Our performance this quarter underscores our relentless pursuit of efficiency across the organization to position the business for sustainable growth and profitability. The consistent results we have achieved speak to the resilience of our business model, and we are proud of the progress we've made to date. With that, let's turn to the third quarter financials in more detail. As I said, total net sales in the third quarter of 2023 were up 14% year-over-year as compared to the third quarter of 2022, with a 19% increase in true Niagen, driven by 13% growth in e-commerce sales, fueled by continued growth on Amazon, including a strong performance on Prime Day, paired with 43% growth in combined Watsons and other B2B sales. Watson sales were higher year-over-year as the COVID-19 and macroeconomic challenges abated, coupled with reorders for Trinitin Immune, following a positive initial launch response from consumers last quarter. We also benefited from sales to new partners like iHerb and ShopHQ, which were not in the prior year period. On that note, ShopHQ's parent company, iMedia Brands, has successfully been acquired by Ivy Media LLC. The new owner has conveyed an interest in sustaining a partnership with Chromadex and continues to purchase in the third and fourth quarter. We have formally asserted a claim for the past due amount totaling approximately $930,000 in the bankruptcy court. Given the uncertainty of the bankruptcy process and our assessment of collectability, we placed the reserve on the remaining balance of trade receivable with ShopHQ this quarter, which was not material to our overall financial results. We have now reserved the full $930,000 outstanding receivable. In the context of these developments, we are currently supplying to them only on prepayment terms to sustain the business and mitigate risk to Chromadex while negotiating with the new owner. As we navigate through this transition, the continued success of ShopHQ's TV retail model for TruNiagen makes us optimistic about a continued partnership. The increased sales from our TruNiagen business were partially offset by lower Niagen ingredient sales, down 21% year-over-year. As you may recall, our ingredient sales surged in the first half of the year due to the addition of new partners and continued sales from existing partners. Year-to-date, Niagen ingredient sales were up 78% compared to the prior year, and we maintained a positive outlook for Niagen ingredient sales growth for full year 2023, despite some quarter-to-quarter variability. Of note, we faced our most challenging ingredient sales comparison in the fourth quarter, since the prior year results included a $2 million upfront minimum purchase from Nestle. Gross margins increased by 160 basis points, reaching 61.4%, compared to 59.8% in the third quarter of 2022. The elevated gross margin in the quarter was primarily a result of higher overall sales, allowing us to more efficiently leverage fixed supply chain costs, including labor and other overhead. Additionally, We continue to drive cost savings across the supply chain through optimization efforts in shipping and procurement, as well as improvements in yield loss with CMOs. As Rob mentioned, selling and marketing expense as a percentage of net sales decreased to 31%, improving 340 basis points compared to 34.4% in the third quarter of 2022. Research and development expense remained stable compared to the prior year quarter. However, there were two offsetting drivers. First, we had increased investments of approximately $0.4 million to support important R&D initiatives, which were largely offset by a $0.3 million refund related to a discontinued R&D project. We anticipate a further uptick in these R&D investments during the fourth quarter as we ramp up R&D projects, paving the way for new commercial opportunities for Chromadex in 2024 and beyond. As reported, general and administrative expense decreased $0.3 million compared to the prior year period. The reduction was primarily attributable to lower legal expense as well as lower severance and restructuring expense. For the third quarter of 2023, our operating loss was $1.1 million versus a $3.1 million loss in the third quarter of 2022, an improvement of $1.9 million, largely driven by higher net sales. The net loss attributable to common stockholders for the third quarter of 2023 was $1 million, or a loss of $0.01 per share, consistent with a net loss of $1 million and a loss of $0.01 per share in the third quarter of 2022. The prior year quarter included a one-time recognition in other income for the Employee Retention Tax Credit, or ERTC. When the ERTC is excluded, net loss improved $2.1 million, which highlights a clear fundamental improvement in profitability this quarter. Moving to the balance sheet and cash flow. Our balance sheet remains strong. We ended the quarter with $26.8 million in cash and no debt. For the nine months ended September 30th, 2023, net cash provided by operations was $6.5 million, a significant turnaround from the $14.8 million cash outflow in the same period last year. The difference year over year was largely driven by improvements in our net loss of $10.1 million paired with changes in working capital, primarily related to inventory and prepaid and other assets, which provided positive impacts of $4.1 million and $3 million, respectively, year-to-date. The strength in cash flow year-to-date related to inventory was the result of stronger sell-through of true Niagen in our e-commerce channels and to key partners, higher volume of Niagen ingredient sales, and more efficient production management. The change in prepaid and other assets is linked to the employee retention tax credit receivable booked in the prior year period, coupled with collections against this receivable balance in the current year. For the full year, we expect an increase in cash driven by reduced net loss and improvements in working capital. The trends in the fourth quarter may not be as strong as recent performance, as there is always quarterly variability in investments, inventory production, and overall working capital management. As it relates to our 2023 full-year P&L outlook, Detailed information on key profit and loss metrics can be found in our earnings press release and accompanying slide presentation. Overall, all key metrics remain consistent with last quarter's outlook, but we have narrowed our revenue projection as we close out the year. In maintaining a conservative approach to our top-line outlook, we now expect 14% to 16% revenue growth year over year, driven by our global e-commerce business, steady growth from new and existing partnerships, upside realized from new partnerships in the first nine months of 2023, and realistic opportunities in the fourth quarter. This reflects a slight adjustment from our prior guidance of at least 15%, primarily to account for a slower recovery of our own website business, as we attempt to scale our spend from the low levels last year while maintaining targeted efficiency. In addition, while we have a pipeline of new business development opportunities with partners, as well as an exciting new commercial opportunity of our own, this upside is taking longer to materialize and is more likely to contribute to 2024 results. As it relates to adjusted EBITDA, we remain committed to achieving sustainable profitability or balancing important strategic investments to drive growth. For the first nine months of the year, we sustained adjusted EBITDA breakeven or better each quarter and delivered positive $700,000 year to date. Looking to the fourth quarter of 2023, we expect negative adjusted EBITDA as we continue to invest in important R&D initiatives, as well as investments in our marketing team to position us for accelerated growth in 2024 and beyond. We anticipate that adjusted EBITDA will be close to break even on a full year basis. In summary, this quarter underscores the strength of our resilient business model with double-digit net revenue growth, over 60% gross margins, and overall cost reductions as we emphasize increased efficiency. Further, it again highlights our capability of delivering cash flow breakeven, having done so for three consecutive quarters, and our significantly improved cash position, with $26.8 million on our balance sheet and no debt. I'm truly inspired by our achievements in a short amount of time. I'm confident we can build upon this progress and unlock new revenue opportunities in 2024, which, when coupled with new cost savings initiatives, will enable us to sustain positive adjusted EBITDA. Operator, We are now ready to take questions.
spk01: As a reminder, to ask a question, simply press star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up. We'll pause for just a moment to compile the Q&A roster. Our first question will come from the line of Ram Silvaraju with HC Wainwright. Please go ahead.
spk06: Hi, thanks very much for taking my questions, and congrats on all the progress on the quarter. Thank you, Ron. I wanted to ask, firstly, about your top-line revenue guidance. And if you expect, A, a meaningful increase quarter over quarter with respect to the fourth quarter versus the third quarter, if you're already seeing trends, that that would be the case. And then if you anticipate sequential quarter over quarter revenue growth from here on in, or if we should continue to expect, you know, some seasonality to some degree, you know, as we look ahead to 2024, you know, if you have any feelings on that.
spk09: Thanks, Ron. Yeah, so implied in our guidance, I think you'd probably get to the range of revenues, which is what you're looking at, which does imply a fourth quarter sequential uptick. There's a couple things that drive that. Seasonally, as you pointed out, nitrogen ingredient is typically higher in the fourth quarter. So we're expecting, you know, that trend to continue some of our longer-term partners, you know, relative to the third. Of note, year over year, the reason the growth rate guide is not as strong is the 2 million upfront from Nestle. So that would impact year over year, but you were asking sequentially. E-commerce, you know, as always, continues to be a steady source of performance for us. The website's taking a bit longer to turn the trend. Amazon's growing nicely. and we are looking to build upon that going into the third quarter and into 2024. Into 2024, a bit early in looking at quarterly commentary, and we'll give you our fulsome outlook in March. We do see some building blocks. We touched on new commercial opportunities, new partnerships taking a bit longer that can ladder up to some acceleration and growth on a full-year basis. Quarterly, that seasonality does tend to play out a little bit for us, but more so it's about when we have newer partnerships that are ramping and timing of new ingredient partnerships, as an example, or truniogen, it can be lumpy quarter to quarter on that part of the business like we've seen this year. I don't know if you wanted to add.
spk04: The last few years, the first quarter has been our strong quarter.
spk06: Got it. And then just very quickly, you mentioned moving into the companion animal space, the veterinary space, so to speak, you know, particularly on the aging side. And I was just wondering if you could contextualize the potential market opportunity there for the Niagen brand, as well as whether you expect this to be either kind of primarily focused on canine, exclusively focused on canine, or broadly speaking across multiple companion animal categories.
spk04: We do expect it to go broader than just canine. We think the global supplement space for pets is approaching $2 billion, but growing rapidly. One of the fastest growing segments of the supplement space. We do expect to have our own brands in the marketplace, perhaps next year. And Zesty Paws has gotten off to a terrific start. They've already placed a second order.
spk06: Thank you so much. Sure.
spk01: Your next question comes from the line of Mitch Pinero with Sturdivant. Please go ahead.
spk05: Hey, just wanted to follow up on the guidance. So for the fourth quarter, so on a year-over-year basis, however, it's going to be, you know, flat. And, you know, it looks like, you know, is it just simply, you know, Maybe a tougher comparison against Watson's last year and the Ingredient businesses. Any concerns around e-commerce growth rates?
spk09: Yes, it is a tougher comparison on Ingredient with Nestle, that $2 million last year at the comp.
spk04: It's not Watson's, it's Nestle. That was a one-time large purchase in the fourth quarter of last year. No, e-commerce looks very strong for us.
spk05: Yeah, I mean, when I look at like the efficiency, you know, it's not a perfect look, but, you know, your efficiency has been growing for the last, you know, four or five quarters. Your marketing, you know, spend what drives your total e-commerce. And I just was a little confused why you call out that your website is is having a tougher turn than Amazon, if you could just elaborate.
spk04: We put many more, much more resources over the last two years into Amazon than we have our own website, Shopify. So Amazon has actually become more efficient than Shopify over the last couple of years, but we've begun to turn that around. And what we are now doing is putting more of our resources into Shopify and we expect to be Shopify to be a more significant engine for growth for us in the future. And when I say Shopify, I'm referring to our website, uh, then Amazon. So we're the team that we're building the team. We're putting more advertising revenues into it. We're optimizing the site. We see it as an opportunity. And I know we've said that before. So that's what we mean when we say it's taking a little bit longer, but we are seeing some significant progress in important KPIs, performance metrics, in the website.
spk05: Okay. And then just one more question, just on Watson's. Can you talk a little bit more about Watson's in terms of like, you know, how many stores were in and then, you know, Are there plans to expand beyond the Hong Kong, Singapore, Taiwan area in 2024?
spk04: They are considering two additional territories, but they have not committed to it yet, so we don't know.
spk05: But given it seems like they're pretty happy with the product, what's sort of the gating factor for further store growth?
spk04: has to do with the structure of watson's as a company these are independently operated businesses so it's not really centralized these separate countries i think more realistic would be expansion within the existing stores of expanded product offerings which they are interested in doing okay all right well thank you i appreciate the question thank you
spk01: Your next question will come from the line of J.P. Mark with Farmhouse Equity Research. Please go ahead.
spk07: Hi, Rob and Brianna. I have a question for you about the TrueNiogen Pro product, which I was delighted to see you had recently launched and wanted to know kind of what your expectations are for the rollout of that. And I saw that you had, it's been certified for sport by the NSF International. Are you kind of leading with MLB and NHL? hoping that they'll be using the product, or is that just incidental?
spk04: No, it's not incidental. There are many professional athletes that take TruNiagen today, as you probably know, and there are several teams that give it out to each of their players, and they're giving out 1,000 milligrams. There are also most of the studies that get published, if you've seen, are on 1,000 milligrams, and then we all take 1,000 milligrams. So we thought we'd make 1,000 milligrams available to the general consumer since that's what the experts are taking, that's what the research shows, and that's why we launched the product.
spk07: And is that going to be going out through, just my follow-up question, through the channels with physicians and clinics? Is that sort of the main product you'll be selling to them? Are you doing that?
spk03: Yes, it is. Okay. All right. Thank you very much. Thank you.
spk01: Our final question will come from the line of Matt Dane with Tietan Capital Management. Please go ahead.
spk02: Thank you. I wanted to ask a little bit more about your website. You mentioned, Rob, that you're starting to see some of the key performance indicators turn the corner. I was curious, so with those initial signs, what is sort of your expectation for when that's really going to play out and start driving the sales growth that you expect out of your own website?
spk04: First question, what are the key indicators? So our conversion rate is actually extremely high on our website. But the amount of traffic needs to increase. Now, part of the reason why the conversion rate is so high is because we've spent months now optimizing it, targeting cohort groups, and targeting the messaging. So it is working. But what it needs to do is scale. I expect it to scale. I'd like to say the first quarter. Hopefully by the first quarter we'll see some significant growth in the website sales.
spk02: Okay, that's helpful. I also did want to ask about the Nestle launch. You may have mentioned this and I missed it. When did they launch their first product and then what is your expectations around additional product launch insights and what can you share around that?
spk04: They have multiple brands at Nestle. They launched with one of their brands called Solgar, which is their very, very high-end dietary supplement brand. They launched it two weeks ago. We don't know how they're doing yet. They seem very enthusiastic. I believe they also launched another high-end brand, Pure Encapsulations launched the product as well. That's mostly a HC healthcare practitioner channel. It also has some consumer distribution. And we think they have, and they've launched that, and we think they have plans to launch another very high-end brand of theirs, Vital Proteins. Okay.
spk03: No, that's helpful. Thank you. Thank you.
spk01: Thanks, Matt. With that, I'll hand the call back to Brianna for closing remarks.
spk09: Thank you, Regina. There will be a replay of this call beginning at 4.30 p.m. Pacific time today. The replay number is 1-800-770-2030, and the conference ID is 412-6168. Thank you, everyone, for joining us today and for your continued support of Chromadex.
spk01: This will conclude today's meeting. We thank you again all for joining. You may now disconnect.
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