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spk02: Good evening and welcome to the KidPIC first quarter 2022 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ezra Daba. Please go ahead.
spk01: Thank you, operator. We are happy to welcome everyone to today's call to review Q1 2022 and provide an update on our business. We're going to start with a review of our financial and business highlights. followed by a financial review, which Hadir, our CFO, will take us through. And we will then open the call to Q&A. Murshid Daba, our Chief Technology Officer and Chief Operating Officer, is also available for any questions you may have pertaining to that side of the business. As previously communicated in our last quarterly update, we continue to face many of the same business challenges that have slowed the pace of our sales growth due to reduced member acquisitions that has been further affected by nationwide declining consumer confidence. We are combating the challenges in the marketplace to adopt and grow the business. We've taken actions to address this macro forces, which I will describe in a moment. While the quarter did not meet our expectations, we are confident that our concept our team, our products, and the underlining business value propositions that we have at KidPick will enable us to scale and reach our growth objectives in time. I'll start by commenting on the top line, gross margins, and other KPIs, both in terms of where we stand, the drivers and trends we are seeing, and some of our go-forward strategies. Q1 revenues were $4.3 million, which represents a decrease from the same period in 2021 of approximately 19%. As previously communicated, privacy changes across social media advertising platforms that were implemented late last year continued to affect the pace of our new customer acquisitions and resulted in lower revenues for KidPick. These social advertising channels have historically been a primary advertising resource to acquire new customers. To address these changes, we have launched a number of new programs that we expect to help grow our acquisitions and top-line sales. These programs include a heightened focus on Google Search, our newly expanded Ambassador Program, newly planned Direct-to-Mail Marketing, and improved utilization of YouTube, TikTok, Pinterest, and Snapchat. In addition, we aim to build upon existing brand partnerships and introduce new collaborations similar to our previously announced partnership with Disney, which will enable us to gain brand awareness amongst new customer databases. We have noted in our prior calls that we have launched a brand ambassador program, which is up and running and growing steadily. And we're implementing a paid influencers campaign strategy in which we enlist key influencers in the fashion and parenting space to share their KidPic experience with their many followers. Our ambassadors and influencers create UGC, a user-generated content capturing their family experience in KidPic, which is amongst the most effective type of content when it comes to building brand awareness and attracting new members. From our experience, it takes several touch points to get through and generate a conversion. We feel this is an important strategy to grow awareness for the Kipik brand in a cost-effective manner. As noted earlier, we are planning a targeted in-home direct mail program for this upcoming summer season. Direct mail gives us the opportunity to communicate a convenient time-saving service in a traditional manner. It is our current understanding that the highly targeted direct mail channel has become quite a cost-effective advertising method. Our combined expertise was in-house design, merchandising, sourcing, and branding, coupled with the immense technology we have built with data-driven analytics uniquely positions us within the kid subscription marketplace and enables us to deliver great products and value to the price-sensitive children's wear consumer. We noted in our press release earlier this month that we have recently introduced an option for a 12-piece box, delivering more items for our members to choose from and purchase. This feature launched with our summer 22 collection, giving our customers the option to receive a box with 12 items versus the traditional eight will raise our average box selling price. Early signs are that almost half of our members are opting, half of our new members are opting for the bigger box. We are committed to fulfilling our mission of changing the way parents shop for children's clothing by delivering personally styled, high-quality products and services that make kids look great and inspire confidence. Our products and services are appealing to parents who value more quality family time, having an expert stylist for their child, receiving outfits that make the children look great and feel confident, and who enjoy the fun unboxing experience and discovery we provide. Lastly, As you know, we operate with an integrated model where our design, merchandising, and procurement are done in-house. We have built our own KitPick fashion brand, which gives us the opportunity to expand beyond subscriptions by selling our KitPick brand through other e-commerce platforms and retail channels. We are now implementing a third-party software that will enable us to market our branded apparel and shoes online on other top retailers' online e-commerce platforms. We expect this to become a meaningful revenue source for us as we continue to build a great fashion, apparel, and lifestyle brand. Additionally, we are growing our website e-commerce sales on shop.kitbit.com, which we invite you all to experience and where we see great growth opportunities. I want to close by saying that while we have challenges to overcome, KitPick offers a very special and differentiated brand and service which delights our customers. While we anticipate the current hurdles we are facing to remain in place in the near future, we are confident in our future growth potential. Sorry about that. With that, I'll turn the call over to Adir to detail the financial highlights of the quarter. Adir?
spk00: Thank you, Ezra. Q1 revenue was $4.3 million, a decrease of 18.7% year-over-year. The decrease in revenue was primarily driven by a decrease in subscription box sales. Looking at Q1 revenue by channel, Subscription sales were 3.5 million, a decrease of 24% year-over-year. Amazon sales were slightly lower at 550K. Online website sales increased by 129% to 293K. Looking at Q1 revenue by product line. Girls apparel decreased by 22% to $3.3 million. Boys apparel decreased by 23% to $868K. Toddler revenue was $201K versus $7K during the same period last year. We launched our toddler collection in March 2021. Turning to gross margin. Gross margin for the quarter was 59.9%, slightly lower than the 60.9% last year. Shipped items for the first quarter decreased by 32% to 371K compared to 543K last year. Keep rate for the first quarter was 70.4%, compared to 67.7% last year. This is in line with our record level of 70.8% which was achieved in Q4 2021. On the bottom line, net loss for the quarter was approximately 1.8 million or a loss of 24 cents per share compared to net loss of 1.5 million or a loss of $0.30 per share last year. Speaking to non-GAAP adjusted EBITDA, for the quarter was a net loss of $1.5 million compared to a net loss of $1.3 million last year. Now to the balance sheet and cash flow. Cash at the end of the quarter was approximately $5.4 million. compared to $8.4 million at the end of 2021. We used $2.2 million in operating cash flow for the quarter, compared to $2.7 million in the last year's quarter. As of April 1, 2022, we had $19.5 million in total current assets, $6.3 million in total current liabilities, and a working capital of $13.2 million. With that, I will turn it back to the operator for Q&A. Operator?
spk02: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up the headset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Edward Riley with EF Hutton. Please go ahead.
spk03: Hey, guys. Thanks for taking my question. I'm just wondering about the timing of some of the new marketing initiatives. You know, which channels have you guys been exploring the most? And then which channels do you think you'll need to explore a little bit more or maybe if you're looking forward to exploring them more in the future?
spk01: Yeah. Well, we have intensified and put more money on Google Search, which we found to make up some of that. losses we have seen from Facebook. And as you know, we have this new ambassador program that we are paying much more attention to and it's giving us at this particular moment, we're not seeing the kind of return we would like to see, but we know that it's very cost effective and we will see it. The direct mail program is planned for this summer. So we hope that will be launched within the next three, within about four weeks. And in the past, we really have not paid much attention to TikTok and Pinterest and YouTube and Snapchat. And we are beginning to play in these channels as we speak.
spk04: Okay. Great.
spk03: Got it. Um, just, um, maybe talk about, you know, um, your ability to maybe pass on costs to the customers, um, given the kind of inflationary time period we're in right now.
spk01: No, we have, uh, you know, I guess throughout last year past some of the costs that we have incurred, especially as it relates to the freight. We haven't seen as much of cost increase on the China side, but we really have not seen much of any issues as the customer accepting the cost increases that we have put in place over the last year in order to maintain our margins.
spk04: Okay, great. That's it from you guys. Thank you. Thank you to you, Ed.
spk02: This concludes the question and answer session. I would like to turn the conference back over to Ezra Daba for closing remarks.
spk01: Okay. We thank you all for your time, interest, We are available for any follow-up questions any of you might have. Thanks again. Wishing everyone health, success, and a great summer.
spk04: Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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