Charlotte's Web Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the Charlotte's Web Holding Inc. 2025 Second Quarter Conference Call. At this time, our lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 13, 2025. I would now like to turn the conference over to Corey Pala, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Charlotte's Web Second Quarter 2025 Earnings Conference Call. On the call with me today are Bill Marachnik, our Chief Executive Officer, and Erica Lin, our Chief Financial Officer. This morning, we will review our financial results and provide commentary on the business performance and outlook. Following our prepared remarks, we'll answer questions from our covering analysts. Before we begin, I need to remind you that certain statements made during this call may constitute forward-looking statements within the meaning of applicable securities laws. These forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties, which could cause actual future results to differ materially from those expressed or implied. We direct you to review the cautionary language in this morning's earnings press release, as well as the risk factors and other important considerations detailed in our filings with the Securities and Exchange Commission and in Canada on CDR+, particularly our most recent Form 10-K and 10-Q reports. We undertake no obligation to update these forward-looking statements except as required by law. During today's call, we will also reference non-GAAP measures, including adjusted EBITDA and adjusted gross profit. Reconciliations to comparable GAAP measures can be found with our earnings press release. A replay of this call will be available for one week via the instructions contained within this morning's earnings press release, and a webcast replay will be accessible for an extended period through our Investor Relations website. And with that, I'll now turn over the call to Bill Maroschek, Charles Webb, Chief Executive Officer.

Good morning, everyone, and thank you for joining us today. So, let's jump right in. I'm pleased to report that Q2 marked another meaningful step forward in our transformation journey. We delivered our second consecutive quarter of year-over-year revenue growth, building on the momentum established in Q1 when we achieved our first year-over-year increase since 2021. This sustained improvement validates our strategic initiatives and demonstrates that Charlotte's Web is successfully navigating through industry headwinds while positioning for accelerated growth. For the second quarter, we reported net revenue of $12.8 million, representing 4.2% year-over-year growth and sequential improvement from Q1. While these growth rates remain modest, They represent a fundamental inflection point in our trajectory. After several challenging years, we've stabilized the business, returned to growth, and are now building sustainable momentum. So, let me highlight some critical areas of progress that are driving our transformation. Our Q2 top-line performance was fueled by enhanced e-commerce capabilities and innovative product launches. Our direct-to-consumer channels remain a cornerstone of our revenue architecture, powered by the enhanced e-commerce platform deployed in 2024. These investments are yielding measurable returns for improved conversion rates, reduced cart abandonment, and just an overall better consumer experience. Our subscription programs continue to reflect the loyalty and trust consumers place in the Charlotte's Web brand. In addition, our strategic expansion across Amazon, TikTok Shop and Fair is delivering incremental revenue while broadening our addressable market. Each of these platforms serves distinct consumer segments, allowing us to meet wellness seekers wherever they shop. Now, it is important to mention that innovation remains at the heart of our growth. The launch of Brightside during the second quarter represents perhaps our boldest innovation to date. These precision-formulated, low-dose hemp-derived Delta 9 THC gummies have exceeded our projections with initial SKUs selling out during Memorial Day weekend. What sets Brightside apart is our proprietary time infusion technology, which delivers effect in 5 to 15 minutes versus the typical 1 to 2-hour onset time for traditional edibles. This fast-acting formulation, combined with our need-state-based approach, really differentiates us in the marketplace. Our fast acting gummies outperform most competitive offerings in onset time and efficacy due to our precision dosing and unique cannabinoid blends. Brightside Collection addresses the multi-billion dollar hemp delivered THC market, which is one of the fastest growing segments in the botanical wellness industry. Now, following the success of our CBN Stay Asleep Gummies, which is now our second best-selling gummy, we recently launched our new CBG Focus and Attention Gummies. The U.S. CBG market grew 47% year-over-year in 2023, and we are really well-positioned to capture share with our science-backed formulations and brand trust. Our diversification beyond hemp is also gaining momentum to expand our omni-channel footprint. Our four functional mushroom gummies, including a new muscle recovery product, are now available across multiple platforms, including Walmart.com, Amazon, and our direct-to-consumer website. This new product line is tapping into a rapidly growing wellness category with fewer regulatory constraints. Our portfolio expansion into non-hemp botanical products creates strong opportunities for nationwide omnichannel distribution, as these products face fewer regulatory restrictions than hemp-derived offerings. We have several innovative products pending launch in the second half of 2025, which will further strengthen our position as a leading botanical wellness innovation company. All right, turning to our key operational updates. We have made major strides in in-house manufacturing, which is a critical component of our cost optimization efforts. I'm particularly pleased to report that our new bright side dummy line is entirely produced in-house, which not only enhances our control over quality and supply chain, but also positions us for meaningful cost savings. This milestone represents an important achievement in our manufacturing optimization strategy. By next year, We anticipate that our in-house manufacturing could yield up to $3 million in annual savings, improving our margins and our cash flow profile. Looking at the broader market, we're still operating in a complex hemp regulatory environment. However, lately we've seen some of the most promising developments in years for establishing clear federal pathways for hemp-derived products. Coalition for Access Now, a group that we support, is actively engaged with both Congress and the new administration on advancing comprehensive CBD regulations. The appointment of Representative Morgan Griffith as chair of the House Energy and Commerce Healthcare Subcommittee is particularly significant, as he now has direct jurisdiction over the FDA and has been a longtime champion of hemp regulations. Both Chairman Griffith and Senator Wyden have indicated their intention to introduce legislation this year that would provide the FDA with clear authority to regulate CBD as a dietary supplement and food ingredient. This represents a fundamental shift from the regulatory stalemate we've faced since 2018. While the administration's position continues to evolve, we're encouraged by the growing recognition that a regulated market better serves public health than the current patchwork of state approaches. The U.S. CBD market, despite challenges, was still $2.9 billion in 2024, with potential growth to $3.8 billion by 2030 under favorable regulatory scenarios, according to latest estimates from the Brightfield Group. We view eventual FDA regulation as a potential catalyst that could consolidate the market in favor of established, compliant brands like Charlotte's Web. Let me touch quickly on the clinical development front. Our DeFloria joint venture was cleared to commence FDA Phase II clinical trials for AJA001, an investigational new drug or idea that's known, for potential treatment of irritability associated with autism spectrum disorder. This represents a significant long-term opportunity with Charlotte's Web retaining exclusive manufacturing rights for commercial supply. While we maintain focus on our core consumer business, this pharmaceutical pathway provides material upside potential in a multibillion-dollar addressable market. Quickly, before I turn the call over to Erica to discuss our financial results in detail, I just want to emphasize what excites me most about Charlotte's Web's position today. As I've noted earlier, we've stabilized the business, we've returned to growth, We dramatically improved our cost structure and launched innovative products that are resonating with consumers. We're not simply navigating market challenges, but we're helping to define the future of botanical wellness with a combination of brand trust, scientific rigor, and operational excellence. With that, I'll turn the call over to our CFO, Erica Lynn, to walk through our Q2 financial performance.