Demonstrates Strong Execution Despite Challenging Macroeconomic Environment and Unfavorable e-Commerce Traffic in Q2
Provides Full Year 2022 Revenue Guidance Range of $81 million to $90 million
REDMOND, Wash., Aug. 12, 2022 (GLOBE NEWSWIRE) -- Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the second quarter ended June 30, 2022.
Financial Highlights for Second Quarter 2022:
Total revenues increased 27.1% and 19.8% to $14.8 million, compared to $11.6 million in the year-ago period and $12.4 million for the first quarter of 2022, respectively.
Net loss totaled $0.31 million, compared to net income of $1.1 million in the year-ago period and net loss of $0.65 million for the first quarter of 2022.
Cash used in operating activities for the six months ended June 30, 2022 was $13.2 million, compared to $0.2 million in the year-ago period.
Management Commentary
“We’re pleased with our second quarter 2022 performance as we reported strong financial and operational results despite the significantly impacted consumer spending environment driven by inflationary and supply chain pressures and the trending down traffic in overall e-commerce,” said Sam Lai, CEO of Hour Loop. “Against this backdrop, we further demonstrated our ability to execute on our strategy and drive growth as planned. Given that our investment in labor and inventories were frontloaded in the first quarter, we have delivered second quarter 2022 revenues of $14.8 million, up 27.1% and 19.8% compared to the year ago period and first quarter of 2022, respectively, while our net loss significantly narrowed.
“While we are encouraged by our progress, we are not immune to the challenging macroeconomic environment, which impacted our gross profit percentage as a result of increased operating expenses, FBA fees, and a strong competitive environment. However, despite these challenges, we are frontloading our investments for the year while projecting to show profitability and maintain double digit growth for the full year 2022. We believe our investments are necessary to grow our headcount, rapidly scale, and set a foundation for future success once these headwinds ease, and we are building on our momentum since our IPO. We look forward to continuing to execute, drive growth, and ultimately deliver increased value for our shareholders.”
Second Quarter 2022 Financial Results
Total revenues in the second quarter of 2022 were $14.8 million compared to $11.6 million in the year-ago period and $12.3 million for the first quarter of 2022, respectively. The increase was primarily due to continued growth and maturity in our operating model, despite a continuation in overall e-commerce traffic decline in the second quarter.
Gross profit percentage declined 1.92% to 56.46%, compared to 58.38% of total revenues in the comparable period a year ago but improved from 52.3% for the first quarter of 2022. The year-over-year decrease was a function of our aggressive growth initiatives and a heightened inflationary environment causing higher cost of goods sold, increased FBA fees, and strong competition.
Operating expenses increased 52.8% to $8.7 million compared to $5.7 million in the year- ago period. This was a function of increased platform fees paid to Amazon, and a significant increase in our labor force.
Net loss in the second quarter was $0.31 million, or $0.01 per diluted share, compared to net income of $0.86 million, or $0.03 per diluted share, in the comparable year-ago period. The decrease was driven by increased costs and expenses as a result of the reasons mentioned above. Nevertheless, net loss in the second quarter narrowed to around half of the net loss for the first quarter of 2022.
As of June 30, 2022, the Company had $2.3 million in cash and cash equivalents, compared to $10.6 million as of December 31, 2021. This decrease was driven by the growth of inventory and labor force.
Inventories as of June 30, 2022, were $14.6 million compared to $7.0 million as of December 31, 2021. The Company intentionally invested heavily in inventories for strategic reasons.
Full Year 2022 Financial Outlook
For the full year 2022, the Company maintains its guidance for revenue to be in the range of $81 million to $90 million, representing 30% to 45% year-over-year growth.
About Hour Loop, Inc. Hour Loop is an online retailer engaged in e-commerce retailing in the U.S. market. It has operated as a third-party seller on www.amazon.com and has sold merchandise on its website at www.hourloop.com since 2013. The Company expanded its operations to www.walmart.com in October 2020. To date, the Company has generated practically all of its revenue as a third-party seller on www.amazon.com and only a negligible amount of revenue from its own website and Walmart. Hour Loop manages more than 100,000 stock-keeping units (“SKUs”). Product categories include home/garden décor, toys, kitchenware, apparels, and electronics. The Company's primary strategy is to bring most of its vendors product selections to the customers. It has advanced software that assists the Company in identifying product gaps so it can keep such products in stock year-round including the entirety of the last quarter (holiday season) of the calendar year. In upcoming years, Hour Loop plans to expand its business rapidly by increasing the number of business managers, vendors and SKUs.
Forward-Looking Statements This press release contains statements that constitute "forward-looking statements" including with respect to the Company's business strategy, product development and industry trends. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to the Company on the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the Company's filings with the Securities and Exchange Commission, as the same may be updated from time to time. Thus, actual results could be materially different. The Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, after the date of this release, except as required by law.
Investor Contact Finance Department finance@hourloop.com
HOUR LOOP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2022 (Unaudited) and December 31, 2021
June 30,
December 31,
2022
2021
(unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
2,306,430
$
10,592,572
Accounts receivable, net
151,607
125,991
Inventory, net
14,601,346
7,041,864
Prepaid expenses and other current assets
831,839
965,298
Total current assets
17,891,222
18,725,725
Property and equipment, net
156,335
15,667
Deferred tax assets
325,030
45,488
Right-of-use lease assets
485,066
30,111
TOTAL ASSETS
$
18,857,653
$
18,816,991
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
5,358,935
$
9,539,258
Accrued expenses and other current liabilities
1,255,714
1,282,161
Due to related parties
4,294,731
5,214,794
Income taxes payable
126,333
126,333
Current operating lease liabilities
303,923
-
Total current liabilities
11,339,636
16,162,546
Non-current liabilities
Long-term operating lease liabilities
184,704
-
Total liabilities
11,524,340
16,162,546
Commitments and contingencies
-
-
Stockholders’ equity
Preferred stock: $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding
-
-
Common stock: $0.0001 par value, 300,000,000 shares authorized, 35,042,578 and 33,300,000 shares issued and outstanding
3,504
3,330
Additional paid-in capital
5,645,322
4,291
Retained earnings
1,696,400
2,654,695
Accumulated other comprehensive loss
(11,913
)
(7,871
)
Total stockholders’ equity
7,333,313
2,654,445
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
18,857,653
$
18,816,991
HOUR LOOP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Periods Ended June 30, 2022 AND 2021 (Unaudited)
Three Months
Three Months
Six Months
Six Months
Ended
Ended
Ended
Ended
June 30,
June 30,
June 30,
June 30,
2022
2021
2022
2021
Revenues, net
$
14,800,518
$
11,643,230
$
27,154,501
$
20,966,143
Cost of revenues
(6,443,910
)
(4,845,441
)
(12,341,179
)
(8,939,993
)
Gross profit
8,356,608
6,797,789
14,813,322
12,026,150
Operating expenses
Selling and marketing
6,480,625
4,803,598
12,006,727
8,630,792
General and administrative
2,275,642
925,698
3,951,606
1,462,507
Total operating expenses
8,756,267
5,729,296
15,958,333
10,093,299
(Loss) income from operations
(399,659
)
1,068,493
(1,145,011
)
1,932,851
Other (expenses) income
Other expense
(3,944
)
(3,754
)
(9,394
)
(4,624
)
Interest expense
(20,567
)
(10,328
)
(104,125
)
(10,328
)
Other income
13,754
52,098
20,693
54,504
Total other (expenses) income, net
(10,757
)
38,016
(92,826
)
39,552
(Loss) income before income taxes
(410,416
)
1,106,509
(1,237,837
)
1,972,403
Provision for income taxes
97,009
-
279,542
-
Net (loss) income
(313,407
)
1,106,509
(958,295
)
1,972,403
Other comprehensive (loss) income
Foreign currency translation adjustments
(9,497
)
2,893
(11,913
)
1,671
TOTAL COMPREHENSIVE (LOSS) INCOME
$
(322,904
)
$
1,109,402
$
(970,208
)
$
1,974,074
Basic and diluted (loss) income per common share
$
(0.01
)
$
0.03
$
(0.03
)
$
0.06
Weighted-average number of common shares outstanding
34,939,695
33,300,000
33,300,000
33,300,000
HOUR LOOP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2022 and 2021 (Unaudited)
Hour Loop, Inc. is an online retailer engaged in e-commerce retailing in the United States market. The Company operates through online retail channels, such as Amazon, Walmart, and Hourloop.com. It is engaged in buying products in bulk directly from the brand or manufacturer at a wholesale price and making a profit by selling the product on Amazon. It sells merchandise on Amazon and the sales are fulfilled by Amazon. It pays Amazon fees for allowing it to sell on their platform. Its product categories include home/garden decor, toys, kitchenware, apparel, and electronics. It has advanced software that assists it in identifying product gaps so it can keep such products in stock. It also pays Walmart fees for allowing it to sell its merchandise on their platform. It has developed software that is tailored to all its operational needs. This includes managing the order review process, shipment management, inventory management, accounting, and complete end-to-end third-party integrations.