Arcadia Biosciences Inc. ((RKDA)) has held its Q4 earnings call. Read on for the main highlights of the call.
Arcadia Biosciences Inc. recently held its earnings call, revealing a generally positive outlook for the company despite some challenges. The call highlighted significant growth in Zola coconut water sales and successful business restructuring efforts. However, the decline in GLA oil sales and increased SG&A costs were noted as areas of concern. Overall, the positive developments in Zola’s performance and strategic refocusing of the business were emphasized as outweighing the negatives.
Zola Revenue Growth
Zola coconut water has been a standout performer for Arcadia, with revenues increasing by 124% in Q4 2024 compared to the same period last year. For the full year, Zola sales saw a 46% increase, driven by significant distribution gains and an 86% growth in retail distribution. This robust performance underscores the brand’s expanding market presence and consumer appeal.
Cash Management and Profitability
Arcadia demonstrated improved cash management, with operating cash use decreasing by 30% in the second half of 2024 compared to the first half. The company reported gross margins of 41.3% for the year, aligning with previous guidance and highlighting a focus on maintaining profitability.
Successful Business Restructuring
The company successfully restructured its operations by exiting underperforming Body Care brands and monetizing a portion of its wheat intellectual property portfolio. This strategic shift has resulted in a leaner company, now primarily focused on the thriving Zola coconut water products.
Strong Category Performance
Zola’s growth has outpaced the overall coconut water category, growing more than twice as fast. While the category grew by 18.5%, Zola achieved a 38.5% increase for the full year, showcasing its competitive edge and market strength.
GLA Oil Sales Decline
Arcadia faced a significant decline in GLA oil sales, which dropped by 60% in the second half of 2024 and by 49% for the full year. The company has since exited this product line, focusing resources on more profitable ventures.
Increased SG&A and Transaction Costs
SG&A expenses rose to $9.6 million in 2024, up from $8.2 million in 2023. This increase includes $2 million in transaction-related costs due to the sale of GoodWheat assets and a pending transaction with Roosevelt Resources.
Forward-Looking Guidance
Arcadia provided optimistic forward-looking guidance, reporting full-year revenues slightly over $5 million and a gross profit of $2.1 million. Despite higher than anticipated R&D and SG&A expenses, the company maintained strong momentum. Zola’s impressive growth is expected to continue, supported by expanded distribution and retail presence. The company also plans to monetize the remaining wheat intellectual property portfolio and anticipates concluding a transaction with Roosevelt Resources by the end of Q2 2025.
In conclusion, Arcadia Biosciences Inc.’s earnings call painted a picture of a company on a positive trajectory, driven by the success of Zola coconut water and strategic business restructuring. While challenges such as declining GLA oil sales and increased costs remain, the company’s focus on growth and profitability offers a promising outlook for the future.