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CFO Marc Benathen confirmed the vast majority of the guidance revision stemmed from RexMD's Q2 performance and its downstream impact, with a smaller portion from higher refund rates in weight management. He noted the new guidance is prudent and does not assume a full rebound. Regarding LifeMD Plus, he stated marketing spend is included in the plan and will be scaled in a measured way to balance growth and profitability.

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CEO Adam L. Michaels stated he is comfortable with a double-digit growth rate for the year, emphasizing that it must be profitable. He explained that the 26.1% gross margin was achieved despite a record 6% trade promotion investment, implying a theoretical 32% margin. Michaels noted that operational efficiencies from new equipment and fixed-price contracts on protein are blunting commodity headwinds, and the company will continue to reinvest margin gains into high-ROI trade promotions.

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CEO Adam Michaels responded that while some holiday-related softness in Q4 is expected, the sales team's success in securing incremental rotations and stronger trade programs, like with Publix, should mitigate the historical pullback. Regarding margins, he noted that while commodity markets remain challenging, the company is securing better procurement terms due to higher volumes and is optimistic about margin improvement in Q4 and beyond, independent of major market price drops.

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CEO Adam Michaels reiterated the company's 'double-digit' revenue growth target for the year but chose not to provide a more specific figure due to market uncertainties. Regarding margins, he stated that the 500 basis point impact from construction is now largely resolved. The primary remaining headwind is high chicken commodity prices, though he noted that internal efficiency gains, such as in-sourcing chicken processing, have significantly blunted this impact.

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Erica Wei, CFO, attributed the stronger-than-expected Q1 results to robust growth in service revenue and European markets. Regarding Q2 gross margins, she stated the company could not provide a definitive forecast due to market uncertainty. She also noted that any significant margin impact from the new, more profitable Noble House SKUs would likely take 3 to 6 months to materialize, tempering near-term expectations.

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CFO Erica Wei attributed the Q1 slowdown to a combination of the soft macro environment, channel-specific partner weakness, and the ongoing Noble House integration. For Q2, she emphasized that the planned retirement of older, less profitable Noble House SKUs would be the main factor in a potential revenue decline. Regarding margins, Wei noted continued pressure in Q1 and Q2, highlighting that the company still needs to sell through high-cost ocean freight inventory in Q1, which will compress margins before the benefits of new fixed-rate contracts are fully realized.

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CFO Erica Wei explained that achieving the high end of Q4 guidance is heavily dependent on overall market performance, as GigaCloud's results are a direct reflection of the activity of its large base of marketplace participants. Regarding 2025 margins, Wei stated the company does not provide annual guidance but expects positive contributions from newly developed Noble House SKUs. However, she cautioned that macroeconomic headwinds may continue to pressure margins in the near term, with a potential recovery later in the year contingent on factors like the economy and the housing market.

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CFO Jian Guo confirmed that Q2 2025 gross margin is expected to be in line with Q1, attributing this to good inventory visibility. Guo explained that the full-year guidance includes conservatism for the second half to account for potential margin pressure from tariffs. Executive Alan Yu stated that domestic manufacturing is ramping up significantly to meet overwhelming demand and market shortages, though he could not provide a specific revenue percentage. Yu attributed recent market share gains to the company's established credibility and reliability, which was reinforced by its ability to build inventory in its new warehouse ahead of the tariff announcements, positioning Karat to supply customers when competitors could not.

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CEO Alan Yu attributed revenue acceleration to the stabilization and growth in the California market, strong performance in the Midwest, and increased demand for eco-friendly products as styrofoam bans take effect. He also noted the company is building inventory in anticipation of tariff-related demand. CFO Jian Guo added that the guidance incorporates new business deals expected to convert to revenue mid-year. Regarding EBITDA margins, Alan Yu highlighted future operational savings from securing a new, more cost-effective shipping carrier and lower lease rates on a new warehouse.

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CFO Jian Guo confirmed the mid-to-high single-digit Q4 growth forecast and reaffirmed full-year guidance. She explained the comparison is skewed by a $6 million accounting misclassification that benefited Q4 2023 sales. Regarding the chain segment, she acknowledged pricing adjustments to remain competitive and noted that shipments to a new major supermarket chain began late in Q3, with the full benefit expected in Q4. Executive Alan Yu added that on an 'apple-to-apple' basis, excluding the $6 million adjustment, the Q4 growth forecast is over 14%, which is double-digit growth.

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Executive Brian Kocher explained that the pipeline's close cycle is typically between 6 and 18 months. He emphasized that while the pipeline has projects at all stages, its primary role is to provide confidence in achieving the company's long-term growth algorithm. As projects convert to actual sales, the company will update its guidance accordingly.

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CEO Brian Kocher outlined the growth strategy, ranking opportunities as: first, expanding share and innovation with existing customers; second, acquiring new customers by providing solutions like assured supply or R&D solves; and third, long-term TAM expansion. He noted that while some new business is in the guidance, the business development team is pressured to exceed the 7-11% growth target.

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Executive Brian Kocher reiterated the company's philosophy of guiding based on what they can see, not what they hope for. He emphasized that their consistent high growth rates are the result of continuously working on a wide range of initiatives, including growing share with existing customers, acquiring new ones, and innovating, but did not provide specific new business forecasts.

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Executive Mark Webb explained that Q1 presents the most difficult gross margin comparison, with headwinds expected in the first half, followed by easier comparisons, lower freight costs, and OMS benefits in the second half. Executive Claire Spofford acknowledged that traffic was challenged but highlighted the successful testing of geo-targeted marketing efforts to drive store traffic, which the company plans to expand in 2025.

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Executive Mark Webb stated that the direct risk from potential China tariffs is low, as finished goods production from China is below 5%. He acknowledged that broad, all-country tariffs would be meaningful and would necessitate vendor negotiations, price reviews, and some cost absorption, but noted it is too early to quantify any impact.

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Mark Webb, an executive, clarified that Q3 gross margin pressure is expected to be less severe than in Q2. The pressure stems from elevated ocean freight costs, which are less impactful than the air freight used in Q2, and from promotional activity to manage inventory. Executive Claire Spofford outlined traffic-driving levers, including performance marketing, significant marketing support for the new fall collection, and personalized outreach from store teams to key customers.

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CFO David Loretta identified reduced legal costs as a primary driver of OpEx leverage but noted some savings would be reinvested into marketing and R&D. CEO Carla Vernon stated the national ACV is 84% but emphasized this metric is misleading. She explained that individual item-level ACV is much lower, citing key products with ACVs below 34%, which represents a significant runway for growth within existing retail footprints.

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