Thomas Forte

Thomas Forte asked how the company determines whether to work with a strategic partner or own and operate an asset across its three pillars, noting Pillar 1 is largely owned while Pillars 2 and 3 appear to be more partnerships or combinations. He also requested a vision for the home operating system and the home OS.

Answer

Executive Chairman and CEO Marcus Lemonis explained that Pillar 1 is mostly owned, with some licensing opportunities. For Pillar 2, the company partners when there's significant regulatory complexity or balance sheet risk, preferring to be an origination machine earning commissions and fees without inventory or capital requirements. In Pillar 3, the company aims to own as much as possible, including home services and installation, due to "explosive" margins and the opportunity to control the customer journey and upsell. For the home operating system, Lemonis described it as a "wrapper" around the ecosystem, focusing on a blockchain-based real estate ledger for durable digital records of the homeowner and home asset (title, deed, insurance, maintenance), aiming to launch in partnership in 2027.

Thomas Forte asked how Bed Bath & Beyond determines whether to work with a strategic partner or to own and operate an asset across its three pillars. He also requested a detailed vision for the home operating system and the home OS.

Answer

Marcus Lemonis, Executive Chairman and CEO, explained that Pillar 1 (omnichannel) is largely owned, with some licensing. For Pillar 2 (financial services), they opt for partnerships due to regulatory complexity and balance sheet risk, acting as an origination machine to earn commissions and fees without inventory or capital requirements. In Pillar 3 (home services), the strategy is to own as much as possible, including installation and products, due to explosive margins and the ability to control the customer journey for upsells. Regarding the home operating system, Mr. Lemonis described it as a 'wrapper' around the ecosystem, with its core feature being a blockchain-based real estate ledger (LifeChain). This ledger captures critical documents for both homeowners and home assets (title, deed, insurance, maintenance records), providing integrity for various providers and solving issues like lost records. He anticipates development over the next 12 months and a 2027 launch in partnership.

Thomas Forte asked about the trends in customer acquisition costs (CAC) and lifetime values (LTV) for IM8 over time, and how Prenetics is leveraging artificial intelligence, particularly in digital marketing.

Answer

Co-Founder and CEO Danny Yeung stated that the blended LTV to CAC ratio is projected at approximately 3x, with a payback period of 3.4 months in 2025. He noted that CAC has increased proportionally with the average order value, without significant increases even at scale. Yeung detailed AI's use in digital marketing, including rolling out 800-1,000 new ads weekly and replicating winning ads, and highlighted an AI video with Aryna Sabalenka that achieved 233 million views.

Thomas Forte asked about the customer acquisition costs (CAC) and lifetime values (LTV) for IM8 and their historical trends, how Prenetics is leveraging artificial intelligence (AI) in its operations, particularly in digital marketing, and the company's strategic M&A approach given its strong balance sheet and recent divestitures.

Answer

CEO Danny Yeung detailed IM8's CAC, noting a 0.8x return on ad spend, a $130 CAC for a $110 AOV in 2025, and a 3.4-month payback period. He mentioned that CAC has increased proportionally with AOV (now $233) without significant scaling issues, and marketing channels are diversifying beyond Meta and Google. Yeung highlighted AI's company-wide adoption, citing weekly rollouts of 800-1,000 AI-generated ads and an AI video with Aryna Sabalenka that garnered 233 million views. Regarding M&A, Yeung emphasized a primary focus on organic growth for IM8, leveraging its performance marketing flywheel, but remains open to strategic acquisition opportunities.

Thomas Forte inquired about the current percentage of ReposiTrak's total revenue derived from its traceability solutions, referencing a previous fiscal year's figure, and later asked about the impact of AI on data accuracy, the influence of the MAHA trend, updates on ingredient-level traceability, the effect of food inflation on the business, how investment spending is reflected in the P&L, and the company's current thoughts on strategic M&A.

Answer

Chairman and CEO Randy Fields estimated traceability revenue to be between 8% and 10% of total revenue, acknowledging cross-selling complexities. He explained that ReposiTrak's AI significantly improves data accuracy by detecting and autocorrecting errors, differentiating their approach from large language models and simple EDI validation. Fields also noted that MAHA indirectly benefits ReposiTrak by increasing food safety awareness, thereby raising the cost of errors for retailers. He confirmed the system's capability for ingredient-level traceability, crucial for FDA compliance. Regarding food inflation, Fields stated an indirect impact through potential margin squeeze for customers. CFO John Merrill clarified that investment spending is reflected in targeted resource allocation, such as increased development and reduced marketing, leading to lower aggregate spending, with de minimis capitalized patent costs. Both executives emphasized that while M&A opportunities are reviewed, the current focus is on internal initiatives, particularly preparing for the looming FDA traceability deadline.

Thomas Forte inquired about the most recent percentage of total revenue derived from ReposiTrak's traceability solutions, referencing a prior fiscal 2025 figure. He also asked if AI can improve traceability data accuracy, the impact of the MAHA trend on ReposiTrak, an update on ingredient-level traceability capabilities, and the direct or indirect impact of food inflation on the business. Additionally, Forte sought clarification on how investment spending is reflected in the P&L, whether costs are capitalized, and the company's current thoughts on strategic M&A.

Answer

CFO John Merrill indicated that traceability revenue is currently between 8% and 10% of total revenue, noting that cross-selling initiatives make precise measurement challenging. Chairman and CEO Randy Fields detailed how ReposiTrak leverages AI for error detection and automatic correction in traceability data, emphasizing that their approach differs from large language models and significantly improves data quality. Fields clarified that MAHA indirectly benefits ReposiTrak by heightening public awareness of food safety issues, thereby increasing the perceived value of ReposiTrak's solutions. He affirmed that ReposiTrak's system is fully capable of ingredient-level traceability and allows for searching specifications, addressing a significant gap for retailers. Fields explained that food inflation has an indirect impact; if supermarkets cannot pass on rising costs, they experience margin pressure, which could lead to scrutiny of all expenses. Merrill explained that investment spending is reflected in more targeted resource allocation, with a shift from marketing to development, resulting in lower aggregate expenses, and confirmed that some patent-related costs are capitalized but are de minimis. Both Merrill and Fields stated that while M&A opportunities are reviewed, the company's current focus is on internal priorities and preparing for the anticipated surge in demand for traceability solutions as the FDA deadline approaches.

Thomas Forte with Maxim Group inquired about ReposiTrak's evolving market approach and target accounts due to automation, the direct and indirect impacts of tariffs on the business and its customers, the company's strategic M&A considerations and criteria, the potential for a one-time dividend, and the company's stance on crypto treasury plans.

Answer

Randy Fields, ReposiTrak's Chairman and CEO, explained that automation has enabled the company to effectively serve smaller accounts, significantly expanding its total addressable market beyond traditional large retailers to include suppliers further down the value chain. He noted that tariffs have had no significant direct or indirect impact on the business or its customers to date, though future impacts on the international food supply chain are uncertain. Regarding M&A, Mr. Fields indicated increased activity and interest in accretive opportunities that could expand into adjacent industries or offer capabilities not easily developed internally. John Merrill, ReposiTrak's CFO, concurred on M&A criteria, emphasizing non-dilutive, accretive bolt-on services. Both executives stated they are not currently considering a one-time dividend, preferring consistent capital returns through preferred share redemption, common stock buybacks, and increasing regular dividends, though Mr. Fields acknowledged a future reconsideration if cash reserves become 'unwieldy.' Mr. Merrill firmly stated the company has no crypto treasury plans, citing fiduciary responsibility and risk aversion.

Thomas Forte from Maxim Group asked for clarification on ReposiTrak's updated pricing and billing strategy, the direct and indirect impacts of tariffs on the business, and the company's current thoughts on strategic M&A, including acquisition parameters. He also inquired about the potential for a one-time dividend and the company's stance on crypto treasury plans.

Answer

CEO Randy Fields explained that automation has enabled ReposiTrak to effectively serve smaller accounts, expanding their addressable market rather than a fundamental change in pricing. He stated that tariffs have not significantly impacted the business, directly or indirectly, to date. Randy Fields and CFO John Merrill noted increased M&A activity, seeking accretive opportunities in adjacent industries, but emphasized it's premature for announcements. John Merrill expressed a preference for consistent dividend increases over a one-time dividend, a view Randy Fields supported for the current period. John Merrill also confirmed no crypto treasury plans, citing fiduciary responsibility and risk.

Thomas Forte inquired about ReposiTrak's updated pricing or billing strategy, seeking clarification on any changes.

Answer

Chairman and CEO Randy Fields clarified that the shift is primarily in their market approach, enabled by automation. This allows ReposiTrak to effectively serve smaller accounts, significantly expanding their total addressable market beyond large retailers to include suppliers further down the supply chain, impacting marketing and billing strategies.

Thomas Forte of D.A. Davidson & Co. asked about the impact of tariffs, the conversion of incremental revenue to profit, the success of cross-selling initiatives, and the company's capital allocation strategy regarding M&A and stock buybacks.

Answer

Executive Randall Fields stated that tariffs add uncertainty but have not negatively impacted their accelerating business. Executive John Merrill clarified that the contribution margin on incremental revenue is currently 50%, with a goal of 70-80% as marketing and onboarding costs flatten. Both executives highlighted the growing success of cross-selling, driven by their single technology platform and strong customer relationships. Regarding capital allocation, management prioritizes organic growth and shareholder returns (dividends, buybacks) over M&A, given their platform's strength, but remains open to acquiring domain knowledge or customers.

Thomas Forte of D.A. Davidson & Co. asked a series of questions regarding the company's operational efficiency, financial structure, and industry landscape. He inquired about updates on the customer onboarding automation (the 'Wizard'), the breakdown of fixed versus variable costs, and the relative contribution margins of the three main business lines. Forte also sought management's perspective on industry-specific issues, including potential solutions for egg shortages, the impact of tariffs under a potential second Trump administration, and the implications of RFK Jr.'s focus on food safety. Finally, he asked about the current capital allocation strategy, the role of AI, and the status of expansion into the restaurant sector.

Answer

CEO Randall Fields and executive John Merrill addressed the questions. Fields explained that the 'Wizard' onboarding tool is progressing well, with a goal for 60-70% of users to onboard without assistance within a year. Merrill detailed the company's ~$12 million fixed cash cost base, noting that incremental revenue has very low variable costs, primarily commissions. He confirmed that all three business lines have similar contribution margins. Regarding industry issues, Fields stated they could not help with the avian flu-driven egg shortage but could assist with tariff mitigation through supply chain forecasting. He viewed a potential government-mandated slowdown in traceability enforcement as a net positive, allowing for more orderly growth. Fields confirmed the capital allocation strategy remains unchanged, balancing cash accumulation with dividends and buybacks. He noted that AI is already integrated into their operations without significant CapEx and that the restaurant sector is a lower priority due to its less lucrative supplier structure compared to grocery.

Thomas Forte of D.A. Davidson & Co. asked about several key topics, including whether major retailers like Walmart and Kroger are setting a new industry standard for food traceability. He also inquired about the future revenue contribution from traceability, potential expansion into adjacent markets, the growth composition of the legacy business, capital allocation priorities, operating cost discipline, customer pruning strategies, and the potential for M&A to accelerate onboarding.

Answer

Randall Fields (executive) confirmed that large retailers are establishing a new market standard, making traceability a competitive necessity. He projected traceability could represent 50% of revenue within three years as the company doubles in size. Fields emphasized that the immediate focus is on perfecting the core retail food offering, stating that their proprietary automation process is superior to what M&A could offer and that an acquisition would be a distraction. John Merrill (executive) added that growth in the legacy business is split evenly between Compliance and Supply Chain. He reiterated the capital allocation plan to first redeem all preferred shares before resuming common stock buybacks or increasing dividends, all while maintaining a stable operating cost base.

Thomas Forte of D.A. Davidson & Co. asked about ReposiTrak's strategy, including whether the culling of low-margin customers is complete, plans for adjacent markets, and international expansion. He also inquired about capital allocation, specifically the potential for a special dividend, the company's use of AI, its current operating cost structure, M&A appetite, and the source of management's high confidence in its cross-selling opportunities.

Answer

Executive Randall Fields explained that while the customer portfolio adjustment is largely done, they retain the option for more if needed. He stated the primary focus is on US execution and add-on products for the current traceability network, deferring major international and M&A efforts to avoid distraction. Executive John Merrill noted that a special dividend isn't off the table but he prefers a predictable, increasing quarterly dividend. Merrill also reiterated the base cost to run the business is around $12 million, though it can flex with investments. Fields attributed their confidence to having firm contracts in place for thousands of suppliers, shifting the traceability initiative from 'hope to real.'

Thomas Forte sought broader insights into Alliance Entertainment's strategic M&A opportunities, beyond the recent acquisition related to authenticated collectibles.

Answer

CEO Jeff Walker indicated that Alliance Entertainment is continuously engaged in numerous M&A conversations across various categories. He emphasized the company's focus on identifying the right opportunities that are financially accretive and align with strategic goals, noting that the timing and fit of potential acquisitions can evolve over time.

Thomas Forte questioned Alliance Entertainment's broader strategic M&A opportunities, beyond the recent acquisition related to authenticated collectibles.

Answer

CEO Jeff Walker indicated a robust pipeline of M&A conversations across various categories. He emphasized that the company continuously evaluates opportunities based on financial metrics and the requirement for acquisitions to be accretive to Alliance Entertainment, noting that timing and strategic fit are crucial considerations.

Thomas Forte asked about Alliance Entertainment's ability to secure similar exclusive distribution deals with other studios following the Paramount agreement, the impact of tariffs on the business and mitigation strategies, and the company's capital allocation priorities, including reinvestment, debt reduction, strategic M&A, and stock buybacks.

Answer

CEO Jeff Walker stated that the company is diligently working on securing similar long-term opportunities for physical DVD distribution consolidation with other studios. Regarding tariffs, Mr. Walker explained that music and video segments have minimal impact, while the collectibles side, particularly Handmade by Robots manufactured in China, incurs current tariffs, which are managed within cost structures without major impact on the brand. He noted that price increases from other collectible manufacturers are passed to retail, with no significant decline in consumer demand. For capital allocation, Mr. Walker clarified that daily cash collections sweep to reduce the line of credit, minimizing cash on hand. He indicated no desire for stock buybacks due to a small amount of stock in the market, emphasizing that generated cash is actively deployed into strategic acquisitions and internal investments for business growth.

Thomas Forte asked about Alliance Entertainment's capital allocation priorities, specifically regarding reinvestment in the business, debt reduction, strategic M&A, and potential stock buybacks.

Answer

CEO Jeff Walker explained that daily cash sweeps automatically reduce the revolving credit line, minimizing interest costs and cash on hand. He noted no current desire for stock buybacks due to a small float. The company prioritizes reinvesting generated cash into strategic acquisitions and internal growth initiatives.

Thomas Forte from Maxim Group inquired about the sustainability and potential for similar exclusive distribution deals like the Paramount Pictures agreement, the impact of tariffs on the business and mitigation strategies, and the company's capital allocation priorities including reinvestment, debt reduction, strategic M&A, and stock buybacks.

Answer

CEO Jeff Walker addressed the Paramount deal, noting ongoing efforts to secure similar long-term opportunities in physical DVD distribution consolidation. Regarding tariffs, he explained minimal impact on music and video, while for China-manufactured collectibles (Handmade by Robots), tariffs are managed within cost structures with price increases passed to retail without significant demand decline. On capital allocation, Mr. Walker highlighted daily cash sweeps for debt reduction, no plans for stock buybacks, and a focus on deploying cash into strategic acquisitions and internal growth investments.

Thomas Forte from Maxim Group inquired about the pricing strategy for the Loved by Lovesac re-commerce program, specifically the discount offered to consumers and the gross margin contribution to Lovesac from these sales.

Answer

President Mary Fox explained that Loved by Lovesac products are typically discounted by 20-25% compared to new items, with two pricing tiers based on condition. CFO Keith Siegner added that the current year focused on building infrastructure for the program, with plans to expand and integrate it with a future trade-in program.

Thomas Forte inquired about the discount structure for consumers in the Loved by Lovesac re-commerce program and the gross margin contribution to Lovesac from these re-commerce sales.

Answer

President Mary Fox explained that Loved by Lovesac products are discounted 20-25% from typical prices, with two tiers based on condition. CFO Keith Siegner added that the current year focused on building infrastructure for the program, which is now in 27 states, positioning for future trade-in initiatives.

Thomas Forte inquired about Lovesac's promotional strategy in a highly competitive environment and asked how the gross margin of the new recliner compares to other products.

Answer

CEO Shawn Nelson stated that Lovesac is intentionally avoiding deep discounts to protect long-term brand value, noting new products like the recliner are not heavily promoted. President & COO Mary Fox added that the company aims to keep promotions with a '3 in front of them.' Shawn Nelson also confirmed that the new recliner's gross margin is in line with the company's overall strong margin profile, which is among the highest in the category.

Thomas Forte asked about the company's new product development strategy, particularly for adjacent categories like AnyTable, and inquired about the gross and contribution margins of these new innovations.

Answer

CEO Shawn Nelson explained that the 'Design for Life' philosophy guides all innovation, with a current focus on the living room. He described AnyTable as a 'straddle product' that enhances the core Sactionals platform but has potential to grow. CFO Keith Siegner and President/COO Mary Fox added that new products are engineered to meet target margin profiles and that marketing efforts leverage the existing platform to drive sales efficiently.

Thomas Forte of Maxim Group asked how quickly Lovesac could move all of its sourcing out of China if necessary and questioned how investors should view the potential catalyst of lower interest rates unlocking housing market demand for furniture sales.

Answer

CEO Shawn Nelson, speaking from China, stated that Lovesac operates with redundant sourcing for nearly all critical products and sees a clear path to reducing China sourcing below 10% this year, with the potential to exit completely. CFO Keith Siegner and CEO Shawn Nelson addressed the macro question, stating that while lower rates would be welcome, the company is focused on controlling its own growth through product innovation like EverCouch. They highlighted their flexible supply chain is ready to capture any rebound in housing turnover.

Thomas Forte inquired about the strategic importance of Olin Lancaster's appointment as Chief Revenue Officer and the company's efforts to mitigate tariff impacts by focusing on domestically sourced influencer brand products, such as food items.

Answer

Robert D'Loren, Founder, Chairman, and CEO of Xcel Brands, highlighted Olin Lancaster's 25+ years of experience and his current focus on launching new influencer brands with licensing partners. D'Loren also noted the opportune timing of signing influencers like Gemma Stafford and Jenny Martinez, whose food products are domestically sourced, aligning with retailers' eagerness for such items and helping to mitigate tariff risks. He added that licensees are actively shifting sourcing away from China.

Thomas Forte inquired about the strategic importance of Olin Lancaster's hire as Chief Revenue Officer and how Xcel Brands attracted him. He also asked about the company's efforts to mitigate tariff impacts by focusing on domestically sourced influencer brand products, particularly in food.

Answer

Robert D'Loren, Founder, Chairman, and CEO, highlighted Olin Lancaster's 25+ years of experience from companies like Ralph Lauren and his current role in launching new influencer brands. D'Loren noted that the timing for signing influencers like Cesar Millan, Gemma Stafford, and Jenny Martinez was perfect, as QVC and other retailers are eager for domestically sourced food and pet supplement products, which helps mitigate tariff risks. He added that licensees are shifting sourcing out of China, and these new brands are set to launch in Q1 2026.

Thomas Forte from Maxim Group inquired about A-Mark Precious Metals' current position in the market cycle, the company's strategic M&A outlook following recent acquisitions, the effectiveness of countercyclical acquisitions like Stack's Bowers Galleries, and the completion status of the Las Vegas distribution center upgrade.

Answer

CEO Gregory N. Roberts noted that while April showed strength, May and June were slower, with continued headwinds from high spot prices and compressed silver premiums. He expressed optimism about integration efforts optimizing expenses. Regarding M&A, Roberts stated A-Mark is always looking for opportunities and is ready to digest more acquisitions, especially in a slower market. He highlighted the strong performance of Stack's Bowers Galleries, with a record $62 million rare coin auction, confirming the countercyclical strategy's success. Roberts also confirmed the Las Vegas distribution center is 95% complete from an infrastructure standpoint, with ongoing software and IT integration, and has met expectations for increased capacity and cost savings.

Thomas Forte inquired about management's perspective on the current market cycle, the company's stance on strategic M&A after recent acquisitions, the effectiveness of countercyclical acquisitions, and the completion status of the Las Vegas distribution center upgrade.

Answer

CEO Gregory N. Roberts noted improved performance in April 2025 but slower conditions in May and June, citing high spot prices and premium spread headwinds. He confirmed A-Mark is actively seeking M&A opportunities, believing the team is ready to digest new acquisitions, especially in slower markets. Roberts highlighted the strong countercyclical performance of Stack's Bowers Galleries with a record $62 million rare coin auction. He also stated the Las Vegas distribution center infrastructure is 95% complete, with ongoing IT integration, delivering expected capacity and cost savings.

Thomas Forte inquired about A-Mark's current position in the market cycle, the company's strategy regarding future strategic M&A, the progress and effectiveness of countercyclical acquisitions, and the completion status of the Las Vegas distribution center upgrade.

Answer

CEO Greg Roberts explained that the market saw strength in April but slowed in May and June, with continued high spot prices and premium headwinds. He expressed optimism about integration efforts. Regarding M&A, Roberts stated A-Mark is always seeking opportunities and is ready to digest new acquisitions, balancing capital allocation. He highlighted the success of Stack's Bowers' rare coin auction as proof of countercyclical benefits. For the Las Vegas facility, Roberts confirmed it's 95% complete, with infrastructure finished and IT integration ongoing, delivering expected capacity and cost savings.

Thomas Forte asked for an explanation of how market backwardation affected Q3 results and when A-Mark last experienced it. He also questioned A-Mark's earnings power during macroeconomic uncertainty with a strong, one-way trade in gold. In a follow-up, he inquired about the potential exhaustion of inventory from long-time holders selling back, the financial impact of the Las Vegas facility upgrades, and the company's current stance on share buybacks.

Answer

Executive Gregory Roberts explained that backwardation, caused by tariff fears, negatively impacted trading revenue by making it costly to hold the company's large short hedge position, a situation last seen materially post-COVID. He noted that while A-Mark historically performs best in active silver markets, it has performed well in the current gold-dominated market. Roberts also addressed follow-ups, stating that customer sell-backs increase secondary supply, impacting demand for new products. He projected the Las Vegas facility automation could boost package processing by 50-75% without more staff, creating efficiencies. On capital allocation, he reiterated that buybacks are considered alongside acquisitions, dividends, and inventory reduction, with a current focus on integrating recent M&A.

Thomas Forte of Maxim Group asked for a historical comparison to the current market of low volatility and high gold prices. He also inquired about the countercyclical benefits of the numismatics and wine businesses from the pending Spectrum Group International (SGI) acquisition, and later asked about capital allocation priorities between M&A, dividends, and share buybacks.

Answer

Gregory Roberts, an executive, explained that the current market, with its high percentage of customer buybacks, is unprecedented since 1980. He detailed that the SGI acquisition, particularly Stack's Bowers, offers complementary higher-margin business in a period of low bullion premiums. Roberts affirmed the company's strategy of balancing M&A with shareholder returns, noting that active M&A pursuits can temporarily pause share repurchases, but all are key components of their capital allocation strategy.

Thomas Forte of D.A. Davidson & Co. asked about the levers A-Mark can use to stimulate demand in a challenging environment and inquired about the company's current strategy for strategic M&A.

Answer

Executive Gregory Roberts explained that the company can increase marketing to attract new customers and is positioned to capitalize on brief spikes in demand. He noted that the M&A pipeline is very active, highlighting the recent strategic acquisition by Silver Towne Mint and expressing optimism about closing more favorable deals within the next 90 days.

Thomas Forte of D.A. Davidson & Co. asked for confirmation that A-Mark performed well and generated significant profit despite a challenging market where gold prices moved steadily up, and also inquired about the company's high-level thoughts on the current M&A environment.

Answer

Executive Gregory Roberts agreed, highlighting the nearly $90 million in EBITDA for the year as a strong performance given market headwinds and low volatility. He noted that the company successfully grew its DTC customer base to over 3 million and is well-prepared for future opportunities. Regarding M&A, Roberts stated the pipeline is "busier than ever" with both large and small opportunities, and A-Mark is well-positioned with liquidity to pursue acquisitions, which remain a top priority for capital allocation.

Thomas Forte of Maxim Group inquired about the performance of the Noble House portfolio in the second quarter, the progress of its SKU rationalization, and the impact of the dynamic tariff environment on sourcing costs between China and Southeast Asia.

Answer

CFO Erica Wei explained that the Noble House SKU rationalization is ahead of schedule, with 1,200 new SKUs introduced, which drove better-than-expected margin performance in Q2. She noted the portfolio should stabilize by the next peak season. Regarding sourcing, Wei emphasized that GigaCloud's strategy relies on flexibility and a large, dynamic supplier network to navigate rapid policy changes.

Thomas Forte of Maxim Group inquired about the Q2 performance of the recently acquired Noble House portfolio and the progress of its SKU rationalization. He also asked how the company is managing sourcing costs amid a dynamic tariff environment, particularly concerning shifts from China to Southeast Asia.

Answer

CFO Erica Wei explained that the Noble House SKU rationalization is ahead of schedule, with 1,200 new SKUs introduced and 3,800 retired, leading to better-than-expected margin performance. She noted the process should stabilize by the next peak season in Q2 2026. Regarding sourcing, Wei emphasized that the company's key strategy is maintaining flexibility through its large and dynamic network of suppliers to adapt to policy changes.

Thomas Forte from Maxim Group posed four questions regarding GigaCloud's strategy, asking about the marketplace's role in international expansion, the real-world price impact of tariffs, interest in new product categories, and the company's current M&A appetite.

Answer

CFO Erica Wei explained that the marketplace empowers international expansion by offering sellers flexible, pay-as-you-go logistics, reducing capital risk. On tariffs, she clarified that they apply only to the value of goods, not total costs, so price hikes are not 1-to-1. She confirmed the platform already supports diverse non-furniture categories like auto parts and fitness equipment. For M&A, she stated GigaCloud is actively interested in assets that support European growth and enhance its service capabilities for brick-and-mortar retailers.

Thomas Forte asked about the implications of the increasing frequency of major e-commerce sales events and inquired about the company's current strategy for M&A given its strong balance sheet.

Answer

CFO Erica Wei acknowledged that frequent sales events reflect increased consumer price sensitivity and positioned GigaCloud's platform as a solution for retailers to enhance supply chain efficiency and diversify sourcing. Regarding M&A, Wei confirmed the company is actively seeking opportunities, with a focus on targets that either strengthen its European infrastructure and relationships or expand its reach into new market segments, particularly brick-and-mortar retail, similar to the Wondersign acquisition.

Thomas Forte asked a series of five questions covering GigaCloud's growth strategy, the drivers of its impressive European growth, the impact of major retail sales events in October, the company's current approach to strategic M&A, and its pricing power to pass on incremental freight costs.

Answer

Executive Iman Schrock and CFO Erica Wei responded. Schrock addressed category growth, emphasizing the vast runway within the $60 billion furniture TAM, which remains the core focus, though other bulky categories are naturally entering the platform. Wei explained that rapid European growth is driven by starting from a small base, having established infrastructure, and the fragmented nature of the market. She noted that recent October retail sales felt 'a little softer' across the board. For M&A, Wei outlined three target areas: complementary product businesses, technology enhancers, and European accelerators. Regarding pricing power, she stated that while GigaCloud has the ability to pass on costs, the current soft market makes cost management a more prudent strategy.

Thomas Forte asked if Beyond Inc. could compel its portfolio company tZERO to go public. He also inquired if the newly announced contingent value right (CVR) could trade on the tZERO platform and asked about the potential timeline for a GrainChain IPO.

Answer

Executive Chairman Marcus Lemonis stated that while Beyond can compel tZERO, they prefer mutual alignment on value creation and emphasized that the time for a liquidity event is "right now." He clarified the CVR is intended to trade on the NYSE for broad investor accessibility. Regarding GrainChain, he noted an IPO is a possibility they are exploring, but they want to wait for GrainChain to announce its recent major deals to establish a proper valuation marker first.

Thomas Forte asked for a comparison of the tokenization strategies for Overstock versus buybuy BABY, the definition of success for these initiatives, and the potential valuation impact on the company's blockchain investments.

Answer

Executive Chairman Marcus Lemonis explained that the Overstock token was a proof-of-concept to validate the tZERO platform and identify system improvements. The upcoming buybuy BABY token will apply these learnings to a different audience. He stressed the overarching goal is to monetize the entire blockchain portfolio, including tZERO and GrainChain, to demonstrate what he believes is a materially undervalued part of the company's assets for shareholders.

Inquired about the strategy to generate shareholder value from the Medici Ventures portfolio, specifically the role of a potential buybuy BABY token, and asked for a timeline on an update for GrainChain's performance.

Answer

The company is taking a more active role in unlocking value from the Medici portfolio. Tokenizing an asset like buybuy BABY is viewed as creating the ultimate loyalty program, giving token holders benefits and a share in the brand's monetization. This initiative also aims to prove the efficacy of tZERO's platform, in which they are a major shareholder. This strategy is intended to unlock value without requiring new capital investment. No specific timeline was given for a GrainChain update, but significant partnership announcements are expected in the coming weeks and months.

The analyst asked about the impact and longevity of the 'Cards on the Table' marketing campaign on sales, and how the new store prototype is designed to improve sales of new products.

Answer

Joe Vernachio explained that the 'Cards on the Table' campaign successfully re-inserted Allbirds into the cultural conversation, generating significant views and subscriber growth. He noted the content is evergreen and its viewership is still growing. The plan is to connect future product messaging back to this campaign to resurface it and maintain momentum. Regarding the new store prototype, he described changes like making all shoes accessible for customers to handle, and adding more 'touchdown spaces' for storytelling. He reported that the Hayes Valley pilot store saw a noticeable increase in daily sales, prompting the rollout to two more locations. The facelift is economical but delivers a powerful financial lift.

Thomas Forte inquired about the favorable and unfavorable surprises encountered during the PSQ Payments rollout and asked about the future product pipeline for the Brands division, specifically plans for expansion beyond its current categories.

Answer

Chairman and CEO Michael Seifert responded that the PSQ Payments rollout saw overwhelmingly positive demand, creating a merchant backlog. The main challenge was prioritizing implementation amidst merchants' broader tech stack reviews. Regarding the Brands division, Seifert explained that future expansion will focus on home essentials like cleaning products, guided by direct customer feedback from their ambassador program.

Thomas Forte of D.A. Davidson & Co. asked about the resilience of the digital advertising market amid current macroeconomic challenges and inquired about performance differences across advertiser verticals, especially those potentially impacted by tariffs.

Answer

CEO Michael Blend stated that as a performance marketer, System1 has not yet seen significant negative impact, as this segment is typically the last to be affected in a downturn. He also noted no major shifts across advertiser verticals related to tariffs. CFO Tridivesh Kidambi added that advertising channels with a high, measurable ROI, like their Google partnership, are the last to be cut from marketing budgets.

Thomas Forte of D.A. Davidson & Co. asked about System1's perspective on AI developments like DeepSeek, its ability to invest in RAMP with low CapEx, the company's balance sheet and debt management strategy, and the impact of political advertising cycles on its business model.

Answer

Co-Founder and CEO Michael Blend explained that broad AI competition is lowering costs, while internal AI adoption is driving 2-4x productivity gains in engineering and enabling rapid product launches. He also noted that the conclusion of the political ad season is a net positive for System1, as it reduces media buying costs. CFO Tridivesh Kidambi addressed the balance sheet, acknowledging the 5.6x net leverage is higher than desired but stated the company is confident in its ability to grow into it, with 2.5 years remaining on its current credit agreement.

Thomas Forte of D.A. Davidson & Co. asked about the strategy behind MapQuest's successful brand revival, the potential impact of the post-election advertising landscape, and recent AI-driven enhancements to the RAMP platform.

Answer

Co-Founder and CEO Michael Blend explained that MapQuest was resurrected by moving it to System1's tech stack and consistently adding user-focused features, leading to record traffic. He noted that while a post-election ad market may lower buy-side costs, guidance was withheld due to sell-side volatility in Google's Search Partner Network. Blend also confirmed that AI is dramatically improving the RAMP platform's efficiency in creating ad content and campaigns, though the full financial impact is currently masked by the Google-related issues.

Thomas Forte asked for a performance comparison across event categories (concerts, sports, theater) and for an update on capital allocation priorities, including cash conversion, buybacks, and M&A.

Answer

CFO Larry Fey detailed that at an industry level, concerts have been volatile but slightly up, sports are down due to tough comps, and theater has been strong. He noted Vivid Seats' performance was broadly similar. Regarding capital allocation, Fey stated that with lower GOV and EBITDA, cash generation will be limited. Consequently, the bar for M&A is high, and the company will continue to evaluate share repurchases based on valuation.

Thomas Forte asked for comments on published reports that Vivid Seats was exploring a sale. He also inquired about the outlook for free cash flow conversion in 2025 and the company's current stance on strategic M&A.

Answer

CEO Stan Chia declined to comment on 'unsubstantiated rumors or speculation' regarding a potential sale. CFO Larry Fey stated that 2025 free cash flow conversion should revert to historical levels if growth returns, and noted that the company is 'pretty cautious about M&A in the near term,' as it's difficult to find targets at multiples lower than where Vivid Seats itself has been trading.

Thomas Forte asked for the company's thoughts on emerging sports trends like women's professional sports and soccer, and for an update on its capital allocation priorities.

Answer

CEO Stanley Chia confirmed the company is seeing strength and growth from emerging sports, citing women's NCAA basketball and the WNBA as new contributors. CFO Lawrence Fey reiterated that capital allocation priorities remain focused on accretive M&A and share buybacks, noting that buybacks become more compelling when the company's stock is attractively priced.

Thomas Forte asked a series of questions regarding the toy industry's ability to pass costs to consumers, the feasibility of moving manufacturing out of China, the impact of tariffs on licensing visibility, and if the environment is creating new M&A opportunities.

Answer

Stephen Berman (executive) stated that tariff costs are essentially a consumer tax that will be passed on, likely impacting sales of higher-priced items most. He noted that while some large plastic items can be sourced in the U.S., the majority of manufacturing will remain in Asia due to specialized skills and safety track records, with Chinese vendors often leading expansion into other Asian countries. On the licensing front, Berman sees the current disruption as an opportunity to gain share and partnerships as indebted competitors struggle. Similarly, he confirmed that the challenging environment is creating more strategic M&A opportunities, which JAKKS is well-positioned to evaluate given its debt-free balance sheet and strong liquidity.

Thomas Forte of Maxim Group inquired about the implications of retailers dedicating more floor space to toys, the strategy for sales to value-focused retailers, the impact of increased e-commerce sales events, the company's currency exposure, and the current strategic importance of box office performance.

Answer

CEO Stephen Berman confirmed that JAKKS is gaining more shelf space globally due to its multi-tier development process that creates distinct product lines for mass, specialty, and value channels. He noted that major e-commerce sales events are a clear opportunity the company capitalizes on. CFO John Kimble addressed currency, explaining that with over 75% of business denominated in U.S. dollars, FX exposure is minimal. Finally, Berman stated that while the box office is an enhancement, the company's diversified portfolio of evergreen and private label brands reduces its dependency on theatrical success for 2025.

Thomas Forte of Maxim Group asked about the current value of intellectual property, questioning if hit films are still essential for success. He also inquired about the competitive landscape and JAKKS' ability to secure additional retail shelf space with its new product lines.

Answer

Executive Stephen Berman explained that while theatrical IP is important, many successful lines like the Princess Style Collection are evergreen and perform well without new film support. He stated that JAKKS gains shelf space when competitors falter, leveraging its quick-to-market capabilities. He also highlighted the use of exclusive products and out-of-aisle placements to expand retail footprint beyond traditional toy aisles.

Thomas Forte of Maxim Group asked about the potential impact on monthly active users from key influencer Dan Bongino's departure, the company's Bitcoin treasury purchase strategy, and how Rumble successfully attracted creators like Dr. DisRespect and the White House. He also inquired about the drivers of improved content margins and the source of the CEO's increased confidence.

Answer

CEO Christopher Pavlovski explained that a new 'Rumble lineup' feature successfully transitioned Dan Bongino's audience to other creators, mitigating the impact. He positioned the Bitcoin treasury strategy as an alignment with the crypto community and a long-term investment. Pavlovski attributed recent content success to a fully operational monetization suite (RAC, sponsorships, premium) and a new creator program. He stated his heightened confidence stems from the strategic investment by Tether, the significant upside in brand advertising, and a shared vision to compete directly with Google's ecosystem.

Thomas Forte asked about Rumble's plans to retain high user engagement post-election, the current state of its advertising tools and user interface, and the sales cycle for its cloud services.

Answer

Christopher Pavlovski, Founder, Chairman and CEO, addressed all questions. He stated that product improvements and the Rumble Premium offering, which now includes exclusive content like Steven Crowder's MugClub, are driving higher engagement and stickiness than in the past. He confirmed that the Rumble Advertising Center (RAC) is in its best shape ever, with the introduction of mid-roll ads creating a positive flywheel for both ad revenue and premium subscriptions. Regarding the cloud, he acknowledged long sales cycles but noted that conversations with large enterprise and government clients are progressing well.