Executive Summary

Q4 revenue grew 7% sequentially to $0.749M with gross margin improving to 66% (from ~60% in Q3), driven by the shift from a third‑party digital pharmacy to in‑house distribution; non‑GAAP OpEx fell to $11.6M as headcount and customer acquisition costs declined .
EndeavorOTC traction continued: active subscribers rose to 11,571 in Q4 despite fewer first‑time downloads (139,499) as conversion and renewals improved; ARPU was $88 .
FY24 non‑GAAP OpEx guidance was cut to $38–$43M (from $42–$47M), gross margin target of 60–70% by late 2025 was reaffirmed, and cash runway guided into 2H25; FY23 cash and equivalents ended at $75.2M .
Potential stock catalysts: Japan partner Shionogi submitted SDT‑001 (localized AKL‑T01) for approval; FDA review of EndeavorOTC OTC marketing submission ongoing; no Q4 earnings call was held (communications via press release only); reverse split authorization to regain Nasdaq compliance on the 2024 proxy .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 66% in Q4 (from ~60% in Q3) on operational changes (insourced EndeavorRx fulfillment), indicating structural COGS improvements .
Non‑GAAP OpEx fell sequentially to $11.6M (from $14.7M in Q3) on headcount savings and lower customer acquisition costs, narrowing non‑GAAP net loss to $(10.8)M (from $(13.9)M) .
Strategic/regulatory progress: FDA authorized EndeavorRx label expansion to ages 13–17 (Dec. 18), more than doubling eligible pediatric patients; Shionogi reported positive Phase 3 results and filed in Japan; EndeavorOTC OTC submission under FDA review .

What Went Wrong

Total billings declined QoQ to $676k (from $699k) due to fewer EndeavorRx prescriptions as the company scaled the OTC business, highlighting Rx softness during the model transition .
First‑time downloads fell to 139,499 in Q4 (from 176,559 in Q3), suggesting higher‑funnel deceleration even as conversion/renewals improved .
Ongoing listing risk and potential dilution: company disclosed Nasdaq minimum bid deficiency in Oct. and is seeking shareholder authorization for a reverse split at the Apr. 17, 2024 Annual Meeting .

Financial Results

Sequential performance (oldest → newest)

Metric	Q2 2023	Q3 2023	Q4 2023
Revenue ($000)	$114	$702	$749
Gross Margin %	~-32%	~60%	66%
GAAP Total Operating Expenses ($000)	$15,281	$18,848	$12,120
Non-GAAP Total Operating Expenses ($000)	$13,060	$14,732	$11,564
GAAP Net Loss ($000)	$(11,759)	$(15,876)	$(11,147)
Total Billings ($000)	$170	$699	$676

Year-over-year comparison

Metric	Q4 2022	Q4 2023	YoY Change
Revenue ($000)	$111	$749	+574% (calc. from $111 and $749)

KPIs and product metrics

KPI	Q3 2023	Q4 2023
First-time app downloads	176,559	139,499
Active subscribers	7,535	11,571
ARPU ($/paying user)	$93	$88
EndeavorOTC Revenues ($000)	$553	$596
EndeavorOTC Billings ($000)	$533	$596

Segment/line-of-business highlights

Period	EndeavorOTC Revenue	EndeavorRx Revenue	Notes
FY 2023	$1.2M	$0.5M	OTC ramp post-June 2023 release
Q4 2023	$596k	—	Total revenue $749k; OTC detailed, Rx not separately disclosed in Q4 release

Versus Wall Street estimates

S&P Global consensus for AKLI Q4 2023 revenue and EPS was unavailable via our S&P Global connection at time of analysis; therefore, we cannot assess beats/misses versus consensus. No alternative consensus was identified in company materials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Non-GAAP Total Operating Expenses	FY 2024	$42–$47M	$38–$43M	Lowered
Gross Margin (non-prescription model)	By late 2025	60–70%	60–70%	Maintained
Cash Runway	Multi-year	Into 2H 2025	Into 2H 2025	Maintained

Earnings Call Themes & Trends

Note: Akili disclosed it would not host an earnings call for Q4/FY23; commentary is from company press releases .

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2023)	Trend
Regulatory/OTC pathway (EndeavorOTC)	Prepared and submitted adult EndeavorOTC OTC submission; continuing marketing under FDA enforcement policy	FDA review ongoing; status update expected by end of Q2 2024	Advancing
Pediatric label expansion (EndeavorRx)	Filing under review; expected to expand to 13–17	FDA authorization granted Dec 18, 2023	Positive inflection
Product performance (OTC)	Early adult demand; Q3 OTC rev $553k; ARPU $93; 7,535 active subs	Q4 OTC rev $596k; ARPU $88; 11,571 active subs despite fewer downloads	Mixed (subs ↑, ARPU/downloads ↓)
Gross margin/COGS	Q3 ~60% on OTC launch impact	66% in Q4, aided by in‑house fulfillment transition	Improving
OpEx discipline	Q2–Q3 focus on marketing efficiency; headcount reductions	FY24 non‑GAAP OpEx cut to $38–$43M	Improving
Partner progress (Shionogi)	Phase 3 completion expected Q1’24; planned 2024 filing	Positive P3; marketing application submitted in Japan	Positive

Management Commentary

“Our mid-year shift to a leaner, customer-centric model has yielded strong initial results, with revenue growth and gross margin improvement in 2023, that we believe will strengthen our ability to achieve profitability over time.” — Matt Franklin, CEO .
“This increased age range is expected to more than double the number of pediatric patients with ADHD who are now eligible for EndeavorRx …” — Dr. Scott Kollins, CMO (on FDA label expansion to 13–17) .
Q4 gross margin improvement “largely driven by a transition from a third-party digital pharmacy to an in-house distribution system for EndeavorRx order fulfillment” .

Q&A Highlights

No Q&A in Q4: Akili announced it would report via press release and not host an earnings conference call for Q4/FY23 .

Estimates Context

S&P Global consensus estimates for AKLI Q4 2023 (revenue and EPS) were unavailable via our S&P Global connection, and the company did not provide external consensus in its materials; as a result, we cannot declare beats/misses vs. consensus .
Given limited coverage and early-stage monetization, we expect sell-side estimates (where they exist) to adjust around: improving gross margin trajectory, reduced FY24 OpEx, and updated regulatory timelines (EndeavorOTC FDA review; Shionogi filing in Japan) .

Key Takeaways for Investors

Margin momentum is real: Q4 gross margin reached 66% vs. ~60% in Q3, aided by fulfillment insourcing; management still targets 60–70% by late 2025, implying room for sustained structural improvements .
Cost discipline sharpened: FY24 non‑GAAP OpEx was cut to $38–$43M (from $42–$47M), with Q4 non‑GAAP OpEx already down to $11.6M; this, combined with rising gross margins, narrows losses and extends runway .
OTC execution is the core driver: Q4 active subscribers rose to 11,571 despite lower downloads, signaling improved conversion/retention; maintaining ARPU while scaling efficiently is key to profitability .
Regulatory catalysts ahead: FDA review of EndeavorOTC OTC submission (status update expected by end of Q2 2024) and Japan SDT‑001 application via Shionogi represent near‑ to medium‑term sentiment drivers .
Cash runway into 2H25 reduces near‑term financing risk, but listing compliance remains a watch item; reverse split authorization planned for the 2024 Annual Meeting to regain Nasdaq compliance .
Rx softness during the transition: total billings dipped QoQ on fewer EndeavorRx prescriptions; monitoring pediatric ramp post‑label expansion (13–17) will be important for the legacy Rx channel .
No Q4 call limits color; investors should track upcoming conference appearances and filings for updates on FDA timelines, CAC trends, and cohort retention .

Appendix: Additional Data Points

FY23 revenue was $1.7M (OTC $1.2M; Rx $0.5M); cash and equivalents at year-end were $75.2M; FY23 GAAP OpEx $65.3M; FY23 non‑GAAP OpEx $53.4M .
Q4 2023 GAAP net loss was $(11.1)M; non‑GAAP net loss was $(10.8)M .
Q4 2023 total billings were $676k; EndeavorOTC revenues and billings were $596k .
Q3 2023 revenue was $702k; Q3 total billings $699k; Q3 gross margin ~60% .
The company announced on Feb. 21 that it would report Q4/FY23 via press release and not host a call; CEO scheduled a fireside chat at TD Cowen on Mar. 4, 2024 .

Akili, Inc. (AKLI)·Q4 2023 Earnings Summary