Executive Summary

Q4 2023 revenue accelerated to ~$1.6M gross sales (approx. $1.48M net), up 43% sequentially from Q3 as new customers ramped; management highlighted a ~$6.4M annualized revenue run-rate and expects high growth and margin improvement in 2024 .
Despite top-line momentum, Q4 gross margin was negative (~-12.7%) and operating loss widened, driven by elevated COGS and a Q4 impairment related to the Peru co-manufacturer disruption that also increased costs by forcing a shift to higher-cost sourcing .
Customer concentration is high (Walmart 77% and Costco 13% of 2023 sales), and supply-chain risk rose after loss of access to the Peru dehydration machine; resolving production logistics is a key near-term margin catalyst .
No Q4 earnings call transcript or numeric guidance was filed; consensus estimates from S&P Global were unavailable via API at the time of request, so estimate comparisons could not be provided.

What Went Well and What Went Wrong

What Went Well
- Strong Q4 momentum: “BranchOut had a great fourth quarter with preliminary revenue nearly double all of last year’s revenue,” with ~43% sequential revenue growth vs. Q3 and ~$6.4M annualized run-rate .
- New customer launches and product expansion drove revenue acceleration into year-end; management expects continued high revenue growth and improving gross margin in 2024 .
- Full-year revenue grew 276% to $2.83M, reflecting successful big-box retail expansion (notably Walmart/Costco) .
What Went Wrong
- Supply chain/manufacturing disruption: Peru co-manufacturer suspended operations in Q4 amid a legal dispute with its landlord; BranchOut lost access to its dehydration machine, raising costs and pressuring margins .
- Q4 margin compression: Q4 gross margin turned negative (~-12.7%) and operating loss widened as COGS rose and the company recorded a Q4 impairment ($761k) tied to the Peru partner (note receivable, VAT, and prepaid inventory) .
- High customer concentration and continued operating losses highlight execution risk and reliance on a small number of large retail partners (Walmart 77%, Costco 13% of FY23 net sales) .

Note: Q4 net figures are derived as FY 2023 minus 9M 2023 from filed reports.

Metric	Q2 2023	Q3 2023	Q4 2023
Net Revenue ($)	$343,065	$906,996	$1,478,454 (FY $2,825,855 – 9M $1,347,401)
COGS ($)	$305,703	$878,664	$1,666,559 (FY $2,922,085 – 9M $1,255,526)
Gross Profit ($)	$37,362	$28,332	-$188,105 (derived)
Gross Margin (%)	10.9% (derived)	3.1% (derived)	-12.7% (derived)
Operating Loss ($)	-$753,870	-$698,990	-$1,442,805 (FY -$3,502,158 – 9M -$2,059,353)
Net Loss ($)	-$973,510	-$705,993	-$1,469,114 (FY -$3,925,710 – 9M -$2,456,596)
EPS (Diluted)	N/A (not disclosed)	N/A (not disclosed)	N/A (not disclosed)

Additional reported items:

Preliminary gross revenue for Q4 2023: ~$1.6M (43% seq growth vs. ~$1.1M Q3 gross revenue) .
Full-year revenue: $2.83M (up 276% YoY from $0.75M) .
Impairment recorded in 2023: $761,085 tied to Peru co-manufacturer (note receivable, VAT, prepaid inventory) .

No segments disclosed; core revenue from branded/private label snacks and powders. Customer concentration: Walmart 77%, Costco 13% of FY23 sales .

No numeric guidance issued; directional commentary only.

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth	FY 2024	None	Expects revenue to “grow at high rates”	Introduced directional outlook
Gross margin	FY 2024	None	Expects gross margin to “continue to improve” as year progresses	Introduced directional outlook

No Q4 earnings call transcript was filed; themes synthesized from 10-Q/10-K and press release.

Topic	Q2 2023 (Prior-2)	Q3 2023 (Prior-1)	Q4 2023 (Current)	Trend
Manufacturing & supply chain	First production run on large-scale dehydration machine completed Q1; ramping capacity	Bulk shipping lowered COGS; margins modestly positive	Peru co-manufacturer suspended; loss of access to dehydration machine increased costs; impairment recorded	Deteriorated in Q4
Retail/customer expansion	Big-box wins; online + wholesale channels	Net revenue up 399% YoY in Q3	Strong Q4 momentum; new customers drove acceleration	Improving
Gross margin trajectory	Positive in Q2 (10.9%)	3.1% in Q3	Negative in Q4 due to higher COGS/sourcing shifts	Mixed/near-term pressure
Customer concentration	High (KEHE/Walmart)	High (big-box driven)	FY23: Walmart 77%, Costco 13%	Persistent risk
Liquidity/capital actions	IPO completed; debt converted	—	Jan-24: $400k notes + warrants; CFO change (risk oversight)	Neutral; adds flexibility

“BranchOut had a great fourth quarter with preliminary revenue nearly double all of last year’s revenue… We expect revenue to continue to grow at high rates in 2024 and gross margin to continue to improve as the year progresses.” — Eric Healy, CEO .
On Peru manufacturing disruption: “During the fourth quarter of 2023… manufacturer suspended operations… we currently do not have access to the dehydration machine… we have been able to continue to fulfill orders by shifting fulfillment to other manufacturing sources, [but] our costs of goods are expected to increase.” .

No earnings call transcript for Q4 2023 was filed; no Q&A available in company documents for this period.

Wall Street consensus (S&P Global) was unavailable via API at the time of request; as a result, we cannot present “vs. estimates” comparisons for Q4 revenue or EPS. The company also did not disclose quarterly EPS in filings reviewed.

Revenue trajectory is improving: Q4 net revenue of ~$1.48M (vs. $0.91M in Q3 and $0.34M in Q2) with preliminary gross Q4 sales of ~$1.6M and a ~$6.4M run-rate exiting 2023 — a positive demand signal into 2024 .
Margin recovery is the swing factor: near-term gross margin remains under pressure after the Peru disruption and sourcing shifts; resolving production/logistics and regaining access to the dehydration asset would be a material catalyst for margin normalization .
Concentration risk: Walmart/Costco dominance in the mix heightens execution sensitivity to individual retailer resets; diversifying the customer base and expanding SKUs should reduce volatility over time .
Balance sheet and governance moves: post-Q4 financing ($400k notes/warrants) and CFO change (Jan-24) suggest a focus on liquidity and financial oversight during a scaling phase .
2024 setup: Management’s directional guide (high growth, improving margins) plus new customer launches could drive upside if supply chain stabilizes; lack of broad analyst coverage may increase event-driven volatility .
Trading implications: Watch for updates on (i) Peru asset access or alternative capacity, (ii) gross margin progress by mid-2024, and (iii) large-retailer order cadence; positive developments could re-rate shares on improved profitability visibility .

References:

Preliminary Q4 press release and 8-K Item 2.02
Q2 2023 10-Q financials and MD&A
Q3 2023 10-Q financials and MD&A
FY 2023 10-K financials/MD&A (Q4 derivations, impairment, customer concentration, supply-chain disclosures)
Jan 2024 8-K (financing, CFO change)