Better Choice Co Inc. (BTTR)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 net revenue declined 14% YoY to $7.9M, while net loss narrowed 19% to $(2.8)M and EPS improved 28% to $(3.60); gross margin compressed 200 bps to 33% on discounting excess inventory and higher reserves tied to Halo Elevate expiration risk .
• Adjusted EBITDA improved 27% YoY to $(1.4)M; adjusted EBITDA margin improved 299 bps to (18)% as management emphasized “organizational change” and a “digital-first strategy” with fill rates averaging 96% and inventories reduced ~50% over 15 months .
• Channel mix shifted toward International (37% of sales, +12 pts YoY) and away from Brick & Mortar (7%, –12 pts), reflecting an exit from Petco stores and payment term changes to preserve cash in International; e-commerce remained the largest channel (41%) but declined YoY due to traffic softness .
• Liquidity/going-concern risk elevated: non-compliance with Alphia term loan covenants (debt callable), NYSE American notice for equity deficiency, and incremental borrowings on the Wintrust facility in April–May; share repurchase authorization up to $5.0M announced in April 2024 .

What Went Well and What Went Wrong

• What Went Well

  • “We are executing a digital first strategy… grow brand awareness and discoverability” with sustained 96% fill rates; inventory down ~50% in 15 months, supporting service levels and working-capital discipline .
  • Adjusted EBITDA improved 27% and adjusted EBITDA margin expanded 299 bps YoY; EPS improved 28% YoY to $(3.60) .
  • International mix increased to 37% of sales (from 25%) and Halo Elevate launched on Chewy with 4.6-star rating, indicating traction in key online channels .

• What Went Wrong

  • Revenue fell 14% YoY driven by tightened International payment terms to preserve cash and lower e-commerce traffic; gross margin fell 200 bps to 33% on discounted sell-through of excess inventory and a higher reserve tied to Halo Elevate expiry risk .
  • Liquidity and covenant pressures: Alphia term loan covenant non-compliance (debt callable), going-concern uncertainty, and need for additional capital or waivers; subsequent borrowings in Apr–May further underscore funding needs .
  • Structural pressures in Brick & Mortar (down to 7% of mix) following exits from Petco stores and Pet Supplies Plus; e-commerce softness weighed on top line .

Financial Results

Headline metrics (YoY comparison)

Additional non-GAAP and prior-quarter datapoints

Channel mix (Revenue and mix %)

KPIs and operational metrics

Balance sheet and liquidity snapshot

Drivers/Why: Management cited lower e-commerce traffic and tighter International terms to preserve cash as key revenue headwinds; margin compression was driven by discounting excess inventory and higher inventory reserves due to Halo Elevate expiration risk .

Guidance Changes

Note: The company did not issue quantitative revenue/EPS/margin guidance in the reviewed materials .

Earnings Call Themes & Trends

No Q1 2024 earnings call transcript was available in our sources; themes below synthesize 10-Q, Q3/Q4 press releases.

Management Commentary

• “We are executing a digital first strategy… marketing investment shifts to grow brand awareness and discoverability… improved our inventory levels by ~50% in the last 15 months, and… fill rates to an average of 96% for the quarter.” — Kent Cunningham, CEO .
• Q1 margin commentary: gross margin decreased 200 bps to 33% due to discounted sell-through of excess inventory and a higher inventory reserve tied to Halo Elevate expiration risk .
• Revenue drivers: decline primarily due to new International payment terms to preserve cash and a decline in e-commerce traffic .

Q&A Highlights

No Q1 2024 earnings call transcript was located; therefore, no Q&A themes or clarifications were available from primary sources. We searched for an earnings-call-transcript and found none for BTTR in the period reviewed.

Estimates Context

• Wall Street consensus (S&P Global) for Q1 2024 revenue and EPS was unavailable for BTTR via our SPGI interface due to missing CIQ mapping; we were unable to retrieve estimates or the number of estimates. Values from S&P Global were therefore unavailable.
• Implication: With no published consensus, there is no beat/miss determination vs estimates for Q1 2024.

Key Takeaways for Investors

• Execution vs liquidity: Operating KPIs (96% fill rates, inventory down ~50%) and adjusted EBITDA/EPS improvement signal operational progress, but covenant breaches, going-concern risk, and NYSE notice elevate financial risk; near-term equity or waiver financing is a key swing factor .
• Mix shift continues: Brick & Mortar contraction and pending DTC exit increase reliance on e-commerce and International; watch for e-commerce traffic recovery and International collection cycles under tighter terms .
• Margin trajectory: Q1 margin compression was driven by clearance of excess inventory and reserve builds; normalization of inventory and product mix improvements are required to re-expand gross margin .
• Brand engagement: Halo Elevate’s 4.6-star Chewy rating and Halo Holistic comprising ~75% of volume support brand health; marketing ROI under the digital-first playbook will be closely watched .
• Optionality in R&D: The Aimia acquisition opens GLP-1-inspired treats innovation, but it is pre-revenue and early-stage; timeline and regulatory positioning will determine contribution .
• Trading setup: Absent consensus anchors and with elevated financing risk, catalysts include any capital raise/waiver, cash-generating inventory normalization, and e-commerce traffic inflection; downside risks stem from further covenant pressures and slower online sell-through .

Citations

• Q1 2024 10-Q: .
• Q1 2024 Press Release (May 17, 2024): .
• Q4 2023 8-K/press release: .
• Q3 2023 8-K/press release: .