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ChromaDex Corp. (CDXC)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue was $22.7M, up 12% year-over-year; gross margin was 60.2% and net loss was approximately breakeven ($15K), with positive Adjusted EBITDA of $1.6M .
  • Management lowered FY2024 revenue growth guidance to 10–15% (from “>16%” previously) and reduced FY2024 G&A outlook to down $1.5M YoY (from up $1.5–$2.5M), citing later-than-expected NIAGEN+ IV commercialization; gross margin “slight improvement” and S&M stable % of sales maintained .
  • Launch of NIAGEN+ IV and injectables is a near-term catalyst; supply constraints drove October scaling, with clinic injectables expected in 2–3 months and potential at-home injectables by year-end or Q1 2025 .
  • Strategic science/regulatory progress: FDA Orphan Drug and Rare Pediatric Disease designations for nicotinamide riboside chloride (NRC) in AT; new peer-reviewed publications in PAD and brain NAD+ elevate the medium-term narrative .
  • Note: management commentary on e-commerce mix (57% current vs 64% prior year) conflicted with the investor presentation (64% Q2’24 vs 57% Q2’23); figures in the presentation and press release indicate 64% e-commerce in Q2’24 .

What Went Well and What Went Wrong

What Went Well

  • Revenue growth and profit trajectory: Total net sales rose 12% YoY to $22.7M; Adjusted EBITDA improved to $1.6M from $0.2M in Q2’23; operating loss narrowed to $0.3M .
  • Product and science milestones: Unveiled NIAGEN+ (IV and injectable), launched NIAGEN+ NAD+ Test Kits; FDA orphan/rare pediatric designations for NRC in AT; new clinical publications (Nature Communications PAD trial; UPenn brain NAD+ study) bolster legitimacy .
  • Management quote: “We are thrilled to finally unveil our new product line, Niagen+, … the first company to offer NR in both oral and intravenous forms” — Rob Fried, CEO .

What Went Wrong

  • Guidance reset: FY2024 revenue growth lowered to 10–15% due to delays in NIAGEN+ IV commercialization; G&A outlook pivoted from an increase to a $1.5M YoY decrease given timing shifts .
  • Margin pressure: Gross margin fell 60 bps YoY to 60.2% on business mix; S&M rose to 30.6% of sales as brand investments increased without last year’s one-time Amazon event tailwind .
  • Working capital drag: Operating cash flow was roughly breakeven for 1H’24 vs $6.1M inflow prior year, driven by higher trade receivables (+$4.2M) and lower accounts payable (-$2.5M) .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$21.2 $22.2 $22.739
Gross Margin (%)61.0% 60.7% 60.2%
Net Income (Loss) ($USD Millions)$0.114 $(0.5) $(0.015)
EPS ($USD)N/A$(0.01) $0.00
Operating Loss ($USD Millions)N/A$(0.7) $(0.256)
Adjusted EBITDA ($USD Millions)$1.247 $0.670 $1.575
Cash & Equivalents ($USD Millions)$27.325 $27.565 $27.885

Segment/channel breakdown (Q2 2024 vs Q2 2023):

CategoryQ2 2023 ($M)Q2 2024 ($M)YoY Change
Tru Niagen net sales$16.9 $18.6 +10%
E-Commerce$11.6 (57% mix) $13.0 (64% mix) 0% YoY (slide shows 0%)
Watson’s & Other B2B$5.1 (25% mix) $5.6 (19% mix) +44%
NIAGEN Ingredient$2.5 (14% mix) $3.1 (12% mix) +26%
Analytical Standards & Services$0.7 (3% mix) $0.8 (4% mix) +9%
Other Ingredients$0.2 (1% mix) $0.2 (1% mix) -23%
Total Net Sales$20.3 $22.7 +12%

KPIs (mix and balance sheet):

KPIQ2 2023Q2 2024
Tru Niagen as % of Net Sales83% 82%
NIAGEN-related sales as % of Net Sales95% 96%
E-Commerce Mix57% 64%
Cash & Equivalents ($M)$26.406 (as of 6/30/2023) $27.885 (as of 6/30/2024)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth YoYFY 2024“Higher than 16%” (above FY2023 growth) ; reiterated “at least 16%” in Q1 10–15% Lowered
Gross MarginFY 2024Slight improvement YoY Slight improvement YoY Maintained
Selling & Marketing (% of sales)FY 2024Up in absolute $, stable % of sales Up in absolute $, stable % of sales Maintained
R&D ExpenseFY 2024Up in absolute $ Up in absolute $ Maintained
G&A ExpenseFY 2024Up $1.5–$2.5M YoY Down $1.5M YoY Lowered

Drivers: Later NIAGEN+ IV commercialization timing and infrastructure investments shifted to 2025; mix/cost optimization continues underpinning margin outlook .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023 and Q1 2024)Current Period (Q2 2024)Trend
NIAGEN+ IV rollout“New vertical” close to launch; FY2024 includes new launch revenue; heavier 1H R&D; margin slight improvement Commercialization took longer; limited Aug supply; larger October batch; expect >50% share; clinic and at-home injectables timing laid out Slower-to-scale near term; positive medium-term optionality
Marketing efficiency & e-commerceAmazon homepage event boosted 2023; aim for stable efficiency; website optimization ongoing E-commerce stable YoY; increased S&M without large one-time event; subscriptions rising; mix commentary conflicted with slides Incremental progress; mix clarification needed
Partners (Watsons, Nestlé, B2B)Watsons steady with expansion; Nestlé SKUs launched (Solgar, Pure Encapsulations); ingredient sales lumpy Watsons/B2B up 44% (timing aided); partner marketing driving strong ingredient demand on Amazon Positive partner momentum
Regulatory/legalDelaware fee ruling disclosed; appeal planned; Blue Hat approval in China difficult Blue Hat remains challenged; NMN crackdown in China creates awareness issues for TRU NIAGEN Regulatory overhang persists
Science/R&DPAD, Parkinson’s NR-SAFE, Werner syndrome; “gold standard” NAD science; 1H heavier R&D AT orphan/rare designations; PAD and brain NAD+ publications; IND plans for AT Strengthening scientific narrative
China cross-borderH&H/SinoPharm cross-border efforts; website conversion challenges NMN banned cross-border; confusion between TRU NIAGEN and NMN; working with partners to drive transition Slow conversion but potential tailwind
Margin/costSlight GM improvement expected; S&M stable %; R&D and G&A up in prior outlook GM down 60 bps on mix; S&M % up; G&A guided down $1.5M due to timing Mixed; cost discipline evident

Management Commentary

  • “We delivered solid financial results…virtually breakeven net loss…positive Adjusted EBITDA of $1.6 million” — Rob Fried, CEO .
  • “Gross margins remained strong at 60.2%…modest decline mainly due to business mix” — James Lee, Interim CFO .
  • “NIAGEN IV will provide a superior experience…75% shorter infusion time and a faster elevation of NAD blood levels” — Rob Fried .
  • “We now anticipate a 10% to 15% year-over-year growth…revised our G&A expense outlook…down approximately $1.5 million” — James Lee .

Q&A Highlights

  • NIAGEN+ IV adoption: Biggest hurdle is supply availability, not demand; expect >50% share over time; scaling constrained until October batch arrives .
  • Market sizing: U.S. NAD IV retail market ~$100–$150M; clinics represent >50% of spend; NIAGEN IV/injectables seen as expanding addressable market .
  • Pricing/margins: NIAGEN IV priced slightly above NAD IV; expected to be margin accretive; potential complementary use with GLP-1 users seeking energy .
  • Timeline: Clinic injectables in 2–3 months; at-home injectables by year-end or Q1 next year (indicative) .
  • China: Blue Hat approval unlikely near-term; NMN banned as cross-border product; awareness gap persists between NMN and TRU NIAGEN .
  • B2B dynamics: Partner’s Amazon-heavy marketing on a combined product boosted NIAGEN ingredient sales materially; “lumpiness” remains .

Estimates Context

  • S&P Global consensus estimates for CDXC were unavailable at the time of analysis; comparisons to Wall Street consensus for Q2 2024 cannot be provided. Values retrieved from S&P Global were unavailable; therefore, no estimate comparisons are included.

Key Takeaways for Investors

  • Q2 delivered clean top-line growth and continued bottom-line improvement, highlighted by positive Adjusted EBITDA and near-breakeven net income — a supportive setup for any re-rating on sustainability of profitability .
  • The guidance reset reflects prudent timing assumptions for NIAGEN+ IV; the pivot to lowering G&A and maintaining margin discipline de-risks execution in 2H and into 2025 .
  • NIAGEN+ IV/injectables is the core near-term catalyst; October supply scaling, a clinic channel with established demand, and potential at-home injections broaden optionality and could expand the current ~$100–$150M NAD IV market .
  • Science/regulatory tailwinds (AT orphan/rare designations, PAD and brain NAD+ publications) bolster the medium-term thesis beyond dietary supplements, potentially opening therapeutic or professional channels .
  • Watch the China narrative: NMN cross-border ban is a structural tailwind, but consumer confusion remains; partner execution (H&H, SinoPharm, iHerb) is the key to unlocking transition .
  • Channel mix matters: e-commerce vs B2B/ingredient mix drives margin variability; note the discrepancy between call commentary and slide data on e-commerce mix — anchor modeling to presentation (64% Q2’24) until clarified .
  • Near-term trading implications: stock likely sensitive to October NIAGEN IV supply milestones, clinic adoption updates, and any clarity on injectables timing; medium-term considerations include 2025 growth trajectory, partner-driven ingredient demand, and clinical data readouts (e.g., Parkinson’s) .