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Edible Garden AG Inc (EDBL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue declined to $2.72M (-13.2% YoY) as management continued exiting lower-margin floral/lettuce; gross profit improved nearly 4x YoY and gross margin rose to 3.2% on mix shift to shelf-stable CPG lines .
  • Against Wall Street consensus, revenue missed ($3.82M* vs $2.72M), while EPS was a modest beat (consensus -$3.03* vs actual -$2.47); coverage is limited (1 estimate each)* .
  • Non-perishable revenue grew 15% YoY; cut herbs grew 13% seasonally as CPG brands (Kick., Pickle Party, Squeezables, Pulp®, Vitamin Way/Vitamin Whey®) gained traction .
  • Strategic acquisition of NaturalShrimp assets (preferred-stock funded $15.5M) adds patents, refrigeration/warehousing, and R&D capacity; management expects operational synergies rather than immediate margin accretion from acquired operations .

What Went Well and What Went Wrong

  • What Went Well

    • Shelf-stable portfolio traction drove non-perishable revenue +15% YoY; gross profit +283% YoY with margin up to 3.2%, reflecting improved cost control and mix .
    • Expanded retail presence (Walmart, Stop & Shop, ShopRite, Berkot’s; later add Waverly/Key Food/NetCost/Marrazzo’s), reinforcing omnichannel strategy and merchandising (self-watering displays) .
    • Strategic acquisition completed; CEO: “enhancing…operational infrastructure and sustainability leadership,” integrating patented water-treatment tech into greenhouse ops .
    • Quote: “We are delivering on our plan to shift toward higher-margin, shelf-stable products… brands are building strong momentum” — CEO Jim Kras .

  • What Went Wrong

    • Revenue fell 13.2% YoY to $2.72M driven by deliberate exit of low-margin categories; core herb portfolio “relatively flat” in Q1 as SKUs rationalized .
    • Net loss remained elevated at $(3.32)M, though improved YoY; interest expense rose to $0.44M on receivables financings (Arin/Cedar) .
    • Liquidity tightened: cash fell to $0.41M; 10‑Q flags going concern and potential Nasdaq listing risks despite prior bid-price compliance .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$2.584 $3.872 $2.718
Net Loss ($USD Millions)$(2.063) $(3.079) $(3.324)
Diluted EPS ($USD)$(0.65) $(10.34) $(2.47)
Gross Profit ($USD Millions)$0.699 $0.023 $0.088
SG&A ($USD Millions)$2.189 $2.764 $3.015
Gross Margin %27.1% 0.6% 3.2%

Segment/disaggregated revenue (Q1 seasonality and mix)

Revenue Stream ($USD Millions)Q1 2024Q1 2025
Herbs, Produce & Floral$2.754 $2.547
Vitamins and Supplements$0.378 $0.171

KPIs and mix indicators

KPIQ1 2024Q1 2025Change
Non-perishable revenue YoY growth (%)—15% +15pp
Cut herbs seasonal growth (%)—13% —
Gross profit YoY growth (%)—~283% —
Cash and Equivalents ($USD Millions)$0.388 $0.409 +$0.021

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidance (revenue, EPS, margins)FY 2025None disclosed None disclosed Maintained (no formal guidance)

Earnings Call Themes & Trends

TopicQ3 2024 (Prior)Q4 2024 (Prior)Q1 2025 (Current)Trend
Product mix shift to higher-margin CPGBegan phasing out floral/lettuce; gross margin 27% Continued mix shift; holiday labor impacted quarterly margin Shelf-stable brands gaining traction; non-perishables +15% YoY Positive mix, short-term revenue drag
Retail/distribution expansionWalmart Hydro Basil; balance sheet strengthened Prepared for peak season; Walmart/Meijer programs Added placements incl. Walmart/Stop & Shop/ShopRite/Berkot’s; later NE expansion Broadening footprint
Technology/R&D (GreenThumb, nanobubbles)Operating discipline; grants and tech investments Nanobubble trials: +55% yield, -30% harvest cycle Integrate water-treatment patents from NaturalShrimp Advancing sustainability tech
Supply chain/tariffsNoted domestic focus implicitlyLabor ramp for holidays >90% domestic operations; minimized tariff exposure Resilient domestic supply
Capital structure/liquidityRaised ~$5.65M; paid down ~$3.2M debt Paid down debt; strong cash entering year Receivables financings; going concern flagged; cash $0.41M Liquidity tighter; risk noted
Regulatory/listingRegained bid-price compliance (Oct 2024) [105 in doc list]—Under Nasdaq panel monitor; equity threshold risk Monitoring risk

Management Commentary

  • “We are delivering on our plan to shift toward higher-margin, shelf-stable products…brands are building strong momentum…nearly fourfold increase in gross profit” — CEO Jim Kras .
  • “We are confident that our U.S.-focused production model…positions Edible Garden to thrive…expansion of our omnichannel presence” .
  • On NaturalShrimp: acquisition adds patents and infrastructure; expected immediate warehousing/logistics synergies; existing business “demonstration mode” and not margin accretive initially .
  • R&D/efficiency: nanobubble irrigation trials showed up to +55% yield and -30% harvest cycle time .

Q&A Highlights

  • NaturalShrimp strategy: Immediate warehousing/logistics benefits; longer-term nutraceutical innovation using shrimp-derived ingredients; acquired patents support greenhouse water treatment .
  • CPG ramp: Kick. Sports Nutrition secured Midwest big-box placement (orders shipped in Q2); Amazon marketing agency engagement; near-term launches expected .
  • Margin drivers: Mix shift and cost optimization underpin margin gains; continued investment in people/branding to accelerate shelf-stable lines .
  • Clarifications: No additional one-time charges expected in Q1 2025 tied to exiting floral/lettuce; legacy equipment repurposed .

Estimates Context

MetricConsensus (Q1 2025)*ActualSurprise*
Revenue ($USD Millions)$3.821*$2.718 -$1.103 (-28.9%)*
Primary EPS ($USD)-$3.03*-$2.47 +$0.56 (beat)*
# of EstimatesRevenue: 1*—EPS: 1*
  • Values retrieved from S&P Global.

Implications: Limited sell-side coverage magnifies headline surprise. Revenue miss reflects deliberate exit from low-margin categories; EPS benefit aided by lower SG&A and improved gross profit .

Key Takeaways for Investors

  • Near-term top-line pressure is a function of mix shift; the positive margin trajectory (Q1 gross profit +283% YoY) signals early success of CPG-led strategy .
  • Revenue miss vs consensus likely reflects limited model updates to incorporate category exits; EPS beat aided by cost controls — watch for continued SG&A discipline .
  • CPG brand ramp (Kick., Pickle Party, Squeezables, Pulp®) and expanded retail placements are catalysts for H2 traction; monitor sell-through and repeat orders .
  • NaturalShrimp assets provide logistics/R&D leverage and sustainability IP; evaluate tangible cost benefits and cross-category product development into 2026 .
  • Liquidity and listing risks are material: cash $0.41M; receivables financings elevate interest; 10‑Q going concern and Nasdaq thresholds warrant close monitoring .
  • Domestic-heavy operations (>90%) mitigate tariff risk and supply chain volatility — supportive for execution in core herbs and new refrigerated CPG .
  • Actionable: Expect volatility around execution milestones (Amazon launch metrics, big-box rollouts); emphasize unit economics/margin cadence over headline revenue during transition .