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MI

MINIM, INC. (MINM)·Q3 2022 Earnings Summary

Executive Summary

  • Q3 2022 net revenue was $13.8M, up 7.5% q/q (from $12.9M) but down 8.0% y/y (from $15.0M). Gross margin improved to 22.3% from 19.7% in Q2; net loss narrowed to $4.1M (-$0.09 EPS) vs. $4.4M (-$0.10) in Q2 .
  • Working capital actions were a focus: inventory reduced 11.7% q/q to $30.3M; accounts payable cut 38.9% q/q to $6.9M; cash decreased to $1.9M (company targets year-end cash roughly flat vs. September) .
  • Management announced an ISP business exit by Q4 2023 to reallocate resources toward paid software subscriptions (monetization of the motosync app); Q3 marked launches of WiFi 6E mesh (Q14) and broader retail/e-commerce expansion (Lenovo.com, Office Depot, Staples, Newegg) .
  • Liquidity and listing risks: NASDAQ granted a 180-day extension to April 24, 2023 for the $1 minimum bid, and the upcoming 10-Q would include going concern language given the SVB credit line maturity within 12 months; management is working on an extension .
  • Estimates context: S&P Global consensus EPS/revenue for MINM was unavailable due to a mapping issue; no beat/miss comparison can be made at this time (Wall Street consensus via S&P Global unavailable).

What Went Well and What Went Wrong

What Went Well

  • Amazon Prime Day and e-commerce strength drove sequential revenue growth; July Prime Day sales were up 53% y/y and Q3 revenue rose to $13.8M (+8% vs. Q2 per call) with gross margin at 22.3% (from 19.7%) .
  • Working capital progress: inventory fell to $30.3M (from $34.3M), AP declined nearly 40% to $6.9M, and the company targets AP of $4–$5M by year-end; deferred revenue increased to $1.3M .
  • Strategic pivot toward software monetization and retail expansion: ISP business wind-down by 2023 to enable paid subscriptions; WiFi 6E mesh launches (Q11/Q14) bundled with motosync; new channels include Lenovo.com, Office Depot, Staples, Newegg .

What Went Wrong

  • Cash declined to $1.9M (from $4.7M in Q2), driven by working capital reductions; availability under the credit line was just ~$0.5M with $5.8M drawn .
  • Consumer demand softness and competitive pricing pressure; October Prime Early Access sales were about 50% of July Prime Day and lighter than hoped as consumers delayed purchases .
  • Listing and going concern risks: NASDAQ minimum bid price extension to April 2023; management expects going concern language in the 10-Q due to SVB line maturity within 12 months, though they are negotiating an extension .

Financial Results

Quarterly Performance (sequential comparison)

MetricQ1 2022Q2 2022Q3 2022
Net Revenue ($USD Millions)$13.3 $12.9 $13.8
Gross Margin %31.5% 19.7% 22.3%
Net Income (Loss) ($USD Millions)($2.539) ($4.427) ($4.062)
Diluted EPS ($USD)($0.06) ($0.10) ($0.09)
Adjusted EBITDA ($USD Millions)($1.664) ($3.442) ($3.207)
Cash & Equivalents ($USD Millions)$10.5 $4.7 $1.9
Inventories ($USD Millions)$29.957 $34.341 $30.313
Accounts Payable ($USD Millions)$8.208 $11.354 $6.934
Bank Credit Line Outstanding ($USD Millions)$7.072 $5.554 $5.845
Deferred Revenue (Total) ($USD Millions)$0.832 $1.1 $1.3

Year-over-Year (Q3 comparison)

MetricQ3 2021Q3 2022
Net Revenue ($USD Millions)$15.036 $13.833
Gross Profit ($USD Millions)$4.493 $3.083
Net Income (Loss) ($USD Millions)$1.700 (includes $4.0M trademark sale) ($4.062)
Diluted EPS ($USD)$0.04 ($0.09)

Segment Breakdown

SegmentRevenueNotes
Not reportedN/ACompany does not disclose segment revenue in press releases/8-Ks

KPIs and Operating Metrics

KPIQ1 2022Q2 2022Q3 2022
Minim Intelligent Networks (MINs) activeOn track to exceed 100k by mid-year Not disclosed100k+ active with motosync app
Amazon Prime Day performancePrime Day shifted to Q3; set up inventory, Q1 commentary +53% y/y for Prime Day, entering Q3 October Prime Early Access ~50% of July Prime Day gross sales
Deferred Revenue ($USD Millions)$0.832 $1.1 $1.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Inventory level ($USD Millions)FY 2022 year-endNot previously quantifiedTarget $25–$27M by year-end; further reduce to low-20s exiting Q1 into Q2Raised specificity
Accounts Payable ($USD Millions)FY 2022 year-endNot previously quantifiedTarget $4–$5M by year-endNew target introduced
Cash balance ($USD Millions)FY 2022 year-endNot previously quantifiedExpect +/- $0.5M vs. Sept ending cash ($1.9M)New target introduced
Inventory turns (per year)Ongoing operationalImprove from ~1–2 turnsFocus on 3–4 turns per yearOperational objective reiterated
ISP business exitThrough 2023Not previously targeted exit dateWind-down to fully exit by Q4 2023 / Nov 2023Strategic shift announced
SVB credit line maturity/extensionMatures Nov 1, 2023N/AWorking to extend terms; expect going concern language in 10-Q nowDisclosure and extension intent
NASDAQ bid price complianceThrough Apr 24, 2023Initial Oct 24, 2022 deadline180-day extension granted to Apr 24, 2023Extension obtained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2022)Trend
Supply chain & demandPricing actions to hold ~30% GM; seasonality; component constraints; Prime Day shifted to Q3 October Prime Early Access weaker than July; competitive pricing aggressive Mixed (macro headwinds persist)
Inventory & cash disciplineBuilt inventory as hedge; plan to burn down; cash to improve later; heavy inventory and turn targets Inventory down to $30.3M; AP down to $6.9M; cash $1.9M; targets set for year-end Improving (working capital actions)
Software subscription monetizationAll products intelligent; app bundling; premium support, security features planned H2 ISP exit to focus on paid subscriptions; motosync paired to all products; 100k+ MINs Advancing (execution underway)
Product launchesQ11/Q14 WiFi 6/6E planned for Q3; higher ASP Q11/Q14 launched in Q3; bundled with motosync Positive (portfolio refresh)
Retail/e-commerce expansionAmazon #1; Walmart.com progress; new retail shelf space Expansion to Lenovo.com, Office Depot, Staples, Newegg Positive (distribution breadth)
NASDAQ bid price & listingBelow $1; potential 180-day extension 180-day extension granted to Apr 24, 2023 Stable (watch listing risk)
Credit facility & going concernHeavy reliance on credit line; inventory/cash plan Going concern language expected in 10-Q; working to extend SVB line Risk heightened (near-term maturity)
Motorola brand/royaltyNot discussed in prior callsRoyalty through Dec 2025; expect extension at expiration Stable (brand supports positioning)
International ISP trialsPaid trials in India/Indonesia; long cycles Focus shifting away from ISP support; exit by 2023 Strategic shift (toward consumer/software)
Patent/IP positionNot discussedPursuing hardware and especially software patents Building (software-centric)

Management Commentary

  • “Our third quarter revenue was $13.8 million, up 8% compared to Q2 of 2022… Prime Day in July was up 53% from prior year… October Prime early access… approximately 50% of our Prime Day performance from July… lighter than we had hoped” — Mehul Patel, CEO .
  • “Gross margin was 22.3%, up from 19.7% in the prior quarter… net loss was $4.1 million… adjusted EBITDA was negative $3.2 million vs. negative $3.4 million in prior quarter” — Dustin Tacker, CFO .
  • “We announced the wind down of our ISP business… plan to fully exit this business by November of 2023” — Mehul Patel, CEO .
  • “Our mobile app is now paired to all our products… we announced further expansion of our e-commerce footprint to include Lenovo.com… agreements with Office Depot, Staples and Newegg” — Mehul Patel, CEO .
  • “We successfully launched our new mesh products, the Motorola Q11 and Motorola Q14, first WiFi 6E products as planned in third quarter of 2022… bundled with our motosync app” — Mehul Patel, CEO .

Q&A Highlights

  • Liquidity, cash burn, and reverse split risk: Investors asked about cash bleed and reverse split. Management emphasized inventory conversion to cash, limiting new purchases, AP reductions, and evaluating listing options; NASDAQ granted an extension to April 2023 .
  • Insider buying and stock support: Management noted blackout restrictions but is considering purchases by senior leadership and board as permitted .
  • Credit line and going concern: Upcoming 10-Q to include going concern language given SVB line maturing within 12 months; negotiations underway to extend terms; line secured by AR and a portion of inventory .
  • Motorola brand/royalty details: Agreement through Dec 2025 with minimums and incremental tiers; expectation to renew given healthy relationship .
  • Patent strategy and product focus: Emphasis on software-oriented patents and keeping roadmap focused; no plans for a “bitcoin router” product .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for MINM were unavailable due to a mapping issue; therefore, we cannot quantify beats/misses vs. Wall Street expectations at this time (Wall Street consensus via S&P Global unavailable).
  • Given the sequential improvement in gross margin and adjusted EBITDA, estimate revisions may focus on liquidity trajectory, inventory conversion, and timing of software monetization rather than top-line outperformance .

Key Takeaways for Investors

  • Sequential improvement, but y/y decline: Revenue grew q/q to $13.8M and margins lifted to 22.3%; y/y softness reflects pandemic peak comp and macro demand headwinds .
  • Working capital execution is the near-term catalyst: Inventory reduction ($30.3M → $25–$27M target) and AP cuts ($6.9M → $4–$5M target) are central to liquidity stabilization; monitor cash ($1.9M) and credit line availability ($0.5M) closely .
  • Strategic pivot to software subscriptions: ISP exit by Q4 2023 and motosync bundling across products set the stage for recurring revenue; the pace of subscription uptake will impact margin and valuation .
  • Product and channel expansion: WiFi 6/6E mesh launches and retail/e-commerce partnerships (Lenovo.com, Office Depot, Staples, Newegg) support ASP and distribution breadth; execution in holiday season is key .
  • Risk monitor: Going concern language in 10-Q, SVB line maturity (extension plans), and NASDAQ compliance status through April 2023; any reverse split decision would be a stock-moving event .
  • Trading implications (short term): Stock likely sensitive to liquidity updates, AP/inventory progress, and any listing-related announcements; October demand data suggests cautious holiday outlook .
  • Medium-term thesis: If software monetization and inventory normalization proceed as planned, margin structure and cash flow could improve materially; continued e-commerce leadership (Amazon #1 position) is supportive if pricing competition moderates .