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MI

MINIM, INC. (MINM)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 revenue was $10.6M, up 1.4% year over year but down 23.2% sequentially as retailers reduced on-hand inventory; gross margin fell to 19.9% from 22.3% in Q3, and net loss widened to ($4.5M) versus ($4.1M) in Q3 .
  • Management enacted a ~20% cost reduction plan (split between COGS and OpEx) effective Q2 2023 and is preparing to launch Support+, a premium support subscription in June 2023 aimed at lifting gross margins in H2 2023 .
  • Working capital actions were material: inventory cut to $25.4M (from $30.3M in Q3) and accounts payable reduced to $2.8M (from $6.9M in Q3); cash ended at $1.0M with credit line availability of $38K .
  • A non-binding term sheet was signed for a three-year, $12M asset-backed credit facility to replace SVB, and shareholders approved a 10:1 to 25:1 reverse split to regain Nasdaq compliance—both likely stock-reaction catalysts .
  • Wall Street consensus (S&P Global) for Q4 2022 EPS and revenue was unavailable for MINM; no beat/miss can be assessed (GetEstimates mapping missing).

What Went Well and What Went Wrong

What Went Well

  • Expanded ecommerce distribution (HomeDepot.com, OfficeDepot.com) while maintaining Amazon leadership with ~40% category share, positioning for online demand resilience .
  • Significant working capital progress: inventory reduced 26% since Q2 to $25.4M and accounts payable cut 75% to $2.8M by year-end, improving the current ratio to ~2.1 .
  • Clear software monetization roadmap: Support+ subscription launches June 2023 with minimal incremental cost and expected positive gross margin impact in late Q3/Q4 2023 (“virtually no incremental cost” and “accelerate our path to sustainable profitability on Adjusted EBITDA”) .

What Went Wrong

  • Sequential revenue decline of 23.2% and gross margin compression to 19.9% in Q4, driven by retailer inventory rightsizing and demand softness in consumer electronics; Adjusted EBITDA loss increased to ($3.9M) from ($3.2M) in Q3 .
  • Cash fell to $1.0M with very limited credit availability ($38K) at year-end, increasing financing risk ahead of the new facility execution .
  • Ongoing headwinds: inventory reserve charge of ~$1.2M in Q4 and lingering macro softness pressured margins; earlier in 2022, inventory costing errors required restatements and highlighted internal control weaknesses .

Financial Results

Revenue, EPS, and Margins (USD)

MetricQ2 2022Q3 2022Q4 2022
Revenue ($M)$12.9 $13.8 $10.6
Diluted EPS ($)($0.10) ($0.09) ($0.10)
Gross Margin (%)19.7% 22.3% 19.9%

Notes:

  • Q4 revenue +1.4% YoY vs Q4 2021 ($10.5M) and −23.2% QoQ vs Q3 ($13.8M) .
  • Q4 gross margin 19.9% vs 22.3% in Q3, with ~$1.2M inventory reserve impact; ex-reserve, gross margin “continues to approach 30%” .

KPIs and Balance Sheet

KPIQ2 2022Q3 2022Q4 2022
Cash & Equivalents ($M)$4.7 $1.9 $1.0
Inventory ($M)$34.3 $30.3 $25.4
Accounts Payable ($M)$11.35 $6.93 $2.84
Deferred Revenue ($M)$1.1 $1.3 $1.4
Adjusted EBITDA ($M)($3.44) ($3.21) ($3.93)
Credit Line Availability ($M)$0.2 $0.5 $0.038
Total Debt Outstanding ($M)$5.6 $5.8 $5.8

Segment breakdown: not disclosed in Q4 materials; the company reports consolidated results .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cost Reduction ProgramFY 2023N/A~20% annualized savings starting Q2 2023; split between COGS and OpEx New
Inventory TargetH1 2023YE22 inventory expected $25–$27M Target “low-$20M” exiting Q1 into Q2 2023 Lower target
Gross Margin OutlookNear-term“Approaching 30%” ex one-time costs Ex-reserve, “continues to approach 30%”; Support+ expected to lift margins in late Q3/Q4 2023 Maintained trajectory
Financing2023SVB credit line with limited availability Signed non-binding term sheet for 3-year, $12M asset-backed facility; replacing SVB Improved access
Nasdaq Compliance2023180-day extension to April 24, 2023 Shareholders approved reverse split 10:1 to 25:1 Actionable compliance step
ISP Business ExitBy Nov 2023Announced exit plan [2H 2022] On schedule to wind down in 2023; reallocating resources to Support+ Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2022, Q3 2022)Current Period (Q4 2022)Trend
Software subscription monetization (Support+)Planned premium support and security features; app pairing to non-WiFi products Support+ launches June 2023; minimal incremental cost; expected margin lift late Q3/Q4 Execution progressing
Supply chain & inventory managementRestatements for inventory costing errors; inventory $34.3M Inventory cut to $25.4M; target low $20M in H1 2023; AP down 75% since Q2 Improving
Ecommerce distributionWins at Target/Best Buy; mesh launches (Q11/Q14) Added HomeDepot.com and OfficeDepot.com; maintaining Amazon leadership Expanding
Financing & listingNasdaq minimum bid deficiency; extension to April 2023 Reverse split approved; $12M facility term sheet signed De-risking
Macro demand & pricingDemand cool down; inventory rightsizing at retailers began Demand softness cited; brick-and-mortar reduced inventories impacting sales and margins Persistent headwind
Internal controlsMaterial weakness from inventory costing errors; remediation plans No new control issues disclosed in Q4 8-K; focus shifted to operations and cost control Stabilizing

Management Commentary

  • “We are making great progress towards strengthening our balance sheet through disciplined working capital management, improving our cost structure and growing the lifetime value of our customers.” — CEO Mehul Patel .
  • “Support+… will establish a new revenue stream which we believe will have an incremental positive impact to our gross margin beginning near the end of Q3 and as we head into Q4.” — CEO Mehul Patel .
  • “Excluding an inventory reserve charge of $1.2 million, our gross margin continues to approach 30% despite negative impact from inflation and component cost increases.” — CFO Dustin Tacker .
  • “Earlier this month, we signed a non-binding term sheet for a three year, $12 million asset-backed credit facility… replacing our existing credit facility with Silicon Valley Bank.” — CEO Mehul Patel .

Q&A Highlights

  • Profitability timeline: Management targets EBITDA and cash flow improvements with cost reductions and software subscription, aiming for profitability in the second half of 2023; Q1 2023 expected to reflect historical cost levels before savings take effect .
  • Capital needs: No consideration for an equity capital raise; focus on right-sizing AP, inventory, and cash to reach cash flow positive in 2023 .
  • Inventory quality: Remaining inventory is “marketable” with no near-term obsolescence risk; DOCSIS 4.0 still 2–3 years out .
  • Motorola brand license: Fixed through 2025 with expectation to renew; structure includes minimum royalties with step-ups beyond revenue thresholds .
  • Reverse split: Shareholders approved 10:1–25:1 split to regain Nasdaq compliance; management monitoring timing .

Estimates Context

  • S&P Global consensus estimates for MINM Q4 2022 EPS and revenue were unavailable (GetEstimates mapping missing). We attempted retrieval but could not obtain S&P Global data; therefore, no beat/miss assessment is possible.

Key Takeaways for Investors

  • Sequential weakness was pronounced: revenue declined 23.2% QoQ and gross margin compressed to 19.9%; Adjusted EBITDA loss widened—highlighting the importance of retailer inventory normalization in coming quarters .
  • Working capital normalization is real and ongoing: inventory reduced to $25.4M and AP to $2.8M, with a stated path to low-$20M inventory in H1 2023—an important driver for cash generation .
  • The $12M credit facility (pending definitive docs) and approved reverse split reduce financing and listing risk, potentially removing overhangs that could improve investor sentiment once executed .
  • Support+ launch in June 2023 is the near-term strategic catalyst; successful adoption could lift gross margins and diversify revenue beyond hardware in H2 2023 .
  • Macro demand and retailer inventory discipline remain headwinds; management’s ecommerce expansion (Amazon leadership, new channels) is the counterbalance to brick-and-mortar softness .
  • Internal control issues from inventory costing errors were addressed earlier in 2022; continued operational discipline and margin recovery (ex-reserve near ~30%) are key proof points to watch .
  • With consensus estimates unavailable, traders should focus on operational milestones (facility signing, Support+ launch/metrics, inventory turns, margin trajectory) as the narrative drivers into H2 2023.