KIDPIK CORP. (PIK)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 revenue was $1.04M, down 69.2% year over year and down 7.6% sequentially; diluted EPS improved to $(0.45) from $(0.67) in Q2 and $(1.20) in Q3 2023 as opex was sharply reduced .
• Gross margin printed 68.6%, elevated by the Q4 2023 inventory write-down; management quantified “pro forma” gross margin would have been 54.3% absent that effect, a material quality-of-margin caveat .
• Management continued to eliminate marketing spend and ceased new inventory purchases while focusing resources on the Nina Footwear merger; timeline slipped again to expected close in Q1 2025 (from Q4 2024 previously and Q3 2024 before that) .
• Balance sheet stress intensified: cash fell to $3K, stockholders’ equity turned negative $(2.47)M, and current liabilities rose to $7.01M; Nasdaq listing risk remains elevated amid an ongoing delisting process and pending panel hearing .
• Catalysts: merger closing/process updates and Nasdaq panel outcome; operational catalysts would be any resumption of marketing, inventory replenishment, or stabilization in keep rate and shipped items .

What Went Well and What Went Wrong

What Went Well

• Gross margin expanded to 68.6% (vs. 61.1% YoY) with inventory write-down tailwinds; management disclosed underlying GM would be 54.3% absent the Q4’23 write-down, demonstrating transparency on margin quality .
• Sequential EPS loss narrowed to $(0.45) from $(0.67) in Q2 as shipping, payroll and G&A were sharply reduced; total operating expenses fell to $1.54M vs. $2.04M in Q2 .
• Clear strategic focus: “We have eliminated marketing expenditures for subscription services and ceased the purchase of new inventory as we are working to clear and maximize the return on our current inventory in anticipation of the combination with Nina Footwear,” — Ezra Dabah, CEO .

What Went Wrong

• Revenue contraction remained severe: Subscription box revenue fell 68.8% YoY and total revenue fell 69.2% YoY; shipped items dropped to 107K from 292K and keep rate fell to 67.7% from 82.6% .
• Liquidity and equity deterioration: Cash at quarter end was $3,205, stockholders’ equity swung to $(2.47)M, and short-term debt/related party loans increased; current liabilities exceeded current assets .
• Merger timeline slipped again (now Q1 2025), and listing compliance risk heightened as Nasdaq issued a delist determination; company requested a panel hearing to seek additional time .

Financial Results

Sequential Performance (Quarterly)

Year-over-Year (Q3)

Channel Mix (Q3 YoY)

Product Line Mix (Q3 YoY)

KPIs

Balance sheet highlights (Q3 2024): Cash $3,205; Inventory $3,472,216; Total current assets $4,165,074; Total current liabilities $7,009,066; Stockholders’ (deficit) equity $(2,467,882) .

Guidance Changes

Kidpik stated it would not hold an earnings call for Q3 2024 .

Earnings Call Themes & Trends

Note: No Q3 2024 earnings call was held .

Management Commentary

• “We have eliminated marketing expenditures for subscription services and ceased the purchase of new inventory as we are working to clear and maximize the return on our current inventory in anticipation of the combination with Nina Footwear.” — Ezra Dabah, CEO .
• “We and Nina Footwear remain committed to closing the Merger... which we believe will increase Kidpik’s revenue, cashflow and prospects, while also strengthening Kidpik’s balance sheet and significantly increasing stockholder value.” — Ezra Dabah .
• “While we work towards closing the Merger, we have eliminated marketing expenditures for subscription services and ceased the purchase of new inventory...” — reiterated in Q2 release .
• Q1 framing: “We have ceased the purchase of new inventory and are working to clear current inventory in anticipation of the combination with Nina Footwear.” — Ezra Dabah .

Q&A Highlights

• No Q3 2024 earnings call or Q&A session; management did not host a call while focusing on the merger process .

Estimates Context

• S&P Global consensus estimates for PIK’s Q3 2024 EPS and revenue were unavailable; therefore, beat/miss vs. the Street cannot be determined.
• The absence of a call and the micro-cap nature likely contributed to limited sell-side coverage .
• Result: No estimate comparison presented; future updates hinge on increased coverage post-merger.

Key Takeaways for Investors

• Revenue pressure tied to strategic marketing pullback and halted inventory purchases; expect continued volume headwinds until normal operations resume post-merger .
• Gross margin quality caveat: reported GM benefitted from Q4’23 write-down; underlying GM was 54.3% in Q3; monitor margin normalization when inventory dynamics change .
• Liquidity and equity risk: de minimis cash ($3K), negative equity, and rising current liabilities — funding risk is acute absent merger completion or external capital .
• Listing overhang: Nasdaq delist determination and pending panel hearing introduce path dependency and potential trading volatility; outcome is a near-term catalyst .
• Operational KPIs deteriorated: shipped items and keep rate declined materially YoY; stabilization here is a necessary milestone for rebuilding revenue .
• Merger timeline slippage (Q3→Q4→Q1 2025) increases execution risk; diligence on Nina Footwear integration and pro forma financials is crucial .
• Near-term trading setup: stock likely moves on merger filing progress, panel decision, and any indication of resumed marketing or inventory purchases; medium-term thesis rests on post-merger scale and improved cash generation .