Executive Summary

Q2 2023 printed net revenue of $5.20M, up 15% year over year, with gross margin improving 90 bps to 32%; sequentially, revenue declined 10.8% vs Q1 as mix shifted and TapouT Energy launched late in the quarter .
Net loss from continuing operations was $5.61M (EPS −$0.13), slightly better vs $5.90M (EPS −$0.16) in Q2 2022 but wider vs Q1’s $3.73M (EPS −$0.10) due to higher freight, Amazon fees, marketing and wage investment supporting growth .
Liquidity tightened: cash was $0.90M at 6/30 vs $4.43M at 12/31; management raised ~$2.7M subsequently and noted a $10M credit facility, alongside ongoing convertible notes activity to support working capital and growth initiatives .
Catalysts: Qplash e-commerce momentum (Q2 net revenue +29% YoY; H1 +43% YoY) and TapouT Energy launch set up H2 execution; estimate comparison not available from S&P Global for Q2 2023 (coverage/availability constraints) .

What Went Well and What Went Wrong

What Went Well

Qplash e-commerce drove the quarter: Q2 e-commerce revenue was $4.07M (vs $3.14M YoY), and management highlighted “increased territory coverage, new products and larger purchases per customer” fueling growth; six-month e-commerce sales up 43% YoY .
Gross margin expanded to 32% in Q2 (+90 bps YoY) on “cost efficiencies and product mix,” improving gross profit to $1.78M vs $1.35M YoY .
Strategic product pipeline: “TapouT Energy Drink launched towards the end of the second quarter” with management expecting a second-half impact, supporting the beverage segment’s growth narrative .

Management quote: “Our 2023 second quarter results reflect the strengths that we are developing as we grow the business as well as some of the challenges that inevitably emerge in growth businesses… Our Qplash platform… is developing very nicely… and is now expanding to select international markets” .

What Went Wrong

Sequential revenue softness: Q2 revenue of $5.20M declined ~10.8% vs Q1’s $5.82M as product mix shifted and TapouT Energy timing pushed impact to H2 .
Operating cost pressures: management cited “increases in freight cost, amazon fees, marketing expenses and salary and wages in 2023 to support the revenue growth” contributing to the $5.61M net loss in Q2 .
Liquidity and financing needs: cash fell to $0.90M at quarter-end, with significant reliance on convertible notes and shareholder/related party advances; effective interest burden and debt discount amortization weighed on results (Q2 amortization $1.13M) .

Financial Results

Metric	Q2 2022 (oldest)	Q1 2023	Q2 2023 (newest)
Revenue ($USD Millions)	$4.50	$5.82	$5.19
Gross Profit ($USD Millions)	$1.35	$1.76	$1.78
Gross Margin (%)	30.0% (1.35/4.50)	30.2% (1.76/5.82)	32.0% (1.78/5.19)
Net Loss - Continuing Ops ($USD Millions)	$(5.90)	$(3.73)	$(5.61)
EPS - Continuing Ops ($USD)	$(0.16)	$(0.10)	$(0.13)
Cash And Equivalents ($USD Millions)	n/a	$2.15	$0.90
Total Debt ($USD Millions)	n/a	$4.71 gross notes less discount; LT $2.43	$8.09 gross notes less discount; LT $0.72

Notes: Gross margin shown as calculated from cited revenue and gross profit.

Segment revenue mix (continuing operations):

Segment	Q2 2022 (oldest)	Q1 2023	Q2 2023 (newest)
E-Commerce	$3.14M	$3.92M	$4.07M
Beverage (incl. Copa di Vino, SALT, TapouT, Pulpoloco)	$1.36M	$1.90M	$1.13M

Key KPIs / operating details:

KPI	H1 2022 (oldest)	H1 2023 (newest)
E-Commerce Revenue ($USD Millions)	$5.59	$7.99
E-Commerce YoY Growth (%)	—	43% (company statement)
Gross Profit ($USD Millions)	$2.64	$3.54

Guidance Changes

No formal quantitative guidance (revenue, margin, OpEx, tax rate) was provided in Q2 2023 press materials or filings. Management indicated H2 tailwinds from TapouT Energy launch and e-commerce expansion but did not issue explicit ranges .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2023	n/a	n/a	n/a
Gross Margin	FY 2023	n/a	n/a	n/a
OpEx	FY 2023	n/a	n/a	n/a
EPS	FY 2023	n/a	n/a	n/a

Earnings Call Themes & Trends

No Q2 2023 earnings call transcript was available in our document set or public transcript aggregators; themes are drawn from Q1/Q2 10-Q MD&A and the Q2 press release [ListDocuments returned none; Morningstar page shows 2024 transcripts] .

Topic	Previous Mentions (Q1 2023)	Current Period (Q2 2023)	Trend
E-commerce (Qplash) momentum	+60% YoY; expanded coverage, new products, larger cart size	Continued strength; H1 +43% YoY; expanding to select international markets	Improving momentum
Gross margin mix/costs	Lower margin e-commerce mix pressure; shipping/handling and Amazon fees elevated	Gross margin up to 32% on cost efficiencies/product mix; shipping/handling still high	Mix improving; cost focus
TapouT Energy launch	Not yet launched (can delay mentioned)	Launched late Q2; expected H2 impact	Positive catalyst
Liquidity/capital	$2.0M note; $200k shareholder advance; financing needs highlighted	Cash $0.90M; subsequent $2.7M raised; noted $10M credit facility; continued convertible note activities	Tight but active financing
Internal controls	Material weaknesses (segregation of duties, GAAP expertise)	Material weaknesses remain; steps to enhance controls	Remediation in process

Management Commentary

“Our Qplash platform… is developing very nicely on both a B2B and B2C basis and is now expanding to select international markets” .
“Gross margin in the second quarter of 32% was a 90-basis point improvement over the prior year period, with cost efficiencies and product mix driving the improvements” .
“TapouT Energy Drink launched towards the end of the second quarter as the Company eyes second half impact” .

Q&A Highlights

No Q2 2023 earnings call transcript available; therefore, no Q&A themes or clarifications can be cited. We searched SEC documents and public transcript sources and found none for Q2 2023 [ListDocuments earnings-call-transcript returned none] .

Estimates Context

Wall Street consensus estimates via S&P Global for Q2 2023 could not be retrieved (SPGI daily limit exceeded), and SBEV appears thinly covered at that time. As a result, we cannot provide beat/miss vs consensus for Q2 2023. Values retrieved from S&P Global were unavailable due to rate limits.

Key Takeaways for Investors

E-commerce engine is the growth driver: Q2 e-commerce revenue +29% YoY and H1 +43% YoY signal durable momentum even as beverage segment timing (TapouT Energy) skewed late in Q2 .
Margin trajectory improving: Q2 gross margin 32% (+90 bps YoY) suggests mix and cost actions gaining traction; watch for H2 benefits from TapouT and sourcing initiatives .
Liquidity remains the swing factor: low quarter-end cash, reliance on convertible notes/credit facility, and high non-cash financing charges (debt discounts) are key variables for inventory availability and sell-through; monitor subsequent capital inflows and terms .
Sequential normalization expected: late-quarter TapouT Energy timing and mix pressure drove Q2’s sequential revenue decline; H2 execution on recent launches/distribution wins is the near-term trading catalyst .
Operational costs need discipline: freight, Amazon fees, marketing, and wage increases were cited; continued cost control is critical to narrowing losses as the top line scales .
Controls remediation underway: material weaknesses remain, but management plans to enhance internal controls—important for credibility and timely filings .
Estimate comparison unavailable: lack of S&P Global consensus for Q2 2023 limits beat/miss framing; focus on intrinsic momentum (e-commerce), margin execution, and funding runway.

Appendix: Prior Two Quarters Snapshot

Metric	Q4 2022 (oldest)	Q1 2023	Q2 2023 (newest)
Revenue ($USD Millions)	$4.79 (press release)	$5.82	$5.19
Net Loss ($USD Millions)	$(4.8) (press release)	$(3.73)	$(5.61)

Press releases:

Q1 2023 press release: “Net Sales Rise 48% to $5.8 Million; Gross Profit Rises 36% to $1.8 Million” .
Q2 2023 press release: “Quarterly Revenues Rise 15%… TapouT Energy Drink launched” .

Regulatory filings context:

8-K delisting notice (late filing Q1 10-Q) .
Auditor change (June 16, 2023) .
Q2 8-K includes convertible note/warrant financing and press release exhibit .

SPLASH BEVERAGE GROUP, INC. (SBEV)·Q2 2023 Earnings Summary