| Revenue |
Note
2 – Revenue
The
Company records revenue net of discounts, which primarily consist of trade promotions, certain customer allowances and early pay discounts.
The
Company excludes sales taxes collected from revenues. Retail-partner based customers are not subject to sales tax.
The
Company’s direct-to-consumer (“DTC”) loyalty program enables customers to accumulate points based on their spending.
A portion of revenue is deferred at the time of sale when points are earned and recognized when the loyalty points are redeemed. The
Company closed its DTC channel effective June 1, 2024 and expired the loyalty program as of June 30, 2024.
Revenue
channels
The
Company groups its revenue channels into three categories: Digital, which includes the sale of product to online retailers such as Amazon
and Chewy, as well as DTC sales, which included the sale of product through the Company’s website through June 1, 2024; Brick &
Mortar, which primarily includes the sale of product to Pet Specialty retailers, independent pet stores, and regional distributors; and
International, which includes the sale of product to foreign distribution partners and to select international retailers (transacted
in U.S. dollars).
Information
about the Company’s net sales by revenue channel is as follows (in thousands):
Schedule
of Information about Revenue Channels
| |
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
| |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
| Digital (1) |
|
$ |
4,406 |
|
|
|
51 |
% |
|
$ |
5,436 |
|
|
|
51 |
% |
|
$ |
8,880 |
|
|
|
54 |
% |
|
$ |
11,207 |
|
|
|
57 |
% |
| International (2) |
|
|
3,649 |
|
|
|
43 |
% |
|
|
3,875 |
|
|
|
37 |
% |
|
|
6,523 |
|
|
|
40 |
% |
|
|
6,185 |
|
|
|
31 |
% |
| Brick & Mortar (3) |
|
|
487 |
|
|
|
6 |
% |
|
|
1,225 |
|
|
|
12 |
% |
|
|
1,042 |
|
|
|
6 |
% |
|
|
2,381 |
|
|
|
12 |
% |
| Net Sales |
|
$ |
8,542 |
|
|
|
100 |
% |
|
$ |
10,536 |
|
|
|
100 |
% |
|
$ |
16,445 |
|
|
|
100 |
% |
|
$ |
19,773 |
|
|
|
100 |
% |
| (1) |
The
Company’s Digital channel includes two wholesale customers that amounted to greater than 10% of the Company’s total net
sales for the three and six months ended June 30, 2024 and 2023, and represented $3.5 million and $6.6. million of net sales for the
three and six months ended June 30, 2024, and $3.1 million and $6.9 million of net sales during the three and six months ended June
30, 2023, respectively. Additionally, DTC sales within the Digital channel amounted to greater than 10% of the Company’s total
net sales for the three months ended June 30, 2023, and six months ended June 30, 2024, and 2023, respectively. DTC sales within
the Digital channel were approximately $0.8 million and $2.0 million for the three and six months ended June 30, 2024, and $1.7 million
and $3.0 million for the three and six months ended June 30, 2023, respectively. As of June 1, 2024, the Company has exited its DTC
channel in an effort to improve profitability. The Company historically reported the sales in this channel as E-commerce and DTC
separately and has been consolidated into one revenue stream as of June 30, 2024. |
| (2) |
One
of the Company’s International customers amounted to greater than 10% of the Company’s total net sales during the three
months and six months ended June 30, 2024 and 2023, and represented $3.0 million and $5.2 million of net sales for the three and
six months ended June 30, 2024, and $2.9 million and $5.0 million of net sales for the three and six months ended June 30, 2023,
respectively. |
| (3) |
None
of the Company’s Brick & Mortar customers represented greater than 10% of net sales for the three and six months ended
June 30, 2024 or June 30, 2023. For the three and six months ended June 30, 2023, Petco was included within the Brick & Mortar
channel. Beginning in Q1 2024, Petco is presented within Digital as a result of the strategic exit out of Petco stores, while remaining
on Petco.com. |
|