| 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. Net sales for the period ended
June 1, 2024 was $2.0 million.
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
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
| |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
| Digital (1) |
|
$ |
3,539 |
|
|
|
31 |
% |
|
$ |
4,478 |
|
|
|
34 |
% |
|
$ |
12,418 |
|
|
|
45 |
% |
|
$ |
14,646 |
|
|
|
45 |
% |
| International (2) |
|
|
7,070 |
|
|
|
62 |
% |
|
|
6,390 |
|
|
|
49 |
% |
|
|
13,593 |
|
|
|
49 |
% |
|
|
12,575 |
|
|
|
38 |
% |
| Brick & Mortar (3) |
|
|
763 |
|
|
|
7 |
% |
|
|
2,249 |
|
|
|
17 |
% |
|
|
1,806 |
|
|
|
6 |
% |
|
|
5,669 |
|
|
|
17 |
% |
| Net Sales |
|
$ |
11,372 |
|
|
|
100 |
% |
|
$ |
13,117 |
|
|
|
100 |
% |
|
$ |
27,817 |
|
|
|
100 |
% |
|
$ |
32,890 |
|
|
|
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 nine months ended September
30, 2024 and 2023, and represented $3.4 million and $10.0 million of net sales for the three
and nine months ended September 30, 2024, and $3.1 million and $10.0 million of net sales
during the three and nine months ended September 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 and nine months ended September 30, 2023. DTC sales within the Digital
channel were approximately $1.3 million and $4.3 million for the three and nine months ended
September 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 September 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 nine months ended September 30, 2024 and 2023,
and represented $6.0 million and $11.2 million of net sales for the three and nine months
ended September 30, 2024, and $6.0 million and $11.0 million of net sales for the three and
nine months ended September 30, 2023, respectively. |
| (3) |
None
of the Company’s Brick & Mortar customers represented greater than 10% of net sales
for the three and nine months ended September 30, 2024 or September 30, 2023. For the three
and nine months ended September 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. |
|