Nexgel, Inc. ((NXGL)) has held its Q4 earnings call. Read on for the main highlights of the call.
Nexgel, Inc. Reports Strong Revenue Growth Amidst Financial Challenges
The recent earnings call for Nexgel, Inc. revealed a mixed sentiment, with the company celebrating significant revenue growth and successful expansions in both contract manufacturing and consumer products. However, the call also highlighted challenges such as decreased gross margins, inventory write-offs, and continued financial losses, reflecting a company making positive strides but still facing ongoing financial hurdles.
Record Revenue Growth
Nexgel, Inc. achieved record revenue growth, with a remarkable 181% increase in Q4 2024 revenue, reaching $3.04 million compared to $1.08 million in Q4 2023. The full-year revenue also saw a substantial rise of 112%, totaling $8.69 million compared to $4.09 million in 2023. This impressive growth underscores the company’s ability to scale its operations and capture market opportunities.
Successful Contract Manufacturing
The earnings call highlighted the significant contribution of contract manufacturing to Nexgel’s growth. The company experienced increased demand from existing customers and successfully onboarded new global corporations, including Cintas and Owens & Minor, which played a pivotal role in driving revenue.
Expansion of Consumer Products
Nexgel’s consumer products portfolio, featuring brands like Medagel, Kenkoderm, and Silly George, demonstrated strong growth. Notably, Silly George’s revenue surged from $2 million to over $5 million, showcasing the brand’s increasing market presence and consumer appeal.
Positive Partnership Developments
The company’s partnership with STADA is progressing well, with the product Histasolv exceeding projections. A contract amendment was signed to expand this relationship further, indicating promising future collaboration and potential revenue growth.
Innovation and New Product Launches
Nexgel is actively pursuing innovation, launching a study on hydrogel efficacy for laser hair removal, which could offer regulatory compliance and safety benefits. The company plans to introduce new product lines in 2025, including expanded offerings for Medagel and Kenkoderm, signaling a commitment to product development and market expansion.
Decreased Gross Margins
Despite revenue growth, Nexgel reported a decrease in gross margins for Q4 2024, down to 37% from 43.6% in Q3. This decline was primarily due to a reclassification of Amazon sales commissions from selling costs to the cost of goods sold (COGS), impacting profitability.
Inventory Write-Offs
The company faced two inventory write-offs totaling $243,000, resulting from high minimum order quantity purchases in 2022. These write-offs affected net loss and EBITDA figures, highlighting areas for operational improvement.
Continued Losses
Nexgel reported a net loss of $0.85 million for Q4 2024 and a total net loss of $3.28 million for the year. These figures indicate ongoing financial challenges despite the revenue growth, emphasizing the need for strategic financial management.
Forward-Looking Guidance
Looking ahead, Nexgel provided extensive guidance, projecting a positive EBITDA in 2025. The company expects Q1 2025 revenue to be at least $2.75 million, with full-year revenue projected at a minimum of $13 million. Successful partnerships, such as the supply agreement with Cintas, and the expansion of consumer product lines, are expected to contribute to future growth.
In summary, Nexgel, Inc.’s earnings call painted a picture of a company experiencing robust revenue growth and successful expansions, yet grappling with financial challenges such as decreased margins and continued losses. The forward-looking guidance offers optimism, with expectations of reaching positive EBITDA and further expansion of product lines and partnerships in the coming year.