Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kits Eyecare Ltd (KTYCF, Financial) achieved record quarterly revenue of nearly $42 million, surpassing their guidance range of $39 million to $41 million.
- The company reported an impressive 34% organic year-over-year growth, with an annual revenue run rate exceeding $167 million.
- Kits Eyecare Ltd (KTYCF) has maintained eight consecutive quarters of positive adjusted EBITDA, achieving a margin of 3.8% for the quarter.
- The eyeglasses segment, the fastest-growing part of the business, increased by 43% year over year.
- The company reduced its debt principal by $1 million and ended the quarter with over $19 million in cash, reflecting strong financial health.
Negative Points
- Customer acquisition costs increased by approximately 20% year over year, reaching the highest level so far this year.
- Despite strong revenue growth, the adjusted EBITDA margin guidance for Q4 remains consistent with Q3, implying potential reinvestment through the P&L.
- The company faces potential risks from tariff changes, although they have identified alternative sourcing channels.
- The market share of Kits Eyecare Ltd (KTYCF) in the optical industry remains less than 1%, indicating significant competition and room for growth.
- There is a reliance on recurring revenue from existing customers, which may limit growth if new customer acquisition does not keep pace.
Q & A Highlights
Q: Can you explain the factors driving the strong Q4 guidance, which seems ahead of expectations?
A: Roger Hardy, CEO, explained that the team's exceptional performance in customer acquisition and retention, along with strong word-of-mouth referrals, are key drivers. Joseph Thompson, COO, added that the momentum built over the last eight quarters has continued into Q4, with a strong start in October.
Q: The average order value (AOV) for new customers seems higher than the overall AOV. Is this accurate, and what is resonating with new customers?
A: Joseph Thompson, COO, confirmed the AOV increase, attributing it to success in the premium segment, including daily modality contact lenses and premium eyeglasses lenses. The value and convenience offered online are significant factors for these customers.
Q: How does the expansion of designer glasses offerings align with your branded strategy?
A: Joseph Thompson, COO, stated that while Kits' branded products perform well, expanding the offering to include designer frames provides customers with a wider selection. This strategy aims to make eyecare easy for every customer while maintaining Kits' service standards.
Q: With a 39% year-over-year increase in Q4 guidance, do you see this momentum continuing into 2025?
A: Roger Hardy, CEO, expressed confidence in the current momentum, driven by both returning and new customers. However, he emphasized the team's focus on executing the current quarter rather than projecting too far into 2025.
Q: Can you comment on the performance of your own branded contact lens line?
A: Roger Hardy, CEO, reported that the new contact lens line is performing well, contributing about 5% of revenue. While it slightly lowers the average order value, it is margin accretive, supporting both customer satisfaction and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
