Aterian (ATER) 17th Annual LD Micro Main Event Conference summary

Historical context and challenges

• Founded in 2014, IPO in 2019, initially focused on organic growth, M&A, and a proprietary e-commerce platform.

• Heavy investments in products and infrastructure, funded by equity and later term debt during the 2021 e-commerce boom.

• Faced margin pressure and inventory issues due to rising shipping costs and overstocking in 2021.

• Breached debt covenants and struggled with profitability as consumer e-commerce spending declined post-COVID.

• Leadership change and a multi-year turnaround plan launched in mid-2023.

Turnaround strategy and operational changes

• Adopted three mantras: focus (narrowing product portfolio), simplify (streamlining operations), and stabilize (cost control and profitability focus).

• Reduced Amazon accounts and shifted from proprietary to third-party software to cut costs and improve efficiency.

• Workforce reduction in February 2024, expected to save $4 million annually.

• Rationalized SKU portfolio and fixed cost structure, leading to first Adjusted EBITDA profitability in over 10 quarters in Q2 2024.

• Ended Q2 2024 with $20 million cash, no term debt, and a healthy balance sheet.

Financial performance and outlook

• Q2 2024 marked first Adjusted EBITDA profitability in over 10 quarters; net loss improved by 90% year-over-year.

• Adjusted EBITDA improved by over 100% despite lower revenue.

• Stabilization phase expected to conclude by end of 2024, with focus shifting to profitable growth in 2025.

• Break-even revenue estimated at $110–115 million; current annualized revenue around $100 million.