MGO Global Inc. Common Stock (NASDAQ:MGOL) Q3 2023 Earnings Call Transcript

MGO Global Inc. Common Stock (NASDAQ:MGOL) Q3 2023 Earnings Call Transcript November 17, 2023

Operator: Good afternoon, ladies and gentlemen, and welcome to MGO Global’s Third Quarter Results Webcast. Joining us from MGO are Maximiliano Ojeda, Co-Founder, Chairman and CEO; and MGO’s Chief Financial Officer, Vincent Ottomanelli. Before I turn the floor over to them, I remind you that during today’s call statements that are not historical facts, including any projections, statements regarding future events or future financial performance or statements of intent or belief are forward-looking statements and are covered by the safe harbor disclaimers contained in the company’s public filings with the SEC. Actual outcomes and results may differ materially from what is expressed in or implied by these forward-looking statements. With that said, I’d now like to introduce Max. Max, the floor is yours.

Maximiliano Ojeda: Thank you very much, Karen. I also like to thank all of you for listening this afternoon. For both the third and 9 months reporting period this year as compared to last year, MGO has succeeded in delivering revenue growth of 948% and 1,017%, respectively. We believe that this performance is a direct reflection of our growth initiatives, producing highly favorable top line results and testifying to our team’s hard work and the trust of our customers. Moving through the holiday season and into the new year, we expect to perpetuate our success by driving leverage in our operating efficiencies, expanding product categories for each of our brands, better aligning our cost structure with revenue growth and executing marketing strategies that will fuel higher customer conversion rates and increase per customer order values for both the Messi store and Stand Flagpoles.

MGO, it’s also focused on capitalizing on our shared service platform and infrastructure to support the addition of potential new brands, addressing niche markets to our portfolio through possible acquisitions, brand collaborations and organic incubation initiatives, all of which are in the works. Since going public in January of this year, we have embarked on a journey that has presented and continues to present us with value learnings and future growth opportunities. Our unique high-quality products and world-class team, has serve us as the foundation of our strategy to become a leading direct-to-consumer digital commerce company, all while navigating the challenges posed by a difficult capital market environment, inflationary pressure impacting consumers, geopolitical conflicts and a volatile macroeconomic backdrop.

Despite these challenges, our focus has not changed in our financial and operational goals for the year appear to be on track as a result. Vinnie, could you now please provide our listeners with some insights into our third quarter results.

Vincent Ottomanelli: Sure, Max. Good afternoon to all of you listening in on today’s webcast. Earlier today, we filed our third quarter 2023 report on Form 10-Q with the SEC. If you have not had a chance to review it, you may access it on sec.gov or via MGO’s Investor Relations section on our website under SEC filings. I encourage everyone to read our 10-Qs and other filings with the SEC to ensure you have a full understanding of our business, financial results and other important information disclosed. I’ll begin by sharing performance highlights from our statement of operations for the 3 and 9 months ended September 30, 2023, compared to the same reporting period in the prior year. Q3 2023 total revenues increased 948% to approximately $1.46 million, which is up from approximately $140,000 reported in the Q3 of last year.

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Q&A Session

Revenues generated from sales of the Messi brand apparel, accessories and homewares through our MGOTEAM 1 LLC subsidiary climbed 197% to approximately $415,000 for the 3 months ended September 30, 2023, when compared to approximately $140,000 reported for the 3 months ended September 30, 2022. Revenues from our relatively new Stand Flagpoles business operated through our Americana Liberty subsidiary, totaled approximately $1.05 million for Q3 of this year, which compared to $0 for the third quarter in 2022 due to the fact that we did not license the Stand Flagpoles business until March of this year 2023. For the 9 months of this year, total revenues climbed 1,017% to approximately $3.75 million from approximately $336,000 for the same 9 months in 2022.

Revenue contribution from The Messi brand represented approximately $931,000 for the first 9 months of ’23, which is up from revenues of approximately $336,000 reported for the comparable 9-month period last year. Revenues from the sales of Stand Flagpoles products totaled around $2.82 million for the 9 months ended September 30, 2023, compared to $0 in the prior year due to the aforementioned timing of the licensing of the Stand Flagpoles, which occurred in the first quarter of 2023. Now moving down the income statement. MGO’s total operating expenses increased 328% to around $3.4 million, up from approximately $802,000 for the comparable 3 months. Our expenses for the first 9 months of 2023 also increased, rising 241% to around $7.6 million from around $2.23 million.

The increase on a comparable 9-month basis was largely due to higher SG&A expenses in connection with noncash stock compensation expense, public company costs, increased headcount and higher marketing expenses to fuel the increased sales of our Messi and Stand Flagpole products. After factoring the net loss attributable to noncontrolling interest of $62,800 for the 3 months ended September 30, 2023, net loss increased 307% to around $2.55 million or $0.17 loss per share as compared to a net loss after factoring the net loss attributable to noncontrolling interests of approximately 73,000 of around $627,000 or $0.06 loss per share for the 3 months ended September 30, 2022. Now for the 9 months ended September 30, 2023, the net loss increased 178% to around $5.1 million or $0.36 loss per share after accounting for a net loss attributable to noncontrolling interest of around $186,000.

This compared to a net loss of approximately $1.86 million or $0.17 loss per share for the first 9 months of 2022 after factoring a net loss attributable to noncontrolling interest of approximately $222,000. Now moving on to our balance sheet. As of September 30, 2023, cash on hand was approximately $1.72 million. Our working capital was approximately $2.42 million and total stockholders’ equity was approximately $2.63 million. Now that concludes my overview of the financial highlights, and I’ll now turn the call back to Max. Max?

Maximiliano Ojeda: Thank you, Vinnie. I mean, significant changes in [indiscernible] behavior and [indiscernible] and e-commerce companies are evolving to meet new challenges in the marketplace, MGO is executing a purpose-centered strategy to help ensure that we are optimizing the value that we are creating for all our shareholders. Along with myself, MGO’s co-Founder and Chief Design Officer, Ginny Hilfiger; and our company’s Chief Operating Officer, Julian Groves, we own nearly 57% of MGO’s common stock. As significant shareholders, our interest in the market performance of our stock is directly aligned with the interest of all our shareholders. It is important to note that we recognize that the volatility in and decline of our share price has been a detrimental blow to all of us over the past several months.