Niagen Bioscience, Inc. Q1 FY2024 earnings call

• Delivered $22.2 million in revenue and positive adjusted EBITDA of $0.7 million, marking the fourth consecutive quarter of positive adjusted EBITDA.
• E-commerce sales up 5% YOY, with focus on building website as growth engine and less on price promotions, more on subscriber base and influencer marketing.
• Partnered with Sprouts Farmers Market (over 400 locations) and Vitamin Shoppe (over 700 locations), expanding TRU NIAGEN's reach to a larger health and wellness-focused consumer base.
• Preclinical studies on NR for cerebral ischemia, diabetic ulcers, miscarriages, etc., with ChromaDex's SERP program having over 30 peer-reviewed human studies.
• Investing in new vertical for NAD precursors, with preclinical trials completed and ongoing R&D to support innovation.

ChromaDex delivered total net sales of $22.2 million in the first quarter of 2024. The e-commerce business was the largest and most reliable revenue source, with e-commerce sales up 5% year-over-year. TRU NIAGEN sales decreased 2% year-over-year. Combined Watsons and other B2B sales reduced by 17% due to timing. Ingredient sales were flat, but NIAGEN ingredient sales had moderate growth of $0.2 million. Gross margins increased to 60.7% from 59.9% in Q1 2023, driven by a shift in business mix with e-commerce constituting 58% of total net sales.

• Full-year revenue growth expected to be at least 16% faster than the previous year, with ramp in new product launches and partnerships in the second half.
• R&D investments to moderate in the second half after heavy spending in the first half.

• Forward-looking statements subject to risks and uncertainties, including those in ChromaDex's quarterly report on Form 10-Q, global market and economic conditions.
• Potential liability from Delaware litigation, but ChromaDex intends to appeal the decision.

Q: Congrats on an excellent start to the year. I was wondering if you could talk a little bit about gross margin evolution and how you see that being driven by the overall product panel mix?

A: Ram, it's Brianna. So gross margins, if you look recently, we've been trending between 60% and 61%. And when we trend about higher, it's when we have quarters with a higher e-commerce mix. That said, while mix is a contributor. We do have ongoing cost savings initiatives...

Q: You had previously talked about the intent to move those customers who already utilized TRU NIAGEN or those customers who have exhibited adherence to TRU NIAGEN to higher dosage forms of the product. And I was just wondering if you could comment on how that initiative is going?

A: Right. That initiative has been successful thus far. I mean we've had some supply chain issues, which we have mostly resolved at this point. But we see that there is a great demand for the 1,000 milligram...

Q: With the first quarter revenue to reach 16% growth for the year, it's going to be solid, roughly 23% for the last 9 months. I'm curious where we should expect that to come from?

A: We are not baking in any new product revenue in second quarter, which, as you said, is implied in the outlook, the ramp will be in the second half. We've been very consistent with that. There's nothing that I'd point to in terms of a clear catalyst in terms of the second quarter...