ATER

This article first appeared on GuruFocus. Release Date: November 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Aterian Inc (NASDAQ:ATER) improved its contribution margin by over 700 basis points from Q2 2025, reaching over 15%. The company successfully implemented a fixed cost reduction plan, securing approximately $5.5 million in annualized savings. Aterian Inc (NASDAQ:ATER) has leveraged AI to enhance productivity, resulting in a 30% improvement in service level performance and a 20% improvement in talk time. The company expanded its marketplace channels by adding Home Depot, Best Buy, and Bed Bath and Beyond, alongside existing platforms like Amazon and Walmart. Aterian Inc (NASDAQ:ATER) is focusing on launching consumable products sourced in the US, which carry higher contribution margins and limit exposure to tariff risks. Net revenue for Q3 2025 declined by 27.5% compared to the same quarter in 2024, primarily due to reduced consumer demand and tariff-related price increases. The company's gross margin decreased to 56.1% from 60.3% in the year-ago quarter, impacted by tariffs and product mix. Aterian Inc (NASDAQ:ATER) experienced an operating loss of $2 million in Q3 2025, an increase from a loss of $1.7 million in the same period last year. The company has postponed Asian-sourced product launches for 2025, affecting potential revenue growth. Aterian Inc (NASDAQ:ATER) suspended its share repurchase program due to tariff uncertainties, impacting shareholder returns. Warning! GuruFocus has detected 3 Warning Signs with ATER. Is ATER fairly valued? Test your thesis with our free DCF calculator. Q: What percentage of revenue in the third quarter came from sales through the Amazon channel versus other platforms? What are the early trends on the new e-commerce sites like Home Depot, Best Buy, and others? A: According to Arturo Rodriguez, CEO, Amazon accounted for over 95% of the revenue for the quarter. The new channels like Home Depot and Best Buy are still in early stages, with Home Depot being a setup for the next season's dehumidifier sales. Best Buy's performance will be clearer in Q4 as they test the steam mop during the holiday period. The company is focusing on merchandising strategies for these channels to ramp up in 2026. Q: How is the launch revenue tracking with your plans, and how should we think about the marketing strategy for new product launches? A: Arturo Rodriguez explained that launch revenue was about $0.25 million, which is muted due to wholesale sales to Amazon and limited initial marketing due to tariff impacts. The company plans to reengage more direct-to-consumer and social-based marketing in 2026. The focus is on long-term growth, with recent launches on Walmart and Target expected to expand in 2026. Q: With changes in tariffs, how quickly can you adjust sourcing for products like refrigeration units? A: Arturo Rodriguez noted that sourcing adjustments depend on the manufacturer. For example, their beverage refrigerator manufacturer has facilities outside China, which could reduce tariff impacts. The company is evaluating whether to source some products back from China if tariffs remain stable, focusing on larger, costlier goods for sourcing flexibility. Q: Does the company have plans to leverage relationships with big box retailers like Target or Walmart for joint advertising, and have you considered selling in stores like Costco or Sam's Club? A: Arturo Rodriguez stated that big box retail is a strategic goal, but tariff unpredictability in 2025 delayed progress. Some products were placed in Walmart, but the focus had to shift back to core business. Long-term, there is significant opportunity for their brands in big box and club stores. Q: What is the status of the share repurchase program? A: Josh Feldman, CFO, explained that the share repurchase program was suspended in May due to tariff uncertainties. While the business has stabilized, the company believes preserving capital is prudent and will reassess the program going forward. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Thursday, November 13, 2025 at 5 p.m. ET Chief Executive Officer — Arturo Rodriguez Chief Financial Officer — Josh Feldman Investor Relations — Devin Sullivan Need a quote from a Motley Fool analyst? Email [email protected] Arturo Rodriguez: Some of which may be outside our control and that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties, among others, are discussed in our filings with the SEC. We encourage you to review these filings for a discussion of these risks, including our annual report on Form 10, as well as subsequent filings with the SEC. You should not place undue reliance on these forward-looking statements. These statements are made only as of today, and we undertake no obligation to update or revise them for any new information except as required by law. This call will also contain certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past performance, and facilitate period-to-period comparisons of our core operating results. Reconciliation of these non-GAAP measures to the most comparable GAAP measures and definitions of these indications are also included in our earnings release, which is available in the Investor Relations portion of our website. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. We are unable to provide a reconciliation of non-GAAP and adjusted EBITDA margin to net income margin, the most directly comparable financial measure on a forward-looking basis without unreasonable efforts, Devin Sullivan: because items that impact this GAAP financial measure are not within the company's control, and/or cannot be reasonably predicted. With that said, I would now like to turn the call over to Arti. Please go ahead. Arturo Rodriguez: Thank you, Devin. And thank you, everyone, for joining us today. On today's call, I will be covering one, a brief overview of our Q3 results; two, a discussion of the tariffs' impact on our business; and an update on the proactive moves we continue to make to navigate this environment. Following my remarks, our CFO, Josh, will walk through our third quarter financial results in greater detail. Generally speaking, tariffs and the trade policy beginning earlier this year impacted our business and industry, as well as consumer decision-making. These US policies made it difficult to navigate considering the speed they were implemented in and the magnitude of the tariffs themselves. Faced with these strong and ever-shifting headwinds, we responded with an aggressive, thoughtful strategy that we believe mitigated the impact that tariffs have produced, and most importantly, put us back on the path of stabilizing our business. As a result, we delivered on the improved performance we promised. Our results for 2025 improved across multiple metrics when compared to 2024, and we remain confident in our ability to deliver on our guidance. Let's look at what transpired in Q3. Net revenue was $19 million, a significant decline from Q3 2024; however, it represented just a 2% decrease from the previous quarter. We also saw our Q3 2025 contribution margin improved by over 700 basis points from Q2 2025, back to over 15%. Our adjusted EBITDA loss improved by over 80% versus Q2 2025. The actions we took to rationalize our fixed cost and align our marketing spend to our new pricing reality have paid off. However, more work is needed, which I will address later in my prepared remarks. The net revenue decline from Q3 2025 to Q3 2024 was driven by two main factors. First, strategic price increases to offset tariff costs led to reduced run rates. This is especially acute in areas where we found our products to be one of the highest-priced offerings. We saw this in particular in two key product areas, humidifiers and steam mops. To this, our primary competition, specifically in our dehumidifier and steam mop space, is Amazon 1P, meaning Amazon buys from brands directly and sells it as an online retailer. In those segments, we saw that Amazon did not raise prices significantly, if at all. As such, our best seller ranks were impacted and reduced. This led to slower unit velocity and made our products the higher-priced offering for most of the quarter. We believe we will continue to see our products being the highest-priced offering through 2025 before pricing becomes more competitive in 2026, specifically for dehumidifiers as the peak summer season is behind us. As for the steam mops, we have seen competition begin to raise prices, and as such, we believe our offerings will be more competitive early in 2026. The second factor contributing to the decline in revenue is a general slowdown in consumer spending. In several of our tariff-affected categories, particularly those where competition comes mainly from other third-party sellers, we maintain best seller rankings comparable to last year's levels, yet have seen fewer units sold. This suggests that an issue lies not with our competitive position, but with reduced overall consumer demand likely due in part to uncertainty surrounding tariff trade policy, pricing pressures, softer market conditions, or a shift in discretionary spending. Regardless, we are very confident our core products and brands are still very strong and viable and continue to have tremendous opportunities in marketplaces in the US and abroad. Now to the actions we announced in May. As reflected in our Q3 results, we continue to believe that the actions we took with respect to cost reductions, resourcing, product launch strategy, and pricing adjustments were correct. Here's an update on those six key points to that plan. First, the fixed cost reduction plan. As part of our immediate response to tariffs, we announced the fixed cost reduction initiative targeting $5 to $6 million in annualized savings. Today, we believe we have secured approximately $5.5 million of those savings, of which $3.8 million is primarily coming from headcount reductions we implemented in May, and the remaining $1.7 million from vendor savings initially taking effect through the rest of 2025, with a more significant impact starting in 2026. In parallel, our team is actively leveraging AI to enhance productivity. Our focus for AI continues to be on creating operating leverage and scale for future growth, rather than immediate headcount reductions. For example, we have successfully implemented AI in our customer's experience operations, which has significantly improved service quality metrics even with a smaller team. This implementation has led to Aterian's tech and customer experience teams being recognized as a 2025 recipient of the Genesys Orchestrator's Innovation Award. This CX transformation led to a 30% improvement in service level performance during seasonal peaks and up to a 20% improvement in talk time across brands. Email handle times also dropped even as voice support launched with no headcount increase, highlighting scalable gains in efficiency and productivity. Our experienced agents now handle more complex interactions across new voice and chat channels, improving key metrics and significantly reducing our total cost of ownership. Ultimately, we are hearing, listening, and addressing our customers better and faster than we have before. Finally, we continue to see how AI deployed into our data platform along with some of our third-party tools can unlock efficiencies and insights to our operations. We see this as a continued area of opportunity for Aterian in finding ways to create savings and efficiencies. Two, accelerate resourcing. The financial incentive to move manufacturing out of China is less urgent due to the November 2025 agreement between China and the US, which reduced incremental tariffs to 20% from 30%. We continue to explore opportunities to diversify our supply chain when doing so can produce a material and substantial benefit. We still see opportunities to source from outside China in categories which are not only expected to benefit from the reduced 2025 incremental tariffs, but also are still affected by the 2017 section 301 tariffs, which on average are an incremental 25% for certain of those products. For example, beverage refrigerators from China would be subject to approximately a 48% tariff. As such, we think opportunities to locate better sourcing for this product is prudent. We are currently reviewing our 2026 ordering plans and will provide better updated targets as part of our Q4 2025 reporting. Number three, pausing on launches in certain new categories. As far as the tariff moves, we paused new category launches from China in Q2, particularly hard electronic goods. However, now that the reciprocal tariffs have been reduced and appear to be stable, we are restarting new product launches in the hard electronic goods space for 2026 with a much more focused approach. Number four, strategic pricing adjustments. As we said earlier, we implemented price increases to mitigate the effects of the shifting cost structure related to tariffs. Although we have defensively raised prices first in many categories, we do not foresee the need to take significant additional price increases across our portfolio. What we do believe is that our current competitors will eventually increase prices, including Amazon 1P. As a result, our products should be priced more competitively in 2026, leading to improving run rates, assuming no material changes to consumer purchasing habits or additional changes to tariffs. New product launches in low tariff regions. We believe our push into consumables is still a strong strategic objective. Many of the items we are exploring can be sourced predominantly in the US and carry higher contribution margins in our broader product portfolio, which over time will drive a higher overall profitability. Further, the US-sourced nature of these products will limit our exposure to the continued risk related to tariffs and the uncertainty they can produce. Today, we have launched Squatty Potty wipes, which are receiving great reviews, and just recently, we launched a line of Talos skincare under a healing solution brand that is crafted from nutrient-rich 100% grass-fed tallow. Initial reviews for these products have been positive as well. We will continue to expand consumable product launches in the coming months, all sourced from primarily the US or tariff nations with acceptable levies. With the stabilization of our operations substantially in hand, our focus has returned to growth. This will be our primary and most pressing objective for 2026 and be defined by thoughtful decision-making, patience, and a goal of complementing this growth with sustainable profitability. Over the past quarter, we expanded our foundation of key marketplace channels by adding Home Depot, Best Buy, and Bed Bath and Beyond. This adds to our core US digital sales space, including walmart.com, target.com, eBay, our direct branded websites, and, of course, Amazon. In the past few months, we have also continued to expand our product offering in Amazon UK and expect to announce a few more sales channels over the coming months. As mentioned earlier, we have started to launch consumable products being led by our Squatty Potty wipes and healing solution, Talos. Both products are receiving high review scores and are really great quality products. However, I want to reconfirm. These will be long-term plays. We have been very prudent in not overspending on marketing to allow us to further stabilize the overall business while still investing acceptable amounts to allow these products to grow. Over time, the contribution margin of consumable products will improve the company's overall profitability. In closing, we continue to deliver on our promises. Though the tariffs have impacted our run rates and velocity over this past several quarters, the swift actions we have taken have steadied Aterian. However, we still have a lot of work in front of us. We believe top-line growth is our biggest challenge, and we are committed to addressing it thoughtfully and profitably. We will continue to expand our marketplace channels here and abroad, in order to broaden our reach and meet consumers where they shop. Our push into consumables is off to a good start, providing a solid foundation to drive sales of our current products and expand our consumer portfolio beginning in 2026 to deliver both higher sales and enhanced margin. The events of 2025 created a fundamental shift in our business and industry, causing the significant progress we made in 2024 to seem like a distant memory. We are looking forward to 2026 with a renewed sense of optimism and a shared goal to build a growing profitable company supported by great products, great people, and a commitment to delivering long-term value to all our stakeholders. I want to thank our team for their dedication and tenacity, and to our shareholders, thank you for your continued support and patience. We believe the best is yet to come for Aterian. And with that, I will turn it over to Josh. Josh Feldman: Thanks, Arti. Good evening, everyone. As Arti mentioned, Q3 was an important step forward for the business and a reflection of our ability to meaningfully address the disruption from this year's tariffs. When comparing our results to Q2 2025, revenue was broadly stable, contribution margin improved from 7.8% in Q2 to over 15% in Q3, and our adjusted EBITDA loss narrowed to just over $400,000 from a loss of $2.2 million in Q2. These results underscore the benefits of our cost reduction and our more disciplined approach to marketing and pricing in light of the new tariff environment. The improvements show that the actions we have taken this year are having a real impact on our results and strengthening the foundation of the business. We remain focused on driving profitable growth, maintaining cost discipline, and protecting liquidity as we navigate the current environment. I will now walk through the Q3 results and our financial position in more detail. Net revenue for 2025 declined 27.5% to $19 million from $26.2 million in the year-ago quarter, primarily reflecting the reduction in consumer demand as we increased pricing to mitigate the impact of tariffs on our cost of goods sold. Our launch revenue was $200,000 during Q3 2025, compared to $600,000 in Q3 2024. While we have postponed our Asian-sourced product launches for 2025, we plan on restarting these launches in 2026. We are also focused on consumables sourced in the US. Overall gross margin for the third quarter decreased to 56.1% from 60.3% in the year-ago quarter. The year-over-year decline was primarily related to product mix, impact of tariffs on our cost of goods sold, and a $400,000 charge relating to product remediation costs. Our overall Q3 2025 contribution margin, as defined in our earnings release, was 15.5%, a decrease from 17% in Q3 2024. Our contribution margin decrease primarily relates to the reduction in gross margin. Looking deeper into our contribution margin for Q3 2025, our variable sales and distribution expenses as a percentage of net revenue decreased to 42.8% as compared to 43.3% in the year-ago quarter, primarily due to product mix and a decrease in logistics costs. Our operating loss of $2 million in 2025 increased from a loss of $1.7 million in the year-ago quarter, primarily driven by reduced sales volume and contribution margin compared to the prior year period. Our third quarter 2025 operating loss included $700,000 of non-cash stock compensation expense and $400,000 of product remediation costs, while our third quarter 2024 operating loss included $1.8 million of non-cash stock compensation expense. Our net loss for 2025 of $2.3 million increased from a loss of $1.8 million in the year-ago quarter, primarily driven by the reduction in sales volume and contribution margin. Our adjusted EBITDA loss of $400,000, as defined in our earnings release, decreased compared to an EBITDA gain of $500,000 in 2024. This change was primarily driven by lower sales volumes stemming from tariff-related price increases as well as a decline in gross margin. Moving to the balance sheet. At 09/30/2025, we had cash of approximately $7.6 million compared to $18 million at 12/31/2024. Most of this reduction occurred in the first half of the year. However, due to our fixed cost reductions and our pricing strategy, we significantly reduced the cash used in operations during Q3. Borrowings on our credit facility went from $6.9 million as of the end of 2024 to $6.2 million at the end of 2025. The credit facility balance is down $500,000 in the year-ago quarter. At 09/30/2025, our inventory level was at $17.2 million, up from $13.7 million at the end of 2024 and up from $16.6 million in the year-ago quarter end. Increased inventory levels are a result of lower expected demand for our seasonal air quality products, resulting in a higher proportion of our working capital being tied up in inventory. As we noted in last quarter's call, we expect a reduction in this long inventory, which we purchased in advance of tariffs, over the next six to nine months. We also anticipate a working capital benefit in 2026 as we draw down this inventory to meet anticipated customer demand. As we look ahead to 2025, our focus remains on strengthening the business while positioning for renewed growth in 2026. The combination of targeted cost savings, US-sourced product launches, focused marketing, and disciplined cash management gives us confidence in our ability to navigate the ongoing tariff environment. We are maintaining our initial guidance of net revenue for the six months ended 12/31/2025, of $36 million to $38 million and adjusted EBITDA of breakeven to a loss of $1 million. This compares to net revenue of $34.8 million and an adjusted EBITDA loss of $4.7 million for the six months ended 06/30/2025. Importantly, based on our liquidity position, the cost-saving measures, and our focus on preserving cash, we believe we are well-positioned to navigate the current environment without raising additional equity capital for the foreseeable future in support of our day-to-day operations due to the expected working capital benefit. While tariff volatility is affecting the entire industry, Q3 showed that the actions we have taken to strengthen our balance sheet, streamline our cost structure, and sharpen execution are working. We have built a healthier foundation, and our focus as we look to 2026 is returning to sustainable top-line growth. Looking ahead, we are taking a disciplined and targeted approach, expanding our marketplace presence across key channels, leaning into consumables like Squatty Potty flushable wipes, and our tallow-based skincare line, continuing to use AI to drive efficiency and improve the customer experience. Over time, we believe these initiatives will support more durable growth and improve profitability. Our goal remains to build a stronger, growing, and profitable Aterian. I want to thank our team for their execution and our shareholders for their continued support. With that, we will open up the lines for questions. Operator: We will now begin the question and answer session. Again, if you would like to ask a question, just press star then the number one on your telephone keypad. And your first question comes from the line of Brian Kinstlinger with Alliance Global Partners. Brian, please go ahead. Brian Kinstlinger: Hi, good evening. Thanks for taking my questions. I am wondering if you could dig into your new channel partners. So first, what percentage of revenue in the third quarter were sales through the Amazon channel versus other platforms? And then what are the early trends you are seeing on the new e-commerce sites? Which sites are you seeing more success versus maybe more challenges? Or a measured approach? You have got Home Depot, I think Best Buy, Bed Bath and Beyond, Target, Walmart. A lot of big names, some trying to assess, you know, where that success is coming from, if any, right now. Arturo Rodriguez: Yeah. And, Brian, how are you doing? And it is a good question. So, you know, we are looking at it in the sense of we want to get the core channels up. And I think for the most part, we got all the big players in place. Some of those channels that we are launching, we are launching early. Such as Home Depot. We are getting it ready to understand how it works a bit better and how the marketing is going to work on that. But that is really a setup. So the reality, Home Depot has been a very tiny amount of sales for the period because that is really an investment and setup for next season's dehumidifier season, right, where we do think that can play a significant role in us regaining some of that market share through other channels. Best Buy, we will know more about it during Q4 because the reality is we put our PureSteam steam mop on that one as part of a drive to sort of see how that channel will work during a holiday period. So we are still learning a lot about each of these channels. I think a lot of our focus is now about thinking about how to really merchandise them because I do think certain of our products will do really well in a Best Buy, something like, as I mentioned earlier, the steam mop or some of the newer living products like the kettle. As opposed to Home Depot, where I think predominantly that is going to be a dehumidifier or environmental appliance channel. So far, Amazon is still predominantly, you know, probably over 95% of our revenue for the quarter. But I would say that these are things that we are lining up to help us really start hitting the gas for in 2026, especially as we ramp up some of the marketing of those channels now that we feel comfortable with merchandising. Brian Kinstlinger: Great. That is super helpful. And then when I look at launch revenue, I think it was a quarter of a million dollars in the quarter. How is that tracking to your plans? And then moreover, how should we think about the bear and bull case in light of your comments about carefully deploying capital for marketing for launches? Arturo Rodriguez: Yeah. I will grab that, Josh. Yeah. So good question, Brian. You know, listen. The wipes are a bit different than some of our other products. Right? As we might have said in the past, you know, a lot of our Squatty Potty products are actually sold 1P. Right? We sell it wholesale to Amazon. So the wipes are no different. They are being sold to Amazon wholesale, so you do not get the same top-line dollar that we would theoretically see if we were selling directly. And so the numbers are probably a little bit muted there. At the same time, with all the noise going on with tariffs, we did hold back a little bit on the marketing dollars. And even to that, you know, Amazon does not let you necessarily do promotionals within the first thirty days of certain launches. The ones we standardly do. Right? You can do buying programs and other items like that, but there are limitations. So we knew going into this, this is going to be kind of a slow step. Some of the marketing that we kind of held back were more kind of, like, de-focused, more social-based marketing that I think we will reengage into 2026 since we will just get a natural kind of uplift as Q4 because of the holiday shoppers. In some aspects, we had to repivot some of the launch plans because of the tariff impact. That said, you know, end of the day, quality product is going to sell. It has got 4.6-star reviews, so we are very, very happy about how that is being how it is performing from a customer experience perspective. I think as we kind of get through the holiday period, we are going to continue to see that grow over time. This is a long-term play. You know? And that is why I kind of emphasize this. That this market is going to continue to grow for us, and we are going to continue to expand even recently, we just put it on to Walmart and Target. That was not on the day one kind of ramp up. We wanted to give Amazon kind of, like, a thirty-day exclusive there. And so we are going to start putting that in other channels. So I do see those numbers expecting to grow probably in Q2 in 2026 more than you see now. But keep in mind that, you know, the mix is a little bit different. It is more of a wholesale place, so the number is probably not as big as you would think. Brian Kinstlinger: Great. My last question is you were clear with the changes in tariffs in China you are not in a race to get out anymore. Especially in certain SKUs. Depending on, again, the tariffs. But how quickly can you adjust sourcing once you do identify new sourcing as necessary for a SKU, for example, you talked about refrigeration and the high tariffs in China there. How quickly can you find new sourcing? Arturo Rodriguez: It depends. I like, you know, our manufacturer for the beverage refrigerator, they do have facilities outside of China that actually manufacture that good. So in that case, Brian, it is just about making sure the good is still the same quality that we have gotten in China. And so we are very fortunate in that particular case. We are looking at sourcing that from outside of China, which will reduce the tariff impact significantly in that good. The dehumidifiers, you know, we did get out of China this year or a good second half, portion of those. But with the tariffs where they are today, you know, there is a question we are going through. Like, where should we source that? Should we go back to China? Because I think in some aspects, the margins may actually be slightly better assuming the tariffs hold. And so it really depends on the manufacturer partners you pick. And the size of those and how flexible and strong they have in sense of additional capabilities outside of China. Unfortunately, in some cases, like a lot of our kitchen appliances, which still we have been able to raise prices on, like, you know, the new living products, you know, for the most part, they are sourced in China, so we are making it work that way. But, really, where we are really focused on is our bigger, more cost goods, like a beverage refrigerator, like a dehumidifier. We do want to create optionality. And so it is about really making sure the manufacturers you partner with have that. And so it gives you some opportunities to sort of move as this continues to be volatile. Brian Kinstlinger: Great. Nice work on the changes and pivots to the business. Arturo Rodriguez: Thank you, Brian. Appreciate that. Operator: Again, if you would like to ask a question, just press star then the number one on your telephone keypad. There are no further questions at this time. We will now turn the call back over to Mr. Sullivan. Please go ahead. Devin Sullivan: Thank you, Mark. As usual, as part of Aterian's shareholder perks program, investors can sign up at aterian.io/perks. Participants have the ability to ask management questions during our earnings calls. I want to thank all of our Perks participants for their loyalty and their participation in the program, as well as for their questions. Management has picked a few of the more popular questions from the Perks program as well as from some other sources, and so I will read those now. Our first question, does the company have any plans to leverage its relationships with the big box retailers through which it sells merchandise, like Target or Walmart, to jointly spend on advertising? And then sort of, in addition to that, have you considered selling your products either in-store or online at places like Sam's Club? Arturo Rodriguez: I will grab that, Josh. Is that right? Thanks, Devin. Listen. Over time, we do believe big box retail is an important opportunity and strategic goal for Aterian, you know, including opportunities with the club stores. However, earlier this year with the unpredictability of tariffs, it made it difficult to progress that plan in 2025. We have put some products out there. We have PureSteam steam station going to Walmart this year and also our portable vacuum sealer from Living going to Walmart. So we have had some success there. But with the unpredictability of tariffs throughout the year, you know, the kind of process had to be put on hold and we had to refocus on the core business. But I definitely think over time, especially from a long-term perspective, there is a tremendous amount of opportunity for our brands to be in big box retail, including the club stores. Devin Sullivan: Okay. Great. The next question, does the company have any plans to break into the Amazon market in the EU and the UK, like the company has already done with MercadoLibre? Arturo Rodriguez: You want me to try that? Thanks, Josh. Listen. We already sell in the UK and EU through our Photo Paper Direct brand. The amount of revenue related to that is relatively small to the rest of the business. We already have sales there. What we have done in 2025, especially with the tariffs, we have started expanding that. We are bringing a lot of our core SKUs, what we like to call internally our marquee SKUs. That includes our steam mop, some of our irons, our kettle, you know, our hand blenders. We have been moving them to be sold both in the UK and EU. We have made good progress in the UK this year, and we are kind of excited to see how that is going to go for Q4 because it will be the first time, I think, we have a lot of these products lined up for the holiday season in the UK. Though it is obviously not as big as the US, but certainly, you will see an uplift. And so I think we are really bullish on the UK. EU will probably use more of a 2026 expansion for those marquee products and SKUs just because there is a little bit more compliance and, you know, tax/legal things to go through as a company to make sure you are okay to sell there. But, certainly, we are quite bullish about the UK, and we are quite pleased with some of the progress, which we will be able to report in the Q4 2025 earnings. Operator: Great. Thank you, Arti. The next question. Devin Sullivan: What is the status of the share repurchase program? Arturo Rodriguez: Hey, Devin. As we mentioned in the prepared remarks, obviously, the tariffs had a big impact on our business this year. We had to change our pricing strategy, our marketing strategy, and because of the uncertainty of the tariffs, we decided in May to suspend the share repurchase program. And so while we believe we have stabilized the business, barring no other changes in tariffs, we do still think the prudent measure is to preserve capital. So we will, you know, assess the program going forward, but right now, we are going to stick with the suspension. Devin Sullivan: Okay. And our last question. Can you provide any insight regarding sales by the CEO and the CFO at the same time they are being compensated in shares? Arturo Rodriguez: Sure. So a large portion of the executive compensation does include restricted stock units to tie, you know, the compensation to company performance. When these shares do vest, it does trigger an immediate tax liability. So the executives or we either cover this tax liability in cash or we go out and sell shares to cover the taxes. So this is specifically denoted on the form fours that are filed with the SEC. In the past two years or so, current management has not sold any shares outside of this sell to cover the tax liability. In addition to that, the board and executive management are subject to stock ownership guidelines that require us to hold a set amount of shares. And as such, again, a large portion of our realized compensation is tied to the performance of our stock. Devin Sullivan: Great. Thanks, Josh. That ends the perks question part of the call. We would like to thank everyone for their participation today. And have a good rest of the evening, and we look forward to speaking with you in conjunction with our fourth quarter financial results. Thank you, everyone. Good night. Operator: That concludes today's call. You may now disconnect. Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this. On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. 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Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Aterian (ATER) Q3 2025 Earnings Call Transcript was originally published by The Motley Fool

Produced Higher Margins, Lower Operating Expenses, and Significantly Narrowed Losses Compared to Q2 2025 New Product Introductions and Sales Channel Expansion Broadening Market Reach SUMMIT, N.J., Nov. 13, 2025 (GLOBE NEWSWIRE) -- Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”), a consumer products company, today announced financial results for the third quarter ended September 30, 2025 (“Q3 2025”) and reiterated net revenue and Adjusted EBITDA guidance for the six months ending December 31, 2025. "Our team has executed with precision and purpose along multiple fronts, with a focus on expense control, margin enhancement, sales channel expansion, new product introductions, and sourcing diversification,” said Arturo Rodriguez, Chief Executive Officer. “Although we have endured some revenue challenges primarily related to tariffs, our success in executing these strategies drove significant improvements in Operating expenses, margin, and Adjusted EBITDA loss when compared to the second quarter of 2025. We secured new digital shelf space at some of the nation’s leading retailers and entered the consumables market with two new products to date, each of which extends from a trusted Aterian brand and carries an attractive margin profile and recurring revenue opportunities.” Mr. Rodriguez concluded, “Our efforts to date have positioned Aterian to meet its goals for 2025 and given us confidence in our ability to deliver improved performance beginning in 2026.” Josh Feldman, Chief Financial Officer, commented, “When compared to the second quarter of 2025, our Q3 2025 gross margin improved by 180 bps, our contribution margin doubled, and we narrowed our Adjusted EBITDA loss by over 80%. We remain confident in our ability to meet our financial forecasts for the second half of 2025. We expect to realize further operational efficiencies in 2026 when our previously announced workforce reductions and vendor savings initiatives fully take hold. We also expect a working capital benefit in 2026 as we draw down inventory purchased in advance of tariffs to meet anticipated customer demand.” Third Quarter 2025 Highlights All comparisons are to the third quarter ended September 30, 2024 (“Q3 2024”) Net revenue was $19.0 million compared to $26.2 million, primarily reflecting the overall macroeconomic environment and lower unit volume on certain products due to price increases related to tariffs. Gross margin was 56.1% compared to 60.3%, reflecting a change in product mix and impact of tariffs on pricing and cost of goods sold. Contribution margin was 15.5% compared to 17.0%. Total operating expenses declined to $12.7 million from $17.6 million, reflecting the impact of the Company’s previously announced cost reduction initiatives. Operating loss was $(2.0) million compared to an operating loss of $(1.7) million. Net loss was $(2.3) million compared to a net loss of $(1.8) million. Adjusted EBITDA loss was $(0.4) million compared to Adjusted EBITDA gain of $0.5 million. Total cash balance at September 30, 2025 was $7.6 million compared to $18.0 million at December 31, 2024. Select Operating Highlights To Date Launched select offerings from hOmeLabs, Squatty Potty, PurSteam, Mueller Living, and Photo Paper Direct on BestBuy.com Introduced Squatty Potty wipes in the United States on Amazon.com and www.squattypotty.com and in the United Kingdom at www.Amazon.co.uk. Received an Orchestrators Innovation Award from Genesys®, a global cloud leader in AI-powered experience orchestration, recognizing the Company’s implementation of AI to enhance customer service and improve operating efficiencies. Launched select offerings from hOmeLabs, Squatty Potty, PurSteam, Mueller Living, and Photo Paper Direct on www.BedBathandBeyond.com. Introduced Tallow Skin Care line of beef tallow-based scented and unscented balms and salves under the Healing Solutions® brand. These products are available for sale in the United States on Amazon.com, Walmart.com and www.healingsolutions.com. Launched the hOmeLabs brand line of dehumidifiers, which are now available on homedepot.com. Reiterates Guidance The Company reiterated that it expects net revenue for the six months ending December 31, 2025 of $36 million to $38 million, and Adjusted EBITDA of $0 to a loss of $(1.0) million. This compares to net revenues of $34.8 million and an Adjusted EBITDA loss of $(4.7) million for the six months ended June 30, 2025. Webcast and Conference Call Information Aterian will host a live conference call to discuss financial results today, November 13, 2025, at 5:00 p.m. Eastern Time, which will be accessible by telephone and the internet. Investors interested in participating in the live call can dial: (800) 715-9871 (Domestic) (646) 307-1963 (International) Passcode: 6644814 Participants may also access the call through a live webcast at https://ir.aterian.io. The archived online replay will be available for a limited time after the call in the investors section of the Aterian corporate website. Non-GAAP Financial Measures For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Non-GAAP Financial Measures” section below. The most directly comparable GAAP financial measure for EBITDA and adjusted EBITDA is net loss and we are reporting a net loss for the quarter ending September 30, 2025 due primarily to our operating losses, which includes stock-based compensation expense, and interest expense. We are unable to reconcile the forward-looking statements of EBITDA and adjusted EBITDA in this press release to their nearest GAAP measures because the nearest GAAP financial measures are not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort. About Aterian, Inc. Aterian, Inc. (Nasdaq: ATER) is a consumer products company that builds and acquires leading e-commerce brands with top-selling consumer products, in multiple categories, including home and kitchen appliances, health and wellness and air quality devices. The Company sells across the world's largest online marketplaces with a focus on Amazon, Walmart and Target in the U.S. and on its own direct to consumer websites. Our primary brands include Squatty Potty, hOmeLabs, Mueller Living, PurSteam, Healing Solutions and Photo Paper Direct. Forward Looking Statements All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements regarding our ability to continue to successfully implement our tariff mitigation and cost optimization plans, and to realize the anticipated financial and operating benefits in the fourth quarter of 2025 and beyond, even under prolonged tariff pressure and an inflationary environment. These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties and other factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to our ability to continue as a going concern, the effect of tariffs and other costs on our results, our ability to continue to operate following our reduction in workforce, our ability to meet financial covenants with our lenders, our ability to maintain and to grow market share in existing and new product categories; our ability to continue to profitably sell the SKUs we operate; our ability to maintain Amazon’s Prime badge on our seller accounts or reinstate the Prime badge in the event of any removal of such badge by Amazon; our ability to create operating leverage and efficiency when integrating companies that we acquire, including through the use of our team’s expertise, the economies of scale of our supply chain and automation driven by our platform; those related to our ability to grow internationally and through the launch of products under our brands and the acquisition of additional brands; those related to consumer demand, our cash flows, financial condition, forecasting and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; our ability to disrupt the consumer products industry; our ability to generate profitability and stockholder value; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue; acquisitions of other companies and technologies and our ability to integrate such companies and technologies with our business; our ability to continue to access debt and equity capital (including on terms advantageous to the Company) and the extent of our leverage; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Investor Contact: The Equity Group Devin Sullivan Managing Director [email protected] Conor Rodriguez Associate [email protected] Non-GAAP Financial Measures We believe that our financial statements and the other financial data included in this press release have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the U.S. (“GAAP”). However, for the reasons discussed below, we have presented certain non-GAAP measures herein. We have presented the following non-GAAP measures to assist investors in understanding our core net operating results on an on-going basis: (i) Contribution Margin; (ii) Contribution margin as a percentage of net revenue; (iii) EBITDA (iv) Adjusted EBITDA; and (v) Adjusted EBITDA as a percentage of net revenue. These non-GAAP financial measures may also assist investors in making comparisons of our core operating results with those of other companies. As used herein, Contribution margin represents gross profit less amortization of inventory step-up from acquisitions (included in cost of goods sold) and e-commerce platform commissions, online advertising, selling and logistics expenses (included in sales and distribution expenses). As used herein, Contribution margin as a percentage of net revenue represents Contribution margin divided by net revenue. As used herein, EBITDA represents net loss plus depreciation and amortization, interest expense, net and provision for income taxes. As used herein, Adjusted EBITDA represents EBITDA plus stock-based compensation expense, product remediation costs, changes in fair-market value of warrant liability, restructuring expenses, and other expenses, net. As used herein, Adjusted EBITDA as a percentage of net revenue represents Adjusted EBITDA divided by net revenue. Contribution margin, EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to loss from operations or net loss, as determined under GAAP. We present Contribution margin and Contribution margin as a percentage of net revenue, as we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to gross profit, provides useful supplemental information for investors. Specifically, Contribution margin and Contribution margin as a percentage of net revenue are two of our key metrics in running our business. All product decisions made by us, from the approval of launching a new product and to the liquidation of a product at the end of its life cycle, are measured primarily from Contribution margin and/or Contribution margin as a percentage of net revenue. Further, we believe these measures provide improved transparency to our stockholders to determine the performance of our products prior to fixed costs as opposed to referencing gross profit alone. In the reconciliation to calculate contribution margin, we add e-commerce platform commissions, online advertising, selling and logistics expenses (“sales and distribution variable expense”) to gross profit to inform users of our financial statements of what our product profitability is at each period prior to fixed costs (such as sales and distribution expenses such as salaries as well as general and administrative expenses). By excluding these fixed costs, we believe this allows users of our financial statements to understand our products performance and allows them to measure our products performance over time. We present EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue because we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to net loss, provide useful supplemental information for investors. We use these measures with financial measures prepared in accordance with GAAP, such as sales and gross margins, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance and to compare our performance to that of our peers and competitors. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue are useful to investors in assessing the operating performance of our business without the effect of non-cash items. Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue should not be considered in isolation or as alternatives to net loss, loss from operations or any other measure of financial performance calculated and prescribed in accordance with GAAP. Neither EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue should be considered a measure of discretionary cash available to us to invest in the growth of our business. Our Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue may not be comparable to similar titled measures in other organizations because other organizations may not calculate Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue in the same manner as we do. Our presentation of Contribution margin and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from such terms or by unusual or non-recurring items. We recognize that EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue, have limitations as analytical financial measures. For example, neither EBITDA nor Adjusted EBITDA reflects: our capital expenditures or future requirements for capital expenditures or mergers and acquisitions; the interest expense or the cash requirements necessary to service interest expense or principal payments, associated with indebtedness; depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, or any cash requirements for the replacement of assets; changes in cash requirements for our working capital needs; or changes in fair value of warrant liabilities Additionally, Adjusted EBITDA excludes non-cash expense for stock-based compensation, which is and is expected to remain a key element of our overall long-term incentive compensation package. We also recognize that Contribution margin and Contribution margin as a percentage of net revenue have limitations as analytical financial measures. For example, Contribution margin does not reflect: general and administrative expense necessary to operate our business; the fixed costs portion of our sales and distribution expenses including stock-based compensation expense; or changes in fair value of warrant liabilities Contribution Margin The following table provides a reconciliation of Contribution margin to gross profit and Contribution margin as a percentage of net revenue to gross profit as a percentage of net revenue, which are the most directly comparable financial measures presented in accordance with GAAP. Adjusted EBITDA The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable financial measure presented in accordance with GAAP: Each of our products typically goes through the Launch phase and depending on its level of success is moved to one of the other phases as further described below: i. Launch phase: During this phase, we leverage technology and market data to target opportunities. This phase also includes revenue from new product variations and relaunches. During this period of time, due to the combination of discounts and investment in marketing, our net margin for a product could be as low as approximately negative 35%. Net margin is calculated by taking net revenue less the cost of goods sold, less fulfillment, online advertising and selling expenses. These primarily reflect the estimated variable costs related to the sale of a product. ii. Sustain phase: Our goal is for every product we launch to enter the sustain phase and become profitable, with a target of positive 15% net margin for most products, within approximately three months of launch on average. Net margin primarily reflects a combination of manual and automated adjustments in price and marketing spend. iii. Liquidate phase: If a product does not enter the sustain phase or if the customer satisfaction of the product (i.e., ratings) is not satisfactory, then it will go to the liquidate phase and we will sell through the remaining inventory. Products can also be liquidated as part of inventory normalization especially when steep discounts are required. The following tables present our results of operations for the three- and nine-month periods ended September 30, 2025 and 2024, broken down by product phase (in thousands):

Tariff Mitigation Strategies, Cost Optimization Plan, New Product Introductions, and Sales Channel Expansion Position the Company for Improved Performance SUMMIT, N.J., Aug. 13, 2025 (GLOBE NEWSWIRE) -- Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”), a consumer products company, today announced financial results for the second quarter ended June 30, 2025 (“Q2 2025”) and provided net revenue and Adjusted EBITDA guidance for the six months ending December 31, 2025. "The second quarter tested our resilience against significant tariff volatility, and our team responded with swift, decisive actions to put the business back on a path towards stabilization. We believe the most disruptive impacts are now behind us,” said Arturo Rodriguez, Chief Executive Officer. “By focusing on those areas that we can control, we met our goals with respect to fixed cost reduction, optimized our supply chain, and made strides towards diversifying our manufacturing footprint. We remain on track for additional new product introductions this year, highlighted by our entrance into the consumables market with the scheduled September 2025 full launch of our Squatty Potty flushable wipes. This will be the first major step in our strategic expansion toward the higher margin consumables market.” Josh Feldman, Chief Financial Officer, commented, “Our previously announced workforce reductions and vendor savings initiatives are expected to generate annual pre-tax savings of approximately $5.5 million, with initial benefits realized in the second half of this year and the full effect taking hold in 2026. These anticipated cost savings, combined with enhanced operating efficiencies, omnichannel sales expansion, and new product introductions, are expected to produce higher revenues and a substantial decline in our Adjusted EBITDA loss for the second half of 2025 compared to the first half of the year. We incurred the majority of the estimated $2.3 million in restructuring costs related to the plan in Q2 2025. We remain focused on preserving our balance sheet and our liquidity position.” Guidance Commentary Aterian expects net revenue for the six months ending December 31, 2025 of $36 million to $38 million, and Adjusted EBITDA of $0 to a loss of $(1.0) million. This compares to net revenues of $34.8 million and an Adjusted EBITDA loss of $(4.7) million for the six months ended June 30, 2025. Second Quarter 2025 Highlights All comparisons are to the second quarter ended June 30, 2024 (“Q2 2024”) Net revenue was $19.5 million compared to $28.0 million, primarily reflecting the overall macroeconomic environment and lower unit volume on certain products due to price increases related to tariffs. Gross margin was 54.3% compared to 60.4%, reflecting a change in product mix and impact of tariffs on pricing and cost of goods sold. Contribution margin decreased to 7.8% from 17.4%. Total operating expenses declined to $15.1 million from $20.1 million. Operating expenses in Q2 2025 included restructuring costs of $1.8 million and $0.1 million of non-cash stock compensation while Q2 2024 operating loss included $2.9 million of non-cash stock compensation. Operating loss was $(4.5) million compared to an operating loss of $(3.2) million. Net loss was $(4.9) million compared to a net loss of $(3.6) million. Adjusted EBITDA loss was $(2.2) million compared to Adjusted EBITDA of $0.2 million. Total cash balance at June 30, 2025 was $10.5 million compared to $18.0 million at December 31, 2024. Select Operating Highlights Launched the PurSteam Steam Station Max and the Mueller Living Cordless Portable Vacuum Sealer into Walmart locations across the country. Launched select products from our flagship brands—including Squatty Potty, hOmeLabs, Healing Solutions, Mueller Living, and PurSteam—on Temu. Expanded our presence on Mercado Libre, Latin America’s leading e-commerce platform, by offering select products from PurSteam, Mueller, and Squatty Potty on Mercado Libre’s platforms in Chile, Colombia, and Argentina. Advanced our product resourcing and diversification initiatives away from high-tariff regions, including manufacturing dehumidifiers in Indonesia (which will ship in the second half of 2025) instead of China. In 2025, we sourced approximately 65% of our dehumidifiers from China, down from 100% in 2024. Collaborated with Chinese manufacturers and supply chain partners to import the majority of goods in Q2 2025 at an average incremental 2025 tariff of 30%, predominantly avoiding the peak tariffs of 145%. Commenced the implementation of AI in our customer service operations, which has improved service quality metrics and efficiencies. Webcast and Conference Call Information Aterian will host a live conference call to discuss financial results today, August 13, 2025, at 5:00 p.m. Eastern Time, which will be accessible by telephone and the internet. Investors interested in participating in the live call can dial: (800) 715-9871 (Domestic) (646) 307-1963 (International) Passcode: 6644814 Participants may also access the call through a live webcast at https://ir.aterian.io. The archived online replay will be available for a limited time after the call in the investors section of the Aterian corporate website. Non-GAAP Financial Measures For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Non-GAAP Financial Measures” section below. The most directly comparable GAAP financial measure for EBITDA and adjusted EBITDA is net loss and we are reporting a net loss for the quarter ending June 30, 2025 due primarily to our operating losses, which includes stock-based compensation expense, and interest expense. We are unable to reconcile the forward-looking statements of EBITDA and adjusted EBITDA in this press release to their nearest GAAP measures because the nearest GAAP financial measures are not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort. About Aterian, Inc. Aterian, Inc. (Nasdaq: ATER) is a consumer products company that builds and acquires leading e-commerce brands with top-selling consumer products, in multiple categories, including home and kitchen appliances, health and wellness and air quality devices. The Company sells across the world's largest online marketplaces with a focus on Amazon, Walmart and Target in the U.S. and on its own direct to consumer websites. Our primary brands include Squatty Potty, hOmeLabs, Mueller Living, PurSteam, Healing Solutions and Photo Paper Direct. Forward Looking Statements All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements regarding our ability to continue to successfully implement our tariff mitigation and cost optimization plans, and to realize the anticipated financial and operating benefits in the second half of 2025 and beyond, even under prolonged tariff pressure and an inflationary environment. These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties and other factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to our ability to continue as a going concern, the effect of tariffs and other costs on our results, our ability to continue to operate following our reduction in workforce, our ability to meet financial covenants with our lenders, our ability to maintain and to grow market share in existing and new product categories; our ability to continue to profitably sell the SKUs we operate; our ability to maintain Amazon’s Prime badge on our seller accounts or reinstate the Prime badge in the event of any removal of such badge by Amazon; our ability to create operating leverage and efficiency when integrating companies that we acquire, including through the use of our team’s expertise, the economies of scale of our supply chain and automation driven by our platform; those related to our ability to grow internationally and through the launch of products under our brands and the acquisition of additional brands; those related to consumer demand, our cash flows, financial condition, forecasting and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; our ability to disrupt the consumer products industry; our ability to generate profitability and stockholder value; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue; acquisitions of other companies and technologies and our ability to integrate such companies and technologies with our business; our ability to continue to access debt and equity capital (including on terms advantageous to the Company) and the extent of our leverage; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Investor Contact: The Equity Group Devin Sullivan Managing Director [email protected] Conor Rodriguez Associate [email protected] Non-GAAP Financial Measures We believe that our financial statements and the other financial data included in this press release have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the U.S. (“GAAP”). However, for the reasons discussed below, we have presented certain non-GAAP measures herein. We have presented the following non-GAAP measures to assist investors in understanding our core net operating results on an on-going basis: (i) Contribution Margin; (ii) Contribution margin as a percentage of net revenue; (iii) EBITDA (iv) Adjusted EBITDA; and (v) Adjusted EBITDA as a percentage of net revenue. These non-GAAP financial measures may also assist investors in making comparisons of our core operating results with those of other companies. As used herein, Contribution margin represents gross profit less amortization of inventory step-up from acquisitions (included in cost of goods sold) and e-commerce platform commissions, online advertising, selling and logistics expenses (included in sales and distribution expenses). As used herein, Contribution margin as a percentage of net revenue represents Contribution margin divided by net revenue. As used herein, EBITDA represents net loss plus depreciation and amortization, interest expense, net and provision for income taxes. As used herein, Adjusted EBITDA represents EBITDA plus stock-based compensation expense, changes in fair-market value of warrant liability, restructuring expenses, and other expenses, net. As used herein, Adjusted EBITDA as a percentage of net revenue represents Adjusted EBITDA divided by net revenue. Contribution margin, EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to loss from operations or net loss, as determined under GAAP. We present Contribution margin and Contribution margin as a percentage of net revenue, as we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to gross profit, provides useful supplemental information for investors. Specifically, Contribution margin and Contribution margin as a percentage of net revenue are two of our key metrics in running our business. All product decisions made by us, from the approval of launching a new product and to the liquidation of a product at the end of its life cycle, are measured primarily from Contribution margin and/or Contribution margin as a percentage of net revenue. Further, we believe these measures provide improved transparency to our stockholders to determine the performance of our products prior to fixed costs as opposed to referencing gross profit alone. In the reconciliation to calculate contribution margin, we add e-commerce platform commissions, online advertising, selling and logistics expenses (“sales and distribution variable expense”) to gross profit to inform users of our financial statements of what our product profitability is at each period prior to fixed costs (such as sales and distribution expenses such as salaries as well as general and administrative expenses). By excluding these fixed costs, we believe this allows users of our financial statements to understand our products performance and allows them to measure our products performance over time. We present EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue because we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to net loss, provide useful supplemental information for investors. We use these measures with financial measures prepared in accordance with GAAP, such as sales and gross margins, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance and to compare our performance to that of our peers and competitors. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue are useful to investors in assessing the operating performance of our business without the effect of non-cash items. Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue should not be considered in isolation or as alternatives to net loss, loss from operations or any other measure of financial performance calculated and prescribed in accordance with GAAP. Neither EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue should be considered a measure of discretionary cash available to us to invest in the growth of our business. Our Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue may not be comparable to similar titled measures in other organizations because other organizations may not calculate Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue in the same manner as we do. Our presentation of Contribution margin and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from such terms or by unusual or non-recurring items. We recognize that EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue, have limitations as analytical financial measures. For example, neither EBITDA nor Adjusted EBITDA reflects: our capital expenditures or future requirements for capital expenditures or mergers and acquisitions; the interest expense or the cash requirements necessary to service interest expense or principal payments, associated with indebtedness; depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, or any cash requirements for the replacement of assets; changes in cash requirements for our working capital needs; or changes in fair value of warrant liabilities Additionally, Adjusted EBITDA excludes non-cash expense for stock-based compensation, which is and is expected to remain a key element of our overall long-term incentive compensation package. We also recognize that Contribution margin and Contribution margin as a percentage of net revenue have limitations as analytical financial measures. For example, Contribution margin does not reflect: general and administrative expense necessary to operate our business; the fixed costs portion of our sales and distribution expenses including stock-based compensation expense; or changes in fair value of warrant liabilities Contribution Margin The following table provides a reconciliation of Contribution margin to gross profit and Contribution margin as a percentage of net revenue to gross profit as a percentage of net revenue, which are the most directly comparable financial measures presented in accordance with GAAP. Adjusted EBITDA The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable financial measure presented in accordance with GAAP: Each of our products typically goes through the Launch phase and depending on its level of success is moved to one of the other phases as further described below: i. Launch phase: During this phase, we leverage technology and market data to target opportunities. This phase also includes revenue from new product variations and relaunches. During this period of time, due to the combination of discounts and investment in marketing, our net margin for a product could be as low as approximately negative 35%. Net margin is calculated by taking net revenue less the cost of goods sold, less fulfillment, online advertising and selling expenses. These primarily reflect the estimated variable costs related to the sale of a product. ii. Sustain phase: Our goal is for every product we launch to enter the sustain phase and become profitable, with a target of positive 15% net margin for most products, within approximately three months of launch on average. Net margin primarily reflects a combination of manual and automated adjustments in price and marketing spend. iii. Liquidate phase: If a product does not enter the sustain phase or if the customer satisfaction of the product (i.e., ratings) is not satisfactory, then it will go to the liquidate phase and we will sell through the remaining inventory. Products can also be liquidated as part of inventory normalization especially when steep discounts are required. The following tables present our results of operations for the three- and six-month periods ended June 30, 2025 and 2024, broken down by product phase (in thousands):

Release Date: August 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Aterian Inc (NASDAQ:ATER) has implemented a fixed cost reduction plan, securing approximately $5.5 million in savings, primarily from headcount reductions. The company is leveraging AI to enhance productivity, particularly in customer service, which has improved service quality metrics. Aterian Inc (NASDAQ:ATER) has successfully shifted a portion of its manufacturing from China to Indonesia, reducing tariff exposure. The company is focusing on launching US-sourced consumables, which offer higher margins and less volatility. Aterian Inc (NASDAQ:ATER) has launched a new product, the Squatty Potty flushable wipes, which are expected to contribute positively to the company's growth. Net revenue for Q2 2025 declined by 30.5% compared to the same quarter in the previous year, primarily due to reduced consumer demand and increased pricing. The company experienced a loss in adjusted EBITDA of $2.2 million, compared to a gain in the previous year, driven by lower sales volume and increased marketing costs. Aterian Inc (NASDAQ:ATER) faced challenges with inventory management, holding approximately $3 million more than desired due to strategic decisions related to tariffs. The company had to increase advertising spend to offset volume declines, leading to inefficiencies and lower returns. Aterian Inc (NASDAQ:ATER) is facing significant headwinds from tariffs and trade policy, impacting pricing, sourcing, and spending decisions. Warning! GuruFocus has detected 4 Warning Signs with ATER. Q: Could you talk more about expansion into other consumable products or categories beyond the flushable wipes? A: Arturo Rodriguez, CEO: We see significant opportunities in the health and beauty space, leveraging our existing essential oil brands under the Healing Solutions umbrella. While I can't disclose specific product launches, we plan to announce further developments in October 2025, focusing on US-sourced products with higher contribution margins. Q: Are there any updates on reducing Chinese-based manufacturing by the end of 2025? A: Arturo Rodriguez, CEO: We initially aimed to reduce our Chinese manufacturing from 70% to slightly under 50%. However, with tariffs now at 30%, this goal is more challenging. We've already shifted some dehumidifier production to Indonesia, reducing Chinese sourcing to 65%. We continue to explore diversification opportunities, including leveraging UK and European markets to avoid tariffs. Q: How is the performance in the Latin American markets, particularly with Mercado Libre? A: Arturo Rodriguez, CEO: Our expansion into Latin America via Mercado Libre is a long-term strategy. While currently small in our overall numbers, we expect growth over the next 2-3 years as these platforms evolve. This expansion is part of our broader strategy to be present wherever our consumers are. Q: How are you evaluating potential M&A opportunities given the current environment? A: Arturo Rodriguez, CEO: While we always consider M&A opportunities, our current focus is on stabilizing our business. Once we achieve a stable business model, M&A could be considered. Our priority for the second half of the year is to stabilize and aim for break-even results. Q: What steps are being taken to ensure the stock price remains compliant and avoids another reverse split? A: Josh Feldman, CFO: Our stock price is not directly within our control. Our focus is on growing the business sustainably to support long-term shareholder value. Despite a challenging Q2, we are optimistic about the second half of the year and 2026, with plans to launch consumables and expand into new geographies and channels. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.