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Date
Aug. 14, 2025 at 10 a.m. ET
Call participants
Co-Founder and Chief Executive Officer — Claudia Goldfarb
Chief Financial Officer — Donna Guy
Moderator — Cody Slach
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Risks
Revenuefor the first half of 2025 declined due to "softer demand driven primarily by increased competitive pressure with the arrival of large market entrants."
Gross margindecreased as a result of lower sales and higher occupancy costs.
Net losswas reported, primarily due to the sales decline under intensified competition.
Cash positionended the quarter at $1 million, down from $3.7 million as of Dec. 31, 2024, and $1.6 million as of Mar. 31, 2025.
Takeaways
Revenue-- $1.9 million for the first half of 2025, a significant decline attributed by management to heightened competition from new large market entrants.
Gross loss-- $100,000 for 2025, with management attributing this reversal to both lower sales and elevated occupancy costs tied to increased facility space for finished goods.
Negative gross margin-- Negative 7% in 2025, visibly impacted by a combination of sales contraction and increased occupancy expense.
Operating expenses-- $3.9 million in 2025, with the decrease tied to lower accrued bonus compensation compared to $4.1 million in 2024.
Net loss-- $4.2 million or negative $0.36 per diluted share in 2025, reversing net income of $3.3 million or $0.29 per diluted share in 2024.
Adjusted EBITDA-- Negative $2.7 million in 2025, compared to $6.2 million in 2024.
Cash and cash equivalents-- $1 million at the end of Q2 2025, down from $3.7 million as of Dec. 31, 2024, and $1.6 million as of Mar. 31, 2025.
Inventory-- Management cited a high level of finished goods from the prior year, with two SKUs being sold at a discount while the rest are performing at regular retail channels.
Retail channel growth-- Full production, packaging, and shipping of holiday inventory completed, enabling accelerated supply chain flexibility and focused production scale-up.
Distribution developments-- New Halloween products shipped nationwide to Albertsons; partnership expansion with Five Below across multiple SKUs, including innovation and seasonal items.
International expansion-- Early sales acceleration in the Middle East, with "sell-through rates are driving repeat business and SKU expansion into Q4," though restricted by delays in securing export health certificates.
Cost optimization-- Ongoing actions to reduce excess inventory storage costs, align production to forecasted demand, and right-size occupancy needs.
Cash flow outlook-- CEO Goldfarb said, "I would say before the end of the year," in response to a question regarding reaching cash flow breakeven.
Innovation pipeline-- Development ongoing for proprietary caramel line and soft chew version, with active exploration of private label, co-manufacturing, and adjacent segments such as yogurt milk.
Leadership transition-- Appointment of Donna Guy as Chief Financial Officer, with immediate improvements in forecasting, cash management, and performance tracking emphasized.
Operational recovery-- Management confirmed that delayed Q2 shipments have now been fulfilled, and demand has rebounded, outpacing current labor capacity.
Summary
Sow Good(SOWG -15.48%) reported a substantial year-over-year decline in revenue and profitability, with management attributing the downturn to increased competition and higher facility overhead. Operational stabilization was highlighted following earlier supply chain bottlenecks and fulfillment delays, with all previously deferred shipments now complete. Distribution momentum was observed in both domestic and international retail channels, with new product initiatives and repeat business signaling regained partner confidence. Cost reduction programs targeting occupancy and storage expenses accompanied the strategic affirmation of an innovation-led product roadmap. Management projected the company could achieve cash flow breakeven before the end of the year.
Management reported $1 million in cash and cash equivalents at quarter-end, emphasizing a focus on capital efficiency.
CEO Goldfarb described current inventory as "quite a bit of finished goods from last year," clarifying that "business has stabilized" and regular retail sales continue for most SKUs.
Completion of holiday inventory allowed management to commit to supply chain stabilization and ramp production for upcoming demand cycles.
Management acknowledged continuing challenges from high occupancy costs and export certification delays, but emphasized ongoing progress in rightsizing and opening new retail opportunities.
Industry glossary
SKU: Stock Keeping Unit; a unique identifier for each distinct product sold, used in tracking inventory and sales analytics for packaged foods and retail distribution.
Full Conference Call Transcript
Cody Slach: Good morning, everyone, and thank you for participating in today's conference call to discuss Sow Good Inc.'s financial results for the second quarter ended June 30, 2025. Joining us today are Sow Good Inc.'s Co-Founder and CEO, Claudia Goldfarb, and Chief Financial Officer, Donna Guy. Following their remarks, we will open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Slach as he reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.
Cody Slach: Good morning, everyone, and thank you for joining us in today's conference call to discuss Sow Good Inc.'s financial results for the second quarter ended June 30, 2025. Certain statements made during this call are forward-looking statements, including those concerning our financial outlook, our competitive landscape, market opportunities, and the impact of the global economic environment on our business. These statements are based on currently available information and assumptions, and we undertake no duty to update this information except as required by law. These statements are also subject to a number of risks and uncertainties, including those highlighted in today's earnings release and our filings with the SEC.
Additional information concerning these statements and the risks and uncertainties associated with them is highlighted in today's earnings release and our filings with the SEC. Copies are available on the SEC's website or our investor relations website. Furthermore, we will discuss adjusted EBITDA, a non-GAAP financial measure, on today's call. A reconciliation of adjusted EBITDA to net income or loss, the nearest comparable non-GAAP financial measure discussed on today's call, is available in our earnings press release at our Investor Relations website. With that, I will turn the call over to Claudia.
Claudia Goldfarb: Thank you, Cody, and good morning, everyone, and thank you for joining us today. Q2 2025 marked an important step forward for Sow Good Inc. While we faced some near-term operational challenges, we also saw encouraging signs that our innovation strategy, brand resonance, and retail partnerships are gaining meaningful traction. What we learned this quarter has only strengthened our conviction in the long-term value of the business we are building and the strategic decisions guiding our path to sustainable growth. Our financial performance was impacted by short-term supply chain and labor constraints that pushed certain shipments into July.
Claudia Goldfarb: I am pleased to report that these orders have now been fulfilled. It is important to note that these results do not reflect weakness in demand. On the contrary, demand has rebounded nicely, outpacing our current labor capacity. To meet momentum, we have returned to scaling our workforce and supply chain. Our retail partners continue to request new items, validating both the depth of our innovation pipeline and the enduring appeal of the Sow Good Inc. brand. We have also completed production, packaging, and shipping of our entire holiday inventory, giving us the flexibility to stabilize our supply chain and ramp up production more aggressively.
While there is still work to do, we have stabilized operations and are moving forward with clarity, focus, and confidence. With these foundations in place, we are entering 2025 with greater confidence in our ability to deliver sustained growth. Sow Good Inc. remains resilient, well-positioned to rebuild momentum, and ready to capture growing demand for our brand.
Claudia Goldfarb: So how do we scale from here? By executing with discipline, continuing to drive product innovation, and nurturing a strong pipeline of opportunities with both new and existing retail partners. Before I hand it off, I want to very warmly welcome our new CFO, Donna Guy, to the Sow Good Inc. leadership team. Donna brings more than 25 years of public company finance experience, including senior leadership roles at Advantage Technologies and Basic Energy Services. She is the founder of Elevation Accounting and Finance. Having worked closely with Sow Good Inc. as a consultant over the past year, she already has deep insight into our systems, team, and vision.
Donna has been such a fantastic addition, and her transition into the role has been seamless. I cannot tell you how much easier this transition has been with her leadership. She has a proven track record of driving operational efficiencies, optimizing cost structures, and leading through dynamic environments. We are already seeing that expertise at work. In just a short time, she has strengthened our forecasting, cash management, and performance tracking.
Claudia Goldfarb: We are grateful to have her on the team, and I have every confidence in her ability to help lead Sow Good Inc. through this next phase as we pursue disciplined and sustainable growth. With that, I will turn it over to Donna to walk us through our Q2 financials. Donna?
Donna Guy: Thank you, Claudia. It is a pleasure to be here with all of you, and I look forward to making a meaningful contribution to this great company. Now turning to our financial performance. Revenue in 2025 was $1.9 million compared to $15.6 million for the same period in 2024. The decline reflects softer demand driven primarily by increased competitive pressure with the arrival of large market entrants. Gross loss for 2025 was $100,000 compared to a gross profit of $9 million for the same period in 2024. Gross margin was negative 7% in 2025, compared to 58% in the year-ago period.
The year-over-year decrease in gross profit and gross margin was largely due to lower sales in conjunction with higher occupancy costs. The increased occupancy costs are related to the larger facility we previously secured, which is partially being used for storing finished goods. As has been mentioned on past calls, we are actively working to right-size our occupancy needs. Operating expenses in 2025 were $3.9 million compared to $4.1 million for the same period in 2024. The lower operating expenses were due to lower accrued bonus compensation. Net loss in 2025 was $4.2 million or negative 36¢ per diluted share, compared to net income of $3.3 million or $0.29 per diluted share for the prior year period.
The decrease was primarily attributable to the lower sales in connection with the increased competitive environment. Adjusted EBITDA in 2025 was negative $2.7 million compared to $6.2 million for the same period in 2024. Moving to the balance sheet. We ended the quarter with cash and cash equivalents of $1 million compared to $3.7 million as of December 31, 2024, and $1.6 million as of March 31, 2025. We are approaching the second half of the year with a clear focus: drive top-line growth, improve operational leverage, and rebuild from a more resilient foundation of a broader customer base and product lines.
With our system stabilizing, our retail momentum accelerating, and new category opportunities emerging, I am confident we have the right strategy, the right products, and the right team in place to execute. This concludes my prepared remarks. I will now turn the call back to Claudia.
Claudia Goldfarb: Thank you, Donna. Looking ahead, our execution is centered on three near-term priorities. First, optimizing our cost structure and conserving cash. We have made meaningful progress here. Following Q1, we took decisive steps to right-size our cost base and restore margin, including reducing excess inventory storage costs and better aligning production with forecasted demand. As a result, G&A and interest expenses are trending lower, and we remain focused on capital efficiency, prioritizing spend that directly supports revenue growth and margin expansion. Put simply, last year, we built ahead of demand and have been scaling back strategically, streamlining storage, optimizing our supply chain, and adopting a more efficient demand-driven growth model.
As noted earlier, Q2 results were not sequentially higher due to delayed shipments, an issue that was resolved in July. With those orders now fulfilled, we expect the impact to normalize as operations realign in Q3. Second, expanding distribution of our candy products. Demand momentum is returning. The initial heightened surge of interest in competitors' launches is fading, and consumers are coming back to Sow Good Inc. for the same reasons they always have. Our expertise in freeze-drying provides a superior crunch with bold, creative flavors. In July, we shipped our new Halloween product for Albertsons Grocery nationwide.
Our partnership with Five Below continues to grow across multiple SKUs, including new innovation items such as cotton candy taffy and seasonal favorites such as terrifying taffy and candy corn taffy in exclusive packaging. We are also seeing steady performance from Winn Dixie with our Tenskew brand block, East Hardware and Orgill showing success in the hardware retail category, and promising progress with a major national grocer, where we have advanced to stage three of their review process. Feedback has been positive, signaling growing retailer enthusiasm and confidence in our expanding footprint. Internationally, we are building on strong early success in The Middle East, where sell-through rates are driving repeat business and SKU expansion into Q4.
Given the summer months are the slowest retail months for The Middle East, we are very optimistic about increasing demand beginning in October. The primary challenge remains the speed at which we can secure export health certificates, which we are working closely with our distributor to resolve. Meanwhile, we continue to invest in innovation. Development is advancing on several high-potential products, including our in-house caramel line and the new soft chew version. We are also exploring private label, co-manufacturing, and adjacent categories like yogurt milk. Our innovation pipeline is strong, and new retail opportunities are actively developing. Finally, disciplined execution to build on regained momentum. The challenges of the past year have sharpened our discipline.
Our teams are moving with urgency, tightening cost controls, driving margin recovery, and reinvigorating our go-to-market strategy. With Halloween and holiday shipments complete, we are positioned to fully shift our focus to stabilizing the supply chain and executing on growth. Demand signals remain encouraging, and our retail partnerships, both domestic and international, are strengthening. While the operating environment remains dynamic, we believe the worst of the near-term disruptions are behind us. With operations stabilizing, demand continuing to build, and new opportunities emerging, we remain committed to our long-term objectives: scaling with discipline, deepening retailer relationships, and leading with bold, differentiated innovation. Sow Good Inc. is built for resilience, and we are very excited about the opportunities ahead.
Operator, we will now open the call for Q&A.
Operator: Thank you, ma'am. Star one on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again.
Eric Des Lauriers: And our first question is going to come from Peter Sidoti with Sidoti and Company. Your line is open.
Peter Sidoti: Good morning. Can you just talk to your inventory levels as well as your need for future financing?
Claudia Goldfarb: Yeah. Good morning, Peter. Good morning. So from an inventory perspective, we still have quite a bit of finished goods from last year. The good thing about our inventory is that it has a very long shelf life, and we continue to sell through that inventory. There are two SKUs that we are working through at a discount, which are the sweeter geeks and sweet worms. So those two were moving through discount channels, but the rest is remaining at regular retail and continues to perform well. In regards to what we are going to need from a financing perspective, right now with our current run rate, we are fine.
Once we expand, if we want to do further R&D or move into some adjacent categories, then that is something we will evaluate at that time. But for right now, business has stabilized. You know, sales are in a good spot for where we are. We still need to right-size our occupancy cost, but we are actively working through that. And that is where we are with those things.
George Kelly: How long until your cash flow breakeven at this point do you think?
Claudia Goldfarb: That is a good question. I would say before the end of the year. Okay. But we are making really good progress right now. So from a cash perspective, and Donna, you can speak a little bit to this if you would like. We are holding steady where we are right now.
Donna Guy: Okay. Very good. I would agree.
George Kelly: Okay. Thank you very much.
Claudia Goldfarb: Thanks, Peter.
Operator: And, again, to ask a question, please press 11 on your telephone and wait for your name to be announced. One moment for our next question. Okay. And I am showing there are no further questions in the queue at this time. So I will turn the call back over to Claudia for closing remarks.
Claudia Goldfarb: Thank you, everybody, for joining us today. We feel very positive about the steps that we have taken thus far and where we are going to keep going from here. So I appreciate the time, and have a great day, everyone.
Operator: This does conclude today's conference call. Thank you for participating, and you may now disconnect.