XWELL, Inc. (Ticker: XWEL) has reported an increase in third-quarter revenue for the fiscal year 2024, with total revenue reaching approximately $8.4 million, up from $7.5 million in the same period last year. The company's CEO, Ezra Ernst, highlighted the successful realignment of resources and cost reduction strategies that are expected to return the company to profitability.
Despite the revenue increase, XWELL still reported an operating loss of $4.8 million for the quarter, which is an improvement from the $12.1 million operating loss in the previous year. The company emphasized its commitment to driving sustainable growth and efficient cost management.
Key Takeaways
- XWELL's total revenue for Q3 2024 was approximately $8.4 million, an increase from $7.5 million in Q3 2023.
- The company reported an operating loss of $4.8 million, an improvement from the $12.1 million loss in the prior year.
- There was a reduction in total operating expenses by about 35% compared to the same nine-month period in 2023.
- XWELL has no long-term debt and maintains solid liquidity with $4.4 million in cash and cash equivalents and $11.7 million in marketable securities.
- The company is prioritizing its out-of-airport brand strategy and plans to expand into several markets in Florida, including a new Naples Wax location.
Company Outlook
- XWELL is focusing on long-term top-line growth and market expansion, with plans to operate up to 10 properties by mid-2025.
- The company is exploring opportunities to align additional properties with existing in-airport markets to enhance brand awareness and operating efficiency.
Bearish Highlights
- Despite the increase in revenue, XWELL still faces an operating loss, although reduced from the previous year.
- The company reported significant legal expenses, contributing to general and administrative expenses of approximately $4.5 million.
Bullish Highlights
- XWELL is seeing solid foot traffic and customer traction at its new XpresSpa location at Philadelphia International Airport.
- The partnership with Priority Pass is increasing foot traffic and positively impacting revenue.
- XWELL is committed to driving higher sales and margins through strategic location buildouts and operational improvements.
Misses
- Salaries and benefits increased to approximately $1.9 million in Q3 2024, up from $1.2 million in the same period in 2023.
- General and administrative expenses rose to approximately $4.5 million due to over $2 million in extraordinary legal expenses.
Q&A Highlights
- The earnings call did not include a question and answer session, or it was not summarized in the provided transcript.
XWELL, Inc. continues to navigate a challenging financial landscape with an eye towards innovation and strategic growth. The company's leadership is optimistic about the future, citing a reduction in operating expenses and a clear strategy for expansion and profitability. As XWELL moves forward with its growth initiatives, investors and stakeholders will be watching closely to see if these efforts translate into sustained financial improvement and a stronger market position.
InvestingPro Insights
XWELL, Inc.'s recent financial report reveals a company in transition, striving for profitability amidst challenging market conditions. InvestingPro data provides additional context to the company's financial situation and future prospects.
According to InvestingPro, XWELL's market capitalization stands at a modest $8.83 million, reflecting its current position as a small-cap company. This aligns with the company's reported financial figures and ongoing efforts to achieve profitability.
One of the InvestingPro Tips highlights that XWELL "holds more cash than debt on its balance sheet." This corroborates the company's statement about maintaining solid liquidity with $4.4 million in cash and cash equivalents and $11.7 million in marketable securities, providing a financial cushion as it pursues its growth strategy.
Another relevant InvestingPro Tip indicates that the company is "quickly burning through cash." This tip resonates with XWELL's reported operating loss of $4.8 million for the quarter, despite the improvement from the previous year. It underscores the importance of the company's cost reduction strategies and efforts to return to profitability.
The InvestingPro data shows a revenue of $32.88 million for the last twelve months as of Q2 2024, with a quarterly revenue growth of 13.54% in Q2 2024. These figures provide context to the company's reported Q3 2024 revenue increase and support the narrative of gradual improvement in top-line performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for XWELL, providing a deeper understanding of the company's financial health and market position.
Full transcript - Xwell Inc (XWEL) Q3 2024:
Operator: Good day, and welcome to the XWELL, Inc. Third Quarter 2024 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Suzanne Scrabis, Chief Financial Officer. Please go ahead, ma’am.
Suzanne Scrabis: Good day, everyone. Welcome to XWELL’s conference call to review our third quarter 2024 financial results. Joining me on today’s call is Ezra Ernst, XWELL’s Chief Executive Officer. We have posted our fiscal year earnings release on the Investor Relations section of our website located at www.xwell.com. A link to the webcast of today’s conference call can also be found on our site. Before turning the call over to Ezra for his prepared remarks, we need to advise you of the following. Comments made on today’s call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on current assumptions as of the date of this earnings conference call and webcast and opinions that involve a variety of known and unknown risks and uncertainties. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Important factors that might cause such differences include those set forth from time to time in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2023, as well as our other current and periodic reports that we file with the SEC. With that said, I’d now like to turn the call over to Ezra.
Ezra Ernst: Thank you so much, Suzanne. I want to thank everyone who’s joining us on the call today and also express our appreciation for your continued interest in XWELL. As this is my first earnings call as the company’s CEO, I’d like to give you a brief overview of my 25-plus year career. For those of you who may not know me, I’ve been with XWELL for several years, having first served as CEO of our HyperPointe brand beginning in March of 2020 and CEO of XpresCheck brand since January of 2022. Operationally, during this time, I led the collaboration with the Center for Disease Control and Prevention under which we helped establish the CDC’s Traveler-based Genomic Surveillance program. Initially, it was a small pilot. It was built on XpresCheck’s advanced COVID-19 testing capabilities and HyperPointe’s marketing expertise. Over time we evolved the program into a key component of the United States’ biosecurity infrastructure, and we continue to be very proud of the important work we are doing with our partners and the CDC. Prior to joining XWELL, I held multiple senior management positions, including CEO of Physician’s Weekly, Chief Commercial Officer of Treato, General Manager at WebMD, and President at OptumHealth Education, a UnitedHealthcare company, as well as a few others. With that color in mid-September, I was excited to take on the expanded role as sole Chief Executive Officer for XWELL. The transition from Scott has been very smooth and I’m pleased with XWELL’s continued momentum. From my perspective, by consolidating our dual CEO operating structure, we successfully realigned resources while creating a leaner, more agile decision-making structure. This streamlined approach also aligns with our broader cost reduction strategy and supports our efforts to return the company to profitability. At the same time, it advances the Board of Directors’ mandate to drive growth, innovation and expansion. In short, we have a talented, engaged team at XWELL and we have many compelling opportunities in front of us. Towards that end, I’d like to now spend a few minutes discussing several company initiatives we’re actively pursuing. We will continue to prioritize our out-of-airport brand strategy, which we believe to be a major contributor to top line growth over the long term. We’re planning to expand into several attractive markets in Florida. And by mid-2025, we expect to be in a position to operate up to 10 XWELL properties. In fact, we’re opening our first Naples Wax location in November and look forward to building on this momentum. Our team is also exploring opportunities to align additional XWELL properties with our existing in-airport markets. We believe that syncing our current geographic markets with additional XWELL properties will allow us to enhance our competitive positioning from a brand awareness, marketing and operating efficiency standpoint. Turning to our in-airport growth. Foot traffic and customer traction at our recently opened XpresSpa at Philadelphia International Airport has been solid. It’s a great location. It’s our first airport spa that fully leverages our tech-forward concept. And I’m pleased with the initial customer demand and overall feedback. Our autonomous massage chairs and robotic nail systems are showing promising performance indicators. As part of our strategic growth in other transit hubs, the company plans to open its Penn Station XpresSpa next year. This location, as previously discussed, will showcase a tech-forward, labor-lite spa designed to cater to commuters, local residents and tourists alike. It will offer wellness-focused retail, autonomous massage and nail care services. I expect we’ll have more to share regarding this as well as other XWELL growth initiatives in 2025. Furthermore, as we strategically build out our new locations, we also remain committed to driving higher sales and margins. For example, customers are taking advantage of our new partnership with Priority Pass, which we believe has enhanced brand awareness, broadened our reach and allowed us to engage with new customers. We're pleased with the resulting increase in foot traffic to our locations as well as the positive revenue implications. We're also committed to making sure that every guest enjoys an exceptional experience when they visit our stores. To deepen engagement, we've been expanding our service menu while emphasizing our selection of fully autonomous and innovative wellness solutions. Additionally, we've added new skilled retail and store management professionals to help us maintain a customer-first focus across all of our efforts. Our team has been focused on simplifying the way in which guests can reserve a spa appointment. Convenience is really the key, and we understand that pre-booking a service should be as seamless and as straightforward as possible. To help support this, our social media platforms have expanded in an effort to highlight how easy it is to interact with staff and our autonomous offerings. By embracing technology and mobile platforms, our goal is to make the process more frictionless and convenient, so our customers can just focus on relaxing and rejuvenating. As we look ahead, we remain focused on driving sustainable top line growth and believe we are taking the right steps to accomplish this goal. As we have discussed many times over the past year, we've been looking at every cost in an effort to improve efficiencies across all our brands and deliver a more profitable operating model. Towards this end, looking at our nine-month 2024 performance, we reduced total operating expenses by approximately 35% when compared with a similar 2023 nine-month period. We also reduced cost of sales by approximately 6% and our general and administrative expenses by approximately 5% when compared to the comparable nine-month period in 2023. This commitment to optimizing our business structure and holding our labor costs constant while delivering more revenue should benefit our bottom line as we enter and work our way through 2025. In summary, a lot has been accomplished over the year-to-date. We're excited about our tremendous growth potential. We're committed to executing on all levels. I really want to thank the entire organization for their continued hard work, dedication and commitment to our guests. I also want to assure our shareholders that we are making the right decisions consistent with the long-term health of the business and our brands. Thank you for your continued support. At this point, Suzanne can give you some additional details on the third quarter as well as our continued momentum reducing operating expenses and driving growth.
Suzanne Scrabis: Thank you, Ezra. I'm now going to provide a brief synopsis of our third quarter results. However, for details, please refer to the 10-Q filed with the SEC. For the quarter, total revenue was approximately $8.4 million compared to $7.5 million in the prior year period. Third quarter 2024 revenue primarily consisted of approximately $4.9 million from XpresSpa locations and Treat locations; approximately $3.1 million from XpresTest, which includes XWELL's biosurveillance partnership and its HyperPointe business; and approximately $0.4 million from Naples Wax Center, which was acquired near the end of the 2023 third quarter. Turning to expenses. Salaries and benefits were approximately $1.9 million in the third quarter of 2024 compared to $1.2 million in the same period in 2023. It's important to note that our 2023 third quarter included approximately $1 million from a non-recurring Employee Retention Credit or ERC, which helped reduce salary and benefit costs last year. If you exclude the non-recurring ERC credit, our 2024 third quarter salaries and benefits would have decreased 4% year-over-year. Our general and administrative expenses were approximately $4.5 million, including over $2 million related to extraordinary legal expenses compared to approximately $3 million for the 2023 third quarter. Total (EPA:TTEF) operating expenses were approximately $6.8 million compared to approximately $13.2 million for the 2023 third quarter. We reported an operating loss for the third quarter of $4.8 million compared to an operating loss of $12.1 million in the prior year third quarter. Our net loss attributable to common shareholders was $4.8 million compared to $11.5 million in the prior year same period. Turning to our balance sheet. Our liquidity remains solid. Our cash and cash equivalents totaled $4.4 million, and we had $11.7 million in marketable securities. Our total current assets were approximately $19.5 million, and we have no long-term debt. Looking ahead, we remain focused on continued improvements in execution, including prudent cost management and enhanced operational processes. That concludes my remarks, and thanks again for joining our call today. Both Ezra and I look forward to speaking with you again in the months ahead. I'll now turn the call back to the operator.
Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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