Member Info for BigBiteNow

Huddled stated in their FY24 presentation that refunds/one-off lift issues aside, it would have reached operational profitability as soon as March. A month when the group achieved c. £1.75m in revenues.

Do enough people appreciate that this means that only their PLC overhead then needs to be covered before the group reaches a cash flow positive state, and that this cost ran at £1.146m in FY24, which equates to c. £95,000 per month.

Revenues are already at or above £1.9m in April. That is 11.9% in one month. As of May comes the new warehouse floor (which has already helped the warehouse test +2,400 orders a day) and increased advertising.

Cash flow positive is a lot closer than the current market interest appreciates.

https://x.com/BigBiteNow/status/1922285791226544351

I've added a good few shares to my pot today. I've spent a lot of time analysing the report, broker note and presentation.

Some of it I have pulled together in the attached post below. For me, the broker is playing it very safe, which I get. Better to upgrade your client rather than the alternative.

There is enough data available to prove that my previous Q2 forecasts (+£6m) will be achieved.

That sets H1 2025 up for +£10.5m in revenues. That would leave around £13.7m required in H2, which, given their starting point plus the expected Q4 surge in orders and AOV, really isn't asking a lot.

The CEO already indicated in the presentation that Nutricircle is tracking up to c. £600,000 above the Zeus Q2 forecast.

I suspect they will beat the broker FY target by a healthy margin.

https://x.com/BigBiteNow/status/1920119608326987818

The lift issues were as much about the added labour costs for carrying deliveries up and down three floors as they were about customers receiving delayed or damaged parcels (Think added shifts and temporary labour). The cost likely wasn't high, but the disruption contributed to an underperforming service that prevented the business from entering operational profitability in March. No more, no less.

Refunds don't need to be eliminated; they need to return to normal levels. Again, the figure wasn't significant compared to the monthly revenues achieved in March, which demonstrates just how close HUD was to operational profitability. I have said before that HUD's desire to keep investors informed (warts and all) means that focus (in a bear market where any risk is amplified) automatically centres on such detail to the detriment of the real news. This is especially true for investors who aren't prepared to study what they are being told.

HUD could easily have waited until the end of April, until the issues were resolved and revenues were yet higher, to state, yes, we had a couple of issues, but they are now resolved and we are operationally profitable. By being upfront and honest, sentiment has suffered, and attention has temporarily turned elsewhere.

Damned if you do and damned if you don't.

Morning all,

I tend to agree that it reads flatter than it should. The BOD really should back themselves a bit more because the progress deserves more confidence in what will now unfold, and the challenges do not define this business, and so far have been tackled very well. I trust we will receive a more up-to-date picture in the investor presentation.

That aside, I am always keen to read the going concern as it lays out the likelihood of further funding and what form it may take. HUD's one reads very well (Nomad accounts speak aside) by saying that the current path of revenue growth should see them into profitability this year without the need for more funding. After that, there is a very good chance that banking facilities will be agreed upon if required.

So, it now becomes purely about whether I believe in their ability to grow fast enough and waiting for that growth to materialise.

From the details around the March revenues, they show that Discount Dragons was back close to £1m in revenues in March, even before additional warehouse space kicks in and allows this brand the ability to finally push on.

A quick comparison of the other two brands' March performance vs. Q1 outcome demonstrates that significant further growth is due to come through in Q2. Again, this is before the new warehouse space adds further capacity.

Hence why we were told that without the lift interruptions and refunds issue, the business would have essentially reached operational profitability already in March.

I am not focused on the share price in the near term. So long as the growth continues to come through (which the signs say it will) and HUD can achieve it without diluting my stake, then I will do very well out of this investment.

Looking forward to hearing more in the presentation.

Most of the general market isn't giving this sort of detail any sort of thought.

I believe those willing to dig into the information properly and follow what we are being told in the excellent video updates (note the latest was all about converting new customers into returning ones and how that affects later profit margins) can gain a big advantage.

@thewakokid No, that isn't correct.

The warehouse costs are mainly fixed, and marketing spend (which is flexible) is covered at operational breakeven. After that, the margins for the orders above and beyond that level are merely about the "product, postage & packaging and payment processing costs."

To give a frame of reference in Q2 2024, DD delivered a 21% basket margin (so post product, postage & packaging and payment processing costs) at £2.78m in revenues for the period.

But Huddled is a different beast these days with cheaper delivery costs, stronger stock buying power and the introduction of Boop, which has a far higher starting margin thanks to the cosmetics angle (fragrances, etc).

Defining where HUD is right now on that total basket margin is difficult, but I would be willing to guess that it is already +25%.

There is another ingredient here, which is the AOV. That has pulled back slightly in Q1 (£32,10 per order) vs Q2 2024, but that is in part because of the January sales + the drive to secure more new customers. However, as shown with the example for Nutricircle in today's update, those new lower AOV customers are starting to convert, which means higher spend and a rising AOV. Every £1 they can raise the AOV from the same number of orders (137,000 in Q1) gains them £137k for the same cost outlay, except of course for the purchase price of the stock itself. It is well worth reviewing this table in the interim update RNS dated 30th Sept 2024.

I have heard quotes from the company of up to 45% gross margins on DD and 60% on Boop. Take the lower end if you wish, that still equates to over £60,000 in additional revenues that would go straight to the bottom line. March orders are well past 50,000 and rising, meaning that any boost to AOV starts to impact even more. The larger Boop grows, the more it can influence the overall AOV because its average in Q1 looks to be at least £40 per order.

Looking at Nutricircle (due to the new customer drive), it is running an AOV some £6-£7 lower than Q3 last year. There is no guarantee that they will close that gap quickly or at all, but it does give good insight into what is possible without committing further costs. This is why Boop has been pushed so hard front-end and why it deserves to remain the focus in the coming months. It is also why customer acquisition needs to be respected for its necessity and its impact on margins at this stage.

So it's not simply about how much revenue is required to break even. It is about margin and how much marketing spend is worth applying to strike a balance between new customers and returning ones.

Another thing to consider is that with so many new customers coming on board these last 6 months or so (101,000), HUD has access to an ever-increasing database, which they can hit with cheaper direct marketing for greater effect. These returning customers should spend more on improving margins while placing a cap on marketing expenses.

No, I wouldn't argue with that, Horsetrader.

The feedback I have had is that the plan is to be breakeven this year. That implies a manageable loss in H1, which is countered by an equally profitable H2. The message today was that they are on track for this.

They reported £2m in available cash at YE24.

It is important to remember that March was running at £1.7m in revenues, and they had just implemented the reduced picks strategy at DD, and the new warehouse is about to come online.

This is why I have been forecasting that they hit at least £6m in Q2 revenues, which would be a £900k uplift on what March has given them as a starting base. That isn't very pushy.

That to me would see them eating well into any loss generated in Q1.

What is also important to consider is the contribution from Boop. It has the largest margin potential and was already delivering a good net margin in Q1, even when adding 14.7k in new customers. Remember, new customers tend to spend less than returning customers.

The think buying power, which means better deals on stock and the breadth of what can be offered. That too has already progressed from Q4. More offerings mean more return visits = increased AOV.

It is these sorts of little details that get lost in quarterly updates.

I would also flag up the lever element of this business. HUD is busy winning new customers by implementing marketing that attracts the most income. They don't always have to advertise. Hence, the words around being a tipping point business.

There is so much more going on here than the headline figures state. The CEO has tried to convey this in his updates but not many are willing to disect what is being communicated.

The fairer comparison would be this

"Group revenue £4.4m (Q1 2024: £2.1m1"

That is a 110% YoY jump.

Group overheads beyond operational profitability are admin expenses, which the CFO told me ran at £600k per quarter in H1 2024. So they don't need a great deal of operational profitability to achieve net cash generation.

A QoQ comüparison isn't fair because Q4 is the biggest quarter of the year being boosted by Christmas purchases.

That said, if you strip out Let's Explore sales of £1.1m, then they actually beat Q4 by a smidge.

The biggest messages for me in this update were around being on track towards operational profitability and having enough resources to reach it. That means no funding at this stage, and we can wait and see what this new warehouse space can now deliver.

This is retail. Stock needs to be sold off now and again to make room for new items. I am not concerned at this stage because I feel the new warehouse space gives them so much, and they have done remarkably well without it in Q1.

That is not to say there isn't still work to be done, but my goal has always been Q4, and the above gives me a very good shot at that.

Bear in mind also that we are comparing Q4 (boosted by Christmas) to Q1, which is deemed a quieter period of trading due to sales, etc.

Nutricircle is 72% bigger than in Q4 2024. Boop is 40% larger. Strip out January, and DD is running very close to Q4.

That is in just 1 quarter of activity.

Their forward-looking yearly revenue run rate is at c. £20.4m with more to come, including a big Q4.

They did all this whilst managing constrained warehouse space, which is about to come to an end.

They have also acquired a substantial number of new customers in the period, which, as was pointed out in the last update, is more costly but leads to much greater returns in the following periods.

I am confident this company will enter operational profitability this quarter and likely deliver over £25m in revenues this year.

Some detail that I have managed to extrapolate from today's Huddled update.

"Big increase" in MoM orders and revenues leading to c. £1.75m in March revenues. That sets them up for a Q2 starting at c. £5.25m but they should add to that given the fact that the second floor should come online in early May.

The growing pains continue, but as I have said before, most businesses would never be so revealing or honest with their shareholders. The real story is the growth to date in 2025 and what it can mean for Q2 and beyond. I am really looking forward to seeing where this business is by YE.

https://x.com/BigBiteNow/status/1915063108185284938

Worth noting that Hannam and Partners have Rudyard 2P reserves at 100% GCOS and 90% CCOS. The 90% is based on any potential delays to the production build-out.

Linda is targeting the 2P reserves zone.

Initially, what I am excited to see is what they can do with the second floor. When it goes live, Boop and Nutricircle will be based there, and DD will then have its dedicated floor. All brands will have their own dedicated teams, which should help with improving efficiencies and reducing errors.

Management won't be drawn on what they can achieve with this second floor, but I don't think it is unfair to say that they can boost orders by at least 50%.

If that means 270,000 orders per quarter at the current c. £33 average AOV, then we are talking about a c. £36m per annum revenue company. Each 1 improvement on the group AOV can add another c. £1m to that figure.

But I suspect they can do much better than that.

We have a management team here that, inside 3 months, has managed to drive its order capacity from 110,000 to 180,000 orders. That is a 64% jump.

They have done it whilst working against logistical challenges and in what is still an early phase of understanding of their business.

They have also made efficiency savings in numerous areas (postage, picks, shared advertising with TikTok) and improved the quality of their deal-making with suppliers.

Yes, they have made errors and such things as returns are an issue that needs (and are being) resolved.

But they done more than enough to have earned my trust in the other decisions that they need to make around the issues you quite rightly list out

The level of detail we receive is not common in the marketplace. So we must be careful to single things out that are so readily shared.

The core of why I am invested here is the management team. Their work ethic is incredible (eg, answering emails on Sunday evenings), and their nimbleness and the clever innovation they've demonstrated to date are infectious and say much about where this is heading.

It is difficult to bet against those sorts of traits being successfully applied over and over again. Not just across a second warehouse floor but well beyond that.

But as I said the other day, a £13m MC gives me significant room for error here.

I have HUD doing nearly twice that in 2025 revenues alone. Next year, I think £40m is possible.

Get it half right and it's a double up from here. Get it nearly all right,t and this stock offers multiple returns over a fair time period.

I would just like to add that the AOVs on DD and Nutricircle that contribute to those Q1 and Q2 forecast figures are historically low. This has been driven by customer acquisitions, which we are told buy less in their first orders.

I am sure this is something HUD is working on, and if the majority can indeed be retained (Nutricircle tends to do that the best and their AOV is the lowest), then over time this AOV should begin to rise back up.

2/2

We do need to be conscious of the new hires. Each brand has its own dedicated MD now, + the BOD has had minor additions also, along with 3 full-time TikTok presenters.

What I would say is that I trust this BOD with their strategic approach to achieving profitability over a sensible timeline. Up to now, levers have been carefully pulled to ensure that the current limited warehouse space isn't overwhelmed and that advertising spend is sufficient to grow the customer base. So we haven't yet seen what can be achieved when they are fully operational on both floors. I also strongly believe that the strategy is many weeks/months ahead of what we are hearing in these updates.

So many moving parts, but I have felt for some time that cash flow positivity would come in Q2 this year. Perhaps towards the back end, if I am playing it safe. I think the more Boop is pushed, the faster it comes, and I would expect significant further growth in their orders in Q2, given the fact that TikTok sales have only just gotten going in March.

Based on the AOVs that can be calculated from the updates, I have Q1 running at (give to take) c. £4.5m and Q2 at £6m based on 180,000 orders. The more share Boop takes up or new Nutricircle customers return, the more this improves.

If they can finish Q2 stronger than 2,000 orders per day, then they could push beyond that £6m figure.

Also important to appreciate that this c. £4.5m would represent a c. 115% increase vs Q1 2024.

Hit my Q2 figure, and H1 2025 would be c. 100% better than H1 2024. That is tasty growth given the fact that this mainly comes before the second warehouse floor, and the goods lift is fully operational.

Hope that isn't too overwhelming and helps a little at least. With HUD, the devil is in the details, and if one is prepared to look closely enough, there is so much more to learn here and the market certainly isn't paying attention to it yet.

1/2

Morning horsetrader2,

I see nothing wrong with your approach, especially in this current market. I am a numbers man, and these regular updates do give wonderful insight into what is going on behind the scenes and support my confidence that profitability is about when and not if.

I will give you an example. Yesterday, Martin stated that HUD delivered 137,000 orders in Q1 and, with the tweaks to DD picks, he felt that the current warehouse floor could now deliver c. 180,000 orders per quarter.

We also know that the business delivered c. 110,000 orders in Q4, meaning that Q1 had an additional 27,000 orders over a slightly shorter period (90 days vs 91 in Q2).

However, the 16th March update stated that HUD achieved 27,000 orders in the first 15 days of March. With the end-of-month Boop live TikTok event + new adverts, it is unlikely that orders dropped off in the second half of the month. In fact, they most likely expanded further. But let's say they stayed constant. That would mean that HUD was already running at 1,800 per day, which, when spread over Q2, would equate to c. 164,000 orders.

What this means is that c. 55,800 of the Q1 orders (c. 41%) were achieved in March alone, and the 180,000 orders target is only a further 10% away. It was therefore interesting to hear yesterday that all 3 brands, including DD, are airing new adverts from next week, and DD orders growth can now be encouraged.

What this all indicates is that Q2 orders should achieve more than 180,000 total orders, especially when we consider that the additional warehouse space + new goods lift will come online in early May.

With the brands then moving to their own dedicated floor space, I would expect minor disruption as stock is relocated, + additional new staff must surely need to be bedded in along with typical upheaval as the team gets used to a new way of working. But it is unlikely to have a major impact.

In terms of what a profitability tipping point would look like, I cannot exactly pin this down yet. I do know this is influenced by marketing spend, returns, promotions/customer acquisitions, etc.

I am also conscious that only Boop has been mentioned as having "a decent absolute margin" so far, but that doesn't mean the others haven't reached that point. We are close to the accounts release, which likely prevented such details from being shared in the last couple of updates.

We already know that in October, DD delivered an operating profit on not too dissimilar order levels to March, and the reduction in postage and picks since then must have had a positive impact.

Q1 saw a lot of customer acquisitions taking place, which pulled Nutricircle's AOV down, but their order numbers (15,000 per month) are a giant leap from the 22,400 delivered in the whole of Q4. So again, having already achieved a "modest profit contribution" in Q3 2024, this brand must be very close now to delivering a positive operating margin.

To be clear, I welcome the debate, have tough skin and am by no means perfect in my assessment.

But there is so much potential here, it is ridiculous, and it is only a lack of attention from the market that is currently enabling it.

I have no issue with your comments or more cautious stance around Huddled. I have been at this long enough to know that nothing is ever guaranteed.

I remember when I was invested in YU Energy back in 2019, and poor trust pilot reviews were highlighted as a concern. Three years later, they were shown to be what they really are, a limited perspective of a much larger business that was suffering inevitable growing pains.

At 2,000 orders a day, they are processing up to 14,000 orders a week, compared to 16 poor reviews in the last 14 days across Boop and DD (Nutricircle generally receives good reviews). What is key is that Huddled demonstrates a desire to ensure these customers' issues are well served.

What I will say is that the quality assurance person(s) should already have been in place, but what is most important is that it has been recognised and something is being done about it. As I have said and Martin resonated today, these updates are warts and all and share everyday issues that all retailers face but rarely make public. They therefore, shouldn't be allowed to overly detract from the success that is being delivered.

The core of this investment is what is being achieved vs. the current valuation, which should be forward-looking.

110,000 orders in Q4 became 137,000 orders in Q1, which was shuttered due to pressure on the warehouse and several logistics issues. Now, thanks to positive management,t we have a business capable of 180,000 orders, and that is before the new floor space and lift kick in.

So, what can they do post those additions, and what does it mean for Q4 2025, because that is where I am focused right now and where the share price will eventually hone in on.

That level of growth opportunity gazumps the issues shared to date and the current valuation.

However, I agree that solid figures will be required to fully appreciate what this business is capable of. But I can already clearly see that with far more orders shared over the same warehouse cost + reduced delivery spend + greater margins due to improved buying power + the rise of Boop profitability is coming, and again, that is not reflected in today's valuation because there is still another floor to come online.

HUD could get this half right and still deliver a 200% return from these sorts of valuation levels.