RR
Richtech Robotics INC
NASDAQ
10-Q: Richtech Robotics Inc. Reports Increased Revenue but Net Loss in Q1 2024
Sentiment:
Quarterly Report
14 February 2024 5:01 PM
Richtech Robotics Inc. saw a revenue increase of 20% year-over-year in the first quarter of 2024, but also experienced a net loss of $2.748 million.
Worse than expected
The company's net loss increased significantly compared to the same period last year, indicating worse than expected financial performance.
Summary
- Richtech Robotics Inc. reported a net revenue of $1.106 million for the three months ended December 31, 2023, compared to $946 thousand for the same period in 2022, representing a 20% increase.
- The company experienced a net loss of $2.748 million for the quarter, compared to a net loss of $1.202 million in the same period of the previous year.
- The increase in revenue was primarily driven by a significant rise in service revenue, which offset a decrease in product revenue.
- Operating expenses increased significantly, particularly in sales and marketing, and general and administrative costs.
- The company's gross profit margin improved to 61% in Q1 2024 from 53% in Q1 2023, due to a higher margin on service revenue.
- The company's cash and cash equivalents increased substantially to $7.535 million from $433 thousand at the beginning of the period, primarily due to financing activities.
- Richtech is addressing a material weakness in internal control over financial reporting related to IT controls.
Sentiment
Score: 5
Explanation: The document presents a mixed picture. While revenue increased and the company is making strategic shifts, the significant net loss and identified material weakness in internal controls temper the positive aspects. The company is in a growth phase, but faces challenges.
Highlights
- Richtech's total revenue increased by 20% year-over-year, reaching $1.106 million in Q1 2024.
- Service revenue saw a substantial increase of 244%, contributing $799 thousand to the total revenue.
- Product revenue decreased by 69%, falling to $187 thousand.
- The company's gross profit margin improved to 61% due to a higher margin on service revenue.
- Sales and marketing expenses increased significantly by 653% to $595 thousand.
- General and administrative expenses rose by 88% to $1.443 million.
- The company reported a net loss of $2.748 million, an increase from the $1.202 million loss in the same quarter of the previous year.
- Cash and cash equivalents increased significantly to $7.535 million due to financing activities.
- A material weakness in internal control over financial reporting related to IT controls was identified.
Positives
- The company experienced a 20% increase in total revenue year-over-year.
- Service revenue grew significantly by 244%, indicating a successful shift in business focus.
- Gross profit margin improved to 61%, demonstrating better profitability on sales.
- Cash and cash equivalents increased substantially, providing a stronger financial position.
- The company is actively addressing the identified material weakness in internal controls.
Negatives
- The company reported a net loss of $2.748 million, which is an increase from the previous year's loss.
- Product revenue decreased by 69%, indicating a potential weakness in product sales.
- Operating expenses, particularly in sales and marketing, and general and administrative, increased significantly.
- The company identified a material weakness in internal control over financial reporting related to IT controls.
Risks
- Increased competition in the robotics market could lead to price competition and reduced profit margins.
- A potential recession could decrease customer demand for the company's products and services.
- Supply chain disruptions, particularly from China, could delay product delivery.
- Inflationary pressures could increase component costs and affect profit margins.
- Rising interest rates could increase borrowing costs and reduce consumer spending.
- The company's ability to maintain effective internal controls is a risk, as evidenced by the identified material weakness.
- The company's reliance on short-term loans could pose a risk to its financial stability.
Future Outlook
The company anticipates that its research and development expenses will increase by approximately 20-30% in 2024 and 2025. The company expects both product and leasing revenue to return to growth after the upgrading of the product line. The company believes that its existing cash will fund its current operating plans for at least the next twelve months.
Management Comments
- Many of our clients see our robotic solutions as crucial to expanding and scaling their businesses.
- We have taken the initiative to reduce the proportion of robotic product sales and leasing robotics, and have been focusing instead on robot services such as event activities and customized development.
- We were upgrading our product line during the first quarter of 2024.
Industry Context
The company operates in the service robotics industry, which is experiencing rapid growth due to labor shortages and the increasing need for automation. The company's focus on service automation solutions aligns with the industry trend of automating menial tasks in sectors such as hospitality, food service, and cleaning. The company faces competition from established players with more resources, and must adapt to rapid technological changes and evolving market demands.
Comparison to Industry Standards
- While specific competitor data is not provided in the document, the company's revenue growth of 20% is a positive sign in a rapidly growing industry.
- The company's shift towards service revenue, which has a higher margin, is a common strategy in the robotics industry to improve profitability.
- The significant increase in sales and marketing expenses suggests an aggressive approach to market penetration, which is typical for companies in the growth phase.
- The reported net loss is not uncommon for companies in the early stages of growth, especially those investing heavily in research and development and sales and marketing.
- The identification of a material weakness in internal controls is a concern, and the company's remediation efforts will be critical for future financial reporting.
Stakeholder Impact
- Shareholders may be concerned about the increased net loss and the material weakness in internal controls.
- Employees may be affected by potential changes in compensation plans and vesting schedules.
- Customers may benefit from the company's focus on service revenue and product upgrades.
- Suppliers may be impacted by potential supply chain disruptions and changes in demand.
- Creditors may be concerned about the company's reliance on short-term loans and the increased net loss.
Next Steps
- The company will continue to implement measures to remediate the material weakness in internal control over financial reporting.
- The company will focus on growing its service revenue and upgrading its product line.
- The company will monitor and adapt to changing market conditions and competitive pressures.
Related Party Transactions
- The company had several related party transactions, including loans to and from entities controlled by the same stockholders and executive officers.
- Loans were made to Uplus Academy LLC and Uplus Academy NLV LLC, which were disposed of to the CEO in 2021.
- Bison Systems LLC, owned by the CEO and CFO, made interest-free loans to Richtech.
- The CEO and COO also made interest-free loans to the company.
Key Dates
- July 19, 2016: Richtech Creative Displays, LLC was established in Nevada, the predecessor to Richtech Robotics Inc.
- June 22, 2022: Richtech Creative Displays, LLC was converted to Richtech Robotics Inc.
- October 2022: The company completed a 4-for-1 forward stock split and re-designated common stock into Class A and Class B common stock.
- January 1, 2022: The company adopted the new lease accounting standard.
- May 2023: The company opened its ClouTea boba tea store.
- December 11, 2023: The company registered 6,000,000 shares of Class B common stock for issuance under the Employee Stock Option Plan.
- December 31, 2023: End of the reporting period for the quarterly report.
- February 14, 2024: Date of the quarterly report filing.
- March 2024: Expected grant and effectiveness of the Employee Stock Option Plan.
Keywords
robotics, service robots, automation, financial results, revenue, net loss, internal controls, operating expenses, service revenue, product revenue
RR
Richtech Robotics INC
NASDAQ
Sector: Industrials
Filings with Classifications
Capital raise
3 March 2025 10:38 PM
Annual Report Amendment
- On September 3, 2024, the Company issued the following securities to certain institutional investors, pursuant to that certain Securities Purchase Agreement, dated as of August 29, 2024, and to certain retail purchasers (together with the institutional investors, the Investors), pursuant to the Companys prospectus, dated August 29, 2024, as filed with the SEC on August 30, 2024, in a public offering: (i) an aggregate of 13,242,963 shares of the Companys Class B common stock, (ii) pre-funded warrants to purchase up to 2,312,594 shares of Class B common stock (the Pre-Funded Warrants), and (iii) warrants to purchase up to 15,555,557 shares of Class B common stock (the Common Warrants), at a purchase price per share and accompanying Common Warrant of $1.35.
Worse than expected
3 March 2025 10:38 PM
Annual Report Amendment
- The company's total revenue decreased from $8,759 thousand in 2023 to $4,240 thousand in 2024.
- The company experienced a net loss of $8,140 thousand in 2024, compared to a net loss of $339 thousand in 2023.
Capital raise
14 February 2025 4:05 PM
Quarterly Report
- The company issued an aggregate of 3,814,611 shares of Class B common stock and received aggregate proceeds of $5,149,724.85 in January 2025.
- The company entered into a warrant exercise inducement offer letter with a holder of Existing Warrants exercisable for an aggregate of 2,699,797 shares of its Class B common stock, to exercise its Existing Warrants at the existing exercise price of $1.35 per share, generating gross proceeds of approximately $3,644,726 before deducting financial advisory fees.
- In consideration for the immediate exercise of the Existing Warrants, the Company issued to such holder 2,699,797 new warrants (the Inducement Warrants) with an exercise price of $4.00 per share, which are immediately exercisable and valid for five years from issuance (the Armistice Warrant Inducement).
Worse than expected
14 February 2025 4:05 PM
Quarterly Report
- The company reported a net loss of $3.548 million, which is worse than the net loss of $2.750 million in the same period last year.
Capital raise
10 February 2025 8:01 PM
Current Report
- Richtech Robotics is set to receive approximately $3.64 million in gross proceeds from the exercise of existing warrants.
- The company is issuing new warrants with an exercise price of $4.00 per share as an inducement for the warrant holder to exercise their existing warrants.
Worse than expected
14 January 2025 4:53 PM
Annual Results
- The company's revenue decreased significantly due to the transition to a RaaS model.
- The company's net loss increased substantially compared to the previous year.
Worse than expected
31 October 2024 4:30 PM
Current Report
- The company's stock price falling below $1.00 for 30 consecutive days is worse than expected and triggers a delisting notice from Nasdaq.
Capital raise
5 September 2024 4:58 PM
Public Offering Announcement
- The company completed a public offering of 13,242,963 shares of Class B common stock, pre-funded warrants for 2,312,594 shares, and warrants for 15,555,557 shares.
- The offering generated approximately $19.4 million in net proceeds for the company.
- The company is restricted from issuing common stock or equivalents for 90 days and from variable rate transactions for one year, with some exceptions.
Capital raise
29 August 2024 9:50 PM
Registration Statement
- Richtech Robotics is seeking to raise up to $1,087,502.30 through the sale of Class B common stock, pre-funded warrants, warrants, and placement agent warrants.
- The offering is being conducted to raise additional capital for the company.
- The Placement Agent is acting as the placement agent on behalf of the Company on a best efforts basis.
Capital raise
27 August 2024 9:24 AM
Registration Statement
- Richtech Robotics is conducting a public offering to sell up to 14,492,753 shares of Class B common stock and warrants to purchase an equal number of shares.
- The company is also offering pre-funded warrants as an alternative to shares for investors who might exceed beneficial ownership limits.
- The assumed combined offering price is $1.38 per share and accompanying warrant, based on the stock's price on August 23, 2024.
- The company aims to raise up to $20 million through this offering.
Capital raise
14 August 2024 6:16 PM
Quarterly Report
- The company entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. for up to $50 million.
- The company received $3 million in pre-advances via convertible promissory notes, which were fully repaid in July 2024.
- The company issued 259,350 shares of Class B common stock as a commitment fee.
Worse than expected
14 August 2024 6:16 PM
Quarterly Report
- The company reported a net loss of $5.181 million for the nine months ended June 30, 2024, which is worse than the loss of $2.543 million for the same period in 2023.
- Product revenue decreased by 55% due to the transition to a RaaS model, which is worse than the previous period.
Capital raise
14 May 2024 5:41 PM
Quarterly Report
- The company entered into a Standby Equity Purchase Agreement with YA II PN, Ltd., which could provide up to $50 million in funding over 24 months.
- The company issued three convertible promissory notes for $1 million each, with the first two in February and March 2024, and the third in April 2024.
- The company issued 259,350 shares of Class B common stock to the investor as a commitment fee.
Worse than expected
14 May 2024 5:41 PM
Quarterly Report
- The company's net loss increased significantly compared to the same period last year, indicating worse than expected financial performance.
- Product revenue decreased by 59%, which is a significant drop and worse than expected.
Capital raise
22 April 2024 5:50 PM
Debt Financing Agreement
- The promissory note represents a $1 million capital raise for Richtech Robotics.
- The company may need to raise additional capital through share sales to meet its monthly payment obligations under the note.
- The conversion feature of the note could result in a future capital raise through the issuance of new shares to the investor.
Capital raise
29 March 2024 8:23 PM
S-1/A Filing
- Richtech Robotics has a standby equity purchase agreement with YA II PN, Ltd. for up to $50 million.
- The company may issue up to 12,983,208 shares of Class B common stock to the investor.
- The company can obtain pre-advances up to $3 million via convertible notes.
Better than expected
26 March 2024 8:43 PM
Annual Report Amendment
- The company's revenue increased by 45% year-over-year, indicating better than expected growth.
- The company's gross profit margin increased from 65% to 69%, indicating improved profitability.
- The company's net loss decreased from $507 thousand to $339 thousand, indicating improved financial performance.
Capital raise
22 March 2024 5:02 PM
Debt Financing Agreement
- The company has raised $1 million through a promissory note.
- The note can be converted into Class B common stock, potentially leading to further equity issuance.
- The company may need to issue shares to cover monthly payments if it does not have sufficient cash.
Capital raise
15 March 2024 6:13 PM
S-1 Filing
- The document details a potential capital raise of up to $50 million through a standby equity purchase agreement with YA II PN, Ltd.
- The agreement allows Richtech to sell shares of Class B common stock to the investor over a 24-month period.
- The company can also receive pre-advances of up to $3 million via convertible promissory notes.
Capital raise
15 March 2024 4:15 PM
Material Definitive Agreement Amendment
- The agreement involves a potential $50 million share purchase agreement with YA II PN, Ltd.
- The company has received a $1 million pre-advance and is expected to receive two additional $1 million pre-advances upon the satisfaction of certain conditions.
Capital raise
15 March 2024 4:05 PM
Financing Agreement Announcement
- Richtech Robotics has entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. for up to $50 million.
- The company has also secured a pre-advance facility of up to $3 million.
- The company will issue shares to the investor as part of the agreement.
Capital raise
21 February 2024 4:08 PM
Standby Equity Purchase Agreement
- The document details a Standby Equity Purchase Agreement for up to $50 million.
- The agreement includes a pre-advance of up to $3 million, with the first $1 million already advanced.
- The company can issue shares to the investor over a 24-month period, subject to certain conditions and limitations.
Worse than expected
14 February 2024 5:01 PM
Quarterly Report
- The company's net loss increased significantly compared to the same period last year, indicating worse than expected financial performance.
Worse than expected
11 January 2024 5:28 PM
Annual Report
- The company reported a net loss of $339 thousand in 2023, compared to a net loss of $507 thousand in 2022, indicating that while losses have decreased, the company is still not profitable.
Capital raise
11 January 2024 5:28 PM
Annual Report
- The company anticipates that it will need additional funding in connection with its continuing operations after twelve months.
- The company expects to finance its future cash needs through public or private equity or debt financings, third-party funding, and other arrangements.
- The company will continue seeking additional capital to expand its operations, advance its products, and scale its sales and marketing capabilities.
- The company will continue seeking additional financing sources to meet its working capital requirements, make investment in research and development and make capital expenditures needed to maintain and expand its business.
- If the company raises additional funds through further issuances of equity or convertible debt securities, its existing stockholders could suffer significant dilution.
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