Digital Brands Group, Inc.

Net revenues were $2.4 million in Q3 2024, versus $3.3 million a year ago. Gross profit margin was 46% compared with 52.3% a year ago, and gross profit was $1.1 million versus $1.7 million. G&A expenses declined to $2.4 million from $3.7 million, sales and marketing expense fell to $655,000 from $1.2 million, and net loss improved to $3.5 million from $5.4 million; net loss per diluted share was $1.63 versus $14.55. Management did not give formal next-quarter revenue guidance, but said the company has transitioned from balance-sheet cleanup to growth mode and expects 2025 to benefit by over $4.5 million from the end of certain non-cash amortization and interest expenses, including $3.1 million in amortized interest expense and Stateside goodwill amortization ending this year. It also said a wholesale price increase at Sundry should add more than $500,000 a year to gross margins.

Hil Davis framed Q3 as the end of a defensive phase, saying the company had been focused on paying down debt and liabilities amid a weak macro backdrop and the election, but now sees the balance sheet as cleaned up enough to shift into growth. He emphasized VAYNERCOMMERCE as the key strategic partner and laid out multiple growth levers already being launched or planned, including email/SMS, more Shopify apps, Amazon and TikTok, influencer campaigns, and limited-edition monthly drops. His tone was notably more optimistic than in prior quarters, repeatedly describing Q3 as the bottom and the start of an inflection point.

The call highlighted significant year-over-year cost leverage: G&A fell by $1.3 million to $2.4 million, including $1.6 million of non-cash expenses, while sales and marketing dropped to $655,000. Management said the company paid back $1.3 million in convertible debt and now has no convertible debt left, with only longer-term debt remaining. Davis also said interest expense will fall to $105,000 per quarter starting in Q1 next year from over $700,000, creating a stated $3.1 million annual earnings benefit, and that the company expects more than $4.5 million in 2025 earnings benefit from amortization and interest expense roll-offs.

There was no live analyst Q&A, but the prepared answers addressed concerns about the revenue decline, the VAYNERCOMMERCE partnership, and the wholesale account that was dropped. Management said the lost wholesale volume was tied to a customer with single-digit gross margin and added operating burden, making it net negative in cash contribution despite the revenue it brought. Davis also said VAYNERCOMMERCE is heavily incentivized, with 15 people on the calls and only about $1,500 per day of ad spend so far, and that content shoots with influencers are planned for December.