Stocks Update: June 13th, 2023 – SeaChange, Virco, U.S. Global Investors, NIO Inc. and Stitch Fix Financial Results

Hello everyone, in today’s blog post, we will discuss the latest financial and operational results of some of the stocks I own. So, let’s dive into it!

SeaChange International Reports Revenue Growth and Margin Expansion, Providing Positive Outlook for Fiscal 2024

SeaChange International, a leading provider of video delivery, advertising, streaming platforms, and emerging Free Ad-Supported Streaming TV services, recently reported their financial and operational results for Q1 2024. With total revenue of $7.0 million, up 4% YoY, the company experienced significant margin expansion and cost controls which reduced net income losses year-over-year to $0.7 million from $3.0 million. Adjusted EBITDA approached breakeven at a loss of $0.2 million in the first quarter, providing an expected profitable outlook for fiscal 2024.

SeaChange International strengthened their recurring revenue streams by securing two major customer renewals in the first quarter, generating seven-figure service level agreements with two Tier 1 operators in North America. Additionally, they launched two new StreamVid customers, including a premium subscription service for a major content owner in the Middle East and an event-based streaming service for a sports event organizer in the U.S. The company also expanded partnerships with Source Digital and Fox Sports Mexico by initiating Source Digital’s interactive metaverse experience and launching Fox Sports Mexico onto the Roku platform.

The company’s ongoing global expansion for the VIDAA Free platform was successful, with the platform being rolled out in the U.S., UK, and Australia. SeaChange International has also continued to make product enhancements, including personalization options for FAST channels, improved ad targeting, cost optimizations for FAST bouquet customers, and ongoing software upgrades for streamlined support.

With gross margin expanding to 59%, up from 48% in the fiscal first quarter 2023, and adjusted EBITDA loss decreasing by more than $1 million, representing an 83% improvement from the year-ago period, SeaChange International is providing a positive outlook for the future. In my opinion, the company’s strong Q1 2024 results show great potential for future growth in the video delivery and streaming industry. Thus, I recommend buying SeaChange International stock.

Virco Mfg. Corporation (NASDAQ: VIRC) Achieves Record Shipments and Revenue Growth

Virco Mfg. Corporation, the leading manufacturer and supplier of movable furniture and equipment for educational institutions in the US, has announced a new record in shipments and backlog on May 31, 2023. The increase in net sales by 8.7% to $34.9 million for the first quarter of fiscal 2024, as compared to the same period last year, has reflected in lower operating loss down to $1.3 million, indicating positive impacts of higher revenue and higher margins. Selling, General, and Administrative (SG&A) expenses were flat at $14.5 million or 41.5% of sales, compared to $14.5 million or 45.0% of sales in the prior fiscal year period.

As a writer invested in VIRC, I am happy to see the company achieving record sales and profitability, which will likely have a positive long-term impact on the stock. The seasonality of the company’s business is a crucial consideration for investors, and VIRC typically delivers the majority of its annual revenue during the second and third quarters. Overall, current financial reports suggest VIRC is an excellent long-term investment, and I recommend buying the stock.

U.S. Global Investors, Inc. (NASDAQ: GROW) Reports Positive Income in Q2 2023

U.S. Global Investors, Inc. is a registered investment advisory firm that specializes in global markets and sectors ranging from gold mining to emerging markets. The company has reported positive income of $908,000 for the quarter ended December 31, 2022, on total revenues of $3.7 million, with net income of $869,000 or $0.06 per share. Average assets under management (AUM) for the quarter were $2.5 billion, with total AUM at $2.4 billion, an increase of around $112 million from the previous quarter.

US Global Investors faced a significant market downturn in 2022, with a historic drop in both stocks and bonds. However, the company was able to generate positive income in the second quarter of fiscal 2023, which is impressive.

Frank Holmes, the Company’s CEO and Chief Investment Officer, stated that inflation is abating, and the US economy continues to expand at a healthy pace. These factors are bullish for U.S. Global Jets ETF (JETS), which is the company’s ETF that tracks the airline industry. China’s relaxation of its zero-Covid travel policy after three years is also likely to contribute positively to the sector.

I have a positive outlook on U.S. Global Investors, Inc. (NASDAQ: GROW) following this press release. The company was able to generate positive income despite a challenging market in 2022, and with the US economy continuing to grow and inflation abating, the company’s ETFs and investment strategies are well-positioned for success. I recommend holding onto the stock and potentially investing more into it in the future.

NIO Reports First Quarter 2023 Results: Deliveries Increase but Margins Decline

NIO, a leading name in the premium smart electric vehicle market, has delivered more than 31,000 units in Q1 2023, marking a 20.5% increase compared to the same period last year. These units primarily consist of premium smart electric SUVs and sedans. However, there was a 22.5% drop in delivery volume from Q4 2022. The company didn’t announce these highlights in their press release, but the total revenue for the first quarter reached RMB10,676.5 million (US$1,554.6 million). NIO faced hardships in terms of vehicle sales, which came down to RMB9,224.5 million (US$1,343.2 million), representing a decline of 0.2% from Q1 2022 and a 37.5% drop from Q4 2022.

NIO grossed RMB162.3 million (US$23.6 million) in gross profit, a decline of 88.8% from Q1 2022 and 73.9% from Q4 2022. The gross margin was recorded at 1.5% in Q1 2023 compared to 14.6% in Q1 2022 and 3.9% in Q4 2022. Furthermore, NIO’s loss from operations increased by 133.6% from Q1 2022, reaching RMB5,111.8 million (US$744.3 million).

This report brings mixed feelings for the current NIO investors. While Q1 2023 has seen increased deliveries, margins have lowered year over year and spiking losses from operations are concerning. With this being said, it is recommended to hold onto NIO stock at this point. NIO has an established position in the market, and the increase in deliveries deserves recognition. Based on this, it is important to wait for the coming quarters and analyze trends in financials before deciding on selling or buying NIO stock.

Stitch Fix reports better-than-expected Q3 results

Stitch Fix, Inc. is an online personal styling service. The company uses data analytics and human stylists to provide personalized styling recommendations to its clients. According to the company’s recent press release, Stitch Fix has delivered better-than-expected financial results for the third quarter of fiscal year 2023 ended April 29.

During this quarter, the company generated net revenue of $394.9 million, and had an active client base of 3,476,000, representing an 11% drop from the previous year. However, Stitch Fix’s revenue per active client (RPAC) came in at $502, which is a decrease of 9% year over year. Despite the drop, the company delivered adjusted EBITDA of $10.1 million, exceeding its guidance range.

Stitch Fix Interim CEO Katrina Lake said, “We continue to focus on delivering profitability and preserving cash flow, and I’m proud of how far we’ve come. We continue to focus on ways to drive efficiencies across our business, while at the same time invest in the core capabilities that have set Stitch Fix apart from the beginning – personalization powered by our industry-leading data science and AI.”

While it’s disappointing to see the company’s client base decline, Stitch Fix’s focus on driving efficiencies and preserving cash flow is commendable. The improved EBITDA and positive free cash flow this quarter are promising signs that the company is on the right track. However, investors should keep an eye on the RPAC metric, as it represents the average revenue generated by each client and is essential for long-term growth.

Overall, I’m cautiously optimistic about Stitch Fix’s future prospects. If the company can continue to deliver profitability while investing in core capabilities, it could be a good long-term investment opportunity. Therefore, I recommend holding onto the stock for now.

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