[Management View]
Xcel Brands completed a strategic transaction with United Trademark Group in April 2025, providing $3 million in liquidity and eliminating over $1 million per year in interest and principal payments through March 2027. The company reported total revenue of $1.3 million for Q1 2025, up from $1.2 million in Q4 2024, reflecting a 50% decline year-over-year due to the sale of the Lori Goldstein brand and exit from wholesale operations. Direct operating expenses fell 40% year-over-year to approximately $2.3 million in Q1 2025, driven by ongoing cost reductions. Adjusted EBITDA loss was $0.7 million in Q1 2025, marking a 56% improvement from the prior-year quarter. The company’s social media reach expanded from 5 million followers in January 2025 to 45 million as of June 2025.

[Outlook]
Management projects full-year FY2025 adjusted EBITDA in the $1 million to $2.5 million range, incorporating expected impacts from tariffs and operational changes at HSN. The company aims to scale brands anchored by large social audiences, identifying $5 million to $10 million in annual royalty potential for new initiatives.

[Financial Performance]
Total revenue for Q1 2025 was $1.3 million, up from $1.2 million in Q4 2024. Direct operating expenses decreased by 40% year-over-year to approximately $2.3 million. Adjusted EBITDA loss was $0.7 million, a 56% improvement from the prior-year quarter. GAAP net loss was $2.8 million, while non-GAAP net loss was $1.4 million, representing a 24% year-over-year improvement.

[Q&A Highlights]
Question 1: Did I get it right that adjusted EBITDA for full year 2025 would be $1 million to $2.5 million, and does that include the impact of tariffs?
Answer: Yes, it includes potential impacts from tariffs and any disruption from the move of HSN from Tampa to West Chester, PA. We are working on mitigating measures, including short-term domestic production for some of our brands.

Question 2: Is the run rate of $1 million per month for overhead costs correct?
Answer: The overhead run rate is about $9 million for the year, which translates to less than $2.5 million per quarter.

Question 3: What are the guarantees from G-III on Halston, and when do those royalties start to kick in?
Answer: The guaranteed minimum under the license is $1.7 million per year. We plan the business on the minimums with very little pickup on actuals over the minimums in Q2. As they ship for fall, we anticipate they will come in over the minimums.

Question 4: Can you talk about your liquidity needs going into this year and if the $3 million of liquidity is enough to get you through to 2026?
Answer: Our liquidity is good now. We have more transactions in the pipeline and have issued LOIs on additional transactions. If we see additional need for capital, we will address it when that time comes.

Question 5: Can you score the revenue potential of your recently launched or anticipated launch brands?
Answer: All of them are very exciting. Cesar Millan is the biggest voice in the pet world, and we anticipate strong business. Gemma Stafford and Jenny Martinez also have significant potential in various categories. Between the three, they reach over 30 million social media followers.

Question 6: Why would the company want to own a minority interest in the Isaac Mizrahi brand, and are you considering monetizing this interest?
Answer: Isaac Mizrahi has been great for us over the years. We will continue to support the brand and oversee the QVC business. WHP partners handle third-party licensing.

Question 7: What types of acquisitions are you mostly interested in?
Answer: We are interested in brands with significant social media followings and media companies that could extend our reach.

Question 8: What was the impact of Lori Goldstein in the first quarter, and how much did it contribute to second quarter revenue last year?
Answer: Lori Goldstein contributed $1.1 million in the first quarter of 2024 and $1.4 million in the second quarter.

Question 9: How do we think about the revenue growth associated with the increase in social media followers?
Answer: Each opportunity has the potential to generate $5 million to $10 million of royalty income per year. It will take time to ramp up, but we believe they have significant potential.

Question 10: How should we think about operating expenses as the business pivots to growth?
Answer: Our structure is designed to scale. The only real incremental cost will be additional commissions on revenue generated with co-brand partners. Fixed costs will remain stable.

Question 11: How should we think about the second quarter compared to last year or the first quarter?
Answer: We are good with where you are, and if we become aware of anything that will impact the numbers, we will report on that.

[Sentiment Analysis]
The tone of the analysts was inquisitive and focused on clarifications regarding financial projections, liquidity, and growth potential. Management was confident and provided detailed responses, emphasizing strategic initiatives and future growth prospects.

[Quarterly Comparison]
| Metric | Q1 2025 | Q4 2024 | Q1 2024 |
|-------------------------|---------|---------|---------|
| Total Revenue | $1.3M | $1.2M | $2.6M |
| Direct Operating Costs | $2.3M | $2.5M | $3.8M |
| Adjusted EBITDA | -$0.7M | -$0.8M | -$1.6M |
| GAAP Net Loss | -$2.8M | -$3.0M | -$6.3M |
| Non-GAAP Net Loss | -$1.4M | -$1.6M | -$1.8M |

[Risks and Concerns]
Potential impacts from tariffs and the move of HSN from Tampa to West Chester, PA, could disrupt business and sales. The company is working on mitigating measures, including short-term domestic production for some brands.

[Final Takeaway]
Xcel Brands has made significant strides in restructuring its business model, reducing costs, and expanding its social media reach. The strategic transaction with United Trademark Group has provided liquidity and positioned the company for future growth. While there are potential risks from tariffs and operational changes, management is confident in their ability to mitigate these impacts and drive revenue through new creator-driven brands and strategic acquisitions.