Financial Results for the Half Year Ended December 31, 2023
Revenues decreased by approximately $3.7 million, or 35.8%, to approximately $6.7 million for the six months ended December 31, 2023 from approximately $10.4 million for the same period in 2022. The decrease in revenue was primarily attributable to the significant decrease in sales for both domestic and international markets.
The following table breaks down Dogness’ revenue by product and service type for the six months ended December 31, 2023 and 2022:
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For the six months ended December 31, |
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2023 |
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2022 |
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| Products and services category |
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Revenue |
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Revenue | Variance % | ||||
| Products |
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| Traditional pet products |
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$ | 3,601,676 |
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$ | 4,720,547 |
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(23.7) | % |
| Intelligent pet |
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2,234,220 |
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4,909,115 |
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(54.5) | % |
| Climbing hooks and others |
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761,742 |
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722,312 |
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5.5 | % |
| Total revenue from products |
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6,597,638 |
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10,351,974 |
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(36.3) | % |
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| Services |
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| Dyeing services |
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77,049 |
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– |
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– | % |
| Other services |
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– |
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46,633 |
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(100.0) | % |
| Total revenue from services |
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77,049 |
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46,633 |
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65.2 | % |
| Total |
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$ | 6,674,687 |
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$ | 10,398,607 |
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(35.8) | % |
─ Traditional pet products
Revenue from traditional pet products decreased by $1.1 million or 23.7%, from $4.7 million in the six months ended December 31, 2022, to $3.6 million in the six months ended December 31, 2023. The decline was due to a $0.40 decrease in average selling price per unit.
─ Intelligent pet products
Revenue from intelligent pet products decreased by $2.7 million or 54.5%, from $4.9 million in the six months ended December 31, 2022, to $2.2 million in the six months ended December 31, 2023. The decrease was driven by a $28.40 decrease in average selling price per unit, and more low-value intelligent pet products were sold during the six months ended December 31, 2023, compared to the same period in 2022.
─ Climbing hooks and others
Revenue from climbing hooks and other products increased by $39 thousand from $0.7 million in the six months ended December 31, 2022, to $0.8 million in the six months ended December 31, 2023. The increase was due to a $0.10 increase in average selling price per unit.
─ Dyeing service
For the six months ended December 31, 2023 and 2022, the Company earned approximately $0.1 million and $Nil, respectively, in dyeing service fees.
─ International vs. Domestic sales
International sales decreased by approximately $2.3 million or 33.7%, to $4.5 million for the six months ending December 31, 2023, compared to $6.8 million in the same period in 2022. The decline was primarily driven by a significant drop in the average selling price of intelligent pet products during this period.
Domestic sales decreased by approximately $1.4 million or 39.9%, from approximately $3.5 million for the six months ended December 31, 2022, to approximately $2.1 million for the six months ended December 31, 2023. The decrease was mainly due to a decrease in customer orders caused by intense competition in the domestic market.
Cost of revenues was approximately $5.4 million during the six months ending December 31, 2023, compared to around $7.7 million for the same period in 2022. This decrease was due to a significant drop in the average unit cost of intelligent pet products. The cost of goods sold as a percentage of revenues increased by about 6.5 percentage points, reaching 80.4% for the six months ending December 31, 2023, compared to 73.9% in 2022.
Gross profit decreased by approximately $1.4 million or 51.7%, to about $1.3 million for the six months ending December 31, 2023, compared to around $2.7 million in 2022. This decline was primarily due to the lower average selling price of our intelligent pet products. The overall gross profit margin was 19.6%, a decrease of 6.5 percentage points from the 26.1% margin achieved in 2022.
Total operating expenses decreased by approximately $1.4 million or 21.8%, to about $4.9 million for the six months ending December 31, 2023, compared to around $6.2 million for the same period in 2022.
─ Selling expenses
Selling expenses decreased by approximately $1.0 million or 64.8%, from around $1.5 million to about $0.5 million. The decrease was due to reduced marketing research activities. As a percentage of sales, selling expenses were 7.9% in 2023 and 14.4% in 2022.
─ General and administrative expenses
General and administrative expenses decreased by about $0.3 million or 7.6%, from around $4.2 million to approximately $3.9 million. The decrease was mainly due to lower consultant fees and expenses associated with furnishing the new facility. As a percentage of sales, general and administrative expenses were 58.0% in 2023 and 40.3% in 2022.
─ Research and development expenses
Research and development expenses decreased by $0.1 million or 12.4%, from $0.6 million to approximately $0.5 million. As a percentage of sales, research and development expenses were 7.3% in 2023 and 5.3% in 2022.
Net loss was approximately $3.2 million for the six months ended December 31, 2023, as compared to approximately $3.0 million for the six months ended December 31, 2022. The increased net loss was the result of decreased sales and gross profit, offset by decreased operating expenses as discussed above.
