Live Verdure Ltd (ASX:LV1) has had a stellar run on the ASX over recent weeks. In early September, LV1 announced that it had received firm commitments to raise $A1.68 million from existing sophisticated and professional shareholders to accelerate growth and pursue M&A opportunities (the placement was completed on 15 September 2023). Over the past 30 days, LV1 has continued to make significant progress on a number of fronts and has released the following update to its shareholders.
M&A and Technology Partnership Assessments LV1 continues to search for innovative strategies to set themselves apart and advance quickly in what is now a fiercely competitive world of eCommerce. Since the acquisition of Edible Beauty, Live Verdure has received and assessed an increased number of local and international inquiries regarding companies looking to be acquired by or partner with LV1.
These enquiries span a broad range of sectors within the health, wellness, and beauty industry, including some that incorporate ground-breaking technology into their offerings—for example, leveraging artificial intelligence to deliver human resource and digital marketing optimisations among other growth-driving solutions that would substantially boost existing LV1 brands.
AI technology in the healthcare sector has received a lot of attention in the last few months, Specifically Oddity. In mid July, Oddity which is an AI tech which creates personalised beauty products out of Israel, went public on the Nasdaq. The company is only 5 years old and has a current market capitalisation of US$1.65B. Currently there are no AI tech based beauty products listed on the ASX so if LV1 can move into this space, they can have a first mover advantage.
The other advantage LV1 has, is it has a range of long established and successful products. The company would have thousands of data points which they could feed into a machine learning program to better identify products that customers would be interested in buying. With a focus on cost reduction and a potential increase in revenue if they are able to acquire an AI tech, turning the company into a profitable state would be a game changer.
13 Seeds and Edible BeautyReduction in Marketing and Operational Costs
Macro trends around increasing inflation rates have translated into increased operational and production costs. Customer acquisition costs have also continued to increase. Consumers have continued to expect the pandemic-related trends of steep discounting and free shipping, reducing profit margins.
In light of this, LV1 continues to assess and implement cost-reduction strategies, whilst maintaining and/or increasing gross margins for both the 13 Seeds and Edible Beauty brands. The Company continues to reduce online advertising spend and implement other significant cost-reduction initiatives - as it accelerates each brand's path to profitability.
Revenue Growth Initiatives
In April 2023 the Company started to focus on building out a subscription-based offering. A subscription offering for a product or service retains customers by offering an automated discount for products which are consistently bought. This model serves to build a consistent recurring revenue stream whilst reducing customer churn. We have seen significant growth in our subscription-based model of automated ordering, where the Company is seeing its fastest-growing customer segment. Customers who opt into this program have a lifetime value almost double the average and we continue to focus efforts in this area of growth.Edible Beauty has an exciting pipeline of new products including a hybrid makeup/skincare formula scheduled to go to market in November.
This arrival has the brand entering a new in-demand category of makeup “skincare”. Following on will be a botanical sleep support formula and a botanical resurfacing mask, due February. This exciting mask formula utilises natural active technology for resurfacing and skin brightening.Additionally, following a review, the Company sees a potential revenue unlock from an increased investment into paid media spend for the 13 Seeds brand.We expect to see further positive impacts of these initiatives reflected in subsequent quarters, and the Company looks forward to providing updates to our valued shareholders in accordance with its continuous disclosure obligations.
Growing Wholesale Channels
Live Verdure continues to grow its retail, wholesale, and distributor connections as it continues to execute against an omnichannel strategy aimed at providing customers with a seamless and unified brand experience, regardless of which channel they use. An omni-channel approach to retail is essential for brand awareness, with online businesses needing to have their products in ‘bricks and mortar’ retailers, as the disruption caused by the COVID-19 pandemic continues to fade. Existing tier-1 retailers such as David Jones and Heinemann have recently been complemented with the addition of the long-established TV Sales organisation TVSN, a new distributor for Hong Kong, Macau, and China cross-border sales.
Given significant working capital implications of growing wholesale channels, LV1 continues to strategically assess a number of large Tier-1 wholesale partnerships to ensure that any such partnership opportunities will provide for not only topline revenue growth, but meaningful EBITDA contribution in the long term.
New Product Development (NPD) Pipeline and Existing Product Improvements.
Live Verdure has worked to reformulate existing products to increase efficacy, lower costs, and extend shelf life while simultaneously developing a list of new products for launch.Seven new Edible Beauty products were planned for launch during Q1 and Q2 of 2023, with five already on the market as of September. These include a men's skincare range, lip scrub and balm duo, and a highly anticipated stretch mark oil.The November sales period, marked by Black Friday & Cyber Monday, will offer Edible Beauty a key opportunity to not only boost sales but also introduce and test these new product offerings.
The heightened consumer interest during this period provides a unique platform for launching NPD initiatives. Moreover, the data and insights gathered during November sales will further inform future NPD and marketing strategies.In response to the high demand from our valued customers and popularity across the global wellness markets, we are currently exploring formulations for gummies. Gummies are a broad category of gelatin-based chewable sweets serving to deliver active supplement ingredients orally. The gummy supplements market has grown significantly, preliminarily driven by the shift toward preventive health management practices and convenience.By collaborating with new manufacturers who offer low minimum order quantity (MOQ), we can economically address and capitalise on the identified market gap.
Next Steps for Live Verdure
LV1 recognises the significant unlock that utilising innovative and bespoke technological solutions may provide our existing suite of brands - whilst also building a bank of IP to yield a significant competitive advantage.LV1 anticipates that its 13 Seeds and Edible Beauty brands will be able to increase momentum in consumer awareness, offer tailored real-time buying experiences, maximise marketing campaigns and streamline administrative procedures. This aims to drive NPD, supply chain efficiencies and ultimately an improvement in both top and bottom-line growth.Live Verdure looks forward to updating the market in accordance with its continuous disclosure obligations.
In the interest of full transparency, Live Verdure Ltd is a client of Phoenix Global Investments & Phoenix is paid a fee by all stocks mentioned. No information is personal financial advice & all information is general in nature. Please remember all content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our Website and wish to rely upon, whether for the purpose of making an investment decision. The research provided in this article is considered to be reliable and is accurate as of the publication date. This research is also based on the authors opinion and is not meant to represent the opinion of Live Verdure Ltd.
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