Prenetics Q2 2025 Earnings Call - Cash Flow Turned Positive as General Catalyst Funds Growth

Danny Chou, CEO and Founder, Prenetics/IM8: Thank you, Shannon. Good morning, everyone. Before anything else, thank you so much for being here. This is actually the first live earnings video webcast we have done in our company’s history. From the numbers that are joining right now, it may be the largest group of our shareholders ever gathered in one place. So whether you manage a fund, hold a single share, or are simply here because you drink the sachet every morning, welcome. This is for you. Here is why we are doing it this way. Our shareholders range from global institutions to people who found IM8 as customers and became shareholders. We believe every one of them deserves the same depth of information at the same moment. This moment, we have opened the book to everyone at once. We can do that for a simple reason.

We now have 20 months of data, every cohort, every month, every market measured end to end. Enough history that numbers no longer need my adjectives. I will say this plainly, I do not know of another company, publicly traded or private, that has shown its business in this level of detail in which we are showing you today. I just released a 40-page shareholder letter written to be read, not skimmed. An additional 80-page investor deck that shows you this business the way I see it internally. Every single cohort, every vintage, our full acquisition cost month by month, and even independent cart data measuring our retention against every single brand in our category. In this stream, you hear from us directly. Feel free to ask us anything at the end of this call. A business compounding this fast deserves to be examined, not summarized.

When the numbers are this good, transparency is a weapon. The day that numbers softened, someday you will read it from us first in that letter. One promise I want to make in the next half hour is I am not going to be standing here and just reading you that letter. However, hopefully everyone here listening in can read it later today. What I owe you is a part of the document that cannot do the story of what actually happened, how a brand that did not exist two Decembers ago crossed last month a line most consumer companies never reach. But before I talk a single number, I want to show everyone what we are building first. We made this video, two minutes. Please enjoy.

Narrator: Prenetics is the parent company of IM8.

Brian, CFO, Prenetics/IM8: Talk to us a little bit about what IM8 is.

Video Participant: We created this supplement.

Video Participant: Create nutrition simple.

Video Participant: IM8 just covers everything in one sachet.

Video Participant / George Kelly, Roth MKM: What are you willing to do to be the best?

Video Participant: We’re very strategic in the businesses that we go into. I don’t know whether any of you know about IM8, but you should get IM8 because it’s got 92 ingredients.

Brian, CFO, Prenetics/IM8: Is that your secret, IM8?

Video Participant: That’s my secret, IM8.

Video Participant: You don’t have to take 15 or 18 tablets every single morning. It’s just easy, and it’s so good for you and the longevity of your life.

Video Participant: I look forward to this every single morning. It’s actually my incentive to drink more fluids because I just don’t really enjoy it unless I mix that IM8 in it.

Video Participant / George Kelly, Roth MKM: Since the moment that I took IM8, man, I’ve been feeling incredible.

Video Participant: IM8 gives me that immunity and strength that I can wake up every morning and feel good and perform well.

Video Participant: I think for me, not only has my doctor recommended for me, I know IM8’s done so much scientific research, so that makes me feel like I am in really safe hands with IM8.

Danny Chou, CEO and Founder, Prenetics/IM8: Well, first of all, this guy introduced me to the brand,

Video Participant: You are welcome.

Danny Chou, CEO and Founder, Prenetics/IM8: It is amazing product. It is really working. That is why I choose IM8.

Narrator: So with this $1 billion growth financing, we are able to test so much more, go into more channels, test new creatives, test new offline activations, partnerships. This growth financing goes beyond just acquisition, but really for everything brand related and marketing related. The best choose the best.

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah, I mean, that was a highlight for the last 20 months, and it is quite amazing what we have been able to achieve, right? So Brian, if we get to the next slide. In December 2024, we launched IM8. On our first month on the market, we did about $400,000. And I want to tell you what we believed back then because it is written down. It was in our founding moment before we even shipped a single sachet. We believe if we built the best product in the category, clinical studied, certified, customer would not just buy it, they would stay. And if they stayed, every dollar we spent funding them would come back with profit on top. And if that helped, then one day the whole machine would cross a line, the point where growth stops consuming cash and starts producing it.

We marked that line in the model on day one. Every decision we have made has pointed to it. Last month, we crossed it. In July, our consolidated adjusted free cash flow, and I want to be precise here because precision is the whole point of today, that measure includes the funding under our General Catalyst facility, turned positive for the first time in our history. It is, I believe, the single most important fact in the letter, in the deck, and in this stream. And I will be quite honest with you, I did not believe we could get it here so fast. Twenty months, most consumer brands take years. Many never arrive at all. Two things that made it possible, and they are connected. Firstly, our cohorts came first, customers who stayed, who spent more, who paid back their acquisition costs in months.

And these cohorts earned a second thing, $1 billion of a commitment from General Catalyst, committed after they spent months in our data, capital that now funds our growth, so our cash no longer has to. We expect Q3 to be our first positive quarter, and we expect to stay positive from there. And now the quarter itself. Just highlight in terms of what we have been able to achieve in Q2, and I want to frame this the only way results should ever frame against what we told you and what we would do earlier. So in May, we guided publicly $46 million-$48 million total revenue, $44 million-$46 million for IM8. We reaffirmed those numbers in June. This morning, we reported $46.5 million in total, up 29% from Q1, roughly 3.9x from a year ago, with IM8 at $45 million, up 33% sequentially at a 65% gross margins.

Both numbers inside both ranges. Our sixth consecutive record quarter. We say what we will do, and then when we do it, I want to own that pattern in front of you. For the record, because it is the standard you should hold us to every quarter from here. Then July happened. As you can see from this chartwise, this shows you our path from basically December of 2024 to July, last month. Starting at the 400,000 I talked to you, look where it ends. Last month, we achieved $20.9 million of revenue in one month, just strongest month in our history, 4.3x of last July, at an annualized run rate of roughly $251 million. July just was not big. It was our largest single month customer cohort ever. We acquired 47,373 customers. Here is the part that I am most proud of.

We acquired that record cohort at a customer acquisition cost of about $239, down roughly 21% from our Q2. We have record customers, falling CAC, scaling brands never get both. Brian, in a few minutes, will take the whole P&L apart in a few minutes and share all of the details on that. The quarter delivered inside our own guidance, with a July like that behind it. Change is what I can promise ahead. Today, for the first time, we are also raising our full year total revenue guidance to $220 million-$230 million, with IM8 contributing $215 million-$222 million. Understand the nature of that number. The floor of that range is not hope. It is actually underwritten by the subscribers we already have. We also initiating something else today, the 2027 figures.

As we get close to the end of 2026, 2027, we are initiating $400 million or more. There are three numbers that you should be thinking about now because they hold the whole story of this company. Last year, in our first full year of IM8, we achieved $60 million. In our second year, this year, we will achieve $220 million. $400 million-plus expected in its third year. In the letter, we put it in one way, we will say it to you straight. We do not treat that trajectory as ambition, we treat it as arithmetic. We will exit this year above $300 million run rate before a single 2027 customer walks into the door. Note roughly 87% of our revenue is recurring, subscribers we already have. Our retention curves measure across 20 consecutive cohorts, everyone behaving the same way.

Nothing from the new products you will hear about today is in any of those numbers. Every launch is pure upside to every figure I just gave you, that is the promise. Now let me show you the machine underneath it. I want to talk to you a few minutes about the brand that we are building, because, again, in my experience as an entrepreneur, as investors, I have not seen nothing like this, I am so grateful I am able to live this every single day. This is something that numbers cannot, something you can only see with your own eyes. As you may know, I spend much of the year traveling throughout the whole world for IM8. In every country I land in, the same thing always happens.

People come up to me about IM8 and get so happy, and it is not because they recognize me. It is because they recognize their sachet. I have athletes, surgeons, founders, CEOs, high performers who could buy anything telling me unprompted what this product has done for them. In the time we have been around, we have now launched more than 100 brand events around the world, and the room keeps getting fuller. Dave and I talk about this all the time because it is the thing that we are proudest most of. Somewhere in the last 20 months, this stopped being a product people buy and became something people carry with them, and ask each other about, and hand to the people they care about the most. I can tell you this on an earnings call for a hard commercial reason, a brand people trust travels.

It travels into new countries ahead of our marketing, is why our acquisition cost is falling while our spend has doubled in Q2, and it travels into new products where an audience that already believes in us is waiting for whatever we make next. The pipeline as it stands, and again, the brand that we have been able to build and where we are headed next, right? Because everything you have seen is essentially a one-product family in one category. Next quarter, in Q4, we are going to launch IM8 hydration into a $37 billion market. In the first quarter of next year, our premium line of gummies into a $25 billion category, and nothing launches without IM8 level clinical validation. Everything we make carries NSF Certified for Sport®.

On the science behind that, we have three randomized placebo-controlled clinical trials ongoing as we speak right now, including one at the Mayo Clinic, and Dr. Don Wasilen will take you inside them shortly. I will say only this, in a category built on marketing claims, we are building one on evidence. Next, I want everyone also to understand that while hydration gummies are coming next, it is not the whole story. Because I think what we have been able to build this brand is going to be able to do so much more. Look at this slide here. We are talking about, again, sleep, cognition, recovery, women’s health, men’s health, sports performance. When a customer hands our sachet to someone they love, they are telling us they will trust us in any category where science and quality decide the winner, and that map is most of consumer health.

Now, let me be also equally clear about what this slide is not. It is not a roadmap. I am not announcing anything today. But the honest way to think about IM8 is not just as a supplement company. It is a trusted global premium health brand, 20 months old, with most of its categories still ahead of it. Here is the question every operator in this audience is already asking. Entering new categories normally takes armies, new teams, new overhead, margin walking out the door. Let me show you why that math does not apply to us. This is a chart of our AI native organization, and it may be my favorite slide in the deck next to the adjusted cash flow slide. IM8 is an AI native organization from day one. We are roughly 70 people delivering this year’s guided $220 million-$230 million revenue.

More revenue per employee than any scaled brand in this category, and the gap widens as we grow. Revenue grew 3.9 times year-over-year with no proportional hiring. Fixed operating expenses actually fell 21% quarter-over-quarter. We doubled acquisition spend from Q1 to Q2 with the same number of team numbers. That’s not discipline for its own sake. It’s what a company looks like when AI runs through creative marketing operations finance from day one, instead of being bolted on later. Most companies our size are hiring their way to scale. We are compounding our way there. The biggest partnership of this year is the one funding everything I just described. One month ago, General Catalyst committed $1 billion against our cohorts. The deepest diligence I’ve been through as a founder, every single monthly cohort examined at a transaction level.

Now, to walk you through where that number stands today, I’m going to hand it over to Brian, our CFO. Brian just joined us three months ago after that diligence process began. I’ll say this plainly, bringing Brian on board is one of the best decisions we made this year. He came to see the machine, and he stayed to run the numbers on it. Brian, the floor is yours.

Brian, CFO, Prenetics/IM8: Yeah. Thanks, Danny. Thanks for that. Before we get into the quarter here, just a quick word on me, since it’s probably the first time that some of you are hearing from me or seeing me. I’ve been a CFO in the CPG space for quite a long time. IM8 is actually the eighth brand that I’ve been a part of in this category or adjacent categories. When I was first presented with the opportunity to join this business, I did what any good CFO would do. I diligenced it and evaluated it from roughly the same criteria that we’re going to look at today. You take a look at the past, the present, and the future. You start by looking at financial statements.

Those will give a good sense as to how the business has performed in the past, near-term trends that have led to where it presents at that point in time. Really, any given last reported quarter is inherently a little bit in the past anyway, but those quarters are also a byproduct of a lot of the executional effort that’s gone into the prior few quarters. When you look at a financial statement, it’s almost always like looking backwards. When you look at then the present, I think about this as cohort math and unit economics. When you look at those things, you can pretty predictably see where a brand will be in the coming, let’s say, three to six quarters.

It’s pretty good line of sight as to how much the business is looking to grow. It also tells you at the unit economic level where the business can scale and the opportunities that it can do so. Those are always the areas that I look at next. Third, when you look out into the future, that’s more around expansion opportunities, brand equity, brand strength, and where are the opportunities in the form of product, market, channel. Where can the brand extend and where can it play? When I did this assessment of IM8, each part of that got more bullish than the last. The financials were strong, the unit economics and the cohort math quite strong, and the future, obviously with Danny’s vision, the sky’s the limit for this business.

Today I’m going to take us through that same sort of arc around the. We’ll look at the unit economics and the cohort math that’s gone into the last few quarters that’ll give us good line of sight into the future in the form of our near-term guidance. Then I’ll let Danny talk more about the future, but I’ll touch briefly on how that future is funded by strong balance sheet and the General Catalyst financing partnership today. With that, let’s get to the quarter. I’m going to spend a decent amount of time here walking down the P&L because it’s really important for everyone to level set on the presentation of this view and what we are going to hold ourselves to in the future.

For the quarter, in the Q2, so about the middle column of this chart, our revenue was $46.5 million. That’s 29% quarter-over-quarter and 3.9 times bigger than a year ago. That leads us down to gross profit. We did $30.2 million gross profit at a 65% gross margin, which is about 3 full points better than same period of a year ago. Our fixed operating costs are $8.8 million, which is 19% of sales. Note that this is 14% up versus prior quarter, but 2.3 times greater than a year ago. A lot of additional leverage from this line, as you would expect. Danny mentioned the AI nativeness of this business. You would expect this as a business grows, where your operating cost as a percent of sales will continue to decline. That takes us down to contribution profit.

There’s a lot of brands that do contribution a little bit differently. I’ve seen many brands present contribution profit before G&A, before operating expenses, and I’ve never found that to be a very productive thing to do because when you really think about it, the operating costs are really what’s there to drive the business currently. These costs are to drive the fixed base of current customer, current ad spend, current marketing team, and just the day-to-day operation of today. When I think about contribution profit, it’s really a gross profit minus your operating cost, then what’s left in contribution profit and contribution margin as a percent of revenue before you make your choiceful investments into demand creation and customer acquisition. You’ll notice then below contribution profit, which was $21.4 million on the quarter, 46% of sales.

That’s 16% better margin than we saw one year ago. A great amount of leverage has happened at the contribution profit line, which again, is going to be a really important metric to look at into the future. Below that, you are looking at what is our demand creation bucket and really our all-in marketing. We have split this into three lines. For a brand like ours, I think a lot of people just present marketing as one full number. We have gone into a little bit more depth here to show how much our brand royalty is, how much our ambassador partnerships are, and then how much is in just the paid acquisition marketing spend bucket. This acquisition marketing spend of $36.2 million on the quarter is 78% of sales. This is the numerator in what we would consider our CAC equation.

Whenever we are talking about CAC, that is the numerator. Our brand royalty is typically going to be 3.5% of revenue. That’s our contracted royalty against the business. Our ambassador contracts you will notice were $2.1 million in the quarter, which is down to 4% of revenue, versus in prior year, we were at $1.1 million in the ambassador line at 9% of revenue. This includes all of our ambassador partnerships with our equity athletes and lifestyle ambassadors, as well as our scientific advisory board. That’s what that line is. When you look at all marketing, this is really a dial for us as to how much we want to throw profit today versus how much we want to grow for tomorrow.

Every acquisition dollar that we have spent has generated $1.52 of gross profit in our life cycle of our business, and that included several cohorts that are not yet very mature. For every dollar we have spent, we have gotten back $1.52 of gross profit. That straight return, we are going to go into the unit economics in a little bit, but this spend here is really our choice as to whether or not to drive profit today versus growth for tomorrow. Our adjusted EBITDA for the quarter of negative $19 million is really just a byproduct of our marketing spend that, as Danny mentioned, we spent double versus prior quarter, but our CACs have actually gone down. Below adjusted EBITDA, we have adjustments for fair value gains in the quarter of $9.9 million.

You have depreciation in amortization add back, that puts you to a net loss of $9 million for the quarter or $0.52 a share. That’s down 45% from same period of a year ago when our loss per share was $0.94. In a lot of ways, a terrific quarter. Last on this slide, you see the July column Danny showed revenue in July. It was a terrific month for us, and so we wanted to prudently show what July’s preliminary results look like because there has been material strengthening of this business in a way that is quite exciting as we head into Q3 and the rest of this year. Revenue was $21.4 for total Prenetics. A little bit under that for IM8 that we will see in a second. Growth margin 64% on that.

Our operating costs have dropped to 15% of revenue from 19% just last quarter, so some good expansion there. Your contribution profit, $10.4 million in just the month, 49% contribution margin. Our spend, you will notice, versus the Q2 average actually went down. That was not necessarily choiceful. We drove a lot more new customers in the quarter, which is that our CACs improved by so much that our marketing line, or our acquisition marketing line rather, as a percent of sales dropped to 54%, which puts our adjusted EBITDA for July of a $2.4 million loss, or just negative 11% adjusted EBITDA margin. You take it down to net loss of a $3.6 million loss in just July. You can see that July is setting the stage for a really strong Q3. We will briefly then look at the IM8-specific segment, or business unit rather.

The same view of the P&L. IM8 is effectively all of Prenetics today. As we start to report into the future, we will not necessarily be breaking out IM8 specifically versus total Prenetics, as there is really not too much of a need to do so. But same view of the P&L of Q2 on IM8, $45 million of revenue, so almost all of it, all the way down to the EBITDA line, which is a negative $18.6 million loss in the period. The marketing was almost all IM8’s. You are looking at a P&L that is very similar to Prenetics, but then look at the bottom chart. This is what we were speaking to with the customer acquisition metrics. You see 118,000 new customers were acquired in the quarter. It is 98% better than prior quarter. So let that soak in.

98% better on the quarter and our CACs were flat to slightly down at negative 1%. You do not typically see a business able to double its spend and for your customer acquisition efficiency to improve slightly or even hold flat. Take it one step further and you look at the July column, go all the way down to the bottom right and you will see that we did 47,000 new customers in July that Danny mentioned at a CAC of $239. That is 21% less CAC on an average Q2 number versus July that improved by 20%. More than 20% customer growth, 21% CAC improvement. Those two things are moving in a way that we have not yet modeled into the future. We model the business on a CAC more in line with what we saw in the first half. Of course, we would hope that our CAC efficiency will continue.

Everything is looking strong, but we have not necessarily remodeled any of our guidance to assume any of that type of CAC improvement in July. It is just the business scaling. We will move to the rest of the financial statements as kind of the round out of the past, as we will call it, for the financial statements. Looking at the cash flow view next. The first half is really a story of two major investments. The loss for the period, as we saw, entirely driven by the customer acquisition spend for future growth, is the first major investment in the first half. So you see the operating loss was $27 million. We also then executed a share buyback of $40 million, which reflected a $36.1 million cash investment by us net of proceeds as your second major investment.

You see both of those lines take you to about $27 million on the operating loss side and then $36 million on the buyback net of proceeds. What is going to change going forward is that General Catalyst funding will fund 70% of that acquisition marketing line. Our biggest line in our P&L is now funded at 70% of it on the way in. Net of our repayments to them will still end up generating quite a bit of adjusted free cash flow positive momentum into future quarters that started with the month of July. If we take a quick look at the balance sheet next. We have a really strong balance sheet and have consistently, which allows for us to make the types of investments into the Q2 quarter that we saw.

We can really invest for the future in a way that not a lot of brands have the ability to do. Further, they do not have the economics to then support that into the future and actually get the return on that. Taking a quick look at the balance sheet, we have $109.4 million of cash and current financial assets. Our inventory levels have risen. Within the other assets section, we also have prepayments on inventory that get us ready for the back half of the year. It gets us ready for our new products, so we put a lot of cash back into the form of inventories to fuel our growth. As we move down to the liability section, the warrant liabilities here, this is the fair market valuation against the warrants that are currently on the cap table that we will look at in a second.

We have an $18 strike price on 2.36 million warrants. Then we have about 300,000 at some higher strike prices as well. If the stock goes above $21.60 per share for 10 consecutive days, we have a call option to bring in those warrants, which would generate us another $42.5 million of additional cash should that happen. This is kind of the fair market value of the warrant liabilities on the books. The other liabilities are mostly trade payables. If we move into the cap table. I think there has been a lot of uncertainty around our cap table, what does fully diluted look like, so we have done the job of laying this out for everybody very clearly. What you see is an outstanding share burden today of 15.2 million shares. That is 13.6 million Class As and about 1.6 million Class Bs.

If you look at the fully diluted nature of that, so that includes grants not yet issued, but able to be issued in the Class As, you will see that that jumps to 14.5 million fully diluted. Down below, as you see the warrants, as I mentioned, you see that 2.36 million warrants at $18, and then you see the additional 362,000 at strike prices of 24 and 32. These would generate quite a bit of additional cash for us. The total fully diluted cap table would then be 19.2 million shares. That includes everything that has been able to be granted today to all of our partners, and should be looked at as what the fully diluted burden would be.

This is the change since December, and you can see that per our share buyback, we have actually been able to reduce the amount of Class A’s outstanding, down to 13.6 million, from a 15.3 million at the end of the 2025 calendar year. We have returned a bunch of money to shareholders in that line. Then we have the warrant rolldowns that are down below. This is a flow of the shares since the end of the year. We have been really pleased to have delivered some capital back to shareholders in that form. That will round out the past as we talk about the financial statements. Moving next to the unit economics and the cohort math, which is really important because what does that investment in acquisition spend in Q2 get us?

First, we are looking at the CAC chart that we have talked a little bit about. This helps put into perspective what we were talking about with the spend levels effectively doubling from Q1 to Q2, yet you see us doubling the amount of average new customers that we are bringing in. Then you see the July month there, the largest cohort we have ever had at a CAC that has gone down to 239. I also should mention that there has been no mix shift within any of that July number. That is the same mix of quarterly versus monthlies as we had seen in the past in terms of subscription duration and all that. No change. So really a true apples to apples 21% increase in July versus Q2. So tremendous amount of momentum heading into Q3. Then we will look at the return next on the investments.

This is a good view of our quarterly vintages. For some of you might have seen this same chart when the General Catalyst news dropped. We presented this as the collective chart that General Catalyst and us had worked through to underwrite our book of cohort vintages. At that time, if you look at the pink line, the through Q1, our gross profit to CAC and the dollars that we have returned was $1.44. Fast-forward to today, we have updated just through that pink Q1 vintage group. It has gone up from $1.44 to $1.52, which is effectively the model. We have gained $0.08 on this return just in one month of return against existing cohort business. This is what the engine would expect, is that you would see that to continue to rise.

Every dollar we have ever spent into this business through Q1 cohorts has generated 1.52 times the dollar that we put in. That number will obviously continue to go up over time. You will see that the Q1 cohort is quite large, the Q4 cohort is quite large, and you are talking about cohorts that have not had very much time to mature. So that $1.52 is just the beginning of where this business will end up in the coming quarters. This is a great chart that shows some panel data from a partner of ours, Indagari. They do credit card panel data within the U.S., and so they represent anywhere from 6%-8% of all U.S. card transactions online. Effectively, this is the direct-to-consumer business on brands in the U.S. specifically, and 8%-10% Sorry, 6%-8% of the population.

We stack ourselves pretty well as a brand that is only 20 months old against some other big names in the space that we obviously consider as fairly direct competitors. By month 20, our retention is still at 14 10 gruens on this chart. We have a lot of work to do as a business. We are still quite young. We have got a lot of room to run, but this number on the surface of it is really powerful. I mean, a brand that has done what we have done this early on, and to have a month 20 retention number at that stage higher than some great businesses in this space is no small feat, to be sure. Then last, moving on to our subscriber base. This is 140,000 active subscribers.

You will see that we have grown fairly steadily throughout this whole period, but we have really started to accelerate during the 26 periods, and have now reached 140,000. So this is active subscribers, and then towards the bottom, you will see the current base by tenure. If you add some of those percentages, you will see that 50% of our subscribers have been with the business at least for 3 months, which is meaningful given that a lot of our subscribers, especially from a number of cohorts coming into the business standpoint, are still relatively immature and have not been with the business for that long. But half of our subscribers are already past the 3-month tenure, and this number obviously is going to continue to compound into Q3 and the rest of this year. So a really strong subscriber base that fuels this business as we head towards the next phases.

Moving on to the next view. This is where the cohort economics and the unit, sorry, the unit economics and the cohort math that we just talked about will help guide us really predictably into the next 3 to 6 quarters. By just running out the existing repeat revenue of this business, which is how we guide, we can pretty easily see where the next several quarters are going to land. When you look at our Q3 guidance, we are guiding at $61.5 million to $62.5 million on the IM8 revenue or $63 million to $64 million on the Prenetics parent. Which would then imply, based on Danny’s guidance, metrics of $220 million to $230 million for full business, an $81.2 million Q4, which would put us to the top of our guidance.

We are also guiding on EBITDA to improve quite substantially, whereas in the first half, we saw a negative $24.6 million EBITDA loss. In the second half, we expect that adjusted EBITDA loss to drop to negative $8 million to negative $12 million. We expect that to take the form of a couple different things on our P&L. We expect to see additional leverage in most areas. We expect to see the fixed operating costs show nice leverage gains. We expect to see some potential further gains on gross margin as we continue to move into the subscription duration of longer quarterlies and the like, which are more favorable margin. We also expect to see further leverage, especially on our ambassador costs as a percent of sales, as well as the acquisition spend line. We expect that to also get more efficient as a percentage of sales.

And so you have a lot of different areas of the P&L that are driving towards this adjusted EBITDA improvement in the second half expected versus the first half. I would also say that into the future, we will very likely, as we get to be a more mature business, show better versions of guidance figures at the different lines of the P&L so that we can really break this down. But we feel very confident about our guidance here and a great improvement on the adjusted EBITDA line, which, as you can see on the revenue side, is not sacrificing growth at all. We expect a 38% revenue increase in Q3 versus Q2 and another sequential 31% increase in Q4. Then moving on to the next slide. This is the Q3 specifically.

As mentioned, our guidance is $61.5 million to $62.5 million on IM8 specifically or $63 million to $64 million on the parent. We are seeing great momentum in Q3, so we are excited about this quarter not only on the acquisition front, but also on the adjusted free cash flow front. With the General Catalyst financing in place, we have seen July be a strong adjusted free cash flow positive period, and that will continue into the future. So we are quite excited about this quarter. Moving into Q4, this is the 81.2% implied revenue guidance for the year, should we hit the top end of our range. This would be three times better than fourth quarter of 2025, which if you will note, was our strongest quarter in 2025. It is a holiday quarter, it is typically very strong seasonally. We did 59% sequential growth last year.

We are only guiding right now to 31% sequential, and so we think quite deliverable in terms of a number. Also, as Danny mentioned, these numbers do not include the IM8 hydration launch within Q4, so that would all be upside to these figures. Lastly, Danny had touched on this slide briefly. We expect to exit the 2026 calendar year at a $300 million annualized revenue run rate, which would put us at $25 million per month. Then we are guiding to at least $400 million in 2027. I would say that if you look at the exit point of December 2025 of just over $100 million, we have now delivered a year of $220 million to $230 million.

So for us to say we are going to exit 2026 with a $300 million annualized revenue run rate and deliver at least $400 million next year, that ratio is quite achievable relative to what we just saw in this period. So we are quite excited about the business. To round it back to our past, present, future discussion, the past is really strong in the forms of our financial statements. The present in the form of our unit economics and cohorts are driving the growth of the future, and then the future itself is being dictated by our expansion into additional markets, channels, and geographies. So we like to see that the past is printed, our present is guided and measured, and our future with General Catalyst $1 billion financing and a strong balance sheet is now funded.

With that, I will turn it back to Danny and let him go into more of the future.

Danny Chou, CEO and Founder, Prenetics/IM8: Great. Thank you, Brian, for that detailed walkthrough of the P&L wise, right? Before we turn to science, I want to really give a big welcome to Caroline Levy. Caroline, she is on the screen right now. I see the Golden Gate Bridge in the background there. That is where I grew up, spent a lot of my early years there. Caroline, I have actually met Caroline for over 2 years. I met Caroline in March of 2022, in Los Angeles. I remember the first meeting I have had. I actually really wanted Caroline to join the board at that time, and this is pre-IM8.

She respectfully denied me or rejected me at that time, which she was like, "Hey, I need to watch a little bit more what you guys are up to, see if you can actually deliver on everything you say we would." Then I would say maybe about 3, 4 months, we got reconnected again. I am so very happy and honored to officially welcome Caroline. Yesterday, she joined the Prenetics board, as well as the auditing committee and the governance and nominating committee. Since we just announced Caroline, that would be great for her to spend a few minutes on. Caroline, you have so many options when it comes to joining boards, and you have been on Wall Street for the last 30 years as an amazing consumer analyst. Maybe in your own words, maybe just come and share with us why you decided to join us.

Caroline Levy, Board Member, Audit Committee, Governance and Nominating Committee, Prenetics/IM8: Thank you, Danny. Good morning, everybody. I am so excited to be part of the IM8 team. For more than 30 years, my job was professional skepticism. As an analyst, I was paid to look beyond the story, test the numbers, the strength of the brand, the discipline behind the growth. After doing that across hundreds of consumer companies, big and small, you develop a fairly high bar for what genuinely impresses you. There are 3 things that impressed me about Prenetics and IM8. First, as Danny said, I met him more than 2 years ago, and what has stood out to me is his ability to execute. Over my career, I have heard hundreds of CEOs describe what they intend to build. What matters, of course, is what actually gets done, and Danny laid out a clear ambition, and step by step, he has delivered it.

I place enormous value on that combination of ambition, focus, and follow-through. Second, the brand. I spent my career studying consumer brands, including some of the fastest-growing brands of the past decade. The connection IM8’s built with consumers in a relatively short period is unusual. Strong consumer affinity is difficult to create. It’s difficult to sustain, and when it’s genuine, it’s enormously valuable, and I believe there’s something quite special here. Third, the role Danny has asked me to play. He didn’t ask me to join the board simply to agree with him. He asked me to bring the same rigor and willingness to ask difficult questions that I have brought to companies throughout my career as an analyst, and that is important to me. I’m joining the board with real enthusiasm of my responsibility to shareholders and to the long-term success of the company.

I’m so delighted to be here, Danny. Back to you.

Danny Chou, CEO and Founder, Prenetics/IM8: Thank you, Caroline. Again, really glad to welcome you to the board. I’m very excited to also welcome Dr. Dawn Mussallem, where she’s actually going to be talking to everyone about the science. Again, that’s the one thing that we’re really proud of is when I go around the world, people are telling us, "Hey, basically, we love the science. We love everything that you guys stand from day one." Dr. Dawn, again, she’s been with us before we launched the brand. She’s our founding scientific advisory board member. Again, the amazing thing about Dawn, when you meet her in person, she’s just full of hope, full of life. She also has a very interesting story is that when she went to medical school, she actually was diagnosed with stage 4 cancer, given 3 months to survive. She survived that.

About, I think, in 2021, about 5 years ago, she actually underwent a heart transplant due to her cancer from 20-plus years ago. One year to the anniversary of her heart transplant, she became the first woman in the world, I believe, to run a full marathon. While at the same time, she was a founder at Mayo Clinic for their breast oncology center. Dr. Dawn, thank you so much for being here with us from day one. Dawn’s going to talk to us about the science, the background, and what makes IM8 so special.

Dr. Dawn Mussallem, Chief Medical Officer, Founding Scientific Advisory Board Member, Prenetics/IM8: Thank you so much, Danny.

Danny Chou, CEO and Founder, Prenetics/IM8: Dawn?

Dr. Dawn Mussallem, Chief Medical Officer, Founding Scientific Advisory Board Member, Prenetics/IM8: I am so excited to be alive to celebrate this time with IM8. As you said, 20 years as a physician at Mayo Clinic, everything you do is rooted in the deepest of science. I had frequently been approached by other supplement brands, and truly, I would just delete each email because it was never something that Mayo Clinic would allow me to participate in until I received that email and that call from Danny. I remember that in that first call, there was nothing about marketing. The only thing we talked about is how could we create the best scientifically backed nutraceutical solution in the world? That is exactly what we have done.

This was a conversation I had been waiting for truly my entire career because I was an exercise physiologist, actually, before I went to medical school with a special interest in ergogenic aids or nutraceuticals that could help to enhance an individual’s overall health span. For 2 decades, though, at Mayo Clinic, I was just emerged in the sick care environment. I watched patients try to assemble their nutrition from shelves, bottles. They would take 16 to 18 supplements, and they were all inconsistent with quality, and some would do harm. Some patients would actually come in, be admitted to the hospital because these supplements would actually hurt them in their effort to be healthy. The Daily Ultimate Essentials, it is basically replacing everything in those 16, 18 bottles that people would take with over 90 ingredients in that tasty little daily sachet.

If any of you on this call have not tried it, this is my invitation to go out there and make sure you try it, because the biggest investment you can make is actually in your health. Let us start with that IM8 Daily sachet, and it is at a clinical dose. Over 74% of Americans have nutrient gaps, and that is exactly what the Daily Ultimate Essentials is setting out to do, is to close those nutrient gaps and more. What I was sharing with you about having safety at the cornerstone of every single thing we do, it is just not one hero product that is doing it is every single SKU that IM8 sets forward is NSF Certified for Sport®, meaning that there is no banned substances in it, and then it is third-party batch tested, meaning that every single ingredient on that label and the dose is exactly what you are getting.

When you go to that IM8 website, there is transparency, so you can see that actual certificate of what each batch has for you. Very, very important. Then it is also checking for things that can harm people, like heavy metals and microplastics. There was not a shortcut made when it came to IM8 Daily Ultimate Essentials, and I knew that was going to be the product I wanted to be at the foundation of helping to create right alongside that awesome scientific advisory board. It is not just me. I am the voice of those other faces you saw up there, and we are a great team. In truth, we literally talk every single day among the scientific advisory board of how we can do things better. Now, I want to talk to you about how do we prove this? It sounds great.

It sounds like I am selling something, but it is because I have such belief in it. We saw this in our first 12-week randomized controlled study where 95% of participants reported improved energy, improved vitality. That is the number one thing we want to set out to do. There was other reports, we saw 85% improvement in gut health. We saw 80% improvement in the ability for people to sleep. People felt sharper. 75% of individuals felt they had more clarity of thought. They felt a difference. This is why people keep on coming back for more, and we have that high retention rate.

We are going to continue to hold ourselves to this high bar, and that is why we are continuing research right at my, we can say alma mater, because essentially I did all my training at Mayo Clinic, and we have an ongoing randomized controlled study right now at Mayo Clinic among healthcare workers. There are 100 individuals that are being enrolled into this study. The study is designed, one that is really rooted in rigorous science. Basically what we are doing with the IM8 study at Mayo Clinic that is being run by a former colleague of mine, Dr. George Yancopoulos, he is looking at these 100 healthcare workers. These are healthcare workers at the world’s number one research hospital, so they are definitely critical when it comes to taking supplements.

It is being randomized, so half of the 100 individuals unknowingly will get IM8, and the other half will have a matched placebo, and it is matched for taste. In fact, we even stepped out onto a ledge a little bit because the placebo still has some beetroot extract, so even within the placebo, people may feel better. As part of the study, every single study participant has to have a four-week washout, meaning if they are taking any other supplement, they have to hold that supplement, and then they will start IM8 from day one when the study starts. They have baseline laboratory studies, and those laboratory studies will be completed at the completion of the study.

We’re going to be checking different vitamin levels, mineral levels, inflammatory markers, cardiometabolic markers, as well as doing functional tests, like a 6-minute walk test with an equivalent to VO2 calculation, body composition with an InBody, grip strength, as well as, of course, as you can imagine, health-related quality of life surveys. Research like this is not inexpensive. Studies like this cost on par to what they cost for pharmaceutical companies. This is a huge shout-out to Danny, and why that first conversation with Danny was so meaningful to me as a clinician who is a research scientist as well as a physician, is because he wanted to invest in the research, in the science, and that matters. So we expect to have results from that Mayo Clinic study by quarter 2 of 2027, if not sooner.

Next, I want to share with you about the Longevity randomized controlled study. This is a large study with 180 participants, and it is randomized among four different arms. So there’s going to be a placebo arm where they’re not getting anything. There’s going to be a single dose of the Longevity, a double dose of the Longevity, and then the full Beckham Stack, which is going to be a sachet of the Longevity and a sachet of the Daily Essentials. What we’re going to look at is inflammatory markers as well as metabolic markers. These are one of the two most important markers when it comes to the hallmarks of aging. We even know that about 88%-92% of Americans have metabolic disease, basically. This is a really critical study that can help to inform us how we can help Americans basically be healthier.

I’m really, really excited to see what these results show us, and we’re expecting results from this study quarter 1 of 2027. Next, for the Gut Health study. It’s estimated that 66% of Americans struggle with GI issues, and over 70 million Americans actually have diagnosed digestive diseases. This study has 135 participants, and there’s three arms that we’re going to be testing with the different dose response. But what’s unique in this study, where many studies for supplement companies, they just look at quality of life surveys. That indeed is what we did with our first study that I shared with you those results. But this one is going a step deeper. We are actually sequencing the gut microbiome with shotgun metagenomics.

This is huge, and this is super exciting because when we look at the gut microbiome, this is actually our window for bioindividualized optimization of pretty much every bodily function. So really exciting with Suzanne Devkota and the team to see what these results show us. We’re not going to just stop there. As Danny shared with you, come the end of this year into quarter 1, quarter 2, we have some new exciting products on the market, starting with the hydration, which is going to have, well, I don’t know if I’m allowed to go into detail, but two forms of hydration. So we can help people who are athletes as well as people who are more just home who need hydration solutions, thinking of patients and people with complex health issues. Then the gummy.

This is so exciting because we can help children to be healthier, making sure that they have a tasty gummy that has favorable fibers also for their gut microbiome, no sugar, no artificial colorings. We are also going to have this product NSF certified and third-label tested. This means that there is not going to be any of those heavy metals and that what is on the label is actually the dose that that child is getting. As a physician and as a patient myself, I have owed my life to the world’s best medicine, and now we have a nutraceutical solution that is done with the same rigorous methodology. I can tell you this, IM8 is doing it right, and again, remember, the biggest investment is one you make in your health. Danny, back over to you.

Danny Chou, CEO and Founder, Prenetics/IM8: Great. Thank you so much, Dawn. Let me wrap it up here, one more minute here. Let me bring everything that you heard this morning onto one page. Brian showed you all the numbers, Dr. Dawn showed you the science. Here is what all adds up. We have eight advantages, each one making the other better and stronger. The science, three trials on the way, including at the Mayo Clinic. The brand, the one people hand to other people. We also have General Catalyst, again, underwrote $1 billion after months inside our cohorts, a subscription engine across 140,000 active subscribers, and again, growing very, very fast. July, we had our best month ever. An AI native organization, 70 people delivering over $3 million of revenue each. A footprint of 46 countries, and again, we started with 31 countries from day one.

Our largest market only 0.15% penetrated. Founders who own the outcome, my own capital, our athletes’ equity, all of it in the stock that you hold. Now any one of those a competitor can copy. Money can buy their certifications, money can even buy their trials, but the eight together, compounding through the same subscribers, the same data, the same brand month after month for 20 months, that is something really, really rare that nobody has been able to copy. That is why we call ourselves IM8 and here is what I want to sit with you as you go into your questions. Everything you saw today is just from two products.

The flywheel is just beginning to turn, and that is what I am so excited every day to wake up to, and I am so grateful for the opportunity and what we are able to do because, again, we have tens and thousands of positive reviews around the world. I will end it with that. We are right on time, one hour. I know we have done a lot of talking. I think everyone on this stream have learned a lot. We are not done yet, so I think the point of this format that allows everyone, especially our research analysts, to ask us questions. Please feel free to ask Brian, myself, or Dr. Dawn any questions.

Moderator: Thank you, Danny. We will now open the line to our research analysts to ask those questions. If you would like to ask a question, please raise your hand, and you will be moved into the call as a panelist, or you could also drop your question in the chat function of this call. It looks like we will take our first question from Ryan Myers of Lake Street.

Ryan Myers, Research Analyst, Lake Street: Hey, guys. Thanks for taking my questions. I appreciate the really extensive overview here. First question for me with the General Catalyst sort of removing the cash constraint on marketing, how should we be thinking about the spend in the second half of the year, especially as we sort of bridge that gap to the updated adjusted EBITDA loss?

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah, Brian, you want to take that?

Brian, CFO, Prenetics/IM8: Yeah, Ryan, thanks for the question. What we are looking at for the second half is a percentage of revenue that is likely more in line with the second quarter in terms of percentages, maybe a slightly more favorable number than that, but not materially different. We would expect to continue to invest in the business at roughly the same percentage of revenue. Probably not as low as July had come in, but that is also as we are not necessarily expecting that July customer acquisition efficiency to continue. I would expect you to see a little bit more leverage gained on the marketing line, but not too much versus Q2.

Ryan Myers, Research Analyst, Lake Street: Okay. Got it. As the quarterly subscriptions become a larger share of the business and the volumes continue to increase, where do you see the sustainable gross margins going forward from here? Obviously, two consecutive quarters of 65% gross margins. Just how we should think about that going forward as the mix changes a little bit.

Brian, CFO, Prenetics/IM8: Yeah, it is a good question. On the gross margin side, the quarterly duration definitely is more favorable. If mix continues to shift even more heavily towards quarterly, which you would expect as those cohorts continue to grow and to build in, I would expect to see at least a few points of additional margin just come from that portion of the mix improvement. There is also then economies of scale to come, which we have not yet modeled or forecasted or guided to.

But as we continue to scale this business, there is definite efficiency to be gained on economies of scale on not just the supply chain piece of the people and production side of it, but also on the third-party logistics side, postage, freight rates, and also on the cost of product, working with our manufacturers to get costs down with the ability to buy into more ingredients and get some economies of scale that way. So I would expect that to continue into 2027 as further expansion at the gross margin level. So you kind of have two parallel things happening, each of which should be margin accretive for us.

Ryan Myers, Research Analyst, Lake Street: Okay, got it. Lastly, maybe one for Dawn, because I do not know if I have ever spoken with you, and really appreciate hearing the science background of this stuff. But as you guys go through some of these more clinical trials, which are obviously super extensive, and to my knowledge, there is no one else in the supplement space doing that. What do you think that that brings to the brand? Let us say you have successful outcomes for each of those three. What sort of benefit do you think that provides you guys with?

Dr. Dawn Mussallem, Chief Medical Officer, Founding Scientific Advisory Board Member, Prenetics/IM8: Well, our consumers nowadays are becoming much smarter. Thank you for this question, Ryan. More importantly, we are seeing that physicians, this is becoming the trusted product for physicians. It is in Fullscript. I am now Chief Medical Officer at Fountain Life, which is the world’s number one longevity program. Essentially all of our physicians are now switching over our members who were taking 16, 18 plus bottles. I had a patient once come into Mayo Clinic literally with a suitcase of supplements. It is so nice to have one trusted supplement and a solution that is able to check the box on all of these areas. Then you continue that pipeline down through knowing where the ask is with different products on the pipeline.

Ryan Myers, Research Analyst, Lake Street: Okay, got it. That is helpful. Thank you, guys.

Dr. Dawn Mussallem, Chief Medical Officer, Founding Scientific Advisory Board Member, Prenetics/IM8: In fact, Mayo Clinic even has this in their pharmacy. They have it in the Mayo Clinic online store even, to sell to patients. So, if you have it in the world’s number one hospital, that speaks volumes.

Brian, CFO, Prenetics/IM8: Exactly.

Danny Chou, CEO and Founder, Prenetics/IM8: Just to add to that is that is one thing that we are really proud of. We have so many physicians recommending this product to their patients, which is really rare in the supplement space, right? We know, for example, the New York Yankees physician is recommending to all their team players, right? Jay Shetty found out about this through his physician. Aryna Sabalenka found out this through her nutrition coach, then it is really rare that happens. Again, every time the doctors are recommending this, they are going through the labels, they are going through the NSF certifications. They are going everything before they are recommending this. So I think that is something we are really proud of.

Ryan Myers, Research Analyst, Lake Street: Well, that’s great to hear. Thank you guys.

Moderator: We’ll go next to Tom Forte of Maxim.

Danny Chou, CEO and Founder, Prenetics/IM8: Hey, Tom.

Tom Forte, Research Analyst, Maxim: Great. Thank you. First off, Danny and Brian, congrats on the quarter, the General Catalyst deal, and thanks for taking the time this morning to tell the story so well and thoughtfully. Dr. Dawn and Carolyn, thanks for joining the call. I have three questions. I’ll go one at a time. Danny, in general, how long does it take you from deciding to enter a new category to having a product available for consumers?

Danny Chou, CEO and Founder, Prenetics/IM8: To be fair, we are very deliberate and strategic about when we have a new product. Again, because we want to understand if we can create the best product in that category as well. As you have seen earlier when I showed you those 2 slides. Again, right now, we have only honed in on basically 2 new categories, hydration and gummies. Because part of the reason we chose hydration is we see a lot of gaps in the current market. They are either with too much sugar, like Liquid I.V., or too much sodium. We saw that and said, "Why can’t we make something much better?" Again, through discussions with Dawn, as well as some of our SAB, we have to look at all the clinical evidence to create a very comprehensive product before it even goes into the manufacturing and tests, et cetera.

We also have to spend time on the NSF certification on the clinical part. I would say, going back to your original question, when we first thought about hydration, it was already end of last year, I would say. It easily will be 12-18 months, if not longer, when we bring a product into market. I think the good news is that we do not rush into any new products, and that is why, again, 20 months, you have only seen us with 2 SKUs, right? To be fair, if we wanted to, we could have launched a dozen new SKUs. I can tell you, though, we will not have a dozen good SKUs, right? I think for us, it is not the number of SKUs, but every SKU that we do launch and always challenge everyone, "Hey, put it into Claude, put it into ChatGPT.

Is this the best compared to whatever is out there?" I would be very confident to know, again, I tested like 50 different hydration products. I tested like 30 plus gummies. I know for a fact that we, when we come out with it, will have the best ingredients, and we will also have the best certifications around those.

Tom Forte, Research Analyst, Maxim: Excellent. My second question is, how should we think about your build versus buy strategy when entering a new category?

Danny Chou, CEO and Founder, Prenetics/IM8: I think our strategy right now is just building. Again, we’ve been able to build a very, very strong brand, and we’re very strategic with the categories that we’re looking into. With that being said, if there is always a strategic opportunity and we have the capital to do so, we will take a look at it. But I think our primary focus right now, and all of my focus right now, is actually on product development, working with the teams for clinical validation, as well as continuing to discuss with our SAB in terms of what that pipeline could look like.

Tom Forte, Research Analyst, Maxim: Excellent. Lastly, Dr. Dawn and Carolyn, while we have you, I’d appreciate your thoughts on consumers’ increasing interest in health and wellness and if you think this is a multigenerational interest versus just baby boomers.

Dr. Dawn Mussallem, Chief Medical Officer, Founding Scientific Advisory Board Member, Prenetics/IM8: It’s definitely a multi-gen. Carolyn, do you want me to go and take this one first? You’re on mute. I’ll go and take it.

Caroline Levy, Board Member, Audit Committee, Governance and Nominating Committee, Prenetics/IM8: Danny, I’ve been on your board one day. Do you want me to take a stab at that?

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah, feel free to. This is a general question, I think. Yeah, from-

Caroline Levy, Board Member, Audit Committee, Governance and Nominating Committee, Prenetics/IM8: It’s a general question.

Danny Chou, CEO and Founder, Prenetics/IM8: Health wise, yes. Probably.

Caroline Levy, Board Member, Audit Committee, Governance and Nominating Committee, Prenetics/IM8: Yes. I’ll just say that 25 years ago, I think, I wrote a report called "The Absolute Risk of Obesity," and talked about the problem with sugar in the American diet and the risk to the stock valuations on Coke and Pepsi, and stuff like that. I’ve been thinking about health and wellness for years and years and years. It was identified as a trend many years ago. We wrote a futures report on it, and it felt like stating the obvious. What I’ve noticed about trends is that they sort of hop along slowly, being picked up by early adapters, and then they just enter an acceleration curve that is incredible, and I feel we’re at that point. I think we haven’t even touched on what GLP-1s are going to do to people’s health.

I think that it is literally going to change the sizing of American clothing, and furniture, and all sorts of repercussions, because people feel so much better, and the health outcomes are so much better. But it also means we have to think more about bone health and other aspects of our health, and people don’t just want to live long lives, they want to live great lives, and we’ve got a very powerful cohort in us older people. There are a lot of us, and we’re not going quietly into the dark night. We are finding new careers and want to contribute greatly to society. I think we are at the cusp of something really enormous in health and wellness.

Dr. Dawn Mussallem, Chief Medical Officer, Founding Scientific Advisory Board Member, Prenetics/IM8: I agree, Carolyn, and the baby boomer population is one, but the biggest rise, actually, in wellness prioritization is spending among millennials and Gen Z, and these younger cohorts are actually driving over 41% of total wellness spending. It is incredible, and this is the first generation that they’re not actually drinking alcohol. They want to drink their mocktails. Whenever we have our events, and we’re really focusing a lot on connection and sense of belonging and community. You’ll see that in all the ads, which that gives me chills to say, but this is more than just a product. This is really a relationship, as you said, Carolyn, with health and wellness and vitality, and sending forward that message of just being fully alive.

No, it’s a lot of fun to be in this space for pretty much people of all ages, and now including stepping into the children and keeping children safe. Again, it’s that safety first, which the majority of companies just aren’t putting that into perspective. Really proud to be behind this product.

Tom Forte, Research Analyst, Maxim: Great. Thank you, everyone, for taking my questions. I appreciate it.

Danny Chou, CEO and Founder, Prenetics/IM8: Thank you.

Moderator: Thank you, Tom. Our next question will be from Patrick Baudissin from UBS. Patrick, please go ahead.

Patrick Baudissin, Research Analyst, UBS: Hey, thanks for taking the question. First of all, Danny and Brian, congrats on the great quarter. It’s awesome to see the continued momentum. Two questions around competitive landscape. If you could just start by speaking a bit on how the competitive landscape has evolved over the last few months. Related to that is when you guys are acquiring new customers, are customers typically coming from a competing product or new entrants into the category?

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah.

Patrick Baudissin, Research Analyst, UBS: Thank you.

Danny Chou, CEO and Founder, Prenetics/IM8: I think, Patrick, I can answer that. We have actually published some interesting stats from a competitive perspective in the investor deck, where, again, this is third-party independent data. If you look at even the last 20 months of when we launched the brand, basically December 24, it is centralized. If you look at the landscape, we grew, of course, we are near 2,500%. In the same period of time, AG1 went down 36%. I think Grüns went down about 50%. Dorman went up 50% in this period of time. We have been taking quite significant market share from the top players, and rightfully so. We believe we have the best product on the market.

At the premium price point right now, also, I think that is key, and we also published this data, too, the Incorta data, is that on average-wise, at least in the whole supplement category, we have the highest average order value of any supplement brand. On average-wise, it is $180. If you look at AG1, Dorman, I think they are about $80 to $100, and Grüns is like $50. What this means is that our customer clientele, and again, it is also published in this third-party data, is that more than 50% of our current customers have a household income above $150,000 or more. If you think about that for a second, I think that is one of the reasons why after month 20, customers stay with us. Again, the product works, and we have really engaged customers.

Yeah, so I hope that answers your question about the competitive landscape. We are growing every month. Last month in July, we added 47,000 new customers. From our data, I believe 20% to 30% of new customers are from another customer, and other ones, again, a lot of our customers, like Dr. Don mentions, they may be taking five, six, seven different types of supplements, and for us wise, we have been able to condense and make it easy, where again, you do not have to spend $200 to $300 on a monthly basis. You are spending on essentials $9 a month, or on the Beckham Stack, $180. I think we have been able to help people save money, in fact.

Patrick Baudissin, Research Analyst, UBS: Super helpful. Thank you, Danny.

Moderator: Thank you, Patrick. We’ll go next to Alex Hantman of Sidoti. Please go ahead, Alex.

Alex Hantman, Research Analyst, Sidoti: Thanks for taking questions, and congrats on the quarter. The customer acquisition cost improvements throughout spend growth have been very impressive from my perspective. Could you talk a little bit more about TikTok Shop and some of the social commerce efforts you have, and how you’re thinking about their effects on CAC and AOV and prioritizing revenue through your store versus off store as you scale those efforts?

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah. I think creating from day one, we’ve been able to build IM8 against direct to consumer, and majority of transactions are transacted on our own website. It’s roughly about 95%, another 5% from Amazon. That was by design. Because again, when individuals transact on our own website across 40 plus countries, we get to create a much greater experience for them. We also get their email information, and so when we launch new products, we can easily offer to our existing customer base. Again, so we are now experimenting or doing more testing on TikTok, AppLovin, but majority, I would say 90 plus percent of our customers are transacted on our website. Again, we’re still seeing significant growth opportunities on the DTC perspective, so I think we’ll continue to scale that way.

Alex Hantman, Research Analyst, Sidoti: Very helpful. Thanks, Danny. I was also excited to hear about the science and the ongoing research. Beyond getting on physician radars, which we just talked about, can you also talk about your plans to leverage the science to develop future products or partnerships and also share when we might expect readouts from those studies?

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah, I think, again, day one why science has been the core to our foundation. Even when me and David Beckham met like three years ago, we’re like, "Hey, we need to make this a science-backed brand." This is where, again, even the earlier question, this is not a new trend. I think at the end of the day, consumers, they want to understand what ingredients we have. They want to see the results. They want to see the third-party testing. Again, for us wise, we publish Eurofins on our website. We also publish NSF Contents Certified, NSF Certified for Sport®. We’re going well beyond the norm in terms of what you expect from a supplements brand. I think with the two trials that are on the way for the longevity as well as gut, we expect to have results of those by Q1.

Mayo Clinic, just given it’s an academic institution, will likely take a little bit longer, but we expect those, I would say by Q2 of Q3. Again, these trials like Don said are expensive. These are multimillion-dollar trials that were undertaken. We do believe this is going to be part of our moat, in terms of the science where the reality is we don’t know what the results are going to garner, but we’re confident just based upon how many customers we have, our scientific advisory board, the level of quality ingredients that we have in our product, that we’ll be able to get some good results from it.

Alex Hantman, Research Analyst, Sidoti: Great. I appreciate that. Beyond the long history of science, with Carolyn’s addition to the board, I know she has a background in beverages.

I was curious if there’s any thoughts around form factor expansions and potential retail sales, particularly for the upcoming hydration product.

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah. Great question. That’s definitely I would say a possibility, but I think right now we’re focused on the stick powders, stick packs first, for IM8 hydration. But again, I think everything is possible in the future, right? We want to be very deliberate, and we don’t want to rush into anything. Right now, our main focus is launching our two new categories in the stick powders for IM8 hydration as well as gummies, and then we’ll see after that.

Alex Hantman, Research Analyst, Sidoti: Understood. Thanks for all the context.

Moderator: We’ll go next to George Kelly of Roth MKM. George, please go ahead.

George Kelly, Research Analyst, Roth MKM: Thank you. Can you all hear me?

Danny Chou, CEO and Founder, Prenetics/IM8: Yes. Hey, George.

Video Participant / George Kelly, Roth MKM: Okay. Hey, Danny. Thanks for taking my questions and for doing this presentation today. I had a few questions for you.

Danny Chou, CEO and Founder, Prenetics/IM8: Sure.

Video Participant / George Kelly, Roth MKM: First, I wanted to start with your July performance. Curious if you could give us more detail about what drove the acceleration to revenue and the improved CAC. I do not know if it was a certain marketing channel or partner or anything worth flagging. Secondly, I know your second half EBITDA guide does not bake in a continuation of the CAC that you saw in July. I was wondering if you have seen some kind of normalization in August, or just, I guess, comment on what you have seen so far in August with respect to CAC.

Danny Chou, CEO and Founder, Prenetics/IM8: Got it. I will say the first question in terms of July, and obviously, July wise, our CAC went down by about 20% over Q2. In Q2, we made a big investment in terms of overall spending, nearly double from Q1. I think we had some spillover from that aspect. To be fair, the brand, as I mentioned, again, I have written in my shareholder letter and where I talked about earlier, it is getting very strong. Across international, when I am in U.S., when I am in Europe, when I am in Hong Kong, I think there is a lot more word of mouth, so we are not just depending on paid. We are getting a lot of organic word of mouth sharing, and that has been very strong. I think we are also seeing like a halo effect of a lot of our ambassadors.

Again, it’s not just like we have one, we have an elite roster. Again, in Q2, we signed up Giannis. Then we had Inter Miami CF. Then again, we had lots of offline events as well, which is very rare in the supplement category because everyone’s online. While we’re 100% DTC online, we’ve also have 100 plus events that we’ve been a part of in the last 20 months. I think the combination of all of these little things added together really create a lot of word of mouth in the past few months. Again, I think that’s the same thing for Q2. Q2, our CAC in Q1 was $301. Our CAC in Q2 was $305. CAC in Q2 was $301, so it went down by $4 even though we doubled our spend. That rarely happens.

Again, you know my background’s in e-commerce with Groupon, right? I haven’t seen that. That only happens when the brand is getting stronger, right? This is where I think we’re seeing that. Again, the great thing is that we’re going to be doing more stuff on streaming, podcasts, YouTube, and these are all going to be incremental new channels. I think for August wise, it’s still a bit too early, but we are still seeing continued momentum. But it’s too early to comment on the CAP because I only have a full month yet of August figures.

George Kelly, Research Analyst, Roth MKM: Okay, fair enough. That’s helpful. Can you still hear me? Am I still I wasn’t sure if my

Danny Chou, CEO and Founder, Prenetics/IM8: Yes, I can.

George Kelly, Research Analyst, Roth MKM: Okay, great. Second question from me on your new products. I understand you did not bake them into your targets for this year or next year.

I understand they are huge categories and seem to make sense with your subscriber base. Do you have any, I am just trying to sort of dig into what the attach could be with your current subscriber base.

Do you have any kind of survey data that shows X amount of our subs already use hydration or just anything to help me as I try to layer in what these new products could generate?

Danny Chou, CEO and Founder, Prenetics/IM8: Yeah, so we have done actually to have, and great question, George. We have actually done surveys from our existing customer base, post-purchase survey questions in terms of what are the key products that you would like IM8 to come out with. When we did that survey, hydration and gummies was the actual answer, at least from our customer base. That is why we feel very strongly that we will be successful in these two categories, even though it is highly competitive, because at the end of the day, we also believe we have been able to build a much better product than what is into the market that is available. In terms of attach rates, the reason why we have not provided a guidance, because, for a new SKU, it is just very difficult to provide good forecast.

We do not want to provide anything that we do not have a good database of already. I can tell you from at least our customers, for both of the hydration and gummies, more than 20% of our existing customers have asked for this.

George Kelly, Research Analyst, Roth MKM: Okay. Maybe a follow-up to that question, are these more attach products or are they sort of lower customer acquisition cost, lower priced products

Both

that then hopefully you can They are both.

Right.

Okay.

So there would

And then-

Danny Chou, CEO and Founder, Prenetics/IM8: It wouldn’t come. Go ahead, sorry.

George Kelly, Research Analyst, Roth MKM: Nope. Nope, I cut you off.

Danny Chou, CEO and Founder, Prenetics/IM8: Okay. Yeah, I would say it’s twofold, right? It doesn’t compete with our existing products for sure. All right, correct? I think it’s going to be only complementary. There will be some individuals, again, that will want to have a hydration product because, again, they are already taking a separate brand’s hydration today, right? We believe they would be able to switch to ours. There is a big subset around the world that are just drinking hydration, which we believe we’d be able to have them on board, and then we can also cross and upsell them the standard IM8 Essentials and Longevity. I think we’ll work to our advantage. The same thing, same way for the gummies also. Again, we’re looking at kids gummies, and then it doesn’t compete with our current product, right?

20%, 30% of our current customers are already parents. It is naturally that this could be a really great product for the kids, again, that we can identify new customers coming in from the kids segment that ultimately will come in to our hero products of Essentials and Longevity.

George Kelly, Research Analyst, Roth MKM: Okay, then last one from me. Your guided adjusted free cash flow and adjusted EBITDA, do they both add back the General Catalyst funding?

Brian, CFO, Prenetics/IM8: They do. Yeah, George.

George Kelly, Research Analyst, Roth MKM: Okay. Okay, I imagine the scale-

Brian, CFO, Prenetics/IM8: On the, just to clarify that, on the cash flow statement, it will be presented as cash from financing. But since it is real cash into the business and funding a largest part of our P&L, we will present a view that is adjusted free cash flow that assumes that the operating cash flow plus the proceeds from General Catalyst net of the repayment there.

George Kelly, Research Analyst, Roth MKM: Your second half adjusted EBITDA guide handles it similarly?

Brian, CFO, Prenetics/IM8: The cash flow from General Catalyst would not impact EBITDA, at all except for below. It would be interest effectively as interest expense in terms of the repayment rate, but it would not impact the actual EBITDA guidance. It would just impact cash flow.

George Kelly, Research Analyst, Roth MKM: Okay. Okay, thank you.

Brian, CFO, Prenetics/IM8: Yeah, thanks, George.

Moderator: Thank you. Now we have a written submitted question, our last from the analyst community, from Susan Anderson of Canaccord. I am curious how they are thinking about the distribution channels. Right now they are all DTC, so do they think that retail will be a part of the strategy at some point? Where is the opportunity internationally? What countries are they not in and looking to be in? Finally, how do they think about the competitive landscape and the moat IM8 has? Why would another brand copy what you are doing?

Danny Chou, CEO and Founder, Prenetics/IM8: Thank you. I will take that. I think the first question was the retail and DTC model, right? As you can see, we just had our best quarter ever, continued momentum in July, and we are 100% direct to consumer. We are not seeing any slowdowns at all in terms of our growth online. As again, the vision, I want to always keep the business operations simplified, simple as much as we like. If you get into retail, it is a completely different business model, right? We believe we are able to scale and scale well at least for the next 24 or 36 months without the need for a retail presence. We have been able to build a very strong online presence. Again, even in the last 20 months, we have 350,000 followers on Instagram.

Last year, we had one social ad that generated 233 million views on Instagram, and there is just no way you can generate that type of figures on a retail basis. Again, if we are able to still have such strong unit economics and so short payback periods, there is no reason for us to get into retail. The only reason why we would want to go into retail now, I would say, and I said this before, is that if we wanted to sell the brand. We have zero interest in selling the brand, so there is no reason for us to get into retail right now.

Brian, CFO, Prenetics/IM8: And then in terms of countries

Moderator: David,

Brian, CFO, Prenetics/IM8: In terms of countries that we are in today, we are in 46 countries today. We are not in China, we are not in India, as kind of the two larger countries. China, obviously, we have a good way into China, and that will be a different business model with likely a different team. I would say 18 to 24 months out. We have not explored India at this time. So those are kind of the only countries that we are not yet covering today.

Moderator: I will take a question from our retail community. Danny, P&G just paid nearly 6x revenue for Thorne. You trade well below that. Would the board entertain an offer, and if not, how do you close the gap?

Danny Chou, CEO and Founder, Prenetics/IM8: No, great question. Again, I think the sector has been very hot, I would say the last 6 months. Danone acquired Huel, Unilever acquired Grüns, and P&G acquired Thorne. I think in total, it was about $6 billion worth of acquisitions over the course of the last 6 months. Yes, as I just mentioned, we’re building IM8 not to get acquired. That’s not the goal of building this company. When me and David started this company, this brand, it wasn’t like, "Hey, well, how do we exit the next 3 to 4 years?" But like, "How do we build a generational health company over the course of the next 5, 10, 15 years?" That’s why we’re investing in clinical trials, because these things take a long time.

If we’re trying to sell the company, we wouldn’t do this from day one. With that being said, we are a public company. We have an independent board as well. So if there are offers that come in, we have to entertain it. Again, my focus has always been about building this into a generational health company. Regardless of what’s happening out there, our role, my role and Brian’s role, is to continue to deliver quarter over quarter. As long as we do that and the more data that we have, now the reason why we’ve done this live stream and ensuring the investors that, the shareholders, because now I have 20 months of data. Six months ago, 9 months ago, I didn’t have that data, so there’s not much for us to show, but now we are able to do that.

I think, again, we’ll continue to deliver. I think people that have followed our journey, again, I was just looking at it yesterday, it’s quite crazy. We’re a $350 million, $400 million company approximately today. But 1 year ago, we were about a $100 million company, and we were trading bombs. Just alone in the last 12 months, for people that have been following us, we’ve already made significant leap ways, and we’re going to continue to deliver quarter over quarter. Again, I’m having so much fun. I think everyone that knows me knows this. It’s a lot of work, but I don’t call it work because it’s so fun. We have a very unique opportunity given how much momentum we have with this brand. Yes.

I think to answer your question, we’ll just deliver quarter over quarter, and I think that will close the gap in time.

Moderator: I think that’s it for our Q&A session today. Danny, I’ll turn it back over to you.

Danny Chou, CEO and Founder, Prenetics/IM8: Awesome. Great. Thank you, everyone. We’re well over time, so I think that’s a good sign as always. We earmark 60 minutes, and now we’re in 92 minutes. Again, thank you everyone for joining today, and for following us. I think it’s a very, very exciting time. Thank you, Don and Caroline, for coming on board. Follow our journey. I think you guys will be all surprised. Great. Thank you.