Xcel Brands Q4 2025 Earnings Call - Influencer-led rollout lifts reach, but cash, debt and execution are key risks

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Thank you. Now I would like to turn the call over to Seth Burroughs. Seth, you may begin.

Seth Burroughs, Investor Relations, Xcel Brands: Good afternoon, everyone, and thank you for joining us. Welcome to the Xcel Brands fourth quarter of 2025 earnings call. We greatly appreciate your participation and interest. With us today on the call are Chairman and Chief Executive Officer, Robert D’Loren, and Chief Financial Officer, Jim Haran. By now, everyone should have had access to the earnings release for the quarter and fiscal year ended December 31st, 2025. In addition, we plan to file our annual report on Form 10-K with the Securities and Exchange Commission later this week. The release and the annual report will be available on the company’s website at www.xcelbrands.com. This call is being webcast, and a replay will be available on the company’s investor relations website. Before we begin, please keep in mind that this call will contain forward-looking statements.

All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today. These risk factors are explained in detail in the company’s most recent annual report filed with the SEC. Xcel does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time. Finally, please note that on today’s call, management will refer to certain non-GAAP financial measures, including non-GAAP net income, non-GAAP diluted EPS, and adjusted EBITDA. Our management uses these non-GAAP metrics as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends related to the company’s results of operations.

Our management believes these financial performance measurements are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results. Thus, they provide supplemental information to assist investors in evaluating the company’s financial results. These non-GAAP measures should not be considered in isolation or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. You may refer to the attachment to the company’s earnings release or the 10-K for a reconciliation of non-GAAP measures. Now I’m pleased to introduce Robert D’Loren, Chairman and Chief Executive Officer. Bob, please go ahead.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Thank you, Seth. Good afternoon, everyone, and thank you for joining us today. I would like to start today’s call with a brief update on recent developments from Q4 2025 and the full calendar year 2025, and our outlook moving forward. After that, our CFO, Jim Herren, will discuss our financial results in more detail. In 2025, we worked hard with all our production partners and licensees to drive our business for 2026 ramp-up of the business. Also, we worked with UTG on a new business development strategy, identifying prospective business licensing partners, and continued to explore acquisition opportunities with them. 2025 was a year of getting back to basics and laying the foundations of growth for the future after enduring three years of setbacks caused by COVID and the bankruptcy of Lord & Taylor, which alone cost us over $3 million in related losses.

To start with building for the future, in 2025, we announced our new influencer-led brands with Cesar Millan, Gemma Stafford, Jenny Martinez, Coco Rocha, and Shannon Dougherty. This grew the social media following in our brand portfolio from 5 million to 46 million. We identified key category license opportunities for all these new influencer-led brands. Now, all of these influencer-led brands will be launching throughout 2026 on interactive television and at brick-and-mortar and e-commerce retailers. Interest in these brands has exceeded our expectations. We are on track with wholesale shipments by our licensees beginning in the first quarter of 2026 and on-air programming on QVC and HSN commencing in the second quarter, followed by distribution in other channels later this year.

We believe that these new influencer-led and our legacy brands each have the potential of reaching our goal of achieving annual royalty income on average of $6 million per year by 2029. We believe this would imply, assuming royalty exit multiples remain at the current market average of 7x gross royalty income, a potential portfolio gross value for all of our existing influencer-led and legacy brands of $375 million. As I mentioned, our social media reach across our portfolio is now 46 million, and based on our pipeline of new influencer-led brand opportunities, we are well on our way to achieving our goal of 100 million social media followers across our brand portfolio. I should add that our TV and streaming content distribution is well over 100 million households.

We believe the social media and broadcast and streaming reach of our brand portfolio is driving demand for our brands and products across all categories. C. Wonder and Christie Brinkley remain some of the fastest-growing brands on HSN, and we have a new licensee that is designing and selling outstanding apparel products for these brands. Judith Ripka continues to operate on plan on JTV. Revenues from JTV were up 23% from the prior year, and we expect 2026 growth in product sales and related royalties to exceed 2025’s actual sales. We expect that our Longaberger brand will launch in spring of 2027 with new products co-created by Shannon Dougherty. Shannon has three million social media followers and is perfect for the Longaberger brand.

We generated an adjusted EBITDA loss of approximately $600,000 in Q4 and a $2.3 million loss for the full year 2025, which is a $187,000 improvement over the prior year quarter and a $1.2 million improvement over the full year of 2024. Although our results improved year-over-year, it was less than our expectations. This was primarily attributable to a combination of a transition to a new apparel supplier for our C. Wonder and Tower Hill by Christie Brinkley brands and our Halston business not materializing as expected for the full year. That said, Halston had a strong second half of 2025, and we are optimistic about Halston’s potential in 2026.

Although we are pleased with the progress of our legacy and new influencer-led brands, and we believe the worst is now behind us, we remain cautious for the near term given the macroeconomic outlook for 2026, which has been shaped by lingering inflation, the full impact of trade tariffs, the war in Ukraine, and to some extent, the bifurcated consumer spending. With that, I would like to turn the call over to our CFO, Jim Herron, to cover our financial results for the fourth quarter and full calendar year 2025. Jim?

Jim Herron, Chief Financial Officer, Xcel Brands: Thanks, Bob, and good afternoon, everyone. I will now briefly discuss our financial results for the quarter fiscal year ending December 31, 2025. Revenue was $1.17 million for the fourth quarter of 2025, compared with $1.21 million in the fourth quarter of 2024. This decline was primarily attributable to a transition to a new supplier for our HSN business during the quarter, causing a gap in wholesale shipments. On a full year basis, revenue was $4.94 million for the current year, compared with $8.26 million for the prior year. This decrease was primarily driven by the June 2024 divestiture of the Lori Goldstein brand and the subsequent loss of the licensing revenues associated with that brand.

Approximately $350,000 of the decline in revenue was attributable to the fact that in the prior year, we recognized revenue from the final sale of certain residual product inventory with no comparable amounts in 2025. Direct operating costs and expenses were $2.2 million for the current quarter, down 22% from the prior-year quarter. For the current year, our direct operating costs were $8.57 million, a decrease of 33% from the prior year. For both the quarter and full fiscal year, the decrease in direct operating costs was primarily attributable to the business transformation and cost reduction actions taken by the company over the past two years. The full-year decline was partially attributable to the divestiture of the Lori Goldstein brand and the subsequent elimination of costs associated with that brand.

As a result of the restructuring of our business model, we have reduced our payroll, operating, and overhead costs to a run rate of approximately $8 million on an ongoing forward basis. Looking at our other operating costs and expenses, which are predominantly non-cash in nature, our depreciation and amortization expense was relatively flat from the fourth quarter of 2024 to the fourth quarter of this year. On a full-year basis, depreciation and amortization expense declined from $4.9 million in 2024 to $3.6 million in 2025, which was a result of the sale of the Lori Goldstein business. Interest and finance expense was $800 thousand for the current quarter, compared with $500 thousand in the fourth quarter of last year.

On a full-year basis, interest in finance expense was $4.3 million for the current year versus $900,000 in 2024. These year-over-year increases primarily reflect higher interest expense as a result of higher interest rates and higher average debt balances in the current year compared to last year. In addition, during the current year, we recognized a $1.9 million loss on the early extinguishment of debt from the April 2025 financing of our term loan. Now, that being said, it’s important to remember that under our term loan, a majority of the interest due under our current debt will be payable in kind, meaning that will accrue and not require cash payments until starting in 2027.

Overall, we had a net loss for the current quarter of approximately $2.8 million or -$0.55 per share, compared with a net loss of $7.1 million or -$3 per share in the prior year quarter. After adjusting for certain cash and non-cash items, results on a non-GAAP basis were a net loss of approximately $1.6 million or $0.32 per share for the current quarter, and a net loss of $1.6 million or -$0.69 per share for the prior year quarter. Adjusted EBITDA loss for the current quarter was approximately $600,000, compared to a loss of $792,000 in the prior year quarter. This represents a 24% year-over-year improvement in EBITDA, which continues the trend to continue to make year-over-year EBITDA improvements over the past few quarters.

For the full fiscal year, we had a net loss of approximately $17.5 million or minus $5.08 per share on a GAAP basis, compared with a net loss of $22.4 million or minus $9.84 per share in 2024. The net loss for the current year includes a $6 million loss under the divestiture of the equity investee IM Topco and a $1.9 million loss from extinguishment of debt. As a result, we had fully written down our investment in the Isaac Mizrahi brand to zero and divested all of our remaining equity interest in the brand and therefore will not incur any such charges and losses going forward.

The net loss in the prior year included $11.8 million loss related to the equity investee IM Topco, a $3.5 million asset impairment charge related to the company’s former office lease, and partially offset by a $3.8 million gain from the divestiture of the Lori Goldstein business. On a non-GAAP basis, we had a net loss of $5.2 million or minus $1.52 per share, roughly comparable to a non-GAAP net loss in the prior year of $5.1 million or minus $2.23 per share. Our EBITDA for the current fiscal year was negative $2.3 million, a 35% improvement from EBITDA of negative $3.5 million for the prior fiscal year. I’d like to reiterate that all of these charges I’ve described within other operating cost expenses are predominantly non-cash in nature and are non-recurring and/or excluded from our non-GAAP measures of performance.

Once again, as a reminder, our earnings press release and Form 10-K present a full reconciliation of our non-GAAP measures with the most directly comparable GAAP measures. Now turning to our balance sheet and our liquidity. It’s been a very busy past few months as we have entered into a number of transactions to ensure we have the right capital structure in place to ensure appropriate liquidity to successfully execute on our business plan. In December 2025, the company closed on a private investment in a public equity transaction with net proceeds of approximately $1.8 million. In January 2026, we entered into a committed equity line facility, giving us up to $15 million of funding over the next two years for working capital and potential acquisition opportunities at our discretion.

As of December 31st, 2025, the company’s balance sheet reflected stockholders’ equity of approximately $16 million, unrestricted cash of approximately $1.2 million, and restricted cash of $1.7 million. Also, as of December 31st, 2025, we had $12.7 million of long-term debt. With that, I would like to turn the call back over to Bob. Bob?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Thank you, Jim. Ladies and gentlemen, this concludes our prepared remarks. Operator?

Operator: We will now begin the question and answer session. If you would like to ask a question at this time, just press star followed by the number 1 on your telephone keypad. We will pause for a brief moment to compile a Q&A roster. Our first question comes from the line of Michael Kupinski with Noble Capital Markets. Michael, please go ahead.

Jacob Mutchler, Analyst, Noble Capital Markets: Thank you. It’s Jacob Mutchler on for Michael today. I was just curious if you could provide a little bit of additional color around the Halston rollout for spring. I believe you mentioned on the last call that G3 was making some tweaks to merchandising. Any color on the spring rollout would be appreciated.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: They haven’t reported to us, so we don’t know how their spring 2026 is going for them. They did have a good second half of 2025 that we were happy to see. We believe that dresses are working well for them and that they’re continuing to improve the sportswear line, but we were happy to see the second half of 2025 perform really well. That’s what we know now. They usually report to us 45 days after the quarter. We’ll know soon.

Jacob Mutchler, Analyst, Noble Capital Markets: Got you. All right. Well, thank you for the color there. If you could also just briefly touch upon the cadence of the influencer brands that are rolling out. Are they all expected to start selling in the first quarter? Are they going to be spread out throughout the year? My apologies if you touched upon this in your prepared remarks.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Cesar, Gemma, Jenny Martinez will launch now in this Q2 period on QVC and HSN. By the back half of the year, we expect to be in some brick-and-mortar retailers and on Amazon. Starting on Amazon with Cesar, we’re building an Amazon store that will be the first of its kind in the pet category, where Xcel will control what the store looks like and oversee how each of the licensees market within the Cesar Millan Trust. Respect. Love store. We’re excited about that. Then we’ll follow with similar Amazon stores for the rest of our brands. Coco Rocha will be launching later in the year. When you think about the time it takes to go through design, product development, sample reviews, it usually takes about a year. Coco is the newest of the brands, so she’ll be on the back half of the year.

Jacob Mutchler, Analyst, Noble Capital Markets: Got you. Thank you for the color. Just one last question. Could you provide any update on how our adoption for the brands is going? Just curious if there’s been any recent wins or progress with signing up some additional brands. Thank you.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Olin Lancaster and I just finished the Global Pet Expo, which was a week and a half ago in Orlando. We showed between two licensees over 1,000 SKUs. A lot of it was consumer-facing products, collars, leashes, hydration systems, bowls, toys. Some of it was deodorizers, dog shampoo, conditioners, detergents. We had a great show, great response to the product. Those are the first of the Cesar products to really be shown at a trade show. We had great response from specialty retail as well as some of the big boxes. Our licensees over the next 30 to 60 days are taking orders, and we hope to be in store on shelves in August.

Jacob Mutchler, Analyst, Noble Capital Markets: Great. Oh, sorry. Go ahead.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Then just to add to that for you so you understand the cadence of this, those are the first categories by design that we designed and launched. Now more categories will go into development like chews and treats, and hopefully soon supplements and food containment systems, cages, dog beds. All of those are in the pipeline.

Jacob Mutchler, Analyst, Noble Capital Markets: Thank you, Bob, and thank you for taking my questions.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Sure.

Operator: Our next question comes from the line of Tom Forte with Maxim Group. Tom, please go ahead.

Tom Forte, Analyst, Maxim Group: Great. First off, Bob and Jim, congrats on the progress you made in 2025. Bob, thanks for sharing the $375 million opportunity for Xcel Brands. I appreciated that. One question, one follow-up. From a product standpoint, can you provide a high-level view on your mix by category, including apparel, food, jewelry, and pet, and maybe give a sense of how that compares with your historical performance?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Sure. Historically, Tom, we’ve been concentrated in apparel and fashion accessories like jewelry with Judith Ripka and custom jewelry with some of our other brands. Generally speaking, a majority of that production through our licensees and some of our retail partners that imported products under our brands themselves were severely disrupted because of tariffs. We were still dealing with it in 2025 in the apparel categories. We realized that, one, we needed to pivot into consumer categories that were growing at a better rate than apparel. Two, we needed to focus on things where the major categories are produced in America. When you think about food for human consumption, most of it’s made here in America. It’s not really a product that is imported to a large degree.

The same thing holds true for dog food supplements, and most of that product is made here in the U.S. Lead times are shorter, there’s no tariff issues, and we viewed that as one, a hedge against tariffs because even in 2025 where some of our factories, say Cesar Millan, collars, leashes, things like that are typically made in China. They had to pivot to India, and then India was hit with a 50% duty. It caused delays, and it’s just the nature of dealing with what’s happening politically in the world at the moment. We will continue to look for brands and consumer categories that have less of this risk. We’re not going to be able to reduce that 100%, but we will be leaning into more things that are made here.

Tom Forte, Analyst, Maxim Group: Excellent. For my follow-up, Bob, you did a good job of explaining that historically, when you sign an influencer, there can be often a one-year period for product design and things of that nature. How would you characterize your current influencer pipeline? Are lead times on the pipeline such where you start conversations with an influencer, and then how long does it take for those conversations to turn into agreements and things of that nature?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Generally, when we start, when we identify an influencer that we’re interested in, and the criteria for that, Tom, is they need to have an established, credible voice in a category and unimpeachable credentials. If they have those things, they’re the types that we’re interested in. We’re less focused on celebrity brands where a celebrity that may be an actor or an actress is interested in promoting apparel or some other category, beauty. If they were a mega influencer of that type, we would look at it. For the most part, when you think about people that have 10 to 20, 30 million followers, if they don’t have that authenticity in the category, it’s not something we would be interested in.

When we identify someone like a Cesar Millan or Gemma Stafford, we generally, that period of starting a conversation to drafting an LOI and getting it into a definitive agreement is about 90 days. From there, we start product development, conceptual designs initially, and then go out and find licensees that can develop the product, communicate with factories, prepare tech packs. Product samples are sent to us. We do the initial review. We may make changes, and we go through another round, and then it goes to the talent for review. There may be tweaks after that. That whole process is about a year. While that is all happening, the licensees and Xcel are working with retailers to sell product into those retailers. That’s approximately how the cycle works. Sometimes it could take a little longer, but for the most part, it’s a year.

That’s why in the licensing business, generally all license agreements have an 18-month first year for that very reason.

Tom Forte, Analyst, Maxim Group: Excellent. I’m going to get back in the queue with potential follow-up questions.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Sure.

Operator: Our next question comes from the line of Howard Broz with Wellington Shields. Howard, please go ahead.

Howard Broz, Analyst, Wellington Shields: Thank you. I’m getting a good sense of a turn in 2026. How do we look like for 2027 and ongoing forward?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Howard, I would say the way to think about this is the goal here internally is to get each of the brands to $6 million of royalties on average heading into 2029. If you think about $6 million spread over the next three years, I would put some of it into 2026. I would start to model in $2 million per year, say, per brand, going into 2027, 2028, 2029. If you run out that model, what you might find in 2027 is $18 million of top line. Jim covered expenses. We’re running just about $8 million in overhead. That’s what we think we could look like in the near term based on everything we have in the pipeline today in terms of license agreements and all the negotiations that are happening across all the brands, including Coco.

We think she’s going to be great for what she does. If there’s anything more that you want to know about that, Howard, let me know. I think that’s how you should look at it.

Howard Broz, Analyst, Wellington Shields: Well, you’re basically talking about $84 million for this year, 2027, 2028. You’re talking about 2x EBITDA, more or less, based on today’s value. Is that a fair comment?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Yes. If you think about if everything happens the way we believe it will, based on where we are with all of these new brands, and you think about 18 million x 7 in 2027, that would imply $126 million value. I think certainly we’ve demonstrated that we sell our brands for those kinds of multiples. If you back into what that would mean, less our debt, the stock’s. The stock price does not reflect, in any way, the value of the portfolio.

Howard Broz, Analyst, Wellington Shields: That’s all I have for the moment. Thank you.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Thank you, Howard.

Operator: Again, if you would like to ask a question, just press star followed by the number 1 on your telephone keypad. Our next question comes from the line of Walter Schenker with MAZ Partners. Walter, please go ahead.

Walter Schenker, Analyst, MAZ Partners: Hi. Just since we’re using Cesar and you gave a bunch of information about cadence for Cesar and so how it goes forward, when you go to a show and you show 1,000 different items, the cost of that’s been borne by the suppliers?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Yes. The suppliers bear the product development cost. We’re in there with advice and guidance on design, but we don’t order samples from factories, Walter, and we don’t incur the cost of setting up significant booths at these shows. We attend the shows, and we solicit new potential licensees in categories that we’re targeting. There may be a point where we do shared presentation booths when we have, say when someone like Cesar gets to 7 or 8, 10 signed license agreements, well, then we might make the world of Cesar. At that point, revenues will be ramping up and sharing in the cost of a booth with 7 or 8 licensees, certainly something we would be willing to do.

Walter Schenker, Analyst, MAZ Partners: You took us through the year and getting on the shelves in the latter part of the year. You collect a royalty when the end retailer sells it, when the supplier you’re dealing with sells it to a retailer? Question.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Both. It depends what the channel is. If it’s a wholesaler, if it’s one of our licensees, we’re paid when they ship, in the quarter that they ship. The goods that are going to be launching on QVC this month and next month and in June, for the most part, a lot of those goods have already been shipped into QVC’s warehouses. Then as the wholesalers begin to ship, Amazon and other retailers will be paid. For business that happens on QVC, because the royalties are also tied to retail sales on QVC, when the goods are sold on QVC, then we’re paid the royalties.

Walter Schenker, Analyst, MAZ Partners: Okay. Cesar, since it seems to be sort of leading, and maybe bigger as an opportunity at this point, you are expecting some revenue to be generated in the second quarter, but more in the third quarter and even more in the fourth quarter, some seasonality maybe to some of the stuff he’s selling. Cesar will be generating revenues through the balance of the second half of the year, surely.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Yes. Cesar, Gemma, and Jenny, yes, because products are shipping, and we’re out in the market with them. If you recall, we signed Cesar, Jenny, and Gemma in the early part of last year. They’re the ones that products being delivered to the market now. Coco is more recent for us, and she will begin to deliver products to the market, or we will together, for the second half of this year. I would say more holiday, just given the timeline it takes to get product into the market. Then with Shannon Doherty for Longaberger, because she is the most recent, it’ll be a 2027 project for us.

Walter Schenker, Analyst, MAZ Partners: As a big picture, you have a handful of different brands and influencers all in what I would call a startup phase, where you’re really getting them going.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Just the influencers.

Walter Schenker, Analyst, MAZ Partners: Getting them working with suppliers.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Yeah, just the influencers.

Walter Schenker, Analyst, MAZ Partners: The influencers, I’m sorry.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Halston-

Walter Schenker, Analyst, MAZ Partners: How does that?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: That’s different. C. Wonder’s different. Christie Brinkley is different. Those are established and up and running.

Walter Schenker, Analyst, MAZ Partners: Right. How does that affect your view, personally maybe, with the company’s time and effort toward adding further influencers or adding expanding the business versus really concentrating on those and getting those startups, again, my term, not your term, getting those startups off to a good start with your help?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: We are focused on the ones that we have. We are also at the same time looking for new talent in new categories. We do have a goal to get the brand portfolio to 100 million followers. QVC has been, I think, making a lot of the right decisions about pivoting to streaming. I don’t know if you saw this, but last quarter they were TikTok shop’s number one seller. They are leaning into streaming now in a big way, and I think, hopefully they’ll get through whatever restructure they have to do and continue doing what they’re doing because it’s the right thing. We are five for five with them on launching influencer-led brands on the network because this is their future too. We’re seeing that even with the brick retailers and Amazon.

Today, customer acquisition cost is extremely expensive, if you’re doing it the traditional way. Influencers change that dynamic. They come with a lot of reach. Take someone like Cesar. He has syndicated TV shows in 80 countries and 21 million highly engaged followers. If you speak with those followers in the right way, which we are very good at, we’ve been putting celebrities on television for many years, you can really help your retail partners to develop new customers at a much lower customer acquisition cost. That’s the whole point of what we’re doing.

Walter Schenker, Analyst, MAZ Partners: Okay. That’s it for me. Thank you very much.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Thank you, Walter.

Operator: Now we have additional question from Tom Forte from Maxim Group. Tom, please go ahead.

Tom Forte, Analyst, Maxim Group: Great. Last two for me, Bob. You just talked about 100 million follower goal by year-end. Can you talk about if you’re on track for that?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: We are. We’re in conversations with, I’ll call it a celebrity for the moment, that could get us there, just that one. There are more that we’re focused on, another big one in the pet space, and some additional ones in the food space.

Tom Forte, Analyst, Maxim Group: My last question, I think you said that you have your, essentially operating costs at $8 million per. Does that mean that the incremental profitability of each extra dollar of revenue is essentially 100%? How should we think about the incremental profitability of the next dollar of revenue?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: I don’t think the operating overhead will increase dramatically except for the rev share that we have with the influencers. That’s variable. It goes up only if the products are making sales and we’re generating royalties. We like where the overhead is now. Of course, we’re working every day to try to find more efficient ways to do things, and AI is helping us to do that, quite frankly. We’re using it in design, we’re using it in concepting, we’re using it for strategic plans. I sat down with some of our younger, smarter people that really understand AI and I think soon we’ll be able to leverage Claude and Claw to do a lot of manual things that we’ve been doing in the office. We’re excited about what AI can do for the business, including using it for design.

Tom Forte, Analyst, Maxim Group: Thank you, Bob.

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Thank you, Tom.

Operator: There’s no further questions at this time. I will now turn the call back over to Robert D’Loren for closing remarks. Bob?

Robert D’Loren, Chairman and Chief Executive Officer, Xcel Brands: Thank you. Ladies and gentlemen, in concluding, we have not been more excited about our business in several years. I want to thank every one of you for your support and for your time this afternoon. We greatly appreciate all of you. As always, stay fit, eat well, and be healthy.

Operator: That concludes today’s conference call. You may now disconnect.