EMERGE Reports Strong Q2 2025 Results

Executive Summary

• EMERGE Commerce Ltd. reported strong Q2 2025 financial results, with revenue increasing 70% year-over-year to $8.5M and Adj. EBITDA turning positive at $958K, marking the second consecutive quarter of positive Adj. EBITDA.
• The company successfully closed the acquisition of Tee 2 Green (T2G) on April 4, 2025, for $1.1M, which contributed to the quarter's performance and exceeded management's expectations for organic growth and profitability in its first quarter under EMERGE ownership.
• Cash position improved to $3.5M as of June 30, 2025, driven by strong cash flow from operations ($2M), despite the acquisition spend. The company also refinanced its debt facility, extending maturity to April 2027.

Key Details

• Revenue: $8.5M for Q2 2025, up 70% from $4.98M in Q2 2024; marks the 5th consecutive quarter of revenue growth.
• Gross Profit: $3.1M (vs. $2.1M in Q2 2024). Gross margin was approximately 41.0% excluding a $382K non-cash fair value inventory adjustment related to T2G.
• Adj. EBITDA: $958K for Q2 2025, compared to a loss of ($40K) in Q2 2024.
• Net Income: $201K from continuing operations (vs. ($623K) in Q2 2024). Excluding the $382K inventory adjustment, net income from continuing operations would be $583K.
• Cash Flow: Cash flow from operations was $2M (vs. ($0.2M) in Q2 2024).
• Cash Position: Grew to $3.5M at June 30, 2025, compared to $2.7M at March 31, 2025, and $2.2M at June 30, 2024.
• Tee 2 Green (T2G) Acquisition:
  • Closed on April 4, 2025, for an upfront cash payment of $1.1M.
  • T2G is a discount golf apparel and equipment business with a 38-year track record.
  • T2G's 2024 (unaudited) financials: Revenue $6.4M, Adj. EBITDA $1M, Net Income $700K.
  • Q2 2025 performance under EMERGE: Delivered exceptional organic revenue growth and profitability, exceeding expectations. Cash flow generated in Q2 comfortably exceeded the $1.1M upfront payment.
  • Funding for acquisition came from the Carnivore Club asset sale and the sale of premium SHOP domains to Shopify.
• Debt Refinancing:
  • Entered into a first amendment to the credit agreement on April 4, 2025.
  • Provides an 18-month extension with an additional 6-month extension option, maturing in April 2027.
  • Anticipates cash savings from recent and anticipated interest rate cuts.
• Q3 2025 Outlook: Management expects double-digit revenue growth and positive Adj. EBITDA.
• Acquisition Strategy: Focus on profitable acquisition candidates in grocery and golf verticals with $750K-$2M in Adj. EBITDA.

Notable Quotes

• "Q2 was a break-through quarter for the Company. We drove exceptional revenue growth, profitability and cash flow generation. We closed the transformative acquisition of T2G, and subsequently super-charged that brand, historically a low growth business, to high double-digits in its first quarter under EMERGE, leveraging our digital ads playbook and cross-brand synergies with our golf portfolio." — Ghassan Halazon, Founder and CEO