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The Marygold Companies’ Mixed Performance Amid Challenging Market Conditions

The Marygold Companies, a diversified holding company with operations spanning fund management, food products, beauty products, security systems, and financial services, has reported its financial results for the three and six months ended December 31, 2024. The company’s performance was mixed, with some segments showing resilience while others faced headwinds.

Revenue and Profit Trends

For the three-month period, The Marygold Companies reported a 5% decrease in revenue, from $8.5 million in Q3 2023 to $8.0 million in Q3 2024. This decline was primarily driven by lower revenue in the fund management and food products segments. The fund management segment, which accounts for the largest portion of the company’s revenue, saw a 6% decrease in revenue due to a drop in average assets under management (AUM) from $3.5 billion to $3.1 billion. The food products segment also experienced a 12% revenue decline, largely due to a temporary cancellation of certain product categories sold to national grocery chains.

The company’s gross profit decreased by 7% to $5.9 million, while operating expenses increased by 5% to $7.8 million, leading to an 83% increase in the loss from operations, from $1.0 million to $1.8 million. The net loss for the quarter widened by 48%, from $1.2 million to $1.7 million.

For the six-month period, the company’s revenue declined by 5% to $15.9 million, again driven by the fund management and food products segments. The fund management segment saw an 8% decrease in revenue, while the food products segment experienced a 4% decline. Gross profit decreased by 7% to $11.7 million, and operating expenses increased by 8% to $15.7 million, resulting in a 96% increase in the loss from operations, from $2.0 million to $4.0 million. The net loss for the six-month period more than doubled, from $1.7 million to $3.3 million.

Segment Performance

The company’s diverse business segments exhibited varying levels of performance during the reporting period.

U.S. Fund Management - USCF Investments The fund management segment, which is the company’s largest revenue contributor, saw a 6% and 8% decrease in revenue for the three and six-month periods, respectively, due to the decline in average AUM. Operating income for this segment decreased by 33% and 40% for the respective periods, driven by the lower AUM and increased operating expenses related to sub-advisory and license fees.

Food Products - Gourmet Foods The food products segment, which includes the commercial-scale bakery and the digital printing business, experienced revenue declines of 12% and 4% for the three and six-month periods, respectively. The decreases were primarily due to a temporary cancellation of certain product categories sold to national grocery chains and a decline in the printing business. Operating income for this segment decreased by 72% and 77% for the respective periods, as the revenue declines were not fully offset by cost savings.

Beauty Products - Original Sprout The beauty products segment, which markets proprietary hair and skin care products, maintained relatively stable revenue of around $0.8 million for both the three and six-month periods. Operating loss for this segment decreased by 48% and 46% for the respective periods, as the company eliminated amortization expenses associated with the impairment of intangible assets in the prior fiscal year.

Security Systems - Brigadier The security systems segment, which provides alarm monitoring and access control services, reported a 3% and 13% increase in revenue for the three and six-month periods, respectively, driven by growth in commercial installations. Operating income for this segment decreased by 19% for the three-month period but increased by 33% for the six-month period, as the revenue growth was partially offset by higher cost of goods sold.

U.S. and U.K. Financial Services - Marygold US and Marygold UK The financial services segment, which includes the company’s Fintech app development in the U.S. and the investment advisory businesses in the U.K., saw a 67% and 65% increase in revenue for the three and six-month periods, respectively, primarily due to the acquisition of Step-By-Step in the U.K. However, the segment’s operating losses increased by 15% and 9% for the respective periods, as the company continued to invest in the development of the Fintech app.

Liquidity and Capital Resources

As of December 31, 2024, The Marygold Companies had $5.7 million in cash and cash equivalents, a slight increase from $5.5 million as of June 30, 2024. The company’s cash used in operating activities for the six-month period was $1.7 million, and it made additional expenditures of $2.7 million for the development of the Fintech app.

In September 2024, the company entered into a $4.4 million note financing arrangement with the potential to borrow an additional $2.2 million. The company also has the option to obtain up to $10 million in additional financing from the same lender. The company’s working capital position remained strong at $14.4 million as of December 31, 2024.

In January 2025, the company raised approximately $1.85 million in net proceeds from a public offering of its common stock. The company plans to use the proceeds to retire or reduce debt, make additional investments in its financial services operations, and for general corporate purposes.

Outlook and Challenges

The Marygold Companies’ performance during the reporting period was impacted by several factors, including the decline in average AUM in the fund management segment, the temporary cancellation of product categories in the food products segment, and the continued investment in the development of the Fintech app in the financial services segment.

The fund management segment’s performance is closely tied to market conditions, and the company’s AUM has been affected by commodity price fluctuations, the high-interest rate environment, and broader geopolitical and economic uncertainty. The company will need to navigate these challenges to stabilize and grow its fund management business.

The food products segment’s challenges, particularly the temporary cancellation of product categories, highlight the importance of maintaining strong relationships with key customers and adapting to changing market dynamics. The company will need to focus on diversifying its customer base and product offerings to mitigate the impact of such disruptions.

The financial services segment’s Fintech app development has been a significant investment for the company, and the losses and negative cash flows associated with this initiative are expected to continue in the near term. The company will need to carefully manage its capital resources and explore additional financing options to support the Fintech app’s development and eventual commercialization.

Despite these challenges, the company’s diverse business model and strong liquidity position provide a foundation for weathering the current market conditions. The recent equity financing and the potential for additional debt financing give the company the flexibility to invest in its growth initiatives while managing its financial obligations.

As The Marygold Companies navigates the evolving market landscape, it will need to focus on optimizing the performance of its core business segments, prudently managing its investments, and strategically allocating resources to drive long-term value for its shareholders.