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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. This was attributed to commodity price fluctuations, the high-interest rate environment, and broader economic and geopolitical uncertainty.

The food products segment also experienced a 12% decline in revenue, with both the commercial bakery and digital printing businesses contributing to the decrease. The bakery business saw a 15% drop in revenue due to a temporary cancellation of certain product categories sold to national grocery chains, while the printing business saw an 8% decrease due to the timing of job completion and invoicing.

The beauty products and security systems segments reported relatively stable revenue, with a 1% and 3% increase, respectively. The financial services segment, which includes the company’s U.S. and U.K. operations, saw a 67% increase in revenue, driven primarily by the acquisition of Step-By-Step Financial Planners in the U.K. in April 2024.

The company’s gross profit decreased by 7% for the three-month period, in line with the revenue decline. Operating expenses, however, increased by 5%, driven by higher fund operations costs, including sub-advisory and license fees, as well as increased costs associated with the development of the company’s Fintech app.

The net result was a 48% increase in net loss, from $1.2 million in Q3 2023 to $1.7 million in Q3 2024. This was primarily due to the decreased profitability in the fund management and financial services segments, as well as the increased investment in the Fintech app.

For the six-month period, the company reported a similar 5% decrease in revenue, from $16.7 million in the first half of 2023 to $15.9 million in the first half of 2024. The drivers of the revenue decline were consistent with the quarterly results, with the fund management segment seeing an 8% decrease in revenue due to the lower AUM.

Gross profit decreased by 7% for the six-month period, while operating expenses increased by 8%, leading to a 98% increase in net loss, from $1.7 million in the first half of 2023 to $3.3 million in the first half of 2024.

Segment Performance

The Marygold Companies’ 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 three and six-month periods, respectively, as the lower revenue was coupled with increased fund operations expenses.

Food Products - Gourmet Foods The food products segment, which includes the commercial bakery and digital printing businesses, reported a 12% and 4% decrease in revenue for the three and six-month periods, respectively. Operating income for this segment decreased by 72% and 77% for the three and six-month periods, respectively, due to the revenue declines and a non-recurring cost of goods sold adjustment.

Beauty Products - Original Sprout The beauty products segment, which sells proprietary hair and skin care products, reported relatively stable revenue, with a 1% and 12% decrease for the three and six-month periods, respectively. Operating loss for this segment decreased by 48% and 46% for the three and six-month periods, respectively, as a result of reduced marketing costs and a nominal price increase to domestic distributors.

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. Operating income for this segment decreased by 19% for the three-month period but increased by 33% for the six-month period, as the larger commercial accounts generated more revenue and profits, though they took longer to complete.

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 its investment advisory businesses in the U.K., reported a 67% and 65% increase in revenue for the three and six-month periods, respectively, driven by the acquisition of Step-By-Step Financial Planners in the U.K. However, the segment’s operating loss increased by 15% and 9% for the three and six-month periods, respectively, due to the continued investment in the Fintech app development.

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 working capital position remained strong at $14.4 million as of December 31, 2024.

During the six-month period, the company used $1.7 million in cash from operating activities and invested $2.7 million in the development of its Fintech app. To fund these investments, the company entered into a $4.4 million note financing arrangement in September 2024, with the potential to borrow an additional $2.2 million.

The company also closed a public offering of 2.05 million shares of common stock in January 2025, raising approximately $1.85 million in net proceeds. 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 faces a mixed outlook, with some segments showing resilience and others facing ongoing challenges.

The fund management segment is expected to continue to be impacted by the volatile market conditions, which have led to a decline in AUM. The company will need to focus on attracting and retaining assets to drive revenue growth in this core business.

The food products segment may continue to face headwinds, particularly in the bakery business, as the company navigates the temporary cancellation of product categories and works to regain acceptance for price increases.

The beauty products segment appears to be stabilizing, with the company’s efforts to reduce discounts and reposition its products for a larger presence on store shelves expected to yield positive results.

The security systems segment is expected to maintain its focus on the commercial and public facilities customers, as the residential consumer segment becomes more complex due to the bundling of services offered by larger telecom companies.

The financial services segment, particularly the Fintech app development, will continue to be a significant investment area for the company. The company expects to require additional financing to fund the Fintech operations over the coming 12 months, and the success of this initiative will be crucial for the company’s long-term growth.

Overall, The Marygold Companies faces a challenging market environment, with some of its core businesses experiencing headwinds and the company’s strategic investments in the Fintech app weighing on its financial performance. The company’s ability to navigate these challenges and execute its diversified strategy will be key to its future success.