Cubbo: Exceeding projections each month this quarter
Sharing our latest shareholder letter, which was sent to investors this morning
Dear Cubbo investor,
We hope you’re well. In this update, we’re happy to share the latest company news.
- In January we generated $1.1M in gross revenue, marking a 102% increase compared to the same month last year. Additionally, our total orders for January reached 148K, representing a 70% growth year-over-year.
- Our gross profit for the month stood at $336K, with a gross margin of 30%. To put this in perspective, our average margin throughout 2023 was 33.4%. Looking ahead, we project our margin to improve to 36% in 2024. This optimism is grounded in our strategic focus on economies of scale and the expansion into high-margin revenue streams, notably our importer and merchant of record services.
- On a consolidated basis, our EBITDA for January was a positive $50K, which is in line with our projections. We are now anticipating an EBITDA of $271K for the first quarter of 2024.
- While our February figures are still being finalized, preliminary estimates suggest we reached approximately $1.4M in gross revenue. This growth is primarily attributed to a successful NFL campaign by Pepsi.
- As of mid-March, we are already at 100K orders for the month, outpacing our initial forecasts. Coupled with the strong results detailed above, it is clear that we are on track to exceed our projections for each month this quarter.
Cash Flow by Country — January
- In January, our financial strategy yielded a significant increase in our cash reserves, with a boost of $535K, predominantly due to the profitability in our Mexico operations. Over the last quarter, Mexico consistently demonstrated financial robustness, averaging an impressive $270K in positive EBITDA each month.
- Specifically within Mexico, our cash position for the month increased by $605K, which was a +222% increase, primarily driven by profits. Our target for the year is to elevate Mexico’s cash balance to exceed the $2M threshold.
- In Brazil, we experienced a slight dip in January, with our cash balance decreasing by $9K. However, we are optimistic about the future, anticipating a turnaround to positive cash flow by May. This optimism is bolstered by our strategic customer acquisitions, particularly the notable achievement of securing the full operation of a large book subscription club. This partnership is expected to generate an additional 30K orders per month, significantly contributing to our growth trajectory in the country.
The Value of a Customer
In 2023, Cubbo achieved a Lifetime Value to Customer Acquisition Cost (LTV:CAC) Ratio of 19.5. This figure not only highlights our strong return on investment but also underscores our company’s effectiveness in both acquiring new customers and retaining them. It serves as a testament to our strategic efficiency and sets a positive outlook for Cubbo’s long-term sustainability and growth prospects.
- In 2023, Cubbo strategically invested in customer acquisition, with the cost per new customer averaging $3,200. This investment facilitated the addition of 117 new customers across our operations, with 72 in Mexico and 45 in Brazil, expanding our market presence and reinforcing our competitive stance in these regions.
- The lifetime value of a customer in 2023 was $62K. This value is derived from an average annual revenue of $56K per customer, a gross margin of 33%, and an annual churn rate of 30.2%, translating to an average customer lifespan of approximately 3.3 years.
- Our efficiency in capital allocation is further demonstrated by the payback period on our customer acquisition investment. Specifically, it takes us just 2 months to recoup the cost of acquiring a customer, calculated by dividing the acquisition cost of $3,208 by the monthly contribution of $1,572 per customer (after the cost of sales).
As the first quarter draws to a close, it appears that we have embarked on the year with significant momentum, surpassing our forecasts for the initial three months. Although a few strategic hires remain to be made, we are well-positioned to consistently meet or exceed our projections throughout the remainder of the year. Our current team and available warehouse space are primed to scale in alignment with our pipeline. We are enthusiastic about continuing to execute our strategic plan effectively.
Please feel free to reach out with any questions or for additional information. We highly value your engagement and feedback.
Cubbo co-founders Josu, Ignasi, and Brian