Cubbo: Invested $378K to Generate $13.5M
We’re publicly sharing our investor updates — here is the latest update we shared to investors today.
Dear Cubbo investor,
In this update, we’re happy to share the latest company news.
1) In May we generated $1.6M in gross revenue, marking a 152% increase compared to the same month last year. Additionally, our total orders for the month reached 239K, representing a 150% growth year-over-year.
2) Historically, Q4 has consistently been our most revenue-generating quarter. For example, we saw a 78% increase in Q4 2022 compared to Q3 2022 and a 66% increase in Q4 2023 compared to Q3 2023. Given this trend, we believe that our projected 33% increase in Q4 2024 compared to Q3 2024 represents a conservative estimate.
3) With July results in, for the year we have reached approximately 1.2 million orders, generating over $8.7 million in gross revenue. This achievement means that in just the first seven months of 2024, we have already matched the total year-to-date numbers for all of 2023.
Adjusting 2024 Projected Revenue from $23M to $16M
With seven months of operations behind us in 2024, we now have clearer visibility into our expected final revenue for the year. At the beginning of the year, we projected earning $23M, but we are now adjusting our forecast down to $16M. This recalculation is based on several key factors:
1) Although we were over 17% ahead of our original forecast for total orders in the first half of the year, we now anticipate a less aggressive scale-up in the second half of 2024. In Mexico, we’re adopting a more conservative outlook based on the current visibility of our pipeline. In Brazil, the onboarding of several large customers took longer than expected, causing a delay in revenue recognition by a few months, which has negatively impacted our total projected revenue.
2) One of our key revenue initiatives for 2024 was to scale up our cross-border services for international customers, specifically providing importer and merchant of record services as new revenue streams. In 2023, we generated $235K from these services and initially projected earning over $1M this year. However, due to delays in assembling the necessary team and continued under-investment in this initiative — given our conservative approach with the $2M cash remaining in the bank — we no longer expect significant growth in this area for 2024. Despite this, we remain excited about these cross-border services, as we believe they will be a key differentiator for our business. By offering international brands a quick go-to-market solution in Mexico and Brazil without the need for a subsidiary or a local bank account, Cubbo can serve as both the importer and merchant of record, streamlining in-country fulfillment.
3) With reduced order volumes in both Mexico and Brazil, coupled with the lower-than-expected revenue from international customers, our revised forecast for 2024 is a realistic $16.4M. However, revenue could reach $18M or more, depending on the performance during the Q4 eCommerce holidays and continued pipeline development.
4) We believe we could have achieved, or even exceeded, our initial $23M revenue target if we had been more aggressive with our investment activities. However, we’ve been managing our cash reserves conservatively, using them as a buffer rather than for bold investments. With additional funds, one example initiative we would have pursued more aggressively is committing to our own warehouse space in Extrema, Brazil. Earlier this year, we launched operations there using a 4PL model, outsourcing our fulfillment through another 3PL. While this approach allowed us to test the waters, we now realize that given our strong customer pipeline, it would have been more strategic to rent and operate our own space to scale the business in this key region.
YoY Capital Efficiency — Invested $378K to Generate $13.5M
Since June 2023, Cubbo has generated over $13.5M in total revenue, with just $378K in cash invested to achieve this.
- This period marks our most successful in terms of gross profit, demonstrating our ability to leverage economies of scale. Gross profit increased by 102% compared to the previous year, while total expenses grew by only 43%, indicating that we’ve managed to grow costs at a lower rate than revenue in both countries.
- During this time, we’ve expanded our operations significantly: headcount increased by over 20%, our customer base grew by 49%, and we expanded our warehouse square footage by 94%.
- Our EBITDA during this period was approximately $500K. The difference between EBITDA and cash retention is primarily due to investment activities, particularly warehouse capital expenditures.
- While we are still finalizing July’s books, we have enough visibility to confirm that our financial performance continues to follow this positive trend.
- Importantly, our final cash balance does not include funds raised from investors. If we were to factor in those funds, our final cash balance would be nearly equivalent to where it stood in June 2023.
Final thoughts
While we’re adjusting our revenue projections downward, we remain proud of our accomplishments. We’re on track to ~double our business year-over-year, primarily fueled by our own free cash flow. While additional capital could accelerate our growth, we’ve demonstrated our ability to drive significant expansion through profits alone, if necessary.
Both Mexico and Brazil are well-positioned to continue capturing market share. In Mexico, we’re generating sufficient free cash flow to make strategic reinvestments. In Brazil, we’ve seen a 200% year-over-year increase in monthly orders, and the local market remains highly promising. Over the past quarter, multiple 3PL fulfillment providers have approached us regarding potential mergers, highlighting our unique position in the market. While we may not pursue these opportunities immediately, they illustrate our strong market presence.
We will continue to steadily advance, focusing on maintaining healthy unit economics, driving top-line growth, and controlling fixed costs, all of which will help us sustain our competitive edge.