Troubling Past, Bright Future
- $4.29M Market Capitalization
Vejii Holdings Ltd. (VEJI.C) released on May 3, 2022, its financial results for the fourth quarter and fiscal year ended December 31, 2021. The quarter that ended on December 31, 2021, was a transformational period for the Company, including several milestones that were integral to the long-term strategy of the Company. This is a long article, so bear with me, folks. If you’d like to know more about Vejii before delving into this one, check out this article!
“The 4th quarter shows significant improvements in unit economics and gross margins based on just two months of efficiencies gained from integrating with Vegan Essentials, with our planned initiatives and the additional scale the VEDGEco brings, we expect to continue seeing significant improvements on unit economics, gross margins, selling and distribution, and G&A as management focuses on demonstrating a clear path to profitability,” said Darren Gill President and COO of Vejii.
If you have been following Vejii, you’d know some investors are hesitant to place their trust in the Company. Vejii’s current co-founder and CEO, Kory Zelickson, previously worked as the co-founder of “Namaste Technologies” alongside its CEO, Sean Dollinger. Long story short, Sean Dollinger was fired by the Namaste, now referred to as Lifeist Wellness, following an internal investigation alleging that Mr. Dollinger had committed securities fraud.
While the dumpster fire that is Namaste has long since burned, its name still lingers like a ghost. However, after covering Vejii extensively over the course of my time here at Equity Guru, I can confidently say that the Company’s business structure is solid. If my word isn’t good enough, check out Equity Guru’s Gauntlet with Vejii where Kory Zelickson himself addresses his past with Namaste.
Quarter Ended December 31, 2021
While 2021 was a transformative year for Vejii, without any financials to work with, determining if the Company was as solid as it appeared to be was nigh impossible. However, Vejii’s Q4 2021 and FY 2021 financial results are just as promising as I had hoped they would be. In Q4 2021, Vejii was able to substantially improve its ground delivery following the acquisition of Vegan Essentials on November 5, 2021. In addition to bolsteringVejii’s revenue, this acquisition significantly cut the Company’s sales and distribution costs.
“We’re very pleased to report these financial results. Our key performance indicators and unit economics are heading in the right direction. With approximately $7 Million in unaudited proforma revenues, we have already established ourselves as a leader within the space and support startup brands scaling online as well as multi-national companies that leverage our retail, distribution and B2B resource,” said Kory Zelickson, Vejii’s CEO.
To be more specific, Vejii’s sales and distribution expenses as a percentage of revenue were substantially reduced to just 106% for Q4 2021 compared to 561% in the prior-year quarter. In total, the Company’s gross margin percentage for the quarter was 44% compared to 68.3% for the prior-year quarter, demonstrating Vejii’s ability to improve the unit economics of its business model. In the same quarter, Vejii also closed an offering of Subscription Receipts and Special Warrants for gross proceeds of CAD$4,098,459.
Revenues
Vejii’s revenue for the quarter ended December 31, 2021, was CAD$938,404, representing an increase of CAD$912,963, or 3,589% compared to CAD$25,441 for the quarter ended December 31, 2020. The Company attributes its increased revenue to a full period of operations for its marketplace at ShopVejii.com in both the United States (US) and Canada, along with the acquisition of the VeganEssentials.com marketplace on October 28, 2021, which provided CAD$606,249 in revenue.
Moreover, Vejii’s acquisition of VEDGEco on December 31, 2021, has significantly augmented the Company’s distribution capabilities, making it one of Vejii’s most significant milestones. Following this acquisition, Vejii now has five warehouses across the US, which are expected to have the largest impact on further reducing the Company’s selling and distribution costs as it moves to Zone 1 and Zone 2 delivery across key markets.
For context, “Zones” refers to shipping zones, which are geological areas that carriers ship to, spanning from Zone 1 to Zone 8 for domestic shipments in the US. Carriers use shipping zones to calculate the distance a package travels from its point of origin to its destination. Bearing this in mind, Zone 1 refers to local deliveries within a 50-mile radius while Zone 2 deliveries are within a radius of 51-150 miles.
Year Ended December 31, 2021
Since initially launching ShopVejii.com in the US on November 19, 2020, Vejii has expanded its product selection to include over 100 new brands and more than 500 products across all of its digital assets. It is worth noting that the Company’s FY 2021 financial results represent Vejii’s first full year of operations. Looking at the numbers, I would say Vejii is on the right track and has done quite well for itself. Some key milestones achieved by Vejii in 2021 include:
- launched Vejii Express
- launched Canadian online marketplace via ca.ShopVejii.com
- launched same-day delivery across Lower Mainland in British Columbia (BC)
- established warehouse facilities in California, Texas, Wisconsin, Georgia, Hawaii, and BC
- reached 29,715 active user accounts
Revenue
For the year ended December 31, 2021, Vejii reported revenue of CAD$1,721,640 compared to CAD$25,441 for the year ended December 31, 2020. Referring back to Vejii’s acquisition of VEDGEco, revenue from VEDGEco will be included in consolidated results beginning in January 2022. On a proforma basis, the unaudited revenues from the combined companies would have been roughly CAD$7,000,000 for the year ended December 31, 2021.
Vejii achieved gross margins of 30.3% for the year ended December 31, 2021, compared to 68.3% for the prior-year period. Vejii attributes this improvement to economies of scale as the Company scaled up operations and received recognition from numerous brands. In total, for the year ended December 31, 2021, Vejii reported a net loss of CAD$12,251,671 or CAD$0.61 per share, compared to a net loss of CAD$432,575 or CAD$0.18 per share for the year ended December 31, 2020.
While Vejii’s net loss increased significantly, this can be attributed to a number of one-time startup costs for technology development, brand awareness, market development, and costs associated with the Company’s CSE listing. However, Vejii’s increased net loss is mostly associated with a non-cash loss on measurement of warrant liability of CAD$3,117,856 and, of course, a full year of operating expenses.
Key Performance Indicators
As previously mentioned, Vejii’s active accounts have increased to 29,715 in the current year, compared to just 402 in the prior year, representing an increase of 7,292%. This number was significantly augmented by the Company’s acquisition of both VEDGEco and Vegan Essential, paired with Vejii’s organic growth. Furthermore, through these acquisitions, Vejii was able to expand its customer emails to over 250,000.
Vejii was also able to improve and better optimize its advertising and marketing campaigns to reduce its customer acquisition costs (CAC) to CAD$39.81 for Q4 2021 and CAD$73.80 for the current year ended versus CAD$247.49 for the prior quarter and year ended, representing a decrease of 84% and 70% respectively. For context, CAC refers to the total advertising spend during a period divided by the number of new accounts. In other words, CAC indicates how effective a company’s advertising strategy is.
Similarly, return on ad spend (ROAS) is a metric used to measure the effectiveness of a digital advertising campaign. For example, if a company were to generate $10.00 for every $1 spent on advertising, its return would be 10:1. In Vejii’s case, the Company has increased its ROAS from 0.33x for Q4 2020 and FY 2020, to 4.83x for Q4 2021. This demonstrates an improvement of 1364% and 2.21x for the year ended 2021, and an improvement of 570% year-over-year (YOY).
Don’t worry, we are almost there. According to Vejii, the Company experienced improvements in product selection, brand awareness, brand loyalty, and customer insights. Overall, this increased Vejii’s average order value (AOV) in the current quarter to CAD$77.19 compared to CAD$52.83 in the year prior, representing an increase of 46%. For context, AOV is defined as the average dollar spent each time a customer places an order on a website, such as ShopVejii.com.
Looking forward, Vejii expects these positive trends to continue into 2022 as the Company focuses on acquisitions, onboarding new vendors, and building upon its customer base. Vejii’s financial results certainly look promising and, hopefully, this will draw more attention from investors who may have been on the fence previously. Vejii’s latest key performance indicators show continued growth from the Company’s Q3 2021 financial results. I look forward to seeing how Vejii continues to bloom.
Vejii’s share price opened at $0.15 on May 3, 2022. The Company’s shares were trading at $0.15 as of 1:48 PM EST on May 3, 2022.
Full Disclosure: Vejii Holdings Ltd. (VEJI.C) is a marketing client of Equity Guru.