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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, and welcome to the Emerge Commerce Second Quarter 2023 Results Conference Call. [Operator Instructions] This call is being recorded on the 29th of August 2023. Your hosts today are Ghassan Halazon, Founder and Chief Executive Officer; and Jonathan Leong, Chief Financial Officer. Before we begin, I am required to provide the following statement respecting forward-looking information, which is made on behalf of EMERGE and all of its representatives on this call.
Certain statements made on this call will contain forward-looking information. These forward-looking statements generally can be identified by the use of words such as intend, believe, could, expect, estimate, forecast, may and other words of similar meaning. This forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we currently believe are appropriate and reasonable in the circumstances.
Actual results could differ materially from a conclusion, forecast, expectations, belief or projection and the forward-looking information. Certain material factors and assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. We caution investors not to rely on the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in Emerge's filings with Canadian provincial securities regulators.
Today's call, all figures are in Canadian dollars unless otherwise stated. And with that, I'd like to turn the call over to Mr. Ghassan Halazon, Founder and CEO.
Thank you very much. Good morning, everyone. We appreciate you taking the time to participate in our second quarter 2023 results conference call. Joining me today is Jonathan Leong, our CFO. This morning, I will walk through Emerge results, share some insights on our business as well as our key priorities for the balance of 2023. Following my remarks, Jonathan will provide further details on our financial results, and we will conclude by opening up the call to analysts for questions. Despite the macro climate, we're pleased to have delivered another quarter of positive adjusted EBITDA and positive cash flow from operations, both exceeding last year's results.
Q2 also marks our second consecutive quarter with gross margin exceeding 50%, reflecting the team's various gross margin enhancement initiatives. Our revenue in Q2 2023 was down versus Q2 2022, in large part due to the unprofitable truLOCAL U.S. operations and trading divisions eliminated in late 2022. In addition to what we view as a more normalized post-pandemic revenue level reflected in recent quarters. We expect the second half of 2023 to offer a more apples-to-apples revenue comparison. Notwithstanding, emerges overall revenue remains meaningfully higher than pre-pandemic levels in 2019, with some of our brands showing healthy organic growth year-over-year.
Notably, we are seeing strong double-digit growth in some of our discount centric brands, which we believe are well suited for this weaker macro climate. With respect to gross margins, we have taken and continue to take numerous steps to improve our gross margin, including exiting low-margin revenue streams and price increases through various measures with gross margins improving in Q2 2023 to 51.3% compared to 44.1% in Q2 2022, our second consecutive quarter exceeding 50%.
The company was once again able to achieve improved positive adjusted EBITDA, marking our seventh consecutive quarter of positive adjusted EBITDA and 13 out of the 14 -- out of the last 14 quarters. We would like to highlight that adjusted EBITDA in Q2 does not fully account for some of the recently announced cost-saving measures and synergies being executed in Q3. The company continues to explore additional cost savings with a focus on non-revenue impacting areas. One of our main priorities this year is to drive stronger cash flow from operations which increased to positive $800,000 in Q2 2023 compared to positive $200,000 in Q2 2022.
A positive swing of $600,000 in cash flow from operations year-over-year. and our third consecutive quarter of positive operating cash flow. I will now provide a brief update on some of our progress subsequent to quarter end. In August 2023, Emerge announced the sale of the WagJag business, which includes wagjag.com and berightnack.ca, our legacy experiences and travel vertical for $1 million in cash. Emerge originally acquired the business for $500,000 from Torstar Corp in 2017.
The company expects further HQ cost reductions in association with the sale of WagJag given the reduced overheads required to service the go-forward brand portfolio. Following the transaction, Emerge retains 5 brands across 3 main verticals: pets, grocery and golf. In Canada and the U.S., namely WholeSalePet, truLOCAL, Carnivore Club, UnderPar and JustGolfStuff. Next, I would like to provide a general status update on each of our 3 go-forward verticals.
First, WholeSalePet, our B2B pet products marketplace and our largest business by GMS, EBITDA and cash flow. While top line is below its peak pandemic levels, sales remain comfortably above 2019 pre-pandemic levels. The business remains highly profitable and cash flow generative. Building on its 21-plus year track record. Major opportunities ahead include scaling marketing and partnership initiatives, upgrading the tech platform and implementing price increases.
Second, truLOCAL, our direct-to-consumer premium meat subscription business, our largest business by revenue. Like WholeSalePet, truLOCAL also remains meaningfully ahead of its 2019 pre-pandemic revenue levels. truLOCAL has seen consistent revenue stability over the last 13 months or so following a decline from peak pandemic levels. The team has also been streamlined, and the business is now profitable, following various margin improvement and cost reduction initiatives. A number of exciting opportunities lie ahead for truLOCAL, including corporate orders during the holiday season, additional price increases, private label opportunities to drive margin, cross-selling with Carnivore Club, which now sits under truLOCAL and growing our partnership with Amex Canada.
Third, our golf business, which includes UnderPar, our golf experiences brand and JustGolfStuff our golf products brand. Under Park continues to be challenged from a supply perspective, albeit seeing marginal and sporadic signs of incremental recovery. Q4 will be a big test to see where the golf experience market is at and whether we can expect a larger comeback as that is peak season for UnderPar. And with the cooling economy potentially taking a broader effect, which would be conducive to courses offering larger discounts again on the platform.
On the other hand, JustGolfStuff, our golf products business is seeing strong double-digit growth this year to date on track for a record year with a growing assortment of reputable brands, rave reviews and a newly minted partnership with Amex Canada. In addition, we are now starting to optimize the brand for profitability and expanding into the U.S. market.
To sum up, we have a valuable e-commerce brand portfolio, including multiple profitable businesses that deserve more attention and we believe our recent streamlining efforts will help us focus on our most compelling opportunities. Now for an update on the debt front. Q2 was also a critical quarter to progress on debt pay down in large part facilitated by the sale of BattlBox and more recently supplemented by the sale of WagJag completed in Q3. Our senior debt facility now sits at $15.85 million, down from $25 million a year ago, driving substantial interest savings exceeding $1 million annually.
We plan to continue to be relentless in both driving operational improvements and paying down debt. The company remains in good standing with our lender, which we have worked with since November 2019. We continue to explore refinancing options with our existing lenders as well as with other parties. Finally, the company's top priorities in the near term remain to continue to pay down debt and reduce interest expense, drive organic growth across the portfolio. Extract further operational efficiencies and enhance EBITDA to cash flow conversion.
To wrap up, I would like to sincerely thank our team, board and trusted partners across North America for everyone's hard work as we execute on our plan to pave the way for our next chapter together. I will now turn the call over to Jonathan for a review of our financial results.
Thanks, Ghassan. Good morning, everyone. For our second quarter results, please note that BattlBox results have been reflected as discontinued operations in our financial statements with prior periods being reclassified to account for this where noted. Our gross merchandise sales for GMS for the quarter was $20.2 million, a decrease of 9% compared to the prior year at $22.1 million.
When excluding GMS from U.S. operations and trading at truLOCAL that were eliminated, last year's Q2 GMS would have been $20.6 million. As a reminder, GMS is a non-GAAP measure and represents the total dollar value of customer purchases of goods and services through our brands excluding applicable taxes and net of discounts and refunds. Q2 revenue from continuing operations was $6.2 million versus $8.6 million in Q2 2022, when excluding revenue from U.S. operations and trading that were eliminated, the decrease in revenue would have been approximately 13%. Gross profit for the quarter decreased to $3.2 million versus $3.8 million in the prior year.
However, our gross margins increased 51.3% from 44.1% as we continue to review and execute on a variety of initiatives maintaining or increasing gross margin. The net loss from continuing operations for Q2 was $1.6 million compared to $0.9 million for the same period in the prior year. The larger net loss is mainly attributable to a swing in foreign exchange and other losses in 2023 versus the prior year. Adjusted EBITDA increased to $126,000 from $86,000 in 2022 and Ghassan mentioned, this marks the seventh straight quarter of positive adjusted EBITDA, and we continue to focus on improving profitability and cash flow.
I will now pass it back to Ghassan for some closing comments.
Thanks, Jonathan. In closing, we are generally pleased with our brand's portfolio resilience, especially with our improved gross margins, positive adjusted EBITDA and enhanced cash flow from operations. Emerge is taking key steps to strengthen the company's balance sheet, and we believe both the cost reductions and gross margin initiatives implemented recently as well as the sale of BattlBox and WagJag to pay down debt are important steps in the right direction. With a diversified portfolio of profitable brands and largely recession resilient verticals, we plan to operate with rigor through the balance of 2023 and beyond.
We believe a disciplined capital allocation approach and an inherently bottom line focused playbook will come handy during this macro climate. This concludes our prepared remarks. Operator, please open the line for questions.
[Operator Instructions] There seems to be no questions at this time. I'd now like to turn the call back over to Mr. Halazon for any closing remarks.
Thank you very much for joining us today and for your continued interest in Emerge Commerce. We look forward to reporting on our progress throughout the balance of the year and beyond. Have a good day, everyone. Thank you.
Thank you so much presenters. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.