Prepared remarks
Actual results may differ materially. Please refer to the company's filings with the SEC. Certain figures for July are preliminary and unaudited. The full Q2 2026 shareholder letter and this investor presentation were published this morning and are available at ir.prenetics.com. With that, it is my pleasure to hand the call over to Prenetics CEO, Danny.
Thank you, Shannon. Good morning, everyone. Before anything else, thank you so much for being here. This is actually the first live earnings video webcast we've done in our company's history. And from the numbers showing who are joining right now, it may be the largest group of our shareholders ever gathered in one place. So whether you manage a fund, hold a single share or are simply here because you drink the sachet every morning, welcome. This is for you. And here's why we're doing it this way. Our shareholders range from global institutions to people who found IM8 as customers and became shareholders. And we believe every one of them deserves the same depth of information at the same moment. This moment, we've opened the books to everyone at once. We can do that for a simple reason. We now have 20 months of data, every cohort, every month, every market measured end-to-end. Enough history that numbers no longer need my adjectives.
And I will say this plainly, I do not know of another company publicly traded or private that has shown its business at this level of detail which we are showing you today. I just released a 40-page shareholder letter written to be read, not skimmed, an additional 80-page investor deck that shows you this business the way I see it internally, every single cohort, every vintage, our full acquisition cost month by month and even independent card data measuring our retention against every single brand in our category. In this stream, you hear from us directly and feel free to ask us anything at the end of this call. And the business compounding this fast deserves to be examined, not summarized. When the numbers are this good, transparency is a weapon. Today, and the day that number softens, someday you'll read it from us first in that letter. And one promise I want to make in the next half hour is I'm not going to be standing here and just reading you that letter.
However, hopefully, everyone listening in can read it later today. What I owe you is a part of the document that cannot do the story of what actually happened, how a brand that did not exist two Decembers ago crossed last month a line most consumer companies never reach. But before I talk about a single number, I want to show everyone what we're building first. We made this video, two minutes. Please enjoy. Yes. That was a highlight for the last 20 months, and it's quite amazing what we've been able to achieve. So Brian, if we get to the next slide. In December 2024, we launched IM8. In our first month on the market, we did about USD 400,000. I want to tell you what we believed back then because it's written down. It was in our founding moment before we even shipped a single sachet. We believed that we built the best product in the category: clinically studied, certified, customers wouldn't just buy it, they would stay.
And if they stayed, every dollar we spent funding them would come back with profit on top. And if that helped, then one day, the whole machine would cross the line, the point where growth stops consuming cash and starts producing it. We marked that line in the model on day one. Every decision we've made has pointed to it. Last month, we crossed it. In July, our consolidated adjusted free cash flow — and I want to be precise here because precision is the whole point of today — that measure includes the funding under our General Catalyst facility turned positive for the first time in our history. It is, I believe, the single most important fact in the letter, in the deck and in this stream. And I'll be quite honest with you, I did not believe we could get it here so fast. Twenty months — most consumer brands take years; many never arrive at all. Two things made it possible, and they are connected.
Firstly, our cohorts came first: customers who stayed, who spent more, who paid back their acquisition cost in months. And these cohorts earned the second thing: $1 billion of commitment from General Catalyst, committed after they spent months in our data, capital that now funds our growth. So our cash — we expect Q3 to be our first positive quarter, and we expect to stay positive from there. Now the quarter itself. I want to frame this only the way results should ever be framed against what we told you we would do earlier. In May, we guided publicly $46 million to $48 million in total revenue, $44 million to $46 million for IM8. We reaffirmed those numbers in June. This morning, we reported $46.5 million in total, up 29% from Q1, roughly 3.9x from a year ago, with IM8 at $45 million, up 33% sequentially at a 65% gross margin. Both numbers inside both ranges, our sixth consecutive record quarter.
We say what we'll do. And then when we do it, I want to own that pattern in front of you. For the record, because it is the standard you should hold us to every quarter from here. And then July happened. As you can see from this chart, this shows you our path from basically December of 2024 to July last month. Starting at the $400,000 I talked about, and look where it ends. Last month, we achieved $20.9 million of revenue in one month — our strongest month in our history — 4.3x last July at an annualized run rate of roughly $251 million. July wasn't just big. It was our largest single-month customer cohort ever. We acquired 47,373 customers. Here's the part I'm most proud of: we acquired that record cohort at a customer acquisition cost of about $239, down roughly 21% from our Q2. So we have record customers at a falling CAC; scaling brands never get both. Brian will take the whole P&L apart in a few minutes and share all the details on that.
The quarter delivered inside our own guidance. With a July like that behind it, it changes what we can promise ahead. So today, for the first time, we are raising our full-year total revenue guidance to $220 million to $230 million, with IM8 contributing $215 million to $222 million. Understand the nature of that number: the floor of that range is not hope. It's actually underwritten by the subscribers we already have. And we're also initiating 2027 figures as we get close to the end of 2026: we're initiating $400 million or more. There are three numbers you should be thinking about because they hold the whole story of this company. Last year, in our first full year of IM8, we achieved $60 million. In the second year, this year, we will achieve $220 million. $400 million plus expected in its third year. In the letter, we put it one way, and we'll say it to you straight: we don't treat that trajectory as ambition.
We treat it as arithmetic. We'll exit the year above a $300 million annualized run rate before a single 2027 customer walks in the door. Note: roughly 87% of our revenue is recurring subscribers; we already have our retention curves measured across 20 consecutive cohorts, everyone behaving the same way. Nothing from the new products you will hear about today is in any of those numbers. So every launch is pure upside to every figure I just gave you. Let me show you the machine underneath it. I want to talk a few minutes about the brand we are building because, in my experience as an entrepreneur and investor, I haven't seen anything like this. And I'm grateful I get to live this every day. It's something numbers cannot show and something you can only see with your own eyes. I've spent much of the year traveling the world for IM8. In every country I land in, the same thing happens: people come up to me about IM8 and get so happy.
It's not that they recognize me; it's that they recognize the sachet. I've met athletes, surgeons, founders, CEOs — high performers who could buy anything — telling me unprompted what this product has done for them. In the time we've been around, we've now watched more than 100 brand events around the world, and the rooms keep getting fuller. Somewhere in the last 20 months, this stopped being a product people buy and became something people carry with them, ask each other about, and hand to the people they care about most. On an earnings call, for a hard commercial reason, a brand people trust travels. It travels into new countries ahead of our marketing — which is why our acquisition cost is falling while our spend has doubled in Q2 — and it travels into new products where an audience that already believes in us is waiting for whatever we make next. The brand we've been able to build and where we're headed next: everything you've seen is essentially a one-product family in one category.
Next quarter, in Q4, we're going to launch IM8 Hydration into a $37 billion market. In the first quarter of next year, our premium line of gummies into a $25 billion category. Nothing launches without IM8-level clinical validation. Everything we make carries NSF Certified for Sport. On the science, we have three randomized placebo-controlled clinical trials ongoing right now, including one at the Mayo Clinic; Dr. Dawn Mussallem will take you inside them shortly. In a category built on marketing claims, we are building one on evidence. Everyone also understands that while hydration and gummies are coming next, it's not the whole story. We've been able to build a brand that will be trusted in sleep, cognition, recovery, women's health, men's health and sports performance. When a customer hands our sachet to someone they love, they are telling us they will trust us in any category where science and quality decide the winner.
That map is most of consumer health. Now, let me be equally clear: this slide is not a roadmap announcing everything today. The honest way to think about IM8 is not just as a supplement company. It is a trusted global premium health brand, 20 months old with most of its category still ahead of it. Here's a question every operator here is already asking: entering new categories normally takes armies, new teams, new overhead, and margin walks out the door. So let me show you why that math doesn't apply to us. This is a chart of our AI-native organization, and it may be my favorite slide in the deck next to the adjusted cash flow slide. IM8 is AI-native from day one. We are roughly 70 people delivering this year's guided $220 million to $230 million revenue — more revenue per employee than any scaled brand in this category, and the gap widens as we grow. Revenue grew 3.9x year-over-year with no proportional hiring.
Fixed operating expenses actually fell 21% quarter-over-quarter. We doubled acquisition spend from Q1 to Q2 with the same number of team members. That's not discipline for its own sake. It's what a company looks like when AI runs through creative marketing, operations and finance from day one instead of being bolted on later. Most companies our size are hiring their way to scale. We are compounding our way there. The biggest partnership this year is the one funding everything I just described. One month ago, General Catalyst committed $1 billion against our cohorts — the deepest diligence I've been through as a founder; every single monthly cohort examined at the transaction level. Now, to walk you through where that number stands today, I'm going to hand it over to Brian, our CFO. Brian just joined us three months ago after that diligence process began. I'll say this plainly: bringing Brian on board is one of the best decisions we've made this year. He came to see the machine and he stayed to run the numbers on it. Brian, the floor is yours.
Before we get into the quarter here, just a quick word on me since this is probably the first time some of you are hearing from me or seeing me. I've been a CFO in the CPG space for quite a long time. IM8 is actually the eighth brand that I've been a part of in this category or adjacent categories. When I was first presented with the opportunity to join this business, I did what any good CFO would do: I diligenced it and evaluated it from roughly the same criteria we're going to look at today. You take a look at the past, the present and the future. Start by looking at financial statements. Those give a good sense of how the business has performed and near-term trends. Any given last reported quarter is inherently a little in the past, but those quarters are also a byproduct of executional effort in prior quarters. So financial statements are almost always looking backwards. When you look at the present, I think about cohort math and unit economics.
Those things give predictable line of sight for the coming three to six quarters and show where the brand can scale. Third, when you look into the future, that's about expansion opportunities, brand equity, brand strength — where the brand can extend across product, market and channel. When I did this assessment of IM8, each part of that got more bullish than the last. The financials were strong. The unit economics and cohort math were quite strong. And with Danny's vision, the sky is the limit for this business. Today, I'll take us through the same arc: where we are on the financial statements; look at Q2 results; then the unit economics and cohort math that give line of sight into the near-term guidance; and briefly touch on how that future is funded by a strong balance sheet and the General Catalyst financing partnership. With that, let's get to the quarter. I'm going to spend a decent amount of time walking down the P&L because it's important for everyone to level-set on the presentation of this view and what we will hold ourselves to in the future.
For Q2, in the middle column of this chart, our revenue was $46.5 million — 29% quarter-over-quarter and 3.9x bigger than a year ago. That leads us to gross profit: $30.2 million at 65% gross margin, about three full points better than the same period a year ago. Our fixed operating costs were $8.8 million, which is 19% of sales. Note that this is 14% up versus the prior quarter, but 2.3x greater than a year ago. There's a lot of additional leverage in this line, as you'd expect: when your operating costs as a percent of sales decline as the business grows. That takes us down to contribution profit. There's a lot of ways to present contribution; I've seen brands present it before G&A or operating expenses, which I don't find productive. When you think about contribution profit, it's gross profit minus operating costs — what's left before you make choiceful investments into demand creation and customer acquisition.
You'll notice contribution profit was $21.4 million in the quarter, 46% of sales, 16 percentage points better than one year ago. A great amount of leverage at that line. Below that is our demand-creation bucket and all-in marketing. We've split it into three lines: brand royalty, ambassador partnerships and acquisition marketing. The acquisition marketing expense of $36.2 million in the quarter is 78% of sales — that's the numerator in our CAC equation. Our brand royalty is typically 3.5% of revenue. Ambassador contracts were $2.1 million in the quarter, down to 4% of revenue versus $1.1 million the prior year when it was 9% of revenue. The ambassador line includes equity athletes, lifestyle ambassadors and our Scientific Advisory Board. When you look at all marketing, it's a dial for us — how much we want to throw at growth today versus profitability. Every acquisition dollar we've spent has generated $1.52 of gross profit in our lifecycle to date.
That return includes several cohorts that are not yet very mature. That $1.52 is the direct return and we'll go into unit economics a bit more. This spend is a choice to grow for tomorrow. Our adjusted EBITDA for the quarter was negative $19 million, a byproduct of marketing spend — we spent double versus the prior quarter — but our CACs actually improved. Below adjusted EBITDA, there are adjustments for fair value gains ($9.9 million add-back), depreciation and amortization, which puts you to a net loss of $9 million for the quarter or $0.52 a share — down 45% from the same period a year ago when the loss per share was $0.94. A terrific quarter in many ways. On this slide, you also see a preliminary July column. Danny showed the revenue in July; we wanted to prudently show July's preliminary results because there's been material strengthening as we head into Q3. Revenue was $21.4 million for total Prenetics.
Gross margin 64%. Operating costs dropped to 15% of revenue from 19% in the prior quarter — good expansion. Contribution profit was $10.4 million for July, a 49% contribution margin. Acquisition marketing spend, compared to the Q2 average, actually went down in July. We drove a lot more new customers in the month; our CAC improved substantially, which drove acquisition marketing as a percent of sales down to 54%. That puts July adjusted EBITDA at a $2.4 million loss, negative 11% adjusted EBITDA margin. Net loss for July was about $3.6 million. July sets the stage for a strong Q3. Next, the IM8-specific segment. IM8 is effectively all of Prenetics today. As we report into the future, we may not break out IM8 specifically versus total Prenetics. But same P&L view: Q2 IM8 revenue $45 million; EBITDA similar to Prenetics — negative $18.6 million in the period. Marketing was almost all IM8. Now look at the customer acquisition metrics.
We acquired 118,000 new customers in Q2, 98% better than the prior quarter. CACs were flat to slightly down, about negative 1% — you don't typically see a business double spend and have customer acquisition efficiency improve slightly or hold flat. In July, we did 47,000 new customers at a CAC of $239 — 21% less than the Q2 average. So more than 20% customer growth and a 21% CAC improvement. Those two things are moving in a way we haven't modeled into the future; we modeled the business on a CAC more in line with H1. We would hope the efficiency continues, but we haven't remodeled guidance to assume the July improvement. Looking at the cash flow view: the first half is the story of two major investments: the operating loss driven by customer acquisition spend for future growth (operating loss about $27 million) and a share buyback of $40 million, which reflected about $36.1 million cash used net of proceeds.
What's going to change going forward is General Catalyst funding will fund 70% of that acquisition marketing line. That funding on the way in, net of repayments, will generate adjusted free cash flow positive momentum into future quarters. July showed that momentum already. On the balance sheet, we have $109.4 million of cash and current financial assets. Inventory levels have risen; we also have prepayments on inventory to get ready for the back half of the year and new product launches. On liabilities, warrant liabilities reflect fair valuation against warrants currently on the cap table: $18 strike on 2.36 million warrants and other warrants at higher strikes. If the stock goes above $21.60 per share for 10 consecutive days, we have a call option to bring in those warrants, which would generate another $42.5 million of cash. On the cap table, outstanding shares are 15.2 million: 13.6 million Class A and 1.6 million Class B. Fully diluted, including grants able to be issued, jumps to 14.5 million Class A equivalent and 19.2 million including warrants.
Since December, we've reduced Class A outstanding to 13.6 million from 15.3 million through our buyback. Now to unit economics and the cohort map. This chart helps put into perspective the spend levels doubling from Q1 to Q2, yet us doubling the average new customers we bring in. July was the largest cohort with a CAC of $239. There's been no mix shift within that July cohort in subscription duration; it's apples-to-apples, a true 21% decrease versus Q2. Momentum heading into Q3 is tremendous. On returns: looking at our quarterly vintages, when the General Catalyst news dropped we presented collective charts that General Catalyst and we worked through to underwrite our cohorts. At that time, through Q1 our gross profit-to-CAC return was $1.44. Fast forward to today, the Q1 vintage group has gone from $1.44 to $1.52 — we've gained $0.08 in one month. That's the engine: that number should continue to rise.
Every dollar we've spent through Q1 cohorts has generated 1.52x back so far, and that will likely increase as cohorts mature. We showed third-party credit card panel data from Indagari: by month 20 our retention is 14.2%, higher than Thorne, AG1 and Gruns on this chart. We're still young with a lot of room to run, but this retention number at month 20 is powerful. Subscriber base: 140,000 active subscribers. We've grown steadily and accelerated in 2026. Fifty percent of our subscribers have been with the business at least three months, which is meaningful given cohort immaturity. That base fuels the business as we head into the next phases. This is where the cohort math helps guide the next three to six quarters. By running out existing repeat revenue, which is how we guide, we can see where quarters will land. For Q3 guidance, we are guiding $61.5 million to $62.5 million on IM8 specifically or $63 million to $64 million on Prenetics parent.
That implies, based on Danny's metrics, $220 million to $230 million for the full year and an $81.2 million Q4, which would put us at the top of our guidance. We are also guiding EBITDA to improve substantially: first half saw negative $24.6 million EBITDA loss; in the second half we expect adjusted EBITDA loss to drop to negative $8 million to negative $12 million. We expect leverage across P&L: fixed operating costs will show leverage, potential further gross margin gains as subscription mix shifts to longer quarterlies, and leverage on ambassador and acquisition spend as a percent of sales. So lots of areas driving adjusted EBITDA improvement in H2 without sacrificing growth. We expect 38% revenue increase Q3 vs Q2 and another sequential 31% increase in Q4. For Q3 specifically: guidance $61.5 million to $62.5 million IM8 or $63 million to $64 million parent. Momentum in Q3 looks strong on acquisition and adjusted free cash flow.
With General Catalyst financing, July was adjusted free cash flow positive and that should continue. Into Q4: $81.2 million implied revenue for the year if we hit the top end — 3x better than Q4 2025 (our strongest quarter last year). We're guiding to 31% sequential growth vs last year's 59% — a deliverable number. As Danny mentioned, these numbers do not include the hydration launch in Q4 — all upside. Lastly, we expect to exit the 2026 calendar year at a $300 million annualized revenue run rate (about $25 million per month) and we are guiding to at least $400 million in 2027. If you look at the exit point of December 2025 at just over $100 million and we deliver $220 million to $230 million this year, exiting 2026 at a $300 million run rate and delivering at least $400 million next year is achievable. Our past is printed in financial statements; our present in unit economics and cohorts is driving future growth; and the future is funded with General Catalyst's $1 billion financing and a strong balance sheet. With that, I'll turn it back to Danny and let him go into more of the future.
Great. Thank you, Brian, for that detailed walk-through of the P&L. Before we turn to science, I want to really give a big welcome to Caroline Levy. Caroline is on screen now. I see the Golden Gate Bridge in the background there — that's where I grew up and spent a lot of my early years. I've met Caroline over two years ago, in March of 2024 in Los Angeles. I actually wanted Caroline to join the Board at that time — pre-IM8 — but she respectfully declined, saying she wanted to watch a little more to see if we could deliver on everything we said we would. A few months later we reconnected, and I'm very happy and honored to officially welcome Caroline. Yesterday, she joined the Prenetics Board as well as the Audit Committee and the Governance and Nominating Committee. Caroline, we'd love you to spend a few minutes and share in your own words why you decided to join us. Thank you, Caroline.
Also, I'm very excited to welcome Dr. Dawn Mussallem, who will talk about the science. That's the thing we're really proud of — when I go around the world, people say they love the science and what we stand for from day one. Dr. Dawn has been with us before we launched the brand; she was a founding Scientific Advisory Board member. When you meet her in person, she's full of life. She had a long personal story: when she went to medical school she was diagnosed with Stage IV cancer, given three months to live, and she survived. In 2021 she underwent a heart transplant and one year after, she ran a full marathon. She was founder at Mayo Clinic for the Breast Oncology Center. Dawn, thank you so much for being here from day one. Dawn is going to talk about the science, the background and what makes IM8 special.
Questions and answers
Thank you, Danny. Good morning, everybody. I'm so excited to be part of the IM8 team. For more than 30 years, my job was professional skepticism. As an analyst, I was paid to look beyond the story, test the numbers, the strength of the brand and the discipline behind the growth. After doing that across hundreds of consumer companies, big and small, you develop a fairly high bar for what genuinely impresses you. There are three things that impressed me about Prenetics and IM8. First, as Danny said, I met him more than two years ago. What has stood out is his ability to execute. Over my career, I've heard hundreds of CEOs describe what they intend to build. What matters, of course, is what actually gets done. Danny laid out a clear ambition and step by step, he has delivered it. I place enormous value on that combination of ambition, focus and follow-through. Second, the brand. I spent my career studying consumer brands, including some of the fastest-growing brands over the past decade.
The connection IM8 has built with consumers in a relatively short period is unusual. Strong consumer affinity is difficult to create and sustain, and when it's genuine, it's enormously valuable. I believe there's something quite special here. Third, the role Danny asked me to play. He didn't ask me to join the Board simply to agree with him. He asked me to bring the same rigor and willingness to ask difficult questions that I have brought throughout my career as an analyst, and that matters to me. I'm joining the Board with real enthusiasm for what Prenetics is building and a clear sense of my responsibility to shareholders and to the long-term success of the company. I'm delighted to be here. Danny, back to you.
Thank you so much. I'm so excited to be alive to celebrate this time with IM8. As Danny said, 20 years as a physician at Mayo Clinic means everything we do is rooted in the deepest science. I've frequently been approached by other supplement brands and truly deleted most outreach because what they proposed wouldn't be something Mayo Clinic would allow me to participate in — until I received that call from Danny. I remember that first call: there was nothing about marketing. The only thing we talked about was how could we create the best scientifically backed nutraceutical solution in the world. That's exactly what we've done. This is a conversation I've been waiting for my entire career. I was an exercise physiologist before medical school with a special interest in ergogenic aids or nutraceuticals that enhance health span. For two decades at Mayo Clinic, I was immersed in sick care. I watched patients try to assemble their nutrition from shelves full of inconsistent supplements — 16 to 18 products — and some would do harm.
Some patients were admitted because supplements harmed them. The daily UltIM8te Essentials replaces everything in those 16 to 18 bottles with over 90 ingredients in that tasty daily sachet. If anyone on this call hasn't tried it, this is my invitation: try it. The biggest investment you can make is in your health. The IM8 daily sachet is at clinical dose. Over 74% of Americans have nutrient gaps, and the daily UltIM8te Essentials is designed to close those gaps and more. Safety is the cornerstone of everything we do. Every SKU IM8 sets forward is NSF Certified for Sport, meaning no banned substances. Every batch is third-party batch tested — every ingredient on that label in the dose is exactly what you're getting. On our website, we publish the certificate for each batch. We also check for heavy metals and microplastics. There were no shortcuts when creating IM8 Daily Essentials. I wanted to be at the foundation of creating this product, working with the Scientific Advisory Board.
We literally talk every day about how to do things better. Now let's talk about evidence. We saw this in our first 12-week randomized controlled study: 95% of participants reported improved energy and vitality. That's the number one thing we set out to do. We also saw 85% improvement in gut health, 80% improvement in sleep, and 75% reported clearer thinking. This is why people keep coming back, and why we have high retention. We have an ongoing randomized controlled study at Mayo Clinic among health care workers with 100 individuals being enrolled. It's randomized: half will get IM8 and half a matched placebo, matched for taste; the placebo even has some beetroot extract, so placebo effects are possible. Participants have a four-week washout if they're taking supplements. Baseline labs and completion labs will measure vitamin and mineral levels, inflammatory and cardiometabolic markers, and we'll do functional tests like a six-minute walk test with VO2 calculations, InBody body composition, grip strength and health-related quality of life surveys.
Research like this is not inexpensive — studies cost on par with pharmaceutical studies. A big shout-out to Danny for investing in research and science. We expect results from the Mayo Clinic study by Q2 of 2027, if not sooner. The longevity randomized controlled study is large: 180 participants randomized across four arms — placebo, single dose longevity, double dose longevity and the full Beckham Stack (longevity sachet plus daily essentials). We'll look at inflammatory and metabolic markers — two important markers for the hallmarks of aging. About 88% to 92% of Americans have metabolic disease; this is a critical study and we expect results by Q1 2027. Next, the gut health study: it's estimated 66% of Americans struggle with GI issues and over 70 million have diagnosed digestive diseases. This study has 135 participants across three arms testing dose response, and we will sequence the gut microbiome with shotgun metagenomics.
That allows a window on bioindividualized optimization across bodily function. Suzanne Devkota and the team are leading this. We won't stop there. At the end of this year into Q1 and Q2, we have new products launching, starting with hydration — two forms to serve athletes and everyday users — and a gummy to help children be healthier with favorable fibers for their gut microbiome, no sugar, no artificial coloring, NSF Certified and third-party tested. As a physician and patient, I owe my life to medicine; now we have a nutraceutical solution developed with the same rigorous methodology. IM8 is doing it right. The biggest investment you can make is in your health. Danny, back to you.
Great. Thank you so much, Dawn. Let me wrap up in one minute. Brian showed you the numbers. Dr. Dawn showed you the science. Here is what it all adds up to: we have eight advantages, each one making the others better and stronger — the science with three trials underway including Mayo Clinic, the brand and word-of-mouth, General Catalyst underwriting $1 billion after spending months in our cohorts, a subscription engine across 140,000 active subscribers growing very quickly, July best month ever, an AI-native organization with 70 people delivering over $3 million of revenue each, a footprint of 46 countries (we started with 31 from day one), our largest market only 0.15% penetrated, and founders who own the outcome in our own capital, athletes holding equity — all of it in the stock you hold. Any one of those things a competitor could copy: money can buy certification, money can buy trials.
But the eight together compounding through the same subscribers, the same data, the same brand month after month for 20 months — that combination is rare and hard to copy. We call ourselves IM8 because everything you've seen today is from two products. The flywheel is only beginning to turn. I'm excited every day to wake up to this. We've tens of thousands of positive reviews around the world. We're right on time. We earmarked 60 minutes and we've spoken a lot. Now we're not done. The point of this format is it allows our research analysts and all of you to ask questions. Please feel free to ask Brian, myself or Dr. Dawn any questions.
It looks like we'll take our first question from Ryan Meyers of Lake Street.
Appreciate the really extensive overview here. First question for me: with General Catalyst removing the cash constraint on marketing, how should we be thinking about spend in the second half of the year, especially as we bridge that gap to the updated adjusted EBITDA loss?
Ryan, thanks for the question. For the second half, we expect spend as a percentage of revenue to be roughly in line with Q2 percentages, maybe slightly more favorable, but not materially different. We would continue to invest in the business at roughly the same percentage of revenue. Probably not as low as July came in, but July was a particularly efficient month and we're not necessarily modeling that July CAC efficiency to continue. Expect some leverage gain on the marketing line, but not a dramatic step function down versus Q2.
Got it. As quarterly subscriptions become a larger share and volumes increase, where do you see sustainable gross margins going forward from here? Two consecutive quarters at 65% gross margin — how should we think about that as mix changes?
Good question. Quarterlies are more favorable for margin. If mix continues to shift toward quarterly durations, I'd expect a few points of additional margin from mix alone. There are also economies of scale we haven't modeled yet: supply chain efficiencies, third-party logistics (postage, freight), and cost of product improvements with manufacturing scale. Those should add further margin tailwinds into 2027.
Lastly, one for Dawn. As you run these clinical trials — which are extensive and, to my knowledge, rare in the supplement space — what do you think successful outcomes on those three trials would bring to the brand?
Our consumers are becoming much smarter, and physicians increasingly look for trusted products. These trials build the credibility physicians need to recommend a single trusted supplement versus patients taking 16 to 18 different products. I'm Chief Medical Officer at Fountain Life and I can tell you physicians are switching members who were taking numerous bottles to a single trusted product. Mayo Clinic even has us in their pharmacy and online store to sell to patients. Being in the world's top hospital speaks volumes. Strong trial outcomes will accelerate physician adoption and patient trust, which is a meaningful commercial moat.
To add: we're proud so many physicians recommend IM8. It's rare in supplements. Team physicians for teams like the New York Yankees recommend it; Jay Shetty and Aryna Sabalenka found us through their physicians and nutrition coaches. Physicians check labels and NSF certifications; that vetting and recommendation is a powerful endorsement.
We'll go next to Tom Forte of Maxim.
Great. Danny and Brian, congrats on the quarter and the General Catalyst deal. Thanks for taking the time this morning. Dr. Dawn and Caroline, thanks for joining. I have three questions; I'll go one at a time. First, Danny, how long does it typically take you from deciding to enter a new category to having a product available for consumers?
We're deliberate and strategic about new products. We want to ensure we can create the best product in that category. For hydration and gummies, we started thinking about hydration at the end of last year. It easily takes 12 to 18 months, if not longer, from concept to market when you include clinical evidence, manufacturing, testing and NSF certification. We don't rush SKUs: in 20 months we've launched a very small number of SKUs because we won't launch anything that isn't best-in-class. I personally tested dozens of hydration formulas and gummies. When we launch, I'm confident we'll have the best ingredients and certifications.
Excellent. Second question: how should we think about build versus buy when entering a new category?
Right now our strategy is to build. We've been able to build a very strong brand. If there is an attractive strategic acquisition and we have capital, we'll consider it, but my primary focus is product development and clinical validation. We prioritize building high-quality products and science-first launches.
Lastly, Dr. Dawn and Caroline: can you share your thoughts on consumers' increasing interest in health and wellness? Is this a multi-generational trend or primarily baby boomers?
I've followed health and wellness for decades. Trends often accumulate slowly and then hit an acceleration curve. I think we're at that inflection point. GLP-1s and other treatments are changing health outcomes and people's day-to-day lives. People want not just to live longer but to live better, and there's a powerful cohort of older consumers who remain active contributors. We're at the cusp of something enormous in health and wellness.
I agree, and I'd add younger cohorts — millennials and Gen Z — are driving a large portion of wellness spending. These younger groups prioritize wellness and are reshaping behaviors: less alcohol, more mocktails, more attention to nutrition and vitality. Our focus on safety and high-quality products resonates across ages, including children as we expand into gummies.
Our next question is from Patrick Budicini of UBS.
First, congrats on the great quarter. Two questions on the competitive landscape. How has the competitive landscape evolved over the last few months? And when you're acquiring new customers, are customers typically switching from a competing product or are they new entrants to the category?
We published third-party competitor data in the investor deck. Since our launch in December 2024, we grew roughly 2,500% while some incumbents declined. H1 saw certain competitors decline meaningfully; others grew modestly. We've been taking significant share from top players because we believe we have the best product. Our average order value is among the highest in the category: about $180. Many incumbent brands have lower AOVs. Our customer base skews affluent: over 50% have household income above $150,000. Customers come from multiple sources: perhaps 20% to 30% of new customers come from competitors or word of mouth, and many are consolidating multiple supplements into our stack. We often displace several products per customer.
Next is Alex Hantman of Sidoti.
Congrats on the quarter. The CAC improvements while spend grew have been impressive. Could you talk more about TikTok Shop and social commerce efforts and how they affect CAC, AOV and prioritization of on-site versus off-site sales as you scale?
From day one we've designed for direct-to-consumer: roughly 95% of transactions happen on our own website, about 5% on Amazon. That's by design: owning the customer experience and email gives us the ability to cross-sell and retain. We're experimenting more with TikTok, AppLovin and other channels, but the majority of customers are transacting on our site. There remain strong organic channels and word of mouth. We'll continue to scale DTC and test social commerce without ceding the customer relationship.
Excited about the science. Beyond physician adoption, what are plans to leverage science for future products or partnerships and when might we expect readouts from ongoing studies?
Science is core from day one. We publish third-party testing and NSF content on our site. For the trials: the longevity and gut health trials expect results in 2027 — Q1 for some, Q2 for others. Mayo Clinic timing may be a bit longer because of academic timelines. These are multimillion-dollar trials and part of our competitive moat. We believe the trials will strengthen physician adoption and consumer trust.
Caroline has beverage experience. Any thoughts about form factor expansion and retail for the upcoming hydration product?
Retail is a possibility, but our focus now is stick powder stick packs for hydration, and we want to be deliberate. For the next 24 to 36 months we can scale DTC effectively; retail would be a different business model. We'll evaluate retail opportunistically but only when it makes strategic sense.
Next we go to George Kelly at ROTH.
Can you give more detail on what drove the acceleration in July and the improved CAC? Was it a specific marketing channel, partner, or something else? And given you didn't bake July CAC into guidance, have you seen any normalization in August so far?
July's CAC fell about 20% vs Q2. Several things contributed. First, we doubled spend in Q2 and had spillover effects. Second, brand strength and word of mouth have been increasing globally — not just paid channels. We have many organic referrals; we've run over 100 brand events which generate offline word of mouth. We also had ambassador momentum: new signings and partnerships create halo effects. Q1 CAC was $305; Q2 CAC $301 despite double spend — that's rare and indicates brand strength. For August it's early; we continue to see momentum but it's too soon to give a full-month CAC number.
On new products: do you have survey data showing attach potential among current subscribers for hydration or gummies?
Yes. We've run post-purchase surveys. Hydration and gummies were top requests from our customer base, which supports our selection of those categories. We have seen more than 20% of existing customers request these SKUs. We haven't provided attach-rate guidance because we lack sufficient historical data on the SKUs yet, but customer interest is meaningful.
Will these be attached products or standalone lower-priced items bringing new customers?
They will be complementary. They don't compete with our existing products. Some customers will replace existing hydration products and switch to IM8; others will be new customers. We expect cross-sell into our hero products and that both attach and new-customer acquisition will be part of the growth.
To clarify on General Catalyst funding: in the cash flow presentation, proceeds from General Catalyst will be presented as financing, but adjusted free cash flow will assume the operating cash flow plus proceeds net of repayments to show the funded nature of acquisition marketing. For EBITDA, the General Catalyst cash flow doesn't affect EBITDA except for interest expense on repayments which is below the EBITDA line.
We have a written submitted question from Susan Anderson of Canaccord: curious how you're thinking about distribution channels, given you're all DTC — will retail be part of the strategy at some point? Where is the opportunity internationally; what countries are you not in and looking to be in? Finally, how do you think about the competitive landscape and the moat — why couldn't another brand copy what you're doing?
On retail and DTC: we had our best quarter and July was a record month working 100% DTC. There's no immediate need to pursue retail for the next 24 to 36 months given online economics and our growth. Retail is a different business model and we prefer the direct relationship with customers. We can scale significantly on DTC. Internationally, we're in 46 countries today. We are not in China or India yet. China would be a different model and likely 18 to 24 months out; India hasn't been explored yet. Those are the large markets where we don't yet operate. On the moat: many elements can be copied separately: certifications, trials, funding. But the combination — science, brand, cohorts, data, subscription economics, NSF certification, the AI-native organization, and the $1 billion financing tied to verified cohorts — together create a more durable advantage that's difficult to replicate quickly.
A retail community question: P&G paid nearly 6x revenue for Thorne. You trade well below that valuation. Would the Board entertain an offer? If not, how do you close the gap?
We see significant consolidation in the space — Danone, Unilever and P&G transactions in recent months. We're building IM8 to be a generational health company, not to be sold in the near term. My focus is on long-term value creation, not a near-term exit. We are a public company with an independent board; if offers come in they will be evaluated. Our role is to deliver quarter-over-quarter growth and execution. Over the last 12 months we've made significant progress: we're a materially larger company than a year ago with far greater liquidity and investor engagement. We'll continue to execute and that should close the gap over time.
I think that's it for our Q&A session today. Danny, I'll turn the call back over to you.
Awesome. Great. Thank you, everyone. We're well over time — a good sign. We earmarked 60 minutes and now we're at about 92 minutes. Thanks again for joining today and for following us. It's a very exciting time. Thank you, Dawn and Caroline, for joining. Stay tuned and follow our journey; you'll be surprised. Thank you.