Thread by @Patrick_Invests

$GDDFF $FOOD $FOOD.T with a big topline beat (all metrics in CAD)

Revenues up 71% YoY to 100.7M (9.75% beat off of the 91.75M estimate which was adjusted down from 93.75M last week)

Gross margin up 14 bps to 30.44% (more on this below but in-line with consensus)

Delivered positive Adj. EBITDA of 0.5M (backing out SBC this becomes 0.9M EBITDA vs. -3.4M in Q2 2020)

FCF of 0.3M without adding SBC vs. -7.3M in Q2 2020

$163M in cash on the balance sheet (33% of market cap)

The most important note from the call:

Gross profit impact from 50% off grocery promo in January was 3-5M. This implies gross margin would have likely been > the Q1 32.3% number had the promo not happened (lower revenues + the above impact)

Gross margins will be heavily scrutinized in 2H 2021 and 2022 as COVID winds down because there are lots of doubters that meal-kit delivery + online grocery delivery have staying power once the pandemic ends.

This is why it's important to note the Q1 vs. Q2 gross margins comparison is skewed by the 50% off promo in January.

Other notes from the call:

Gross profit grew 2.5x the rate of subscribers

750 SKUs on GoodFood WOW (up 36% QoQ)

Exceeding expectations of 1,000 SKUs by EOY 2021 (no official raised guidance given but at the current rate they will pass this by July)

GoodFood WOW customers are younger on average (could be skewed by demographics) and basket sizes are smaller but more frequent vs. meal-kit offering

Credits and incentives should normalize below pre-COVID levels but above the lowest mid-pandemic levels in the short-to-mid-term.

Amazon mentioned as being a guide for what GoodFood is trying to achieve with its fulfillment network in terms of speed

Mgmt. is open to breaking out WOW subscribers from meal-kit subscribers down the line

Vertical integration + private labels are key to fending off competition

In the late stages of hiring a new CFO

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A near 10% topline beat is very impressive and nearly met consensus for Q4 (101.4M) 2 quarters early

Estimates almost certainly will come up given the recent partial lockdown in Ontario and today's big beat

Comps get tough next quarter, but that will happen when you're on track to 5x revenues in 3 years and have posted 11 straight quarters of >60% YoY growth

Assuming no QoQ growth (QoQ growth this quarter was 10%), revenues would grow 16% YoY.

Subscriber growth in the mid 20%s (was 30% last Q) likely gets you near 16% YoY revenue growth alone. GoodFood WOW, which didn't launch until October last year, should cover the rest, even if churn increases as the pandemic ends.

Trading at ~6x TTM gross profit (analyst + my own forward estimates need to be updated), FCF ex-SBC positive, and growing their topline near 40% this year (implies 207M in revenues in 2H 2021), I think shares are a bargain

Adding 20% to my position today to make it a 3% position