SenesTech, Inc. Common Stock 2026 Q2 Earnings Call

Thank you very much, Megan, and thank you all for joining us today to discuss Senestech's second quarter 2026 financial results. Again, this is for the period ended June 30th, 2026. With us on the call today are Michael Edell, the company's President Chief Executive Officer, and Tom Chesterman, the company's Chief Financial Officer. As the operator indicated, at the conclusion of today's prepared remarks, we will open the call for a question and answer session. Again, if you are listening through the webcast portal and would like to ask a question, you can submit it through the Ask a Question feature in the webcast player there. Before we begin with prepared remarks, we submit for the record the following statement.

Statements made by the management team of Senestech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually, or projected.

Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in our filings with the Securities and Exchange Commission. All forward-looking statements contained during this conference call speak only as of the date in which they were made and are based on management's assumptions and estimates as of such date. The company does not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events, or otherwise." With that said, let me turn the call over to Michael Edell, President Chief Executive Officer.

Michael, please proceed. Thank you, Robert, good afternoon to everyone joining us today.

I appreciate you taking the time. This is my second earnings call as President and Chief Executive Officer, the tone of today's discussion is meaningfully different from last quarter. In May, I described the strategy we had begun putting in place and the early indicators that gave us confidence in the direction. Today, we can point to a full quarter of measurable commercial results. The strategic changes are working, in several important areas, they are working faster than we had planned. Stepping back for a moment, the past year has been a transformation of this company from a primarily research-focused organization into a revenue-driven business with a clear strategy for sustainable long-term growth in a category that we are creating. The headline numbers are all very positive.

Revenue increased 56% sequentially to a company record of $770,000. E-commerce revenue increased 186% to another record of $511,000. Amazon revenues increased 473% to a record $349,000 in our first full quarter of having this being managed in-house. Direct-to-consumer subscription revenues increased 89% to another record of $104,000, gross margins reached another company record of 73.6%. First half revenue reached another record of $1.26 million, up 14% year-over-year. Each of those results is important, what excites me most is that they are connected. They reflect on a commercial model built around direct consumer relationships, data analytics, recurring revenue, stronger brand control, and just a disciplined channel strategy.

Q2 was the first full quarter in which we directly managed our Amazon and other e-commerce channels from beginning to end. During the quarter, Amazon established new records across major platform categories, performance categories including total orders, subscription revenue or non-subscription revenue, total revenue, and subscriber counts. Amazon revenue has now grown every single month since we assumed direct control middle of February, culminating in a record June of $148,000. June was also the strongest e-commerce month in the company's history, with a total e-commerce revenue of $206,000. We now control the customer experience, advertising strategy, pricing, promotions, subscription programs, and the data that comes from each of these transactions. We can see what's working, make changes quickly, test new messages and offers, and allocate marketing dollars with much greater precision. That is not simply a better Amazon model.

It is the ideal operating model that we need to rapidly scale. Importantly, the e-commerce momentum broadened beyond Amazon. Non-Amazon e-commerce, which is primarily our own senestech.com Shopify channel, saw revenues increase 31% sequentially to $155,000. We ended the quarter with a record number of Shopify recurring revenue subscribers. In July, we also completed the launch and redesign of the Senestech website on the schedule we have previously communicated. The new site places Evolve and rodent birth control at the center of the customer experience. It is designed to make the product easier to understand, easier to purchase, easier to reorder, whilst also providing a strong platform for digital marketing and subscription growth, customer education, and commercial B2B lead generation. If you have not done so yet, please take a look at the new site. We think you'll be impressed.

Subsequent to the quarter end, July provided another encouraging data point for the e-commerce strategy. E-commerce revenues for July reached a record $245,000, up 19% from the $206,000 in June, and subscription revenue achieved a new record at $52,000, up 22% from the $43,000 in June. Subscription growth remains one of the most important components of the strategy. The Evolve product is not intended to be a one-time purchase. It is designed to become part of an ongoing rodent management program. Subscription revenue increased 89% to a record $104,000 in Q2 2026, compared to $55,000 in Q1 of 2026, and increased 142% compared to $43,000 in Q2 of 2025. Combined subscriber counts across Amazon and the company's e-commerce site increased 117% to new record levels, further strengthening the company's recurring revenue base and increasing revenue visibility.

That creates more predictable revenue, improves customer lifetime value, and provides evidence that customers are incorporating the product into a recurring program. We are still early on, but the direction is exactly what we want. More customers, greater retention, more repeat purchasing, and larger recurring revenue base. There is a bigger strategy beyond the e-commerce results. Senestech is creating an entirely new category of rodent fertility control. Before we can meaningfully scale the B2B opportunities that we have available to us, we needed to build the awareness of the Evolve and ContraPest brands, educate the market further, establish credibility, and create demand. E-commerce is how we accelerate that process. Every customer review, educational campaign, digital advertisement, subscription, and repeat order does two jobs.

It generates consumer revenue today, and it makes the brand more recognizable, understood, and trusted when our sales organization engages with a pest management company, a municipality, commercial operator, agricultural customer, big retailers, or distributors. Our growth strategy is therefore built around three priorities that reinforce each other. First, you use the e-commerce to build the Evolve and ContraPest brands, establish the category, and create a growing recurring revenue base. Second, you grow B2B with both Evolve and ContraPest through a professional sales organization focused on targeted vertical markets. Third, expand our addressable opportunity through new products, new services, and separate initiatives. We design them to build one on the other with customer awareness and data supporting B2B growth and with services and partnerships deepening customer relationships across the platform. Turning to B2B. Reported revenue was $259,000 for the quarter.

The sequential comparison requires some context because the first quarter included an $81,000 international order carryover from 2025. If we actually exclude these one-time events, core B2B revenue actually increased by 11%. Tom will walk through the full comparisons in a moment. In June, we were proud to present that Jack Karabees is our new Executive Vice President of Sales and was brought in to lead the effort. Jack's mandate is to build a professional commercial organization with clear vertical ownership, qualified pipelines, better forecasting, stronger follow-up, and accountability for conversion. We're moving away from a broad approach, which in every prospect, it was treated the same. Each market now has different business challenges, buying criteria, decision-makers, and sales cycles. Our sales process needs to reflect those differences.

We have already begun adding to the team with a new regional sales manager and a director of marketing, both joining in July. To further support that strategy, we are developing dedicated sales presentations, ROI models for each vertical, case studies, technical support materials, and industry-specific messaging for each priority vertical. We do not want to lead only with product features or science. The science does matter, and it is a critical differentiator, but customers ultimately make purchasing decisions based on business outcomes and solving problems. Our objective is to demonstrate how Evolve and ContraPest can reduce damage, disruption, support sustainable objectives, improve pest management performance, and deliver measurable long-term value. We are concentrating our resources across 8 strategic verticals: third-party e-commerce, pest management, commercial, agribusiness, zoos, sanctuaries, government, retail, and international markets.