Senestech (NASDAQ:SNES) has undertaken a broad strategic and operational overhaul in the roughly 200 days since Michael Edell joined the company, including less than 90 days as chief executive officer, according to comments made during a fireside chat moderated by Lytham Partners Managing Partner Robert Blum.
Edell said the company has established a new corporate strategy, strengthened its leadership team, implemented new sales processes and accountability measures, and prioritized eight business-to-business verticals. The company appointed Jack Karabees as executive vice president of sales effective July 1 to lead its B2B efforts, Edell said.
E-Commerce Efforts and Subscription Growth
Edell pointed to second-quarter results that included record quarterly revenue, e-commerce revenue, gross profit, gross margins, Amazon sales and subscription revenue. He said e-commerce revenue nearly tripled during the period, while subscription revenue nearly doubled.
The company took control of its Amazon brand operations earlier this year. Edell said managing the brand directly gives Senestech greater control over consumer messaging, marketing spending and customer acquisition. The company is focused on expanding the channel profitably rather than spending solely to increase revenue, he said.
Among the metrics Senestech is monitoring are return on advertising spend, average order size across platforms and the portion of business that converts into longer-term subscription revenue, according to Edell.
“If your margins are remaining intact or you are growing your gross profit margins, yet you are acquiring New-to-Brand, that is the Goldilocks,” Edell said. He added that the company’s EBITDA measures did not move in the wrong direction despite substantial revenue growth in some channels, which he said indicates that cash invested in growth is producing results.
Senestech launched a redesigned company website in July. Edell said the company had only recently started advertising outside Amazon, and that early gains in subscriptions were driven by a cleaner website experience with less customer friction.
To support customer retention and repeat purchases, the company revised product pages, product information and frequently asked questions to better explain its products and the time required to address longer-term pest problems. Senestech has also launched new packaging intended to provide more consumer information. Edell said the company is in the middle of transitioning from its older packaging inventory and expects the new packaging to begin reaching customers within about 60 days.
Edell said Senestech could potentially double or nearly triple in size without requiring major capital expenditures for infrastructure, inventory or fulfillment.
B2B Pipeline Focuses on Larger Opportunities
On the B2B side, Senestech has concentrated on eight verticals, with its top four receiving the greatest focus because they are currently producing revenue, Edell said. The company is seeking a mix of small, medium and large opportunities to build its longer-term sales pipeline.
Historically, the company’s opportunities were largely small and medium-sized, Edell said. He said the sales organization must work with corporate decision-makers to develop larger opportunities and proposed contracts, including deals valued at more than $1 million.
The company is also seeking to use distribution partners more extensively, particularly in pest management. Rather than relying entirely on its own team, Senestech aims to educate the sales representatives employed by distribution partners and equip them with product information and support, he said.
Edell identified commercial, pest management and third-party e-commerce as areas showing substantial activity and larger potential opportunities. The company’s online B2B channel already represented about 5% to 6% of overall e-commerce revenue, he said.
Online B2B orders can also help identify potential larger commercial customers. Edell said customers that initially purchase smaller quantities online may contact Senestech’s sales team when they are ready to deploy larger volumes.
Sales cycles vary by deal size and customer type. Small commercial customers can make relatively quick online purchases, while mid-sized customers often require internal approvals. Government and municipal sales processes can take longer, and large contracts typically require more time because of approval requirements, Edell said.
Assessment Services and Product Positioning
Senestech launched its assessment and implementation services in July and has completed its first customer deployment, according to Edell. The service uses track plates and track tunnels to gather information at a customer site. Senestech can then use an AI model to assess the extent and location of rodent activity and provide related analytics.
The services can be delivered on site or through a model in which customers submit track-plate images for Senestech to analyze. Edell said the company has proposals for quarterly assessment services, which could generate recurring revenue and lead to product deployment proposals.
Edell also said the company is selling both its liquid-based ContraPest product and its solid-bait Evolve product in certain deployments. ContraPest addresses specific situations because it is liquid-based, he said, while some current opportunities involve both products in the same implementation.
Looking ahead, Edell said investors should watch for continued growth through the third and fourth quarters as the B2B organization develops. He characterized the first quarter as an early indication of Senestech’s new direction and the second quarter as further evidence of the company’s progress.
About Senestech (NASDAQ:SNES)
SenesTech, Inc (NASDAQ: SNES) is a biotechnology company specializing in non-lethal pest management solutions. The company’s core focus is the development and commercialization of fertility-based control methods for commensal rodents, providing an alternative to traditional rodenticides. By targeting the reproductive cycle of rats, SenesTech aims to reduce rodent populations over time without the use of toxic chemicals, offering a more sustainable approach for pest management professionals.
The company’s flagship product, ContraPest®, is an EPA-registered liquid bait that disrupts rodent reproduction.
