Welcome to Aterian, Inc. Q1 Earnings Report Conference Call. My name is James and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. And I now would like to turn the call over to Ilya Grozovsky, Director of Investor Relations and Corporate Development. Ilya, please go ahead.

Thank you. Thank you for joining us on today's call to discuss Aterian’s first quarter 2021 earnings results. On today's call are Yaniv Sarig, Co-Founder and CEO and Arturo Rodriguez, our Chief Financial Officer. A copy of today's press release is available on the Investor Relations sections of Aterian’s website @aterian.io. I would like to remind you that certain statements we make in this presentation are forward-looking statements and these forward-looking statements reflect Aterian’s judgment and analysis only as of today and actual results may differ materially from current expectations based on a number of factors affecting Aterian’s business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included on our first quarter earnings release, as well as our filings with the SEC. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to certain non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today. With that, I will turn the call over to Yaniv.

Thanks, Ilya, and good afternoon, everyone. I'm really excited for this first conference call as Aterian, following our rebranding announcement last week. Changing our company name to Aterian was an important decision we thoughtfully considered over a significant period of time. First of all, it was about telling our story more concisely. As a company at the intersection of e-commerce, technology, and consumer products, we often found that those new to our story had a difficult time grasping the full breadth of our vision. Thanks to the strong work of our team, our new website does a great job of explaining our business and the differentiation our team is driving in the consumer products industry. As many of you are aware, this week an anonymous short seller made various unfounded claims against our business practices and integrity in an effort to reap profits from a decline in our stock. We welcome questions from all our shareholders and I've always been proud to showcase what our incredible team has built through the years on technology, marketing, and supply chain sides. Yesterday, we issued a release where we addressed the factual inaccuracies and mischaracterizations. If you wish to spend time with us to learn more about our efforts to build a scalable consumer product platform for e-commerce, please reach out to Ilya Grozovsky, our Director of IR, whose email can be found at the bottom of our earnings post. We welcome investors to see live demonstrations of our new platform, to answer questions about our business, and our go-to-market strategy, all subject to regulation, of course. We hope that the content we share helps those who are interested in our company understand what our tech platform actually does, the nuances of online marketing, and the efforts we have made to be competitive while remaining compliant with rules and regulations. Q1 was an incredible learning opportunity for our company. While we faced the most difficult supply chain challenges in the history of our firm, despite all our efforts, we were not able to maximize the full potential of our portfolio revenue. Regardless, I know that we learned a lot and improved very fast. In my seven years in this company, I've learned that every time our team is tested, we come out stronger and more capable. To our sourcing and supply chain operations team, I've watched them fight through the incredible complexity of daily supply chain disruptions, both domestically and internationally, while continuing to work on the supply chain optimization of our recent acquisitions. On behalf of all shareholders, I thank you for your efforts and dedication as well as the ability to creatively solve difficult problems on the fly. To give more context to the audience today, regarding the scale of the crisis, according to Drewry American, Research and Consulting Service, the historical shortage of containers in Q4 and Q1 2021 has led to a three to four times increase in the cost of shipping, while the reliability of marine schedules has plummeted to 55% by September 2020. Combined with the increased demand for e-commerce items and continuous growth of certain products, we struggled to keep inventory on hand and we missed approximately $6 million in sales for the quarter. Over the past three quarters, we believe that we missed approximately $20 million in revenue as a result of inventory shortages. We continue to monitor the challenging international shipping environment and have chosen to remain conservative with our adjusted EBITDA guidance in case shipping rates, congestion, pricing of last mile shipping, and other supply chain factors continue to increase and affect our bottom line. We expect to have more clarity on the normalization of the supply chain irregularities in the coming months. As most of you already read in our earnings press release today, we're proud to announce that we're officially adding two new brands to our portfolio. As we mentioned, we closed the acquisition of Photo Paper Direct, our leading online brand in the office and printing business, basically, in the United Kingdom. Photo Paper Direct has established itself as a category leader in various inkjet media product categories and created a strong moat on Amazon. This strong addition to our portfolio further diversifies our product categories, as well as the footprint on various marketplaces in Europe. We intend to leverage the company's local team expertise in the European market to accelerate our international expansion. Additionally, we're super excited to announce that Squatty Potty is joining our family, adding a nationally loved brand to our portfolio. Squatty Potty has brought to market health and personal care products with health and humor and an abundance of caring for others while creating an entire category in the space. According to our estimates, an average of a million searches for Squatty Potty products occur on amazon.com every month, following an appearance on Shark Tank and video ads that have generated over $30 million views on YouTube. We believe Squatty Potty is poised to continue to dominate the market it's created. We see significant opportunity expanding the brand's success in the United States into international channels, as well as developing additional products to delight the brand's followers. Abroad, we continue to pursue M&A strategy and review new opportunities on a weekly basis. We intend to continue to invest in our team infrastructure and deal flow capabilities to drive growth through the acquisitions. When it comes to launching new products, we launched a record 21 new products this quarter. While initially we projected launching a higher amount of products, we recalibrated for favorable quality and zoning and are very happy with our achievements on that front, given the complex challenges in the supply chain that affected our manufacturing partners as well. Certain products that suffered delays have been put on hold, as their launch could have missed seasonality-related windows. Additionally, COVID travel restrictions have prevented us from being able to fully run quality control procedures, which resulted in some cancellations and delays. Overall, our teams have worked tirelessly to overcome these challenges, and I think we made the best possible judgment calls when expected, given our expectations. This is the reality that's been imposed on us. We're looking forward to the challenges and exciting opportunities we have in the future and beyond. I thought it was important on this call to address questions around some of the management team's selling of stock during the last open trading window. As announced in previous earnings calls, most of the management stock holdings, including mine, are in the form of restricted stocks, and as you may know, taxes for the shares are due at the time of divesting. No individual on the team is able to cover those taxes without selling. Also, we would like to preserve the company's cash for growth versus covering management tax liabilities. Most of the shares that were sold were done without cover and some individuals chose to sell additional shares after many years of hard work. It's important to mention too, that we've required the management team several times to delay divesting of their shares, and even on one occasion to forfeit their shares to protect the potential downward pressure on the company's share price that could have resulted from tax-related selling. Our management team includes some of the hardest working and dedicated people I've ever had the privilege of partnering with, and they remain extremely invested in the company's long-term success. On a personal note, as part of my long-term wealth planning, as reported in 2018, I decided to give a significant portion of my holding in the company to an irrevocable trust on behalf of the benefit of my children. This company is my life's work and I do everything in my power to lead it in a way that drives maximum long-term shareholder value. With that, I'll pass it on to Artie for our finance update.

Thank you, Yaniv, and good afternoon everyone. Here are the operational performance details of our first quarter. For the first quarter of 2021, net revenue increased 88% to $48.1 million from $25.6 million in the year-ago quarter. The strong gain was primarily from growth in our sustained products of $25.1 million to $42 million from $16.9 million, including our recently acquired products, and wholesale revenue of $1.9 million, including $0.6 million of CME versus zero in the prior year period. The quarter also saw a decrease in launch product revenue of $2.6 million versus the prior year period of $6.2 million, as the majority of the 21 products launched in the period happened in the late period of March. We suffered from inventory shortages in the quarter, which we estimate to have impacted approximately $6 million, meaning we estimated that we could have sold an additional $6 million with normal inventory levels. Gross margin for the first quarter increased to 54.1% from 40.2% in the year-ago quarter, an increase from 45.6% in Q4 2020. This year-over-year and sequential improvement in gross margin was due to both favorable product mix, including new products acquired pursuant to M&A, and pricing from vendors offset by wholesale revenue, which carries a much lower gross margin. Our overall Q1 2021 contribution margin was 12.7% as a result of aforementioned factors, which improved compared to the prior year's CM loss of 2.9%. Within CM, our sales and distribution costs were negatively impacted by the supply chain crisis, which drove higher costs and last mile fulfillment given the carrier tightness in the quarter, as well as e-commerce platform commissions, online advertising, and logistics expenses included within sales and distribution expenses. Our variable sales and distribution expenses as a percentage increased to 45.2% for the three months ended March 31, 2021 as compared to 43.1% for the three months ended March 31, 2020. We continue to see some of these increased costs impacting our Q2. In Q1 2021, we saw our sustained products' contribution margin grow to 18.2% when excluding the $1.8 million in non-cash inventory step-up related to M&A, versus 6.4% in Q1 2020. We continue to see year-over-year improvement in our product unit economics from the mix pricing. Adjusted EBITDA, which excludes stock-based compensation, change in fair market value of warrant earn-out liabilities, net charges from changes in fair value of warrants, and the loss of the issuance of the warrants, amortization inventory step up from acquisitions, and other M&A related costs, for the first quarter of 2021 improved to a loss of $1.3 million from a loss of $6.4 million in the first quarter of 2020. We'd like to highlight that if not for the inventory shortages described earlier, we believe that adjusted EBITDA would have been approximately breakeven. Excluding M&A related costs from professional fees and transition of the Healing Solutions, our fixed costs increased approximately $1.5 million as compared to the prior year period. Our headcount rose, as previously mentioned, to 220 people as of March 31, 2021. We added headcount primarily in customer service and other customer-related roles predominantly in the Philippines. We expect our revenue per full-time employee equivalent to be near $1.4 million for 2021 versus 2020's approximately $1.2 million. This is a continued example of our operating leverage in our technology-led business model. Our net loss, which has been impacted by charges of changes in fair value on warrants and losses on the issuance of warrants, on a net basis, was $50.3 million. As part of the refinancing completed in April, we amended the warrants to be treated as equity as opposed to debt and expect to avoid these impacts in the future. Turning to the balance sheet at March 31, 2021, we had cash of $35 million compared to $26.7 million at the end of December 31, 2020. The increase in cash is strongly driven by financing cash proceeds from the exercise of warrants at $25 million and the High Trail note 2 for $14 million, offset by cash portion of the purchase of Healing Solutions of $15.3 million, repayments on seller notes from Smash of $4.7 million, working capital uses of $13.6 million, as we build up for inventory in the summer season, and our cash net loss. The company has approximately $9.7 million in escrow accounts as of March 31, 2021, related to certain inventory purchases, which have been treated as restricted cash. As previously announced, the company closed its $110 million debt refinancing on April 8. The company views this financing as a stepped approach. We do expect opportunities to improve our debt profile over time. The historical Smash audit, which is for the period of 2018 and 2019, has been completed and we expect to file a delayed 8K/A including performers no later than May 14. As previously mentioned, the delay was related to the earlier periods, including the opening balance sheet period of December 31, 2017. The audit results, including the reviewed nine-month period ending September 30, 2020, will be included in 8K/A performers and are in line with previously disclosed financial results for the Smash acquisition. Looking at guidance, for the full-year 2021, the company now expects net revenue to be in the range of $360 million to $390 million, up from the previous range of $350 million to $380 million, reflecting the addition of Squatty Potty. For the full-year 2021, the company expects adjusted EBITDA to remain in the range of $30 million to $34 million. Adjusted EBITDA increase from Squatty Potty is approximately $2.5 million based on the timing of closing of that acquisition, which is offset by cautious planning due to costs related to the current global crisis and the supply chain. So, we do expect to raise prices to offset the impacts of this global crisis. The timing and speed of raising prices will always be managed against the long-term listing position of our products on marketplaces. With that, I'll turn back the call to the operator to open the call for questions.

Very good. We can now begin our question-and-answer session. Our first question comes from Thomas Forte, D.A. Davidson.

Great, thanks for taking my question. So I have one question and one follow up. So you need at a high level. I wanted to know how you leverage your technology to identify opportunities to build and buy products, selling marketplaces to advertise those products, and manage logistics for those products.

Sure, thanks, Tom. Yeah, so let's touch on all these points. We use technology along the three ways you mentioned. First and foremost by capturing large amounts of data from different sources, including public sources and APIs, and building through models visibility into different categories of products. What's moving in those categories? What are the trends and dislocations in those, and where do we see opportunities to potentially make better products? Once those are defined, we use software to also build our P&L and a forward-looking forecast for that product based on data that we have accumulated to help us quickly understand the opportunity. If we qualify the opportunity, that's when we engage our sourcing team to leverage the data and the information we collected to find the right suppliers to help us get the right product to market. Those suppliers are typically more than one; we try to get products from many suppliers and compare the cost and other parameters through the software. We can compare different scenarios to tell us what the best product to launch is. Once we move forward with launching a product, it typically takes six to eight months from the moment we identify the idea until the product is ready to sell once it arrives in the target market. We launch the product using marketing across the board to outperform the incumbents where we see certain weaknesses in the market. At that point, everything flows through the software in terms of managing the P&L of the product, the statistics every day of how well they are doing. We automate marketing on Amazon for those products, and in certain cases, especially for oversized items, our software manages the last mile fulfillment, meaning that instead of relying on Amazon's fulfillment centers, we use our own partners' centers that are connected to our software to manage the last-mile shipping. So, does that answer your question?

Yes, it does. Thank you. So then for my follow-up question, you sort of touched on this in your opening remarks, but can you walk through the impact on adjusted revenue in the quarter from the inventory shortfall?

Art, do you want to answer that?

Yes, thanks, Yaniv. Hey, Tom. So yeah, we estimated our shortages to be $6 million. And obviously, our sustained contribution margin was roughly 80%. So when you multiply those numbers, that's how you get that figure.

Excellent. Thanks, Yaniv, thanks Art.

Our next question is from Brian Nagel, Oppenheimer.

Good afternoon, everyone. I have a couple of questions. First, regarding the supply chain, we've discussed this a lot in the last quarter, and you mentioned it again here. Can you provide insight into the impact on EBITDA? Are you still absorbing the higher shipping costs, or has there been a change? Additionally, what trends are you observing within the supply chain, and how much longer do you anticipate these pressures will last?

Arturo, do you want to take the financial part? I'll answer on the business side.

Certainly. Our sales and distribution numbers have improved compared to the previous year, showing a gain of about two points. We executed well in eCommerce, but as we navigate this global crisis, we anticipate raising prices. I believe we can mitigate much of the impact through price increases. The key issue is timing, as we need to ensure that these adjustments do not diminish the long-term value of our listings, especially given the dynamics of the marketplaces. It’s crucial to approach this carefully and strategically. Our goal is to effectively offset the majority of these challenges as we move from Q2 into Q3.

Yeah. If I can add to that, Brian, just to touch more on what Arturo said. Right. As you know, the marketplace is very competitive, right? And the dilemma is always, as you kind of see increasing prices of shipping, if you start increasing your price, obviously absorb that and produce better contribution margin, it’s going to potentially come at the expense of a more aggressive competitor who will try to keep its price low and take more market share from you. Potentially this could long-term affect the performance of your product, right. So, on a case-by-case basis, the decision has to be made given many factors. We try to find that sweet spot between optimizing for contribution margin and also long-term conserving the market share that we have.

Yes. Got it. So, just to follow up on that. So Artie, is there a way you could see the actual impact on adjusted EBITDA from the supply chain issues?

Brian, I can’t provide that information at this time. We assess the guidance and overall, and I believe we mentioned that you will notice them in the queue. In the script, we noted there’s about a two-point impact in terms of what you observed on the sales and distribution side, which is likely where we noticed the impact for Q1 in its last mile. However, I can't quantify what we think the future holds at this moment.

Got it. And then I guess my final question. Probably more for Yaniv, just any update on the Touro product within your portfolio?

Yeah, sure. So, the Touro product was basically attacked in one of the most aggressive ways by black hat sellers, which has caused a decline in sales. There is still evidence of that on Amazon; some of these black hat sellers are still appearing on the page. We're working with Amazon to resolve that problem. Obviously, there was a big impact on client sales. One thing I would caution is to try to estimate those numbers using some external tools that are very inaccurate from what we've seen. But again, this is an ongoing issue. We're working with Amazon on this; it's not clear exactly when it will get resolved, but it's one of the most egregious black hat attacks that we've seen, and we think it's very limited to its category and the nature of these products and cannot necessarily affect other overall products. Again, we're working on resolving this.

Got it. Thank you.

Our next question is from Marvin Fong of BTIG.

Thank you. Good afternoon. Thanks for taking my questions. A couple for me. Actually, just building on the last question, maybe it’d be helpful for investors to also hear how some of the other deals that you've executed have performed, maybe Smash being the next oldest. Could you provide some insight into how that progressed against your expectations, and then I have a couple of follow-ups?

Yeah, so in general, we don't want to break the acquisition down on a regular basis. I can tell you that Smash, you know, for the first four months of the year, grew a little over 20% compared to the same time last year. But let me explain our approach, right, and help you understand how we think about this, right? We manage all of our assets, whether they are acquired or part of one large portfolio, using the same pool of resources, right? So we think of it as, what does the data tell us? We have all these different assets, and we have a certain amount of resources that we can invest in growth. Our goal is always to drive growth across the entire portfolio at the best possible positive and with the lowest possible fixed costs. Remember, like the investments we’re making in technology are really to be able to manage thousands of products over time across many different channels, at the optimal fixed cost, and with the best decisions on a per product basis around contribution margin or growth or both, right? So I’m going to give you an example, right? I mean, if we are at a certain point in time, and the data shows us more opportunities in appliances, for example, we think we can launch more products in that category and invest more in that growth; the expense, for example, of some products that we have in the beauty category doesn't mean that those products are not good, and we're going to stop selling them or that because again, as long as they’re managed properly and efficiently, that’s really the beauty of it, right? So as you have certain limited resources to invest in growth, whether we’re building more products or doubling down on the market in certain categories, that decision is done across the entire portfolio, not per brand, but really based on what the data tells us, right? I can tell you also that, for example, 88% of the revenue generated by all the products launched by us or acquired grew on the last LTM basis, right? So again, we take a portfolio view, and 88% of all the revenue generated by all of our products has been on a growth pattern, right? So does that make sense? Again, the approach that we have taken is not as traditional as a certain brand that is in one particular category; we look at this entire portfolio and what the data tells us is important.

Yes, thank you. That makes perfect sense. Moving on, I have a question. You mentioned in the release that you are now assessing an expanded M&A pipeline compared to last quarter. Could you elaborate on the dynamics? Is this building on the pipeline from last quarter, or have some prospects from last quarter dropped off? Could you help us understand that? Also, is the company mentioned one of the prospects from last quarter? I'm asking to clarify whether you are executing on the pipelines discussed in these updates.

Yes. That's a great question. Yes, that pipeline is obviously revolving, right? Some deals are going to be moving to LOI. Some of them will close. Some of them will be dismissed, even after we went to LOI, due to certain reasons, right? And so the pipeline revolves, and yes, Squatty Potty was in that number, right? So again, some deals we might lose also to someone else, right? And that will leave the pipeline so the seller on the other side might say they decided to go into the deal with someone else, right? So that number is really out there, to give a sense of how much revenue we're looking at. At any point in time, we're assessing the amount of opportunity there is, right? I mean, it’s a drop in the bucket in the size of the time of acquisition that's out there. But we think it's important to convey the amount of revenue that we're looking at and are competitive around in terms of what we putting under LOI and closing it.

Terrific. And if I could just get one more in, just very quickly. With all the supply chain issues out there, are you still expecting the number of product launches that you mentioned last quarter around 70, or should we think about that number being affected by all the supply chain issues? Thanks.

Yes. So we definitely are still seeing pressure. You know, we're probably planning for 17 to 20 products at this point in the second quarter of 2021. You know, it’s a challenging situation for us because at the end of the day, the only way a product is sustainable long-term, it has to have that sweet spot of quality and price. There's just no other way to make it successful. And we can't cut corners. Definitely, we want to be cautious not to try to rush too many products out, given some of the limitations that COVID is creating, not just on us, but also on our suppliers. The suppliers are having a hard time, you know, making sure that they have all the raw materials. You know, there are delays everywhere. It’s hard to get trucks in various parts of the world where we manufacture our products. And so, again, we are doing our best and working as hard as we can to launch as many products but without sacrificing quality and value for customers, and obviously with the constraints on both sides of the supply chain.

Yes. Okay, that makes perfect sense. Thank you so much, Yaniv. Appreciate it.

Thank you.

Next question from Brian Kinstlinger of Alliance Global Partners.

Great. Thanks so much for taking my questions. I'm curious how management's inventory strategy has changed at all. While much is not in your control right now, obviously, after learning more over the last six months, what can you control regarding limited inventory shortages? And I guess, I wonder, is that about owning versus renting containers? Is that something that companies like yourself are evaluating the differences?

Thanks for the question. Yes, you know, obviously, inventory management is a crucial piece here. One of the things I love about the model of the business is that we control things like pricing and the inventory levels that we can allow. For example, the retail pricing through which we sell to show customers gives us a lot of flexibility in terms of trying to basically, as much as possible control the velocity of sales on a regular basis, right? Oftentimes, we might lower the marketing levels, right, or slightly increase the price to adjust and try to do our best to obviously, make sure that we have a sustainable supply and demand. Now, again, with the level of disruption that we're seeing here, that becomes a little more challenging, as really, we've not seen this type of constraints in terms of how long it takes for containers to arrive to the floors, in terms of how difficult it is to find containers. Our team is doing really, I mean, amazing work and working through many different solutions, including sometimes, and this goes back to a question that was asked before, right? Because we're so attuned to the performance of the product and the implication that performance has over the long-term market share of the product in the space, we sometimes have to make tough decisions around paying more for containers that we feel could impact our contribution margin because we know being out of stock for too long could open the door for competitors to take too much market share, right? So, again, we're really kind of like turning every stone and on a per product basis, managing the authority given many variables, again, including the effect that losing inventory for too long would have on the market share. And the amount of CM that we need to supply to produce for the company to meet expectations.

And then can you remind us, I know a lot of the global supply issues are shipping from China. Are there other areas where you manufacture from or are investments being made in alternative geographic locations?

Yes, there is still a mix. The majority is still coming from China, but there are other locations in Asia as well. However, the global supply chain crisis impacts nearly every route, at least as far as I know. This is not something we can solve by simply moving to another country, particularly when it comes to meeting product requirements. The best approach is to manage visibility for our suppliers as much as possible and provide them with insights into our forecasts and challenges. Working closely with them and having our own team in China is very beneficial in this regard. We are also optimizing our marketing spend and pricing given the situation. Our team is doing the best they can, and we will continue to keep a close watch on developments for any opportunities to enhance the situation.

Great. Last question I have is on M&A. Let's assume and I don't know the average, but if the average is about four times EBITDA you're paying and trailing EBITDA. And the earn-out is achieved for what you've generally been paying? Does that keep it at about four times, given the upside they've delivered, or what does evaluation looks like generally after the earn-out? Is it much? Is it much better? How does it change versus what the initial evaluation looks like?

Yeah. The deal structure is very dependent on obviously, negotiations and other things, and yeah, sometimes it can end up being a higher multiple than what the company has done, really well, which we're very excited about. We're happy to pay more if the company and the assets that we bought have performed exceptionally well, right? So it really is, it really is something that's negotiated on a per deal basis, again, a certain kind of multiple range, a prompt and a certain multiple range on the earn-out, depending on various factors.

Okay. Great. Thank you so much.

Thank you.

Next question from Gus Galá of ROTH Capital Partners.

Hi, guys. Just quick question on Squatty Potty. So you guys are raising the guidance the midpoint by about 10 million, and they delivered 70 million over the trailing 12 months? Just wanted to understand the gap there.

Arturo, you want to take that?

Yep. So I think – I think some of its timing seasonality there, Gus. Right? So I think, you know, we just closed today, so you're not going to get the full year, that's number one. And number two, there's a little bit of seasonality baked into our business. So we're just kind of prudent on that number. But that's kind of how you get there.

Okay. And I have the follow-up here. So just looking at the full report that came out earlier this week. Just wanted to clarify, does Aterian never give away products or pay for reviews?

I'm sorry, can you ask the question again? I couldn’t hear it.

Sorry. So I just want to know, does Aterian ever pay for reviews or give away products?

Right. No, we don't – we do not pay for reviews. We do promotions, including sweepstakes, giveaways, and other methods. And, you know, look, in general, we ask customers for reviews, right, like a lot of times through the retail email systems themselves, right? But we never – we don't take any of these promotions or any benefits that we give as contingent on leaving a review, right? The challenge is that those are very separate marketing tactics that people can confuse, right? So we obviously ask consumers for reviews post-purchase, again, sometimes the retail systems themselves, but we've never, again, made those promotions or any other-type of benefits contingent on leaving reviews.

Okay. Great. And one last question. Just regarding the M&A pipeline, can you kind of talk about the average size of the targets? Looking at the new acquisition, what the gap style is going to be at the end of Q2? How much firepower do you have with the current cash levels? How do you think about using stock parameters?

Yeah. So, I think we've said before, guys, the pipeline is dynamic. There are a lot of different entities or opportunities, right? Some are bigger, some smaller, and depending on what's next, we said previously, we would need to raise money or raise debt to sort of close the next big one or something like that, depending on what the next opportunity is. I think, excluding M&A, we got sufficient cash to run the business. However, depending on what's in that pipeline and what we decide to go for next, we might need to consider doing some type of financing or debt raising.

Great. Thanks for taking my questions, guys.

And there are no more questions so I will turn the call back to Ilya.

Thank you. The upcoming calendar, Aterian management will be participating in the 16th annual Needham Technology and Media Conference, May 17th to 20th, the 2021 RBC Capital Markets Global Consumer and Retail Conference, June 22nd and 23rd, and the Jefferies Virtual Consumer Conference, June 22nd to 24th. Thank you for joining us on the call today. We look forward to speaking with you on future calls. And this ends our call.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation. You may now disconnect.