Senestech Inc (SNES) 2026 Q3 法說會逐字稿

Good afternoon, and welcome to the SenesTech Reports third-quarter fiscal year 2026 financial results conference call. (Operator Instructions) Please also note today's event is being recorded.

I would now like to turn the floor over to Robert Blum with Lytham Partners. Please go ahead.

All right. Thank you very much, and thank you all for joining us today to discuss SenesTech's third-quarter 2026 financial results that's for the period ended September 30, 2026. With us on the call today is Michael Edell, the company's President and Chief Executive Officer; and Tom Chesterman, the company's Chief Financial Officer.

As the operator mentioned, at the conclusion of today's prepared remarks, we will open the call for questions. (Operator Instructions) Before we-begin, we'd like to remind everyone that our remarks today may include forward-looking statements. 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 are made and are based on management's assumptions and estimates as of such date. Except as required by law, the company does not undertake any obligation to update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.

We will also discuss adjusted EBITDA, a non-GAAP financial measure. This measure should be considered alongside our GAAP results. A reconciliation to the most directly comparable GAAP measure is included in today's earnings release available on the Investor Relations portion of our website.

With that said, I will turn the call over to Michael Edell. Michael, please go ahead.

Thank you, Robert, and thank you to everyone joining us today. This was a milestone quarter for SenesTech. We surpassed $1 million in quarterly revenue for the first time in our history. Delivered our second consecutive quarterly revenue record and set new records for gross profit and subscription customers. We are reaching more customers, building more ongoing relationships and seeing the commercial opportunity for rodent birth control take shape across both consumer and professional markets.

Revenue reached approximately $1.1 million, growing 42% from the second-quarter and 59% from a year ago. Gross profit reached a record $796,000 and combined subscription customers across Amazon and our website increased 72% in just one quarter. Those results give us a great deal to be excited about as we build a larger business with a growing recurring revenue base.

On our last call, we discussed the opportunity to turn our e-commerce momentum into a broader platform for growth. This quarter, we made meaningful progress on that opportunity. Amazon continued to expand. Our subscription base grew substantially and our direct B2B business delivered sequential growth as we added sales capacity. Each of these areas plays an important role in where we go from here.

Let me start with e-commerce. Revenue across our online channels increased 52% sequentially and 337% year-over-year, representing 71% of total third-quarter revenue. These channels serve both consumers and business customers. They make it easier for customers to discover our products, understand how rodent birth control fits their needs and establish a regular purchasing routine. Amazon was again a major driver.

Revenue increased 76% from the second-quarter, and we established new quarterly records for orders, revenue, subscribe and save revenue and subscribers. Revenue increased every month of the quarter. That sustained progress is particularly encouraging because it shows the opportunity to build on the demand we are generating.

When we decide where to invest next, we look at pricing, advertising costs and the mix of channels where customers buy. We closely monitor acquisition cost, which helps us direct our advertising dollars toward customers we can serve profitably over time. That sustained progress is particularly encouraging because it shows the opportunity to build on the demand we are generating.

We are focused on the full customer relationship from the first time someone learns about Evolve to the decision to purchase again. Rodent population management is an ongoing need, helping customers understand the value of a sustained approach is central to how we market our products and support their use.

Subscriptions bring that approach into purchasing experience by making replenishment more convenient, helping customers keep enough product on hand for the consistent use that effective rodent birth control requires. Amazon subscribed and saved subscribers increased 161% from the end of June to the end of September.

Across Amazon and our website, subscription revenue grew 53% sequentially and 234% year-over-year. Our combined subscriber base increased 72% during the quarter and subscription revenues were approximately 15% of total e-commerce revenues. For us, this is one of the most exciting developments in the business. Every ongoing customer relationship creates an opportunity to build repeat purchasing and greater revenue visibility.

We are investing in customer education, acquisition and retention with that long-term relationship in mind. Our own website remains an important part of this effort, giving customers another direct way to learn about our products, buy them and subscribe. We are also broadening our reach through third-party e-commerce. The addition of Grove Collaborative brings Evolve to a highly engaged audience of sustainably focused consumers.

It gives us another channel to introduce rodent birth control to customers who are actively looking for products that align with their priorities. To support the next stage of our brand and marketing work, we have engaged Sandstrom Partners as a strategic adviser. This Portland-based brand development firm has worked with brands, including Nike, Target and Coca-Cola, to name a few.

Our work with Sandstrom Partners is another element of our growth strategy. The focus is on sharpening our brand identity and creating a clear, more consistent way to communicate how and why our products work across consumer, B2B and the investor audiences. From an investor perspective, we view stronger brand positioning as a commercial tool rather than simply a marketing exercise.

The objective is to build awareness and brand affinity, improve customer retention and acquisition and support more effective sales and marketing across e-commerce and B2B channels. Sandstrom's work will also help us better define target audiences and value propositions and improve how customers discover and understand our products.

Ultimately, the goal is to translate a differentiated product and stronger brand identity into sustainable sales growth, recurring customer relationships and greater long-term value as we scale. We are very excited about the growth potential, leveraging the foundation we have built over the last six months. Amazon is bringing new customers to SenesTech. Subscriptions are turning more of those first purchases into ongoing relationships and channels such as walmart.com and Grove are expanding our reach.

As we move through the fourth-quarter, our focus is on building on that momentum by attracting more customers, keeping them engaged and making repeat purchasing a natural part of their rodent management routine. We believe that combination can make e-commerce an even more powerful driver of sustained growth for SenesTech.

Let me turn to direct B2B, which we see as the significant driver of growth alongside e-commerce. Direct B2B revenue increased 19% sequentially as changes to our sales process helped drive growth in our pest management, commercial and government verticals. We are building the sales capacity to pursue these opportunities with greater focus and more consistent follow-through.

Under Jack Karabees, our Executive Vice President of Sales, we now have four salespeople, including two recent additions. We expect to add at least one more before the end of the year. This gives us more resources to best cover the number of territories in the US to engage prospective customers, develop opportunities in our targeted vertical markets and build repeat business.

Our goal is to turn growing awareness into practical adoption. For a business or municipality, that means understanding the site, explaining where our products fit within its rodent management program and supporting an ongoing approach. The expanded team gives us a greater capacity to have those conversations, develop those relationships and build the pipeline.

In July, we began deploying assessment and monitoring services across our targeted B2B verticals. These services help customers measure rodent activity and understand the scope of an infestation before we recommend a solution. Customers can choose a turnkey assessment performed by SenesTech or deploy our tracking products themselves with the data analyzed using our internally developed AI analysis tools.

These services also help us to reduce the sales cycle and increase the potential of each and every opportunity. Together with our existing implementation and deployment services, assessments give us another way to support customers throughout their rodent management programs and create additional revenue opportunities.

The connection between e-commerce and B2B is important to understand. As more customers discover Evolve and become familiar with rodent birth control, we believe that awareness can support our direct sales effort. We have an opportunity to build a recognizable brand while developing deeper relationships with professional and municipal buyers.

The municipal results we recently announced provide compelling examples of how our products can fit into integrated pest management programs. In Chicago's Wicker Park Bucktown deployment, a program incorporating our assessment services, and Evolve, reduced average rodent activity intensity by 88% over 12 months.

Rodent-related 311 calls in the areas declined 36%. Evolve has now expanded to six Chicago special service areas and wards. Q3 was the highest revenue in municipalities in the company's history. Those results are supported by another encouraging example in Swampscott, Massachusetts. There, Evolve Rat, combined with sanitation and waste management improvements helped reduce measured rodent activity by 43% over just six months.

Together, these programs demonstrate the role rodent birth control can play within a sustained integrated approach to manage rodent activity. For our sales team, these are useful examples to bring into discussions with prospective customers. They help make the concept tangible by showing how communities have incorporated Evolve into their programs and measure progress over time.

We're excited to build on that experience as we pursue additional municipal, professional and commercial opportunities. As we look ahead, our priorities are clear: continue growing e-commerce; build our subscription relationships; equip our expanded B2B team to drive revenues; and communicate the value of rodent birth control in a way that makes it easier for customers to understand and adopt our products.

We have reached an important milestone, and we see meaningful opportunities to build from here. Our team is focused on turning this momentum into continued revenue growth and a much stronger business.

With that, I will turn the call over to Tom to review the financial results. Tom?

Thank you, Michael, and good afternoon, everyone. The third-quarter established new records for revenue and gross profit. It also reflected the work we're doing to direct more of our resources toward commercial growth and use our cash more efficiently. I'll walk through our results and then discuss that progress. Total revenue was $1.1 million compared with $770,000 in the second-quarter of 2026 and $690,000 in the third-quarter of 2025.

That represents 42% sequential growth and 59% year-over-year growth. The result was consistent with the preliminary revenue of approximately $1.1 million we announced on October 15. As Michael discussed, e-commerce revenue increased 52% sequentially and 337% year-over-year. Direct B2B revenue, which excludes e-commerce B2B and third-party e-commerce sales, increased 19% sequentially and 2% year-over-year.

By product, Evolve revenue increased 67% year-over-year to $979,000 and represented 89% of product revenue. ContraPest revenue increased 13% to $118,000, driven by higher retail sales. Gross profit reached record $796,000, up 40% from $567,000 in the second-quarter and up 84% from $433,000 in the prior year quarter. Gross margin was 72.6% compared with 73.6% in the second-quarter and 52.8% a year ago.

The combination of revenue growth and strong gross margin is an important foundation for our financial model. Total operating expenses were $2.8 million compared with $1.8 million in the third-quarter of 2025. Research and development expense was $418,000. Sales and marketing expense was $1.1 million, reflecting the shift to managing Amazon in-house and our investment in commercial growth.

One note about Amazon. Our selling price on Amazon is higher than our B2B pricing, which gives the channel a higher gross margin. Much of that advantage, though, is offset by Amazon fees, base advertising and other selling expenses, which we record in operating expenses rather than cost of sales. After those costs, though, the channel's net margin remains positive.

We've also increased certain expenses such as incremental marketing and advertising to drive growth. We manage those investments carefully so the customers we acquire are profitable on the margin. This is also evident in how we deploy our resources with a significant shift towards sales and marketing. Sales and marketing represented a higher percentage of operating expenses this quarter, matched with the decline in the proportion of operating expenses categorized as G&A.

This reflects our focus on putting more of our resources behind customer acquisition, retention and the development of our B2B business. We are evaluating those investments alongside customer economics and cash use with the objective of building sustainable growth and a more efficient business over time. Net loss for the third-quarter was approximately $2.0 million or $0.36 per share compared with $1.8 million in the second-quarter and $1.3 million or $0.28 per share in the third-quarter of 2025.

Adjusted EBITDA loss was approximately $1.4 million compared with $1.4 million in the second-quarter and $1.1 million in the prior year quarter. Please refer to today's press release for the reconciliation of adjusted EBITDA to GAAP net loss. Turning to liquidity. We ended September with approximately $4.0 million in cash and cash equivalents compared with $5.1 million at the end of June.

Subsequent to quarter end, we raised $1.2 million in gross proceeds from our ATM facility. Net cash used in operating activities has improved in each quarter since the end of 2025. Operating cash use was $1.9 million in the first-quarter, $1.7 million in the second-quarter and $1.3 million in the third-quarter. That progression is an important measure of our focus on cash management as we build the business.

As we evaluate future financing options, we're weighing the cash we need to support growth against the cost of capital and potential dilution to shareholders. Glenbrook Capital Management, a SenesTech investor since before our IPO, has provided useful input on the timing and structure of potential financings. Glenbrook has participated in nearly all of our financing, including every round to which it was invited beginning before and including our IPO.

Glenbrook has also expressed its intention to remain a supportive long-term investor and to consider further investments subject to mutually acceptable terms and market conditions. We value that perspective and support as we evaluate the timing and structure of future financings with the objective of supporting our growth plans while remaining disciplined about shareholder dilution and long-term value creation.

Our focus remains on translating commercial momentum into sustained financial progress. record gross profit, a larger subscription base and a more focused allocation of resources give us the foundation to build on. We will continue to pair investment in growth with disciplined spending and careful cash management as we advance our path towards profitability.

With that, I'll turn the call back to Michael. Michael?

Thank you, Tom. We are very proud of what the team has been able to deliver this quarter. Our first-quarter above $1 million in revenue is an exciting milestone for SenesTech. So our record profit and substantial growth in our subscription customer base. Together, these results show how -- show the progress we're making in bringing rodent birth control to a broader market.

Our opportunity now is to build on that progress and momentum. E-commerce is helping us reach a very large audience of customers and building the brand. Subscriptions are growing and reaffirming the stickiness of the products. Our expanded B2B team is pursuing opportunities across targeted vertical markets, and the results in Chicago alone provide practical examples of the efficacy of the products as part of integrated pest management.

We're entering the next stage of our growth with clear priorities and a team focused on execution. Thank you to our employees, our customers, partners and shareholders for being part of this progress. We look forward to sharing more as we continue to build SenesTech.

Operator, let's open the call for questions.

(Operator Instructions) Sameer Joshi, H.C. Wainwright.

First of all, congratulations on a solid $1 million quarter, the first-quarter. I have a few questions sort of related to some of the items that you already discussed, especially the sales, right? You have Amazon, you have other third-party e-commerce, your own website and now the B2B with the new reps hired. So how do these compare in terms of like customer acquisition costs, return on those costs?

And how are you managing which ones to prioritize? I understand B2B is a different ball game, but on Amazon third-party as well as your own website, how do you do that?

Well, the first thing we did as we took over and brought Amazon in-house, and that's been a little over seven, eight months now, one of the things that we had to do is we've been building out that channel. We've been investing in our marketing ad spend dollars. And as we've been increasing the dollars of spend, we're keeping an eye and we monitor it literally daily and weekly to understand what is the acquisition cost of a customer and is that profitable for us either from an immediate sale or related to the long-term value of that customer.

Those are the things that you have to keep your eye on because if you're not marketing in a manner that you can be profitable on customers that you're acquiring, you have a big -- you have a much bigger problem. We just have been able to be profitable in our acquisition costs and also for the long-term value of those customers that build over time. We're doing quite well in terms of the spend versus acquired customers.

Is it fair then to say that as time progresses and you have repeat subscribers, that your -- you will have leverage and your margins will increase, or at least should increase as you retain more customers?

I think the margins on the B2B side are going to fluctuate a little bit over time depending on our approach to building up the subscriber base because as we gather more information over time, we know the value of subscribers. And one of the things that we're going to be testing as we come up into Q4 is going to be testing different pricing strategies to see if we could even accelerate the subscription revenues and subscription adoption over a period of time, which would require a little bit more of an investment, but the long-term value of those customers is much higher.

Got it. On the -- just moving to fourth-quarter now. I know last year's the quarter -- fourth-quarter was sort of weaker. There was some seasonality and some other factors going into that. Are you expecting a flat or a lower quarter for the -- fourth-quarter '26?

That's a great question. What you're going to find is that just a year ago, the e-commerce parts of the business were so small and the B2B parts of the business were what was seasonal in Q4. But what you find now that e-commerce makes up 72% of our quarter, the seasonality is not going to play as much of a part as we go into Q4 because the e-commerce is just far larger than the B2B at this point.

What we will see on the B2B side is that there's just a number of business days is less, and that will impact some of your B2B because you have to squeeze more business into a shorter time frame. But it has nothing to do with anything about the weather or anything other than just the holidays themselves and the shorter number of business days.

Understood. I just have two quick questions. In the -- you mentioned the Chicago sites. You mentioned the assessment services. You do -- revenues do you charge -- and then, of course, these result in -- should result in orders that are more meaningful and with higher gross margins?

Yes. And actually, since July and August, as we've been rolling out multiple deployments in Chicago, there's revenues on every one of those opportunities from the assessment and monitoring services.

Got it. And then last question is maybe if you have a crystal ball, do you know at what level of revenues would you be EBITDA breakeven? Like I know there are many factors going into this, but do you have sort of a targeted revenue at which you think you can be EBITDA positive or breakeven?

Yes. We don't provide guidance -- future guidance on that. But what we can tell you is if you take a look at the net cash used in operating activities, hopefully, the investors are seeing a fairly consistent theme in terms of the cash used in the operating activities of the business. And that has -- as you look at the numbers, each quarter it's getting better and better because we're focusing on top line revenues.

And we're also focusing on top line revenues that are not heavily discounted just to get the business. So by maintaining our margin profile, increased activity in the channels that we're going into and driving top line revenues, that's what you're going to see continue to make an impact on operating cash.

Yes, Tom did mention the cash used in operating activities go down from $1.9 million, $1.7 million, $1.3 million over the last three quarters. So that's good to see. Once again, congrats on a really good quarter and good luck.

We appreciate it. We have a lot more work that we can do, but we're excited about it.

(Operator Instructions) M. Marin, Zacks.

So I wanted to follow up on some of the things that you discussed in the press release, the prepared remarks and now in the Q&A session. You've long talked about how important it is to educate the consumer and the prospective consumer about how best to use the products. And I think that you cited that being one important priority that you plan to work with Samsung.

Where do you think -- particularly with a B2C consumer, where do you think you are in that process? Do you think that there's a good understanding there that this is a product that has to be used on a regular basis, on recurring basis and over time, which I think would also play into your goal of driving subscriber growth?

That's a great question. And the education of the consumers and the customers is absolutely in top of mind. We have to make sure that consumers and users of our product understand that unlike a track, you have to have a period of time to let the product be effective to where you could actually see the results, and it doesn't happen overnight. It will start working as soon as the rodents are eating the bait.

But in terms of the number of cycles that you go through in terms of new rodents coming into the population, that just takes a little bit longer period of time. And in education, in the last eight to nine months, an interesting thing occurred when we redid the entire e-commerce, both Shopify and Amazon and Walmart and Home Depot, we made a huge shift into the product descriptions and how to use and deployment.

And where you would think that being more and more transparent with our customers and our consumers might negatively impact the business, the exact opposite thing occurred. And as you can see by the e-commerce revenues, the revenues and the number of subscribers is growing at a very, very fast pace because consumers are getting that education. But we need to do more.

We need to continue to make sure that our pricing models, our subscription models fit the time frames so that the customers get the best experience from using our products. And that's things that you're going to start to see as we work with Sandstrom and our customers to understand that more. And those are some changes that you will start to see coming in Q4 and Q1.

So the subscriber growth, very impressive. But as you rightly point out, subscriber growth alone doesn't really tell the whole story. It's retention and churn. It's really early days, but do you have any sense of what your churn has been? And given what you said a few minutes ago about the Amazon fees and the economics, do you feel comfortable that you can offer price points and create economies of scale for the B2C customer that incentivizes becoming a long-term subscriber?

Yes. I do firmly believe that. And to your point on churn, if your customers are churning, your percentages and your -- both the number of subscribers that you have and the dollars you're generating would drop. What we're seeing is the exact opposite happening. Even though revenues are growing on e-commerce at a very, very fast pace, the percentage of revenue is not diminishing, that is subscriber revenue.

It's still -- even though sales and top line are growing exponentially, the percentage of revenue that is coming from subscription base is still growing at 15% and 16%. We're still maintaining a 15% to 16% level. We think we can grow that even further with these changes that we just described and doing more in terms of how we price and how we package, sort of these options available to consumers for the subscription part of the business.

You mentioned -- during the Q&A earlier, you mentioned Glenbrook and some of the dialogues that you've been engaged in and how valuable that's been. But another thing I believe Glenbrook had cited was potentially selectively using equity-based comp instead of cash compensation to the same extent that you currently are, which I think would also play in with your goal or align with your goal of conserving cash.

Again, is this something you think the Board is willing to take a look at and your -- any color you could provide on that?

Yes, absolutely. That is a focus and it is being discussed at the Board level. One of the things that we have to do is make sure that there's enough options in the pool will allow us to move certain things from cash to equity based. So if we can work on that and get the options pool such that we can offer more and create more opportunities for equity-based, I think we can go a long way with that. Everybody is very, very receptive to that.

And my last question is sort of a follow-up to something that you've already discussed, specifically relative to Samsung. You mentioned the help you expect to obtain initially on figuring out retention. What about some of the key verticals that you've identified as your initial priority? Do you expect that Samsung will be able to help with some of those larger B2B verticals?

I think the -- achieving additional clarity and having messaging at each of the different verticals that we're in on the B2B side is going to help dramatically in terms of what's going on out in the field. And I'll give you an example of one of the things that we just -- with PestWorld, which is the largest test trade show in the country.

And during PestWorld, we announced and started to show pest management organizations programs that they can incorporate this into their offering so that they can go and add these types of services to provide additional streams of revenue for them that they may not have access to today with current offerings. And it was a big hit at PestWorld.

And doing more of that work and having Sandstrom come in and help clarify the messaging around that in those programs, we think it is going to give us an even bigger boost going down the path.

And one last follow-up. I know I said the previous question was the last. This is really the last.

That's okay. You get more.

So in the past, you had talked about increasing your outreach and your promotional activities around social media and online. Is there a process that you've already started? How do you see that going, if that has, in fact, started? And if you can provide any kind of color on that and feedback you might be getting from the channels?

Yes. And as I might have mentioned, it was either one or two quarters ago, I don't remember, but we needed -- as we're rebuilding the B2B team and relaunching our efforts into B2B. One was as we brought Jack Karabees on as our EVP, who came on full time in July. But prior to that, Jack and I were working on what the strategy was going to be and the number of people that we needed to support those territories, but also how we're going to access and drive inbound so that it's not all outbound effort in lead gen.

And during that time, what we've done is, pretty much the first time, I think, in the last three to four years, Jack and the team have built outreach programs that now we're outbound to tens of thousands of prospective opportunities, whereas that hadn't been going on at all prior to Jack, and the team coming on board.

So there's a significant outreach that is going on, and it's being reflected in the pipeline and the opportunities that are building over the last second, third and fourth quarters. And as we move into Q1 and Q2, again, I don't want to give guidance, but I will just tell you that the only way that your B2B parts of your business are going to grow is if your pipeline is growing.

And without that, you really don't have a shot of growing your business. So all of the activities, all of the opportunities, the number of quotes that are going out, all of that has to be driving to build the pipeline. And all of those activities are well underway.

Richard Rudgley, Glenbrook Capital.

I just wondered if you could give some color on the -- we see some good sales momentum in the reported quarter. But I just wondered if you could give some kind of color on how it's going so far in this quarter, not just with Amazon, but more generally?

Do you mean going into Q4?

Yes.

Yes. I can't really speak to any specifics because, again, we're not giving any forward guidance. But I can tell you that things that I was just describing about the pipeline on the B2B, the pipeline growth and the activity is moving along quite nicely. And the fact that we are moving from two sales reps in the field, we'll have 5, hopefully by the end of the year, is really helping to drive that activity on the B2B side.

And I had a couple of questions about the ATM because in the prepared remarks and the news release, I didn't see anything about whether you add the ATM in the quarter. And I also wondered if you, again to disclose the average price of what was raised the $1.2 million post quarter?

Yes. Well, I'll let Tom take that one. Tom?

Yes. We had -- as I mentioned in the prepared remarks, and I think we mentioned in the press release as well, we did have some activity during the quarter, but not as much, and then we did have some activity after the end of the quarter. So the -- we will provide a lot more detail in the 10-Q. But just to -- I'm sorry, I'm just trying to pull up the numbers to answer your question.

The -- in terms of the amount that we raised, we mentioned that. But we also pointed out that we've now got -- we've issued about 1.3 million shares. And for that $1.2 million, the average price on that, I just took out my calc to figure that out. But it's a little less than $1. I don't know if you remember, we had that day where we had over 50 million shares traded. We took part in that rally on the ATM, seemed like -- seemed appropriate at the time.

So yes, you're saying 1.3 million shares post quarter. But I guess I'm missing -- I don't see anything in the third-quarter use of the ATM?

There wasn't much. I'll have the -- we'll be filing the Q, which will have the amounts that were raised, but it wasn't much. We didn't have many opportunities for that.

All right. Gentleman here, I'll jump in while we wait to see if anyone else comes into the live dial-in here to ask their questions. We have some webcast questions. Building off the last one there, Tom, what is the outstanding share count currently based on the activity of the ATM after the quarter end?

Yes. The current share count is approximately 6.8 million shares.

Next question here is, could you speak to the expenses? What drove the absolute dollar increase in Q3 G&A? And why hasn't G&A declined in dollar terms now that the earlier CEO leadership transition and Liphatech litigation settlement costs are behind the company?

Yes. The biggest driver really was a combination of share-based compensation expense. For example, the -- we've made the grants -- the annual grant to the Board. They received a significant portion of their compensation in shares instead of cash. So you're going to see that in there. In addition, we also recognized the potential for paying a bonus across the company. It wasn't quite clear that we were going to be hitting our numbers until the third-quarter.

So there's actually a bit higher than usual and out of -- kind of out-of-period expense there so that in terms of accruing for a potential bonus as we begin to get closer to being sure that we're going to hit our numbers. So I think you've taken them together, really was about $524,000 in both combination of the stock-based and the bonus noncash compensation. Both of those were noncash. That's why the cash in the quarter actually went down even though the recognized operating expenses went up.

And Michael, I know you touched on this, but I'll ask a question. What quarterly revenue milestone will incremental gross profit dollar growth exceed incremental operating expense growth between Q3 '25 and Q3 of '26? Gross profit increased $363,000, while operating expenses increased by about $1 million?

Yes. This, again, is the question -- it's a great question in terms of when are we going to achieve profitability, right? That's the main theme. And again, I cannot really give you any guidance on that other than to say that, because we're focusing on top line revenues and growing that number, still maintaining some of the other KPIs that we described, we're on that path, and we just have to continue to execute like we're doing now, and we are going to get to that point where we're crossing over into profitability.

I think I'd like to add something to this concept. The key of what we're doing right now -- the path to profitability is just a gate along the way, so to speak. The bigger target is can we grow the business to be a substantial company in this category? Can we -- and are we moving? And are we putting those things in place as a company, the foundation to be able to support that?

And the answer to that question is yes. Those are the things that we're focused on that are going to get us to cash flow positive, but far beyond that. As we expand our B2B team and you go far beyond the five people that we're looking to bring on board into the territories in the United States, that's when you're going to really see substantial growth. As we get into 2027 and 2028, that's where you're going to see the B2B parts of the business far exceed what we're doing on the e-commerce side.

All right. Our next question here, and again, this is somewhat touched on, how are trends in the current quarter? Can we expect continued sequential growth with $1 million as the new floor?

Well, the trends -- that's a great question, ties right into my prior answer. The trends that we're seeing are activity and pipeline, expanded B2B sales team. Those trends are not just continuing what was historically in Q2 and Q3, they're far surpassing the activity in these prior quarters because the number of people that we have is growing exponentially.

The trends that we're seeing on various platforms on the e-commerce side, those are -- Amazon is more mature now because we're now eight months, nine months into it. And we're still seeing how big -- where is the upper end, where is the ceiling on that in terms of doing -- currently what we're doing. And our new-to-brand is still significantly -- it's still a significant percentage.

So we haven't even gotten to the point yet in terms of new-to-brand customers being or showing that it's mature enough that we're tapping out or we're getting to the top end of that. We're not going to hit that as we go into Q4 for sure. The other trends in terms of what we're seeing on average order size and number of subscribers and recurring revenue, that trend is continuing. It is very, very, very strong.

All right. That's all the questions we have on the webcast portal. Jamie, I will turn it back to you for any additional questions on the live teleconference.

(Operator Instructions) Grover Wickersham, Glenbrook.

I'm also glad you guys are doing in live interviews because I think it was really helpful to get the feedback from both the analysts. I will say I am kind of concerned by the heavy tapping of the ATM. I was not surprised to see the ATM tapped, but I think $1.2 million shares, or if that's the number is -- I mean, you're pushing what is that 20%, 25% dilution.

And my understanding is on the ATM on baby Form S-3, you can only do 33% of the shares outstanding during a 12-month rolling period. So I had hoped that you would continue to see a higher stock price than you would possibly -- if you did tap into the ATM, you'd be doing it at a higher price. So I guess, I don't know if there's a question, just a comment, but my impression is that you do not have very much headroom left in the ATM at this point. Is that correct?

That's actually not correct, Grover. We have about $6 million -- a little over $6 million left in the capacity. The way the ATM rules work is that you can kind of lock in that baby shelf limit, and we did so at a higher price earlier. So we actually locked in at the time over $7 million worth of capacity, and we -- so we only used a portion of it. So we still have a lot of capacity.

But the other point is right. We certainly would like to be tapping into it at higher prices. But a 50 million share day is very, very tough to really ignore that opportunity for what can be some relatively expensive capital.

Yes. I -- well, I'd just say that personally, I'm a little disappointed to hear that because I think that you should start prioritizing shareholder value in terms of limiting the dilution. The other comment I'd make is that -- or a question is that you indicated that you're -- I guess as Michael's comment, you indicated that you're focused on the top line.

I would say that -- just as one of the larger shareholders that I see the priority being market penetration, market adoption. I personally do not put a high value on the top line versus market penetration. And my concern is with the B2C business to consumers that you're currently, if I have this correctly, pricing the product at $35 for a 1.5 pound portion, which I think would last maybe depending on how much the rat activity is as little as 1.5 weeks or two weeks and maybe as long as a month.

But for $35 for a product that was pointed out by Zacks that you need to use for four to five months, we're, I think, following the science and selling the product in a way so that people don't get essentially something that doesn't do anything. And since it's like so many other pharmaceutical or other products, they don't work. It doesn't work if you just use it for one dose. You need to be using it for an extended period of time.

So -- and we know that -- we have the science, we have the data. We know that, that is a minimum of three months, but preferably six months. And in the case of your Chicago study, it was 12 months. So I would just, as a significant shareholder, place my disapproval of that approach and encourage you to rethink it, especially since you're working with Sandstrom now.

Actually, what you're saying, and as I mentioned, aligning the subscription and the pricing, we're saying the same thing, where we align the price and the time frame for the subscriptions to give enough time for the product to meet customer expectations. So we agree with you.

But that 15% of business remains, 85% of people are getting a product that is not being sold in a way that's suitable for the science and the data, namely (technical difficulty)

Yes, we only took over Amazon beginning mid-March. So we had to get that up and running and make those changes to the business to really start that forward momentum. And now is the time, to your point, to go back in and say, how can we optimize that, make it more efficient and grow it even further. So now we're right in the middle of those efforts as we speak.

(technical difficulty)

Yes, got to give the customer -- we want the customer to have a better and better experience as they incorporate this into their IPM. So we agree with you. We're going to hear argument on this front.

I'm glad you get on, especially for the consumer business where you're not selling -- you're not using a PCA or a pest service where they're going to go out once a week or once a month and fill the vape box. And -- But instead, you're going with the consumer that just buys the product and thinks they can use it and expect it to work.

Yes. We agree with you. That is definitely a major focus for us. And that ties into also the education and making sure that all of those pieces are aligned. We've had -- when I came on board and Jack came on board and the new team that I put in place -- we just have to make these adjustments as we learn more and more.

And then directionally, Sandstrom is going to be able to help define that, and then we can adopt some of those changes. But we still believe that we can continue the growth and then make these adjustments. We don't have to stop, change the tires and then start going again. We can continue the momentum. And this is just one way that it should help quite a bit.

And with that, ladies and gentlemen, we will conclude today's question-and-answer session. I'd like to turn the floor back over to management for closing remarks.

Thank you, Robert, and everybody for joining us today. We appreciate everyone's interest in SenesTech. We look forward to updating you on our progress next quarter. We just really appreciate everybody's time and focus and energy on this. And we want to have -- I hope everybody has a great evening. Thank you.

With that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.