Sow Good at The Gateway Conference: Strategic Resilience Amid Challenges

On Thursday, 04 September 2025, Sow Good Inc (NASDAQ:SOWG) shared its strategic outlook at The Gateway Conference 2025. The company is navigating a challenging landscape marked by significant revenue declines and increased competition from major consumer packaged goods brands. Despite these hurdles, Sow Good is focusing on innovation and international expansion to stabilize and return to growth.

Key Takeaways

• Sow Good’s revenue plummeted from $15.7 million in Q2 last year to $1.9 million in Q2 this year.
• Gross margin shifted dramatically from 57.6% to a negative 7%.
• The company is expanding into new product categories, such as baby snacks and meat products.
• Sow Good plans to leverage its freeze-drying technology and manufacturing expertise.
• The company is targeting breakeven EBITDA in the coming quarters and positive EBITDA within a year.

Financial Results

• Revenue Decline: Net revenues dropped significantly from $15.7 million to $1.9 million in Q2, attributed to increased competition and exclusivity agreements by competitors.
• Margin and Expenses: Gross margin fell to negative 7% due to overhead costs. Operating expenses slightly decreased as the company already operates leanly.
• Interest and Debt: Interest expenses were reduced from $1.3 million to $100,000 following debt repayment. The company restructured its debt to long-term.
• Cash Flow: Cash burn was approximately $2.5 million, with a current cash balance of about $1 million.

Operational Updates

• Core Competencies: Sow Good emphasizes its freeze-drying technology, custom-engineered freeze dryers, and SQF Level 2 certified facility.
• Customer Base: The company is stabilizing its customer base and expanding into new retailers like Ace and Orgill, with promising growth in the Middle East.
• Innovation and Expansion: Focus on new products for key customers like Five Below and exploring private label baby snacks and meat products.

Future Outlook

• Category Expansion: Sow Good is exploring air-dried and freeze-dried meat products and ready-to-eat meals.
• Sales Recovery: The company anticipates steady revenue levels for the next two to three quarters, with growth expected late this year and early next year.
• Strategic Focus: Rebuilding and growth through category expansions, leveraging freeze-drying capacity, and focusing on innovation.

Q&A Highlights

• No questions were raised during the call, indicating either a comprehensive presentation or limited immediate interest from the audience. CEO Claudia Goldfarb humorously noted her effective communication.

Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - The Gateway Conference 2025:

Unidentified speaker, Unidentified role: Unless they have a lapel mic, you’re gonna have to do this. Do you do you wanna be able to walk around?

Claudia Goldfarb, CEO, So Good: Not gonna.

Unidentified speaker, Unidentified role: So this timer, twenty five minutes?

Claudia Goldfarb, CEO, So Good: Yeah.

Unidentified speaker, Unidentified role: You’ll see it start and then just fill the time however you see fit. Okay.

Claudia Goldfarb, CEO, So Good: So We

Unidentified speaker, Unidentified role: good? Okay. Claudia, you ready to go? I’m ready. Good morning for our first presentation of the day.

We’re pleased to have Claudia Goldfarb, CEO of So Good.

Claudia Goldfarb, CEO, So Good: Yay. Awesome. Hi, guys. I didn’t know I was the first one of

Unidentified speaker, Unidentified role: the day, so I’ll try to be good. So,

Claudia Goldfarb, CEO, So Good: yes, I’m Claudia Goldfarb. I am the CEO of So Good. And of course, that doesn’t work. It’s the morning. All the disclaimers, forward looking statements, and on to who we are.

So So Good, we started six years ago. Originally, we focused on just building out freeze drying technology. That was our core competency. About a year and a half later, we entered the CPG market. And we started with fruits and veggies, and then we entered the freeze dried candy crates.

Over the last fifty two weeks, we’ve done 24,400,000.0 in dollars, 4,400,000.0 in units sold, and we’re in a little under 17,000 doors. Now freeze dried candy really came to be about two point five years ago. And so in that two and a half time period, we are still the number one independent freeze dried candy brand, but we have had a lot of competitive pressure from some of the large CPG brands that we’ll be discussing shortly. What really makes us different than all the other freeze dried candy companies out there is our manufacturing expertise and the power of our technology. We built our freeze dryers from scratch.

So they freeze dry much better than anything else on the market. All of our freeze dryers, and we have six currently in operation, are in our 21,000 square foot facility in Irving, Texas. And just to kind of give you a rule of thumb, each freeze dryer does about $10,000,000 in revenue. The management team. My husband and cofounder, me, and our fabulous CFO, Donna Guy, who just came on board about two months ago, Donna.

And prior to that, she was our SEC consultant for two years, and she has just been a fantastic addition to the team. Now, I don’t know how many of you guys are familiar with freeze dried candy. If you guys have little kids, you’ve probably had some bags in your house. But what freeze dried candy is is you take, you know, gummy products, a Skittles type product, you put it in our freeze dryer, and over anywhere between seven and twenty four hours, you take all of the moisture out of the product. And that results in a super crunchy, super dried, and very flavorful candy.

Because you took all the moisture out, all the water out, all you’re left is the flavor of the candy. Now, candy continues to just grow at great rates. You know, we’re estimating about 6% in all sugar confectionery sales between now and 2028. It’s rapidly growing across retailers. And, you know, when we first launched freeze dried candy, there were very small independent regional candy brands.

Today, because of the success that we had in this space, Hershey’s and Mars has entered freeze dried candy, solidifying the fact that it is an everyday product. You know, I think for any of you that were here a year ago, one of the biggest questions I always got was, is this just a fad? Is this going to stay? And I think as we see all of these large entrants enter the space, it is very much established that freeze dried candy is gonna be its category for a long time. Now what makes us different?

You know, we’ll talk in a little bit about how Mars entering and Hershey’s entering really affected our trajectory in sales. But what makes us different and allows us to have remained the independent leader even with all of that competitive pressure was our broad product mix. So we really tried creating something for everyone. We have sweet. We have sour.

We have chocolate. We have ice cream. So that broad product mix as we start reengaging with buyers is really what is calling them to our brand. So along with that, what’s really important is innovation. You know, Five Below is still our largest customer at this time, and we’re having quarterly meetings with them about what new products can we bring.

I think what freeze dried candy really showed retailers and buyers was that the candy category had been stagnant for too long. Now, you know, a lot of our competitors, they’ve got four main freeze dried SKUs, and what’s really differentiating us now is this innovation pipeline. We’re super excited for our caramel crunch. That’s something that we’re making in house in our Irving facility. So we’re making it from scratch.

Holiday SKUs. We just shipped Albertsons holiday displays. Albertsons has chosen not to have an everyday candy model. What they focused on is innovation and holiday. So on a quarterly basis, we’re doing some really interesting and exciting in and outs.

So how is it shaking out? As you can see here, you know, we represent on the independent side, so outside of Jolly Rancher and Skittles, 30% 34% of the market. One up is primarily just in Walmart. So that market share is really just the mark the Walmart side, and then everyone else kinda splits up the rest. One of the things that I think is really interesting about the freeze dried candy category is it’s outpacing overall candy sales.

So, you know, candy right now is growing at about 4% annually. Freeze dried is growing at about 8.5%. So you bring in Jolly Ranchers and Skittles and obviously it changes a little bit. You know, over the last year, what we’ve really been focused on at So Good as Jolly Ranchers and Skittles came in is treading water. You know, we really felt if we could survive this year of competitive pressure, you know, they signed exclusivity contracts with some of our main retailers.

Then, you know, once the dust settled, we would be able to rebuild. And so that’s really where we are right now, rebuilding those relationships with our retailers that we lost during the initial launches. And it’s starting to work. You know, the last year was really like we were at the peak, we hit the valley, and now we’re coming back out. And so even with all of the exclusivity agreements and the millions of dollars that they threw at retailers, you know, obviously, Skittles and Jolly Rancher are performing well, but we are holding our own.

And that’s really what our focus has been on. So of the top 10 freeze dried candy items, we hold four of the 10. As I mentioned earlier, sugar is outperforming chocolate, And we see that as a tremendous market opportunity. You know, a lot of you know that cocoa prices are going through the roof. And so buyers are actively looking for items that customers want that don’t have the high premiums that chocolate has right now.

And tada, good news. We’re finally starting to, you know, beat out the big CPG companies where it counts. You know, over the last thirteen weeks, we’ve really started seeing, you know, recovery in our units per door. So, you know, Skittles popped, eight units per door. Jolly Ranchers, four.

Crazy Candy, six. And we hit 16 units per door. So that, you know, excitement for the large CPG launches has started to settle, and our customers are coming back to our product. You know, we’re neck and neck with Mars and Velocity. Jolly Ranchers, while still higher, and they launched after Skittles.

Over the last few weeks, we’ve seen 11% decline week over week. So, you know, we’re we’re making a comeback. Global candy market growth, again, you know, about 4%. North American candy market’s growing at about 7.6%. And so why do we keep saying that we’re better than everybody else out there?

And excuse the formatting. It really comes down to what our core competencies were, which was manufacturing. So, you know, freeze drying, it’s not like an oven. You don’t just stick the candy in there and set it at four twenty five for for ninety minutes. It’s really a very nuanced process to get the outcomes that you want.

So because of our expertise, you know, the things that we focus on are precision hand packing, not short cutting the freeze dry cycle. As I mentioned earlier, some of these products take up to twenty four hours. You can cheat and do it in a much shorter time period, but you’re not gonna have the same crunch and outcome and flavor that you do if you do it the right way. You know, we custom engineered our equipment. From scratch, there is not one piece of the freeze dryers that we have not built out.

If you know anything about freeze dryers, they’re these big large chambers. They’re like a tractor truck size. Most freeze dryers on the market only control their heat and their freeze drying cycle on a chamber basis. We get down to the tray level, which is what allows us to have such control over our process. We’re vertically integrated.

So here you see some of our hand packaging. Because of the fragility of the product, we found this the most effective way to keep the quality high. You know, our freeze dryers were an SQF two certified facility. We scored a 97 on our last audit, which is just some of the highest rates that you can get. Some of the retailers that were in, Five Below, Kroger, Ace and Orgill have been really interesting.

So over the last four months, we’ve entered the hardware space and just week over week, it continues to grow. So what we’ve really been focused on is stabilizing our customer base over the last year. Now that we feel like we’ve stabilized, now we can go back to, you know, slowly increasing, sustainably increasing our our door count. Five below. What we’re really focused on with them is innovation.

Really bringing to their customers something new, something exciting, something that keeps the category fresh. And we’re one of the only freeze dried candy companies that are doing this. Now over the last year, you know, as candy has gone through the growing pains that that we’ve gone through, it’s really allowed us to go back to what are our core principles and what are we really about as a company. And so we refocused on what makes us special, which is our technology. And so that allows us to start opening up other categories.

Right now, we’re in conversations for some private label baby snacks. We’re gonna be looking at air dried and freeze dried meat products and ready to eat meals. So those are opportunities that over the next year, we’ll be able to explore. The Middle East, not somewhere I expected to be, but it has been such an exciting launch. We launched about three months ago during the slowest time of the year for them.

And according to our distributors there, we are exceeding expectations. And so starting in October is when we believe that the cadence and the quantity of product that they’re ordering will increase significantly. I really hate this chart, but that’s okay. It’s gonna look different next year. So, you know, at well, we don’t have our peak on here, but second quarter of last year, we did somewhere around $14,000,000.

Mars and Hershey came in. It really took a beating on our market share. And so now we’re just in recovery mode. And this is the recovery slide. Not quite there, but we’re getting there.

So you see where we peaked, where we came down, and now we’re holding steady. We believe that we’re going to be holding at this level for about the next two to three quarters and then go back to seeing growth and some resurgence late in this year and early the following year. Donna, do you want to come up and go over the financial overview? Okay. Anyone have any questions?

I know I did that really quickly because I’m still waking up. Okay. Then, no. I guess I did a good job. And I will turn it over to miss Guy.

Okay.

Unidentified speaker, Unidentified role: Where where do we tab? Right there.

Donna Guy, CFO, So Good: Oh, okay. Great. Good morning. Okay. So this is our let’s see, summary income statement compared to last year.

Yeah. I think this recaps the graph that we just saw. We had net revenues of 15,700,000.0 last year for the second quarter. This year, second quarter, about 1,900,000.0 in net revenues. Margin, 56 57.6 last year.

This year, negative 7%. So speaking on the decrease in margins real quick, you know, we just have certain allocated overhead costs that at these sort of rates that we’re doing right now are, you know, not fully absorbed by the current sales and and revenue. So we do expect margins to increase in the in the coming quarters as we kind of work to lower that overhead.

Claudia Goldfarb, CEO, So Good: Yes. One of the things that we’ve seen from a margin perspective, labor costs, raw material costs, our hard production costs have not increased. We just built out a 320,000 square foot facility that we no longer need. And so until we rightsize that, that’s really what’s affecting our margin profile.

Donna Guy, CFO, So Good: Yes. OpEx decreased. I I think one thing, SoGoods operates pretty lean. So a lot of the sort of decrease in in OpEx is we’re we’re kind of, you know, where we need to be, not a lot more to really cut there. Just we just need to grow top line, which we plan to do.

Claudia Goldfarb, CEO, So Good: And right now, what’s I mean, an opportunity for us is that we have so much capacity in our freeze dryers. Obviously, we’d rather not have capacity in our freeze dryers right now. But once sales recover and some of these adjacent categories come into play, we have the ability to scale very quickly because all of the infrastructure and all of the CapEx is already done. That’s right.

Donna Guy, CFO, So Good: Yeah. I would say last year when revenues were in the 16 millions and kind of predicting to grow, The company wisely did an offering and raised about $12,000,000 and just put all that into expansion with the six freeze new freeze dryers and the and the larger space. So that’s all sort of at the ready when the time comes to build out, you know, which we predict to be within the next year, next four quarters. Other income expense has that is our interest expense on our debt, which decreased from 1,300,000.0 last year to 100,000 this year. That’s due to paying down a lot of debt, which, you know, that’s another great thing about SOGAs.

We’re not highly leveraged. We don’t have huge debt service, and that it’s also helping us with with our cash right now.

Claudia Goldfarb, CEO, So Good: Yeah. Cash management has been key over the last year, and, you know, we’ve been able to manage that successfully.

Donna Guy, CFO, So Good: Yeah. Our debt that we do have is long term and convertible. So there’s there’s bright points even though this comparison year over year doesn’t look doesn’t look great, but good things to come. This is the last four quarters in LTM adjusted EBITDA, you know, it’s kind of it’s negative right now. Just the aforementioned reasons.

I not not not great, but I think it’s not it’s not insurmountable to get back to breakeven in the next coming quarters and then back to positive EBITDA hopefully in the next year. That’s the goal. Balance sheet. Talk a little bit about this. Cash, we have burned about $2.02 and a half million.

I think this is kind of where we are with cash right now. Like, today is still we’re still about a million dollars of cash. I think we’re kind of able to maintain about a million dollars of cash with, you know, like, the current sales AP and AR situation, working capital. Inventory. Inventory increased from December 2024 to June 2025.

We’re kind of selling what we produce right now. So inventory had had increased a little bit at June, but a lot of that is the allocated overhead, which hits inventory. I think as of today, the inventory number is lower. We have sold off some some more. So inventory is decreasing.

This inventory does we do get the question a lot of the shelf life, and it does have a a very long shelf life, which we’re not in danger of impairment or obsolescence or spoilage, Yeah. So that’s kind of good. To the extent that we can kind of sell out of our inventory that we have, it doesn’t cost us a lot to do so.

Claudia Goldfarb, CEO, So Good: We have three minutes left.

Donna Guy, CFO, So Good: Oh, okay. Great. Well, I’m happy to speed this up. Cash flow, again, we burned, looks like, 2,700,000.0 compared to cash inflow of 12,000,000 last year due to our capital raise over the over the six month period. And we we feel like we’re we’re actually fine in from a cash standpoint.

Working capital from December until June is kind of the networking capital is kind of the same. We did burn some cash, but we also restructured our debt so that all of our current debt is now long term debt. And so, you know, that was good work by the management team to restructure that and put us in a good place. Again, our high a year ago, we were at $20.23 dollars and 56¢. Our fifty two week low, 54¢.

You know, this kind of goes along with our other peak and valley slide wherein during this period we were, you know, just kind of targeted by some anticompetitive practices that you we really just have to wait out and and, you know, do our best to find new markets, new products, and and get the share price back up. I’ll let Claudia Yeah. Give you the rest of the vision.

Claudia Goldfarb, CEO, So Good: So it’s been a bumpy year, but we’ve survived. And so now it’s going back to rebuilding and going back to growth. I really believe that with the category expansions that we’re doing, with the management team we’ve put in place

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