Good morning, and welcome to the Emerge Commerce second quarter 2024 results conference call. At this time, all lines on a listen-only mode. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on August 27, 2024 . Your hosts today are Ghassan Halazon, Founder and Chief Executive Officer, and Kyle Burt, Chief Financial Officer. Before we begin, I am required to provide the following statement respecting forward-looking information, which is made on behalf of Emerge and all of its representatives on this call. Certain statements made on this call will contain forward-looking information. These forward-looking statements generally can be identified by the use of words such as intend, believe, could, expect, estimate, forecast, may, and other words of similar meaning.
These forward-looking information is based on our opinions, estimates and assumptions in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Actual results could differ materially from a conclusion, forecast, expectation, beliefs, or projection in forward-looking information. Certain material factors and assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. We caution investors to not rely on the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information, Emerge filings with Canadian provincial securities regulators.
During today's call, all figures are in Canadian dollars unless otherwise stated. And with that, I'd like to hand over to Mr. Ghassan Halazon, Founder and CEO.
Thank you very much. Good morning, everyone. We appreciate you taking the time to join our Q2 2024 results conference call. Joining me today is Kyle Burt-Gerrans, our CFO. This morning, I will walk through Emerge's Q2 results and share some insights on our business, as well as our key priorities for the balance of 2024 . Following my remarks, Kyle will provide further details on our financial results. Q2 is our second quarter of our reporting based on our streamlined go-forward business, which mainly includes truLOCAL and our golf vertical. Following the sale of multiple non-core businesses, primarily to pay down debt during most of 2023 and early 2024 .
In many ways, Q2 represents a crucial turning point for our more focused business, which has meant that most of management's time and energy has been spent on optimizing our key brands directly in a more centralized fashion, rather than overseeing other founders and brand-level CEOs running operations, as was previously the case for years under our decentralized, diversified portfolio approach. With this new formula in play, we have successfully reignited growth and improved profitability. Let's dive into the results. First, we are pleased to report that our gross merchandise sales, or GMS for short, which captures the actual sales volume being transacted across our sites, was $8.4 million, a 5% increase year- over- year. We view GMS as a key figure that informs investors on our ability to grow overall customer spend on our platform and grow market share over time. Second, revenue.
We recorded revenue of $5.2 million in Q2, compared to $4.7 million in Q2 2023, an increase of 9.4%. Excluding Carnivore Club, our smallest brand, and a business that is actively eliminating loss-making revenue to optimize profitability, Emerge's revenue grew at approximately 14%. This marks our first quarter of positive organic revenue growth since Q4 2020, during the artificially high peak pandemic phase, so we are particularly proud of this breakthrough quarter for the company following years of restructuring and set-up efforts to unlock this next phase of growth. We are seeing strong revenue trends in Q3 to date, furthering our conviction in the return to growth plan we laid out earlier in the year, which remains a top priority this year.
Now that we have reported on the first half of 2024 with the go-forward business of grocery and golf verticals only, investors can extrapolate a directional annual revenue run rate baseline for the business, which, based on the past two quarters, exceeds $ 20 million in yearly revenue, noting the seasonal nature of our businesses at different times of the year. Beyond the top-line growth, the team's efforts in Q2 also translated into meaningful year-over-year gains across gross profit, gross margin, Adjusted EBITDA, and net income. Much like in Q1, we drove more gross profit in dollar terms, as well as a higher gross margin. Gross profit increased by more than 13% to $ 2.1 million versus $ 1.9 million in Q2 2023. Q2 gross margin improved to 41%, compared to 39% in Q2 2023.
These gross margin improvements reflect a series of initiatives across our businesses, including price increases, renegotiated vendor costs, improved pricing, and increased service fees, among other items. We also saw another drastic improvement in Adjusted EBITDA, which was CAD -73,000 in Q2 versus CAD -346,000 in the prior period. We can attribute this large improvement to a combination of the aforementioned revenue growth, gross margin enhancements, as well as reduced expenses. With respect to overheads, we continue to make measurable progress on reducing SG&A expenses, given our more streamlined operations that are now almost exclusively centered around truLOCAL and the golf business. These cost reductions were partly reflected in our much-improved profitability in Q1 and Q2, with additional savings being actioned in Q3 as well. Put simply, our more focused strategy requires considerably less HQ staffing and all-around expenses.
Next up, I will provide some commentary at the brand level. As a refresher for our existing investors and to recap for any first-time attendees, Emerge currently owns four brands across two main verticals, grocery and golf, in Canada and the U.S., namely truLOCAL, Carnivore Club, UnderPar, and JustGolfStuff. truLOCAL, our premium meat subscription service and Emerge's largest business by revenue, saw strong organic growth in Q2, with continued momentum in Q3 to date. Management believes truLOCAL represents an outsized strategic opportunity for the company with a large total addressable market. We view it as an anchor asset that we can build around in the food tech space at large, where we have big ambitions. We take inspiration from the $500 million market leader in the U.S. and believe the truLOCAL opportunity is one worth doubling down on.
The business continues to see favorable active customer behavior, including increased average order values, coupled with reduced overhead expenses. truLOCAL's future growth is expected to come from a mix of consumer subscription revenue growth, i.e., our core business, B2B initiatives and partnerships, geographical expansion, and acquisition opportunities down the line. Our golf vertical, which includes UnderPar and Just Golf Stuff, continues to perform well. The golf business has gained tremendously from the weakening macro climate, which has resulted in more golf courses and golf vendors returning to the marketplace platform, in some cases for the first time in years, offering more aggressive deals to seek customers. Credit card and travel partnerships have also contributed to this year's strong growth, including from Amex and Travelzoo.
Carnivore Club, our artisanal meat brand and sister site to truLOCAL, is Emerge's smallest business by revenue and is being optimized for profitability, which includes active elimination of loss-making revenue. At this time, we believe these revenue cleanup efforts are mostly complete, and we can expect Carnivore Club to have a less pronounced impact on revenue discrepancies for the balance of the year. As mentioned earlier, Emerge's Q2 2024 revenue is up approximately 14% once Carnivore Club revenue is excluded. All in all, we are making terrific progress from top line to bottom line. However, our return to organic revenue growth for the first time since late 2020, no doubt steals the show for Q2. It's been a long time coming. To sum up, focus has proven to be a wonderful thing.
Our more streamlined strategy and direct oversight of our brands is starting to pay dividends, and we are excited to build on this momentum. Now for an update on the debt side. Following the sale of WSP to Tiny earlier in Q1 and subsequent CAD 10 million dollar debt paydown, our senior debt facility was brought down to CAD 5.85 million, down from CAD 15.85 million prior to the transaction and CAD 25 million originally. Alongside this transaction, we entered into an amended facility with our existing lender, offering us an up to 24-month term, inclusive of a six-month extension, which would bring the maturity to January 31, 2026. We remain in excellent standing with our existing lender, which we have worked with since November 2019.
In addition, the recent interest rate cuts, as well as the highly anticipated upcoming rate reductions, are expected to result in meaningful cash savings for the business, given our variable rate under the facility. We believe that our improving operational results, coupled with reduced overall debt levels and a more favorable interest rate climate, could lead to the possibility of securing cheaper alternative refinancing options down the line in 2025 , further driving savings and improving cash flow. In another important step during Q2, 2024 , Emerge managed to successfully amend the convertible note, receiving 100% support from debenture holders present in person or by proxy at the meeting of the debenture holders.
The completion of the redemption under the amended terms effectively immediately reduced our debt by CAD 1.4 million, with approximately 50% of the debentures converting to equity on the redemption date at the agreed CAD 13.5 conversion price at 200% premium to our share price at the time. The amendment, the redemption, and the conversion of interest are also expected to save Emerge approximately $ 140,000 in annualized interest expense during the extended term of the debentures, with the debentures now being due in November 2026 instead of November 2025. The debentures now have an adjusted conversion price of CAD 13.5, in turn, increasing the possibility of further debt reduction down the line.
We appreciate the strong vote of confidence and unwavering support displayed by our holders in agreeing to restructure the debenture in a manner that we believe is in the best interest of all stakeholders. Inclusive of the reduced senior credit facility and the reduced convertible note, Emerge's net debt position, after subtracting approximate cash on hand, is now around $ 5 million, down from CAD 27.8 million combined originally. The company's top priorities in the near term remain unchanged from Q1. Those being drive organic growth, extract further operational efficiencies given our streamlined operations, and opportunistically explore avenues to further pay down debt and reduce interest expense.
Finally, I would like to take this opportunity to offer my sincere gratitude to our relenting team, unrelenting team, board, shareholders and trusted partners as we deliver this breakthrough quarter and look to build on this momentum for the balance of 2024 and beyond. I will now turn the call over to Kyle for a review of our financial results.
Thanks, Ghassan. Good morning, everyone. For our second quarter results, as a reminder, WholesalePet results have been reflected as discontinued operations in our financial statements, with prior period reclassified to account for this where noted. Our gross merchandise sales, or GMS, for the quarter was CAD 8.4 million, an increase of 5% compared to the prior year at CAD 8.0 million. As a reminder, GMS is a non-GAAP measure and represents the total dollar value of customer purchases of goods and services through our brands, excluding applicable taxes and net of discounts and refunds. GMS is also a leading indicator of future deferred revenue in certain instances where revenue is recognized at a time of shipment or redemption, which may occur in future quarters.
Q2 revenue from continuing operations was CAD 5.2 million versus CAD 4.7 million in Q2 2023. Carnivore Club, Emerge's smallest business, continues to be optimized for profitability, which includes the elimination of loss-making revenue. Excluding Carnivore Club, Emerge's Q2 2024 revenue increased by approximately 14%. Gross profit for the quarter increased to CAD 2.1 million versus CAD 1.9 million in the prior year. Gross margins also increased to 41% versus 39% as we continued to review and execute on a variety of initiatives aimed at maintaining or increasing gross margins. Adjusted EBITDA losses were CAD 70,000, compared to a loss of CAD 346,000 in 2023.
This decrease is mainly attributable to a combination of revenue growth year over year, stronger gross margin performance as previously noted, coupled with reductions to SG&A through efficiencies realized during the quarter and a continued focus on improving profitability. The net loss from continuing operations for Q2 was CAD 0.66 million, compared to CAD 1.76 million for the same period in the prior year. The majority of the net loss in Q2 2024 was attributable to a one-time non-cash modification expense related to the restructured convertible note. Excluding this one-time charge, net loss from continuing operations for the Q2 2024 would have been CAD 0.37 million. The decrease in net loss this year over last year is mainly due to lower amortization and depreciation, lower finance costs, and favorable foreign exchange and other gains.
The company's cash on hand at June 30, 2024 was CAD 2.2 million. Finally, an update with respect to the company's Omnibus Equity Incentive Plan. This morning, we announced a total of CAD 2,334,390 options were voluntarily canceled by certain directors and officers of the company. The options were previously issued with an effective price of between CAD 0.11 and CAD 0.79 per share. Prior to this cancellation, each vested option entitled the holder to receive one common share of the company. I will now pass it back to Ghassan for some closing comments.
Thanks, Kyle. In closing, we consider Q2 to be a breakthrough quarter for Emerge. First and foremost, because of our return to organic revenue growth, a feat not accomplished since late 2020, but also because we drove visible improvements across the P&L while further reducing our debt and starting to benefit from interest rate reductions as we enter a new economic cycle that we view favorably as it pertains to our business. Management's near full-time focus on directly managing and operating truLOCAL and our golf business has resulted in multiple unlocks in the early going. We believe our streamlined operations and focused approach are starting to pay off, and we can see that in our Q2 results, with continued momentum in Q3 to date.
As we recapped earlier in the year, our number one priority has now shifted from debt reduction last year to driving excellent operational results and ultimately delivering on a return to positive organic growth year for the business overall in 2024, along with much improved profitability, both of which we believe will be crucial to unlock shareholder value and offer the company new optionality to reignite our business to new heights while also reducing our cost of capital. We hope investors are satisfied with the results we have delivered in Q2. We view them as a big step in the right direction and intend on executing relentlessly until the full potential of our business is realized. Thank you very much, everyone, for joining us today and for your continued interest in Emerge Commerce.
We look forward to reporting on our progress throughout the balance of 2024 and beyond. Have a nice day. Thank you very much, everyone.
Ladies and gentlemen, this concludes your conference call for today. You may now disconnect. Thank you.