The Sugarmade Inc (OTCMKTS:SGMD) story continues to get more and more interesting. The company is seeing gawdy growth numbers from its BudCars cannabis delivery service division. And, according to a press release from the company this morning, that pace of growth is only accelerating as the volume of business for BudCars jumps to new levels.
Specifically, the company announced BudCars performance data for the month of June, which featured around a half-million dollars in sales, representing 36% sequential monthly top-line growth, with total sales and profits now growing by more than 30% m/m for the third consecutive month.
In case you are wondering, 30% sequential monthly growth is unreal. If you annualize that pace of growth, you are talking about a steady 2,200% on a year/year basis. Also note: 30% is the “at least” number in this story. Whenever a company says that, you know it’s because one data point in the series was about that level, and all the rest were higher. If we shift the basis just 5% higher (ie, to just 35%, as the company saw in June), the y/y rate jumps to well over 2,300%.
That type of growth is only sustained by companies if they are undergoing a transformative transition from a small operation to a much bigger role in the larger marketplace. It’s difficult to avoid the conclusion that this is precisely what we are seeing right now for Sugarmade and its BudCars segment.
It’s also important to note that this isn’t something we are seeing because of “tiny numbers” mathematics. It’s not a remarkable thing for a new local company to see 5,000% growth when it sees sales jump for $10 to $1,500.
BudCars, at $500K per month in sales, is already pacing for $6M/year presuming no further growth. And one thing we know here is that the last thing we are going to see is “no further growth”. As noted in the recent, if you take into account the rate of growth seen steadily over the past few months, the projection for annualized sales this year pushes above $21 million.
The other important point to make here is that this is decidedly not a “thin cook” that goes no deeper than a flash fire on the topline. We see that all the time from digital-only companies who find a way to show strong sales data in an unprofitable model when they get ready to court series B or C VC funding. It’s flashy, but it doesn’t represent anything substantial. You can cook up the topline in some cases. But you can’t cook up the bottom line.
In this case, Sugarmade Inc (OTCMKTS:SGMD) is piling up a gross profit growth profile that is keeping pace with the topline boom, with 31% on a sequential monthly basis added to the gross bottom-line on steady 47% margins.
But it gets even better than that: BudCars is ramping in average daily sales (+41% m/m), total orders (+34%), and average order size (+2%). All of this is month-over-month.
In other words, to sum things up: more people are paying more each, and at an increasingly rapid rate. Put another way: Everything that could be going right for BudCars, is. Period.
“June was another breakout month for BudCars growth across basically every single metric important to gauging our progress,” stated Jimmy Chan, CEO of Sugarmade. “Our pricing improved. Our average order improved. We did more business with more people and booked a significant jump in gross profits while holding our 47% gross margin level as volume increased. We look forward to continued breakout growth in July.”
Sugarmade Inc (OTCMKTS:SGMD) also advanced the story in other ways in June, including making progress toward the launch of its new LA hub (which is expected to show similar metrics and add at least $20 million in annualized sales into the mix) and the move the company is making to pick up cheap assets (licenses and production capacity) to verticalize at least some portion of the supply chain supporting BudCars distribution.
The move is anticipated to widen margins even further.
Chan continued, “As we recently outlined, the California cannabis landscape is ripe for consolidation of dormant distressed production assets, which plays powerfully into our verticalization vision. And we look forward to providing further updates on our progress in this direction in the very near future.”
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