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Hour Loop Reports First Quarter of 2025 Results

1. HOUR reported a 4.7% revenue increase to $25.8 million. 2. Net income fell to $0.7 million, down from $1.1 million last year. 3. Operating cash flow declined significantly, showing cash used of $0.02 million. 4. Gross margins decreased due to heightened competition and market conditions. 5. Management remains optimistic despite economic uncertainty about future demand.

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Why Neutral?

Revenue growth is positive, but declining net income and increased costs are concerning. Past examples show that companies often face stock price challenges when net profits decline, especially in competitive industries.

How important is it?

Investors will closely watch earnings results and future guidance, which may influence buying or selling decisions. Current performance paired with management's cautious optimism provides a balanced but cautionary outlook for stock traders.

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Immediate investor reactions may lead to volatility based on recent performance. Past market behavior indicates that quarterly performance often influences stock rapidly, presenting short-term effects.

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Profitability Continues Despite Challenges for the Overall Economy Redmond, WA, May 12, 2025 (GLOBE NEWSWIRE) -- Hour Loop, Inc. (NASDAQ: HOUR) (“Hour Loop”), a leading online retailer, announces its financial and operational results for the quarter ended March 31, 2025. Financial Highlights for First Quarter of 2025: Net revenues increased 4.7% to $25.8 million, compared to $24.7 million in the year-ago period;Net income decreased to $0.7 million, compared to $1.1 million for the three months ended March 31, 2024; andCash used in operating activities was $0.02 million, compared with cash provided by operating activities $0.5 million for the three months ended March 31, 2025 and 2024, respectively. Management Commentary “We are pleased to report our results for the first quarter of 2025. During the first quarter of 2025, we continued to deliver good revenue growth, despite a more cautious consumer outlook due to rising tariffs and fees charged by the marketplace,” said Sam Lai, CEO and interim CFO of Hour Loop. “The revenue growth rate for the first quarter was 4.7%, compared with for the year-ago period.” “However, our gross margin for the first quarter of 2025, compared with the year-ago period, was negatively affected by a challenging e-commerce environment and intense competition across the industry. Our operating expenses also increased mainly because we amended our profit-sharing frequency to quarterly for the purpose of talent retention. Overall, we believe we’ve built a solid foundation to continue generating steady growth while maintaining profitability.” “Looking forward, we’re cautiously optimistic. Despite an uncertain economy, we continue to see strong demand for our products so far in 2025. We are confident in our ability to continue delivering values to our vendors, customers, and shareholders.” First Quarter of 2025 Financial ResultsNet revenues in the first quarter of 2025 were $25.8 million, compared to $24.7 million in the year-ago period. The increase was primarily due to continued growth and maturity in our personnel and operating model, despite the overall e-commerce traffic slowdown and intense competition.Gross profit percentage for the first quarter of 2025 decreased 3.9% to 54.7%, compared to 58.6% of net revenues in the comparable period a year ago. The decrease was a function of increased market competition, and higher inbound costs.Operating expenses as a percentage of net revenues decreased 1.1% to 51.2%, compared to 52.3% of net revenues in the year-ago period. The decrease reflected better management of platform fees.Net income in the first quarter of 2025 was $0.7 million, or $0.02 per diluted share, compared to $1.1 million, or $0.03 per diluted share, in the comparable year-ago period. The decrease was driven by increased costs and expenses as a result of the reasons mentioned above.As of March 31, 2025, the Company had $1.3 million in cash and cash equivalents, compared to $2.1 million as of December 31, 2024. This decrease was driven by the loan repayment and growth of inventory.Inventories as of March 31, 2025, were $15.9 million, compared to $14.6 million as of December 31, 2024. The Company intentionally invested heavily in inventories for strategic reasons in the first quarter of 2025. Full Year 2025 Financial Outlook For the full year 2025, Hour Loop is not able to provide forward-looking guidance at this time due to ongoing economic uncertainty, primarily influenced by current tariff conditions.About Hour Loop, Inc. Hour Loop is an online retailer engaged in e-commerce retailing in the U.S. market. It has operated as a third-party seller on www.amazon.com and has sold merchandise on its website at www.hourloop.com since 2013. Hour Loop further expanded its operations to other marketplaces such as Walmart, eBay, and Etsy. To date, Hour Loop has generated practically all its revenue as a third-party seller on www.amazon.com and only a negligible amount of revenue from its own website and other marketplaces. Hour Loop manages more than 100,000 stock-keeping units (“SKUs”). Product categories include home/garden décor, toys, kitchenware, apparel, and electronics. Hour Loop’s primary strategy is to bring most of its vendors’ product selections to the customers. It has advanced software that assists Hour Loop in identifying product gaps so it can keep such products in stock year-round, including the entirety of the last quarter (holiday season) of the calendar year. In upcoming years, Hour Loop plans to expand its business rapidly by increasing the number of business managers, vendors, and SKUs. Forward-Looking Statements This press release contains statements that constitute "forward-looking statements," including with respect to Hour Loop’s business strategy, product development and industry trends. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of Hour Loop. While Hour Loop believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to Hour Loop on the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in Hour Loop’s filings with the Securities and Exchange Commission, as the same may be updated from time to time. Thus, actual results could be materially different. Hour Loop undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, after the date of this release, except as required by law. Investor Contact Finance Department, Hour Loop, Inc.finance@hourloop.com HOUR LOOP, INC. CONSOLIDATED BALANCE SHEETS(In U.S. Dollars, except for share and per share data)As of March 31, 2025 and December 31, 2024(Unaudited)   March 31, 2025  December 31, 2024        ASSETS        Current assets        Cash $1,260,122  $2,119,581 Accounts receivable, net  394,242   1,650,547 Inventory, net  15,889,482   14,640,632 Prepaid expenses and other current assets  614,685   327,894 Total current assets  18,158,531   18,738,654          Property and equipment, net  42,759   56,797 Deferred tax assets  821,205   1,060,104 Operating lease right-of-use lease assets  54,978   111,409 Total non-current assets  918,942   1,228,310 TOTAL ASSETS $19,077,473  $19,966,964          LIABILITIES AND STOCKHOLDERS’ EQUITY        Current liabilities        Accounts payable $6,859,536  $4,176,305 Credit cards payable  2,404,365   3,389,880 Short-term loan  603,227   610,967 Operating lease liabilities-current  56,478   114,540 Accrued expenses and other current liabilities  677,726   2,322,535 Due to related parties  2,660,418   4,192,995 Total current liabilities  13,261,750   14,807,222          Total liabilities  13,261,750   14,807,222 Commitments and contingencies  -   -          Stockholders’ equity        Preferred stock: $0.0001 par value, 10,000,000 shares authorized; none issued and outstanding as of March 31, 2025 and December 31, 2024, respectively  -   - Common stock: $0.0001 par value, 300,000,000 shares authorized; 35,151,440 and 35,143,460 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively  3,515   3,514 Additional paid-in capital  5,817,685   5,802,686 Retained earnings (accumulated deficit)  59,342   (595,175)Accumulated other comprehensive loss  (64,819)  (51,283)Total stockholders’ equity  5,815,723   5,159,742          TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $19,077,473  $19,966,964  The accompanying footnotes are an integral part of these unaudited consolidated financial statements. HOUR LOOP, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(In U.S. Dollars, except for share and per share data)For the Three Months Ended March 31, 2025 and 2024(Unaudited)          Three Months Ended March 31,   2025  2024        Revenues, net $25,837,090  $24,681,122 Cost of revenues  (11,691,792)  (10,228,916)Gross profit  14,145,298   14,452,206          Operating expenses        Selling and marketing  11,246,997   11,174,191 General and administrative  1,977,436   1,739,843 Total operating expenses  13,224,433   12,914,034          Income from operations  920,865   1,538,172          Other income (expense)        Other income (expense)  301   (1,156)Interest expense  (47,055)  (62,112)Other income  61,825   28,034 Total other income (expense), net  15,071   (35,234)         Income before income taxes  935,936   1,502,938 Income tax expense  (281,419)  (437,124)         Net income  654,517   1,065,814          Other comprehensive loss        Foreign currency translation adjustments  (13,536)  (16,533)         Total comprehensive income $640,981  $1,049,281          Basic and diluted earnings per common share $0.02  $0.03 Weighted-average number of common shares outstanding  35,151,351   35,095,602  The accompanying footnotes are an integral part of these unaudited consolidated financial statements. HOUR LOOP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In U.S. Dollars)For the Three Months Ended March 31, 2025 and 2024(Unaudited)          Three Months Ended March 31,   2025  2024        Cash flows from operating activities        Net income $654,517  $1,065,814 Reconciliation of net income to net cash used in operating activities:        Depreciation expenses  14,126   35,273 Amortization of operating lease right-of-use lease assets  55,383   42,892 Deferred tax assets  238,899   351,127 Stock-based compensation  15,000   36,000 Inventory allowance  497,347   637,058 Unrealized foreign exchange gain  (24,826)  - Changes in operating assets and liabilities:        Accounts receivable  1,256,305   210,133 Inventory  (1,746,197)  2,021,008 Prepaid expenses and other current assets  (286,791)  76,091 Accounts payable  2,683,231   (392,733)Credit cards payable  (985,515)  (2,543,010)Accrued expenses and other current liabilities  (2,338,386)  (1,093,909)Operating lease liabilities  (56,984)  (35,175)Income taxes payable  -   82,374 Net cash (used in) provided by operating activities  (23,891)  492,943          Cash flows from investing activities:        Purchases of property and equipment  (720)  (17,798)Net cash used in investing activities  (720)  (17,798)         Cash flows from financing activities:        Payments to related parties  (839,000)  - Net cash used in financing activities  (839,000)  -          Effect of changes in foreign currency exchange rates  4,152   (37,218)         Net change in cash  (859,459)  437,927          Cash at beginning of period  2,119,581   2,484,153          Cash at end of period $1,260,122  $2,922,080          Supplemental disclosures of cash flow information:        Cash paid for interest $4,986  $3,380 Cash paid for income tax $6,230  $- Non-cash investing and financing activities:        Operating lease right-of-use of assets and operating lease liabilities recognized $-  $123,107  The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

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