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Hour Loop Reports Second Quarter of 2025 Results

1. HOUR's Q2 2025 net revenues fell 3.4% year-over-year. 2. Net income jumped to $1.2 million, doubling last year's performance. 3. Strategic price adjustments improved gross profit margin to 57.2%. 4. Cash reserves decreased significantly to $0.3 million amid rising inventory. 5. HOUR's full year guidance remains uncertain due to tariff impacts.

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FAQ

Why Bullish?

Despite revenue decline, improved profitability showcases effective cost management and resilience, akin to historical resilience seen in similar retail scenarios during economic downturns.

How important is it?

The article highlights substantial financial indicators that create potential for stock appreciation. Investors value profitability amidst revenue challenges.

Why Short Term?

Immediate market confidence may rise due to strong income performance, but uncertainty from tariffs poses a risk affecting stability in the next quarters.

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Profitability Continues Despite Challenges for the Overall Economy Redmond, WA, Aug. 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 June 30, 2025. Financial Highlights for Second Quarter of 2025: Net revenues decreased 3.4% to $27.1 million, compared to $28.1 million in the year-ago period;Net income increased to $1.2 million, compared to $0.6 million in the year-ago period; andCash used in operating activities for the six months ended June 30, 2025, was $0.9 million, compared to cash provided by operating activities of $0.9 million in the year-ago period. Management Commentary “The second quarter of 2025 brought meaningful disruption to the retail sector as new U.S. trade actions targeting Chinese imports reshaped sourcing dynamics, pressured margins, and introduced heightened uncertainty across global supply chains. Retailers had to adapt quickly to rising costs and increased operational complexity.” said Sam Lai, CEO and interim CFO of Hour Loop. “Despite these headwinds, Hour Loop delivered a strong quarter. Net income was nearly double compared to the same period last year, even as revenue declined modestly — marking our best second quarter performance to date.” “This outcome was not accidental. Over the past several years, we’ve made focused investments to improve our operating efficiency, streamline our cost base, and build margin resilience. In the second quarter of 2025, we saw that effort materialize through expanded margins and reduced operating expenses. These improvements weren’t short-term fixes — they are structural gains that we believe position us to weather volatility and outperform through cycles.” “Looking forward, we believe we are well-positioned for the second half of the year. Our strengthened operating model gives us the flexibility to defend margins or pursue growth offensively as conditions evolve.” “To our shareholders — thank you for your continued trust. To our team around the world — your focus and execution made this performance possible. We’re proud of what we’ve accomplished together, and we remain committed to building long-term value, even in uncertain times.” Second Quarter of 2025 Financial Results Net revenues in the second quarter of 2025 were $27.1 million, compared to $28.1 million in the year-ago period. The decrease was mainly impacted by higher sales prices. Gross profit percentage for the second quarter of 2025 increased 1.5% to 57.2% of net revenues, compared to 55.7% of net revenues in the comparable period a year ago. The increase was primarily driven by strategic price adjustments. 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 was mainly caused by the significant reimbursement for the claims of last year. Net income in the second quarter of 2025 was $1.2 million, or $0.04 per diluted share, compared to $0.6 million, or $0.02 per diluted share, in the comparable year-ago period. The increase was driven by decreased costs and expenses as a result of the reasons mentioned above. As of June 30, 2025, the Company had $0.3 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 inventories. Inventories as of June 30, 2025, were $20.9 million, compared to $14.6 million as of December 31, 2024. The Company intentionally ramped up inventory investment during the second 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 June 30, 2025 and December 31, 2024(Unaudited)   June 30, 2025  December 31,2024        ASSETS        Current assets        Cash $325,354  $2,119,581 Accounts receivable, net  477,955   1,650,547 Inventory, net  20,940,746   14,640,632 Prepaid expenses and other current assets  525,287   327,894 Total current assets  22,269,342   18,738,654          Property and equipment, net  40,574   56,797 Deferred tax assets  513,152   1,060,104 Operating lease right-of-use lease assets  137,465   111,409 Total non-current assets  691,191   1,228,310 TOTAL ASSETS $22,960,533  $19,966,964          LIABILITIES AND STOCKHOLDERS’ EQUITY        Current liabilities        Accounts payable $8,584,090  $4,176,305 Credit cards payable  2,980,539   3,389,880 Short-term loan  683,760   610,967 Operating lease liabilities-current  75,897   114,540 Accrued expenses and other current liabilities  732,367   2,322,535 Due to related parties  2,660,418   4,192,995 Total current liabilities  15,717,071   14,807,222          Non-current liabilities        Operating lease liabilities-non-current  61,334   - Deferred tax liabilities  19,464   -  Total non-current liabilities  80,798   - Total liabilities  15,797,869   14,807,222 Commitments and contingencies  -   -          Stockholders’ equity        Preferred stock: $0.0001 par value per share, 10,000,000 shares authorized, none issued and outstanding as of June 30, 2025 and December 31, 2024  -   - Common stock: $0.0001 par value per share, 300,000,000 shares authorized, 35,160,190 and 35,143,460 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively  3,516   3,514 Additional paid-in capital  5,832,685   5,802,686 Retained earnings (accumulated deficit)  1,236,343   (595,175)Accumulated other comprehensive income (loss)  90,120   (51,283)Total stockholders’ equity  7,162,664   5,159,742          TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $22,960,533  $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 and Six Months Ended June 30, 2025 and 2024(Unaudited)   Three Months Ended June 30,  Six Months Ended June 30,   2025  2024  2025  2024              Revenues, net $27,103,106  $28,070,707  $52,940,196  $52,751,829 Cost of revenues  (11,605,754)  (12,445,297)  (23,297,546)  (22,674,213)Gross profit  15,497,352   15,625,410   29,642,650   30,077,616                  Operating expenses                Selling and marketing  11,715,571   12,843,697   22,962,568   24,017,888 General and administrative  2,160,930   1,844,517   4,138,366   3,584,360 Total operating expenses  13,876,501   14,688,214   27,100,934   27,602,248                  Income from operations  1,620,851   937,196   2,541,716   2,475,368                  Other (expenses) income                Other expense  (2,300)  (4,777)  (1,999)  (5,933)Interest expense  (43,782)  (61,984)  (90,837)  (124,096)Other income  7,912   59,477   69,737   87,511 Total other expenses, net  (38,170)  (7,284)  (23,099)  (42,518)                 Income before income taxes  1,582,681   929,912   2,518,617   2,432,850 Income tax expense  (405,680)  (280,762)  (687,099)  (717,886)                 Net income  1,177,001   649,150   1,831,518   1,714,964                  Other comprehensive income (loss)                Foreign currency translation adjustments  154,939   (8,058)  141,403   (24,591)                 Total comprehensive income $1,331,940  $641,092  $1,972,921  $1,690,373                  Basic and diluted income per common share $0.04  $0.02  $0.06  $0.05 Weighted-average number of common shares outstanding  35,160,095   35,108,804   35,155,795   35,102,203  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 Six Months Ended June 30, 2025 and 2024(Unaudited)   Six Months  Six Months   Ended  Ended   June 30,  June 30,   2025  2024        Cash flows from operating activities        Net income $1,831,518  $1,714,964          Reconciliation of net income to net cash used in operating activities:        Depreciation expenses  23,517   70,920 Amortization of operating lease right-of-use lease assets  122,018   98,773 Deferred tax assets  546,952   571,296 Deferred tax liabilities  19,464   - Stock-based compensation  30,001   36,000 Inventory allowance  416,196   645,379 Unrealized foreign exchange gain  237,028   - Changes in operating assets and liabilities:        Accounts receivable  1,172,592   (5,594)Inventory  (6,716,310)  (1,026,905)Prepaid expenses and other current assets  (197,393)  37,203 Accounts payable  4,407,785   1,875,374 Credit cards payable  (409,341)  (2,120,514)Accrued expenses and other current liabilities  (2,283,745)  (888,522)Operating lease liabilities  (125,712)  (92,899)Income taxes payable  -   33,700 Net cash (used in) provided by operating activities  (925,430)  949,175          Cash flows from investing activities:        Purchases of property and equipment  (801)  (34,593)Net cash used in investing activities  (801)  (34,593)         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  (28,996)  (51,838)         Net change in cash  (1,794,227)  862,744          Cash at beginning of the period  2,119,581   2,484,153          Cash at end of the period $325,354  $3,346,897          Supplemental disclosures of cash flow information:        Cash paid for interest $11,095  $9,883 Cash paid for income tax $52,841  $109,260 Non-cash investing and financing activities:        Operating lease right-of-use of assets and operating lease liabilities recognized $134,648  $172,903  The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

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