BRSH: Growing Subscriber Base & Expanding Product Portfolio Expected To Drive Revenue Growth

By [M. Marin]( NASDAQ:BRSH Founded in 2018, Brüush (NASDAQ:BRSH) is an e-commerce direct-to-consumer oral care brand marketing an electric toothbrush that is available in several colors. The product leverages what the company views as industry-leading sonic technology that is capable of six different cleaning modes. Utilizing a razor-razor blade model, after the initial brush, or starter kit, has been sold, the company sells replacement brush heads under a refill plan that can be a la carte or, preferably, subscription. The company has modeled this plan on other personal hygiene clubs such as Harry’s club or Dollar Shave Club. Brüush is positioning itself to benefit from anticipated growth in its subscriber base as customers seek the convenience of obtaining brush head refills by mail on a regular basis. At this early stage in its development, Brüush has more than 28,000 active subscribers and has been growing rapidly (see below). In fact, Brüush believes it is disrupting the oral care space by providing consumers access to premium oral care products with a product portfolio that currently consists of a sonic-powered electric toothbrush kit and brush head refills. Moreover, the company expects to expand its product offerings through both organic new product introductions and expand its distribution footprint into new channels. The company intends to introduce several new subscription-based consumable oral care items such as toothpaste, mouthwash, dental floss, a whitening pen and an electric toothbrush specifically made for children, among other new products under development or planned. For people who make their initial purchase of the company’s original core product, the Brüush Kit includes: ▪ Brüush electric toothbrush ▪ three brush heads ▪ magnetic charging stand & USB power adapter ▪ travel case Studies have shown that there are often advantages to using an electric toothbrush versus a traditional manual one. For instance, a 2019 study by the [Oral Health]( Foundation concluded that people who use an electric toothbrush have healthier gums, fewer instances or levels of tooth decay and generally are able to retain their teeth for a longer period of time compared with those people who only use a manual toothbrush. The ADA (American Dental Association) notes that electric toothbrushes have advantages for people who have dexterity problems … or those who have dental appliances, like braces. Nevertheless, despite their advantages in many cases, electric toothbrushes have relatively low penetration compared to traditional manual toothbrushes, which market research firm Mintel estimates at 36% of adults (and about 50% of people 55 years and older with an annual income of $75,000 or more). Given the low penetration among younger people, the company’s strategy is to be the leading oral care brand for the 18 to 45-year demographic group. An estimated 70% of its customer base falls in this age category. Moreover, market research indicates that some 67% of millennials prefer purchasing online. One gating factor constraining sales of electric toothbrushes is that electric toothbrushes generally cost more than manual ones and are sometimes perceived as being more cumbersome to purchase and use, given the need to replace and refill brushes. The ADA (American Dental Association) notes that “while the powered toothbrushes can be more expensive than most manual toothbrushes, some people prefer the powered version… People who have dexterity problems … or those who have dental appliances, like braces, may find a powered toothbrush easier to use.” The company believes the design of the Brüush toothbrush and convenience of ordering online create an attractive way for younger people to enter this niche of the oral care market. As an incentive to subscribe, the company offers an initial discount on the Brüush Kit if consumers enroll in the company’s subscription plan at the same time that they buy the starter kit. Consumers are able to cancel their subscriptions at any time if they decide that the plan does not work for them, although to-date the company has experienced low levels of churn and product return (see below). After the initial purchase of the Brüush Kit, the company believes that the cost of the subscription refills generally is in-line with that which the consumer would pay to replace the manual brush on a regular basis. The ADA recommends that people replace toothbrushes “every three to four months or more often if the bristles are visibly matted or frayed.” Given the perceived convenience of the subscription model to the consumer, subscription-based companies have emerged not only in the personal hygiene space with companies such as Harry’s and Dollar Shave Club, but also in the food category with offerings from Blue Apron and Home Chef and fashion (Fix Stitch), among other subscription-based companies. According to [Forbes]( subscriptions “don't change what consumers want, subscriptions get consumers to look at existing products in a new way.” Forbes notes that subscriptions have experienced rapid growth in many consumer categories. Nearly 80% of the company’s customers purchase the Brüush Kit with a subscription. To-date, the company’s subscriber churn rate has been a low 12% on an annual basis and the return rate is less than 1%. By comparison, Dollar Shave Club and Harry’s experience annual churn of nearly 70%, according to Bloomberg Second Measure. One of the consumer benefits of a subscription model is that the consumer does not need to think about running out to the store to purchase new brush refills, as they are automatically mailed every few months to replace older brushes in a timely manner. The consumer also avoids the need to visit a bricks-and-mortar retailer and often request help with the purchase, as these products are kept behind locked displays in many cases. For Brüush and other companies that employ the subscription model, a key benefit is the stickiness the model creates with customers and the recurring revenue stream it generates. Marketing strategy includes critical promotional endorsements from Kevin Hart In late 2020, Brüush signed Kevin Hart as its celebrity spokesperson and endorser. Kevin Hart has about 150 million Instagram followers. Moreover, as the company’s strategy is to become the go-to oral care brand for its target 18 to 45-year demographic group, the company markets what it views as the competitive advantages of its product portfolio, including the sleek design of the toothbrush offered in a variety of colors and the convenience of the subscription model on its own website, as well as through advertising via a broad based multimedia plan that includes social media. Given how active the Brüush target market is on social media, the company engaged more than 200 influencers last year to promote the Brüush electric toothbrush, generally on a barter basis. The company also sees the high-end packaging of its products as an attractive complement that enhances the overall consumer satisfaction with the service. Management has experience growing early stage companies The company completed its IPO on August 6, 2022. Chief Executive Officer (CEO) Aneil Manhas is a former investment banker and private equity investor. He founded the company and has served as its CEO since Brüush’s inception in 2018. His previous companies include Surface 604, a manufacturer and distributor of electric bicycles in North America that he founded in 2015, as well as GVA Brands Corporation, a distributor of powersport vehicles and related outdoor products in Canada that he purchased in 2014. $12 billion market - competitive landscape The company currently sells products in North America in the U.S. (60% of sales) and Canada (40% balance). The North American oral care market is estimated at $12 billion, of which electric toothbrushes account for roughly $1+ billion. Globally, the electric toothbrush market is estimated at about [$3.1]( billion as of 2020 by market research firm Allied Market Research, which forecasts that the market will reach worldwide sales of about $6.5 billion by 2031, which represent a CAGR of more than 8% from 2022 to 2031. One factor behind this expected growth is that oral health has become a key public health challenge in many markets, reflecting dietary issues, and alcohol and cigarette usage, among other factors. The World Health Organization (WHO) cites a 2019 Global Burden of Disease study that estimates that oral diseases affect nearly 3.5 billion people worldwide. In fact, government agencies such as WHO and the American Dental Association (ADA) have been promoting the benefits of oral health, which has been positive for the electric toothbrush market, according to Allied Market Research, which notes that “the rise in government initiatives for the growing acceptance and adoption of the electric toothbrush in the global market is expected to create lucrative opportunities for the growth and development of the global electric toothbrush market…” [WHO]( notes that “[t] here is a proven relationship between oral and general health.” The North American electric toothbrush industry has traditionally been a duopoly dominated by two major brands: Philips Sonicare, which is owned by Dutch conglomerate Koninklijke Philips N.V., and Oral-B, a Proctor & Gamble subsidiary. Smaller players such as Burst, Goby, Moon and Quip have entered the market over the past few years, generally offering electric toothbrushes at lower prices. High-end toothbrush models retail for over $200. Brüush believes that, unlike the product offered by other new market entrants, the quality of the Brüush electric toothbrush is comparable to the high-end models offered by market leaders Philips Sonicare and Oral-B but offered at a lower price. Given the e-commerce nature of Brüush’s business – the majority of sales come through its proprietary website and Brüush also sells through Amazon and certain retailers, including Indigo, Harry Rosen, Macy’s and Urban Outfitters, for online sales – the company retains a higher margin of sales (although Brüush plans to expand to certain bricks-and-mortar retailers selectively over time) and secures recurring revenue through the subscription model. Revenue growth Revenue has been growing, as the company’s subscription base expands. As noted, Brüush currently has more than 28,000 active subscribers. This growth contributed to Brüush’s revenue for the nine months ended October 31, 2021 coming in just shy of $2.0 million compared to $901k for the twelve months ended January 31, 2021 (the company changed its fiscal year), as the company achieved 67% higher sales of Brüush Kits and a more than 5-fold (up 617%) increase in sales of Brüush Refills on a larger subscriber base. For the full calendar year of 2021, revenues more than quadrupled to $901,162 compared to $207,404 for the comparable period of 2020. Risks Among the risks Brüush faces, is that of increased competition, as the market currently is dominated by two well-capitalized players who might increase their marketing efforts and brand extensions, as well as regulatory risk on potential new product launches (toothpaste is considered an over-the-counter drug product and is therefore subject to FDA approval requirements), the potential need to raise funds and foreign exchange currency risk on the roughly 40% of sales from Canada, among other risks. Learn More about Brüush by gaining access to the latest research report [Download Report]( This website is wholly owned by scd media llc (d/b/a “smallcapsdaily.com”). Our reports are advertorials and are for general information purposes only. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. 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