Digital Brands Group, Inc. (NASDAQ: DBGI) is adding more firepower to its digitally-focused apparel brand portfolio. This time, it's on the payments side, with DBGI announcing that it's launching an exclusive DSTLD branded offer on the recently upgraded Google Pay App.

It's an important milestone reached and taps into the strength of an app used by more than 150,000,000 people every month across forty countries. It also fits right into DBGI's wheelhouse as far as demographics are concerned, with Google Pay evenly balanced between women and men. Better yet, it reaches well toward DBGI's target market, serving a large Gen Z and Millennial crowd between 18 to 34 years old.

Benefits Sooner Than Later

The better news is that the DSTLD brand could benefit sooner than later. Laura Dowling, Chief Marketing Officer of Digital Brands Group, said,"we are working with a dedicated Google Pay onboarding team right now to launch our exclusive DSTLD offer within the coming days. The compelling nature of this first initiative, focused on denim, should entice many of the payment app users to visit our site, engage with the product and convert just in time to receive their product before the holiday if they like! We are excited to not only partner with Google on an exclusive offer, but to more importantly have exposure to a new very large addressable market that represents significant spending power in addition to their appreciation of quality denim."

This initial promotion may be the first of many as the company heads into 2022. Keep in mind, DSTLD is only one of its fast-growing brands. They also own Bailey 44, Stateside, and Harper & Jones. And according to previous guidance, each is earning impressive sales traction through direct-to-consumer and wholesale channels. Moreover, they are reaching more consumers with a business model designed to have revenues flow faster toward the bottom line.

In that respect, DBGI is leveraging a business model derived from its founding as a digitally native-first vertical brand. Digital native first brands are those founded as e-commerce driven businesses. However, while those online sales constitute a meaningful percentage of net sales, the goal is to expand delivery into wholesale or direct retail channels. But, the best part of the model is that, unlike typical e-commerce brands, as a digitally native vertical brand, companies like DBGI maintains control of their distribution and can source products straight from their third-party manufacturers. Thus, by then selling directly to the end consumer, they cut out the intermediaries that drive cost-of-goods higher. That saves money. A lot of it.

Not only that, staying engaged with its customers is proving to have its advantages. Instead of one-and-done transactions, DBGI intends to own the customer's "closet share" by leveraging client data and purchase history to create personalized, targeted content and looks for that specific customer cohort. And by enhancing its sales strategy through an omnichannel brand offering, they expect its styles and content to attract an audience beyond its online market at selected wholesale and retail storefronts. The sought-after result- driving Lifetime Value while increasing new customer growth.

Strong Q3 may Be Precursor Of Better Things To Come

Keep in mind, too, DBGI is doing pretty well. In fact, they posted a record-setting quarter in November, presented decidedly bullish guidance, and told investors to expect at least one more acquisition by the end of this year. If so, and assuming new revenues come quickly, current valuations on a peer-multiple basis may be exposing a massive investment opportunity.

Thus, at roughly $2.38 today, the valuation disconnect looks more than attractive from an investment perspective; it's compelling. Moreover, revenue-generating momentum is on its side. In Q3, DBGI generated $2.2 million in revenues, a roughly 75% increase over the prior quarter. In addition, guidance called for more of the same, with management expecting current sales momentum to help double its revenues to $4 million in the current quarter. While that's excellent news for Q4, it may be only the start of a tsunami of new revenues in 2022, with DBGI guiding for sales to reach upwards of $42.5 million.

Remember, those expected gains are planned despite one of the most challenging times in the apparel sector's history. Moreover, if markets strengthen, revenues may even top the high end of its forecast. Here's the more excellent consideration- DBGI's bullish guidance does not include any impact from planned acquisitions. Thus, with DBGI already laying the expectation for one to happen this quarter, current estimates may need to be revised considerably higher.

Of course, its brands are responsible for the growth. And each appears to be earning sales traction at an accelerating pace.

Brand Performance Scores Big

There, sales data supports that all its brands are in hyper-growth mode. And better still, 2022 will be the first time its current brand portfolio will contribute an entire year's worth of revenues. So, despite the record-setting gains announced in Q3, they reflected only a limited period of revenue contribution from its brand portfolio.

Moreover, DBGI started Q4 with an ambitious marketing plan that saw tremendous results after spending only a fraction of its planned budget. And the numbers were impressive. DBGI reported its Bailey 44 brand saw a 379% surge and DSTLD a 52% jump in revenues after spending only a small part of their respective ad budgets. As of that report date, DBGI said it spent only about $30,000 of a marketing budget of roughly $500,000. Thus, the campaign's dollar-to-dollar returns are more than impressive; they can be referred to as phenomenal.

And better yet, those surging revenues are falling faster toward the bottom line. DBGI said its gross profit margin increased 96% year over year to 55.9%. And that's a result of the company realizing the benefits inherent to its shared services platform. Heading into 2022, DBGI expects margin expansion to continue, and if all goes according to plan, it can lead to DBGI generating EBITDA positive results as early as Q1 of next year.

Notably, the triple-digit growth for some of its brands isn't a coincidence. It results from a portfolio of brands that are attracting significant consumer attention and their dollars. Looking at each, its Bailey 44, DSTLD, Stateside, and Harper & Jones brands are all reaching new sales milestones as demand for its styles surge from bringing forward-thinking fashions and inspired styling to the market. (View DBGI's current brand portfolio here.)

Justifying A Higher Valuation

It's a big reason why revenues are doubling Q over Q. Moreover, its revenue and brand growth make a strong case for higher share price valuations. And so do recent IPO's that set a standard for industry multiples. Considering those, the IPO's of a.k.a Brands (NYSE: AKA) and Solo Brands (NYSE: DTC) make a case for DBGI to be an $11 stock. How? By applying similar 5X revenue multiples. But, here's the kicker. DBGI has a capital structure that may place them better positioned to grow.

And that would justify a premium even above the 5X multiple. Other factors also come into play, including DBGI brands and revenues growing at warp speed, its low O/S count, and its mission to find and close accretive cash-flow positive acquisitions. Add that to a strong quarter and excellent guidance, the path of least resistance may be to the upside. If so, expect DBGI stock to be a fashionable trade heading into 2022.

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