Shares of a.k.a. Brands (AKA) have gained 1.4% over the past four weeks to close the last trading session at $10.15, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $20.5 indicates a potential upside of 102%.The average comprises four short-term price targets ranging from a low of $9.00 to a high of $30.00, with a standard deviation of $11.09. While the lowest estimate indicates ...

Summary of AKA Brands Holding (AKA) Conference Call Company Overview - AKA Brands is a portfolio of brands targeting the next generation of consumers through an omnichannel approach, primarily focusing on direct-to-consumer and expanding into stores and wholesale [2][3] - The company operates four main brands: Princess Polly, Petal and Pop, Culture Kings, and Minimal, with Princess Polly being the largest, accounting for about 50% of the overall portfolio [4][5] Core Business Strategies - **Data-Driven Merchandising**: The company employs a "test and repeat" model, introducing approximately 100 new styles weekly, with initial low inventory risk [15][16] - **Influencer Marketing**: Emphasis on working with smaller, more authentic influencers rather than mega influencers, which is seen as more economical and effective [17][18] - **Omnichannel Expansion**: The company is expanding its physical presence, having opened 11 stores for Princess Polly in the U.S. and planning to open 8 to 10 more in the next year [26][29][30] Brand Performance - **Princess Polly**: Focused on the teenage and college demographic, has seen significant growth in the U.S. and internationally, with successful store openings [6][27] - **Petal and Pop**: Targeting a slightly older female demographic, has successfully entered Nordstrom stores and is expanding its wholesale presence [8][32] - **Culture Kings**: A streetwear brand that combines sports, music, and fashion, has opened a flagship store in Las Vegas, which serves as a marketing and sales hub [11][12][13] - **Minimal**: Focused on runway-inspired streetwear for men, leveraging athlete endorsements for marketing [14] Financial Performance - The company reported a 9.5% growth on a constant currency basis and a 14% increase in the U.S. market [37] - Projected sales for the year are between $600 million to $612 million, with EBITDA expected to be between $24.5 million to $27.5 million [38] Challenges and Mitigation Strategies - **Earnings Per Share (EPS) Concerns**: The decline in EPS is attributed to amortization from acquisitions and tariffs affecting performance [41][42] - **Sourcing and Tariff Mitigation**: The company is diversifying its supply chain away from China, seeking dual sourcing options, and has implemented pricing actions to offset tariff impacts [43][44][45] Long-Term Growth Opportunities - The company sees significant growth potential in the U.S. market and is exploring international expansion and acquisition opportunities to accelerate brand growth [35][36] Key Metrics - Approximately 30% of new customers are being introduced through physical stores [26][28] - The company aims for a payback period of two years or less for new store investments [31]

Group 1 - The stock of a.k.a. Brands (AKA) closed at $11.1, showing a 0.1% gain over the past four weeks, with a mean price target of $20.5 indicating an 84.7% upside potential [1] - The mean estimate includes four short-term price targets with a standard deviation of $11.09, where the lowest estimate is $9.00 (18.9% decline) and the highest is $30.00 (170.3% increase) [2] - Analysts show strong agreement on the company's ability to report better earnings, with a positive trend in earnings estimate revisions correlating with potential stock upside [4][11] Group 2 - The Zacks Consensus Estimate for the current year has increased by 5.3% over the past month, with one estimate rising and no negative revisions [12] - AKA holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While the consensus price target may not be a reliable indicator of potential gains, it does provide a directional guide for price movement [14]

A.k.a. Brands (AKA 0.93%), a portfolio company behind digital and omnichannel fashion brands, reported results for Q2 2025 on August 6, 2025. The headline news from the release was stronger-than-expected GAAP revenue of $160.5 million for Q2 2025, ahead of the $155.8 million GAAP analyst estimate, and a GAAP loss per share of $(0.34), also less than the anticipated loss of $(0.505). Revenue grew 7.8% compared to the same period last year. While the net loss (GAAP) widened year over year to $(3.6) million, t ...

Group 1 - a.k.a. Brands reported a quarterly loss of $0.34 per share, better than the Zacks Consensus Estimate of a loss of $0.46, but worse than a loss of $0.22 per share a year ago, representing an earnings surprise of +26.09% [1] - The company posted revenues of $160.52 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.66%, compared to year-ago revenues of $148.93 million [2] - a.k.a. Brands shares have declined approximately 39.7% since the beginning of the year, while the S&P 500 has gained 7.1% [3] Group 2 - The earnings outlook for a.k.a. Brands is mixed, with the current consensus EPS estimate for the coming quarter at -$0.44 on revenues of $155.12 million, and -$2.13 on revenues of $606.93 million for the current fiscal year [7] - The Zacks Industry Rank for Retail - Apparel and Shoes is currently in the bottom 22% of over 250 Zacks industries, indicating potential challenges for the stock's performance [8]

Financial Data and Key Metrics Changes - Net sales increased approximately 9.5% on a constant currency basis to $160.5 million, marking the fifth consecutive quarter of growth [6][26] - Adjusted EBITDA was $7.5 million, in line with expectations, compared to $8 million in the same period last year [8][32] - Gross margin declined 20 basis points to 57.5%, slightly ahead of expectations, impacted by elevated tariffs [28][29] - Active customer count rose to 4.13 million, a 3% increase year over year [27] Business Line Data and Key Metrics Changes - U.S. net sales grew 14% to $108 million, driven by successful merchandising and marketing initiatives [6][26] - Australia region's net sales were flat at $45.7 million, ahead of expectations due to improved margins [6][26] - Princess Polly, the largest brand, accounted for approximately half of total revenue, with strong performance in dresses and omnichannel strategy [13][16] Market Data and Key Metrics Changes - Active customers grew 3% on a trailing twelve-month basis, with global orders increasing by 7% [7] - Princess Polly's TikTok shop revenue increased by 60% year over year, indicating strong engagement on social media platforms [14] - Culture Kings in Australia saw double-digit revenue growth in the second quarter, reflecting successful turnaround efforts [22] Company Strategy and Development Direction - The company is focused on expanding its direct-to-consumer channels and enhancing brand awareness through physical retail growth and wholesale partnerships [12][17] - Plans to open 8 to 10 new Princess Polly stores in 2026, continuing to leverage data for optimal locations [7][43] - Emphasis on diversifying the supply chain to mitigate tariff impacts and enhance operational flexibility [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the macro environment and highlighted the resilience of the business model despite tariff challenges [24][25] - The company anticipates that sourcing diversification and strategic price increases will offset tariff impacts in Q4 and beyond [11][35] - Positive outlook for the second half of the year, with expectations for net sales growth between 5% to 7% [35] Other Important Information - The company ended the quarter with $23.1 million in cash and cash equivalents, down from $25.5 million a year ago [33] - Inventory levels decreased by 13% year over year, indicating improved inventory management [33] - The company is committed to long-term brand building and sustainable fashion practices, as evidenced by Princess Polly's B Corp certification [15] Q&A Session Summary Question: Thoughts on distribution model between DTC, e-commerce, and wholesale - Management highlighted the success of the omnichannel strategy, with strong growth in U.S. sales and positive customer reactions in stores [40][42] Question: Long-term sourcing structure approach - Management discussed the shift from predominantly sourcing in China to diversifying supply chains, enhancing flexibility and resilience [44][46] Question: Gross margin dynamics in the third quarter - Management confirmed a similar 120 basis point headwind from tariffs in Q3, but expected slight gross margin expansion due to improved inventory management [53][54] Question: Active customer growth and order frequency - Management attributed growth in active customers to effective engagement strategies and the test and repeat merchandising model [56][58] Question: Inventory position ahead of the holiday season - Management expressed confidence in inventory levels returning to desired positions by the holiday season, despite a lighter inventory at the end of Q2 [72][74] Question: Breakdown of U.S. business growth - Management noted strong demand across channels, with positive results from Nordstrom partnerships and retail store performance [79][80] Question: Pricing strategy across different channels - Management indicated successful pricing actions taken across brands, allowing for offsetting tariff impacts and maintaining gross margins [82][84] Question: Opportunities beyond Nordstrom for wholesale - Management acknowledged potential for expanding wholesale partnerships, particularly for Petal and Pup, while focusing on direct-to-consumer for Princess Polly [85][86]

PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial information for the interim periods, including financial statements and management's analysis [ITEM 1. FINANCIAL STATEMENTS](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements of a.k.a. Brands Holding Corp. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of income, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes on significant accounting policies, assets, liabilities, equity, and other financial disclosures [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $410,823 | $385,204 | | Total current assets | $155,175 | $144,769 | | Cash and cash equivalents | $23,105 | $24,192 | | Inventory | $92,455 | $95,750 | | Total liabilities | $296,683 | $267,570 | | Total current liabilities | $117,167 | $97,038 | | Total stockholders' equity | $114,140 | $117,634 | - Total assets increased by **$25.6 million** (6.6%) from December 31, 2024, to June 30, 2025, primarily driven by increases in property and equipment, operating lease right-of-use assets, and goodwill[17](index=17&type=chunk) - Total liabilities increased by **$29.1 million** (10.9%) over the same period, mainly due to increases in accounts payable, accrued liabilities, and operating lease liabilities[17](index=17&type=chunk) [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net loss over specific reporting periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $160,524 | $148,931 | $289,181 | $265,771 | | Gross profit | $92,344 | $85,969 | $166,000 | $151,643 | | (Loss) income from operations | $(491) | $636 | $(5,874) | $(5,457) | | Net loss | $(3,625) | $(2,261) | $(11,975) | $(11,194) | | Net loss per share (Basic and diluted) | $(0.34) | $(0.22) | $(1.13) | $(1.07) | - Net sales increased by **8%** for the three months ended June 30, 2025, and by **9%** for the six months ended June 30, 2025, compared to the respective prior periods[19](index=19&type=chunk) - The company reported an increased net loss for both the three-month period (from **$(2,261) thousand to $(3,625) thousand**) and the six-month period (from **$(11,194) thousand to $(11,975) thousand**) year-over-year[19](index=19&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents the net loss and other comprehensive income items, such as currency translation adjustments | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3,625) | $(2,261) | $(11,975) | $(11,194) | | Currency translation | $4,555 | $1,573 | $5,197 | $(3,407) | | Total comprehensive income (loss) | $930 | $(688) | $(6,778) | $(14,601) | - Total comprehensive income improved significantly for the three months ended June 30, 2025, reaching **$930 thousand** compared to a loss of **$(688) thousand** in the prior year, primarily due to positive currency translation adjustments[20](index=20&type=chunk) - For the six months ended June 30, 2025, total comprehensive loss decreased to **$(6,778) thousand** from **$(14,601) thousand** in the prior year, also driven by favorable currency translation[20](index=20&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement details changes in the company's equity components, including net loss, equity-based compensation, and share repurchases | Metric (in thousands) | Balance as of Dec 31, 2024 | Balance as of Jun 30, 2025 | | :-------------------- | :------------------------- | :------------------------- | | Total Stockholders' Equity | $117,634 | $114,140 | | Equity-based compensation | $2,059 (Q1) / $1,843 (Q2) | $3,902 (6 months) | | Net loss | $(8,350) (Q1) / $(3,625) (Q2) | $(11,975) (6 months) | | Cumulative translation adjustment | $642 (Q1) / $4,555 (Q2) | $5,197 (6 months) | - Total stockholders' equity decreased from **$117,634 thousand** at December 31, 2024, to **$114,140 thousand** at June 30, 2025, primarily due to net losses, partially offset by equity-based compensation and positive cumulative translation adjustments[22](index=22&type=chunk) - The company repurchased shares totaling **$257 thousand** in Q1 2025 and **$111 thousand** in Q2 2025[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $10,013 | $(4,198) | | Net cash used in investing activities | $(7,922) | $(2,731) | | Net cash (used in) provided by financing activities | $(3,817) | $12,002 | | Net (decrease) increase in cash | $(910) | $3,763 | | Cash, cash equivalents and restricted cash at end of period | $25,569 | $27,792 | - Net cash provided by operating activities significantly improved to **$10,013 thousand** for the six months ended June 30, 2025, compared to net cash used of **$(4,198) thousand** in the prior year, primarily due to better inventory sell-through[24](index=24&type=chunk)[100](index=100&type=chunk) - Net cash used in investing activities increased to **$(7,922) thousand**, up from **$(2,731) thousand**, mainly due to additional capital expenditures for new store openings[24](index=24&type=chunk)[137](index=137&type=chunk) - Net cash used in financing activities was **$(3,817) thousand**, a shift from **$12,002 thousand** provided in the prior year, largely due to additional debt repayments[24](index=24&type=chunk)[139](index=139&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's significant accounting policies and financial statement line items [Note 1. Organization and Description of Business](index=12&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) This note describes the company's business model as a portfolio of fashion brands and its operational structure - a.k.a. Brands Holding Corp. operates as a portfolio of next-generation fashion brands, leveraging industry expertise and operational synergies to accelerate brand growth, audience reach, scale, and profitability[25](index=25&type=chunk) - The company's headquarters are in San Francisco, California, with primary operational functions (buying, studio, marketing, fulfillment, and administration) located in Australia and the United States[26](index=26&type=chunk) [Note 2. Significant Accounting Policies](index=12&type=section&id=Note%202.%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the interim financial statements - The interim financial statements are prepared in accordance with SEC's Regulation S-X, condensing certain GAAP disclosures, and are not necessarily indicative of full fiscal year results[27](index=27&type=chunk) - Revenue is primarily from apparel sales via online websites, stores, third-party marketplaces, and wholesale, recognized when control of the product passes to the customer (e.g., transfer to carrier or point of sale)[29](index=29&type=chunk)[30](index=30&type=chunk) - The sales return reserve was **$9.8 million** as of June 30, 2025, up from **$7.6 million** at December 31, 2024, reflecting historical refund experience[32](index=32&type=chunk) - The company has aggregated its four brands into one reportable segment due to similar product nature, processes, target customers, and economic characteristics[34](index=34&type=chunk) - New accounting pronouncements, ASU 2023-09 (Improvements to Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), will require incremental disclosures in future annual reports, effective for fiscal years ending December 31, 2025, and 2027, respectively[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3. Prepaid Expenses and Other Current Assets](index=14&type=section&id=Note%203.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This note details the composition and changes in the company's prepaid expenses and other current assets | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Inventory prepayments | $2,204 | $6,693 | | Other | $12,421 | $10,027 | | Total prepaid expenses and other current assets | $14,625 | $16,720 | - Total prepaid expenses and other current assets decreased by **$2.1 million** from December 31, 2024, to June 30, 2025, primarily due to a reduction in inventory prepayments[37](index=37&type=chunk) [Note 4. Property and Equipment, Net](index=14&type=section&id=Note%204.%20Property%20and%20Equipment,%20Net) This note outlines the company's property and equipment, including changes and depreciation expense | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Total property and equipment, net | $36,109 | $31,262 | | Total depreciation expense (6 months) | $3,901 | $3,041 | - Net property and equipment increased by **$4.8 million** from December 31, 2024, to June 30, 2025, mainly driven by an increase in leasehold improvements[38](index=38&type=chunk) - Depreciation expense for the six months ended June 30, 2025, was **$3.9 million**, an increase from **$3.0 million** in the prior year period[38](index=38&type=chunk) [Note 5. Goodwill](index=14&type=section&id=Note%205.%20Goodwill) This note discusses the carrying value of goodwill and the results of impairment assessments | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Carrying value of goodwill | $92,222 | $89,254 | | Changes in foreign currency translation | $2,968 | N/A | - Goodwill increased by **$2.9 million** from December 31, 2024, to June 30, 2025, primarily due to changes in foreign currency translation[40](index=40&type=chunk) - No goodwill impairment was required for the three and six months ended June 30, 2025, despite revised forecasts due to uncertain trade policy and tariffs, and a decrease in stock price[39](index=39&type=chunk) - As of June 30, 2025, the mnml reporting unit's fair value exceeded its carrying value by **4.6%**, with related goodwill of **$30.0 million**[39](index=39&type=chunk) [Note 6. Intangible Assets](index=16&type=section&id=Note%206.%20Intangible%20Assets) This note provides details on the company's intangible assets, including amortization expense | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Total intangible assets, net | $47,938 | $52,354 | | Accumulated amortization | $(39,607) | $(38,716) | | Amortization expense (6 months) | $4,802 | $5,527 | - Net intangible assets decreased by **$4.4 million** from December 31, 2024, to June 30, 2025, primarily due to ongoing amortization[41](index=41&type=chunk) - Amortization expense for acquired intangible assets was **$4.8 million** for the six months ended June 30, 2025, a decrease from **$5.5 million** in the prior year period[41](index=41&type=chunk) [Note 7. Debt](index=16&type=section&id=Note%207.%20Debt) This note details the company's debt obligations, including term loans, revolving credit, and interest rates | Debt Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Term loan | $84,850 | $89,050 | | Revolving credit facility | $24,300 | $23,300 | | Total debt | $108,707 | $111,711 | | Current portion of long-term debt | $7,700 | $6,300 | | Interest expense (6 months) | $5,163 | $4,954 | - Total debt decreased by **$3.0 million** from December 31, 2024, to June 30, 2025, with a reduction in the term loan partially offset by an increase in the revolving credit facility[46](index=46&type=chunk) - The company borrowed **$27.3 million** and repaid **$26.3 million** under its revolving line of credit during the six months ended June 30, 2025[45](index=45&type=chunk) - As of June 30, 2025, the all-in interest rate for the term loan and revolving line of credit was **7.93%**, and the company was in compliance with all financial debt covenants[44](index=44&type=chunk)[45](index=45&type=chunk) [Note 8. Leases](index=18&type=section&id=Note%208.%20Leases) This note provides information on the company's lease arrangements, including costs and right-of-use assets | Lease Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Total lease costs | $9,942 | $6,206 | | Cash paid for operating lease liabilities | $5,839 | $5,189 | | Operating lease right-of-use assets | $77,111 (June 30, 2025) | $65,382 (Dec 31, 2024) | | Total operating lease liabilities | $86,663 (June 30, 2025) | $63,496 (Dec 31, 2024) | - Total lease costs increased to **$9.9 million** for the six months ended June 30, 2025, from **$6.2 million** in the prior year, reflecting an increase in operating lease costs[51](index=51&type=chunk) - The weighted-average remaining lease term is **6.6 years**, with a weighted-average discount rate of **7.1%** as of June 30, 2025[52](index=52&type=chunk) [Note 9. Income Taxes](index=20&type=section&id=Note%209.%20Income%20Taxes) This note details the company's income tax provision and effective tax rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loss before income taxes | $(3,615) | $(1,795) | $(11,956) | $(10,709) | | Provision for income taxes | $(10) | $(466) | $(19) | $(485) | | Effective tax rate | 0% | (26)% | 0% | (5)% | - The provision for income taxes significantly decreased to **$(10) thousand** for the three months ended June 30, 2025, from **$(466) thousand** in the prior year, and to **$(19) thousand** for the six months, from **$(485) thousand**[55](index=55&type=chunk) - The effective tax rate was **0%** for both the three and six months ended June 30, 2025, primarily due to non-deductible permanent differences and a full valuation allowance on net deferred tax assets in the U.S. and Australia[55](index=55&type=chunk) [Note 10. Accrued Liabilities](index=20&type=section&id=Note%2010.%20Accrued%20Liabilities) This note outlines the components and changes in the company's accrued liabilities | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Accrued salaries and other benefits | $8,559 | $10,504 | | Accrued freight costs | $3,005 | $4,551 | | Sales tax payable | $4,054 | $3,132 | | Accrued marketing costs | $7,064 | $5,800 | | Total accrued liabilities | $33,158 | $31,216 | - Total accrued liabilities increased by **$1.9 million** from December 31, 2024, to June 30, 2025, driven by increases in sales tax payable, accrued marketing costs, and professional services, partially offset by decreases in accrued salaries and freight costs[56](index=56&type=chunk) [Note 11. Deferred Revenue](index=20&type=section&id=Note%2011.%20Deferred%20Revenue) This note details the company's deferred revenue, primarily from gift cards and other sources | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Gift cards | $11,544 | $11,473 | | Other | $1,321 | $742 | | Total deferred revenue | $12,865 | $12,215 | - Total deferred revenue increased by **$0.6 million** from December 31, 2024, to June 30, 2025, primarily due to an increase in other deferred revenue[57](index=57&type=chunk) [Note 12. Equity-based Compensation](index=21&type=section&id=Note%2012.%20Equity-based%20Compensation) This note describes the company's equity compensation plans and related expenses - The 2021 Omnibus Incentive Plan and 2021 Employee Stock Purchase Plan (ESPP) are the primary equity compensation plans, with **2,662,075 shares** and **422,475 shares** reserved for issuance, respectively, as of June 30, 2025[58](index=58&type=chunk)[59](index=59&type=chunk) - Performance-based stock options were granted to Wesley Bryett (**416,667 options**) and Ciaran Long (**100,000 options**) in September 2023 and January 2025, respectively, vesting upon achievement of stock price targets[63](index=63&type=chunk)[64](index=64&type=chunk) - Total equity-based compensation expense for the six months ended June 30, 2025, was **$3.9 million**, slightly up from **$3.85 million** in the prior year, with RSUs being the largest component[73](index=73&type=chunk) | Award Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock options | $193 | $179 | $413 | $359 | | RSUs | $1,599 | $1,242 | $3,270 | $2,370 | | ESPP purchase rights | $38 | $20 | $76 | $40 | | Time-based incentive units | $13 | $454 | $143 | $1,082 | | Total | $1,843 | $1,895 | $3,902 | $3,851 | [Note 13. Stockholders' Equity](index=25&type=section&id=Note%2013.%20Stockholders'%20Equity) This note provides details on the company's common stock, reverse stock split, and share repurchase activities - The company has **500,000,000 shares** of common stock authorized, with **10,752,477 shares** issued and outstanding as of June 30, 2025[17](index=17&type=chunk)[75](index=75&type=chunk) - A one-for-12 reverse stock split was effected on September 29, 2023, retrospectively adjusted in financial statements[76](index=76&type=chunk) - During the six months ended June 30, 2025, the company repurchased **57,020 shares** of common stock for **$0.7 million**, at an average price of **$13.04 per share**, including repurchases under the Share Repurchase Program and shares surrendered for tax obligations[79](index=79&type=chunk) [Note 14. Net Loss Per Share](index=26&type=section&id=Note%2014.%20Net%20Loss%20Per%20Share) This note presents the calculation of basic and diluted net loss per share for the reporting periods | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3,625) | $(2,261) | $(11,975) | $(11,194) | | Weighted-average common shares outstanding | 10,711,466 | 10,501,057 | 10,583,844 | 10,509,810 | | Net loss per share, basic and diluted | $(0.34) | $(0.22) | $(1.13) | $(1.07) | - Basic and diluted net loss per share increased to **$(0.34)** for the three months and **$(1.13)** for the six months ended June 30, 2025, compared to **$(0.22)** and **$(1.07)** respectively in the prior year, reflecting higher net losses[80](index=80&type=chunk) - Potentially dilutive securities were excluded from diluted EPS calculations due to the net loss in all periods, indicating an anti-dilutive effect[80](index=80&type=chunk) [Note 15. Commitments and Contingencies](index=26&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) This note discloses the company's legal commitments and contingent liabilities, including a recent settlement - The company settled a copyright infringement claim for **$16.5 million** on July 23, 2025, with insurers agreeing to pay **$14.5 million**[81](index=81&type=chunk) - An initial accrual of **$2.0 million** was made in 2024 for estimated losses related to this claim[81](index=81&type=chunk) [Note 16. Segment Information](index=26&type=section&id=Note%2016.%20Segment%20Information) This note explains the company's operating segments and provides gross margin analysis - The company operates four brands, each considered an operating segment, but aggregated into one reportable segment due to similar product nature, processes, target customers, and economic characteristics[82](index=82&type=chunk) - Gross margin for the three months ended June 30, 2025, was **57.5%**, slightly down from **57.7%** in the prior year, and **57.4%** for the six months, up from **57.1%**[83](index=83&type=chunk) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $160,524 | $148,931 | $289,181 | $265,771 | | Cost of sales | $68,180 | $62,962 | $123,181 | $114,128 | | Gross profit | $92,344 | $85,969 | $166,000 | $151,643 | | Gross margin | 57.5% | 57.7% | 57.4% | 57.1% | [Note 17. Subsequent Events](index=27&type=section&id=Note%2017.%20Subsequent%20Events) This note discloses significant events that occurred after the reporting period, such as additional borrowings and new tax legislation - On July 3, 2025, the company borrowed an additional **$2.5 million** under its revolving line of credit at an initial interest rate of **9.75%**[85](index=85&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA) was enacted on July 4, 2025, introducing significant changes to federal tax law and regulatory provisions, the impact of which is currently being evaluated for subsequent periods[86](index=86&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations, highlighting key business drivers, performance metrics, and factors influencing financial outcomes for the three and six months ended June 30, 2025, compared to the prior year [Overview](index=28&type=section&id=Overview) This section introduces a.k.a. Brands' business model, target consumers, and strategic objectives - a.k.a. Brands operates a portfolio of next-generation fashion brands (Princess Polly, Petal & Pup, Culture Kings, mnml) targeting Millennial and Gen Z consumers, primarily through social media[88](index=88&type=chunk)[89](index=89&type=chunk) - The company aims to leverage industry expertise and operational synergies to accelerate brand growth, expand audience reach, achieve greater scale, and enhance profitability[88](index=88&type=chunk) [Key Operating and Financial Metrics](index=29&type=section&id=Key%20Operating%20and%20Financial%20Metrics) This section presents crucial operational and financial performance indicators for the reporting periods | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Active customers (millions) | 4.13 | 4.01 | 4.13 | 4.01 | | Average order value | $78 | $78 | $78 | $77 | | Number of orders (millions) | 2.05 | 1.92 | 3.71 | 3.44 | | Gross margin | 58% | 58% | 57% | 57% | | Net loss (in thousands) | $(3,625) | $(2,261) | $(11,975) | $(11,194) | | Adjusted EBITDA (in thousands) | $7,520 | $8,012 | $10,186 | $8,885 | | Free Cash Flow (in thousands) | N/A | N/A | $2,091 | $(6,924) | - Active customers increased to **4.13 million** as of June 30, 2025, from **4.01 million** in the prior year, indicating growth in customer base[90](index=90&type=chunk)[91](index=91&type=chunk) - Number of orders increased by **7%** for the three months and **8%** for the six months ended June 30, 2025, compared to the prior year periods[90](index=90&type=chunk)[111](index=111&type=chunk)[119](index=119&type=chunk) [Non-GAAP Financial Measures](index=30&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like Adjusted EBITDA and Free Cash Flow - Adjusted EBITDA is calculated by excluding interest, taxes, depreciation, amortization, equity-based compensation, and certain one-time or non-recurring items from net income (loss)[96](index=96&type=chunk) - Free Cash Flow is defined as net cash provided by (used in) operating activities minus purchases of property and equipment[98](index=98&type=chunk) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3,625) | $(2,261) | $(11,975) | $(11,194) | | Adjusted EBITDA | $7,520 | $8,012 | $10,186 | $8,885 | | Net cash provided by (used in) operating activities | N/A | N/A | $10,013 | $(4,198) | | Free Cash Flow | N/A | N/A | $2,091 | $(6,924) | - Adjusted EBITDA for the six months ended June 30, 2025, increased to **$10.2 million** from **$8.9 million** in the prior year, while Free Cash Flow improved to **$2.1 million** from **$(6.9) million**[97](index=97&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) [Factors Affecting Our Performance](index=32&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses macroeconomic conditions, operational strategies, and currency fluctuations impacting the company's financial results - Macroeconomic factors like inflation, elevated interest rates, and geopolitical tensions (e.g., U.S.-China trade tariffs) significantly impact consumer spending and the company's cost of goods sold[102](index=102&type=chunk) - The company is evaluating measures to mitigate tariff effects, including sourcing outside China and price increases, but faces challenges like higher costs from new suppliers and potential inventory shortages[102](index=102&type=chunk) - Success depends on brand awareness, cost-effective customer acquisition and retention, effective inventory management (using a 'test, repeat & clear' strategy), and continued investment in operations and infrastructure[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Foreign currency rate fluctuations, particularly against the Australian dollar, significantly affect net sales and operating income due to international operations[108](index=108&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, comparing revenues, costs, and profits across reporting periods [Comparison of the Three Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial performance for the three-month periods ended June 30, 2025, and 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net sales | $160,524 | $148,931 | $11,593 | 8% | | Cost of sales | $68,180 | $62,962 | $5,218 | 8% | | Gross profit | $92,344 | $85,969 | $6,375 | 7% | | Selling expenses | $45,399 | $41,191 | $4,208 | 10% | | Marketing expenses | $19,918 | $18,275 | $1,643 | 9% | | General and administrative | $27,518 | $25,867 | $1,651 | 6% | | Total other expense, net | $(3,124) | $(2,431) | $(693) | 29% | | Provision for income taxes | $(10) | $(466) | $456 | -98% | - Net sales increased by **8%** to **$160.5 million**, driven by a **7%** increase in orders and demand growth in the U.S. On a constant currency basis, net sales would have increased **9%**[111](index=111&type=chunk) - Gross profit increased by **7%** to **$92.3 million**, with gross margin remaining flat at **58%**, as increased tariffs were offset by more full-price selling[113](index=113&type=chunk) - Selling expenses rose by **10%** due to new store openings and increased net sales, while general and administrative expenses increased by **6%** due to higher wages, legal matters, and professional fees[114](index=114&type=chunk)[116](index=116&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=37&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial performance for the six-month periods ended June 30, 2025, and 2024 | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Net sales | $289,181 | $265,771 | $23,410 | 9% | | Cost of sales | $123,181 | $114,128 | $9,053 | 8% | | Gross profit | $166,000 | $151,643 | $14,357 | 9% | | Selling expenses | $83,583 | $75,406 | $8,177 | 11% | | Marketing expenses | $35,091 | $33,154 | $1,937 | 6% | | General and administrative | $53,200 | $48,540 | $4,660 | 10% | | Total other expense, net | $(6,082) | $(5,252) | $(830) | 16% | | Provision for income taxes | $(19) | $(485) | $466 | -96% | - Net sales increased by **9%** to **$289.2 million**, driven by an **8%** increase in orders and a **1%** increase in average order value, primarily from U.S. demand growth. On a constant currency basis, net sales would have increased **11%**[119](index=119&type=chunk) - Gross profit increased by **9%** to **$166.0 million**, with gross margin remaining flat at **57%**, benefiting from more full-price selling and improved inventory position despite increased tariffs[121](index=121&type=chunk) - Selling expenses increased by **11%** due to new store openings and higher sales, leading to a slight increase as a percentage of net sales[122](index=122&type=chunk) - General and administrative expenses increased by **10%**, mainly due to higher incentive and stock-based compensation, non-routine legal matters, and professional services[124](index=124&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to generate and manage cash, including available credit facilities - As of June 30, 2025, the company's primary liquidity sources were **$23.1 million** in cash and cash equivalents, its revolving line of credit, and the term loan accordion provision[127](index=127&type=chunk) - The company believes existing cash, operational cash flows, and available borrowing capacity will be sufficient to meet anticipated cash needs for the next 12 months and beyond[128](index=128&type=chunk) - The senior secured credit facility includes a **$100.0 million** term loan and a **$50.0 million** revolving line of credit, with **$84.9 million** owed on the term loan and **$24.3 million** on the revolving line of credit as of June 30, 2025[129](index=129&type=chunk) - The company was in compliance with all debt covenants as of June 30, 2025, but notes that variable interest rates and macroeconomic factors could impact future compliance[130](index=130&type=chunk) [Material Cash Requirements](index=39&type=section&id=Material%20Cash%20Requirements) This section addresses any significant changes in the company's anticipated cash obligations - There have been no significant changes in material cash requirements from those reported in the 2024 Form 10-K[132](index=132&type=chunk) [Historical Cash Flows](index=39&type=section&id=Historical%20Cash%20Flows) This section analyzes the company's cash flow trends from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $10,013 | $(4,198) | | Net cash used in investing activities | $(7,922) | $(2,731) | | Net cash (used in) provided by financing activities | $(3,817) | $12,002 | - Net cash provided by operating activities increased by **$14.2 million**, primarily due to improved inventory sell-through as net sales grew by **9%**[135](index=135&type=chunk) - Net cash used in investing activities increased by **$5.2 million**, mainly due to additional capital expenditures for new store openings[137](index=137&type=chunk) - Net cash used in financing activities increased by **$15.8 million**, primarily due to additional repayments under the senior secured credit facility and line of credit[139](index=139&type=chunk) [Share Repurchase Program](index=40&type=section&id=Share%20Repurchase%20Program) This section details the company's share repurchase initiatives and related activity - The board of directors approved a Share Repurchase Program, initially authorizing **$2.0 million** and later an additional **$3.0 million** for common stock repurchases[140](index=140&type=chunk) - During the six months ended June 30, 2025, the company repurchased **28,005 shares** for **$0.4 million** under the program, at an average price of **$13.14 per share**[141](index=141&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) This section highlights accounting estimates requiring significant judgment, such as goodwill impairment assessments - Significant judgment and estimates are required for goodwill and intangible asset impairment assessments, including forecasting cash flows and determining discount rates[142](index=142&type=chunk) - In June 2025, revised forecasts due to uncertain trade policy and tariffs, along with a stock price decrease, triggered a quantitative test for goodwill impairment. The mnml reporting unit's fair value exceeded its carrying value by **4.6%**[142](index=142&type=chunk) - A **60 basis points** increase in the discount rate for the mnml reporting unit would result in impairment[142](index=142&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=41&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, a.k.a. Brands Holding Corp. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a 'smaller reporting company' under Regulation S-K[144](index=144&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the evaluation of the company's disclosure controls and procedures, identifying material weaknesses in internal control over financial reporting and outlining ongoing remediation efforts [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section assesses the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2025, due to identified material weaknesses[145](index=145&type=chunk) - Despite the material weaknesses, management concluded that the condensed consolidated financial statements fairly present the company's financial position, results of operations, and cash flows in conformity with GAAP, based on additional procedures[145](index=145&type=chunk) [Material Weaknesses](index=41&type=section&id=Material%20Weaknesses) This section identifies specific deficiencies in the company's internal control over financial reporting - Material weaknesses were identified in the design and operation of internal control over financial reporting, specifically lacking an effective internal control environment commensurate with public company requirements[146](index=146&type=chunk)[150](index=150&type=chunk) - Deficiencies include insufficient personnel knowledge/experience in financial reporting, lack of formal authority delegation and segregation of duties in finance, and ineffective information technology general controls (ITGCs) related to program change management, user access, computer operations, and program development[150](index=150&type=chunk) - These weaknesses could result in a material misstatement of substantially all account balances or disclosures in the financial statements[147](index=147&type=chunk) [Remediation Status of Material Weaknesses](index=42&type=section&id=Remediation%20Status%20of%20Material%20Weaknesses) This section outlines the ongoing efforts to address and resolve identified material weaknesses - Remediation efforts are ongoing and include hiring experienced financial reporting personnel, engaging a third-party consulting firm, increasing staff training, formalizing risk assessment, and designing/implementing new controls for segregation of duties and ITGCs[148](index=148&type=chunk)[151](index=151&type=chunk) - The material weaknesses are not yet remediated as of June 30, 2025, and will require sufficient time and testing to confirm effective design and operation of controls[148](index=148&type=chunk) [Changes in Internal Control over Financial Reporting](index=42&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports any changes in internal control over financial reporting during the period - There were no changes in internal control over financial reporting during the period that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[149](index=149&type=chunk) PART II - OTHER INFORMATION This section provides additional disclosures not covered in the financial information, including legal proceedings and risk factors [ITEM 1. LEGAL PROCEEDINGS](index=43&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section discloses legal proceedings, including a recent copyright infringement settlement and the company's general exposure to litigation in the ordinary course of business - The company settled a copyright infringement claim on July 23, 2025, agreeing to pay **$16.5 million**, with insurers covering **$14.5 million**[153](index=153&type=chunk) - An initial accrual of **$2.0 million** was made in 2024 for estimated losses related to this claim[153](index=153&type=chunk) - The company is subject to other legal proceedings in the ordinary course of business, with no current certainty of a material adverse effect on financial position, results of operations, or cash flows[154](index=154&type=chunk) [ITEM 1A. RISK FACTORS](index=43&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the detailed discussion of risk factors in the company's 2024 Form 10-K, stating that there are no material changes or newly identified undisclosed risks - There are no material changes to the risk factors previously disclosed in the 2024 Form 10-K[155](index=155&type=chunk) - The company has not identified any previously undisclosed risks that could materially adversely affect its business, operating results, or financial condition[155](index=155&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES,%20USE%20OF%20PROCEEDS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section details the company's share repurchase program and the activity related to issuer purchases of equity securities during the quarter [Issuer Purchases of Equity Securities](index=44&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This section provides a breakdown of shares repurchased by the company, including under its repurchase program - The company's board of directors approved a Share Repurchase Program, initially for **$2.0 million** and later an additional **$3.0 million**, with no expiration date[156](index=156&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of a Publicly Announced Plan or Program | | :-------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 12,942 | $10.19 | 7,985 | | May 1, 2025 - May 31, 2025 | 10,906 | $7.76 | 4,110 | | June 1, 2025 - June 30, 2025 | 1,836 | $11.59 | — | | Total (3 months) | 25,684 | N/A | 12,095 | - During the three months ended June 30, 2025, the company repurchased **25,684 shares**, including **12,095** under the program and **13,589 shares** surrendered by employees for tax obligations[157](index=157&type=chunk)[160](index=160&type=chunk) - As of June 30, 2025, approximately **$1.0 million** remained authorized for repurchases under the Share Repurchase Program[157](index=157&type=chunk)[160](index=160&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=44&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to the company for the reporting period - This item is marked as 'Not applicable'[158](index=158&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=44&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company for the reporting period - This item is marked as 'Not applicable'[159](index=159&type=chunk) [ITEM 5. OTHER INFORMATION](index=44&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section provides information on Rule 10b5-1 trading plans [Rule 10b5-1 Trading Plans](index=44&type=section&id=Rule%2010b5-1%20Trading%20Plans) This section reports on the adoption or termination of Rule 10b5-1 trading plans by insiders - During the three months ended June 30, 2025, no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements[160](index=160&type=chunk) [ITEM 6. EXHIBITS](index=45&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, certifications, and XBRL-related files - Exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), and 18 U.S.C. Section 1350), and Inline XBRL documents[161](index=161&type=chunk)[162](index=162&type=chunk) [Signatures](index=46&type=section&id=Signatures) This section contains the required signatures for the Quarterly Report on Form 10-Q, confirming its submission by an authorized signatory - The report was signed on August 6, 2025, by Kevin Grant, Chief Financial Officer, as the Authorized Signatory and Principal Financial and Accounting Officer[164](index=164&type=chunk)[166](index=166&type=chunk)

[Second Quarter 2025 Performance Overview](index=1&type=section&id=1.%20Second%20Quarter%202025%20Performance%20Overview) a.k.a. Brands reported strong Q2 2025 results with net sales growth and positive adjusted EBITDA, driven by US market strength and omnichannel expansion [CEO Commentary](index=1&type=section&id=1.1.%20CEO%20Commentary) CEO Ciaran Long highlighted strong Q2 2025 performance with 8% net sales growth to $161 million, exceeding expectations, driven by US market strength and omnichannel expansion - Net sales grew by **8% to $161 million**, exceeding expectations and marking the fifth consecutive quarter of growth[4](index=4&type=chunk) - US net sales increased by **14%**, while Australia/New Zealand showed stable trends[4](index=4&type=chunk) - Adjusted EBITDA reached **$7.5 million**, aligning with expectations[4](index=4&type=chunk) - DTC channels remained strong, with omnichannel expansion exceeding expectations, as Princess Polly opened three new stores in Q2 and plans for **13 by year-end** and **8-10 more in 2026**[5](index=5&type=chunk) - Wholesale partnerships deepened, with Princess Polly and Petal & Pup successfully launching across Nordstrom[5](index=5&type=chunk) - Culture Kings' in-house brands achieved **double-digit growth** in Q2[5](index=5&type=chunk) - Sourcing diversification initiatives are on schedule, with new supplier products received and satisfaction regarding timing, quality, and cost[6](index=6&type=chunk) [Q2 2025 Financial Highlights](index=1&type=section&id=1.2.%20Q2%202025%20Financial%20Highlights) a.k.a. Brands reported a 7.8% net sales increase to $160.5 million in Q2 2025, alongside an expanded net loss and a slight decrease in adjusted EBITDA due to tariff impacts Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $160.5M | $148.9M | 7.8% | | Net Sales (Constant Currency) | | | 9.5% | | US Net Sales | | | 13.7% | | Net Loss | $(3.6)M | $(2.3)M | (56.5%) | | Net Loss Per Share | $(0.34) | $(0.22) | (54.5%) | | Adjusted EBITDA | $7.5M | $8.0M | (6.3%) | | Gross Margin | 57.5% | 57.7% | (0.2) pp | | Selling Expenses (% of Net Sales) | 28.3% | 27.7% | 0.6 pp | | Marketing Expenses (% of Net Sales) | 12.4% | 12.3% | 0.1 pp | | General & Administrative Expenses (% of Net Sales) | 17.1% | 17.4% | (0.3) pp | | Adjusted EBITDA (% of Net Sales) | 4.7% | 5.4% | (0.7) pp | - Net sales growth was primarily driven by a **6.8% increase in order count**, predominantly from the US market[10](index=10&type=chunk) - Gross margin decline was mainly due to increased tariffs, partially offset by full-price sales and improved inventory levels[10](index=10&type=chunk) - Year-over-year increase in selling expenses was primarily due to higher store-related selling expenses from retail store expansion[10](index=10&type=chunk) [Company Profile](index=3&type=section&id=2.%20Company%20Profile) a.k.a. Brands operates a portfolio of global fashion brands targeting next-generation consumers through social media and a data-driven 'test and repeat' merchandise model [About a.k.a. Brands](index=3&type=section&id=2.1.%20About%20a.k.a.%20Brands) a.k.a. Brands manages a portfolio of global fashion brands, including Princess Polly and Culture Kings, engaging next-generation consumers through online and omnichannel strategies - Brand portfolio includes Princess Polly, Culture Kings, Petal and Pup, and mnml[17](index=17&type=chunk) - Targets next-generation consumers who seek fashion inspiration via social media and primarily shop online[17](index=17&type=chunk) - Employs a data-driven 'test and repeat' merchandise model, launching new and exclusive fashion products weekly[17](index=17&type=chunk) - Connects authentically with customers on the latest marketing platforms through data-driven insights[17](index=17&type=chunk) - Committed to serving customers through online, physical stores, and wholesale channels[17](index=17&type=chunk) [Detailed Financial Results](index=5&type=section&id=3.%20Detailed%20Financial%20Results) This section provides a detailed overview of a.k.a. Brands' financial performance, including consolidated statements of income, balance sheets, and cash flows for Q2 2025 [Condensed Consolidated Statements of Income](index=5&type=section&id=3.1.%20Condensed%20Consolidated%20Statements%20of%20Income) a.k.a. Brands reported increased net sales to $160.5 million in Q2 2025, but operating loss and net loss expanded due to higher operating expenses Condensed Consolidated Statements of Income | Metric (Thousands of USD) | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net Sales | $160,524 | $148,931 | | Cost of Sales | $68,180 | $62,962 | | Gross Profit | $92,344 | $85,969 | | Total Operating Expenses | $92,835 | $85,333 | | Operating (Loss) Income | $(491) | $636 | | Other Expense, Net | $(3,124) | $(2,431) | | Loss Before Income Taxes | $(3,615) | $(1,795) | | Income Tax Provision | $(10) | $(466) | | Net Loss | $(3,625) | $(2,261) | | Net Loss Per Share (Basic and Diluted) | $(0.34) | $(0.22) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=3.2.%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $410.8 million, while total liabilities also rose, leading to a slight decrease in total stockholders' equity Condensed Consolidated Balance Sheets | Metric (Thousands of USD) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total Current Assets | $155,175 | $144,769 | | Total Assets | $410,823 | $385,204 | | Total Current Liabilities | $117,167 | $97,038 | | Total Liabilities | $296,683 | $267,570 | | Total Stockholders' Equity | $114,140 | $117,634 | - Cash and cash equivalents decreased from **$24.2 million** to **$23.1 million**[15](index=15&type=chunk)[25](index=25&type=chunk) - Inventory decreased from **$95.8 million** at FY2024 end to **$92.5 million**, also lower than **$106.7 million** in Q2 2024[15](index=15&type=chunk)[25](index=25&type=chunk) - Total debt was **$108.7 million**, higher than **$106.9 million** in Q2 2024 but lower than **$111.7 million** at FY2024 end[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=3.3.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, a.k.a. Brands generated $10 million in cash from operating activities, a significant improvement from the prior year Condensed Consolidated Statements of Cash Flows | Metric (Thousands of USD) | 2025 | 2024 | | :-------------------------------------- | :------- | :------- | | Net Cash Provided by (Used in) Operating Activities | $10,013 | $(4,198) | | Net Cash Used in Investing Activities | $(7,922) | $(2,731) | | Net Cash (Used in) Provided by Financing Activities | $(3,817) | $12,002 | | Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash | $(910) | $3,763 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $25,569 | $27,792 | - Operating cash flow significantly improved, primarily driven by changes in inventory and accounts payable[15](index=15&type=chunk)[27](index=27&type=chunk) - Purchases of property and equipment increased from **$2.7 million** to **$7.9 million**[27](index=27&type=chunk) [Key Financial and Operational Metrics](index=8&type=section&id=3.4.%20Key%20Financial%20and%20Operational%20Metrics) In Q2 2025, a.k.a. Brands saw a 3.0% increase in active customers and a 6.8% rise in order count, with strong US sales growth Key Operational Metrics | Metric | 2025 | 2024 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | Active Customers (Millions) | 4.13 | 4.01 | 3.0% | | Average Order Value | $78 | $78 | —% | | Order Count (Millions) | 2.05 | 1.92 | 6.8% | Net Sales by Region | Region (Thousands of USD) | 2025 | 2024 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | United States | $108,440 | $95,375 | 13.7% | | Australia and New Zealand | $45,713 | $45,650 | 0.1% | | Rest of World | $6,371 | $7,906 | (19.4)% | | Total | $160,524 | $148,931 | 7.8% | - Year-over-year growth rate was **9.5%** on a constant currency basis[29](index=29&type=chunk) [Operational Metrics Definitions](index=8&type=section&id=3.4.1.%20Operational%20Metrics%20Definitions) This section defines key operational metrics used by a.k.a. Brands, including active customers, average order value, and order count, to assess performance - Active Customers: Total number of unique customer accounts that have made at least one purchase in the preceding 12-month period, a key indicator of company growth, value proposition, and brand awareness[30](index=30&type=chunk) - Average Order Value (AOV): Net sales for a given period divided by the total number of orders placed in that period, which may fluctuate due to new category or geographic expansion or changes in product mix[31](index=31&type=chunk) - Order Count: Total number of orders placed by customers through platforms or stores in any given period, a key indicator of the company's ability to attract and retain customers and product appeal[32](index=32&type=chunk) [Financial Outlook](index=2&type=section&id=4.%20Financial%20Outlook) a.k.a. Brands updated its FY 2025 net sales guidance and provided Q3 2025 outlook, reflecting anticipated tariff impacts [FY 2025 and Q3 2025 Guidance](index=2&type=section&id=4.1.%20FY%202025%20and%20Q3%202025%20Guidance) a.k.a. Brands updated its FY 2025 net sales guidance to $608-$612 million and provided Q3 2025 projections, including adjusted EBITDA of $7.3-$7.7 million Financial Guidance | Metric (Millions of USD) | Updated FY 2025 Outlook | Prior FY 2025 Outlook | Q3 2025 Outlook | | :-------------------------------- | :---------------------- | :-------------------- | :-------------- | | Net Sales | $608 - $612 | $600 - $610 | $154 - $158 | | Adjusted EBITDA | $24.5 - $27.5 | $24.0 - $27.5 | $7.3 - $7.7 | | Weighted Average Diluted Shares Outstanding | 10.8 | 10.8 | 10.9 | | Capital Expenditures | $14 - $16 | $12 - $14 | | - The outlook considers the estimated impact of tariffs implemented in **2025**[12](index=12&type=chunk) - The company does not provide a quantitative reconciliation of its adjusted EBITDA outlook to GAAP net income (loss) outlook, as certain reconciling items cannot be predicted without unreasonable effort[14](index=14&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=5.%20Non-GAAP%20Financial%20Measures) This section explains a.k.a. Brands' use of non-GAAP financial measures like Adjusted EBITDA to assess operational performance and provide supplementary investor information [Explanation and Use](index=3&type=section&id=5.1.%20Explanation%20and%20Use) a.k.a. Brands utilizes non-GAAP metrics such as Adjusted EBITDA to evaluate ongoing operations, facilitate internal planning, and offer investors a clearer view of business trends - The company uses **Adjusted EBITDA** and **Adjusted EBITDA Margin** as non-GAAP financial measures[16](index=16&type=chunk)[35](index=35&type=chunk) - These metrics are used to evaluate ongoing operations, for internal planning and forecasting, and to provide investors with useful supplemental information to assess operating performance and identify business trends[16](index=16&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Adjusted EBITDA is calculated as net income (loss) adjusted to exclude: interest and other expense, income tax provision (benefit), depreciation and amortization expense, stock-based compensation expense, distribution center setup or relocation costs, transaction costs, severance, goodwill and intangible asset impairment, sales tax penalties, insurance losses (net of any recoveries), and one-time or non-recurring items[37](index=37&type=chunk) - Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of net sales[37](index=37&type=chunk) [Adjusted EBITDA Reconciliation](index=9&type=section&id=5.2.%20Adjusted%20EBITDA%20Reconciliation) For Q2 2025, Adjusted EBITDA was $7.5 million, derived from a net loss of $3.6 million by adding back non-GAAP adjustments like interest, taxes, depreciation, and stock-based compensation Adjusted EBITDA Reconciliation | Metric (Thousands of USD) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------------- | :------ | :------ | :------- | :------- | | Net Loss | $(3,625) | $(2,261) | $(11,975) | $(11,194) | | Add (Subtract): | | | | | | Other Expense, Net | 3,124 | 2,431 | 6,082 | 5,252 | | Income Tax Provision | 10 | 466 | 19 | 485 | | Depreciation and Amortization Expense | 4,329 | 4,270 | 8,703 | 8,568 | | Stock-Based Compensation Expense | 1,843 | 1,895 | 3,902 | 3,851 | | Distribution Center Relocation Costs | — | — | 737 | — | | Non-Routine Legal Matters | 1,489 | 889 | 2,200 | 1,052 | | Non-Recurring Items | 350 | 322 | 518 | 871 | | **Adjusted EBITDA** | **$7,520** | **$8,012** | **$10,186** | **$8,885** | | Net Loss Margin | (2.3)% | (1.5)% | (4.1)% | (4.2)% | | Adjusted EBITDA Margin | 4.7% | 5.4% | 3.5% | 3.3% | [Additional Information](index=2&type=section&id=6.%20Additional%20Information) This section provides details on the upcoming conference call, forward-looking statements, and investor and media contact information [Conference Call](index=2&type=section&id=6.1.%20Conference%20Call) a.k.a. Brands will host a conference call on August 6, 2025, at 4:30 PM ET to discuss its Q2 results, with details provided for participation and replay - Conference call scheduled for **August 6, 2025, at 4:30 PM ET**[13](index=13&type=chunk) - Participation via dial-in at (877) 858-5495 or (201) 689-8853, or webcast at https://ir.aka-brands.com[13](index=13&type=chunk) - Replay available after the call by dialing (877) 660-6853 or (201) 612-7415 (international), conference ID **13754506**[13](index=13&type=chunk) [Forward-Looking Statements](index=4&type=section&id=6.2.%20Forward-Looking%20Statements) This report contains forward-looking statements, identified by terms like 'estimate' and 'expect,' which are subject to various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are not guarantees of future performance, conditions, or results[19](index=19&type=chunk) - Involve known and unknown risks, uncertainties, assumptions, and other important factors, many beyond the company's control, that could cause actual results or outcomes to differ materially from those expressed in forward-looking statements[19](index=19&type=chunk) - Key risk factors include economic downturns, NYSE listing compliance, China business risks (including tariffs), changes in consumer preferences, ability to execute strategies, customer acquisition and retention, marketing effectiveness, inventory management, acquisition integration, market expansion, global operational risks (e.g., geopolitical instability, supply chain risks), shipping disruptions, social media platform usage risks, operating results fluctuations, challenges in measuring key operating metrics, potential tax liabilities, talent attraction and retention, wage rate and raw material price fluctuations, and foreign currency fluctuations[20](index=20&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements, except as required by law[20](index=20&type=chunk) [Investor and Media Contacts](index=4&type=section&id=6.3.%20Investor%20and%20Media%20Contacts) This section provides dedicated contact information for investor relations and media inquiries - Investor contact email: **investors@aka-brands.com**[21](index=21&type=chunk) - Media contact email: **media@aka-brands.com**[21](index=21&type=chunk)

Summary of AKA Brands Conference Call Company Overview - **Company**: AKA Brands - **Brands**: Princess Polly, Petal and Pup, Culture Kings, Minimal - **Target Audience**: Next generation consumers, primarily Gen Z and Millennials, who seek fashion inspiration on social media and shop online [1][2] Core Competencies and Differentiation - **Exclusive Products**: All products are exclusive to AKA's brands, allowing for a test and repeat merchandising model that introduces new styles weekly [3][4] - **Marketing Strategy**: Focus on influencer-led marketing, particularly with smaller, authentic influencers rather than mega influencers [4] - **Brand Positioning**: - **Princess Polly**: Targets teens and college consumers with on-trend fashion at accessible prices [4] - **Petal and Pup**: Caters to a slightly older demographic (25-40 years) with elevated styles [4] - **Culture Kings**: Combines sports, music, and fashion, with a mix of first-party and exclusive third-party products [5] Market Expansion and Performance - **US Market Growth**: The US market is 17 times larger than Australia, with 70% of AKA's business now in the US. US sales grew 14% last quarter, marking the sixth consecutive quarter of growth [8][11] - **Store Openings**: Eight stores for Princess Polly are currently open, with plans to reach 13 by year-end. Stores are seen as effective for introducing new customers, with 30% of in-store customers being new to the brand [21][22] Consumer Trends and Insights - **Consumer Engagement**: Active customer count grew 8% year-over-year, with over 4 million active customers. Customers engage daily with new styles introduced weekly [26][31] - **Wholesale Partnerships**: Successful partnership with Nordstrom, with 95% of customers being new to the brands. Petal and Pup is seeing category expansion opportunities through this channel [15][16][18] Marketing and Customer Acquisition - **Marketing Spend**: Approximately 12% of sales are spent on marketing, focusing on influencer marketing and evolving content across various platforms [35][37] - **Customer Acquisition Strategy**: Focus on expanding the customer base through diverse marketing channels, including TikTok and Pinterest [27][28] Financial Performance and Projections - **Profitability**: All brands are profitable and generate cash. The company aims for low teens EBITDA margins as it scales [54][56] - **Dynamic Environment**: The company is prepared for a dynamic market environment, leveraging short lead times for product flexibility [39][42] Challenges and Opportunities - **Tariff Impact**: The company is actively working to mitigate tariff impacts by diversifying its supply chain away from China and negotiating discounts with vendors [42][43] - **Growth in Australia**: Australia has returned to growth with a 6% increase in Q1, driven by improved performance of women's brands and the Culture Kings model [44][45] Long-term Outlook - **Growth Potential**: Significant growth opportunities in the US market across online, wholesale, and store channels. The test and repeat model is expected to reduce merchandising risk and enhance gross margins [57][59] - **Future Strategy**: Continued investment in marketing and store openings, with a focus on being where customers are, whether online or in physical locations [22][60]

A.k.a. Brands (AKA) came out with a quarterly loss of $0.78 per share in line with the Zacks Consensus Estimate. This compares to loss of $0.85 per share a year ago. These figures are adjusted for non-recurring items. There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Em ...