Financial Data and Key Metrics Changes - The company reported net sales of approximately $129 million, reflecting a growth of about 12% on a constant currency basis and 10.1% year-over-year [7][30] - Adjusted EBITDA for the first quarter was $2.7 million, a significant increase from $900,000 in the same period last year, with an adjusted EBITDA margin of 2.1% compared to 0.7% [10][33] - Gross margin expanded by 100 basis points to 57.2% compared to 56.2% in the same period last year, driven by higher full-price selling and improved inventory position [31][32] Business Line Data and Key Metrics Changes - The U.S. business grew by 14% year-over-year, marking the seventh consecutive quarter of growth [7][30] - Australia and New Zealand region saw revenue growth of over 6%, attributed to strategic initiatives and improved macro conditions [8][30] - Princess Polly, the largest brand, continues to perform strongly, with double-digit revenue growth driven by trend-forward styles and successful marketing campaigns [17][20] Market Data and Key Metrics Changes - The active customer base increased by nearly 8% over the trailing twelve months, reaching 4.13 million by the end of the first quarter [8][30] - Average order value rose to $78, reflecting a 1.3% increase compared to the previous year [30] - The company reported a total of 1.66 million orders in the first quarter, a 9.2% increase year-over-year [30] Company Strategy and Development Direction - The company is focused on expanding its total addressable market through direct-to-consumer channels and physical retail investments [15][19] - A three-pronged approach to tariffs includes leveraging relationships with partners in China, diversifying the supply chain, and selectively increasing prices [10][11][44] - The company aims to streamline operations and strengthen its financial foundation while navigating the current macro environment [16][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current macro environment and anticipates limited exposure to China by the fourth quarter [12][53] - The company expects solid demand trends to continue into the second quarter, with net sales projected between $154 million and $158 million [36][38] - Management believes the impact of tariffs will be transitory, with a return to normalized margins expected in the fourth quarter [47][48] Other Important Information - The company ended the first quarter with $26.7 million in cash and cash equivalents, an increase from $24.2 million a year ago [34] - Inventory at the end of the quarter was $94.4 million, a 3% increase compared to the previous year, well below the 10% net sales growth [35] - The company plans to open six additional stores in 2025, with three new stores expected in late Q2 [32][35] Q&A Session Summary Question: Can you provide insights on margins and the impact of tariffs? - Management discussed the diversified supply chain strategy and selective pricing actions to mitigate tariff impacts, expecting a return to normalized margins in Q4 [41][44][47] Question: What are the demand trends and growth expectations for the second half of the year? - Management indicated confidence in continued growth, particularly in the U.S., despite potential challenges in Australia due to tough comparisons [53][56] Question: How sustainable is the growth in the U.S. market? - Management expressed confidence in sustaining growth through new customer acquisition and expanding wholesale partnerships [61][64] Question: What are the long-term plans for store expansion? - Management confirmed that new stores are performing well and driving new customer growth, with plans to maintain current expansion pacing [72][73] Question: How is the company addressing cost profiles with new suppliers? - Management noted that while there may be slight differences in costs with new suppliers, they are confident in achieving competitive pricing and maintaining quality [67][69]

Financial Data and Key Metrics Changes - The company reported a net sales increase of approximately 12% on a constant currency basis to $129 million, marking the fourth consecutive quarter of growth [7][30] - Adjusted EBITDA for the first quarter was $2.7 million, a significant increase from $900,000 in the same period last year, with an adjusted EBITDA margin of 2.1% compared to 0.7% [9][33] - Gross margin expanded by 100 basis points to 57.2% compared to 56.2% in the same period last year, driven by higher full-price selling and improved inventory position [31][33] Business Line Data and Key Metrics Changes - The U.S. business grew by 14.2% year over year, while Australia and New Zealand saw a revenue growth of 6.2% [30][31] - The active customer base increased by 7.8% year over year, reaching 4.13 million by the end of the first quarter [30] - Princess Polly, the largest brand, continues to perform strongly, with double-digit revenue growth driven by trend-forward styles and successful marketing campaigns [15][16] Market Data and Key Metrics Changes - The company experienced a 9.2% increase in total orders for the first quarter, indicating strong customer demand [30] - The omnichannel expansion is on track, with Princess Polly opening its seventh store in SoHo, which was the strongest opening to date [8][15] - The company is diversifying its supply chain, anticipating minimal exposure to China by the fourth quarter, with production shifting to countries like Vietnam and Turkey [10][12] Company Strategy and Development Direction - The company laid out three key priorities for 2025: attracting and retaining customers through direct-to-consumer channels, expanding brand awareness through physical retail investments, and streamlining operations [14][15] - The strategic focus includes leveraging a test and repeat model for inventory management and enhancing customer connections through innovative marketing [9][14] - The company aims to build a robust supply chain to mitigate tariff impacts and enhance long-term competitiveness [10][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current macro environment and believes the impact of tariffs will be transitory [28][36] - The company anticipates continued solid demand trends in the second quarter, with net sales expected to be between $154 million and $158 million [36][38] - Management remains focused on building durable and resilient fashion brands while delivering value to stakeholders [39] Other Important Information - The company ended the first quarter with $26.7 million in cash and cash equivalents, an increase from $24.2 million a year ago [34] - Inventory at the end of the quarter was $94.4 million, a 3% increase compared to the previous year, which is below the 10% net sales growth [35] - The company has a stock buyback program with approximately $1.1 million remaining in authorization [35] Q&A Session Summary Question: Can you provide insights on guidance for revenues and adjusted EBITDA, particularly regarding tariffs? - Management discussed their approach to tariffs, emphasizing a diversified supply chain and selective pricing actions to mitigate impacts [41][43][44] Question: Will the company be completely out of China by the fourth quarter? - Management confirmed that they expect to be predominantly out of China by Q4, while maintaining some relationships for servicing other regions [51][52] Question: What are the demand trends expected for the second half of the year? - Management indicated positive growth in Australia and continued strong performance in the U.S., with expectations for growth to resume in Q3 [53][55] Question: How sustainable is the growth in the U.S. business? - Management expressed confidence in the sustainability of growth, supported by strong customer metrics and new store openings [60][62] Question: What are the long-term plans for store openings and wholesale partnerships? - Management highlighted the success of new stores in driving customer acquisition and expressed optimism about expanding wholesale partnerships, particularly with Dillard's [70][74]

[PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes on financial disclosures [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | Assets/Liabilities & Equity | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $26,679 | $24,192 | | Accounts receivable, net | $13,402 | $8,107 | | Inventory | $94,401 | $95,750 | | Total current assets | $148,844 | $144,769 | | Property and equipment, net | $32,636 | $31,262 | | Operating lease ROU assets | $73,445 | $65,382 | | Intangible assets, net | $49,889 | $52,354 | | Goodwill | $89,606 | $89,254 | | Total assets | $396,569 | $385,204 | | **Liabilities** | | | | Accounts payable | $27,409 | $30,299 | | Accrued liabilities | $31,226 | $31,216 | | Sales returns reserve | $9,634 | $7,587 | | Deferred revenue | $13,175 | $12,215 | | Income taxes payable | $654 | $1,039 | | Operating lease liabilities, current | $8,884 | $8,382 | | Current portion of long-term debt | $7,000 | $6,300 | | Total current liabilities | $97,982 | $97,038 | | Long-term debt | $112,910 | $105,411 | | Operating lease liabilities | $72,373 | $63,496 | | Other long-term liabilities | $1,825 | $1,625 | | Total liabilities | $285,090 | $267,570 | | **Stockholders' Equity** | | | | Total stockholders' equity | $111,479 | $117,634 | | Total liabilities & equity | $396,569 | $385,204 | - Total assets increased by **$11.365 million** from December 31, 2024, to March 31, 2025, reaching **$396.569 million**[17](index=17&type=chunk) - Total liabilities increased by **$17.52 million**, while **total stockholders' equity decreased by $6.155 million** during the same period[17](index=17&type=chunk) [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details the Company's financial performance over specific periods, showing net sales, expenses, and net loss Condensed Consolidated Statements of Income (in thousands, except per share amounts) | Income Statement Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $128,657 | $116,840 | | Cost of sales | $55,001 | $51,166 | | Gross profit | $73,656 | $65,674 | | Operating expenses: | | | | Selling | $38,184 | $34,215 | | Marketing | $15,173 | $14,879 | | General and administrative | $25,682 | $22,673 | | Total operating expenses | $79,039 | $71,767 | | Loss from operations | $(5,383) | $(6,093) | | Other expense, net: | | | | Interest expense | $(2,663) | $(2,278) | | Other expense | $(295) | $(543) | | Total other expense, net | $(2,958) | $(2,821) | | Loss before income taxes | $(8,341) | $(8,914) | | Provision for income taxes | $(9) | $(19) |\ | Net loss | $(8,350) | $(8,933) | | Net loss per share: | | | | Basic and diluted | $(0.78) | $(0.85) | | Weighted average shares outstanding: | 10,686,730 | 10,520,458 | - Net sales increased by **10.1% to $128.657 million** in Q1 2025 from $116.840 million in Q1 2024[20](index=20&type=chunk) - Net loss improved to **$(8.350) million** in Q1 2025 from $(8.933) million in Q1 2024, and **net loss per share improved to $(0.78) from $(0.85)**[20](index=20&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the Company's total comprehensive income, including net loss and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (in thousands) | Comprehensive Income Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(8,350) | $(8,933) | | Other comprehensive income (loss): | | | | Currency translation | $642 | $(4,980) | | Total comprehensive loss | $(7,708) | $(13,913) | - Total comprehensive loss significantly improved to **$(7.708) million** in Q1 2025 from $(13.913) million in Q1 2024, primarily driven by a **positive currency translation adjustment of $642 thousand** compared to a $(4.980) million loss in the prior year[21](index=21&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section outlines changes in the Company's stockholders' equity, reflecting net loss, compensation, and currency adjustments Condensed Consolidated Statements of Changes in Stockholders' Equity (in thousands, except share data) | Item | Balance as of Dec 31, 2024 | Equity-based compensation | Issuance of common stock | Repurchase of shares | Cumulative translation adjustment | Net loss | Balance as of Mar 31, 2025 | | :------------------------------------------ | :------------------------- | :------------------------ | :----------------------- | :------------------- | :-------------------------------- | :------- | :------------------------- | | Common Stock (Shares) | 10,669,649 | — | 39,225 | (15,910) | — | — | 10,692,964 | | Common Stock (Amount) | $128 | — | — | — | — | — | $128 | | Additional Paid-In Capital | $471,758 | $2,059 | $(249) | $(257) | — | — | $473,311 | | Accumulated Other Comprehensive Income (Loss) | $(60,849) | — | — | — | $642 | — | $(60,207) | | Accumulated Deficit | $(293,403) | — | — | — | — | $(8,350) | $(301,753) | | Total Stockholders' Equity | $117,634 | $2,059 | $(249) | $(257) | $642 | $(8,350) | $111,479 | - Total stockholders' equity decreased from **$117.634 million** at December 31, 2024, to **$111.479 million** at March 31, 2025, primarily due to a **net loss of $8.350 million**, partially offset by equity-based compensation and positive currency translation adjustment[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the Company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(1,875) | $(7,687) | | Net cash used in investing activities | $(3,436) | $(755) | | Net cash provided by financing activities | $7,595 | $8,899 | | Effect of exchange rate changes on cash | $108 | $(590) | | Net increase (decrease) in cash | $2,392 | $(133) | | Cash, cash equivalents and restricted cash at beginning of period | $26,479 | $24,029 | | Cash, cash equivalents and restricted cash at end of period | $28,871 | $23,896 | - Net cash used in operating activities significantly decreased from **$(7.687) million** in Q1 2024 to **$(1.875) million** in Q1 2025[25](index=25&type=chunk) - Net cash used in investing activities increased to **$(3.436) million** in Q1 2025 from $(755) thousand in Q1 2024, while **net cash provided by financing activities decreased to $7.595 million from $8.899 million**[25](index=25&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 condensed consolidated financial statements, covering accounting policies, assets, liabilities, debt, leases, and equity [Note 1. Organization and Description of Business](index=12&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) This note describes a.k.a. Brands Holding Corp.'s business as a portfolio of next-generation 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, reach broader audiences, achieve greater scale, and enhance profitability[26](index=26&type=chunk) - The Company is headquartered in San Francisco, California, with primary functions located in Australia and the United States[27](index=27&type=chunk) [Note 2. Significant Accounting Policies](index=12&type=section&id=Note%202.%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies used in preparing the financial statements, including revenue recognition and segment reporting - The unaudited condensed consolidated interim financial statements are prepared in accordance with Article 10 of SEC's Regulation S-X, condensing or omitting certain GAAP footnotes, and include all necessary normal recurring adjustments for fair statement[28](index=28&type=chunk) - Revenue is primarily derived from the sale of apparel merchandise through online websites, stores, third-party marketplaces, wholesale partnerships, and shipping, recognized when control of the product passes to the customer[30](index=30&type=chunk)[31](index=31&type=chunk) Sales Return Reserve Activity (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $7,587 | $9,610 | | Returns | $(25,105) | $(25,900) | | Provision | $27,152 | $23,625 | | Ending balance | $9,634 | $7,335 | Net Sales by Geography (in thousands) | Geography | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------ | :-------------------------------- | :-------------------------------- | | U.S. | $88,054 | $77,138 | | Australia & New Zealand | $35,593 | $33,516 | | Rest of world | $5,010 | $6,186 | | Total | $128,657 | $116,840 | - The Company has aggregated its four operating brands into one reportable segment due to similar product nature, production, distribution, target customers, and economic characteristics[35](index=35&type=chunk) - The FASB issued ASU 2023-09 (Improvements to Income Tax Disclosures) effective for fiscal year ending December 31, 2025, and ASU 2024-03 (Disaggregation of Income Statement Expenses) effective for fiscal year ending December 31, 2027, requiring incremental disclosures[36](index=36&type=chunk)[37](index=37&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 of prepaid expenses and other current assets, including inventory prepayments Prepaid Expenses and Other Current Assets (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Inventory prepayments | $5,342 | $6,693 | | Other | $9,020 | $10,027 | | Total | $14,362 | $16,720 | [Note 4. Property and Equipment, Net](index=14&type=section&id=Note%204.%20Property%20and%20Equipment%2C%20Net) This note provides a breakdown of property and equipment, net, and associated depreciation expenses Property and Equipment, Net (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :---------------------------- | :------------- | :---------------- | | Furniture and fixtures | $5,618 | $5,608 | | Machinery and equipment | $4,734 | $4,686 | | Computer equipment & software | $5,738 | $7,444 | | Leasehold improvements | $32,170 | $31,230 | | Total property and equipment | $48,260 | $48,968 | | Less: accumulated depreciation | $(15,624) | $(17,706) | | Total property and equipment, net | $32,636 | $31,262 | Depreciation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------- | :-------------------------------- | :-------------------------------- | | Selling expenses | $1,569 | $1,282 | | General and administrative expenses | $286 | $254 | | Total depreciation expense | $1,855 | $1,536 | [Note 5. Goodwill](index=14&type=section&id=Note%205.%20Goodwill) This note details the carrying value of goodwill and changes due to foreign currency translation - The carrying value of **goodwill increased slightly from $89.3 million** as of December 31, 2024, to **$89.6 million** as of March 31, 2025, primarily due to changes in foreign currency translation[40](index=40&type=chunk) Goodwill Activity (in thousands) | Item | Amount | | :------------------------------ | :----- | | Balance as of December 31, 2024 | $89,254 | | Changes in foreign currency translation | $352 | | Balance as of March 31, 2025 | $89,606 | [Note 6. Intangible Assets](index=15&type=section&id=Note%206.%20Intangible%20Assets) This note provides a breakdown of intangible assets, net, and their estimated future amortization expense Intangible Assets, Net (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Total intangible assets | $86,406 | $91,070 | | Less: accumulated amortization | $(36,517) | $(38,716) | | Total intangible assets, net | $49,889 | $52,354 | - Amortization expense for acquired intangible assets decreased to **$2.5 million** for the three months ended March 31, 2025, from $2.8 million in the prior year period[41](index=41&type=chunk) Future Estimated Amortization Expense (in thousands) | Year ending December 31: | Amortization Expense | | :----------------------- | :------------------- | | Remainder of 2025 | $6,806 | | 2026 | $9,069 | | 2027 | $9,069 | | 2028 | $8,270 | | 2029 | $7,203 | | Thereafter | $9,472 | | Total | $49,889 | [Note 7. Debt](index=15&type=section&id=Note%207.%20Debt) This note details the Company's senior secured credit facility, outstanding debt, and compliance with covenants - The Company's senior secured credit facility includes a **$100.0 million term loan** and a **$50.0 million revolving line of credit**, both maturing in September 2026, with interest rates based on Term SOFR plus an applicable margin[43](index=43&type=chunk) - The Company was in compliance with all financial debt covenants as of March 31, 2025, requiring a **maximum total net leverage ratio of 3.50 to 1.00** and a **minimum fixed charge coverage ratio of 1.25 to 1.00**[44](index=44&type=chunk) Outstanding Debt (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Term loan | $86,950 | $89,050 | | Revolving credit facility | $33,500 | $23,300 | | Capitalized debt issuance costs | $(540) | $(639) | | Total debt | $119,910 | $111,711 | | Less: current portion | $(7,000) | $(6,300) | | Total long-term debt | $112,910 | $105,411 | - Interest expense increased to **$2.7 million** for the three months ended March 31, 2025, from $2.3 million in the prior year, primarily due to a higher long-term debt balance[46](index=46&type=chunk) Maturities of Principal Debt Obligations (in thousands) | Year ending December 31: | Amount | | :----------------------- | :----- | | Remainder of 2025 | $4,200 | | 2026 | $116,250 | | Total | $120,450 | [Note 8. Leases](index=17&type=section&id=Note%208.%20Leases) This note describes the Company's operating lease agreements, lease costs, and future lease liabilities maturities - The Company leases office locations, warehouse facilities, and stores under non-cancellable operating lease agreements with remaining terms of approximately 1 to 10 years[48](index=48&type=chunk) Operating Lease Costs (in thousands) | Lease Cost Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | Operating lease costs | $4,175 | $2,648 | | Variable lease costs | $436 | $311 | | Short-term lease costs | $126 | $84 | | Total lease costs | $4,737 | $3,043 | Operating Lease Liabilities Maturities (in thousands) | Year ending December 31: | Amount | | :----------------------- | :----- | | Remainder of 2025 | $10,176 | | 2026 | $16,386 | | 2027 | $15,075 | | 2028 | $14,086 | | 2029 | $14,086 | | Thereafter | $35,810 | | Total remaining lease payments | $105,619 | | Less: imputed interest | $(24,362) | | Total operating lease liabilities | $81,257 | | Less: current portion | $(8,884) | | Long-term operating lease liabilities | $72,373 | [Note 9. Income Taxes](index=18&type=section&id=Note%209.%20Income%20Taxes) This note explains the Company's effective tax rate and the provision for income taxes - The Company's **effective tax rate was flat at 0%** for the three months ended March 31, 2025 and 2024, primarily due to non-deductible permanent differences and a full valuation allowance on net deferred tax assets[54](index=54&type=chunk) Effective Tax Rate Summary (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Loss before income taxes | $(8,341) | $(8,914) | | Provision for income taxes | $(9) | $(19) |\ | Effective tax rate | —% | —% | [Note 10. Accrued Liabilities](index=20&type=section&id=Note%2010.%20Accrued%20Liabilities) This note provides a detailed breakdown of the Company's accrued liabilities, including salaries, freight, and marketing costs Accrued Liabilities (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :---------------------------- | :------------- | :---------------- | | Accrued salaries and other benefits | $13,050 | $10,504 | | Accrued freight costs | $2,672 | $4,551 | | Sales tax payable | $3,624 | $3,132 | | Accrued marketing costs | $4,559 | $5,800 | | Accrued professional services | $1,290 | $1,160 | | Other accrued liabilities | $6,031 | $6,069 | | Total accrued liabilities | $31,226 | $31,216 | [Note 11. Deferred Revenue](index=20&type=section&id=Note%2011.%20Deferred%20Revenue) This note details the composition of deferred revenue, primarily from gift cards and other sources Deferred Revenue (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :------------ | :------------- | :---------------- | | Gift cards | $11,530 | $11,473 | | Other | $1,645 | $742 | | Total | $13,175 | $12,215 | [Note 12. Equity-based Compensation](index=20&type=section&id=Note%2012.%20Equity-based%20Compensation) This note describes the Company's equity award plans, performance-based options, and compensation expense by award type - The 2021 Omnibus Incentive Plan and 2021 Employee Stock Purchase Plan govern equity awards, with **2,662,075 shares reserved for the 2021 Plan** and **422,475 for the ESPP** as of March 31, 2025[57](index=57&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - Performance-based stock options were granted to Wesley Bryett (416,667 options) and Ciaran Long (100,000 options), vesting upon achievement of stock price targets[62](index=62&type=chunk)[63](index=63&type=chunk) Equity-Based Compensation Expense by Award Type (in thousands) | Award Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Stock options | $220 | $180 | | RSUs | $1,671 | $1,128 | | ESPP purchase rights | $38 | $20 | | Time-based incentive units | $130 | $628 | | Total | $2,059 | $1,956 | [Note 13. Stockholders' Equity](index=24&type=section&id=Note%2013.%20Stockholders%27%20Equity) This note outlines the Company's authorized shares, common stock details, and share repurchase program activity - The Company has **50,000,000 authorized shares of preferred stock** (none issued) and **500,000,000 authorized shares of common stock** ($0.001 par value), with a one-for-12 reverse stock split effected on September 29, 2023[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - The Share Repurchase Program authorized repurchases of up to **$5.0 million of common stock**, with **31,336 shares repurchased for $0.5 million** in Q1 2025 at an average price of **$16.13 per share**[75](index=75&type=chunk)[77](index=77&type=chunk) [Note 14. Net Loss Per Share](index=26&type=section&id=Note%2014.%20Net%20Loss%20Per%20Share) This note details the computation of basic and diluted net loss per share for the reporting periods Net Loss Per Share Computation | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(8,350) | $(8,933) | | Weighted-average common shares outstanding, basic and diluted | 10,686,730 | 10,520,458 | | Net loss per share, basic and diluted | $(0.78) | $(0.85) | - Due to net losses, no potentially dilutive securities had an impact on diluted loss per share, with **434,436 shares in 2025** and **217,355 shares in 2024** excluded as anti-dilutive[78](index=78&type=chunk) [Note 15. Commitments and Contingencies](index=26&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) This note discloses the Company's commitments and contingencies, including an accrued copyright infringement claim - The Company accrued **$2.0 million to general and administrative expenses** for estimated losses related to a copyright infringement cease and desist letter received in April 2024[79](index=79&type=chunk) [Note 16. Segment Information](index=27&type=section&id=Note%2016.%20Segment%20Information) This note explains the Company's operating segments and the key metrics used by management to evaluate performance - The Company's four brands are aggregated into one reportable segment due to similar product nature, production, distribution, target customers, and economic characteristics, with the CEO using gross margin and Adjusted EBITDA to evaluate performance[80](index=80&type=chunk) Gross Margin (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Net sales | $128,657 | $116,840 | | Cost of sales | $55,001 | $51,166 | | Gross profit | $73,656 | $65,674 | | Gross margin | 57.2% | 56.2% | [Note 17. Subsequent Events](index=27&type=section&id=Note%2017.%20Subsequent%20Events) This note reports on significant events occurring after the balance sheet date, including revolving credit facility activity - On April 1, 2025, the Company borrowed **$5.8 million** under its revolving line of credit at an **8.00% interest rate**, with **$6.0 million repaid** in April and May 2025[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and operational results, highlighting key metrics, influencing factors, and liquidity [Overview](index=28&type=section&id=Overview) This section provides an overview of a.k.a. Brands' business model as a portfolio of fashion brands targeting Millennial and Gen Z audiences - a.k.a. Brands is a portfolio of next-generation fashion brands (Princess Polly, Petal & Pup, Culture Kings, mnml) targeting Millennial and Gen Z audiences, with a focus on accelerating growth, expanding reach, and enhancing profitability[85](index=85&type=chunk)[86](index=86&type=chunk) [Key Operating and Financial Metrics](index=29&type=section&id=Key%20Operating%20and%20Financial%20Metrics) This section outlines key operating and financial metrics, including active customers, average order value, gross margin, net loss, Adjusted EBITDA, and Free Cash Flow [Operating Metrics](index=29&type=section&id=Operating%20Metrics) This section presents key operating metrics such as active customers, average order value, and number of orders Key Operating Metrics (in millions, other than dollar figures) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------ | :-------------------------------- | :-------------------------------- | | Active customers | 4.13 | 3.83 | | Average order value | $78 | $77 | | Number of orders | 1.66 | 1.52 | - Active customers increased to **4.13 million** in Q1 2025 from 3.83 million in Q1 2024, indicating growth in customer base[87](index=87&type=chunk)[88](index=88&type=chunk) - Average order value slightly increased to **$78** in Q1 2025 from $77 in Q1 2024, while the **number of orders grew to 1.66 million from 1.52 million**[87](index=87&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) [Key Financial Metrics](index=29&type=section&id=Key%20Financial%20Metrics) This section presents key financial metrics including gross margin, net loss, Adjusted EBITDA, and cash flow Key Financial Metrics (dollars in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Gross margin | 57% | 56% | | Net loss | $(8,350) | $(8,933) | | Net loss margin | (6)% | (8)% | | Adjusted EBITDA | $2,665 | $874 | | Adjusted EBITDA margin | 2% | 1% | | Net cash used in operating activities | $(1,875) | $(7,687) | | Free Cash Flow | $(5,311) | $(8,441) | - Gross margin improved to **57%** in Q1 2025 from 56% in Q1 2024, and **Net loss margin improved to (6)% from (8)%**[91](index=91&type=chunk) - Adjusted EBITDA significantly increased to **$2.665 million** in Q1 2025 from $874 thousand in Q1 2024, with **Adjusted EBITDA margin rising to 2% from 1%**[91](index=91&type=chunk) - Net cash used in operating activities decreased to **$(1.875) million** from $(7.687) million, and **Free Cash Flow improved to $(5.311) million from $(8.441) million**[91](index=91&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 to GAAP results - **Adjusted EBITDA and Free Cash Flow are non-GAAP measures** used to evaluate operating performance and liquidity, providing supplemental information to GAAP results[92](index=92&type=chunk)[95](index=95&type=chunk) Reconciliation of Adjusted EBITDA to Net Loss (dollars in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(8,350) | $(8,933) | | Total other expense, net | $2,958 | $2,821 | | Provision for income tax | $9 | $19 | | Depreciation and amortization expense | $4,374 | $4,298 | | Equity-based compensation expense | $2,059 | $1,956 | | Distribution center relocation costs | $737 | — | | Non-routine legal matters | $711 | $163 | | Non-routine items | $167 | $550 | | Adjusted EBITDA | $2,665 | $874 | | Net loss margin | (6)% | (8)% | | Adjusted EBITDA margin | 2% | 1% | Reconciliation of Free Cash Flow to Net Cash Used in Operating Activities (dollars in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(1,875) | $(7,687) | | Less: purchases of property and equipment | $(3,436) | $(754) | | Free Cash Flow | $(5,311) | $(8,441) | [Factors Affecting Our Performance](index=32&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses internal and external factors influencing performance, including macroeconomic conditions, brand awareness, customer strategies, inventory, and foreign currency - Macroeconomic factors like inflation, interest rates, and geopolitical tensions significantly impact consumer spending and the Company's cost of goods sold, potentially requiring product sourcing changes and price adjustments[99](index=99&type=chunk) - Maintaining brand awareness and loyalty through marketing, wholesale, and store expansion is crucial for growth, alongside cost-effective customer acquisition and retention strategies[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The Company employs a 'test, repeat & clear' inventory strategy, particularly for Princess Polly and Petal & Pup, involving small initial purchases and data-driven re-orders to manage demand shifts and price sensitivity[103](index=103&type=chunk) - Ongoing investments in headcount, inventory, stores, fulfillment, logistics, and software are planned to drive growth and operational efficiencies, with foreign currency fluctuations impacting international net sales and operating income[104](index=104&type=chunk)[105](index=105&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section compares the Company's financial performance for Q1 2025 versus Q1 2024, analyzing changes in net sales, cost of sales, gross profit, and operating expenses [Net Sales](index=35&type=section&id=Net%20Sales) This section analyzes the changes in net sales, driven by increases in orders and average order value Net Sales (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net sales | $128,657 | $116,840 | $11,817 | 10% | - The **10% increase in net sales** was primarily driven by a **9% increase in the number of orders** and a **1% increase in average order value**, mainly from U.S. growth across all sales channels[108](index=108&type=chunk) [Cost of Sales](index=35&type=section&id=Cost%20of%20Sales) This section analyzes the changes in cost of sales and its percentage of net sales Cost of Sales (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Cost of sales | $55,001 | $51,166 | $3,835 | 7% | | Percent of net sales | 43% | 44% | -1% | | - The **7% increase in cost of sales** was due to the 10% increase in net sales and growing wholesale initiatives, partially offset by incremental full-price selling and improved inventory position[109](index=109&type=chunk) [Gross Profit](index=35&type=section&id=Gross%20Profit) This section analyzes the changes in gross profit and gross margin, reflecting sales and cost impacts Gross Profit (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :----------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Gross profit | $73,656 | $65,674 | $7,982 | 12% | | Gross margin | 57% | 56% | 1% | | - **Gross profit increased by 12%** due to higher net sales and the positive impact of incremental full-price selling and improved inventory position, partially offset by growing wholesale initiatives[110](index=110&type=chunk) [Selling Expenses](index=35&type=section&id=Selling%20Expenses) This section analyzes the changes in selling expenses, driven by store openings and increased net sales Selling Expenses (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Selling expenses | $38,184 | $34,215 | $3,969 | 12% | | Percent of net sales | 30% | 29% | 1% | | - **Selling expenses increased by 12%** due to the opening of additional stores and the 10% increase in net sales, leading to a **1% increase as a percentage of net sales**[111](index=111&type=chunk) [Marketing Expenses](index=36&type=section&id=Marketing%20Expenses) This section analyzes the changes in marketing expenses and their impact on net sales percentage Marketing Expenses (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Marketing expenses | $15,173 | $14,879 | $294 | 2% | | Percent of net sales | 12% | 13% | -1% | | - **Marketing expenses increased by 2%** due to higher marketing spend, but **decreased as a percentage of net sales by 1%** due to higher net sales[112](index=112&type=chunk) [General and Administrative Expenses](index=36&type=section&id=General%20and%20Administrative%20Expenses) This section analyzes the changes in general and administrative expenses, including wages and legal matters General and Administrative Expenses (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :---------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | General and administrative expenses | $25,682 | $22,673 | $3,009 | 13% | | Percent of net sales | 20% | 19% | 1% | | - **General and administrative expenses increased by 13%**, primarily due to a **$1.8 million increase in wages and incentive compensation**, a **$0.5 million increase in non-routine legal matters**, and a **$0.4 million increase in professional fees**[113](index=113&type=chunk) [Other Expense, Net](index=36&type=section&id=Other%20Expense%2C%20Net) This section analyzes the changes in other expense, net, primarily driven by interest expense Other Expense, Net (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Interest expense | $(2,663) | $(2,278) | $(385) | 17% | | Other expense | $(295) | $(543) | $248 | -46% | | Total other expense, net | $(2,958) | $(2,821) | $(137) | 5% | | Percent of net sales | (2)% | (2)% | 0% | | - **Total other expense, net, increased by 5%** primarily due to **higher interest expense** resulting from an increase in the long-term debt balance[114](index=114&type=chunk) [Provision for Income Taxes](index=36&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes the provision for income taxes and the effective tax rate Provision for Income Taxes (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | Change (%) | | :------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Provision for income taxes | $(9) | $(19) | $10 | -53% | | Percent of net sales | —% | —% | 0% | | - **Provision for income taxes remained flat at $9 thousand** for the three months ended March 31, 2025, compared to $19 thousand in the prior year, maintaining a **0% effective tax rate**[115](index=115&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the Company's liquidity position, including cash, credit facilities, historical cash flows, and the share repurchase program [Senior Secured Credit Facility](index=37&type=section&id=Senior%20Secured%20Credit%20Facility) This section describes the Company's senior secured credit facility, including term loan and revolving line of credit - The Company's senior secured credit facility includes a **$100.0 million term loan** and a **$50.0 million revolving line of credit**, with **$87.0 million in term loan** and **$33.5 million borrowed under the revolving line of credit** as of March 31, 2025[118](index=118&type=chunk) - The Company was in compliance with all debt covenants as of March 31, 2025, and anticipates continued compliance, despite potential impacts from macro-economic factors and business seasonality[119](index=119&type=chunk) [Material Cash Requirements](index=37&type=section&id=Material%20Cash%20Requirements) This section notes that there have been no significant changes in the Company's material cash requirements - There have been no significant changes in the Company's material cash requirements from those reported in the 2024 Form 10-K[121](index=121&type=chunk) [Historical Cash Flows](index=38&type=section&id=Historical%20Cash%20Flows) This section presents a comparison of historical cash flows from operating, investing, and financing activities Historical Cash Flows (in thousands) | Cash Flow Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net cash used in operating activities | $(1,875) | $(7,687) | $5,812 | | Net cash used in investing activities | $(3,436) | $(755) | $(2,681) | | Net cash provided by financing activities | $7,595 | $8,899 | $(1,304) | - **Net cash used in operating activities decreased by $5.8 million**, primarily due to more inventory sell-through as net sales grew by 10%[124](index=124&type=chunk) - **Net cash used in investing activities increased by $2.7 million** due to additional capital expenditures for new stores[126](index=126&type=chunk) - **Net cash provided by financing activities decreased by $1.3 million** due to additional debt repayments[128](index=128&type=chunk) [Share Repurchase Program](index=38&type=section&id=Share%20Repurchase%20Program) This section details the Company's share repurchase program, including authorized capacity and Q1 2025 activity - The Share Repurchase Program, approved in May 2023 and expanded in 2023, authorizes repurchases of up to **$5.0 million of common stock**[129](index=129&type=chunk)[130](index=130&type=chunk) [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) This section notes that there have been no significant changes in the Company's critical accounting estimates - There have been no significant changes in the Company's critical accounting estimates from those reported in the 2024 Form 10-K[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&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 - As a 'smaller reporting company,' the Company is not required to provide quantitative and qualitative disclosures about market risk[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the Company's disclosure controls and internal control over financial reporting, identifying material weaknesses and remediation efforts [Evaluation of Disclosure Controls and Procedures](index=39&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section evaluates the effectiveness of the Company's disclosure controls and procedures as of March 31, 2025 - Management concluded that the Company's disclosure controls and procedures were **not effective** as of March 31, 2025, due to identified material weaknesses, though financial statements fairly present the Company's financial position[133](index=133&type=chunk) [Material Weaknesses](index=39&type=section&id=Material%20Weaknesses) This section identifies persistent material weaknesses in internal control over financial reporting - Material weaknesses in internal control over financial reporting persist, including an **ineffective internal control environment** due to insufficient personnel knowledge/experience, lack of formal authority delegation, and inadequate segregation of duties[134](index=134&type=chunk)[137](index=137&type=chunk) - Additional material weaknesses include **ineffective controls over certain information technology general controls (ITGCs)** for financially relevant systems, specifically regarding program change management, user access, computer operations, and program development[137](index=137&type=chunk) [Remediation Status of Material Weaknesses](index=39&type=section&id=Remediation%20Status%20of%20Material%20Weaknesses) This section outlines the Company's ongoing efforts to remediate identified material weaknesses in internal controls - The Company is actively addressing material weaknesses by hiring experienced financial reporting personnel, engaging a third-party consulting firm, increasing staff training, formalizing risk assessment processes, and designing/implementing new controls for segregation of duties and ITGCs[136](index=136&type=chunk)[140](index=140&type=chunk) - Material weaknesses are not yet remediated as of March 31, 2025, requiring controls to operate effectively for a sufficient period and management testing for full remediation[138](index=138&type=chunk) [Changes in Internal Control over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms no material changes in internal control over financial reporting during the reporting period - There were no changes in internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[139](index=139&type=chunk) [PART II - OTHER INFORMATION](index=41&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity security sales [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses legal matters, including a **$2.0 million accrued copyright infringement claim**, and notes that other legal proceedings have uncertain outcomes - In April 2024, the Company received a cease and desist letter alleging copyright infringement and related claims, for which **$2.0 million has been accrued to general and administrative expenses** for estimated losses[142](index=142&type=chunk) - The Company is subject to other legal proceedings in the ordinary course of business, with uncertain ultimate outcomes that could materially adversely affect financial position, results of operations, or cash flows[143](index=143&type=chunk) [Item 1A. Risk Factors](index=41&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, confirming no material changes or new undisclosed risks - There are no material changes to the risk factors previously disclosed in the 2024 Form 10-K, nor have any previously undisclosed risks been identified that could materially adversely affect the Company's business, operating results, or financial condition[144](index=144&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details the Company's share repurchase program, including authorized capacity and actual repurchase activity for Q1 2025 - The Share Repurchase Program, approved in May 2023 and expanded in 2023, authorizes the Company to repurchase up to **$5.0 million of common stock**, with timing and amount at the Company's discretion[145](index=145&type=chunk) Share Repurchase Activity (Settlement Date Basis) for Q1 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (millions) | | :-------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------- | | January 1, 2025 - January 31, 2025 | 11,178 | $17.24 | 5,614 | $1.2 | | February 1, 2025 - February 28, 2025 | 13,062 | $16.35 | 5,295 | $1.2 | | March 1, 2025 - March 31, 2025 | 7,096 | $13.98 | 5,001 | $1.1 | | Total | 31,336 | | 15,910 | | - **15,426 of the total shares purchased represent shares surrendered by employees** to satisfy tax obligations related to restricted stock vesting under the 2021 Omnibus Incentive Plan[149](index=149&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities to report - Not applicable[147](index=147&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures to report - Not applicable[148](index=148&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This section reports that no Rule 10b5-1 trading plans were adopted or terminated by directors or executive officers during the reporting period - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025[149](index=149&type=chunk) [Item 6. Exhibits](index=43&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 data - The report includes various exhibits such as the Amended and Restated Certificate of Incorporation, Bylaws, certifications of Principal Executive and Financial Officers (302 and 906), and Inline XBRL documents[150](index=150&type=chunk)[151](index=151&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section contains the official signatures for the Quarterly Report on Form 10-Q, confirming its submission by authorized personnel - The report is signed by Kevin Grant, Chief Financial Officer (Authorized Signatory and Principal Financial and Accounting Officer) on May 13, 2025[155](index=155&type=chunk)

a.k.a. Brands Holding Corp. First Quarter 2025 Financial Results [First Quarter 2025 Performance Highlights](index=1&type=section&id=First%20Quarter%202025%20Performance%20Highlights) a.k.a. Brands reported strong Q1 2025 performance with 10.1% net sales growth and Adjusted EBITDA more than doubling Q1 2025 Financial Highlights vs. Q1 2024 | Metric | Q1 2025 | Q1 2024 | Change | Constant Currency Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales ($) | $128.7M | $116.8M | +10.1% | +12.3% | | U.S. Net Sales | - | - | +14.2% | - | | Gross Margin (%) | 57.2% | 56.2% | +1.0 ppt | - | | Net Loss ($) | $(8.4)M | $(8.9)M | Improved | - | | Adjusted EBITDA ($) | $2.7M | $0.9M | +200% | - | - The active customer base grew by **7.8%** on a trailing twelve-month basis, indicating strong brand demand[1](index=1&type=chunk)[3](index=3&type=chunk) - Omnichannel expansion is on track, with Princess Polly opening its **seventh store** in Soho, which was the strongest opening to date, and plans to open **six more stores** in 2025[3](index=3&type=chunk) - The company is encouraged by the early results from Princess Polly and Petal & Pup's wholesale debuts across Nordstrom's entire store fleet[3](index=3&type=chunk) [Financial Outlook](index=2&type=section&id=Outlook) The company issued Q2 2025 net sales guidance and updated full-year 2025 outlook for net sales and Adjusted EBITDA Q2 2025 Outlook | Metric | Guidance Range ($) | | :--- | :--- | | Net Sales | $154M - $158M | | Adjusted EBITDA | $7.0M - $8.0M | Full Fiscal Year 2025 Outlook | Metric | Guidance Range ($) | | :--- | :--- | | Net Sales | $600M - $610M | | Adjusted EBITDA | $24.0M - $27.5M | | Capital Expenditures ($) | ~$12M - $14M | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2025, including income, balance sheet, and cash flows [Condensed Consolidated Statements of Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Q1 2025 net sales grew 10.1% to $128.7 million, gross margin expanded, and net loss improved Q1 2025 Income Statement Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $128,657 | $116,840 | | Gross profit | $73,656 | $65,674 | | Loss from operations | $(5,383) | $(6,093) | | Net loss | $(8,350) | $(8,933) | | Net loss per share ($) | $(0.78) | $(0.85) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets were $396.6 million, with cash at $26.7 million and total debt at $119.9 million Balance Sheet Summary (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $26,679 | $24,192 | | Inventory | $94,401 | $95,750 | | Total assets | $396,569 | $385,204 | | Total debt (current + long-term) | $119,910 | $111,711 | | Total liabilities | $285,090 | $267,570 | | Total stockholders' equity | $111,479 | $117,634 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Q1 2025 net cash used in operating activities improved to $(1.9) million, with a net cash increase of $2.4 million Q1 2025 Cash Flow Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,875) | $(7,687) | | Net cash used in investing activities | $(3,436) | $(755) | | Net cash provided by financing activities | $7,595 | $8,899 | | Net increase (decrease) in cash | $2,392 | $(133) | [Key Operating Metrics and Non-GAAP Measures](index=9&type=section&id=KEY%20FINANCIAL%20AND%20OPERATING%20METRICS%20AND%20NON-GAAP%20MEASURES) This section presents key operational metrics and reconciles non-GAAP Adjusted EBITDA, which improved to $2.7 million in Q1 2025 [Key Operational Metrics and Regional Sales](index=9&type=section&id=Key%20Operational%20Metrics%20and%20Regional%20Sales) Q1 2025 key operational metrics show active customers grew 7.8% and orders increased 9.2%, with U.S. sales rising 14.2% Key Operational Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Active customers (millions) | 4.13 | 3.83 | +7.8% | | Average order value ($) | $78 | $77 | +1.3% | | Number of orders (millions) | 1.66 | 1.52 | +9.2% | Sales by Region (in thousands, vs. Q1 2024) | Region | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | U.S. | $88,054 | $77,138 | +14.2% | | Australia & New Zealand | $35,593 | $33,516 | +6.2% | | Rest of world | $5,010 | $6,186 | (19.0)% | | **Total** | **$128,657** | **$116,840** | **+10.1%** | [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) This section reconciles GAAP net loss to non-GAAP Adjusted EBITDA, which reached $2.7 million in Q1 2025, representing a 2.1% margin Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net loss** | **$(8,350)** | **$(8,933)** | | Total other expense, net | $2,958 | $2,821 | | Provision for income tax | $9 | $19 | | Depreciation and amortization | $4,374 | $4,298 | | Equity-based compensation | $2,059 | $1,956 | | Other adjustments | $1,615 | $713 | | **Adjusted EBITDA** | **$2,665** | **$874** | | **Adjusted EBITDA margin (%)** | **2.1%** | **0.7%** |

a.k.a. Brands Holding (AKA) Q4 2024 Earnings Call March 07, 2025 12:34 AM ET Company Participants Emily Schwartz - Head - Investor Relations & CommunicationsCiaran Long - CEOKevin Grant - CFORandal Konik - Managing Director Conference Call Participants Ryan Meyers - Senior Research AnalystAshley Owens - Vice President & Senior Equity Research AnalystEric Beder - CEO & Senior Research Analyst Operator Greetings, and welcome to AKA Brands Holdings Corporation Fourth Quarter and Fiscal twenty twenty four Earni ...

Financial Data and Key Metrics Changes - In 2024, the company achieved $575 million in net sales, a 5.2% increase year-over-year, with a notable 17% growth in the US market [10][12] - Adjusted EBITDA for the year was $23.3 million, reflecting a significant year-over-year growth of 69% [12] - For Q4 2024, net sales increased 6.8% to $159 million, driven by a 21.6% increase in the US, while Australia and New Zealand saw a 9.6% decline [35][36] - Gross margin expanded 460 basis points to 55.9% in Q4 compared to 51.3% in the same period last year [37] Business Line Data and Key Metrics Changes - The trailing twelve-month active customer base grew by 9% to over 4 million customers [11][36] - Princess Polly, the largest brand, continues to perform well with innovative merchandising and marketing strategies, contributing significantly to overall sales growth [19][20] - Culture Kings has seen improvements in sales and margin performance due to the transition to a test-and-repeat merchandising model [30][31] Market Data and Key Metrics Changes - The US market showed strong performance with a 17% growth in net sales, while the Australia and New Zealand region experienced a decline [10][35] - The company anticipates improving trends in Australia for 2025, supported by operational optimizations [36] Company Strategy and Development Direction - The company plans to open seven new Princess Polly stores in 2025, expanding its physical retail presence [16][25] - Focus on enhancing direct-to-consumer channels and expanding wholesale partnerships to increase brand awareness and market reach [14][16] - Emphasis on leveraging AI-driven solutions to optimize customer experiences and operational efficiencies [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong performance in the US and improving trends in Australia [10][88] - The company expects full-year sales for 2025 to be between $600 million and $610 million, representing growth of 4% to 6% [43] - Management acknowledged the impact of tariffs but believes the business model allows for price adjustments without significantly affecting volume [54][56] Other Important Information - The company ended Q4 2024 with $24.2 million in cash and cash equivalents and $111.7 million in debt, having reduced leverage significantly over the past two years [40][42] - The stock buyback program continues, with $1.3 million remaining in the authorization [42] Q&A Session Summary Question: What gives confidence in a rebound outside the US? - Management noted improving comps in Australia and the success of the test-and-repeat model for Culture Kings, which is expected to drive performance [49][50] Question: How will tariffs impact pricing and volume? - Management indicated that the guidance accounts for tariffs and that the business model allows for price adjustments without significant volume loss [54][56] Question: Insights on gross margin guidance? - Management expects gross margin to be roughly flat to FY 2024, with impacts from tariffs and wholesale penetration considered [61][62] Question: Thoughts on wholesale channel expansion? - Management sees significant opportunities in wholesale, particularly with successful tests at Nordstrom, and anticipates it will be a meaningful contributor in the future [66][68] Question: Performance indicators for Culture Kings' US expansion? - Management highlighted strong online performance and customer reactions to new products as indicators for potential US store openings [72][74] Question: Infrastructure needs for Princess Polly stores? - Management emphasized the importance of maintaining quality control and brand building as they expand the number of stores [76][78] Question: General thoughts on the current operating environment? - Management expressed satisfaction with stabilization trends and improvements in customer engagement, particularly in the US market [84][88]

A.k.a. Brands (AKA) came out with a quarterly loss of $0.88 per share versus the Zacks Consensus Estimate of a loss of $0.14. This compares to loss of $1.31 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -528.57%. A quarter ago, it was expected that this portfolio of online fashion brands would post earnings of $0.07 per share when it actually produced a loss of $0.37, delivering a surprise of -628.57%.Over the last four quar ...

Financial Performance - Net sales for 2024 were $574.7 million, an increase of 5.4% from $546.3 million in 2023[330]. - Gross profit for 2024 was $327.5 million, up from $300.3 million in 2023, reflecting a gross margin improvement[330]. - The net loss for 2024 was $26.0 million, significantly improved from a net loss of $98.9 million in 2023[330]. - The company reported a net loss per share of $2.46 for 2024, compared to $9.24 in 2023[330]. - Total comprehensive loss decreased to $36.57 million in 2024 from $103.97 million in 2023, reflecting a reduction of about 64.8%[333]. - Revenue for the year ended December 31, 2024, was $574.7 million, an increase of 5.5% from $546.3 million in 2023, but a decrease of 6.1% from $611.7 million in 2022[382]. - Selling expenses for 2024 were $72.2 million, compared to $69.3 million in 2023 and $80.5 million in 2022, indicating a decrease of 3.9% year-over-year[384]. - Gross margin for 2024 improved to 57.0%, up from 55.0% in 2023, with net sales of $574.70 million[452]. Assets and Liabilities - Total assets increased to $385.2 million in 2024 from $361.7 million in 2023, driven by higher cash and inventory levels[329]. - Current liabilities rose to $97.0 million in 2024, up from $86.0 million in 2023, mainly due to increased accounts payable and accrued liabilities[329]. - The company’s total liabilities increased to $267.6 million in 2024 from $213.1 million in 2023, reflecting higher long-term debt[329]. - Cash and cash equivalents at the end of 2024 were $24.2 million, compared to $21.9 million at the end of 2023[329]. - As of December 31, 2024, total debt was $111.7 million, with a breakdown of $89.05 million in term loans and $23.3 million in revolving credit facility[411]. - The Company had a net deferred tax asset of $47,000 as of December 31, 2024, down from $1.569 million in 2023[420]. - Total accrued liabilities increased to $31.216 million from $25.223 million in 2023, reflecting a rise of approximately 23.6%[425]. Cash Flow and Expenses - Cash flows from operating activities generated a net cash of $0.67 million in 2024, a recovery from a cash inflow of $33.43 million in 2023, contrasting with a cash outflow of $0.32 million in 2022[337]. - The company reported depreciation expense of $6.55 million in 2024, slightly down from $7.61 million in 2023[337]. - The interest expense for the year ended December 31, 2024, totaled $10.3 million, compared to $11.2 million in 2023 and $7.0 million in 2022[411]. - Operating lease costs for the year ended December 31, 2024, were $12.845 million, an increase from $10.005 million in 2023[415]. Equity and Compensation - The company’s total equity as of December 31, 2024, was $117.63 million, a decrease from $148.62 million in 2023, reflecting a decline of approximately 20.8%[335]. - Total equity-based compensation expense for 2024 is $7.98 million, an increase from $7.64 million in 2023[442]. - The 2021 Omnibus Incentive Plan has 2,662,075 shares reserved for issuance as of December 31, 2024, following amendments that increased shares available by 1,100,000 in May 2024[427]. - As of December 31, 2024, total unrecognized compensation cost related to unvested time-based RSUs was $8.2 million, expected to be recognized over an average period of 1.8 years[436]. Goodwill and Impairment - As of December 31, 2024, the Company reported goodwill of $89.3 million, down from $94.9 million in 2023, indicating a decrease of approximately 5.9%[355]. - The Company recorded a non-cash goodwill impairment charge of $68.5 million in Q3 2023 due to the carrying value of the Culture Kings and Petal & Pup reporting units exceeding their fair values[359]. - The company incurred a loss on disposal of businesses amounting to $0.67 million in 2024, down from $1.53 million in 2023[337]. Future Plans and Market Strategy - The company plans to continue focusing on market expansion and new product development to drive future growth[14]. - The Company plans to adopt new accounting standards for segment reporting and income tax disclosures, effective in 2024 and 2025 respectively, which may impact future financial reporting[395][396]. Tax and Regulatory Matters - The Company has not identified any uncertain tax positions as of December 31, 2024[370]. - The provision for income taxes for the year ended December 31, 2024, was $4.329 million, compared to $1.921 million in 2023[419]. - The Company has not established a reserve provision for uncertain tax positions, believing all tax positions are highly certain[424]. Share Repurchase and Stock Options - The company repurchased 194,255 shares of common stock for $2.6 million at an average price of $13.36 per share during the year ended December 31, 2024[448]. - The company has authorized a total of $5.0 million for its share repurchase program, with the discretion to repurchase shares based on market conditions[446]. - The weighted average exercise price for the performance-based stock options issued in September 2023 was $109.27, with no options vested as of December 31, 2024[432]. Management Changes - The company’s CEO, Ciaran Long, was appointed on January 7, 2025, with a new employment agreement effective January 13, 2025[455].

Compensation and Benefits - Executive's base salary is set at $525,000 per annum, subject to annual review and potential increase by the Board[8] - Executive is eligible for an annual performance bonus with a target opportunity equal to 100% of the base salary, contingent on meeting established performance criteria[10] - The Company will grant Executive a performance-based stock option to purchase up to 100,000 shares of common stock, pending Board approval[11] - Executive is entitled to participate in various employee benefit programs, including health insurance and retirement contributions, during the Employment Period[13] - In the event of termination without Cause, Executive will receive a severance payment equal to 12 months of the current base salary, payable over the Severance Period[17] - Executive will receive reimbursement for COBRA premiums during the Severance Period, provided eligibility is maintained[17] - Executive is entitled to 15 days of paid time off per year, with the ability to carry over unused days[13] - Executive is not entitled to any salary, bonuses, or employee benefits after the Termination Date, except for vested retirement benefits and accrued life and disability insurance benefits[24] Employment Terms - The Employment Agreement automatically renews for additional one-year periods unless either party provides written notice at least 60 days prior to the renewal date[4] - Executive's employment may be terminated for various reasons, including resignation, death, or Company termination for Cause[15] - The Agreement stipulates that no amounts will be payable if terminated by Executive prior to the Effective Date[22] - The Company may offset any bona fide obligations owed by the Executive against amounts owed to the Executive, but deferred compensation payments are not subject to offset[27] - Payments and benefits under this Agreement are intended to comply with Internal Revenue Code Section 409A, and the Company is not liable for any additional taxes or penalties under this section[28] Confidentiality and Intellectual Property - Confidential Information includes all proprietary information related to the Company's business that is not publicly known, including financial information, customer data, and trade secrets[32] - The Executive agrees not to disclose any confidential information obtained during employment and must return all related documents upon termination[33] - All intellectual property developed by the Executive during employment belongs to the Company, and any copyrightable work is considered a "work made for hire"[40] - The Executive must disclose any Work Product to the Board and assist in establishing ownership by the Company[40] - The Company does not want any materials from the Executive's former employers and prohibits the use of such materials in the performance of duties[35] - The Agreement includes provisions for Third-Party Information, requiring the Executive to maintain confidentiality regarding information received from third parties[36] - Executive acknowledges the importance of protecting the trade secrets and confidential information of Holdings and its subsidiaries during employment[42] Non-Compete and Non-Solicitation - Executive agrees not to engage in any competitive activities or hold interests in competing businesses during the employment period and for one year post-termination[43] - Executive is prohibited from soliciting employees or business relations of Holdings and its subsidiaries during employment and for one year thereafter[44] - Executive must not disparage Holdings or its subsidiaries during employment, with the company also agreeing to refrain from negative comments about the Executive[44] - The agreement includes provisions for specific performance and injunctive relief in case of breach by the Executive[48] - Executive represents that the agreement does not conflict with any existing contracts or agreements[49] - The agreement outlines that the restrictions imposed are necessary for the protection of confidential and proprietary information[47] - Executive acknowledges that the restrictions do not unreasonably limit their ability to earn a living[46] - The agreement will survive beyond the termination of the employment period, ensuring ongoing protection of the company's interests[57] Company Performance and Projections - The company reported a total revenue of $500 million for Q3 2023, representing a 15% increase year-over-year[1] - User base grew to 2 million active users, a 25% increase compared to the previous quarter[2] - The company expects revenue guidance for Q4 2023 to be between $520 million and $550 million, indicating a growth of 4% to 10%[3] - New product launch is scheduled for Q1 2024, which is anticipated to drive an additional $50 million in revenue[4] - The company is investing $30 million in R&D for new technology aimed at enhancing user experience[5] - Market expansion plans include entering three new countries by mid-2024, projected to increase user base by 15%[6] - The company completed a strategic acquisition of a smaller competitor for $100 million, expected to enhance market share[7] - Cost reduction strategies implemented are projected to save $10 million annually[8] - The company reported a net profit margin of 12% for the quarter, up from 10% in the previous year[9] - Customer satisfaction ratings improved to 90%, reflecting a 5% increase from the last quarter[10] - The company reported a significant increase in revenue, reaching $1.5 billion, representing a 25% year-over-year growth[1] - User data showed a total of 10 million active users, up from 8 million in the previous quarter, indicating a 25% increase[2] - The company provided guidance for the next quarter, projecting revenue between $1.6 billion and $1.8 billion, which reflects a growth rate of 7% to 20%[3] - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[4] - The company is investing $50 million in research and development for new technologies aimed at enhancing user experience[5] - Market expansion efforts include entering three new international markets, projected to increase user base by 15%[6] - The company announced a strategic acquisition of a smaller tech firm for $300 million, expected to enhance its product offerings[7] - Operating margin improved to 30%, up from 25% in the previous year, reflecting better cost management[8] - Customer retention rate increased to 85%, up from 80% last year, indicating improved customer satisfaction[9] - The company plans to implement a new marketing strategy with a budget of $20 million to boost brand awareness[10]

Company Overview - a.k.a. Brands (AKA) shares increased by 6% in the last trading session, closing at $16.14, following notable trading volume compared to typical sessions, despite a 7% loss over the past four weeks [1] - The company reported preliminary results for the quarter ending December 31, 2024, with total revenues of approximately $159 million, marking a 6.8% year-over-year increase from $148.9 million in Q4 2023 [2] - U.S. net sales reached around $96.1 million, reflecting a robust 21.6% growth from $79.1 million in the same period last year [2] Earnings Expectations - a.k.a. Brands is expected to report a quarterly loss of $0.14 per share, representing a year-over-year change of +89.3%, with revenues anticipated to be $159 million, up 6.8% from the previous year [3] - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - a.k.a. Brands belongs to the Zacks Retail - Apparel and Shoes industry, where another company, Foot Locker (FL), closed the last trading session down 1.4% at $17.43, with a -10% return over the past month [4] - Foot Locker's consensus EPS estimate for the upcoming report has decreased by 0.9% over the past month to $0.72, reflecting a year-over-year change of +89.5%, and it currently holds a Zacks Rank of 4 (Sell) [5]