PLBY (US:PLBY)2024-11-12 21:53Revenue Performance - Licensing revenues from China accounted for 26% of total revenues for Q3 2024, down from 40% in Q3 2023, and 24% for the nine months ended September 30, 2024, down from 41% in the same period of 2023[158]. - Net revenues for the three months ended September 30, 2024, decreased to $12,864,000, down 21% from $16,276,000 in the same period of 2023[174]. - For the nine months ended September 30, 2024, net revenues were $32,824,000, down 36% from $51,013,000 in the same period of 2023[185]. - The decrease in net revenues for the nine months was primarily due to a $14.2 million decline in licensing revenue, largely from terminated Chinese licensing agreements[188]. - Total net revenues for the three months ended September 30, 2024, were $12.864 million, a decrease of 21% compared to $16.276 million in the prior year[211]. - Licensing segment revenues decreased by 33% to $7.377 million, primarily due to the termination of certain Chinese licensing agreements[212]. - Digital Subscriptions and Content segment revenues increased by 5% to $5.485 million[211]. - Digital Subscriptions and Content segment saw a revenue increase of $1.7 million for the nine months ended September 30, 2024, driven by the creator platform[221]. - Total net revenues for the nine months ended September 30, 2024, were $32.8 million, a decrease of 36% from $51.0 million in the prior year[218]. Financial Losses and Expenses - The company recorded a loss of $1.8 million on partial extinguishment of debt in Q1 2023, related to $45 million in prepayments of senior debt[170]. - The company experienced further declines in revenue and profitability, which may lead to additional non-cash asset impairment charges[159]. - The net loss from continuing operations for the three months ended September 30, 2024, was $33,798,000, compared to $7,050,000 in the same period of 2023, reflecting a loss increase of over 200%[174]. - The net loss attributable to PLBY Group, Inc. for the nine months ended September 30, 2024, was $66,854,000, compared to a loss of $176,660,000 in the same period last year, indicating a 62% reduction in losses[185]. - The operating loss decreased by $44.3 million for the nine months ended September 30, 2024, compared to the prior year, primarily due to non-cash impairment charges of $65.5 million in the previous year[220][233]. - The company incurred significant operating losses since going public, with an operating loss of $44.3 million for the nine months ended September 30, 2024[233]. - The company expects to continue incurring operating losses until the Digital Subscriptions and Content segment achieves profitability[234]. Impairments and Asset Write-offs - Impairments of indefinite-lived intangible assets and long-lived assets were recognized due to declines in revenue and profitability during Q3 2024[159]. - Impairments rose dramatically to $21,707,000, compared to $392,000 in the same period last year, indicating a significant write-off of assets[174]. - Impairment charges for the nine months ended September 30, 2024 included $17.0 million on goodwill and $4.7 million on internally developed software[191]. Operating Expenses - The total operating expense for the three months ended September 30, 2024, was $41,006,000, a 130% increase from $17,863,000 in the prior year[174]. - The total operating expense for the nine months ended September 30, 2024, was $77,118,000, a 50% decrease from $152,732,000 in the prior year[185]. - Selling and administrative expenses decreased by $4.0 million due to lower stock-based compensation and technology costs, among other reductions[190]. - Corporate expenses decreased by $6.0 million for the nine months ended September 30, 2024, due to reductions in payroll and consulting services[225]. Cash Flow and Financing - As of September 30, 2024, the company had cash of $9.5 million, primarily held in operating and deposit accounts[226]. - The company raised $15 million from a registered direct offering and approximately $47.6 million from a rights offering in early 2023[227][228]. - The net cash used in operating activities for the nine months ended September 30, 2024, was $19.9 million, a 41% improvement compared to $33.6 million in the prior year[246]. - Cash flows from investing activities decreased by 57%, from $863,000 in 2023 to $372,000 in 2024, primarily due to lower proceeds from asset sales[246]. - Financing activities resulted in a net cash outflow of $557,000 in 2024, a significant decrease from a net inflow of $27.3 million in the previous year, largely due to reduced long-term debt repayments[249]. - Outstanding debt obligations increased from $211.6 million as of December 31, 2023, to $217.7 million as of September 30, 2024[258]. Interest Rates and Debt - Interest expense increased due to higher interest rates on senior secured debt following amendments made in May and November 2023[193]. - As of September 30, 2024, the stated interest rates for Tranche A and Tranche B term loans were 11.46% and 9.46%, respectively, with effective interest rates of 12.08% and 13.32%[244]. - A 0.5% increase in underlying interest rates is estimated to increase annual interest expense by $1.1 million, while a 1% increase would raise it by $2.3 million[258]. - The company has not entered into any interest rate swap contracts as of September 30, 2024, to mitigate interest rate fluctuations[257]. Strategic Initiatives - The company is transitioning to a capital-light business model focused on higher margin revenue streams and lower working capital requirements[157]. - The transition of the Direct-to-Consumer segment to a licensing model resulted in no segment results presented for Q3 2024[155]. - The company aims to strategically expand its licensing business in key categories and territories, leveraging high-end designer collaborations[157]. - The company has renegotiated terms with certain Chinese licensees and terminated some agreements due to slow collections, impacting future revenue recognition[232]. Other Income and Adjustments - The increase in other income, net for the three months ended September 30, 2024, was primarily due to foreign exchange adjustments related to certain Chinese licenses[182]. - Other income increased due to foreign exchange adjustments related to certain Chinese licenses[196]. - An unrealized gain of $1.1 million was recorded for the three months ended September 30, 2024, primarily related to discontinued operations and currency fluctuations[260].