a.k.a. Brands (AKA) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Performance Overview 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 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] - US net sales increased by 14%, while Australia/New Zealand showed stable trends[4] - Adjusted EBITDA reached $7.5 million, aligning with expectations[4] - 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] - Wholesale partnerships deepened, with Princess Polly and Petal & Pup successfully launching across Nordstrom[5] - Culture Kings' in-house brands achieved double-digit growth in Q2[5] - Sourcing diversification initiatives are on schedule, with new supplier products received and satisfaction regarding timing, quality, and cost[6] Q2 2025 Financial Highlights 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] - Gross margin decline was mainly due to increased tariffs, partially offset by full-price sales and improved inventory levels[10] - Year-over-year increase in selling expenses was primarily due to higher store-related selling expenses from retail store expansion[10] Company Profile 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 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] - Targets next-generation consumers who seek fashion inspiration via social media and primarily shop online[17] - Employs a data-driven 'test and repeat' merchandise model, launching new and exclusive fashion products weekly[17] - Connects authentically with customers on the latest marketing platforms through data-driven insights[17] - Committed to serving customers through online, physical stores, and wholesale channels[17] Detailed Financial Results 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 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 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][25] - Inventory decreased from $95.8 million at FY2024 end to $92.5 million, also lower than $106.7 million in Q2 2024[15][25] - Total debt was $108.7 million, higher than $106.9 million in Q2 2024 but lower than $111.7 million at FY2024 end[15] Condensed Consolidated Statements of Cash Flows 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][27] - Purchases of property and equipment increased from $2.7 million to $7.9 million[27] Key Financial and Operational Metrics 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] Operational Metrics Definitions 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] - 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] - 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] Financial Outlook 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 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] - 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] Non-GAAP Financial Measures 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 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][35] - 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][35][36] - 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] - Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of net sales[37] Adjusted EBITDA Reconciliation 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 This section provides details on the upcoming conference call, forward-looking statements, and investor and media contact information Conference Call 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] - 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] Forward-Looking Statements 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] - 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] - 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] - The company undertakes no obligation to update or revise any forward-looking statements, except as required by law[20] Investor and Media Contacts This section provides dedicated contact information for investor relations and media inquiries - Investor contact email: investors@aka-brands.com[21] - Media contact email: media@aka-brands.com[21]