Summary of BARK (BARK) FY Conference Call - August 12, 2025 Company Overview - BARK has significantly improved its financial health over the past three years, transitioning from an adjusted EBITDA loss of $58 million in fiscal 2022 to a positive adjusted EBITDA of $5 million in fiscal 2025 [3][4] - Direct-to-consumer (DTC) sales account for 85% of revenues, with over 700,000 pet households served and approximately 1 million boxes shipped monthly [4][5] Core Business Insights - BARK has a strong data-driven approach, utilizing first-party data to refine products and enhance customer feedback mechanisms [5] - The company has diversified its revenue streams, with a focus on consumables and commerce, which now represents 15% of the business and grew by 27% last year [5][6] Strategic Initiatives - BARK launched "Bark Air," generating over $2 million in revenue in its first quarter, with expectations to double this revenue [7] - Transitioned to Shopify for a unified shopping experience, enhancing cross-selling opportunities and reducing payment friction [8][30] - A new consumables line, "Bark in the Belly," is set to launch in August 2025, aiming for broader distribution by the end of the year [9][43] Revenue Diversification and Marketing Strategy - The company plans to dial back marketing support for subscription boxes to maintain positive EBITDA while reallocating funds to consumables and commerce growth [11][12] - The focus is on reducing promotional activities to improve subscriber quality and retention, as promotions attract discount-driven customers who tend to churn quickly [23][24] Tariff and Supply Chain Management - Approximately 70% of BARK's product mix is toys, primarily sourced from China. Tariff increases prompted a shift to diversify manufacturing outside of China, with plans to have all toys manufactured abroad by the end of the fiscal year [13][14] - BARK signed a partnership with Amazon for shipping, which is expected to reduce costs and improve delivery times [16][17] Financial Performance and Projections - The company achieved a record gross margin of 69% in Q1 and expects continued strong performance in commerce, projecting 25% to 30% growth [50][51] - BARK aims to maintain EBITDA positivity and return to top-line growth in fiscal 2027, with a focus on leveraging the consumables launch and improved channel dynamics [49][50] Market Opportunities - The addressable market for consumables is estimated at over $20 billion, compared to $3 billion to $4 billion for toys, indicating significant growth potential [36] - BARK is expanding its presence on e-commerce platforms, including Chewy and Amazon, with plans to explore additional channels like TikTok Shop [41][42] Capital Allocation and Shareholder Value - BARK has repurchased 17 million shares over the past 18 months, with plans to pay down a $44 million convertible note maturing in December [58][59] - The management believes the current share price does not reflect the long-term fundamentals of the business and is open to considering M&A opportunities if attractive offers arise [54][55] Conclusion - BARK is positioned for growth with a healthier financial profile, diversified revenue streams, and a flexible supply chain, aiming for stronger profitability and cash flow generation in the coming years [60][61]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $102.9 million, exceeding guidance of $99 million to $101 million, driven by strong performance in both B2C and Commerce segments [15][23] - Adjusted EBITDA was positive at $100,000, a modest improvement despite external headwinds [20][23] - D2C gross margin reached a record 69.3%, up over 400 basis points year over year [18] Business Line Data and Key Metrics Changes - D2C revenue was $89.2 million, with Bark Air contributing $2.3 million, a 300% increase from last year [5][18] - The Commerce segment generated $13.7 million, a 50% increase year over year, supported by expanded distribution with partners like Amazon and Chewy [17][12] - The product mix shifted, with SuperTure accounting for roughly two-thirds of new subscribers, positively impacting average order value and gross margin [6][16] Market Data and Key Metrics Changes - The retail business saw revenue increase to approximately $14 million, up almost 50% year over year, as the company expanded its retail footprint [12][17] - The company anticipates that Commerce will represent 25% to 30% of revenue in Q2 2026 [22] Company Strategy and Development Direction - The company aims to remain adjusted EBITDA positive while diversifying beyond subscription boxes [4][23] - A new brand platform, Spark, was introduced to deepen emotional connections with customers and enhance brand awareness [8] - The upcoming Bark in the Belly consumables line is expected to unify product offerings and support the company's mission to help dogs in need [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and execution despite ongoing macroeconomic uncertainties and tariff volatility [21][23] - The company is focused on profitable diversified growth and expects to build on Q1 revenue in the coming quarters [13][23] Other Important Information - The company ended the quarter with $85 million in cash, down $9 million from Q4, reflecting inventory build and share repurchases [20] - Marketing expenses were reduced by 25% year over year, allowing for a focus on higher quality customer acquisition [19] Q&A Session Summary Question: What factors influence the EBITDA guidance range for Q2? - Management indicated that timing related to tariffs and operating expenses could affect overall profit performance, leading to a wide guidance range [25][26] Question: What drove stronger subscriber trends in Q1 with low advertising spend? - Management attributed the growth to ongoing experimentation with ad formats and a focus on acquiring higher quality customers, resulting in a shift towards premium offerings [32][33] Question: How should revenue contribution from diversification initiatives be viewed for the back half of the year? - Management expects the Commerce business to represent over 30% of overall revenue within a couple of years, with Bark Air's contribution anticipated to increase to 2-3% of total revenue [34][36]

Financial Data and Key Metrics Changes - The company achieved its first-ever positive adjusted EBITDA for the fiscal year, with Q4 delivering $5.2 million and a full-year total of $5.4 million, marking a significant turnaround from a loss of $58 million three years ago [6][22][23] - Revenue for Q4 was $115.4 million, bringing full-year revenue to $484.2 million, a decrease of 1.2% year-over-year [18][22] - Gross margins improved to 63.6% in Q4 and 62.4% for the full year, reflecting a 73 basis point improvement over the previous fiscal year [10][21] Business Line Data and Key Metrics Changes - The commerce segment grew by 27% year-over-year, achieving $68.3 million for the full year, representing 14% of total revenue [8][19] - Bark Air generated $1.8 million in revenue for Q4 and nearly $6 million for the full year, indicating strong early demand [20] - Direct-to-consumer (DTC) business faced challenges due to a deliberate pullback in marketing spend, impacting subscriber growth [18][48] Market Data and Key Metrics Changes - The company noted a slowdown in consumer sentiment, which affected order placements, particularly in Q4 and Q1 [46][53] - Retail partners adopted a cautious approach due to tariff uncertainties, leading to a temporary slowdown in order placements [70] Company Strategy and Development Direction - The company plans to accelerate diversification of revenue streams away from Bark Box subscriptions, which accounted for approximately 85% of revenue last year [13][14] - Investments will shift towards new product lines, distribution channels, and services, including consumables and AI-driven applications for pets [12][14] - The company is reassessing its supply chain in response to tariff increases, with plans to diversify manufacturing outside of China [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty created by tariffs and economic conditions but expressed confidence in maintaining positive adjusted EBITDA [10][28] - The company is unable to provide full-year guidance due to macroeconomic volatility but remains focused on driving efficiency and agility [27][30] - Management expects Q1 total revenue to be between $99 million and $101 million, reflecting a 14% decline at the midpoint compared to the previous year [29] Other Important Information - The company ended the fiscal year with $94 million in cash, down $21 million in the quarter due to share repurchases and working capital timing [23] - Total marketing expenses in Q4 were $17.3 million, down from the prior year, reflecting a cautious approach in response to macroeconomic conditions [21] Q&A Session Summary Question: Can you provide more details on diversifying your supplier base outside of China? - Management is exploring alternative geographies for manufacturing and has the flexibility to shift production outside of China by the end of the fiscal year [36] Question: Update on progress migrating to the Shopify platform? - The migration to Shopify is mostly complete, with active subscribers now being directed to the new platform, which allows for more nimble operations and experimentation [40] Question: What dynamics are affecting the direct-to-consumer business? - The company experienced strong customer acquisition during the holiday quarter but faced challenges in Q1 due to consumer sentiment and tariff impacts, leading to a strategic shift in marketing focus [46][48] Question: How has demand in the commerce segment changed? - Demand in the commerce segment remains strong, with a 27% growth in fiscal 2025, although there was a temporary slowdown in order placements due to tariff concerns [52][54] Question: Should the company consider more aggressive share buybacks? - Management is cautious about share buybacks given the current environment but remains open to opportunities if the stock is undervalued [62][64]

Financial Data and Key Metrics Changes - The company achieved its first-ever positive adjusted EBITDA for the fiscal year, with Q4 delivering $5.2 million and a full-year total of $5.4 million, marking a significant turnaround from a loss of $58 million three years ago [5][22][23] - Revenue for Q4 was $115.4 million, bringing full-year revenue to $484.2 million, a decrease of 1.2% year-over-year [17][22] - Gross margins improved to 63.6% in Q4 and 62.4% for the full year, reflecting a 73 basis point improvement over FY '24 and a 480 basis point improvement over FY '23 [8][20] Business Line Data and Key Metrics Changes - The commerce segment grew by 27% year-over-year, achieving $68.3 million for the full year, representing 14% of total revenue, up from 11% the previous year [7][19] - Bark Air generated $1.8 million in revenue for Q4 and nearly $6 million for the full year, indicating strong early demand for this new service [20] Market Data and Key Metrics Changes - The company faced headwinds in the direct-to-consumer (DTC) business due to a deliberate pullback in marketing spend in response to tariff uncertainties and weakening consumer sentiment [16][17] - The domestic market is experiencing challenges related to USPS rate changes, but the company is confident in its ability to mitigate these issues [26] Company Strategy and Development Direction - The company plans to accelerate the diversification of its revenue streams, moving away from a heavy reliance on Bark Box subscriptions, which accounted for approximately 85% of revenue last year [12][13] - Future investments will focus on new product lines, distribution channels, and services, including consumables and AI-driven applications for dogs [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty created by tariffs and economic conditions but expressed confidence in the company's ability to remain EBITDA positive and navigate these challenges [9][15][26] - The company is shifting its supply chain strategy to diversify sourcing and mitigate tariff impacts, with plans to start manufacturing in other regions [24][25] Other Important Information - The company ended the fiscal year with $94 million in cash, down $21 million in the quarter, reflecting share repurchases and working capital timing [23] - Total marketing expenses in Q4 were $17.3 million, down approximately $1.5 million from the prior year, as the company adopted a more cautious approach [21] Q&A Session Summary Question: Can you provide more details on diversifying your supplier base outside of China? - The company is exploring alternative manufacturing locations across various continents and has the flexibility to shift all toy production outside of China by the end of the fiscal year [34] Question: Update on progress migrating to the Shopify platform? - The migration is mostly complete, with active subscribers now primarily coming through the new platform, which allows for more nimble testing and experimentation [36][38] Question: What dynamics are affecting the direct-to-consumer business? - The company experienced strong customer acquisition during the holiday quarter but faced pressure from consumer sentiment and tariff noise, leading to a strategic pullback in marketing spend [44][46] Question: How has demand in the commerce segment changed? - Demand in the commerce segment has remained strong, with a 27% growth in fiscal 25, although there was a temporary slowdown in order placements due to tariff concerns [50][52] Question: What is the outlook for share buybacks given the current environment? - The company has been aggressive with share buybacks but is also focused on maintaining cash reserves for potential investments and navigating uncertainties [62][64] Question: How are conversations with retailers trending since the tariff rate changes? - Following the reduction in tariffs, demand and order placements have started to recover, with positive traction expected as seasonal demand picks up [70]