Bark(US:BARK)2023-06-02 02:40Financial Data and Key Metrics Changes - The company reported a total revenue of $126 million for Q4 2023, exceeding guidance by $5 million, and a full-year revenue of just over $535 million, representing a 5.5% increase compared to fiscal 2022 [14][27] - The company achieved free cash flow positivity for the second consecutive quarter, ending Q4 with $178 million in cash, an increase of $14 million sequentially, and reduced cash burn from $194 million in fiscal 2022 to just $17 million in fiscal 2023 [7][33] - Adjusted EBITDA loss improved nearly 50% to negative $31 million for the full year, compared to a loss of $58 million in fiscal 2022 [18][33] Business Line Data and Key Metrics Changes - Direct-to-Consumer (DTC) revenue decreased slightly by 1.5% in Q4, while commerce revenue declined by 9.3% for the quarter; however, DTC revenue increased by 5.3% for the full year [27][28] - Toy revenue increased by 5% to $371 million in fiscal 2023, while consumables revenue grew by 7.2% to $164 million, driven mainly by food and dental products [15][29] - The average order value (AOV) increased by $2.11 year-over-year to $31.70 for the full year, with Q4 AOV at $32.70, reflecting improved cross-selling capabilities [8][26] Market Data and Key Metrics Changes - The company anticipates softness in retail sales in the first half of fiscal 2024 as retailers manage existing inventory, but expects revenue to accelerate in the second half, particularly in Q4 [27][35] - The company is focusing on expanding its consumables business, which currently has virtually no retail presence, and expects significant growth as it introduces treats and dental products to retail partners [10][22] Company Strategy and Development Direction - The company aims to grow its Direct-to-Consumer e-commerce and subscription business, consumables, and services as key pillars for future growth [9][10] - The company has updated its KPIs to reflect a more accurate representation of its business model, moving away from a subscription-only focus to include one-off purchases [12] - The company plans to leverage its strong brand and customer relationships to expand into services, viewing this as a long-term growth opportunity [10][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving breakeven adjusted EBITDA for fiscal 2024, with expectations for gross margin improvement of 200 to 300 basis points [18][20] - The management highlighted the importance of transitioning from profitability to growth mode, with a focus on expanding the consumables business and improving customer lifetime value [37][59] - Management noted that the stock price does not currently reflect the company's progress and long-term potential, emphasizing the undervaluation given the company's revenue and cash position [22] Other Important Information - The company reduced its annual G&A expenses by $12 million through cost reduction initiatives, with $10 million expected to flow into fiscal 2024 [17][30] - The company expects to maintain a cash balance exceeding $180 million by year-end, despite anticipated negative free cash flow in the first half of fiscal 2024 [36] Q&A Session Summary Question: Long-term mix of subscriptions versus standalone purchases - Management indicated that while subscriptions remain significant, there is a growing trend towards one-off purchases, particularly for consumables, reflecting customer demand for flexibility [39][40][41] Question: Growth opportunities in services - Management discussed the potential for expanding into services, leveraging their brand and customer data to create new offerings that enhance the customer experience [42][43] Question: Breakdown of consumable customers - The majority of consumable customers are existing BARK customers, with recent efforts focused on cross-selling and increasing conversion rates [46][47] Question: Adjusted EBITDA guidance and revenue trajectory - Management explained that Q1 revenue is expected to be softer due to retail inventory issues, but anticipates improved performance in the second half of the year [49][50][51] Question: Expanded assortment in retail - Management confirmed that treats are the primary focus for retail expansion, with dental products also being prioritized for introduction [61][62]