Bark(BARK) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for the quarter was $126.4 million, a 1% increase year-over-year, marking the second consecutive quarter of year-over-year revenue growth after eight quarters of declines [27][28] - Adjusted EBITDA for the quarter was negative$ 1.6 million, an improvement of $4.9 million compared to last year, driven by improvements in gross margin percentage and reduced shipping and fulfillment costs [39] - Consolidated gross margin was 62.7%, up 90 basis points compared to last year, with a total increase of over 400 basis points over the last couple of years [34][19] Business Segment Data and Key Metrics Changes - Direct-to-Consumer (D2C) segment contributed$ 106.1 million in revenue, including $2 million from BARK Air, but declined 4% compared to last year [28] - The Commerce segment delivered$ 20.3 million in revenue, representing a 43% increase year-over-year and up 27% year-to-date [32] - BARK Air generated $2 million in revenue last quarter, achieving positive gross profit just seven months after its launch [7][17] Market Data and Key Metrics Changes - New subscriptions in the D2C segment grew 11% year-over-year at a lower customer acquisition cost [10][6] - Revenue from Amazon is expected to grow over 70% this year, with further expansion anticipated [15] - The company is expanding its international presence, recently launching on Amazon Europe and establishing partnerships with major retailers in the U.K. and Europe [33][105] Company Strategy and Development Direction - The company is transitioning all paid media traffic to a new Shopify platform, which is expected to modernize the customer experience and drive increased conversion over time [9][11] - A shift in marketing strategy is underway, focusing more on brand building rather than promotional advertising [12] - The leadership team has been strengthened to drive transformative results, with a focus on profitability and sustainable long-term growth [5][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the first full year of adjusted EBITDA profitability by the end of March [26][20] - The company anticipates mid- to high single-digit top line growth in fiscal year 2026, supported by a more profitable foundation [21][45] - Management acknowledged industry headwinds but emphasized the importance of addressing outdated customer solutions to position for growth [13][30] Other Important Information - The company has invested approximately$ 17 million to repurchase over 11 million shares, indicating confidence in its undervalued status [22][40] - The company expects to maintain a solid cash position, ending the quarter with $115 million in cash [40] Q&A Session Summary Question: DTC segment revenue trajectory and stabilization - Management confirmed that stabilization in the DTC segment is expected in fiscal 2026, with most growth anticipated from the Commerce channel [52][53] Question: Strategic vision for BARK Air - Management indicated that while BARK Air has shown early promise, it is too soon to determine its material impact on financials [54][55] Question: Fourth quarter guidance and shelf resets - Management acknowledged timing variability due to shelf resets, which typically occur in March and April, affecting visibility for the fourth quarter [64][66] Question: Performance with Chewy and SKU expansion - Management reported strong momentum with Chewy, expanding from 30 to over 150 SKUs, and positive sentiment regarding future growth [69][71] Question: Impact of marketing strategy on new customer acquisition - Management stated that the increase in new customers is primarily due to the transition to the Shopify platform and improved marketing strategies [76][78] Question: International growth opportunities - Management highlighted significant growth potential in international markets, particularly through partnerships and expanding product offerings [102][105]