Bark(US:BARK)2024-06-03 23:24Financial Data and Key Metrics Changes - Total fourth quarter revenue was $121.5 million, down 3.6% year-over-year, while total revenue for the year was $490.2 million, down 8.4% [24][25] - Gross margin improved by 580 basis points in the fourth quarter to 62.7%, with a full-year gross margin increase of 410 basis points to 61.6% [10][26] - Adjusted EBITDA for the fourth quarter was $2.2 million, a $5.7 million improvement year-over-year, while the full-year adjusted EBITDA was negative $10.6 million, reflecting a nearly $21 million improvement compared to last year [30][31] Business Line Data and Key Metrics Changes - Direct-to-consumer revenue was $109.3 million, down 5.9% year-over-year, primarily due to carrying fewer total box subscriptions [24] - Total commerce revenue was $12.1 million, up 21% year-over-year, driven by new treat lines in Target and PetSmart [25] - Consumables revenue, excluding subscription boxes, grew nearly 30% to $20 million in fiscal 2024 [25] Market Data and Key Metrics Changes - The toy industry in retail for dogs was down 10% year-over-year according to Nielsen data, while BARK's toy sales were only down 1.5% [39] - Total shipments in the quarter declined 3.3% to 3.5 million, with average order value down roughly 2.5% to $31.25 [24] Company Strategy and Development Direction - The company aims to transition from being perceived solely as a subscription box company to a broader emotional experience provider for dog owners [12] - New leadership additions are expected to drive growth, with a focus on expanding the commerce channel from 11% to one-third of revenue over the next five years [9] - The launch of BARK Air is seen as a significant growth opportunity, with over $1 million in bookings before the first flight [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing softness in discretionary categories but sees potential positive signals in the market [39] - The company is guiding for its first EBITDA positive year in fiscal 2025, with total revenue expected to be flat to low single-digit growth [19][33] - Management emphasizes the importance of patience as new hires and strategies take time to yield results [40] Other Important Information - The company ended the year with $125 million in cash and a strong balance sheet, allowing for continued investments in growth and share repurchases [31][21] - The unified platform transition is expected to enhance marketing efficiency and cross-selling opportunities [60][62] Q&A Session Summary Question: Continued softness in discretionary categories - Management is monitoring macro trends and sees some positive signals but remains cautious about an industry turnaround [39] Question: Revenue and EBITDA seasonality - EBITDA performance is expected to follow a similar cadence to fiscal 2024, with Q3 being the strongest quarter due to the holiday season [42] Question: EBITDA guidance and free cash flow - EBITDA is expected to be a good proxy for free cash flow, indicating a positive outlook for fiscal 2025 [46] Question: Incremental contribution from new retail opportunities - Management is optimistic about the potential growth from new retail partnerships but emphasizes the need for time to see results [48] Question: Marketing spend performance - Marketing spend in Q4 showed healthy ROI, with a significant increase in new subscriber acquisition [53] Question: Inventory levels and DTC growth - Inventory levels have been managed down to healthy levels, with further modest improvements expected [57] Question: Unified platform benefits - The unified platform is expected to enhance marketing effectiveness and provide cross-selling opportunities [60][62] Question: BARK Air progress and future services - The response to BARK Air has exceeded expectations, and while there are ideas for future services, the focus remains on perfecting the current offering [64]