Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BARK Inc (BARK, Financial) reported $126.1 million in revenue for the quarter, surpassing the high end of their guidance range and marking a 2.5% increase compared to the same period last year.
- The commerce segment grew 26% year over year, driven by new partnerships with companies like Chewy and expansion with existing partners such as Costco and Amazon.
- BARK Inc (BARK) achieved a 60% consolidated gross margin in the quarter, with the commerce segment contributing positively to this figure.
- The company reported an adjusted EBITDA of positive $3.5 million, marking the strongest EBITDA quarter in the company's history.
- BARK Inc (BARK) generated positive free cash flow of $1 million during the period, indicating improved financial health and operational efficiency.
Negative Points
- The B2C segment was down 1.6% year over year, with total box subscriptions remaining below last year's levels.
- The transition to a new Shopify-based platform for D2C operations may lead to short-term disruptions and a more measured performance in the B2C segment.
- The mix shift from B2C to commerce is expected to impact the consolidated gross margin negatively in the future.
- Potential tariffs could impact the toy business, although the company has plans to mitigate this risk.
- The company is moving away from heavy promotional ads, which may result in short-term revenue loss as they focus on long-term brand awareness and customer retention strategies.
Q & A Highlights
Q: Can you talk about your thoughts on translating new subscriber growth into total order growth, and when do you anticipate brand awareness initiatives to start contributing to stronger order growth?
A: Matt Meeker, CEO, explained that they are approaching an inflection point with four consecutive quarters of new subscriber growth despite challenges in the toy industry. They are hopeful for D to C growth in the second half, depending on the holiday season and the transition to Shopify. The brand awareness initiatives are starting now, with more impact expected in 2025, aiming for long-term growth and profitability.
Q: Given the election outcome, what is your exposure to potential tariffs, and how might you mitigate any impact?
A: Matt Meeker, CEO, stated that they have been preparing for potential tariffs for over a year. They have mitigation plans in place, and the tariffs would primarily impact the toy business, not consumables, which are domestically sourced. They have seen healthy growth in gross and contribution margins, providing flexibility to handle potential tariffs.
Q: Can you quantify how much of the strong commerce growth was from new customers versus expansion within existing customers?
A: Zahir Ibrahim, CFO, noted that growth was balanced between new and existing customers. They have expanded in new channels like Chewy and TikTok Shop and deepened relationships with existing partners like Amazon and TJ Maxx. International expansion and partnerships, such as with the Girl Scouts, also contributed to growth.
Q: How should we think about the impact of the bark.co transition on D to C growth through the rest of this year and into next?
A: Matt Meeker, CEO, explained that the transition to bark.co was moved up due to encouraging conversion rates and platform flexibility. The transition is expected to be completed this quarter, with all subscribers migrated by the end of the fiscal year. They anticipate a more efficient and impactful D to C business post-transition.
Q: With the commerce business making a larger contribution, how should we think about gross margin trends for the rest of the year?
A: Zahir Ibrahim, CFO, stated that while B to C gross margins are higher, commerce has a lower cost to serve, making it equally or more profitable at the contribution margin level. The expansion in commerce is expected to be accretive to the bottom line, providing a positive tailwind for profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
