Release Date: August 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 $116.2 million in revenue, surpassing the high end of their guidance range.
- The company achieved a record high consolidated gross margin of 63%, marking the seventh consecutive quarter of year-over-year gross margin improvement.
- BARK Inc (BARK) experienced over 5% year-over-year growth in their commerce business, with strong contributions from marketplaces like Amazon.
- The company successfully launched a selection of best-selling toys at Chewy, with initial customer feedback exceeding expectations.
- BARK Air, a new service offering, has generated significant awareness and demand, with $2.5 million in ticket sales and most flights sold out.
Negative Points
- Adjusted EBITDA was negative $1.8 million for the quarter, despite being ahead of the top end of guidance.
- The company is still facing headwinds in new subscriber growth due to inflation and rising interest rates affecting discretionary spending.
- Average orders or number of orders are still down, indicating challenges in reversing previous declines.
- The price point for BARK Air is not accessible to many customers, limiting its current market reach.
- Gross margin in Q2 is expected to be around 60%, lower than the current quarter, due to a higher commerce mix.
Q & A Highlights
Q: Can you discuss any changes in consumer behavior in Q1 and fiscal Q2, given recessionary concerns?
A: Matt Meeker, CEO, noted that discretionary spending has been under pressure, but BARK has been improving its execution, particularly in growth and marketing. Despite macroeconomic headwinds, BARK has seen three consecutive quarters of new subscriber growth and expects direct-to-consumer business growth in the second half of the year.
Q: What are the key drivers behind the continued strength in new customer acquisition this quarter?
A: Matt Meeker, CEO, highlighted the use of artificial intelligence for better and more efficient creative marketing, moving away from promotional-driven tactics. The company is leveraging channels like Amazon and Chewy, with strong leadership from Michael Black and Michael Parness, to drive growth.
Q: Can you explain the dynamics behind the expected gross margin of around 60% in Q2?
A: Zahir Ibrahim, CFO, explained that Q2 will have a heavier commerce mix due to holiday buying and secondary placements, which typically have lower margins. However, the cost to serve the commerce channel is lower, resulting in similar profitability at the contribution margin level.
Q: How did the partnership with Chewy develop, and what are the expectations for this business?
A: Matt Meeker, CEO, stated that the partnership with Chewy has been in discussion for years and recently materialized with the help of Michael Black's team. BARK plans to expand its product offerings on Chewy, including consumables, and sees significant upside potential.
Q: What is the status of the technology transition to Shopify, and what impact will it have on margins?
A: Matt Meeker, CEO, mentioned that while the technical pieces are in place, the full transition is expected in fiscal Q4 to avoid disrupting the holiday season. The transition is anticipated to improve margins as the business consolidates platforms.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
