BARK, Inc. Q3 FY2026 earnings call

• Priorities in fiscal '26 have been to strengthen the business by improving profitability and operating with discipline in a volatile macro environment. - Adjusted EBITDA was negative $1.6 million, within guidance range, and $1.6 million of positive free cash flow was generated, driven by inventory normalizing. - Total revenue of $98.4 million was below guidance due to a deliberate pullback in marketing spend. - Marketing expense was approximately $11 million lower than the third quarter last year. - Consolidated gross margin was 62.5%, with both Direct-to-Consumer and Commerce segments showing year-over-year and sequential improvement. - Diversification progress: Air and Commerce now make up a larger portion of total revenue. - In Direct-to-Consumer, there has been discipline in marketing investment, with a pullback on promotions and reduced customer acquisition costs, though the subscriber base has shrunk. - Transitioned last mile delivery to Amazon in the second quarter to reduce shipping costs and speed up deliveries. - Debt-free after repaying $45 million convertible note in November, and seeing improvements in free cash flow conversion. - Cost management initiatives: G&A expense down $2.1 million, and downsized office footprint generating over $2 million in annualized savings.

Total revenue for the quarter was $98.4 million. The Commerce segment generated $18.8 million of revenue with a gross margin of 46.4%. BARK Air delivered $3.4 million of revenue, which was up 71% year-over-year. Air and Commerce together represented approximately 23% of total revenue, up from 18% last year. The Direct-to-Consumer gross margin was 66.4%, 10 basis points above last year, and the Commerce gross margin was 46.3%, up 240 basis points year-over-year.

• Plan to continue optimizing inventory levels to support cash conversion. - Expect to realize further efficiencies through continued process improvements, infrastructure optimization, and disciplined cost management. - Focus on profitability and cash flow, aiming to exit fiscal 2026 on a strong foot.

• Macro volatility. - Tariff uncertainty. - Changes across shipping partners.