Pattern Group Inc. Series A Common Stock Q4 FY2025 earnings call

• 2025 was a defining year for Pattern with record revenue, retention, and expanding profitability. Net revenue retention was a record 124%. International growth was strong with 63% full - year increase. Non - Amazon and SaaS services and logistics also saw significant growth. - E - commerce is entering a new era driven by AI, with consumers using LLMs for product research and purchase. Pattern is positioned to empower brands in this new ecosystem with its data, international breadth, logistics scale, and speed. - In 2025, the pattern intelligence layer was powered by over 66 trillion data points, automation engine executed 5.53 billion marketplace bid changes and 40 million price changes in real time. Operations were scaled with improved speed and Days Inventory Outstanding (DIO) at 72 days, a 10 - day reduction year over year. - Growth vectors include technology - driven optimization, new marketplaces and geographies, and adding product depth, with compounding effect on partners.

For the full year 2025, revenue increased 39% to $2.5 billion. Net revenue retention (NRR) was a record 124%, up from 116% in 2024. International revenue grew 63% for the full year, with Q4 up 69% year over year. Non - Amazon revenue grew 60% for the full year and 94% in Q4. SaaS services and logistics grew 58% for the full year and 162% in Q4. For the full year, adjusted EBITDA was $153 million, or 6.1% adjusted EBITDA margin, and operating cash flow was $99 million, up 41% year - over - year, with free cash flow $79 million, up 58% year - over - year.

• Expect revenue in 2026 to be in the range of $710 to $720 million in Q1, 31 to 33% growth year over year, and total revenue of $3.12 to $3.16 billion, up 25 to 26%. - Adjusted EBITDA expected to be $41 to $42 million in Q1, 22 to 24% growth, and full - year adjusted EBITDA approximately $180 to $182 million, 5.8% of expected revenue, 17 to 19% growth. - Expect to increase R&D investment to strengthen technology moat and accelerate go - to - market, with focus on profitable growth and cash flow generation.

Q: In terms of the way you would frame the year forward for 2026, can you help us better understand how much of that growth is being contributed by elements of existing brand partners or the potential to expand the scope of brand partners on your platform based on the backlog of conversations you're having today?

A: When looking at guidance, existing brand partner NRR is converging to 115% by year end as a long - term target. New brand partners' guidance takes a middle - of - the - road approach considering 2024 and 2025 growth rates. There's a $460 billion target opportunity list with 39% from outside the Americas.

Q: Dave, obviously you're benefiting from the moat that you've built with the intelligence layer and the logistics footprint now. But looking at one of the top few areas of product innovation on the roadmap that you think have the best opportunity to move the needle, And then, Jason, as you sort of lean into some of these investments as we see this year, what's your expectation in terms of when those investments or those initiatives will augment top - line growth and then maybe ultimately contribute incrementally to adjusted EBITDA margin?

A: The roadmap is exciting with focus on data and leveraging AI. R&D investment is to build technology and use large language models, with some growth ahead of revenue causing short - term margin deleverage. Fulfillment capabilities are being built with East Coast facility launch, expecting top - line benefit near term and EBITDA leverage in following year.

Q: Dave, could you talk about just how agentic coding has really changed productivity across the workforce and the pace of product velocity and perhaps just whether that changes your views on long - term headcount needs? And then just drawing back a little bit more, you know, we'd love to hear about some of the drivers of international growth. We have heard that localization is just getting a lot easier with AI tools. We'd love to hear how that's influencing international.

A: AI is impacting productivity with potential efficiency leverage, but regulatory and some tasks still need human. International growth is driven by a $460 billion pipeline with 39% from outside Americas, leveraging AI for easier localization.

Q: Jason, I know you called out how there was leverage on a year - over - year basis, but the cost did tick up sequentially as a percentage of revenue. Can you just remind us of the seasonality that we should expect in 1Q and if that contemplates continued leverage that we've been seeing? And then secondly, just wanted to follow up on the buyback. It was nice to see the $100 million authorization. the stocks below where the IPO price at, should we expect you guys to be buying back stock at these levels?

A: Q4 marketplace costs are higher due to seasonality. Variable costs have normal variance from product mix. On buyback, capital allocation is to invest in growth, M&A, and repurchase as market - driven decision.

Q: One for Jason, one for Dave. I guess first, Jason, can you just talk a little bit more about the category priorities in 26? And I think in the past, you've kind of talked about beauty as having some of the characteristics that are similar to health and wellness, but curious on your progress there. And then, Dave, just on agentic, I know you talked about the benefits of kind of coding and efficiencies and a little bit more on the expense side. But you also said that AI is fundamentally rewiring e - commerce and the purchase path. And I'm curious how this is changing, how you're helping brands and customers at this point. And are you seeing that AI driven traffic is higher intent or has greater conversion versus, you know, Google and anything else that's kind of been more traditionally top of funnel?

A: Category priorities include health and wellness, beauty, DIY tools with direct outreach sales. AI is reshaping e - commerce with LLMs impacting purchases, and Pattern leveraging logistics and reverse infrastructure. AI - driven traffic is impacting consumer behavior, with Pattern helping brands navigate complex changes.

Q: I wanted to ask about marketplaces. I know你'd mentioned in your prepared remarks, Coupang, TikTok Shop, Walmart. Just give a sense of kind of a life cycle of these or how long it takes to get these marketplaces up to kind of material levels. You know, is this something that you can turn on in, you know, is this quarters or is this years to get to where you are with those companies? And maybe that will help us think about your, you know, ability to successfully and effectively diversify the other marketplaces, you know, going to the current ones and to other marketplaces going forward.

A: Marketplaces like TikTok and Coupang can ramp quickly. Some took a couple of years, now adding 12 marketplaces with more modular platform.

Q: Dave, I'd love to get your perspective on There was an article yesterday that OpenAI is changing its instant checkout to pushing people more towards apps within ChatGPT instead of checking out right inside the app natively. I guess from your perspective, does that change anything from your perspective? Does that kind of signal what's to come for Agente Commerce? That's the first question. And the second one is just a quick one for you, Jason. I think the first question, you know, you walked through the NRR mechanics for 26. Is the way to interpret that is like it kind of maybe slowly trails off and you end the year at 115? Is that the right way to think through, you know, quarter by quarter?

A: OpenAI's change is evolving, with complexity in real - time inventory and reverse logistics. NRR long - term goal is 115%, with sequential pressure from tougher comps in denominator not immediate in Q1.

Q: I was curious if you guys think about some of the new brand partners you onboarded during the quarter. If you could talk about the makeup of that cohort and if it looks similar to your broader cohort if you guys are expanding on the brand you're working with from different categories. And then你 guys did do a couple of deals in the quarter. Maybe you can kind of just talk through the rationale of those deals and the value - profit life of the pattern and their business partners.

A: New brand partners include those on TikTok shops and outside US wanting to enter US. M&A deals like ROI Hunter and NextWave add data, advertising capabilities, and TikTok shop operations, with acquisitions additive to capability set.