Pattern Group Inc. Series A Common Stock Q1 FY2026 earnings call

• CEO Dave Wright mentioned Q1 was a record quarter with key metrics like NRR at 127%, international growth 101%, non-Amazon growth 119%, and other monetization strategies up 173%. Discussed e-commerce performance driven by traffic, conversion, price, and availability, and how the platform's scale and AI optimize these variables for brand partners. - CFO Jason Beasley talked about revenue growth drivers including technology-driven optimization, new marketplaces and geography, product depth. Also discussed operating expenses, R&D spend doubling down, variable cost components growing slower than revenue, operating and free cash flow, cash position, and revolving credit facility.

In Q1, revenue grew 43% year-over-year to $774 million. Adjusted EBITDA was $54 million, up 59% year-over-year. Net revenue retention reached a record 127% in Q1. International revenue increased 101% year over year. Non-Amazon revenue grew 119% year over year. Our other monetization strategies grew 173% year over year.

• Raised full-year revenue outlook to approximately $3.3 billion, up 32% year-over-year. - Raised full-year adjusted EBITDA outlook to approximately $200 million. - Expected Q2 revenue in the range of $810 million to $820 million, representing 35% to 37% growth year over year. - Expected Q2 adjusted EBITDA in the range of $45 million to $46 million, up 30 to 33% year-over-year.

• Geopolitical tensions in the Middle East introduced volatility into global logistics and energy costs, as well as uncertainty around consumer sentiment. - Marketplaces implemented fuel surcharges for sellers during the quarter, though agreements with brand partners allow passing through such cost changes.

Q: Maybe just kind of highlight, if you can, what drove the exceptionally strong performance in the quarter? And then on the non-Amazon channel, that growth was obviously very strong. Maybe talk about more specifically, what's driving that?

A: Thanks for the question. Q1 was a great performance. Drove by hitting on all cylinders on many levers for growth like better tech for existing brands, more marketplaces, new brand partners. Non-Amazon marketplace growth hit nicely with Coupang, TikTok, Walmart working well.

Q: When you look at the exit velocity of the business at Q1 and the backlog of both partners and platforms that you're discussing the business with longer term, how should we think about industry vertical diversification deeper into 2026 and platform diversification as we exit 2026 as well and how some of those could be drivers of the business or even how mix might change?

A: Category diversification not primary focus, simply focused on brands. Brands that would like help worldwide will jump in. Non-Amazon platform growth at larger rates than Amazon growth.

Q: Can you just talk about how much more room there is to optimize inbound and outbound fulfillment? And specifically, Dave, you had mentioned same day and one day delivery capturing a greater share of overall units. Could you just talk to the velocity of delivery speeds improving across the platform?

A: In Q1, 57% of total clicks get same day or one day delivery, up from around 52%. Conversion rate in that group around 18% vs around 9% for two day or two plus. Continuing to optimize with launch of East Coast facility.

Q: With the updated guidance range, I mean, you're going to be pretty close to knocking on the door of doubling your revenue base from 2024 to 2026. what changes about the opportunity set in front of you with scale or any additional opportunities that you have with this kind of step function and scale within the business?

A: 84% growth from 2024 to 2026 guidance. Factors like taking brands to more marketplaces, geographies, use of agentic tools. EBITDA scale benefit with 2024 EBITDA 101 million and latest guidance at 200 million.

Q: Dave, I was hoping you could dive into AI and image generation in more detail. Obviously, the models continue to make very meaningful progress, even versus just a couple of months ago. So I'm curious, if we're now getting to a level where brands are more receptive to you toward working around just creative and hyper-personalization, and how you think that might help just aid international growth, where it seems like that could be pretty meaningful for localization.

A: Continue to be surprised at models' capabilities. Introduced portal for AI-generated product photography. Can localize and personalize globally at fraction of cost.

Q: Can you double click on how new brand partners performed in the quarter? I'm curious to hear more about the pace of new partner acquisition and specifically what you're seeing in the pipeline for the rest of the year.

A: Pipeline looks good with $505 billion GMV opportunity list. Q1 had similar momentum to last year. Invest in sales and marketing to drive new partner acquisition. New brand partner revenue is first 12 months, then benefit from NRR.

Q: On the success you're seeing off the Amazon marketplace, can you help us understand how much is from international brands leaning in harder versus brands just starting in an international presence? And then, more broadly, you called out broad-based strength across existing brand partners. Maybe some additional color on the upside Was it from category demand, new product launches, market expansion, existing partner share gains, pricing, et cetera? Can you just help us parse apart that broad-based strength?

A: Strength is broad. Early years nearly entirely U.S. brands, now ramping international teams. East to West effort helping product manufacturers execute better. Broad-based strength from multiple factors like category demand, new product launches, market expansion, existing partner share gains.