What BARK (BARK) Said on Its Q2 Earnings Call

Key Points

• Revenue exceeded guidance at $87.6 million, though it declined from $107 million a year earlier as lower direct-to-consumer sales outweighed 3.6% growth in commerce. Adjusted EBITDA was $2 million, and the net loss narrowed to $3.8 million.
• BARK reaffirmed fiscal 2027 guidance of $325 million to $340 million in revenue and $7 million to $10 million in adjusted EBITDA. Management said it was trending toward the higher end of the revenue range.
• BARK reached a preliminary understanding to sell the BARK Air customer list and license the brand starting in 2027, subject to a definitive agreement. The company said an exit would free capital for commerce, partnerships and product development.

BARK NYSE: BARK reported fiscal second-quarter revenue above its guidance range as growth in its commerce business helped offset a decline in direct-to-consumer sales. The company reaffirmed its full-year outlook and said it had reached a preliminary understanding to exit its BARK Air operations.

Revenue fell to $87.6 million from $107 million a year earlier, but exceeded management’s forecast of $83 million to $85 million. Adjusted EBITDA was $2 million, compared with a loss of $1.4 million a year earlier and within the company’s guidance range of $1 million to $3 million.

Chief Executive Officer Matt Meeker attributed the year-over-year revenue decline in part to a smaller direct-to-consumer subscriber base following a planned reduction in marketing spending last year. The net loss narrowed to $3.8 million, or $0.43 per share, from $10.7 million, or $1.25 per share, a year earlier.

Commerce Returns to Growth

Commerce revenue rose 3.6% to $25.7 million, accounting for 29% of total revenue, up from 23% a year earlier. Chief Financial Officer Anya Hamill said the segment benefited from retail and marketplace sales, expansion in the club channel and the initial launch of Licksters, BARK’s new line of enrichment toys.

Direct-to-consumer revenue declined to $61.8 million from $82.1 million. The segment included $3.5 million in BARK Air revenue. Average order value rose to $31.40 from $30.87, while retention improved by approximately 200 basis points to 94%, Hamill said.

Advertising and marketing expenses declined 32.5% year over year to $10.4 million, though spending increased 9.4% from the preceding quarter. Hamill said the sequential investment resulted in a 26% increase in subscribers compared with the first quarter.

Gross margin expanded to 58.9% from 57.9%, driven by lower product costs and a favorable product mix in direct-to-consumer sales. Hamill said those gains more than offset the shift toward commerce, which carries a lower margin.

Product Launch and Retail Partnerships

Meeker said Licksters launched in early August and was performing well in direct-to-consumer sales while beginning to enter commerce channels. He said the product’s refills create a recurring revenue opportunity and could help support growth over time.

BARK also launched collaborations with Liquid Death and Crocs and had an activation with Dunkin’. Meeker said the company would begin shipping its Girl Scouts cookie program and a Harry Potter-themed collection for Costco in the third quarter. He described them as the two largest retail orders in BARK’s history.

The CEO said the company was working to diversify beyond its historically subscription-focused business by selling through retail, marketplaces and partnerships.

BARK Air Exit and Outlook

After the quarter ended, BARK reached a preliminary understanding to sell the BARK Air customer list and license the brand beginning Jan. 1, 2027. Meeker cautioned that the arrangement remains subject to definitive documentation and may not be completed on those terms or at all.

Meeker said BARK Air was not generating enough bottom-line contribution to justify continued investment and no longer aligned with the company’s long-term strategy. Exiting the operation would allow BARK to direct capital toward commerce, partnerships, supply-chain improvements and enrichment products, he said.

BARK reaffirmed its fiscal 2027 forecast for revenue of $325 million to $340 million and adjusted EBITDA of $7 million to $10 million. For the third quarter, it expects revenue of $88 million to $92 million and adjusted EBITDA of $1 million to $3 million.

Asked why the company had not raised its annual forecast after exceeding quarterly revenue guidance, Meeker said BARK was trending toward the higher end of the range. He also noted that the outlook takes into account a potential quarter without BARK Air revenue if the proposed arrangement proceeds as planned.

BARK ended the quarter with $19 million in cash and no debt. It generated $4.7 million in operating cash flow and repurchased approximately 194,000 shares for $2 million. Inventory stood at $72.4 million; management said it expects that balance to decline meaningfully over the next two quarters as inventory converts into cash.

About BARK (NYSE:BARK)

BARK, Inc is a New York-based company focused on developing products, services and experiences for dogs and their owners. The company operates a digitally led, omnichannel business that combines subscription offerings, e-commerce and retail distribution.

Its brands and products include BARKBox, a subscription service offering themed boxes of toys and treats; Super Chewer, which provides more durable toys and treats; and BARK Bright, an oral-care line for dogs. BARK also sells toys, treats, food, beds, apparel and other dog-related products through its website, retail partners and other channels.

Founded in 2011, BARK serves customers primarily in the United States and has expanded its products through both direct-to-consumer and retail channels.

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