BARK First Quarter Fiscal Year 2022 Earnings
In only mode. After the speaker presentation, there will be a question-and-answer session to ask a question during this time, you will need to press star 1 on your telephone keypad. Also, please be advised that today's conference is being recorded if you require any further. Assistance, please press star zero, I would now like to hand the conference over to your speaker today, mr. Mike muchas, vice president of investor relations. Thank you, please. Go ahead.
Ed. Good afternoon, everyone and welcome to barks first quarter of fiscal 2022 earnings call joining me. Today, I'm an Eastern Asia CEO and jaunt, ocfo today's conference call is being webcast and its entirety on our website. And a replay of the webcast will be made available shortly after the call. Additionally, a press release covering the company's Financial results was issued this afternoon and can be found on our investor relations website. Before we begin, I would like to remind you of the following information regarding forward-looking statements the statements made on today's call are based on management.
Current expectations and are subject to risk, our uncertainties that could cause actual future results and outcomes to differ, please refer to our SEC filings for more information on some of the factors that could affect our future results and outcomes. Also, during today's call, we will discuss certain non-gaap Financial measures reconciliation to our non-gas. Financial measures are also contained in this afternoon's, press release. Lastly, I would like to remind everyone that our fiscal year and March 31st. We are currently in fiscal 2022 which will consist of the last 3 calendar.
Quarters of 2021. And the first calendar quarter of 2022 with that, let me now turn the call over to Manish
Thanks, Mike and good afternoon everyone. Thank you for joining us trading under the Bob Baker. I would also like to thank our employees customers and partners for a contributions and continued support given. This is the first 1 is called. I will take the opportunity to reiterate Box Mission.
Old box UFO to walk you through our recent financial performance in movie theaters. First, let's begin with some key highlights from our strong. First car is off to a great start.
3 point 6 million for tripping shipment in the chorus of 52 percent increase compared to the same period last year are at box feature, which reflects our cross certain capabilities. Also drove significant growth accounting for over 7 million dollars in Revenue in the quarter a hundred seventy 4 percent increase compared to last year. The average order value was also of 87 cents to 2921.10th last year.
Business, which includes sales of products to retailers.
We have had a lot of things and success in the segment to date 20 individual skills have top 1 million dollars in sales at a single, we can partner with 7 falling between 2 million and 4 million.
Nonetheless, you're extremely pleased with a strong start of the fiscal year. Believe me strongly positioned to capitalize on the immense Market opportunity. They can start back. I would like to reiterate the broader bark opportunity for those on the call that are newer to our story is simple and has not changed since our customer service.
Today, an estimated sixty 3 million households in the US on a dog of which we serve only 1 point 9 million. It's nationally that figure is much higher. Furthermore, the humanization of pets is an ongoing Trend amongst Millennials and gen Z,
Across our son food, health and home verticals. So why is Park uniquely positioned to capitalize on these Rising Tides? First, we have an incredible asset in our customer experience. Happy team, which delivers highly personalized experiences and ensures complete customer satisfaction to that end. Our customer satisfaction scores have been around 95% for the past 4 years. Second The Leverage, our growing data set to personalize a no
Optimize our products at scale, this data enables us to better understand our customers needs while machine learning capabilities. Allow us to predict and tailor our suite of products for your dog, based on age weight, breed and more for the more. This data better enables us to cross sell products, and recommend specific and individualized add-on products for our customers. It strives higher average order value and margin accretion,
You're the only 1, we integrated dog brand, all of the product categories of design when it's fractured and distributed by us bark is a brand. We are not a Marketplace censored body parts you're having to sell a product to Market places to reach all the way across.
It serves as a force multiplier for us to launch and Market new products and categories. Lastly, we are only Channel. We sell products, direct-to-consumer, but we also leverage Partnerships with top retailers like Petco and PetSmart. In addition, to the ones I mentioned before, you can buy bug box toys, waiting in line and Dunkin Donuts walking through the cost of food code or strolling through the pedal in Target.
So, how do we intend to capitalize on these opportunities and deliver long-term shareholder value to that end, we remain focused on the following key growth strategies..1 expansion to new product categories to scaling, and optimizing existing products, 3 enhancing cross-selling and add-on opportunities for increasing our presence and wrinkles, and other marketplaces,
I was touched on each of these. But first, I'd like to spend some additional time on our expansion into new categories, are more than just a dog toy company. The only company offering dogs and the parents are Suite of products starting with fun food and home. We are replicating. The success we have had in the phone category by applying a learning and data into our new extend, the lifetime value of our customers and drive increases in
Value. But we're still.
Early days. We have progressed in these categories and we are confident that the halo effect from our bar. Stock. Success will enable us to replicate our success across new initiatives, such as bogged, white and parties is a highly personalized meal plan created for your specific, dog. In delivered, in portion daily meals, Wellness. Advisers work with dog parents to understand their dogs and create a meal plan consisting of high quality cables Stoppers.
It's and other supplements. Are you Christmas maintain ongoing relationships with our customers? Navigating? The dogs, Wellness, overtime, and commending different meal, plans, and supplements, as a dog matures currently, both ization in the current market is limited and generally consists of a label on the bag. Indicating copy, adult, or senior. This presents bark is a significant opportunity to capture market. Share of the 40 billion dollar-plus kill business in the United States alone. Bye!
Creating a highly personalized and premium product at a more mosques market. Price point, we are confident in our ability to scale this business. As we leverage our data and customers come out existing play category given the magnitude of the opportunity investing in our each product and infrastructure key priority, which will enable us to reach more markets in line with the plan for full National Rollout by end of fiscal year. We have also made a number of recent enhancements in our each part as well.
Well, first, we design the packaging to be more consistent with a brand identity. We also launched an ad box feature for existing but box and super to our customers which will allow us to cross sell into our 1.9 million from the existing.
Trinity is for the earlier section of the specific numbers at this time. However, July was by far our strongest month to date and it is looking like August will be even stronger. Encouraging early, they are from East is not withstanding, the fact that we have spent minimal marketing dollars. Most of our customer acquisition has been to what amount
we learn about you and your dog.
I could priority is to enhance cross training opportunities to utilize our data Centric model. We would commend add-ons historically this has focused on just toys and treats. However we are still nice Opportunity by including e, right? And Home Products as additional add-on features. This is a meaningful opportunity for us as we look to grow average order value and extend the lifetime value of a customer. As I mentioned, we increased our at the Box Revenue by 174
last quarter.
A tremendous sales. Recently assigned a unique collaboration with Netflix, which will roll out next year. These types of opportunities remain a key priority and we will continue to see if you're new and exciting licensing deal. We are also looking to expand our presence in retail and creates additional channels for us to convert 1 time sales to monthly subscriptions and summary.
Our mission is to make the unique relationship and bond between each dog and the parents. See it at home while. Many of us work from home or back in a strong brand enables us to this business.
We look forward to updating you on a progress. As we scale, the bark ecosystem with that, I will turn the call over to John.
Thanks, Manish. And thank you everyone, for joining us today. There have been a lot of new beginnings infarct, but today is a really significant 1. This past Friday, we filed with the SEC RS8, which registers employee options. The S8 is the last filing associated with our transaction and with the filing of our 10-q tomorrow, we truly begin. Our life is a public company.
As Manish mentioned, we hit the ground running in the first quarter of fiscal 2022. The quarter ended June 30, 20.21, as for many companies, this quarter's year-over-year comparisons are dominated by the outbreak of COVID-19 in the US during this quarter last year. With that said, our growth is quarters. All the more significant given the relatively difficult year-over-year comparisons. We faced given the surgeon subscriptions this time last year
We're on the last. We continue to see strong.
We profitably acquire new customers while simultaneously retaining our existing customer base. We were also able to maintain healthy unit economics in spite of media rates, Rising Dupree, COVID-19 levels.
The quick summary is our Revenue margins kak and other key performance metrics that best illustrate, the health of the business are all on track or better than we expected. We are affirming our full-year guidance, notwithstanding the freight and shipping headwinds that we and others are experiencing
Starting at the top of the p&l total revenue for the quarter was a hundred and Seventeen point..6 million dollars. A 57% increase year-over-year are directed consumer segments which represented ninety percent of our Revenue. Last quarter was a hundred and 5 million dollars up roughly, 57 percent compared to last year.
This growth was primarily driven by a 52 percent increase in subscription shipments. Additionally, average order value K OV was up, 87 cents to $29 and 21 cents here over a year. These results largely reflect the continued performance of our place at scription business. However, as eats bright and home become more meaningful contributors to our Revenue, we expect our average order value to increase over time. Remember the a, oh,
Each subscription is over 2 times that of a play subscription.
And this fact coupled with a growing, add to our strategy for products, like bright and home. Give us confidence in our ability to grow both aov and retention per customer over time. Turning to the Commerce segment, total revenue was 12.2 million dollars. A 59 percent increase compared to the same period last fiscal year are strong. Top Line results were accompanied by continued cost to supplant total. Gross profit is sixty 9. Point 8 million.
Which resulted in a healthy gross margin of 59.3%. This is in line with previous quarters despite the increases in freight costs that were mentioned earlier. On that note we are not anticipating a short-term solution to the height and freight and shipping costs. And so we are responding to these challenges strategically first by accelerating investment and self-managed fulfillment assets and further diversification.
And second we are actively managing our network of shippers. Being more selective about who focuses where to take advantage of our economies of scale and third by more. Effectively managing the timing of certain shipments to optimize costs. We will continue to monitor the situation and expect Freight rates to be a headwind. Throughout this fiscal year nonetheless, we are very pleased with our margin profile, last quarter and the team has done a terrific job responding to
Situation and putting us in the enviable position.
Having grown our gross profit and allowing us to affirm our Gardens despite these headlines moving on. WE acquired 280,000, new subscriptions during the quarter. Our customer acquisition cost came in at forty 8 dollars and 36 Cents down 6 percent from the previous quarter. However, up from the COVID-19 driven low of 30 dollars and eighty 3 cents, which we achieved in the same period last year.
We're total advertising and marketing expense associated. With these, new subscriptions was thirteen point 5 million dollars. This coupled with our high gross margin of 59%. Resulted in a very healthy, LTV to kak 5 times. As many as mentioned, we build lifelong relationships with dogs and their parents which drives are high retention, High lifetime value. And with our new products coming online, we are just getting started, our average monthly
Shipment churn for the quarter was 7.4% versus 6 point 2 percent for the same quarter year ago. This Delta is due primarily to The Surge of new subscriptions that occurred during the same quarter last year because there was significant growth in subscribers at this time. Last year, there was a significant overweighting this corner of customers hitting their one-year anniversary, which is typically when we see the majority of churn in a cohort
The behavior of this COVID-19 surgical board is not significantly different from the behavior of any other cohort. It just resulted in a disproportionate number of subscribers coming to their anniversary at the same time and so putting pressure on the shipment. Turn number 4, the overall subscriber base or prior commentary, we believe, 6 percent average, monthly subscription churn is a reasonable Baseline for park with its current business mix.
We expect this number can vary from this Baseline individual quarters, a decrease over the longer term as 1 product mix begins to include eats and bright which are more necessity products and to as subscribers increasingly purchase more than 1 product from us as a follow-on note. We've been told that we may be somewhat punitive in our definition of churn
Turn we use this metric is defined primarily because the inverse of shipment churn is a reasonably accurate approximation of the average monthly lifetime 1, divided by 0.06 equals roughly sixteen and a half months which is terrific for a subscription company. We do also look at churn on an active subscription basis, which is more aligned with how our peers in the dog space report term if we Define churn has subscriptions, which received the shipment during
364 day, period. Preceding this quarter, our attention with the approximately 97.5 percent return of 2.5% and if we look at it on a customer basis, as opposed to a subscription basis, it would be even lower.
Moving on.
Total DNA for the quarter with sixty 9 point 5 million dollars versus 32 million dollars in the same period. A year ago, 17 million dollars of roughly half of this increase was in our shipping and fulfillment costs due to a combination of higher volume from increase sales as well as higher rate, another roughly 10 million dollars is associated with investments in people, to build our new businesses and Technology to support our cross-selling initiatives.
And the balance is attributed to a variety of items including over 5 million dollars in transaction related fees, and several non cash accounting charges. The details of all of this is included in our 10-q.
Moving down the piano interest expense which is associated with our outstanding. Convertible notes was 1 point 6 million dollars in the quarter, largely offset by other income of 1.4 million net loss for the quarter was twenty 4 point 8 million dollars on a gaap basis and 10 million dollars. If you exclude one-time costs associated with the closing of the transaction, non-cash charges and warrant value and non-cash loss on extinguishment of that.
That finally adjusted even thought was negative 7 point, 6 million which is in line with our expectations. For our guidance provided back in December of last year. This is an investment year for us investment in people investment, in new products investment in technology and investment and fulfillment. It is worth noting that last year, discipline marketing, spend, and less expense. In growing new businesses park with net income positive, which demonstrates the strength of our business,
1 additional point, I would like to make is that our place subscription vertical was adjusted. Either top positive last year.
Here in my view, this demonstrates our ability to scale new businesses quickly and profitably. This is encouraging as we scale and invest in our newer initiatives, which we believe will exceed the size of the play segments over time.
I'm turning quickly to the balance sheet. We ended the quarter with 321 million dollars in cash, which affords US, the ability to strategically invest in high Roi opportunities. We intend to maintain a very disciplined Roi approach to our Capital allocation and continue to seek opportunities to optimize our efforts on this front.
Finally, it's a guidance for the second quarter of 2022, expect total revenue of approximately a hundred and twenty 2 million. For the full year. Reiterating our previously provided revenue and eat a diet guidelines.
In summary, we are well on our way to executing the plan, we laid out in December 2020.
Throwing our subscriptions, maintaining solid margins and unit, economics, and have a healthy balance sheet that enables us to intelligently, invest in exciting, growth initiatives. I'm very proud to be working with this team and Reporting on the great work. We are doing the team. Is excited to be a public company and eager to deliver long-term shareholder value.
Our thesis remains very much in.
And robust we are on a huge and cycle. Agnostic Rising tide called the dog market. And we are the only brand for the market with over 9 million, social followers, and nearly 2 million active subscribers. We have the opportunity to leverage, those deep customer, relationships into new, and sticky products that introduced us to enormous market segments like food. And we have a strong business model high-margin, strong unit economics that will scale our profitability.
Leti, overtime. And a visible for castable Horizon with that. I'll turn the call over for question and answer.
At this time, I would like to remind everyone in order to ask a question, you may press star, then the number 1 on your telephone keypad. Again, that's star 1. On your telephone keypad will pause for just a moment, to compile the Q and A roster.
After your first question comes from the line of Staff. We think from Jeffries, your line is open.
And thank you. Good afternoon everyone.
Thanks, Jeff. It's good to hear from you. We're we're very. Fortunate are kak this quarter over the prior quarter was actually down 6 percent. So the really good team that's very Nimble at managing across channels. We continue to pursue our operating goal breaking even in 4 months and for the past 4 quarters, we've been breaking in at 3 and even to so our we're sort of on track for CAC, don't
Good to move up terribly much in the, in our fiscal Q3 calendar Q4, which is the gift-giving season. You always see it go up a little bit, but average for the year, we feel like we're in a good place right now.
Okay, great. If you could
Just getting faster. Uh, plan is to launch Nationwide by end of the fiscal year. So we are able to do that right now. We can shift Nationwide, we are not actively marketing Nationwide and that's part of a plan for us with this earlier. Okay, great.
Yeah, we will be following up with some more detail in the queue on adjustments related to the transaction. So speaking operational easy because we have some lingering transaction cost running through the pnl. But from an operational perspective, we're affirming our guidance for he suggested, he would do for the balance of the year. We, this is an investment year for us. We're growing the teams for bright and eats with growing.
The technology for machine learning. So this quarter is in line with where we wanted to be. And we
Okay. John 6 for clarification, the shipping cost that you're calling out is inflationary that would be in your ex DNA, is that correct? That's right. Shipping and fulfillment but it I wouldn't characterize it as inflation. Is there a real reason? It's up is volume. We just shipped more packages. So we are seeing rate increases as everybody in the u.s. is on shipping and fulfillment. The driver for the increase in sgna was weak.
So we're 50% quarter over this quarter last year so that's his moves the number up as the ship more packages its Revenue related. Does that make sense?
Thank you very much. Your next question comes from the line of Maria rips from canaccord. Your line is open.
I just wanted to follow up on maybe share with us where you are in the logistics investment cycle there and can you talk about sort of, what kind of car cell uptake you seen today in markets, where it is available and sort of, when do you think would be sort of a good point to start supporting the food, roll out with marketing?
And why are you so far? But given our success in the data and the relationships, we can leverage from that. We're optimistic about eating successful has a much larger time, completely from a nationwide perspective. We do ship from the East Coast right now. You don't have to allow us to be able to serve the country all the way you're still investing basically across the country available. So if you discover it, we will serve you but
Actively marketing into the entire 48 states. That's the, that's the obvious first question and the second about in terms of investment in terms of breaking apart, eat, we don't really do that right now. We believe you'll be doing it next year.
Got it, maybe just a quick follow-up. Can you talk about some of you retail Partnerships? How important are those in your sort of brand building effort? And have you seen any sort of, have you done any studies that would suggest that of stronger brand recognition in regions where you have sort of broader retail present?
you even if you're not a direct-to-consumer,
It's a profitable business. You, it helps us raise awareness, you know, we in multiple partners, we announced the partner with lows, there's more coming and all those Partners, we work backwards from that Partners customer to design the products of them. So we don't, I don't have the data right now to break down in terms of conversion. I think your question is basically what percent would convert over into a direct-to-consumer subscription, right? We don't have a breakdown but we're seeing that your brand awareness raised across these Partnerships and different cohorts around the country. Where we do now.
Not serve to that scale yet.
Got it. That's very helpful. Thank you very much.
Our final question comes from the line of Nick Jones from City. Your line is open
And great. Thanks for taking the questions. Give me a call upon on the Commerce segment. If you have any frame with their many opportunities in terms of retailers, you can partner with and then maybe once you do part over the ramp look like you know if you start seeing material sales and then I have a second question. Thanks.
Our total revenue. We want to make sure that we tail is is as profitable as the DTC business. And we're just in the early days of rolling out to all the locations. And some of the big names we have like PetSmart and Petco a Target Etc lows. So a lot of the problem is it has to keep up with the fast growing.
Got it. Thanks. And it may be taking a step back and and you know, you, your category is a little unique. I think some of the other e-commerce players are, you know, the really laughing tough cops because people are kind of stepping out of the house, spending less time on the screen. Maybe that's going back with the Delta variant, but in a dog category, a lot of people can bring their dogs outside of the home. So I guess. Any thoughts on on the current COVID-19 landscape and how you guys are? Looking at the back half is kind of uncertainty.
You see any pullback on a guess?
Yes, people will bring dogs into the home or are things kind of still chugging along as they were before next. So there are a few points around 63 million and 2 million primary injection. Point had been placed now, the think about, you know, injecting into different categories, about Home, Food, and Health, which has highest am, how do we cross the opportunities?
so, we've seen
Sleeping agnostic of the cycles that are hitting us. Now the results that you seeing that with you today is that we are actually out of cat. Got clothes in 2019, we are basically, I think we can ask why you're acquiring customers that are more valuable to have to box potentially, right? So those are the good Tailwinds that we've seen. And the car
Cool.
Great. Thanks for taking my questions.
Ian.
This concludes today's conference call. Thank you for your participation. You may now disconnect
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