Q3 2021 a.k.a. Brands Holding Corp. Earnings Conference Call

November 9, 2021

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Operator: Ladies and gentlemen, welcome to the a.k.a. Brands Holding Corp. Q3 2021 Earnings Conference Call. All phones are in a listen-only mode. We will provide instructions at the end of the call on how to ask your questions. At this time, I'll turn the call over to Emily Goldberg, Head of Corporate Communications. Go ahead, Emily.

Ladies and gentlemen, welcome to the 8-K brands holding Corp, third quarter 2021 earnings Conference call.

All phones are in a listen only mode. We will provide instructions at the end of the call on how to ask your questions. At this time I will turn the call over to Emily Goldberg head of corporate Communications go ahead Emily.

Emily Goldberg: Good afternoon, everyone. Thank you for joining a.k.a. Brands Q3 conference call to discuss the results we released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call are Jill Ramsey, Chief Executive Officer, and Ciarán Long, Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language. Management may make forward-looking statements which refer to expectations, projections, or other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially than those expressed. For further discussion of the risks related to our business, please see our filings with the SEC. Please note we assume no obligation to update any such forward-looking statements. This call will contain non-GAAP financial measures such as Adjusted EBITDA and Adjusted EBITDA margin.

Good afternoon, everyone. Thank you for joining 8-K brands third quarter conference call to discuss the results. We released this afternoon, which can be found on our website at IR that 8-K, a brand's dotcom.

On the call are Jill Ramsey Chief Executive Officer. Thank you Ron long Chief Financial Officer before we get started I would like to remind you of the Companys Safe Harbor language management may make forward looking statements, which refer to expectations projections or other characterizations of future events, including guidance and underlying assumptions forward looking.

Statements involve risks and uncertainties that could cause actual results to differ materially than those expressed or.

For further discussion of the risks related to our business. Please see our filings with the SEC. Please note we assume no obligation to update any such forward looking statements. This call will contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margin reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release.

Emily Goldberg: Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. Now I would like to turn the call over to Jill.

Furniture, the SEC and available on our website now I would like to turn the call over to Jill.

Jill Ramsey: Good afternoon, everyone, and thanks for joining us. We're excited to be hosting our first earnings call as a public company and even more excited to discuss our strong Q3 performance.

Good afternoon, everyone and thanks for joining us we're excited to be hosting our first earnings call as a public company and even more excited to discuss our strong third quarter performance.

Jill Ramsey: I'll begin with an overview of our results and highlights from our brands, and then outline our growth strategies. Ciarán will then take you through the details of our financials and provide our full year outlook, and then we'll open it up for questions. I'm proud of the strong performance our brands delivered in Q3, demonstrating the power of our platform and the talent of our teams. We drove strong growth across our brands while navigating COVID-19 and global supply chain dynamics. For Q3, net sales grew by 155% to $161.8 million. Pro forma for the acquisition of Culture Kings, net sales increased 44% from Q3 last year, and active customers grew 54% across our brands.

I'll begin with an overview of our results and highlights from our brands and then outline our growth strategies.

Ron will then take you through the details of our financials and provide our full year outlook and then we'll open it up for questions.

I'm proud of the strong performance our brands delivered in the third quarter, demonstrating the power of our platform and the talent of our teams we drove strong growth across our brands, while navigating COVID-19, and global supply chain dynamics for the third quarter net sales grew by 155% to 161.

One 8 million and pro forma for the acquisition of culture Kings net sales increased 44% from the third quarter last year and active customers grew 54% across our brands.

Jill Ramsey: Our brands achieved growth across all regions, particularly in the US, where net sales increased 84% on a pro forma basis, making the US our largest market, and momentum has continued into Q4. As many of you know, Australia was in strict lockdown for most of the quarter due to a rise in COVID-19. Despite lockdowns, curfews, and store closures, our Australian business grew 7% on top of very strong growth last year, further proving our agility, resiliency, and the strength of our brands and teams. We are also encouraged by the vaccination rollout and reopening trends we see in Australia. 89% of their population has received at least one vaccine dose, and almost all lockdown restrictions have been lifted. All of our Culture Kings stores are now open and traffic is rebounding. While digital sales also continue to grow.

Our brands achieved growth across all regions, particularly in the U S, where net sales increased 84% on a pro forma basis, making the U S. Our largest market.

And momentum has continued into the fourth quarter.

As many of you know Australia within strict lockdown for most of the quarter due to a rise in COVID-19.

It's bite Mark Downs, Curfews and store closures, our Australian business grew 7% on top of very strong growth last year.

Further proving our agility and resiliency and the strength of our brands and teams.

We are also encouraged by the vaccination rollout and reopening trends, we see in Australia.

89% of their population has received at least one vaccine dose and almost all lockdown restrictions have been lifted.

All of our culture King stores are now open and traffic is rebounding while digital sales also continued to grow.

Jill Ramsey: Ciarán will provide more details on COVID-19 impacts in the region. Turning to rest of world, on a pro forma basis, our brands grew 101%, largely driven by Culture Kings expansion into New Zealand and growing demand for Princess Polly and Culture Kings in Europe and Asia. Over the past few months, we have discussed our mission and strategy with many of you, which is to accelerate the growth of direct-to-consumer fashion brands for the next generation. We have a compelling group of high-growth brands that customers love. Princess Polly, Culture Kings, Petal & Pup, Rebdolls, and our most recent acquisition, mnml. All of them are digital first and masters at connecting with customers on social media through a constant stream of great content and new fashion.

Karen will provide more details on COVID-19 impact in the region.

Turning to rest of world on a pro forma basis, our brands grew 101% largely driven by culture King's expansion into New Zealand and growing demand for Princess Polly and culture Kings in Europe and Asia.

Over the past few months, we have discussed our mission and strategy with many of you which is to accelerate the growth of direct to consumer fashion brands for the next generation.

We have a compelling group of high growth brands that customers Love Princess Polly culture Kings pedal and pop Red dog and our most recent acquisition minimal.

All of them are digital first and masters, our connection with customers on social media through a constant stream of great content and new fashion.

Jill Ramsey: At a.k.a., we accelerate the growth of our brands through our next generation retail platform, providing expertise to achieve greater scale and profitability. We know we are better together. Across our brands, we share best practices like data-driven merchandising and efficient social-led marketing, as well as share vendors for cost leverage and synergies. Through our network of best-in-class third-party tech partners, we get early access to the latest digital capabilities and innovation. Our unique model positions us to achieve our vision to become the global leader in direct to consumer fashion for the next generation. Our strong performance demonstrates that our strategy is working. I'll share some highlights from our brands this quarter, beginning with Princess Polly, our largest and first brand on the platform.

An 8-K, a we accelerate the growth of our brands through our next generation retail platform, providing expertise to achieve greater scale and profitability.

We know we are better together.

Our brands share best practices like data, driven merchandising and efficient social led marketing as well as share vendors for cost leverage and synergies.

And through our network of best in Class Third Party Tech partners, we get early access to the latest digital capabilities and innovation.

Our unique model positions us to achieve our vision to become the global leader in direct to consumer fashion for the next generation.

Our strong performance demonstrates that our strategy is working.

I'll share some highlights from our brands this quarter, beginning with Princess Polly our largest and first brand on the platform.

Jill Ramsey: They have pioneered effective next gen strategies, such as test and repeat buying and micro-influencer-led marketing, both of which we are sharing across our brands, creating powerful network effects. Princess Polly outperformed expectations this quarter across all regions, led by strong growth in the US. As the US reopened and consumer fashion needs changed, Princess Polly quickly adjusted merchandise from stay-at-home wear to going out dresses and party wear. As a reminder, their test and repeat approach to buying gives them agility to react quickly to trends and get new fashion to customers in just 30 to 45 days. This quarter, they increased the number of new weekly styles introduced by 13% over the prior quarter, and they also expanded the penetration of exclusive merchandise, which drives higher gross margins.

They have pioneered effective next gen strategies, such as test and repeat buying and micro Influencer led marketing both of which we are sharing across our brands, creating powerful network effects.

Principally outperformed expectations this quarter across all regions led by strong growth in the U S.

The U S reopened and consumer fashion needs changed Princess Polly quickly adjusted merchandise from stay at home, we're to going out dresses and party wear.

As a reminder, there testing repeat approach to buying gives them agility to react quickly to trends and get new fashion to customers and just 30% to 45 days.

This quarter they increased the number of new weekly styles introduced by 13% over the prior quarter and they also expanded the penetration of exclusive merchandise, which drives higher gross margins.

Jill Ramsey: They also launched a sustainable fashion line, converting 5% of their assortment to products made from lower impact materials and saw strong customer response, exceeding expectations. These merchandising strategies were supported by a marketing campaign celebrating the US reopening and summer holidays. With 75% of their customers in either high school or college, Princess Polly continues to focus their marketing strategy on students. Their back-to-school campaign, powered by influencers, produced strong week-over-week growth. They also rolled out a new university-based influencer program and received 20,000 ambassador applicants. We're pleased with Princess Polly's acceleration in the US and confident about their continued growth ahead. Turning to Culture Kings, a leading Australian streetwear retailer with a cult-like following and unique blend of music, sport, and fashion. We acquired Culture Kings in March of this year, doubling a.k.a. Brands in size.

They also launched a sustainable fashion line converting 5% of their assortment to products made from lower impact materials and saw strong customer response exceeding expectations.

These merchandising strategies were supported by an marketing campaign celebrating the U S reopening and summer holidays.

With 75% of their customers and either high school or college Princess Polly continues to focus their marketing strategy on students.

Their back to school campaign powered by Influencers produced strong week over week growth.

They also rolled out a new University based Influencer program and received 20000 and Bachelor applicants.

We're pleased with Princess Polly is acceleration in the U S and confident about their continued growth ahead.

Turning to culture Kings, a leading Australian street wear retailer with a cult like following and unique blend of music sports and fashion.

We acquired culture Kings in March of this year, doubling a K a N size.

Jill Ramsey: While they are a digital-first retailer, Culture Kings is notably our only brand with stores. These highly experiential and innovative stores are like no other and set a new standard for the future of retail. Their stores serve as powerful marketing engines with a theatrical and celebrity event format that fuels hype and demand and provides powerful content for their digital channels. While the stores have since reopened, notably, five of eight stores were closed for the majority of Q3 due to COVID-19. The team quickly shifted marketing spend and inventory to focus on the digital business and the US market, both of which performed well. We're proud of how the team navigated the COVID-related challenges in Australia and the resulting Q3 growth they achieved. This quarter, Culture Kings opened their eighth and most innovative store yet in Auckland, New Zealand, with record performance.

Well they are a digital first retailer culture Kings is notably our only brand in the stores.

Is highly experiential and innovative stores are like no other and set a new standard for the future of retail.

Their stores serve as powerful marketing engines with the theatrical and celebrity event format that fuel type in demand and provides powerful content for their digital channels.

Well the stores have since reopened notably five of eight stores were closed for the majority of the third quarter due to COVID-19.

The team quickly shifted marketing spend and inventory to focus on the digital business in the U S market.

Both of which performed well.

We're proud of how the team navigated the COVID-19 related challenges in Australia, and the resulting third quarter growth they achieved.

This quarter culture King's opened their eight and most innovative store yet in Auckland, New Zealand with record performance.

Jill Ramsey: On opening day, there was a six-hour line to enter the store, demonstrating the power of the brand. Just three weeks after opening, the store was closed due to lockdowns. During this time, robust growth in New Zealand continued online and accelerated throughout the quarter. The success of Culture Kings' first market expansion outside of Australia further bolsters our confidence in our ability to expand this popular brand to other markets. Next, I'll touch on Petal & Pup, and Rebdolls. We are very pleased with Petal & Pup's growth this quarter. It is now our fastest-growing brand and following the same growth curve as Princess Polly in the US. By leveraging best practices from Princess Polly, we have seen Petal & Pup's growth accelerate, which reinforces the strength of our platform. All of Petal & Pup's buying is data-driven and on the test-and-repeat model that Princess Polly developed.

On opening day, there was a six hour line to enter the store demonstrating the power of the brand.

But just three weeks after opening the store was closed due to lockdowns.

During this time robust growth in New Zealand continued online and accelerated throughout the quarter.

The success of culture, King's first market expansion outside of Australia further bolsters, our confidence in our ability to expand this popular brand into other markets.

Next I'll touch on pedal and pulp and rubbed off.

We are very pleased with pedal and pops growth this quarter.

It is now our fastest growing brand and following the same growth curve as printed poly in the U S.

By leveraging best practices from Princess Polly, we have seen pedal and pumps growth accelerate.

Which reinforces the strength of our platform.

All the pedal and pumps buying is data driven and on the test and repeat model that Princess Polly developed and.

Jill Ramsey: Petal & Pup is now heavily leaning into the micro-influencer strategy, also innovated by Princess Polly. In July, they launched US-based distribution from a distribution center shared with Princess Polly. This improved the customer experience by reducing shipping time and also provided shared cost leverage and learnings. Petal & Pup excels in trendy, event-driven fashion, and we've seen a great rebound in dresses and occasion wear, which was the brand's fastest-growing category this quarter. As we continue to scale the brand in the US, we also appointed a new Brand President, Victoria Perry, who is based in San Francisco. Victoria is a seasoned fashion and e-commerce executive, and we are confident that she will continue to accelerate the growth of the brand in the US and globally. Rebdolls, which specializes in trendy fashion in extended sizes for ethnically diverse young women, also delivered solid growth this quarter.

And Palin pop is now heavily leaning into the micro Influencer strategy also innovated by Princess Polly.

In July they launched U S based distribution from a from a distribution center shared with Princess Polly.

This improves the customer experience by reducing shipping time, and also provided shared cost leverage and learnings.

Paddle in pulp excels in trendy event, driven fashion and we've seen a great rebound in dresses and occasion wear which was the brand's fastest growing category this quarter.

As we continue to scale the brand in the U S. We also appointed a new brand President Victoria, Perry, who is based in San Francisco.

Victoria is a seasoned fashion and ecommerce executive and we are confident that she will continue to accelerate the growth of the brand in the U S and globally.

Red dog, which specializes in 'twenty fashion and extended sizes for ethnically diverse young women also delivered solid growth this quarter.

Jill Ramsey: They launched new collaborations with relevant influencers and increased their brand awareness and credibility through authentic and creative content focused on body positivity and size inclusivity. While small today, we are confident in Rebdolls' long-term potential as it caters to an attractive and underserved customer. Turning now to mnml, the newest brand to join our platform, which we acquired in October. Ciarán will touch more on the financial details surrounding the transaction, but I'll quickly share a few brand highlights and why it is such a good fit for our portfolio. mnml is a premier men's streetwear brand in the US, which bolsters our position in the space. A great strategic fit, mnml is a proven next-gen direct-to-consumer brand that has mastered modern men's fashion and provides sought-after trends at a premium quality and affordable price.

They launched new collaborations with relevant Influencers and increase their brand awareness and credibility through authentic and creative content focused on body positivity and size inclusivity.

While small today, we are confident in red dog long term potential as it caters to an attractive and underserved customer.

Turning now to minimal the newest brand to join our platform, which we acquired in October <unk>.

Huron will touch more on the financial details surrounding the transaction, but I'll quickly share a few brand highlights and why it is such a good fit for our portfolio.

Minimal is a premier men's street wear brand in the U S, which bolsters our position in this space.

A great strategic fit minimal is a proven nexgen direct to consumer brand that has mastered modern men's fashion and provide sought after trends at a premium quality and affordable price.

Jill Ramsey: They have a track record of high growth and profitability and employ a data-driven approach to merchandising and marketing. The brand has built a highly loyal following and has a long runway for growth and profitability in the US and globally. We are confident that this already strong brand can accelerate further and benefit from a.k.a. platform synergies and complements Culture Kings particularly well. mnml excels in denim and bottoms, which perfectly complements Culture Kings' core categories in hats, hoodies, tees, and sneakers. mnml is well established in the US, and we are also confident that we can successfully bring the brand to Australia. With his strong vision and leadership, Founder and CEO Matthew Fields has assembled a highly talented team, and we're thrilled to welcome them to a.k.a. Brands.

They have a track record of high growth and profitability and employ a data driven approach to merchandising and marketing.

The brand has built a highly loyal following and has a long runway for growth and profitability in the U S and globally.

We are confident that this already strong brand can accelerate further and benefit from a K a platform synergies and complements culture, King, particularly well.

Minimal excels in denim and bottoms, which perfectly complements culture, king's core categories, and half hoodies Ts and sneakers.

Minimal is well established in the U S. And we are also confident that we can successfully bring the brand to Australia.

With his strong vision and leadership founder and CEO, Matt fields has assembled a highly talented team and we're thrilled to welcome them to 8-K brands.

Jill Ramsey: Looking forward to the Q4 and beyond, momentum in our brands continues to be strong, and we remain focused on growing our brands organically to drive profitable and sustainable long-term growth. Before turning to our growth strategies, I would like to comment briefly on our supply chain, a topic on everyone's mind. We experienced minimal disruption to our supply chain in Q3, and our inventory is well positioned for the holiday season in Q4. There are a couple reasons we have fared better than many during the global supply chain disruption. First, as discussed, we do test-and-repeat buying for the majority of our inventory, which provides a rapid 30 to 45 days to market. To achieve this speed, we rely primarily on air freight, so we do not have a material amount of merchandise delayed at sea, like many others.

Looking forward to the fourth quarter and beyond momentum in our brands continues to be strong and we remain focused on growing our brands organically to drive profitable and sustainable long term growth.

Before turning to our growth strategies I would like to comment briefly on our supply chain a topic on everyone's mind.

We experienced minimal disruption to our supply chain in the third quarter and our inventory is well positioned for the holiday season in the fourth quarter.

There are a couple of reasons, we have fared better than many during the global supply chain disruption.

First as discussed we do test and repeat buying for the majority of our inventory, which provides a rapid 30 to 45 days to market.

To achieve this speed, we rely primarily on air freight. So we do not have a material amount of merchandise delayed etsy like many others.

Jill Ramsey: While we've seen air freight costs increase, the pricing pressure is far less drastic than cost increases related to shifting from sea to air. Second, we have a diversified group of 271 suppliers across 14 countries, with no single supplier making up more than 13% of our sales. We only have one small supplier in Vietnam, so we were not materially impacted by the closure there, and we were able to quickly adjust. Additionally, by operating at scale in two hemispheres, we are uniquely able to manage inventory and marketing spend across two regions and seasons. This competitive advantage, combined with our flexible business model, has allowed us to remain agile during different phases of the pandemic for nearly two years now. We are well prepared for the reopening of Australia with the right assortment and strategies in place.

While we've seen air freight costs increase the pricing pressure is far less drastic than cost increases related to shifting from sea to air.

Second we have a diversified group of 271 suppliers across 14 countries with no single supplier, making up more than 13% of our sales.

We only have one small supplier in Vietnam. So we were not materially impacted by the closure there and we were able to quickly adjust.

Additionally by operating at scale in two hemispheres, we are uniquely able to manage inventory and marketing spend across two week seasons and regions.

This competitive advantage combined with our flexible business model has allowed us to remain agile during different phases of the pandemic for nearly two years now.

And we are well prepared for the reopening of Australia with the right assortment and strategies in place.

Overall, we believe we are well positioned in the fourth quarter and beyond as we continue to navigate dynamic supply chain and COVID-19 related challenges.

Jill Ramsey: Overall, we believe we are well positioned in Q4 and beyond as we continue to navigate dynamic supply chain and COVID-19 related challenges. Next, I'll turn to our near and long-term strategies to drive growth across our brands. Beginning with the US, our highest priority market right now, we are energized by the tremendous growth potential we see across our brands. Following the successful expansion of Princess Polly in the US, which now represents the majority of their sales, we have applied their US growth learnings to Petal & Pup, and we are doing the same with Culture Kings as they scale their business here. We are on track to deliver on our expansion plans for Culture Kings. We have hired a head of US to build out a team and plan to open a distribution center in the front half of next year in California.

Next I'll turn to our near and long term strategies to drive growth across our brands.

Beginning with the U S. Our highest priority market right now we are energized by the tremendous growth potential we see across our brands.

Following the successful expansion of Princess Polly and the U S, which now represents the majority of their sales.

We have applied their U S growth learnings to peddle in pulp and we are doing the same with culture kings as they scale their business here.

We are on track to deliver on our expansion plans for culture Kings, we have hired a head of U S to build out a team and plan to open a distribution center in the front half of next year in California, we are.

Jill Ramsey: We are also working on plans to open a Culture Kings store next year and look forward to sharing more details on that soon. For all of our brands, as we continue to grow in the US, we have strategies in place to acquire new customers, deepen loyalty with our existing customers, and expand our high-quality merchandise assortment. First, I'll touch on our customer initiatives. Our brands are masters at content creation, and we will continue to capitalize on our social media strengths by growing our network of micro-influencers, which is a highly efficient strategy for acquiring new customers. We're also leaning in on popular platforms like TikTok as we continue to follow customer traffic to new social media platforms as they evolve. We also see an opportunity to further drive customer retention and frequency of visits that will grow lifetime value, such as loyalty programs.

Also working on plans to open a cultural King store next year and look forward to sharing more details on that soon.

For all of our brands as we continue to grow in the U S. We have strategies in place to acquire new customers deepen loyalty with our existing customers and expand our high quality merchandize assortment.

First I'll touch on our customer initiatives.

Our brands are masters of content creation, and we will continue to capitalize on our social media strengths by growing our network of micro Influencers, which is a highly efficient strategy for acquiring new customers.

We're also leaning in on popular platforms like tick tock as we continue to follow customer traffic to new social media platforms as they evolve.

We also see an opportunity to further drive customer retention and frequency of visits that will grow lifetime value such as loyalty programs.

Jill Ramsey: Princess Polly is lapping the one-year anniversary of their loyalty program, which launched in October 2020. While it's still early days, the program has exceeded expectations, and we've seen more than double the spend coming out of our loyalty members. We'll take the best practices from Princess Polly to roll out loyalty programs to our other brands. Next, I'll touch on our merchandising initiatives. As part of our model, our brands are constantly introducing new styles, designer collaborations, and exclusive items, which keep customers engaged and frequently visiting, as seen in our customer retention rates of 63% in 2020 across a.k.a. Brands. Additionally, we have opportunities for strategic assortment expansion. We're pleased to share that Princess Polly is launching extended sizing with their new Curve collection in Q4, which we know will expand our audience and customer base.

Princess Polly is lapping the one year anniversary of their loyalty program, which launched in October of 2020.

While it's still early days the program has exceeded expectations and we've seen more than double the spend coming out of our loyalty members.

We'll take the best practices from Princess Polly to rollout loyalty programs to our other brands.

Next I'll touch on our merchandising initiatives.

Part of our model our brands are constantly introducing new styles designer collaborations and exclusive items, which keep customers engaged and frequently visiting as seen in our customer retention rates of 63% in 2020 across 8-K a brands.

Additionally, we have opportunities for strategic assortment expansion.

We're pleased to share that Princess Polly is launching extended sizing with their new new curve collection in the fourth quarter, which we know will expand our audience and customer base.

Jill Ramsey: Building on the successful launch of their sustainable fashion assortment in Q3, Princess Polly plans to expand their sustainable offering in Q4 with a goal to offer 20% of new styles made from renewable fabrics by the end of the year. At Culture Kings, we are working to expand our print-on-demand graphic tee capabilities, which allow us to real-time react to customer trends and scale T-shirt print production to meet demand. While our near-term focus is in the US, longer term, we will also grow our brands internationally beyond the US and Australia. As we've mentioned, we're seeing highly encouraging early demand signals for Princess Polly in the UK and Europe, and for Culture Kings in the US and Asia.

Building on the successful launch of their sustainable fashion assortment in the third quarter Princess Polly plans to expand their sustainable offering in the fourth quarter with a goal to offer 20% of new styles made from renewable fabric by the end of the year.

And it culture Kings, we are working to expand our print on demand graphic tee capabilities, which allow us to real time react to customer trends and scale T shirt print production to meet demand.

While our near term focus is in the U S longer term, we will also grow our brands internationally beyond the U S and Australia.

As we've mentioned, we're seeing highly encouraging early demand signals for Princess Polly and the U K and Europe and for culture Kings in the U S and Asia.

Jill Ramsey: We will continue to test and learn our way into new digitally savvy markets by localizing the customer experience and tailoring marketing spend to expand awareness and grow our brands internationally over the next several years. Lastly, while organic growth is our top priority, we view M&A as incremental growth drivers for the future. We have a highly disciplined approach that has led to successful M&A deals. As a reminder, we're searching the world for the best high-growth, digital, direct-to-consumer, and profitable brands to add to our portfolio. We believe we can augment our 20% annual long-term growth targets with 1 to 2 acquisitions per year. We will continue to be disciplined and very selective in our M&A strategy and only add brands that meaningfully enhance our portfolio.

We will continue to test and learn our way into new digitally savvy markets by localizing, the customer experience and tailoring marketing spend to expand awareness and grow our brands internationally over the next several years.

And lastly, while organic growth is our top priority, we view M&A as incremental growth drivers for the future.

We have a highly disciplined approach that has led to successful M&A deals.

As a reminder, we're searching the world for the best high growth digital direct to consumer unprofitable brands to add to our portfolio.

We believe we can augment our 20% annual long term growth targets with one to two acquisitions per year.

We will continue to be disciplined and very selective in our M&A strategy and only add brands that meaningfully enhance our portfolio.

Jill Ramsey: Before I pass it to Ciarán, I want to express my gratitude to all of our teams at a.k.a. and across our brands for delivering a great first quarter as a public company. Our IPO in September was a tremendous milestone, and we could not have done it without all of our teams and partners. The opportunity and runway ahead of us is significant, and we could not be more excited to execute our strategy for the quarters and years to come. I'm confident that a.k.a. Brands is the future of fashion, and we're just getting started. With that, I'll turn it over to Ciarán now to discuss our third quarter performance and our guidance in more detail.

Before I pass it to Karen I want to express my gratitude to all of our teams at 8-K E and across our brands for delivering a great first quarter as a public company.

Our IPO in September was a tremendous milestone and we could not have done it without all of our teams and partners.

The opportunity and runway ahead of us is significant and.

And we could not be more excited to execute our strategy for the quarters and years to come.

I am confident that AK a brands is the future of fashion and we're just getting started with.

With that I'll turn it over to John now to discuss our third quarter performance and our guidance in more detail.

Ciaran Long: Thank you, Jill, and good afternoon, everyone. Before I provide more details on our Q3 results and outlook for the remainder of the year, I would also like to take a moment to thank our employees for their dedication and commitment throughout the pandemic. Turning now to our Q3 performance. We are pleased to have delivered results ahead of our expectations, despite the challenges presented by the COVID-related lockdowns in Australia. Our performance this quarter further demonstrates the strength of our business, as well as our operating platform that we believe represents the future of retail. For Q3, net sales grew 155% to $162 million, compared to $63 million last year. On a constant currency basis, net sales rose 156%.

Thank you Jill and good afternoon, everyone before I provide more details on our third quarter results and outlook for the remainder of the year I would also like to take a moment to thank our employees for their dedication and commitment throughout the pandemic.

Turning now to our third quarter performance. We are pleased to have delivered results ahead of our expectations. Despite the challenges presented by the Covid related Lockdowns in Australia.

Our performance this quarter further demonstrates the strength of our business as well as our operating platform that we believe represents the future of retail.

For the third quarter net sales grew 155% to $162 million compared to $63 million last year.

On a constant currency basis net sales rose 156%.

Ciaran Long: Adjusting for the inclusion of Culture Kings in the prior year, our pro forma net sales increased 44% or 42% in constant currency. Culture Kings' net sales grew 29% as compared to the Q3 last year, despite the disproportionate impact of COVID lockdowns in Australia. Pro forma average order value increased 6% to $89 compared to the prior year Q3, in part due to strategic price increases. The number of orders increased 37% to 1.8 million compared to the prior year, including Culture Kings. For the trailing twelve months, our pro forma active customers increased 56% year-over-year to 3.1 million. The growth across these key performance metrics reflects the continued momentum in our brands.

Adjusting for the inclusion of kosher things in the prior year pro forma net sales increased 44% or 42% in constant currency.

<unk> net sales grew 29% as compared to the third quarter last year, despite the disproportionate impact of Covid Lockdowns in Australia.

Pro forma average order value increased 6% to $89 compared to the prior year third quarter in part due to strategic price increases the.

The number of orders increased 37% to $1 8 million compared to the prior year, including culture things.

For the trailing 12 months pro forma active customers increased 56% year over year to $3 1 million.

The growth across these performance key performance metrics reflects the continued momentum in our brands.

Ciaran Long: Now I will provide a few highlights from our three regions on a pro forma basis, again, assuming Culture Kings was included in last year's results. Q3 net sales in the US increased to $76 million, up 84% from the prior year Q3, now making it our largest market at 47% of net sales, as compared to 37% last year. Princess Polly continues to be the primary driver of our growth in the US as brand awareness and loyalty continue to build. Australian net sales of AUD 64 million grew 7% from AUD 60 million in the prior year. The softer top line growth was due to the impact of COVID-related lockdowns that were in place for the majority of Q3. Despite the lockdowns, we continued to outperform our internal expectations, demonstrating the strength of our brands in Australia.

Now I will provide a few highlights from our three regions on a pro forma basis again, assuming closer Kings was included in last year's results.

Third quarter net sales in the U S increased to $76 million.

84% from the prior year third quarter, no, making it our largest market at 47% of net sales as compared to 37% last year.

Princess Polly continues to be the primary driver of our growth in the U S as Brian awareness and loyalty continues to build.

Australia net sales of $64 million grew 7% from $60 million in the prior year.

The softer topline growth was due to the impact of Covid related lockdowns that were in place for the majority of the third quarter.

Despite the lockdown, we continued to outperform our internal expectations, demonstrating the strength of our brands in Australia.

Ciaran Long: Turning to the rest of the world, net sales of $21 million increased 101% from Q3 in the prior year on a pro forma basis. The growth was primarily driven by the expansion of Culture Kings to New Zealand, further supporting the resonance of the brand outside of Australia, in addition to the traction we're seeing in Princess Polly in Europe and the UK in particular. Moving to profitability, our gross profit for Q3 increased 124% to $86 million. Our gross margin rate was 53.2% as compared to 60.8% in the same period last year.

Turning to the rest of the world.

Net sales of $21 million increased 101% from the third quarter in the prior year on a pro forma basis.

The growth was primarily driven by the expansion of culture Kings to New Zealand further supporting the resonance of the brand outside of Australia. In addition to the traction we're seeing in Princess Polly in Europe, and the U K in particular.

Moving to profitability, our gross profit for the third quarter increased 124% to $86 million.

Our gross margin rate was 53, 2% as compared to 68% in the same period last year.

Ciaran Long: The 760 basis point decline in gross margin rate was the result of an approximately $6 million or 370 basis point non-cash purchase accounting charge associated with the Culture Kings acquisition. The balance of the decline was roughly split between higher air freight expense and the inclusion of Culture Kings, which carries a lower gross margin rate as compared to our other brands due to the lower mix of exclusive product. The gross margin decline was partially offset by the implementation of targeted price increases at Princess Polly and Petal & Pup. We continued to generate strong full price sell-through and best-in-class return rates, due in part to our proven test-and-repeat strategy and high mix of exclusive product. Selling expenses in the quarter were $41 million compared to $16 million in the prior year.

The 760 basis points decline in gross margin rate was the result of an approximately $6 million or 370 basis point noncash purchase accounting charge associated with the <unk> acquisition.

The balance of the decline was roughly split between higher airfreight expense and the inclusion of Kochi Kings, which carries a lower gross margin rates as compared to our other brands due to the lower mix of exclusive product.

The gross margin decline was partially offset by the implementation of targeted price increases Princess Polly and pedal and pulp.

We continued to generate strong full price sell through and best in class return rates due in part to a proven test and repeat strategy and current mix of exclusive product.

Selling expenses in the quarter were 41 million compared to $16 million in the prior year.

Ciaran Long: As a percentage of sales, selling expenses increased 30 basis points to 25.1%, compared to 24.8% in Q3 2020. This increase was driven by an expansion in the number of orders shipped and the inclusion of Culture Kings. Marketing expense increased to $15 million from $5 million. The increase in marketing dollars was driven primarily by the inclusion of Culture Kings, which increased its investment in advertising spend as the brand looks to scale in new geographies and tested new marketing opportunities. As a percentage of sales, marketing expense was 9.6%, a 230 basis point increase compared to Q3 2020, which saw exceptional marketing efficiency.

As a percentage of sales selling expenses increased 30 basis points to $25, one compared to 24 days in the third quarter of 2020.

This increase was driven by an expansion in the number of orders shipped and the inclusion of <unk>.

Marketing expense increased to $15 million from $5 million.

The increase in marketing dollars was driven primarily by the inclusion of Kochi Kings.

<unk> increased its investment in advertising spend as the brand looks to scale in new geographies and tested new marketing opportunities.

As a percentage of sales and marketing expense was nine 6%, a 230 basis point increase compared to the third quarter of 2020, which saw exceptional marketing efficiency.

Ciaran Long: Our G&A expense of $29 million increased due primarily to an increase in salaries and related equity compensation associated with new talent, the inclusion of Culture Kings, additional professional fees, and transaction costs. Excluding the $1.6 million of transaction costs and $4.9 million of non-cash stock-based compensation expense related to the IPO, G&A expenses were $22 million. As a percent of sales, G&A was 17.9% of sales as compared to 11.5% in the same period last year. In addition to GAAP measures, Adjusted EBITDA is an important profitability measure that we use to manage our business internally. For the quarter, Adjusted EBITDA was $19 million versus $13 million in the prior year and $28 million on a pro forma basis.

Our G&A expense was $29 million increased due primarily to an increase in salaries and related equity compensation associated with new talent. The intrusion of culture Kings additional professional fees and transaction costs.

Excluding the $1 6 million of transaction costs, and $4 9 million of noncash stock based compensation expense related to the IPO G&A expenses were $22 million.

As a percentage of sales G&A was 17, 9% of sales as compared to 11, 5% in the same period last year.

In addition to GAAP measures adjusted EBITDA is an important profitability measure that we use to manage our business internally.

For the quarter, adjusted EBITDA was $19 million versus $13 million in the prior year and $28 million on a pro forma basis.

Ciaran Long: As a result, as a percent of sales, our Adjusted EBITDA margin of 11.5% compares to 20.4% in the prior year Q3 and 24.6% on a pro forma basis. Our Adjusted EBITDA margin exceeded our expectations, largely due to the better-than-expected results in Australia. During the quarter, we had an income tax benefit of $4 million compared to an income tax expense of $3 million in the prior year. The income tax benefit was related to the loss and extinguishment of debt from the prepayment and termination of our prior debt, as well as an increase in interest expense related to the prior debt.

As a result, as a percentage of sales our adjusted EBITDA margin of 11, 5% compares to 24, 24% in the prior year third quarter.

And 24, six on a pro forma basis.

Our adjusted EBITDA margin exceeded our expectations largely due to the better than expected results in Australia.

During the quarter, we had an income tax benefit of $4 million compared to an income tax expense of $3 million in the prior year.

Income tax benefit was related to the loss.

The extinguishment of debt from the prepayments and.

And termination of our prior dose as well as an increase in interest expense related to the prior dose.

Ciaran Long: Our net loss attributable to a.k.a. for the quarter was $10 million or a loss of $0.11 per share, compared to a net income attributable to a.k.a. of $7 million or $0.10 per share in the prior year. On an adjusted basis, our net income attributable to a.k.a. for the quarter was $3 million or $0.04 per share, compared to $7 million or $0.10 per share in the prior year. Weighted average shares outstanding were approximately 88.4 million in Q3 2021. Turning to the balance sheet, we ended the quarter with $54 million in cash and cash equivalents and $98 million in debt. As part of our IPO, we reduced our debt levels by approximately $70 million from $168 million of debt borrowed during H1 2021.

Our net loss attributable to <unk> for the quarter was 10 million or a loss of <unk> 11 per share compared to a net income attributable to <unk> of 7 million or <unk> 10 per share in the prior year.

On an adjusted basis, our net income attributable to <unk> for the quarter was $3 million.

Or <unk> <unk> per share compared to <unk> 7 million or <unk> <unk> per share in the prior year.

Weighted average shares outstanding were approximately $88 4 million in the third quarter of 2021.

Turning to the balance sheet, we ended the quarter with $54 million in cash and cash equivalents and $98 million and dish.

As part of our IPO, we reduced our debt levels by approximately $70 million from $168 million of debt borrowed during the first half of 2021.

Ciaran Long: At the end of the quarter, we had total liquidity of $104 million, including $50 million available on our credit facility. Inventory at the end of the quarter was $96 million compared to $33 million at the end of Q3 2020. If we adjust for the $26.9 million in Culture Kings inventory in the prior year, our inventory levels would have increased 60% from the third quarter of last year. We are pleased with the level and composition of our inventory as we head into the important holiday season, as we pull forward inventory deliveries to ensure we were able to meet demand.

At the end of the quarter, we had total liquidity of 104 million, including $50 million available on our credit facility.

Inventory at the end of the quarter was $96 million compared to $33 million at the end of the third quarter 2020.

If we adjust for the $26 9 million in <unk> inventory in the prior year, our inventory levels would have increased 60% from the third quarter of last year.

We are pleased with the level and composition of our inventory as we head into the important holiday season, as we pulled forward inventory deliveries to ensure we were able to meet demand.

Ciaran Long: As Jill noted, subsequent to quarter end, we completed the acquisition of mnml for a total of $44.9 million, including cash of $27.6 million, $15 million of which came from our existing debt facilities and equity of $17.3 million or 2.1 million shares. The acquisition was immediately accretive and we see an opportunity to fuel significant growth in 2022 and beyond as we leverage our platform. Additionally, mnml's growth rates as well as its gross margin and EBITDA rates are in line with our acquisition guidelines. Now I will share more details on our outlook for the full year. As Jill mentioned, the solid momentum in our Q3 and strong trends that have continued into the Q4 leave us excited for the remainder of the year.

Ciaran Long: We are pleased with the performance we've achieved so far this year and expect the momentum to continue. Our guidance assumes no further COVID related lockdowns for the remainder of the year. As of today, all 8 of our Culture Kings stores have reopened. While we are not anticipating any meaningful supply chain constraints due to product delays, our guidance assumes higher freight costs will pressure gross margins for the remainder of the year. While we recognize the industry-wide global supply chain challenges, we are closely monitoring the situation and feel confident in our supply chain network and inventory position as we head into holiday. As such, for the full year, we expect net sales to be in the range of $550 to 560 million. Adjusted EBITDA is expected to be in the range of $60 to 62 million.

Let's go ahead and systems no for the Covid related lockdowns for the remainder of the year.

As of today, all eight of our culture can stores have reopens.

We are not anticipating any meaningful supply chain constraints due to product delays.

<unk> assumes higher freight costs will pressure gross margins for the remainder of the year.

While we recognize the industry Roy global supply chain challenges, we are closely monitoring the situation and feel confident in our supply chain network and inventory position as we head into holiday.

As such for the full year, we expect net sales to be in the range of 550 to 560 million.

Adjusted EBITDA is expected to be in the range of 60 to 62 million.

Ciaran Long: We expect a weighted average diluted share count of 93.2 million for the full year and 126 million for Q4. Capital expenditures are expected to be approximately $6 million for the full year. As we look beyond 2021, we are excited about the long-term opportunity across our brands. Although we recognize we are lapping strong growth in both 2020 and 2021, and we expect supply chain challenges will persist into 2022. We are confident in our ability to deliver on our long-term growth targets, which include net sales growth of approximately 20% annually, excluding acquisitions, the addition of 1 to 2 acquisitions per year, and long-term Adjusted EBITDA margins in the mid-teens. In summary, we are excited about our performance this quarter and our outlook for the remainder of the year.

We expect the weighted average diluted share count of $93 $2 million for the full year and $126 million for the fourth quarter.

Capital expenditures are expected to be approximately $6 million for the full year.

As we look beyond 2021, we are excited about the long term opportunity across our brands. Although we recognize we are lapping strong growth in both 2020 in 2021, and we expect supply chain challenges will persist into 2022.

We're confident in our ability to.

To deliver on our long term growth targets, which include net sales growth of approximately 20% annually excluding acquisitions the.

The addition of one to two acquisitions per year.

And long term adjusted EBITDA margins in the mid teens.

In summary, we are excited about our performance this quarter and our outlook for the remainder of the year we.

Ciaran Long: We have confidence that our brand accelerator strategy as well as our asset light and flexible operating model will continue to drive profitable growth and create long-term shareholder value. With those comments, I will turn the call back to the operator to open it up for questions.

We have confidence that our brand accelerators strategy as.

As well as our asset light and flexible operating model, we continued to drive profitable growth and create long term shareholder value.

With those comments I will turn the call back to the operator to open it up for questions.

Okay.

Operator: Ladies and gentlemen, if you'd like to ask a question, please press star one. We would ask that everyone ask only one question and one follow-up to give everyone a chance to ask a question. Again, to get in line to ask a question, please press star one. All right, our first question is coming from Randy Konik.

Ladies and gentlemen, if you'd like to ask a question. Please star one.

We would ask that everyone ask only one question and one follow up to give everyone. A chance to ask the question again to get in line to ask a question. Please press star one.

Alright, and our first question is coming from Randy clinic.

Hey, how are you can you hear me.

Randy Konik: Hey, how are you? Can you hear me?

Jill Ramsey: Yes.

Yeah.

Randy Konik: All right, great. Thanks, guys. I guess my first question is, you talked about strong retention metrics, and it sounds like full price selling is staying pretty strong. Just wanna get a little bit more granular around repeat purchase behavior, a little bit more color on, and maybe if you can give us a little more color around full price selling, what is that at, and how has that been changing? That would be super helpful. Then how do you think about merchandise margin opportunity going forward if retention metrics stay strong, full price selling gets even better, you know, where can these merchandise margins go from here? Just curious. Thanks, guys.

Alright, great. Thanks, guys. So I guess my first question is you talked about strong retention metrics and it sounds like a full price selling is staying pretty strong. So I just want to get a little bit more granular around repeat purchase behavior, a little bit more color on and maybe if you can give us a little more color.

Around full price selling how what is that at and how has that been changing that'd be super helpful. And then how do you think about merchandise margin opportunity going forward, if retention metric stay strong full price selling it gets even better.

Where can these merchandise margins go from here just curious thanks guys.

Thanks, Randy I'll start with saying our retention rates are very high because we are very focused on selling high quality exclusive merchandise and offering a constant stream of new next that really keeps the customer's engaged in coming back.

Jill Ramsey: Thanks, Randy. I'll start with saying our retention rates are very high because we are very focused on selling high quality, exclusive merchandise and offering a constant stream of newness that really keeps the customers engaged and coming back, as reflected in our 63% repeat in 2020. As we've gone through 2021 and through Q3, we have seen retention stay high and actually even tick up a bit. Our full price sell-through has also remained high. As we've talked about, we see that our full price sell-through is a very high percentage of full price. Based on our test and repeat buying, we really know what customers want, which is ultimately leading to less markdowns and that higher full price sell-through.

As reflected in our 63% repeat in 2020.

As we've gone through 2021 and and through the third quarter, we have seen.

Retention say, hi, and actually even kick up a bit.

And are full price fell through has also remained high as we've talked about we see that are full price ourselves through is very high percentage of full price based on our test and repeat buying we really know what customers want.

Which is ultimately leading to total esmark hounds and that higher full price all through we don't have to disclose our brand level full price fell through but it has remained high.

Jill Ramsey: We don't actually disclose our brand level full price sell-through, but it has remained high. It's part of what's contributed to our high AOV this quarter. Regarding kind of merchandise margins going forward, we have confidence in our gross margin rate. We have, you know, competing on quality exclusive merchandise. We do have a bit of pricing power, and are able to, you know, selectively take some price increases, which we've done this quarter, to offset some of the expense we've seen related to supply chain issues. We're able to really balance that out and are very confident we can continue our current trend of our gross margin rate.

Part of what's contributed to our high a O V. This quarter.

Regarding kind of merchandise margins going forward.

We are confident in our gross margin right we have.

Competing on quality exclusive merchandise. We are we do have that have pricing power and are able to selectively take some price increases, which we've done this quarter to offset some of the expense we've seen related to supply chain issues.

So we're able to really balance that out and are very confident we can continue our our current trend of.

Gross margin right.

Operator: All right. Our next question is coming from Ed, excuse me if I'm messing up your last name, Ed Yruma.

Alright. Our next question is coming from a excuse me if I mess up your last name Ed drama.

Ed Yruma: Hey, thanks, guys, taking the questions. I guess first on Australia, I know you guys posted some really strong results there, 7% growth despite the lockdowns. I guess what's the embedded assumption for Australia in Q4? And then as a follow-up, very interesting acquisition, mnml. Help us understand maybe a little bit their supply chain, if you wouldn't mind. Is it different than your core brands? And how much is mnml expected to contribute for the Q4 number? Thank you.

Hey, Thanks, guys, taking the questions I guess first on Australia, I know you guys posted some really strong results are 7% growth. Despite the locked out but guess what the embedded assumption crossrail yeah in the fourth quarter and then there's a follow up very interesting acquisition minimal help us understand maybe a little bit their supply chain. If you wouldn't mind is it.

Different than your core brands and how much is minimal expected to contribute for the four Q number. Thank you.

Ciaran Long: Yeah. I think, Ed. Thanks, Ed. You know, for Australia, you know, we don't give specific guidance, I guess, around regions, but we would expect it to be back in the double-digit growth kind of range as we go into Q4. We see kind of strength coming out of Q3, and we would expect that to continue into Q4. You know, for mnml, from the incremental impact on Q4, it's about $8 to 10 million is what we would expect additionally it to add to the quarter.

Yeah, I think thanks, Thanks for Australia, and we don't go specific guidance I guess around collegians, but we would expect it to be back in the double digit growth and kind of range. As we go into Q4, we see kind of strange coming out of Q3, and you would expect that to continue into Q4.

For minimal from the the incremental impact on queue for it as opposed to 10 million is what we would expect additionally, it to add to the quarter.

Jill Ramsey: On mnml, from a supply chain perspective, first, we're just thrilled to welcome this great brand to our portfolio. It really bolsters our position in men's streetwear and complements our Culture Kings business quite well. They are really strong in bottoms and denim and bring a new network of great suppliers in that space that we are excited about leveraging across our group of brands. Also from a fulfillment center and carrier partner level, we are evaluating and comparing rates and service levels with our current set of providers and with all the brands that we acquire. Over time, we can evaluate if we can get them into our best-in-class network of partners and get some synergy and leverage with our other operating partners. We're evaluating that as we go.

And on minimal from from the supply chain perspective first of all just throw the welcome that's great brand to our portfolio at really bolsters, our position in men's street wear and compliments, our culture kings business quite well.

They are really strong in bottoms, and denim and bring a new network of great suppliers in that space that we are excited about leveraging across our group of brands I'm also from a fulfillment center and carrier partner level, we are evaluating and comparing Ah.

Rates and service levels with our current setup providers and with all the brands that we acquire over time, we can't we can evaluate if we can get them into our best in class network of partners and get some synergy and leverage with or other operating partners. So we're evaluating that as we go.

Operator: Okay. Our next question is coming from Erinn Murphy.

Yeah. Our next question is coming from Erin Murphy.

[noise] great. Thank you good afternoon, congratulations on your first quarter out of the Gate I guess my first question is just around the fourth quarter momentum that you're seeing are you seeing that happened both in the United States to tell it that Australia reopening triage you just referenced and is it broad spread across the portfolio and then my second question is around the performance of culture.

Erinn Murphy: Great. Thank you. Good afternoon, and congratulations on your Q1 out of the gate. My first question is just around the Q4 momentum that you're seeing. Are you seeing that happen both in the United States as well as that Australia reopening trend you just referenced? Is it broad spread across the portfolio? My second question is around the performance of Culture Kings in the quarter. Can you talk about how exclusive brands did versus third-party brands? Just how is your inventory availability right now for third-party brands within that banner? Thank you so much.

Kings in the quarter can you talk about how exclusive granted first is third party brands and just how is your inventory availability right now for third party brands within that banner. Thank you so much.

Great. Thanks, Aaron and thanks for your questions first on on queue for all comment on that you know we are seeing some really nice momentum coming out of two three and continuing already as we head into queue for the early read is strong as Australia has really just come back.

Jill Ramsey: Great. Thanks, Erin, and thanks for your questions. First on Q4, I'll comment on that. You know, we are seeing some really nice momentum coming out of Q3 and continuing already as we head into Q4. The early read is strong. As Australia has really just come back online with their reopening over the past few weeks, we are really seeing business rebound. All of our stores now are open in Australia, and we've seen traffic really rebound to stores. As well, we've seen the online business continue to be really strong. So, seeing great momentum and early reads already.

Online with the reopening over the past few weeks, we are really seeing business.

Rebound all of our stores now are open in Australia.

And we've seen traffic really rebounded stores as well we've seen the online business continued to be really strong.

So seeing great momentum and early reads already we are very well prepared as we head into the queue for from an inventory standpoint, as well as really strong merchandising and marketing plans and very excited I'm over in culture Kings, Australia to get back to some events in our store. So we have a great line.

Jill Ramsey: We are very well prepared as we head into Q4 from an inventory standpoint, as well as really strong merchandising and marketing plans, and very excited over in Culture Kings Australia to get back to some events in our stores. We have, like, a great lineup of events. Just feeling really good as we head into Q4. Also, I mean, I should call out, too, our teams are really agile and will, you know, adjust throughout the quarter. We have a marketing calendar plan for promotional activity, but I think there's a lot of, you know, uncertainty around the promotional intensity this holiday, and we've left ourselves room to really be agile there. In terms of Culture Kings in the quarter, Culture Kings was impacted by the Australian COVID lockdowns.

Enough of events, so just feeling going really good as we as we head into queue for also I mean, I should call out to our teams are really agile and will you know or just throughout the quarter. We have a marketing calendar planned for promotionality, but I think there's a lot of.

You know uncertainty around the promotional intensity. This this holiday holiday and we left ourselves room to really be agile there.

In terms of culture kings in the quarter. So culture Kings was impacted by the Australia Covid Lockdowns five of eight of their stores were closed for the majority of the quarter. They have all reopens now and so we're we're just excited about.

Jill Ramsey: Five of 8 of their stores were closed for the majority of the quarter. They have all reopened now. We're just excited about what we're starting to see there as that business kind of comes back online, and the reopening is occurring in Australia. You did ask about the mix of third party versus exclusive. The Culture Kings business, yes, as a reminder, is a mix across third party and in-house brands. As we expand that brand into the US, we do see a higher mix of in-house brands in the penetration of their business, which we're really excited about and leaning into.

We're starting to see their is that business kind of comes back online and the reopening is occurring in Australia, you didn't ask about the the mix of a third party versus exclusive the culture Cains business, yes, as a as a reminder, as a mix across third party and in house brands.

As we expand that brand into the U S. We do see a higher mix of in house brands and the penetration of their business, which we're really excited about and leaning into as we bring this brand into the U S. We we are looking to lead with him and and certainly looking to grow the in house penetration of that.

Jill Ramsey: As we bring this brand into the US, we are looking to lead with and certainly looking to grow the in-house penetration of that business. Those come at a higher gross margin and are also a real nice competitive moat for us and a real differentiator as we bring that brand into the US market.

Business those come at a higher gross margin and are also a real nice competitive mode for us in a real differentiator as we bring that brand in the U S market.

Ciaran Long: Then, Erinn, just from an inventory position for the third-party brands for Culture Kings, we're actually in a pretty good position with those vendors and really across all of the brands for Q4. We have pulled forward some inventory just to make sure we're able to meet demand, but we feel in a pretty good position heading into the holiday.

And then they're just from Ah and imagery position for the third party brands for coaches getting direction in a pretty good position with those those vendors and really across all of the the brands for Q4, we have put forward. Some inventory just to make sure. We're happy to meet demand, but we feel when they are pretty good position heading into the whole day.

[noise]. Okay. Our next question is coming from Joseph Kelly go ahead.

Operator: Okay. Our next question is coming from Youssef Squali. Go ahead.

Okay, great. Thank you very much. So just two quick questions for me going back to just the performance of the quarter just considering the the material outperformance I was wondering if maybe you can double click on some of the things that actually surprised you between the time. When you guys came out with the initial guidance and ultimately with transcended added a quarter and then second.

Youssef Squali: Great. Thank you very much. So just two quick questions for me. Going back to just the performance in the quarter, just considering the material outperformance, I was wondering if maybe you can double click on some of the things that actually surprised you between the time when you guys came out with the initial guidance and ultimately what transpired out of the quarter. Second, as you look at your marketing efficiency during the quarter, I was wondering if you can comment on any impact from ATT or Apple's or the iOS 14.5 change on the effectiveness on marketing channels, and just kind of remind us again which channels are kind of performing better or best for you guys. Thank you very much.

As you look at your market inefficiency during the quarter was wondering if you could comments on any impact from a T T or apples or the Iowa 14 got five change on the effectiveness of marketing channels, and just kind of reminds us again, which channels are kind of <unk>.

More and better for the best for you guys. Thank you very much.

Yeah. Thanks, Thanks for yourself I'll comment first on what sort of I I wouldn't say it would surprise us, but we were pleased to see the Australia business rebound faster than anticipated recall that in July the Lockdowns and curfews.

Jill Ramsey: Yeah. Thanks. Thank you, Youssef. I'll comment first. I wouldn't say it surprised us, but we were pleased to see the Australia business rebound faster than anticipated. Recall that in July, the lockdowns and curfews started occurring throughout Australia, and we did see a big drop off in the business at that time. We really saw it start to build back up through the course of August and September. We were really pleased with the performance of the business. You know, the fact that we delivered 7% growth in Australia in the quarter, on top of last year's very strong growth while having five of eight stores closed, we were really pleased with that performance.

Started occurring throughout throughout Australia, and we did see a big drop off in the business at that time, but then we really saw it start to build back up through through the course of August and September and and we were really pleased pleased with the performance of the business you know the fact.

That we delivered 7% growth in Australia in the quarter on top of last year's very strong growth, while having five of eight stores close we were really pleased with that performance and you know the teams were able to really be agile and adjust them you know across our multiple.

Jill Ramsey: You know, the teams were able to really be agile and adjust, you know, across two regions, we were able to pivot and adjust our marketing spend and inventory accordingly, and really manage the business very agilely. We were ultimately pleased and outperformed there. From a marketing efficiency standpoint and the impacts on iOS and IDFA, you know, we've been less impacted there than anticipated. I think this is really thanks to our social-first approach in marketing. You know, we really rely more on social media, influencers, and our great content than we are relying on paid ads.

Ross two regions, we were able to to pay that and adjust our marketing spending inventory accordingly, and really manage the business very agile a so we were ultimately please and outperformed their from a marketing efficiency standpoint, and the impacts on I owe us an idea.

You know we've been less impacted their than than anticipated I think this is really thanks to our social first approaching marketing you know, we really rely more on social media and Influencers and are great content. Then we are relying on paid ads that's.

Jill Ramsey: That said, we do spend on paid ads and have performance spend and had a bit of impact on Facebook, but we were able to optimize our mix of marketing spend across platforms and really reallocate. Longer term, our best, you know, approach there is a strong offense on scaling our micro-influencer strategy. Anything to add there? No. Okay. All right. Thanks, Youssef.

Said, we do we do spend on paid as in half performance spend then had some a bit of impact on Facebook, but we were able to optimize our mix of marketing spend across platforms, and really reallocate, but but longer term. Our our best you know approach there is a strong offense on scaling.

Micro influenced their strategy so.

Okay, alright, thanks, he said.

Youssef Squali: Good.

Okay.

Operator: Our next question is coming from Lorraine Hutchinson.

And our next question is coming from Lorraine Hutchinson.

Operator: Our next question is coming from Lorraine Hutchinson.

Lorraine Hutchinson: Thank you. I was curious for an update on the brand awareness of Culture Kings in the US, and then if you could offer us any proof points or early indicators that the Princess Polly playbook for US expansion is gaining some traction for Culture Kings?

Thank you I was curious for an update on the brand awareness of culture Kings in the U S. And then if you could offer us any proof points or early indicators that the Princess poly playbook for U S expansion is getting some traction for culture Kings.

Jill Ramsey: Great. Hi, Lorraine. Thanks so much for your questions. First I'll talk about the Culture Kings brand awareness in the US. You know what excites us about Culture Kings, this is a really popular scaled, awesome men's streetwear brand in Australia, and very well known with strong unaided awareness in the 40s over in Australia, while more in the single digits in the US. That said, their US business is the fastest growing portion of their business, and we're seeing just tremendous growth on their US online business. We are on track with our Culture Kings expansion plans into the US. We have hired a head of US and started to build out our team here.

Great Hi, Lorraine. Thanks, so much for your questions first of all I'll talk about the culture Kings brand awareness in the U S.

What excites us about culture King. This is a really popular scaled awesome Man Street, where brand in Australia, and very well known with a strong strong unaided awareness in the forties over in Australia, while in more in the single digits in the U S that said there you.

<unk> business is the fastest growing portion of their business and we're seeing just tremendous growth on there you left on my business. We are on track with our culture Kings expansion plans into the U S. We have hired a head of the U S and so started to build out our team here our first hires.

Jill Ramsey: Our first hires are really focused on building out our micro-influencer strategy, really learned and adopted from Princess Polly. As you asked about the playbook of Princess Polly, and being able to adapt that, we are using that for Culture Kings to scale a similar social-led micro-influencer strategy. We will really grow that brand with a digital-first approach in the US, and looking to open up their distribution center in the front half of next year, as well, their first flagship store in the back half of next year. Regarding the sort of proof points on the Princess Polly playbook, you know, Princess Polly just continues to really gain share in the growth in the US.

Are really focused on building out or micro influencer strategy.

Really learned and adopted from Princess Polly So as you as you asked about the playbook, a princess Polly and being able to adapt that we are using that for culture kings to scale, a similar social lad micro influencer straw.

Strategy, and we will really grow that brand with a digital first approach and the U S.

Looking to add open up their their distribution center in the front half of next year as well their first flagship store in the back half of next year.

Regarding the sort of proof points on the Princess Poly Playbook Princess policy just continues to really gained share in the growth in the U S. We've had tremendous growth in the U S and saw really strong quarter with the reopening and a shift at the business really back into dresses.

Jill Ramsey: We've had tremendous growth in the US and saw a really strong quarter with the reopening and a shift of the business really back into dresses. They've been leaning in even harder on their social media influencer program. With back to school, they did launch a college ambassador program and just saw incredible demand there with 20,000 signups for that. Really continuing to get a lot of great learnings out of Princess Polly that we're then able to adapt and roll out across the group. We've done that, adopting those over to Petal & Pup, and really seeing that business also now take off in the US. Now it's our fastest growing business. Really pleased with what we're learning out of Princess Polly and being able to apply it elsewhere in the portfolio.

And they've been meaning and even harder on their social media influence or program with back to school. They did launched a college ambassador program and just saw incredible demand there with 20000 sign up for that so really continuing to get a lot of great learnings out of Princess Polly that were there.

Then able to adapt and roll out across the group, we've done that adopting those over to pedal and pop and and really seen that business also now take off in the U S. Now, it's our fastest growing business. So I'm really really pleased with what we're learning how to Princess poly and being able to apply it elsewhere in the portfolio.

Operator: Our next question is coming from Oliver Chen.

Our next question is coming from Oliver Chen.

Oliver Chen: Hi. Thank you. We were curious about the promotional environment and also as you think about pricing, more near- and medium-term and what you're seeing, you know, as we all face inflationary pressures, yet the demand profile remains very strong. Second question, your technology and a.k.a.'s approach to technology is quite unique with that capital-light approach. What should investors be focused on in terms of what you're doing there in terms of some of your key partnerships and the biggest needle movers, as you know, work with different partners across your portfolio? Thank you.

Alright. Thank you we were curious about the promotional environment and also as you think about pricing uhm more near and medium term and what you're seeing you know as we all fifth inflationary pressures you have to demand profile remains very very strong and then second question you you're.

Technology in any case approach to technology is quite unique with a capital light approach what should investors be focused on in terms of what you're doing there in terms of some of your cute partnerships in the biggest needle movers as you work with different partners across your portfolio. Thank you.

Thanks, Thanks, Oliver I think just regarding kind of the promotional landscape as soon as we love to queue for this year I think just to reiterate you know we've seen really strong momentum coming out of Q3, that's already get a strong early read as we get into the corner here and we're very well.

Jill Ramsey: Thanks, Oliver. I think just regarding kind of the promotional landscape as we look to Q4 this year. I think just to reiterate, you know, we've seen really strong momentum coming out of Q3 that's already getting a strong early read as we get into the quarter here. We're very well positioned from an inventory standpoint and just have a really strong merchandising and marketing lineup. You know, a lot of the conjecture is it'll be a less promotional holiday, but we are prepared, ready, and have room to be as promotional as needed to compete in the market this holiday. We're quite agile and able to adjust and adapt as needed. Feeling really good there as we head into the big days.

Physicians uhm from an inventory standpoint, and just have a really strong merchandising and marketing lineup you know a lot of the conjecture and there'll be a last promotional holiday, but we are prepared and ready and have room.

Two b as promotional as needed to compete in the market, that's holiday and were quite agile and able to adjust and adapt as needed. So feeling really good there as we head into the big days from a pricing perspective sort of near and medium term I think you know, it's it's important to point.

Jill Ramsey: From a pricing perspective, sort of near and medium term, I think, you know, it's important to point out that we really compete on quality and exclusivity, not really price per se, which means that we actually have quite a bit of pricing power in our brands. We have been able to actually increase prices selectively in our brands to offset some of the supply chain expense that we did see in the quarter. With that, we have been able to still maintain our growth rates even while taking some of those prices up, just really kind of emphasizing that pricing power. We are committed to maintaining our growth margin rates as we go forward, right where they are in mid fifties. We will reevaluate pricing as needed, ongoing.

Out that we really compete on quality and exclusivity not really price per se, which means that we actually have quite a bit of pricing power in our brands and we have been able to actually increased prices selectively in our branch to offset some of the supply chain expense that we did see in the quarter.

And with that we have been able to still maintain our growth rate, even while taking some of those prices up just really kind of emphasizing that that pricing power. So we are committed to maintaining our gross margin rates as we go go forward right, where they are in mid fifties, and we will reevaluate pricing as <unk>.

Needed ongoing.

Jill Ramsey: From a technology standpoint, as we've talked about, we do run an asset-light technology stack that's really leveraging Shopify and an ecosystem of partners. We are very pleased with our strategy. It keeps our costs low, our flexibility high, and really gives us access to best-in-class and the latest technology capabilities. We are able to really constantly test and learn across our brands and across a network of tech partners and really get to and curate the best-in-class, the best of the best tech partners out there, and then really share that across our brands. This approach also gives us really strong group leverage.

From a technology standpoint, you know as we've talked about you do run an asset light technology Ah stacked that's really leveraging shopify and an ecosystem of partners. We are very pleased with our strategy. It keeps our costs slow or flexibility high and really gets us.

Access to fast in class and the latest technology capabilities, we are able to really constantly test and learn across our branch and across a network of of Tech partners and really get too and curate the best in class. The best of the Best Tech partners out there and then really share that across.

Across our brands. This also gives us. This approach also get this really strong group leverage we've been able to go back now and renegotiate right with some of our tech partners and really develop and lean into strategic relationship there that give us early access to features making sure.

Jill Ramsey: We've been able to go back now and renegotiate rates with some of our tech partners and really develop and lean into strategic relationships there that give us early access to features, making sure that we're first in line on innovation capabilities, as well as being able to even influence their roadmaps. We see this as just a real strategic capability that allows us to access the best innovation out there. I think what we're really most excited about, honestly, is our data and analytics capabilities. If you think about it, we are really sitting on a goldmine of data and insights across our group of brands, across demographics and across geographies. All of our brands are very strong at data-driven merchandising and harnessing analytics for their everyday decisions.

That were first in line on innovation capabilities as well as being able to even influenced their roadmaps. So we see this is just a real strategic capability that allows us to ask access the best innovation out there, but I think what we're really most excited about honestly as our data and analytics capabilities if.

Do you think about it we are really fitting on a on a gold mine of of data and insights across our group of brands across demographics and across geographies and all of our brands are very strong at date data driven merchandising and harnessing analytics for further everyday decisions, but what.

Jill Ramsey: What we've just started to build out is really strong cross brand analytics capabilities that are really gonna take us forward. We've made some good strides on that in Q3, but excited to continue to expand on that. That's what people should be watching to and waiting to hear more from us about.

It just started to build out is really strong cross brand analytics capabilities that are really going to take us forward and we made some good strides on that in Q3, but excited to continue to expand on that so that that's what people should be watching to watching and waiting to hear from more for.

I'm off about.

Ciaran Long: Oliver, I'll just add on inflationary. You know, we've had to do some small wage increases at our US distribution center, but, you know, not a real big impact there on the quarter or kind of on the go forward. I guess the other place where we are seeing pricing pressure is obviously on the inbound air freight. We've seen a significant increase there year over year and even quarter over quarter. We do expect some more increases there in Q4, but we've built that into kind of our expectations, and we're kind of expecting those increases to continue into next year.

Oh I was just add an inflationary you know we've had to do some small wage increases at are you with distribution center, but you know not not a a really big impact there on the floor for or kind of on the go forward I guess, the other place where we are saying pricing pressures, obviously on the inbound air freight we've seen a significant.

[noise] increase their year over year, and even quarter over quarter, we do expect some more increases there in queue for but we've built that into kind of our expectations and we're kind of expecting those increases to continue into next year.

Alright, our next question is coming from Michael Binetti.

Operator: All right. Our next question is coming from Michael Binetti.

Michael Binetti: Hey, guys. Congrats on a nice quarter, and it's nice to talk to you guys here on a live public call. I just wanna ask you maybe a couple of things on the model, and then I think the revenue guidance for Q4 looks like it's about 34% to 41%, a little bit of a deceleration from the pro forma number in Q3. If we take out mnml, it's a little bit more of a deceleration. You talked about the lockdowns and reopening in several parts of the business reaccelerating coming out of Q3.

You guys are congrats on this corner and it's nice to talk to you guys here in our lives public call [noise].

I want to ask you and maybe a couple of things on the on the model and then I think the the revenue guidance for fourth quarter looks like it's about.

34, 41%, a little bit of a deceleration from the pro forma number and <unk> and then if we take out a minimal it's a little bit more of a deceleration.

You talked about the Lockdowns in reopening in several parts of the business Reaccelerating coming out of three Q. So as we're trying to learn to think alongside you guys here and how you built the Guy that's maybe would you help us with a couple of inputs that you're thinking about for fourth quarter and how much of the you know any kind of a <unk> of a deceleration if I'm right on the masters, just conservatism uhm or it could be just related.

Michael Binetti: As we're trying to learn to think alongside you guys here and how you build the guidance, maybe would you help us with a couple of the inputs that you're thinking about for Q4 and how much of the, you know, any kind of a deceleration, if I'm right on the math there, is just conservatism, or it could be just related to, you know, tougher compares, you know, a year ago, since we don't have a lot of history of the combined business. Any inputs there would help. And same question on the EBITDA margins. It looks like you're planning to about 10% to 10.5% in the Q4, a little lower than what we just saw in the Q3. Again, don't know much about the changeover in seasonality from Q3 to Q4.

Two.

Tougher computers, you know a year ago. Since we don't have a lot of history of the combined business at any inputs. There would help uhm and same question on the EBITDA margins. It looks like your planning them to about 10 to 10 and a half from the fourth quarter, a little lower than what we just saw in the third quarter again don't know much about the the changeover in seasonality from three to four Q. So any any help there and then.

Michael Binetti: Any help there?

Michael Binetti: Finally, I just, you know, Ciarán, maybe the AOV is mid-single digit that you had the six percent this quarter. I know we've talked about some price increases across the brands. Is that? You know, as you talk about the 20% long term, if we start thinking a little bit now about 2022, is mid-single digit AOV a safe place to start our thinking for next year? Is that sustainable?

Finally, I'd just soon.

Maybe the a V. As his mid single digits that you had the the 6% this quarter and I know we've talked about some price increases across the branch is that you know as you talk about the 20% longterm. If we start thinking a little bit now about 2022 is made single digit a O V. A safe place to start off thinking for next year's is sustainable.

Ciaran Long: Yeah. Thanks, Michael. Maybe I'll go to AOV first and can kind of work backwards. I think we're pretty happy with the increase we saw in AOV year over year. It's up 6%, 3% on a constant currency basis. It was nice to see it up really across all of the brands. In particular, that's coming from price increases that Princess Polly and Petal & Pup put into effect. I think going forward they will continue to be opportunistic and really look at the market and move prices as they see the ability.

Yeah, Thanks for like <unk>, and maybe I'll go to a O V. First thing can kind of work backwards. I think you know, we're we're pretty happy with the increase we saw an a O V year over year, it's 6%, 3% on a constant currency basis and it was nice to see it up really across all of the brands and in particular, you know that's coming.

From price increases and the Princess poorly in person and <unk> put it put into effect.

They could go forward and they will continue to be opportunistic and we need to look at the market and and you know move prices as they as they see the ability. So I think as we think it will kind of go forward and <unk>. It certainly could have been that low single digits as we think about kind of if.

Ciaran Long: I think as we think about going forward and AOV, it's certainly in that low single digits as we think about it in FY 2022. Then as that relates to our guidance and our expectations around Q4, we certainly see seasonality in AOV from Q3 to Q4, so we would expect it to decrease in Q4 versus Q3. You know, that's somewhat from the promotional nature of Q4, but also just the different mix of categories across the brand. We would see it coming down from that perspective. That's really, I would say, the bigger driver of our decelerating revenue in Q4. Also somewhat a bit of conservatism.

422.

And then as as that kind of relates to or go ahead and send our expectations are going to fool, we certainly see seasonality into V and keep from two three to queue for so kind of where you would expect it to decrease in queue for versus Q3, and you know that's somewhat from the promotion nature of Q4, but also just the different mix.

Of kind of categories across the brand. So we would kind of see it coming down from that from that perspective.

And that's really I would say that the bigger driver of or decelerating revenue in queue for <unk>.

So I'm a little bit of conservatism. These are kind of new brands and you know cause somewhat new brands to the to the U S. When we pick a culture thing. So we we do want to be conservative there.

Ciaran Long: These are kind of new brands and, you know, they're somewhat newer brands to the US when we think of Culture Kings, so we do wanna be conservative there. Really, as it relates to EBITDA and thinking about EBITDA in Q4, I would say kind of three bigger drivers. One is just, you know, the seasonality, the AOV impacting our gross margins. We would expect those to come down in Q4 with the promotional nature of Q4. We've a little bit of increase in selling expenses as it relates to surcharges with carriers. Just the other driver is from a G&A perspective, we are bringing on more public company expenses in Q4 this year as it's really our first full quarter being public, so think of D&O insurance and other public company costs.

And then really as it relates to EBITDA and thank you, but EBITDA in queue for I would say kind of three bigger drivers. One is just the you know the <unk> the a O V impacting or gross margins, we would expect those condoned in queue for with the promotional nature.

Q4, with a little bit of an increase in sending expenses are as it relates to surcharges with carriers and then just the other driver is from a G and a perspective, we are bringing more public company expenses in queue for this year.

So with your first full quarter being public so think of dental insurance and other public company costs, so that kind of.

Ciaran Long: They're the kind of the drivers that bring the decrease in EBITDA over Q3.

Roy was the Burgundy decrease in EBITDA over Q3.

Operator: Our next question is coming from Ike Boruchow.

Our next question is coming from <unk>.

Ike Boruchow: Hey, everyone. Congrats on your first conference call. I guess I'll just ask a couple follow-ups on mnml. I guess, Ciarán, I think you guys used a little bit of equity in the purchase this time. Can you remind me, is that something that you guys would normally do? Is that kinda new? How does that kinda fit into the future of these one or two deals annually going forward? I think you gave, excuse me, the Q4 revenue number $8 to 10. Should we just kind of assume that this business is around $30 to 40 million in annualized run rate revenue? Any kind of gross margin color on mnml as we kind of mix that into next year would be great. Thank you.

Hi, everyone. Congrats on your first start school I guess I'll just ask a couple follow ups on on minimum August Karen.

Thank you guys used a little bit of equity and the purchase of this time can you remind me that something that you guys would normally do is is coming you and I was that comes to the future of these one or two deals.

Mm annually going forward and then I think you do [noise] excuse me the <unk> revenue number eight to 10 should we just kind of assume that this business is around 30 to 40 million an annualized run rate revenue.

Any kind of gross margin color minimal as it kind of makes it to make sure would be great. Thank you.

Ciaran Long: Sure. Thanks, Ike. Yeah, from the acquisition, part of the purchase price was about 2.1 million shares, about $17 million. You know, those are both 35% of the... Or just under 35% of the overall purchase price. I think, you know, in our mind, it's kinda somewhere from 20% to 35% is the range of equity that we would expect to do as part of our acquisitions. Certainly, you know, talking to potential acquisitions out there, they are all very much interested in having equity in a.k.a. and kind of being part of the long-term upside that we see kind of across all of the brands and the overall business.

Sure. Thanks like.

Yeah from from the acquisition with paired with the purchase price was about 2.1 million shares about $17 million.

<unk> pretty 40% of the or just under 35% of the overall purchase price I think you know in our minds, it's kind of similar from 20% to 35% is the range of it could be that we would expect to do as part of our acquisitions and certainly you know total thing to potential acquisitions, Oh, they're they're all very.

Much interested in having equity in a K, a and kind of being perfect. The longterm upside that we see kind of across all of the brands and the overall business.

Ciaran Long: From a revenue perspective, mnml, you know, that is kind of their quarterly range is what we would expect. You know, they're not a seasonal business, so they are in that kind of $30 to 40 million range from a revenue perspective. And across the, you know, the drivers, AOV, gross margins, very similar to the overall portfolio that we have, so no big changes there from a model perspective. I think as we think about EBITDA, you know, we will invest more in them from a head count perspective in that first year just to support their growth and make sure that we can bring them onto the platform. So that will bring down their EBITDA rate on that first year, but it'll, you know, come back very quickly.

And then from a revenue perspective minimal you know that that is kind of their their coffee range is what we would expect you know, they're they're not <unk>, they're not a seasonal business. So they are in that kind of 30 to 40 million dollar range from a revenue perspective, <unk> <unk> across the you know the drivers a O V gross margins very.

Similar to the overall portfolio that we have to fend there'll be changes there for memorial perspective, I think as we think about EBIT go we will invest more in the from the headcount perspective in that first year just to support their growth and make sure that we can bring them onto the platform and.

So that will bring down their EBITDA right on the first year, but you know come back very quickly.

Operator: Our next question comes from Dana Telsey.

Our next question comes from Dana Telsey.

Dana Telsey: Good afternoon, everyone, and congratulations on the progress. You mentioned some of the new initiatives at Princess Polly, whether it's expanding the exclusive merchandise or introducing sustainable component to the mix there, and also increasing the new weekly styles by 13%. How does this move going forward? Does it accelerate in terms of whether it's the new more new weekly styles going forward or extended sizing or sustainable? And do some of these initiatives hold for the other brands, whether it's Petal & Pup or Rebdolls?

Good afternoon, everyone and congratulations on the progress you mentioned something new initiatives that Princess poly, whether it's expanding the exclusive merchandise or introducing sustainable component to the mix there and also increasing.

New weekly styles by 13%.

Does this move going forward. It does it accelerates in terms of whether it's the new more new weekly styles going forward or or extended sizing or sustainable and do some of these initiatives hold for the other brands, whether it's <unk>.

Or red dog.

Jill Ramsey: Thanks, Dana. I'll take that. On Princess Polly, yeah, we have a high mix of exclusives already in Princess Polly. This brand really competes on quality and exclusives. Pleased to increase our penetration of exclusives this past quarter and really committed to continuing to increase that at Princess Polly and across all of our brands. They did roll out, as you mentioned, the sustainable line this quarter with their Earth Club line, and saw a really strong customer response that exceeded expectations. About 5% of their assortment is now coming from recyclable, renewable fabrics. They are very committed to continuing to expand that and looking to get to 20% of all their new styles made, sourced from recyclable or renewable fabrics by the end of the quarter.

Thanks, Dana I'll I'll take that so on Princess probably yeah, we have a high mix of exclusive already in Princess politics Bank branch really compete on quality and exclusive and please to increase.

<unk> R penetration of exclusive this past quarter and really committed to continuing to increase that at Princess Polly and across all of our all of our brands. They did roll out as you as you mentioned the sustainable line, that's corner with Earth Club line and saw really strong customer response that exceeded X.

Spectation.

So about 5% of their assortment is now coming from recyclable renewable fabrics and they are very committed to continuing to expand that and looking to get to 20% of all their new styles made source from recyclable or renewable fabrics by the end of the quarter.

Jill Ramsey: We are excited to take the learnings from Princess Polly of doing that and apply that to our other brands. They have been sourcing those fabrics at a mill and are able to use those fabrics across their supplier network, so they were not needing to go find new suppliers in order to do this. They were also, notably, didn't need to incur any cost increases or price increase to the customer to offer this sustainable line. We're really excited about what they're doing in that space. Princess Polly is really a leader inside our group of brands on sustainability, and we're gonna learn a lot from their expansion plans there and apply that to the rest. They are also, as noted, introducing an extended sizing line with their Curve collection this quarter. In Q4, that'll come out.

And we are excited to take our learnings from Princess Polly of doing that and apply that to our other brands. They have been forcing those fabrics at a male and are able to use those havoc across their supplier network. So they were not needing to go find new suppliers in order to do this and they were all.

Notably didn't need to incur any cost increases or price increase to the customer to offer this sustainable lines. So we're really excited about what they're doing in that space Princess Polly's really a leader inside our group of brands on sustainability and we're gonna learn a lot from from their expansion plans.

There and apply that to the rest. They are also as noted introducing an extended sizing line with their curve collection this quarter and a two four that'll come out we're really excited to learn from that and also similarly be able to apply that across the group of brands.

Jill Ramsey: We're really excited to learn from that, and also similarly be able to apply that across the group of brands.

Operator: Okay. We have a follow-up question from Oliver Chen.

Okay, and we have a follow up question from olive or 10.

Oliver Chen: Hi. Jill, I had a question more broadly about your M&A strategy and M&A platform. As you look to authenticity and also your experience on really pioneering, looking at new social platforms, what are you seeing in the marketplace? What should we know about what might be your key priorities and how, you know, will you more broadly approach value creation within the platform? Thank you.

I July heavy question more broadly about your him a nice strategy in them and a platform and as you look for authenticity and also your experience on a really pioneering looking at a new social platforms. What are you seeing in the marketplace. What should we know about uhm what might be your key priorities and.

Oh, well, you're more broadly approach value creation.

With them the platform. Thank you.

Jill Ramsey: Thanks. Thanks, Oliver. So on M&A, well, first, I think it's important to note that, you know, our biggest priority focus on, you know, growing a.k.a. is focused on organic. We are really committed to scaling the group of brands that we have and in particular, really scaling them in the US. But we are, of course, acquisitive and looking to M&A to make future bets. Our strategy is to really enhance our portfolio and continue to diversify our audiences, our fashion style aesthetics, our gender mix, our geographic mix. You know, ultimately, we're looking for just all-star brands, the best of the best, digital, direct-to-consumer, high-growth, profitable brands with great teams. We do look for brands that can really complement our portfolio and are not necessarily competitive.

Thanks, Thanks Oliver.

So on M&A, well first I think it's important to note that you know our biggest priority focus on on you know growing growing a K a is focused on organic we are really committed scaling the group of brands that we have in in particular really scaling them in the U S. But we are of course inquisitive and.

I'm looking to emanate to make future Beth Ah and our strategy is to really enhance our portfolio and continue to diversify our audiences are are fashion style aesthetics or gender mix, our geographic mixed and you know ultimately we're looking.

For just all Star Grant the back to the Bath digital direct to consumer high growth profitable brands with great teams and we do look for for brands that can really complement our portfolio and are not necessarily competitive and we thank the five we've we've assembled so far just a really great group.

Jill Ramsey: We think the five we've assembled so far are just a really great group of diversified, balanced brands. You know, we have a very disciplined approach to our M&A and, you know, a strong pipeline in the mix right now. The IPO has really upped our visibility, which we're excited about. We have an opportunity to really be selective as we go. We're also a bit of an acquirer of choice in that we have real e-commerce expertise and a real value add proposition for the brands that they really resonates with the brands when we talk to them. Really excited about the potential and what we're seeing out there. You know, we're maintaining a strong pipeline of great brands that we're talking to.

<unk> of diversified balanced France.

You know we have a very disciplined approach to our M&A and you know a strong pipeline and the next right now and the I P. O is really upped our visibility.

Which were excited about and so we have an opportunity to to really be selective as we go and we're also a bit of an acquire a choice in that.

We have real ecommerce expertise and a real value add proposition for the brands that they really resonates with the brands when we talk to them. So I'm really excited about the potential and what we're seeing out there and you know we're maintaining a strong pipeline of of great brands that we're talking to and we're looking at.

Jill Ramsey: We're looking, again, just as a reminder, probably 1 to 2 acquisitions a year.

Yeah, and just as a reminder, probably one to two acquisitions a year.

Operator: Okay. I'm not showing any questions at this time. If anyone does have one, another question, please press star one. There are no further questions.

Okay, I'm not showing any questions at this time and if anyone does have one another question. Please press star one.

There are no further questions.

Jill Ramsey: Thanks, everyone. Really appreciate you joining. Thank you.

Thanks, everyone really appreciate your joining thank you.

Operator: Ladies and gentlemen, thank you for joining. You may now disconnect.

Alright, gentlemen, thank you for joining you may now disconnect.

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