Q4 2023 PLBY Group Inc Earnings Call
Ernest Coffey: Good afternoon, everyone, and welcome to Plby Group's full year and fourth quarter of 2023. Ernest Coffey.
Good afternoon, everyone and welcome to P. L. B Y groups for full year and fourth quarter of 2023 earnings conference call hosting todays call are Ben Cohen, Chief Executive Officer, and Marc Hoffman, Chief Financial Officer, and Chief Operating Officer. The company will be hosting a question and answer session today to join the queue to ask a question. Please.
Operator: Hosting today's call are Ben Kohn, Chief Executive Officer, and Marc Crossman, Chief Financial Officer. The company will be hosting a question and answer session. To join the queue to ask a question, please press star 1 on your telephone.
Press Star one on your telephone keypad.
Ashley DeSimone: A confirmation tone will indicate your line is in. While we wait for the queue to fill, I'd like to hand the call over to Ashley DeSimone, of Ice. Thank you, Operator. Good afternoon, everyone.
A confirmation tone will indicate your line is in the question queue.
Speaker Change: While we wait for the queue to Phil I'd like to hand, the call over to Ashley D. Simone of ICR.
Speaker Change: Thank you operator, good afternoon, everyone I'd like to remind everyone that the information discussed today is qualified in its entirety by the form 8-K filed today by PD L. P. L. B Y group, which may be accessed on the Sec's website M. P. L. B Y group's website. Today's call is also being webcast and a replay will be posted.
Ashley DeSimone: I'd like to remind everyone that the information discussed today is qualified in its entirety by the Form 8K filed today by PLBY Group, which may be accessed on the SEC's website and PLBY Group's website. Today's call is also being webcast, and a replay will be posted to the company's Investor Relations website. Please note that statements made during this call, including financial productions or other statements that are not historical in nature, may constitute forward-looking statements. Such statements are made on the basis of Plby Group's views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks that could cause the company's actual results to differ from its historical results and forecasts, including those risks set forth in the company's filings with the SEC, and you should refer to and carefully consider those filings for more information.
Speaker Change: To the company's Investor Relations website.
Speaker Change: Please note that statements made during this call, including financial productions or other statements that are not historical in nature may constitute forward looking statements such statements are made on the basis of PLT Y groups views and assumptions regarding future events and business performance at the time, they're made and we do not undertake any obligation to update these statements.
Speaker Change: Forward looking statements are subject to risks, which could cause the company's actual results to differ from its historical results and forecast, including those risks set forth in the Companys filings with the SEC and you should refer to and carefully consider those for more information. This cautionary statement applies to all forward looking statements made during this call do not place.
Ashley DeSimone: This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statement. During this call, the company may refer to non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.
Speaker Change: Undue reliance on any forward looking statements.
Speaker Change: During this call the company may refer to non-GAAP financial measures such non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings release P. L. B Y group filed with its form 8-K today with.
Operator: A Reconciliation of Non-Gap Financial Measures to the Most Directly Comparable Gap Measures is available in the earnings release Plby Group filed with its Form 8K. With that, I will hand the call back over to the operator to begin the Q&A session. Operator?
Speaker Change: With that I will hand, the call back over to the operator to begin the Q&A session operator.
Operator: Thank you. Again, at this time, we will be conducting a question and answer session, and again, if you'd like to ask a question... Press Star. The confirmation tone will indicate your line is in the... You may also press Star 2 if you would like. For participants using any speaker equipment, it may be necessary to pick up your hand.
Speaker Change: Thank you again at this time, we will be conducting a question and answer session and again, if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May also press star two if you would like to remove your question from the queue for participants using any speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Jason Ross Tilchen: Our first question comes from the line of Jason Tilchen with Canaccord. Good afternoon. Thanks for taking the question and thanks for all the helpful color in the press release. A few questions, maybe one to start off. Licensing revenue came in pretty well ahead of our expectations. I'm just curious how much of this was driven by sort of recurring revenue, recovering more of the minimum guarantees that you have in place already versus contributions from some of the newer partners that you've been adding over the recent months. Thanks, Jason. Good afternoon, Stan.
Jason Ross Tilchen: Our first question comes from the line of Jason tuition with Canaccord Genuity. Please proceed with your question.
Good afternoon, Thanks for taking the question and thanks for all the helpful color in the press release, a few questions maybe wanted to start off with licensing revenue came in pretty well ahead of our expectations I'm. Just curious how much of this was driven by sort of recurring recovering more of the minimum guarantees that you have in place already.
Jason Ross Tilchen: Contributions from some of the newer partners that you've been adding.
Over recent months.
Jason Ross Tilchen: Thanks, Jason Good afternoon its Dan.
Ben Kohn: You know, we're happy with where we are in the licensing business and the strategic changes we've made, especially as we build our China business. You know, we are in active negotiations to replace the terminated licensees, as well as going after one of our former licensees on a legal basis over there. So, you know, we're starting to see traction, and we're starting to see, you know, what I would say is, you know, stability, especially from a macro perspective in that business. Great, that's helpful.
Dan: Well, we're happy with where we are on on the licensing business and the strategic changes we've made to.
Dan: Especially we build our China business.
Dan: We are in active negotiation to replace the terminated our licensees.
Dan: As well as going after our one of our former licensees on a legal basis over there so yeah.
Dan: We're starting to see traction and we're starting to see that.
Dan: Stability.
Dan: Stability.
Dan: Especially from a macro perspective in that business.
Speaker Change: Great. That's helpful and then when I have a hunting for that last quarter, you talked about how right now maybe with the market backdrop. It wasn't the right time to sort of look at it I gave us that but longer term you didn't see that as part of your core strategy I'm wondering given the momentum that business had in Q4. Some of the things you laid out in terms of your goals for this year if that view is chain.
Ben Kohn: And then one I have on Honeybird Debt, last quarter, you talked about how, you know, right now, maybe with a market backdrop, it wasn't the right time to sort of look to the idea of a set, but longer term, you didn't see it as part of your core strategy. I'm wondering, given the momentum that business had in Q4, some of the things you laid out in terms of your goals for this year, if that view has changed at all, and sort of a follow up to that would be, do you see an opportunity to leverage Playboy Club creators to drive some of the organic advertising and marketing that you talked about within your goals for that business this, Sure, so I'll reiterate, you know, what I've said historically, and it's our goal is to move to an asset-light model.
Speaker Change: At all and sort of a follow up to that would be do you see an opportunity to leverage play by cup creators to drive some of the organic advertising and marketing that you talked about within your goals for that business. This year.
Speaker Change: Sure. So I'll reiterate what I've said historically and it is our goal is to move to an asset light model, but we believe hummingbird is a very valuable brand.
Ben Kohn: But we believe Honeybird is a very valuable brand, and we were going to make the operational changes in the interim, and we've made those, and we're starting to see the performance through those changes, both on the top line and the bottom line. You know, we are in the process of phasing in a 10% price increase this year on the products. We had not really done that, given the mass inflation we've all seen as consumers over the past few years.
Speaker Change: And we will make the operational changes.
Speaker Change: In term and we've made those that were starting to see the performance through that both on the topline and bottom line.
Speaker Change: We're in the process of phasing into 10% price increase this year to the products, we have not really done that.
Given the massive inflation, we've all seen is consumers over the past few years.
Ben Kohn: And we haven't seen any resistance to that from the consumers so far. And so our goal long-term is still to find the right owner for that. But in the interim, you know, we are not going to just give away that asset at the wrong valuation for our shareholders and the fiduciary.
Speaker Change: We haven't seen any.
Any resistance to that from the consumer so far.
Speaker Change: And so our goal long term is still to find the right owner for that but in the interim.
Speaker Change: We are not going to just give away that asset.
Speaker Change: Wrong valuation.
Speaker Change: All of our shareholders as a fiduciary and so as market conditions improve and the business continues to improve.
Ben Kohn: And so, as market conditions improve and the business continues to improve, you know, we're always open to being opportunistic, especially given our debt; our goal is to de-lever the company. As far as integration goes, yes, I can tell you we have creators that come into the office every day wanting Honeybirdette. And I think there are a lot of things that we can do moving forward to better integrate our creators into working with and promoting Honeybirdette. We're working on something right now for a Formula One event we'll be having in Miami with that.
Speaker Change: We're always open to being opportunistic, especially given our debt our goal is to Delever the company.
Speaker Change: Far as integration, yes, I can tell you we have creators to come into the office every day.
Speaker Change: Hunter you forgot and I think there are a lot of the things that we can do moving forward to better integrate our creators.
Speaker Change: Into working with them promoting 100 that we're working on something right now for.
Speaker Change: Formula one is that we'll be having in Miami with that.
Ben Kohn: You know, no promises, but I think there's other rewards now that we've introduced our cure and point system within the Playboy Club app to reward creators down the road with merchandise as well. That's really helpful. And just at a higher level, following up on that, in terms of you talking about how, because of the licensing challenges and headwinds last year, you didn't really invest as much in promoting and marketing the creator platform. I'm curious if you could maybe dive into some of the strategies you plan to deploy this year. You talked a little bit at the end of the press release about how you're going to focus on growing and marketing that digital business. I'm wondering if there's anything else you can share about that plan.
Speaker Change: No promises, but I think there's other there's other rewards now that we've introduced are Kia and point system within the Playboy Club App.
Speaker Change: To reward creators down the road with merchandise as well.
Speaker Change: Okay, Great. That's really helpful and just a higher level following up on that in terms of you talked about how because of the licensing challenges and headwinds last year that didn't really invest as much.
Speaker Change: And to promoting and marketing the creator platform I'm curious.
Speaker Change: If you could maybe dive into some of the strategies you plan to deploy this here you talked a little bit at the end.
Speaker Change: The press release.
Speaker Change: About how you are youre going to focus on growing and market and additional business I'm wondering if there's anything else you can share on that.
Ben Kohn: Sure, and I think, you know, last year we spent basically nothing on marketing or promoting that, and we still saw phenomenal top-line growth in that business last year. But, you know, I think we have to return the company to what its roots were, and I think we talked about that in the earnings release. I think, you know, the expression a lot of people hear here these days is sort of go wake up and go broke.
Speaker Change: That plan.
Speaker Change: Last year, we spent.
Speaker Change: Nothing on marketing or promoting that and we still saw phenomenal.
Speaker Change: Top line growth in that business last year.
Speaker Change: But I think we have to return the company to what it has roots were and I think we've talked about that in the earnings release, I think especially in a lot of people here you hear these days are sort of go well can go broke I think with.
Ben Kohn: I think, you know, this is a business that has always been about, you know, working with beautiful women, and a lot of the way we expressed that historically was through content, and we plan on getting back into the content game this year. And so that content will come to life in many forms, including, you know, the return of the PlayMate, hopefully bringing back the magazine, but then also producing content that lives on other platforms with the goal of acquiring an audience and acquiring creators. And so we think creators want three things in mind.
This is a business.
Speaker Change: That has always been about.
Speaker Change: Working with working with beautiful women and a lot of the way, we we express that historically was blue content.
Speaker Change: And we plan on getting back into the content game. This year and so that content will come to life in many forms including the return of the play May Oh.
Speaker Change: Hopefully, bringing back the magazine, but then also producing content that lives on the other platforms with the goal of.
Acquiring audience and acquiring creators and so we think creators want three things in our mind, they want to make money make as much money as we possibly can.
Ben Kohn: They want to make money, make as much money as they possibly can. They want to build their brand and their audience, and they care about reputation. And we think, you know, at Playboy, we can fill all three. I think we have also launched membership, and membership is very strategic for us. Not only, you know, does it increase our revenue, but it gives us a product that we can actually spend money on marketing. We have not done that to date.
Wanted to build their brand and their audience.
Speaker Change: And they care about the reputation we think Playboy, we can fill all three.
Speaker Change: Thank you.
Speaker Change: We also launched a membership in the membership is very strategic for us not only.
Speaker Change: Does it increase our revenue, but it gives us a product that we can actually.
Speaker Change: Send money against marketing, we have not done that to date very happy with sort of the organic revenue that we're generating off of membership, but now with the $100 price point, we have money to actually go spend.
Ben Kohn: Very happy with sort of the organic revenue that we are generating off of membership. But now, with a hundred dollar price point, we have money to actually spend to generate new users and creators to the platform through performance marketing. But, you know, the majority of our spend moving forward will all be through content.
Speaker Change: To generate new users and krieger's to the platform through performance marketing, but the majority of our spend moving forward, we'll all be through content. We think that's the most effective way to market and the platform that content featuring our creators.
Operator: We think that's the most effective way to market the platform, that content featuring our creators. And it also helps us from a brand perspective on licensing. Great. Very helpful. Thanks a lot.
Speaker Change: And it also helps us from a brand perspective on the licensing side.
Speaker Change: Great very helpful. Thanks, a lot.
Speaker Change: Thank you. Our next question comes from the line of Greg <unk> with Chardan. Please proceed with your question.
Gregory R. Pendy: Our next question comes from the line of Greg Pendy with Charity. Hey guys, thanks for taking my questions and congrats on the strength of Honey and Burdette, carrying them from 3Q into 4Q. But I just wanted to pick at that a little bit. I was wondering if you could provide any color on the decision to close those stores. Were they in unattractive lease locations? Because I know they're typically in very high-end locations. Or any color on what made those three stores kind of stand out versus the overall strength of the brand? Hey, Greg.
Greg: Hey, guys. Thanks for taking my questions and congrats on the strength of Huntingburg that carry in from <unk> into <unk>, but I just wanted to pick at that a little bit.
Greg: I was wondering if you could provide any color on the decision to close those stores were they an unattractive lease locations because I know they are typically in very high end locations or any color on what made those three stores.
Greg: Stand out versus an overall strengthening the brand.
Speaker Change: Hey, Greg I'll take that it was.
Marc B. Crossman: I'll take that. They're primarily stores in Australia, and a lot of the stores in Australia have been around for quite some time. And so we're looking at end-of-life for these leases versus the amount of CapEx we'd have to put in to refurbish them and also whether or not they're running at a four-wall loss or profitability. And so if we have a lease that has come to life, we would still have to put new CapEx dollars in to refresh it, and it's losing money. That's a story that we have earmarked to close.
They're primarily stores in Australia, and a lot of the stores in Australia have been around for quite some time.
Speaker Change: And so we're looking at end of life for these leases versus the amount of Capex, we would have to put in to refurbish them and also whether or not theyre running at a four wall loss or profitability and so if we have a lease that is come to life. We would still have to put new capex dollars and to refresh it and its losing money that the store that we.
Speaker Change: We are mark to close and so we had said in the release there are probably about four of them.
Marc B. Crossman: And as we said in the release, there are probably about four of them that you'll see us close over the course of the year. Okay, that's helpful. So there's going to be a limited termination fee probably on the lease because they're near the end of life. The ones that are near the end of life, yes, there won't be one, but the ones, there's one that we're looking at which, you know, there would be a small termination fee.
Speaker Change: But youll see us close over the course of the year.
Speaker Change: Okay. That's helpful. So theres going to be a limited termination fee probably on the lease because they are near end of life.
Speaker Change: The ones that are near end of life, yes.
Speaker Change: There won't be one but the ones there there's one that we're looking at which there would be a small termination fee.
Gregory R. Pendy: Okay, that's helpful. And then, just shifting gears, just one on the digital strategy. It just looks like, I want to make sure I understand, you know, how you guys are thinking about it in 2024. I know you've made a lot of changes and improvements to the platform, but it seems like, maybe versus your competitors, your strategy is to really support the creators and hope that it's the creators that will then drive the subscribers. Is that fair to say?
Speaker Change: Okay. That's helpful. And then just shifting gears I'm just one on the digital.
Speaker Change: Strategy. It just looks like a I want to make sure I understand how you guys are thinking about it in 2024, I know you've made a lot of change changes and improvements to the platform, but it seems like the strategy maybe versus your competitors is to really support the creators and hope that it's the creators that will then drive the.
Speaker Change: Scrubbers is that fair to say.
Speaker Change: Thanks, Craig I'll take that so a couple of things obviously, we re branded the platform the Playboy club and I think you're doing some research with consumers what we found was.
Ben Kohn: Thanks, Greg. I'll take that. So a couple of things, you know, obviously, we rebranded the platform, the Playboy Club. And I think, after doing some research with consumers, what we found was that the historical names we used for it didn't really support what the main purpose or the main action people were doing, which was interacting with creators. And so the Playboy Club now, from what we're seeing, and from what we're hearing from users, clearly supports the place to come interact with our creators. From a user funnel perspective, there are a number of things that First, creators bring their own users to the platform, and that's mostly done through their social media platforms, whether that be TikTok or Instagram, where they're putting a link in their bio to their And actually, we recently re-platformed our 70 years of archives, which was a standalone product that historically had been licensed, called iPlayboy, but it was run as a third-party site. And we actually re-platformed that into our current code.
None: The historical means we use for it because it really support what the main the main purpose of the main action people doing which was interacting with graders and so the Playboy club now from what we're seeing and from what we're hearing from users clearly supports the place to interact with our creators.
None: From a tradeoff from a user funnel perspective, there's a number of things that we're doing.
Speaker Change: So first graders, bringing their own users to the platform and that's mostly done through their social media platforms, whether that be tick tock, or Instagram, where they're putting a link of their bio to their Playboy page.
Speaker Change: We also have users it just comes to Playboy because of the strength of the brand and actually we recently re platform to our 70 years of archives, which was a standalone product that historically had been license called I Playboy.
Speaker Change: But it was one is the third party site and we actually re platform that into our current code. It fits as part of membership now, but more importantly, what it does is it allows us to archive to S. E O 70 years of archives.
Speaker Change: So we're seeing things like that start to drive more organic traffic and then the third strategy moving forward. There's obviously as you start to produce content alongside our creators.
Ben Kohn: It sits as part of membership now. But more importantly, what it does is it allows us to index 70 years of archives. And then the third strategy moving forward is obviously to start to produce content alongside our creators, with the goal of that content sitting on third-party platforms, whether that's a podcast on Spotify, video content on YouTube, you know, really highlighting our creators through what we think are, you know, historical franchises like 20 Questions, like The Playmate, etc., with the goal of driving people back to our platform. The other thing is we think we can put advertising revenue, programmatic advertising revenue, against that content, and we'll share in that advertising revenue with our creators. Great. Well, that's very helpful. Congratulations on the quarter and good luck in 2024.
Speaker Change: With the goal of that content sitting on 33rd party platforms, whether that's a podcast and Spotify video content on Youtube.
Speaker Change: Really highlighting or creditors through what we think our historical franchises like 20 questions like the play may et cetera, with the goal of driving people back to our platform. The other thing is we think we can put advertising revenue programmatic advertising revenue against that content and we will share in that advertising revenue with our kreger as well.
None: Great well that's it.
None: Very helpful. Congratulations on the quarter and good luck in 2024.
None: Thanks, Gregg the only other thing I'll mention is the the launch of membership is very strategic and the ability to acquire users moving forward as well.
None: So whats actually interesting is were testing our funnels as we've seen almost 40% of our members today come off of our Playboy plus platform Playboy pluses a platform that we've actually never bought traffic for its just done affiliate deals and so we think theres another opportunity over there to actually start to expand our traffic acquisition.
Ben Kohn: Great. The only other thing I'll mention is that the launch and membership are very strategic in the ability to acquire users moving forward as well. And so what's actually interesting is we're testing our funnels. As we've seen, almost 40% of our members today come from our Playboy Plus platform. Playboy Plus is a platform that we've actually never bought traffic for. It's just done affiliate deals. And so we think there's another opportunity over there to actually start to expand our traffic acquisition strategy there.
None: Travis you there it's a separate subscription product, but then we're seeing that conversion of people that are signing up for Playboy class also signing up for the Playboy club membership.
None: And so things like body money, it would enable us to make that transition and that user flow more seamless.
None: Long term as we said in the press release that we will work to re platform. Both those products Playboy Postern Playboy Dot TV. So that we can have a single sign on user flow.
Ben Kohn: It's a separate subscription product, but we're seeing that conversion of people that are signing up for Playboy Plus also signing up for the Playboy Club membership. And so things like Bunny Money enable us to make that transition and that user flow more seamless. You know, long term, as we said in the press release, we will look to re-platform both those products, Playboy Plus and Playboy.tv, so that we can have a single sign-on user flow. Okay, that's helpful.
None: Okay. That's helpful. And then just so that I understand the membership right now it's 100 and is there is a $25 in the bunch of money right now to help incentivize and moved the membership.
None: So so the membership the $199 right now you've got $25 of putting money.
None: As part of that to spend on your favorite creators. Yeah. We think there's use cases to continue to expand but anybody to 10, Playboy events, Playboy golf tournaments poker tournaments et cetera, right now.
Gregory R. Pendy: And then just so that I understand, the membership right now is $100. And is there $25 in the bunny money right now to help incentivize and move the membership? So the membership is $199 right now; you get $25 of money as part of that to spend on your favorite creators. We think there's use cases to continue to expand Buddy Money to attend Playboy events, Playboy golf tournaments, poker tournaments, etc. Right now, the primary use is to spend on the creators. And then, you know, long-term, you see multiple different tiers of membership, each one being more limited in nature at a higher price point but unlocking more of the Playboy life. Okay, and then one final one on Bonnie Money.
None: The primary uses to spend on the creators.
None: And then long term, we see multiple different tiers of membership each one be more limited in nature at a higher price point, but our market more of the Playboy lifestyle.
None: Okay, and then one final one on the Bonnie money I know, it's bundling the transaction does that only lowered the fee on your end or does it does the user kind of also see the benefit of using a bunch of money.
None: Well theres multiple different type of pets and so we've just started with Bunny money, but yes from our perspective the way our credit card fees work is we pay a per transaction fee.
None: As well as a percentage of that transaction and so if someone is tipping the dollar youre paying a per transaction fee every single time someone types of dollar.
None: So by bundling by bundling transactions in saying that any transaction under $10.
None: Has to be used by a bunch of money, where it's a one time charge of the credit card. The other thing we heard from users actually was there was too many transactions showing up on People's credit cards and was there a way to aggregate all of those transactions.
Ben Kohn: I know it's bundling the transactions, but does that only lower the fee on your end, or does the user kind of also see the benefit of using Bonnie Money? Well, there are multiple different benefits.
None: Putting money allows us to do that long term, we can do a bunch of money very much like draft Kings and other other gaming companies do to incentivize first time spenders to incentivize people to come back to the platform that might have churn and so I think we will continue to you know what the.
Ben Kohn: So we've just started with Bunny Money. But, from our perspective, the way our credit card fees work is we pay a per transaction fee, as well as a percentage of that transaction. And so if someone is tipping a dollar, you're paying a transaction fee every single time someone tips a dollar. And so by bundling transactions and saying that any transaction under $10 has to be used by BunnyMoney, where it's a one-time charge on your credit card. The other thing we heard from users, actually, was that there were too many transactions showing up on people's credit cards, and was there a way to aggregate all those transactions? BunnyMoney allows us to do that. You know, long-term, we can use BunnyMoney very much like DraftKings and other gaming companies do to incentivize first-time spenders to incentivize people to come back to the platform that might have churned. And so, I think we will continue to, you know, let the data speak for itself, but continue to expand the use of BunnyMoney, long-term, on the It's just the economics make sense for us. The economics don't change for the consumer or for the creator, and so it makes sense overall.
None: The data speak for itself, but continuing to expand the use of public money.
None: Long term on the platform.
None: The economics makes sense Ross the economics don't change for.
None: The consumer.
None: The greater and so it makes sense overall.
None: Great. That's very helpful. Thanks, a lot.
None: Thank you.
Speaker Change: Thank you and we have reached the end of the question and answer session. I will now turn the call back over to the CEO of Vanguard for closing remarks.
Speaker Change: I appreciate everyone dialing for Q4 and full year 'twenty three results and look forward to talking to you in a few months on our Q1 results appreciate it everyone.
None: And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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Operator: Great, that's very helpful. Thanks a lot. Thank you. And with that, we have reached the end of the question and answer session. I appreciate everyone dialing in for our Q4 and full year 23 results and look forward to talking to you in a few months about our Q1 results. Appreciate it, everyone, and Kool City. Thanks for watching!
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