Q1 2025 BARK Inc Earnings Call

August 7, 2024

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to BARC's first quarter fiscal 2025 earnings call.

Operator: At this time, I would like to welcome everyone to Bark's first quarter fiscal 2025 earnings call. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. Thank you. At this time, I'd like to turn the conference over to Mike Mougias, Vice President of Investor Relations. You may begin.

Operator: At this time, I would like to welcome everyone to Bark's first quarter fiscal 2025 earnings call. After the speakers are marked, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one.

Operator: This time, I would like to welcome everyone to Bark's first quarter fiscal 2025 earnings call. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. Thank you. At this time, I'd like to turn the conference over to Mike Mougias, Vice President of Investor Relations. You may begin.

Unnamed Analyst: Got it. That's, that's very helpful.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you.

Michael Mougias: At this time, I'd like to turn the conference over to Mike Mougias, Vice President of a Mentor Investor Relations. You may begin.

Unnamed Analyst: And Matt, you sort of touched on my second question, but can you maybe talk about some of the key drivers behind continued strength in new customer acquisition this quarter? And what are some of the, maybe different techniques that you are deploying that are driving this? And I guess, how sustainable is it going forward?

At this time, I'd like to turn the conference over to Mike Mougias, Vice President of Investor Relations. You may begin.

Matt Maker: Good afternoon, everyone, and welcome to Bark's first quarter fiscal year 2025 earnings call.

Mike Mougias: Good afternoon, everyone, and welcome to BARC's first quarter fiscal year 2025 earnings call. Joining me today are Matt Meeker, co-founder and chief executive officer, and Zahir Ibrahim, chief financial officer.

Matt Maker: Joining me today are Matt Maker, co-founder and Chief Executive Officer, and Zahir Ibrahim, Chief Financial Officer. Today's conference call is being webcast in its entirety on our website, and a replay of the webcast will be made available shortly after the call. Additionally, a press release covering the company's financial results was issued this afternoon and can be found on our Investor Relations website.

Mike Mougias: Today's conference call is being webcast in its entirety on our website, and a replay of the webcast will be made available shortly after the call. Additionally, a press release covering the company's financial results was issued this afternoon and can be found on our investor relations website. Before I pass it over to Matt, I want to remind you of the following information regarding forward-looking statements. The statements made on today's call are based on management's current expectations and are subject to risks and uncertainties that could cause actual future results and outcomes to differ.

Mike Mougias: Today's conference call is being webcast in its entirety on our website and a replay of the webcast will be made available shortly after the call.

Mike Mougias: Additionally, a press release covering the company's financial results was issued this afternoon and can be found on our Investor Relations website.

Matt Maker: Before I pass it over to Matt, I want to remind you of the following information regarding forward-looking statements. The statements made on today's call are based on management's current expectations and are subject to risks and uncertainties that could cause actual future results now comes to differ. Please refer to our SEC filings for information on some of the factors that could affect our future results and outcomes.

Speaker Change: Before I pass it over to Matt, I want to remind you of the following information regarding forward-looking statements.

Matt Meeker: The statements made on today's call are based on management's current expectations and are subject to risks and uncertainties that could cause actual future results and outcomes to differ.

Mike Mougias: Please refer to our SEC filings for information on some of the factors that could affect our future results and outcomes. We will also discuss certain non-GAAP financial measures on today's call. Reconciliation of our non-GAAP financial measures is contained in this afternoon's press release. And with that, I now pass it over to Matt.

Matt Meeker: Please refer to our SEC filings for information on some of the factors that could affect our future results and outcomes We will also discuss certain non-GAAP financial measures on today's call Reconciliation of our non-GAAP financial measures is contained in this afternoon's press release and with that let me now pass it over to Matt

Matt Maker: We will also discuss certain non-GAAP financial measures on today's call. Reconciliation of our non-GAAP financial measures is contained in this afternoon's press release.

Matt Maker: And with that, let me now pass it over to Matt. Thanks, Mike, and good afternoon everyone. This year, 2025 is off to a strong start, building on the momentum we established last year. Our first quarter results are a testament to this momentum and progress, and we remain confident on our ability to accelerate our top line and deliver our first full-year positive adjusted EBITDA and free cash flow. Last quarter, we delivered $116.2 million of revenue, surpassing the high end of our guidance range. This was powered by a quick win from two of the strong leaders we hired earlier this year.

Mike Mougias: Thanks, Mike, and good afternoon, everyone. Fiscal year 2025 is off to a strong start, building on the momentum we established last year. 250 basis point improvement compared to Q1 last year. This is our seventh consecutive quarter of year-over-year gross margin improvement, and I'm so proud of the team for executing this well. Overall, this is a great start to the year. Bark's talent is strong and provides the foundation for the top line growth we expect to begin in the current quarter.

Matt Meeker: and picking up steam.

Matt Meeker: Thanks, Mike, and good afternoon, everyone. Fiscal year 2025 is off to a strong start, building on the momentum we established last year. Our first quarter results are a testament to this momentum and progress, and we remain confident in our ability to accelerate our top line and deliver our first full year of positive adjusted EBITDA and free cash. Last quarter, we delivered $116.2 million of revenue, surpassing the high end of our guidance range.

Matt Meeker: Thanks, Mike, and good afternoon, everyone.

Operator: Your next question comes from the line of Ryan Meyers with Lake Street. Your line is open.

Matt Meeker: Fiscal year 2025 is off to a strong start, building on the momentum we established last year.

Matt Meeker: Our first quarter results are a testament to this momentum and progress, and we remain confident in our ability to accelerate our top line and deliver our first full year of positive adjusted EBITDA and free cash flow.

Matt Meeker: Last quarter, we delivered $116.2 million of revenue, surpassing the high end of our guidance range.

Matt Meeker: This was powered by a quick win from two of the strong leaders we hired earlier this year. Specifically, on the marketing side, we saw year-over-year growth in new BarkBox subscribers for the third consecutive quarter. Furthermore, we saw over 5% year-over-year growth in our commerce business with strong contributions from marketplaces like Amazon. We're confident this is just the beginning for both BarkBox and Amazon.

Matt Meeker: This was powered by a quick win from two of the strong leaders we hired earlier this year.

Matt Maker: Specifically on the marketing side, we saw a year-over-year growth in new BarkBox subscribers for the third consecutive quarter. Furthermore, we saw over 5% year-over-year growth in our commerce business, with strong contributions from marketplaces like Amazon. We're confident this is just the beginning for both Bark Box and Amazon. The strong revenue performance was more impressive given we delivered a record high consolidated gross margin of 63%. A 250 basis point improvement compared to Q1 last year. This is our seventh consecutive quarter of year-over-year gross margin improvement, and I'm so proud of the team for executing this well.

Matt Meeker: Box. Specifically on the marketing side, we saw year-over-year growth in new Bark Box subscribers for the third consecutive quarter.

Matt Meeker: Furthermore, we saw over 5% year-over-year growth in our commerce business with strong contributions from marketplaces like Amazon.

Matt Meeker: Box. We're confident this is just the beginning for both BarkBox and Amazon.

Matt Meeker: The strong revenue performance was more impressive given we delivered a record high consolidated gross margin of 63%, a 250 basis point improvement compared to Q1 last year. This is our seventh consecutive quarter of year over year gross margin improvement, and I'm so proud of the team for executing this well.

Matt Meeker: The strong revenue performance was more impressive given we delivered a record high consolidated gross margin of 63%.

Matt Meeker: A 250 basis point improvement compared to Q1 last year.

Matt Meeker: This is our seventh consecutive quarter of year-over-year gross margin improvement and I'm so proud of the team for executing this well.

Matt Maker: Finally, supported by further GNA and shipping and fulfillment improvements, adjusted EBITDA was negative $1.8 million for the quarter, ahead of the top end of our guidance range and $5.6 million, or 76%, year-over-year improvement.

Matt Meeker: Finally, supported by further GNA and shipping and fulfillment improvements, adjusted EBITDA was negative $1.8 million for the quarter, ahead of the top end of our guidance range and $5.6 million, or 76% year-over-year improvement. Overall, this is a great start to the year. Bark's talent is strong and provides the foundation for the top line growth we expect to begin in the current quarter. This progress, coupled with our strong balance sheet, enabled us to buy back roughly 3 million shares at a price of $1.43 per share last quarter.

Matt Meeker: Finally, supported by further GNA and shipping and fulfillment improvements, adjusted EBITDA was negative 1.8 million dollars for the quarter ahead of the top end of our guidance range and 5.6 million dollars or 76% year-over-year improvement.

Matt Maker: Overall, this is a great start to the year. Barks talent is strong and provides the foundation for the top line growth we expect to begin in the current quarter. This progress, coupled with our strong balance sheet, enabled us to buy back roughly 3 million shares at a price of $1.43 per share last quarter. We plan to continue to seek opportunities to buy back our stock, given our belief that the market has yet to reflect the value of the company. Last quarter, I discussed the strong leadership team we assembled to accelerate growth. Just one quarter later, we're more enthusiastic about this team than ever, and they started delivering right away.

Matt Meeker: Overall, this is a great start to the year.

Matt Meeker: Bark's talent is strong and provides the foundation for the top-line growth we expect to begin in the current quarter.

Matt Meeker: This progress, coupled with our strong balance sheet, enabled us to buy back roughly 3 million shares at a price of $1.43 per share last quarter.

Matt Meeker: We plan to continue to seek opportunities to buy back our stock, given our belief that the market has yet to reflect the value of the company. Last quarter, I discussed the strong leadership team we assembled to accelerate growth. Just one quarter later, we're more enthusiastic about this team than ever, and they started delivering right away. As I said, we achieved year-over-year growth and new customer acquisition for the third consecutive quarter, but there's so much more potential.

Matt Meeker: We plan to continue to seek opportunities to buy back our stock given our belief that the market has yet to reflect the value of the company.

Matt Meeker: Last quarter, I discussed the strong leadership team we assembled to accelerate growth.

Matt Meeker: Just one quarter later, we're more enthusiastic about this team than ever, and they started delivering right away.

Matt Maker: As I said, we achieved year-over-year growth in new customer acquisition for the third consecutive quarter, but there's so much more potential. Our new CMO, Michael Pernasse, is already evolving our approach to customer acquisition and brand awareness, shifting marketing dollars from bottom of the funnel, heavily promotional ads to a more sophisticated, full-funnel approach. Simply put, that means we'll spend less time talking about our promotions and more time talking about our overall brand proposition, including fantastic products. It's already working, and Michael and his team are just getting started. On the commerce side of the business, our new CRO, Michael Black, has also hit the ground running.

Speaker Change: As I said, we achieved year-over-year growth and new customer acquisition for the third consecutive quarter, but there's so much more potential.

Matt Meeker: Our new CMO, Michael Parnas, is already evolving our approach to customer acquisition and brand awareness, shifting marketing dollars from bottom of the funnel, heavily promotional ads to a more sophisticated full funnel approach. Simply put, that means we'll spend less time talking about our promotions and more time talking about our overall brand proposition, including fantastic products. It's already working, and Michael and his team are just getting started.

Matt Meeker: Our new CMO, Michael Parnes, is already evolving our approach to customer acquisition and brand awareness, shifting marketing dollars from bottom-of-the-funnel, heavily promotional ads, to a more sophisticated full-funnel approach.

Matt Meeker: Simply put, that means we'll spend less time talking about our promotions and more time talking about our overall brand proposition, including fantastic products.

Matt Meeker: It's already working, and Michael and his team are just getting started.

Matt Meeker: On the commerce side of the business, our new CRO, Michael Black, has also hit the ground running. I mentioned some near-term acceleration marketplaces like Amazon that contributed to our strong quarter; look for that to continue under his leadership. To that end, I'm excited to share that we have recently launched a selection of our best-selling toys at Chewy. The initial customer feedback exceeded expectations, and we're excited to expand our offerings to Chewy customers to include many more Bark products, from toys to consumables, in the coming month. Overall, the new leadership team is off to a strong start. We're excited to see what they and their teams do the rest of the year.

Matt Meeker: On the commerce side of the business, our new CRO, Michael Black, has also hit the ground running.

Matt Maker: I mentioned some near-term acceleration marketplaces like Amazon that contributed to our strong quarter. Look for that to continue under his leadership. To that end, I'm excited to share that we have recently launched a selection of our best-selling toys at Chewy. The initial customer feedback exceeded expectations, and we're excited to expand our offerings to Chewy customers to include many more bark products from toys to consumables in the coming months. Overall, the new leadership team is off to a strong start.

Mike Mougias: I mentioned some near-term acceleration marketplaces like Amazon that contributed to our strong quarter. We're excited to see what they and their teams do the rest of the year. One other growth lever that took off this quarter literally is Bark Air. Bark Air is the epitome of how we sell emotional experiences with your dog, and customers love it. The consumer response following our launch was incredible. We've also delivered eight consecutive quarters of year over year adjusted EBITDA improvements, and we're on track for our first positive adjusted EBITDA and cash flow year in our history.

Matt Meeker: I mentioned some near-term acceleration in marketplaces like Amazon that contributed to our strong quarter.

Matt Meeker: Look for that to continue under his leadership.

Matt Meeker: To that end, I'm excited to share that we have recently launched a selection of our best-selling toys at Chewy.

Matt Meeker: The initial customer feedback exceeded expectations and we're excited to expand our offerings to Chewy customers to include many more bark products from toys to consumables in the coming months.

Speaker Change: Overall, the new leadership team is off to a strong start. We're excited to see what they and their teams do the rest of the year.

Matt Maker: We're excited to see what they and their teams do the rest of the year.

Matt Maker: One other growth lever that took off this quarter, quite literally, is Bark Air. Bark Air is the epitome of how we sell emotional experiences with your dog, and customers love it. The consumer response following our launch was incredible. We're less than four months in, and demand for the service continues to grow. To date, we have flown 24 flights between New York, Los Angeles, and London, and booked over $2.5 million in ticket sales. Bark air is exciting for a variety of reasons. First, it is driven incredible awareness for bark. Millions of people worldwide have learned of the company, our products, and our underlying mission to make all dogs happy.

Matt Meeker: One other growth lever that took off this quarter literally is Bark Air. Bark Air is the epitome of how we sell emotional experiences with your dog, and customers love it. The consumer response following our launch was incredible. We're less than four months in, and demand for the service continues to grow. To date, we have flown 24 flights between New York, Los Angeles, and London and booked over $2.5 million in ticket sales. Bark air is exciting for a variety of reasons.

Speaker Change: One other growth lever that took off this quarter, quite literally, is Bark Air. Bark Air is the epitome of how we sell emotional experiences with your dog and customers love it. The consumer response following our launch was incredible.

Speaker Change: We're less than four months in and demand for the service continues to grow.

Speaker Change: To date, we have flown 24 flights between New York, Los Angeles, and London and booked over $2.5 million in ticket sales.

Speaker Change: Air is exciting for a variety of reasons.

Matt Meeker: First, it has driven incredible awareness for Bark. Millions of people worldwide have learned of the company, our products, and our underlying mission to make all dogs happy. Second, we are solving a real pain point for dog parents who, before Bark Air, had limited options for traveling long distances with their dogs. We recognize the price point is not accessible to many today.

Speaker Change: First, it has driven incredible awareness for bark.

Speaker Change: Millions of people worldwide have learned of the company, our products, and our underlying mission to make all dogs happy.

Matt Maker: Second, we're solving a real pain point for dog parents who, before Bark Air, had limited options for traveling long distances with their dogs. We recognize the price point is not accessible to many today. However, with sustained demand, we can lower costs and make the service more accessible to more dog parents. And third, we quickly realize that the service can become a real business. Most of our flights are sold out, and we've received tens of thousands of requests for new flights and destinations.

Matt Meeker: However, with sustained demand, we can lower costs and make the service more accessible to more dog parents. And third, we've quickly realized that this service can become a real business. Most of our flights are sold out, and we've received tens of thousands of requests for new flights and destinations. This is the best start we could have hoped for, and there are more opportunities ahead. Overall, I'm thrilled with how far Bark has come in the past two and a half years.

Speaker Change: Second, we are solving a real pain point for dog parents who, before BarkAir, had limited options for traveling long distances with their dogs.

Speaker Change: We recognize the price point is not accessible to many today. However, with sustained demand, we can lower costs and make the service more accessible to more dog parents.

Speaker Change: And third, we've quickly realized that this service can become a real business.

Speaker Change: Most of our flights are sold out, and we've received tens of thousands of requests for new flights and destinations.

Matt Maker: This is the best start we could have hoped for, and there are more opportunities ahead.

Speaker Change: This is the best start we could have hoped for, and there are more opportunities ahead.

Matt Maker: Overall, I'm thrilled with how far Bark has come in the past two and a half years. In that time, we've delivered seven consecutive quarters of year-over-year gross margin improvement. We've built a strong balance sheet with $118 million of cash and has, after buying back over $7 million shares to date, and $45 million of our outstanding convertible note. Our inventory balance of $80 million is also have from its peak, freeing up working capital and allowing us to be more nimble. We've also delivered eight consecutive quarters of year-over-year adjusted EBITDA improvements, and we're on track for our first positive adjusted EBITDA and cash flow year in our history.

Speaker Change: Overall, I'm thrilled with how far BARC has come in the past two and a half years. In that time, we've delivered seven consecutive quarters of year-over-year gross margin improvements.

Matt Meeker: In that time, we've delivered seven consecutive quarters of year-over-year gross margin improvement. We've built a strong balance sheet with $118 million of cash and have after buying back over 7 million shares to date and $45 million of our outstanding convertible amount. Our inventory balance of $80 million is also halved from its peak, freeing up working capital and allowing us to be more nimble.

Speaker Change: We've built a strong balance sheet with 118 million dollars of cash and has after buying back over 7 million shares to date and 45 million dollars of our outstanding convertible amount. Our inventory balance of 80 million dollars is also halved from its peak, freeing up working capital and allowing us to be more nimble.

Matt Meeker: We've also delivered eight consecutive quarters of year over year adjusted EBITDA improvements, and we're on track for our first positive adjusted EBITDA and cash flow year in our history. This is a considerable feat considering we were burning nearly $200 million of cash.

Speaker Change: We've also delivered eight consecutive quarters of year-over-year adjusted EBITDA improvements, and we're on track for our first positive adjusted EBITDA and cash flow year in our history.

Matt Maker: This is a considerable feat considering we were burning nearly $200 million of cash just two years ago. We're accelerating our growth in all channels and further diversifying our products from consumables to air travel. And as strong as our leadership team is today, it will only grow stronger as they build momentum and familiarity with each other.

Speaker Change: This was a considerable feat considering we were burning nearly $200 million of cash just two years ago.

Matt Meeker: They're meeting again. Yes, this will be the topic of our conversation. We started this conversation arguing from the beginning. They will consider this the root cause of our problem in one or two other ways. We also have debated it, and we will now be talking about what we understand internally and are akin to terms of law functioning in a privacy case. So let's get started. We will begin with Aleksandr Golshach's pendant; her signature on paper has a four-word value to them of 1313 cents.

Matt Meeker: We're accelerating our growth in all channels and further diversifying our products from consumables to air travel. And as strong as our leadership team is today, it will only grow stronger as they build momentum and familiarity with each other. In my view, our business is the strongest it has ever been, and I'm excited for the future. There's so much more to discuss from this quarter, so for that, I will now turn the call over to Zahir.

Speaker Change: we're accelerating our growth in all channels and further diversifying our products from consumables to air travel

Speaker Change: And as strong as our leadership team is today, it will only grow stronger as they build momentum and familiarity with each other.

Matt Meeker: She has 10 years of experience as a victim of that crime. Her most recent information is that, in 1996, for the weapon of war, she mentioned that her marriage was under the order of authorities in New York and that she might invest an eight-year-old girl in employment in therays office of the Sebsys.

Matt Maker: In my view, our business is the strongest it has ever been, and I'm excited for the future.

Speaker Change: In my view, our business is the strongest it has ever been, and I'm excited for the future.

Zahir Ibrahim: There's so much more to discuss from this quarter, so for that, I will now turn the call over to Zahir. Thanks, Matt, and good afternoon, everyone. I will begin by providing an overview of our first quarter results, followed by our outlook for the fish full second quarter and four year 2025. As Matt mentioned, we started the year on a strong note, delivering our third consecutive quarter of new subscriber growth and growing our commerce business by over 5% year over year, fueled by growth in existing and new accounts and our recent consumables expansion into retail. Additionally, we continue to see healthy improvements in growth margin and strong traction on our path to profitability; the lack of being something we expect to continue in the long term.

Speaker Change: There's so much more to discuss from this quarter, so for that, I will now turn the call over to Zahir.

Zahir Ibrahim: Thanks Matt, and good afternoon everyone. I'll begin by providing an overview of our first quarter results, followed by our outlook for the fiscal second quarter and full year 2025. As Matt mentioned, we started the year on a strong note, delivering our third consecutive quarter of new subscriber growth and growing our commerce business by over 5% year over year, fueled by growth in existing and new accounts and our recent consumables expansion into retail.

Zahir Ibrahim: Thanks Matt and good afternoon everyone. I'll begin by providing an overview of our first quarter results followed by our outlook for the Fishville second quarter and full year 2025.

Zahir Ibrahim: As Matt mentioned, we started the year on a strong note, delivering our third consecutive quarter of new subscriber growth and growing our commerce business by over 5% year over year.

Zahir Ibrahim: Fueled by growth in existing and new accounts and our recent consumables expansion into retail

Zahir Ibrahim: Additionally, we continue to see healthy improvements in gross margin and strong traction on our path to profitability, the latter being something we expect to continue in the long term. Overall, we are observing encouraging trends across the business, enabling us to capitalize on the significant opportunity ahead.

Zahir Ibrahim: Overall, we are observing and encouraging trends across the business and enabling us to capitalise on the significant opportunity ahead.

Zahir Ibrahim: On that note, let's look at our first quarter results in more detail. Total revenue was 116.2 million, exceeding the high end of our revenue guidance range for the quarter. From a segment perspective, our D2C business generated 107.1 million in the quarter. As you may recall, we saw headwinds in new subscriber growth in the first half of last year as inflation and rising interest rates pressured discretionary spending. While it's still too soon to declare victory on this front, we have been encouraged by new subscriber growth over the past nine months, and we are continuing to evolve and refine our customer acquisition tactics.

Speaker Change: On that note, let's look at our first quarter results in more detail.

Zahir Ibrahim: Total revenue was $116.2 million, exceeding the high end of our revenue guidance range for the quarter. From a segment perspective, our D2C business generated $107.1 million in the quarter. As you may recall, we saw headwinds in new subscriber growth in the first half of last year as inflation and rising interest rates pressured discretionary spending.

Speaker Change: As you may recall, we saw headwinds in new subscriber growth in the first half of last year as inflation and rising interest rates pressured discretionary spending.

Zahir Ibrahim: While it is still too soon to declare victory on this front, we have been encouraged by new subscriber growth over the past nine months, and we are continuing to evolve and refine our customer acquisition tactics. As a result, we expect our B2C segment to return to growth in the back end of fiscal 2025 and to a greater extent in fiscal 2026. Turning to our commerce segment, we delivered 9.2 million in revenue in the quarter, a 5% increase compared to last year. During the quarter, we introduced our new treat line in 1,000 PetSmart stores, expanded our presence on Amazon, and launched an initial line of our best-selling toys on Shuri.

Speaker Change: While it's still too soon to declare victory on this front, we have been encouraged by new subscriber growth over the past nine months, and we are continuing to evolve and refine our customer acquisition tactics.

Zahir Ibrahim: As a result, we expect our D2C segment to return to growth in the back end of fiscal 2025, and to a greater expense in fiscal 2026. Turning to our commerce segment, we delivered 9.2 million of revenue in the quarter, a 5% increase compared to last year. During the quarter, we introduced our new treat line in 1,000 Pet Smart doors, expanded our presence on Amazon, and launched an initial line of our best selling toys on Shuri. Furthermore, after 12 to 18 months of retail, is carefully managing inventory levels, we're beginning to see order patterns normalized. As we've discussed over the past several quarters, we expect our commerce segment to be a key driver of long-term revenue growth, and we're beginning to see it reflected in the P&L.

Speaker Change: As a result, we expect our B2C segment to return to growth in the back end of fiscal 2025 and to a greater extent in fiscal 2026.

Speaker Change: Turning to our commerce segment, we delivered $9.2 million of revenue in the quarter, a 5% increase compared to last year.

Speaker Change: During the quarter, we introduced our new treat line in 1000 PetSmart Doors, expanded our presence on Amazon, and launched an initial line of our best-selling toys on Shuri.

Zahir Ibrahim: Furthermore, after 12 to 18 months of retailers carefully managing inventory levels, we're beginning to see order patterns normalize. As we've discussed over the past several quarters, we expect our commerce segment to be a key driver of long-term revenue growth, and we're beginning to see it reflected in the P&L. At a minimum, we expect our commerce segment to see high team growth in fiscal 2025 compared to fiscal 2024. In addition to promising top-line trends, we continue to deliver healthy improvements in gross margin.

Speaker Change: Furthermore, after 12 to 18 months of retailers carefully managing inventory levels, we're beginning to see order patterns normalize. As we've discussed over the past several quarters, we expect our commerce segment to be a key driver of long-term revenue growth, and we're beginning to see it reflected in the P&L.

Zahir Ibrahim: At a minimum, we expect our commerce segment to see high-teen growth in fiscal 2025 compared to fiscal 2024. In addition to promising top-line trends, we continue to deliver healthy improvements in gross margin. On a consolidated basis, our gross margin was 63%, reflecting a 250 basis point improvement year over year. On a segment basis, D2C gross margin improved by 230 basis points to 64.5%, while commerce gross margin improved by 680 basis points to 46.5%.

Speaker Change: At a minimum, we expect our commerce segment to see high team growth in FY2025 compared to FY2024.

Speaker Change: In addition to promising top line trends, we continue to deliver healthy improvements in gross margin.

Zahir Ibrahim: On a consolidated basis, our gross margin was 63%, reflecting a 250 basis point improvement year over year. On a segment basis, D2C gross margin improved by 230 basis points to 64.5%, while commerce gross margin improved by 680 basis points to 46.5%. This is fantastic progress in a short amount of time, and we're incredibly proud of the team for their execution on this front.

Speaker Change: On a consolidated basis, our gross margin was 63%, reflecting a 250 basis point improvement year over year.

Speaker Change: On a segment basis, VTC gross margin improved by 230 basis points to 64.5%, while commerce gross margin improved by 680 basis points to 46.5%.

Zahir Ibrahim: This is fantastic progress in a short amount of time, and we're incredibly proud of the team for their execution on this front. Turning to operating expenses, shipping and fulfillment expenses were 34.4 million in the quarter, a 1.8 million improvement compared to last year. Other GNA, which primarily consists of headcounts and overhead costs, was 29 million in the quarter, a 4 million improvement compared to last year. This improvement primarily reflects realising the full year benefit of the two cost reduction initiatives we carried out in calendar 2023. Lastly, total marketing expenses were 20.4 million in the quarter, a 2.8 million increase compared to last year.

Speaker Change: This is fantastic progress in a short amount of time, and we're incredibly proud of the team for their execution on this front.

Zahir Ibrahim: Turning to operating expenses, shipping and fulfillment expenses were $34.4 million in the quarter, a $1.8 million improvement compared to last year. Other G&A, which primarily consists of headcount and overhead costs, was $29 million in the quarter, a $4 million improvement compared to last year. This improvement primarily reflects realizing the full year benefit of the two cost reduction initiatives we carried out in calendar 2023. Lastly, total marketing expenses were $20.4M in the quarter, a $2.8M increase compared to last year.

Speaker Change: Turning to operating expenses, shipping and fulfillment expenses were $34.4 million in the quarter, a $1.8 million improvement compared to last year. Other G&A, which primarily consists of headcount and overhead costs,

Speaker Change: was $29 million in the quarter, a $4 million improvement compared to last year. This improvement primarily reflects realizing the full year benefit of the two cost reduction initiatives we carried out in calendar 2023.

Speaker Change: Lastly, total marketing expenses were $20.4 million in the quarter, a $2.8 million increase compared to last year.

Zahir Ibrahim: As discussed on previous calls, the significant improvements we've made across gross margin and G&A enable us to invest more in marketing, so long as the returns we are seeing justify that incremental investment. Given our recent progress, we intend to continue to invest in this line. Moving on, total adjusted EBITDA for the quarter was a loss of $1.8 million, a $5.6 million improvement year-over-year. Furthermore, free cash flow in the quarter was largely neutral at just $251,000 outflow, a notable improvement compared to Q1 last year, which was minus $13.5 million.

Zahir Ibrahim: As discussed on previous calls, the significant improvements we've made across gross margin and GNA enable us to invest more in marketing, so long as the returns we have seen justify that incremental investment. Given our recent progress, we intend to continue to invest incrementally in this line.

Zahir Ibrahim: Moving on, total adjusted EBITDA for the quarter was a loss of 1.8 million, a 5.6 million improvement year over year. Furthermore, free cash flow in the quarter was largely neutral at just 251,000 outflow, a notable improvement compared to Q1 last year, which was minus 13.5 million. We ended the quarter with total cash of 118 million, which reflects repurchasing 3 million shares in the quarter at an average price of $1.43. Given the business's profitability profile and future cash flow projections, we plan to continue to opportunistically repurchase shares at these levels. Following our Q1 repurchases, we have 12.3 million remaining from our most recent board authorization.

Mike Mougias: Moving on, total adjusted EBITDA for the quarter was a loss of $1.8 million, a $5.6 million improvement year-over-year. Furthermore, free cash flow in the quarter was largely neutral at just $251,000 outflow, a notable improvement compared to Q1 last year, which was minus $13.5 million.

Zahir Ibrahim: We ended the quarter with total cash of $118 million, which reflects repurchasing 3 million shares in the quarter at an average price of $1.43. Given the business's profitability profile and future cash flow projections, we plan to continue to opportunistically repurchase shares at these levels. Following our Q1 repurchases, we have $12.3 million remaining from our most recent board authorization. Additionally, our working capital situation continues to improve. We ended the quarter with an inventory balance of $80 million, a $4 million reduction from the previous quarter.

Zahir Ibrahim: Additionally, our working capital situation continues to improve. We ended the quarter with an inventory balance of $80 million, a $4 million reduction in the quarter. As we prepare for the holiday quarter, we anticipate our inventory to grow sequentially in the second quarter. However, we expect it to continue to downward trend in the second half of fiscal 2025, and we will likely end the year below current levels.

Speaker Change: Additionally, working capital situation continues to improve we ended the quarter with an inventory balance of $80 million, a 4 million reduction in the quarter as we prepare for the holiday quarter, we anticipate our inventory to grow sequentially in the second quarter. However, we expect it to continue its downward trend in the second half of <unk>.

Zahir Ibrahim: As we prepare for the holiday quarter, we anticipate our inventory to grow sequentially in the second quarter. However, we expect it to continue its downward trend in the second half of fiscal 2025, and we will likely end the year below current levels. Overall, we see several exciting developments, from promising top-line opportunities to ongoing margin and pre-cash flow improvements. With that in mind, let's discuss our guidance for the second quarter and full year.

Speaker Change: 2025, and we will likely end the year below current levels.

Zahir Ibrahim: Overall, we see several exciting developments from promising top-line opportunities to ongoing margin and free cash flow improvements.

Speaker Change: Overall, we see several exciting developments from promising top line opportunities to ongoing margin and free cash flow improvements with that in mind, let's discuss our guidance for the second quarter and full year.

Zahir Ibrahim: With that in mind, let's discuss our guidance for the second quarter and four year. Starting with the four year, we are reaffirming the guidance we provided during our Q4 call in June. While there are numerous reasons to be optimistic about the opportunities ahead, we believe it's pragmatic to maintain the current outlook, given we are just one quarter into the fiscal year. Nevertheless, our strong Q1 results give increased confidence in our ability to achieve our targets.

Zahir Ibrahim: Starting with the full year, we are reaffirming the guidance we provided during our Q4 call in June. While there are numerous reasons to be optimistic about the opportunities ahead, we believe it is pragmatic to maintain the current outlook given we are just one quarter into the fiscal year.

Speaker Change: Starting with the full year, we are reaffirming the guidance we provided during our Q4 call in June.

Speaker Change: While there are numerous reasons to be optimistic about the opportunities ahead. We believe it's pragmatic to maintain the current outlook given we had just one quarter into the fiscal year. Nevertheless, our strong Q1 results give increased confidence in our ability to achieve our targets.

Zahir Ibrahim: Nevertheless, our strong Q1 results give increased confidence in our ability to achieve our target. To reiterate, we anticipate total revenue for the year to be between $490 and $500 million, representing year-over-year growth ranging from flat to 2%. For Adjusted EBITDA, we expect a range of $1 million to $5 million, which at the midpoint represents a $13.6 million improvement compared to the previous year. Additionally, we expect to achieve Adjusted EBITDA profitability and free cash flow for the full year of its first-embarked 13-year history.

Zahir Ibrahim: Maria Ripps. To reiterate, we anticipate total revenue for the year to be between 490 and 500 million, representing year-over-year growth ranging from flat to 2%. For adjusted EBITDA, we expect a range of 1 million to 5 million, which at the midpoint represents a 13.6 million improvement compared to the previous year. Additionally, we expect to achieve adjusted EBITDA profitability and free cash flow for the four-year, a first in Bark 13-year history. For the second quarter, we anticipate total revenue between 123 and 126 million. The midpoint of the guidance range represents 1.2% year-over-year growth, marking an important turnaround after eight consecutive quarters of year-over-year revenue declines.

Speaker Change: To reiterate we anticipate total revenue for the year to be between 490 on $500 million representing year over year growth ranging from flat to 2% for adjusted EBITDA, We expect to range of 1 million to $5 million, which at the midpoint represents a $13 6 million improvement.

Speaker Change: Compared to the previous year.

Speaker Change: Additionally, we expect to achieve adjusted EBITDA profitability and free cash flow for the full year.

Speaker Change: First inbox 13 year history.

Zahir Ibrahim: For the second quarter, we anticipate total revenue between $123 million and $126 million. The midpoint of the guidance range represents 1.2% year-over-year growth, marking an important turnaround after eight consecutive quarters of year-over-year revenue declines. We believe we will see further growth as the year progresses, albeit growth on a much more profitable infrastructure. On an adjusted EBITDA basis, we expect a range of $1 million to $3 million in the quarter, compared to a $1 million profit last year.

Speaker Change: For the second quarter, we anticipate total revenue between 123 and $126 million the midpoint of the guidance range represents one 2% year over year growth marking.

Speaker Change: Important turnaround after eight consecutive quarters of year over year revenue declines. We believe we will see further growth of the year progresses.

Zahir Ibrahim: We believe we will see further growth as the year progresses, or the growth on a much more profitable infrastructure. On an adjusted EBITDA basis, we expect a range of 1 million to 3 million in the quarter compared to a 1 million profit last year. The second quarter will index heavier to the Commerce Channel with retailers taking in holiday product and with greater opportunities for secondary placement. This higher commerce mix will impact our growth margin in the quarter, and as a result, we currently expect Q2 consolidated growth margin to be around 60%. However, for the four-year, we continue to expect similar consolidated growth margin to FY24.

Speaker Change: Growth on a much more profitable infrastructure.

Speaker Change: On an adjusted EBITDA basis, we expect a range of 1 million to $3 million in the quarter compared to 1 million profit last year. The second quarter will index heavier to the commerce channel with retail is taking in holiday product and with greater opportunities for secondary replacement.

Zahir Ibrahim: The second quarter will index heavier to the commerce channel, with retailers taking in holiday products and with greater opportunities for secondary placement. This higher commerce mix will impact our gross margin in the quarter, and as a result, we currently expect Q2 consolidated gross margin to be around 60%. However, for the full year, we continue to expect a similar consolidated gross margin to FY24. In conclusion, we're seeing promising trends across the business. We expect to return to revenue growth in the current quarter.

Speaker Change: This higher commerce mix will impact our gross margin in the quarter and as a result, we currently expect Q2 consolidated gross margin to be around 60%. However.

Speaker Change: However for the full year, we continue to expect similar consolidated gross margin to FY 'twenty for <unk>.

Zahir Ibrahim: In conclusion, we are seeing promising trends across the business. We expect to return to revenue growth in the current quarter. Our profitability profile is improving with each passing quarter, and we have approximately 80 million of net cash on the balance sheet. Collectively, this affords us ample opportunity to execute on our growth plans and opportunistically repurchase our shares. We remain committed to driving sustainable, profitable growth and enhancing long-term shareholder value.

Speaker Change: In conclusion, we are seeing promising trends across the business, we expect to return to revenue growth in the current quarter.

Speaker Change: Profitability profile is improving with each passing quarter and we have approximately $80 million of net cash on the balance sheet collectively this affords us ample opportunity to execute on our growth plans and opportunistically repurchase our shares we remain committed to driving sustainable profitable growth and enhancing long term shareholder value.

Zahir Ibrahim: Our profitability profile is improving with each passing quarter, and we have approximately 80 million of net cash on the balance sheet. Collectively, this affords us an ample opportunity to execute on our growth plan and opportunistically repurchase our shares. We remain committed to driving sustainable, profitable growth and enhancing long-term shareholder value. With that, I will turn the call over to the operator for Q&A.

Operator: With that, I will turn the call over to Q & I. Thank you.

Speaker Change: With that I will turn the call over to the operator for Q&A.

Speaker Change: Thank you.

Maria Ripps: Our first question today comes from the line of Maria Rip with Canacard. Your line is open. Great. Good afternoon, and thanks for taking my questions. First, I just wanted to ask you about the broader macro backdrop. It is like your results and outlook are pretty much better than expected, but could you maybe talk about whether you've seen any changes in consumer behavior in Q1, and maybe still find fiscal Q2, given that recessionary concerns have been re-emerging in recent weeks? And maybe how much more pressure do you think category demand could come under if we enter into maybe a prolonged period of softness, given that consumers have already been pulling back on discretionary goods spend for some time?

Operator: Our first question today comes from the line of Maria Ripp with Canaccord. Your line is open.

Speaker Change: First question today comes from the line of Maria <unk> with Canaccord. Your line is open.

Unnamed Analyst: Great, good afternoon, and thanks for taking my questions. First, I just wanted to ask you about the sort of broader macro backdrop. It seems like your results and outlook were pretty much better than expected, but could you maybe talk about whether you've seen any changes in consumer behavior in Q1 and maybe still find fiscal Q2, given that recessionary concerns have been re-emerging in recent weeks? And maybe how much sort of more pressure do you think category demand could come under if we enter into maybe a prolonged period of softness, given that consumers have already been pulling back on discretionary goods spend for some time?

Unnamed Analyst: Got it. That makes sense. And then just thinking about the Chewy launch, obviously, congrats on that. But maybe you could walk us through kind of how that developed. I know you guys have been around for a while, and Chewy obviously has been around for a while, but, you know, I don't believe you were selling products to them previously. So maybe walk us through how that sort of developed and kind of how you expect that business to play out. And then, you know, maybe we could expect to see products expanded outside of just toys there?

Maria Ripps: Great, good afternoon, and thanks for taking my questions. First, I just wanted to ask you about the sort of broader macro backdrop. It seems like your results and outlook were pretty much better than expected, but could you maybe talk about whether you've seen any changes in consumer behavior in Q1 and maybe still find fiscal Q2, given that recessionary concerns have been re-emerging in recent weeks? And maybe how much sort of more pressure do you think category demand could come under if we enter into maybe a prolonged period of softness, given that consumers have already been pulling back on discretionary goods spend for some time?

Maria <unk>: Great. Good afternoon, thanks for taking my questions.

Maria <unk>: Firstly I just wanted to ask you about sort of the broader macro backdrop. It seems like your results and outlook are pretty much better than expected, but could you maybe talk about whether you've seen any changes in consumer behavior in Q1, and maybe still find fiscal Q2, given that recessionary concerns have been reemerging in recent weeks and maybe how much sort of more.

Speaker Change: Pressure do you think category demand could come under if we enter into maybe a prolonged period of softness given that consumers have already been pulling back on discretionary good span for some time.

Matt Maker: Yeah, thanks, Maria. They have been pulling back on the discretionary spend, and as you mentioned, it's been going on for some time, and that continued through Q1 on those discretionary goods. So we obviously keep close tabs on the macro environment and that category in particular, and manage against that, but the counter to that, as I've talked about in the past, is that... that we have a lot of room here to execute better, especially when it comes to the growth and marketing side of the business. And we've been showing steady improvement in that execution over the past few quarters.

Matt Meeker: Yeah, thanks, Maria. And they have been pulling back on discretionary spend. And, as you mentioned, it's been going on for some time. And that continued through Q1 on those discretionary goods. So we obviously keep close tabs on the macro environment and that category in particular.

Speaker Change: Yeah. Thanks Maria.

Speaker Change: And they have been pulling back on the discretionary spend in.

Speaker Change: As you mentioned, it's been going on for some time and that continued through Q1 on those discretionary goods.

Speaker Change: So we obviously keep close tabs on the macro environment in that category in particular.

Speaker Change: And manage against that but.

Matt Meeker: Ab, and manage against that, but the counter to that, as I've talked about in the past, is that we have a lot of room here to execute better, especially when it comes to the growth and marketing side of the business. And we've been showing steady improvement in that execution over the past few quarters. So I think this quarter is another reflection of that. The new subscriber acquisition trend that we saw this quarter, it's our third consecutive quarter of year-over-year growth. It's up in July as well.

Speaker Change: The counter to that as I've talked about in the past is that.

Speaker Change: That we have.

Speaker Change: We have a lot of room here to execute better.

Speaker Change: Especially when it comes to the growth and marketing side of the business and we've been showing steady improvement in that execution over the past few quarters. So I think this quarter is another reflection of that.

Matt Maker: So I think this quarter is another reflection of that. The new subscriber acquisition trend that we saw this quarter, it's our third consecutive quarter of year-over-year growth; it's up in July as well. And if we continue that execution even with that headwind or that pressure that you're talking about, then we expect to see the direct consumer business start to grow in the second half of the year. And we're seeing ourselves outperforming the category in the retail space as well. As I mentioned, we're picking up steam in Amazon. We announced that we're selling with Chewy now, which is just another great venue for our products to be.

Speaker Change: The new the new subscriber acquisition trend that we saw this quarter. It is our third consecutive quarter of year over year growth, it's up in July as well.

Matt Meeker: And if we continue that execution, even with that headwind or that pressure that you're talking about, then we expect to see the direct consumer business start to grow in the second half of the year. And... And we're seeing ourselves outperform the category in the retail space as well. As I mentioned, we're picking up steam on Amazon. We announced that we're selling with Chewy now, which is just another great venue for our products. So there's a lot of positive momentum in there. If the, if or when, I should say when the.

Speaker Change: And if we continue that execution, even with that headwind or that pressure that youre talking about then we expect to see the direct to consumer business start to grow in the second half of the year.

Speaker Change: And we're seeing ourselves outperforming the category in the retail space as well as I mentioned.

Matt Meeker: We're picking up steam on Amazon; we announced that we're selling with Chewy now, which is just another great venue for our products to be. So there's a lot of positive momentum there.

Speaker Change: Where we're picking up steam and Amazon.

Speaker Change: Announced that we're selling with chewy now, which is just another great venue for our products to be so there's a lot of positive momentum in there.

Matt Maker: So there's a lot of positive momentum in there. If the if or when, I should say when the macro environment turns and goes back to the discretionary goods categories growing, then we're going to have wind at our back with much better execution in addition to our strong growth margins, our EBIT. Positive, our cash flow generation, all of that. So we've got we've got those pieces in place that help us ride it out. But really it's on us to execute in the face of those headwinds, as we've been doing for a good stretch of time here, and it's only getting better.

Speaker Change: Sure.

Speaker Change: If or when I should say when they.

Matt Meeker: The macro environment turns and goes back to the discretionary goods categories growing. Then we're going to have the wind at our back with much better execution. In addition to our strong gross margins, our EBITDA positive, our cash flow generation, all of that. So we've got those pieces in place that help us ride it out. But really, it's on us to execute in the face of those headwinds, as we've been doing for a good stretch of time here, and it's only getting better.

Speaker Change: The macro environment turns.

Speaker Change: It goes back to the discretionary goods categories. Growing then we're going to have wind at our back with much better execution.

Speaker Change: In addition to our strong gross margins higher EBITDA positive or cash flow generation all of that so we've got we've got those pieces in place that help us ride it out.

Speaker Change: But really it's on us to execute in the face of those headwinds as we've been doing for a good stretch of time here and it's only getting better.

Maria Ripps: Got it. That's, that's very helpful.

Matt Maker: That's very helpful. And Matt, you sort of dodged on my second question, but can you maybe talk about some of the key drivers behind continued strength in new customer acquisition this quarter? And what are some, what are some of the maybe different techniques that you are deploying that are driving this? And I guess how sustainable is it going forward? Very sustainable because, as I said, well, there are a few things going on in there. On the direct to consumer side, there's the new customer or new subscriber acquisition that's been going well. And picking up steam with a variety of new tactics, some of that on the creative side using artificial intelligence tools to generate more and better creative and do so more more efficiently.

Speaker Change: Got it.

Speaker Change: Very helpful. And then Matt you sort of touched on my second question, but can you maybe talk about some of the key drivers behind continued strength in new customer acquisition this quarter.

Maria Ripps: And Matt, you sort of touched on my second question, but can you maybe talk about some of the key drivers behind continued strength in new customer acquisition this quarter? And what are some of the sort of maybe different techniques that you are deploying that are driving this? And I guess, how sustainable is it going forward?

Speaker Change: What are some what are some of this maybe different techniques that you're deploying.

Speaker Change: Driving this and I guess, how sustainable it is going forward.

Matt Meeker: Very sustainable because.

Matt Meeker: Very sustainable because, as I said, well, there are a few things going on in there. On the direct-to-consumer side, there's the new customer or new subscriber acquisition that's been going well and Picking Up Steam. With a variety of new tactics, some of that on the creative side, using artificial intelligence tools to generate more and better creative and do so more efficiently. Ironically, part of that is getting us to move away from being so promotionally driven.

Matt Meeker: As I said well there are a few things going on in there.

Speaker Change: On the direct to consumer side, there is the new customer or new subscriber acquisition, that's been going well.

Speaker Change: And picking up steam.

Speaker Change: With a variety of new tactics some of that on the creative side using artificial intelligence tools too.

Speaker Change: Generate more and better creative and do so more efficiently.

Speaker Change: Ironically part of that is getting us to move away from being so promotional age ribbon.

Matt Maker: Ironically, part of that is getting us to move away from being so promotionally driven. We've definitely gone way too far to the side of giving customers that the only impression to subscribe is because we're offering some promotion or gift with purchase. And ironically, artificial intelligence would rather tell the great stories that our products have to tell. This is why you should buy it. That's not some sort of incentive. So better creative, more efficient creative, a lot more of it, better conversion by matching that up to the stories that we're telling about the product. and then, as you're starting to balance that, you're telling the story of the product and occasionally giving promotional offers.

Matt Meeker: We've definitely gone way too far to the side of giving customers the only reason to subscribe is because we're offering some promotion or gift with purchase. And ironically, artificial intelligence would rather tell the great stories that our products have to tell. This is why you should buy them. That's not some sort of incentive.

Speaker Change: We have definitely gone way too far to the side of <unk>.

Speaker Change: Giving customers the only impression to subscribe is because we're offering some promotion or gift with purchase.

Speaker Change: And ironically artificial intelligence would rather tell great stories that our products have to tell this is why you should buy it that's not some sort of incentive.

Matt Meeker: So better creative, more efficient creative, a lot more of it, better conversion by matching that up to the stories that we're telling about the products. And then as you're starting to balance that, you're telling the story of the product and occasionally giving promotional offers. Oh, on the commerce side of the business. As you said, I touched on it, but leveraging channels like Amazon and Chewy much more than we have in the past, great leadership from Michael Black and his team on the retail side. So just a lot of good things happening that have been in motion and building. And again, Michael Black and Michael Parnas are four months into the role now, so that momentum should just gather even more.

Speaker Change: So better creative more efficient creative a lot more of it.

Speaker Change: Conversion by matching that up to the stories that were telling about the products.

Speaker Change: And then as Youre starting to balance out your telling the story of the product and occasionally getting promotional offers.

Matt Maker: On the commerce side of the business, as you said, I touched on it, but leveraging channels like Amazon and Chewy much more than we have in the past. Great leadership from Michael Black and his team on the retail side. So just a lot of good things happening that have been in motion and building. And again, Michael Black, Michael Parnass are four months into the role now, so that momentum should just gather some even more.

Speaker Change: On the on the commerce side of the business.

Speaker Change: As he said I touched on it but.

Speaker Change: Leveraging channels like Amazon and chewy much more than we have in the past great leadership from Michael Black and his team on the on the retail side.

Speaker Change: So just a lot of good things happening that had been in motion and building and again, Michael Black Michael Parnassus are four months into the into the role now so that momentum should just gather some even more.

Maria Ripps: God, that's very helpful. Thank you for the call.

Maria Ripps: Got it. That's very helpful. Thank you for the call.

Speaker Change: Got it that's very helpful. Thank you for the color.

Ryan Meyers: Thanks. Your next question comes from the line of Ryan Meyers with Lake Street. Your line is open. Thanks for taking my questions. First one for me is here. Maybe can you just touch on a little bit what you said about the gross margin in Q2. I think you said it was going to be around 60% or so, with the more heavily weighted towards retail. Just kind of walk us through the dynamics of that and remind us kind of why that business shakes out to be a little bit lower margin. Sure. So we're seeing now, you know, seven straight quarters of gross margin growth.

Speaker Change: Thanks.

Operator: Your next question comes from the line of Ryan Meyers with Lake Street. Your line is open.

Speaker Change: Your next question comes from the line of Ryan Meyers with Lake Street. Your line is open.

Ryan Meyers: Hey guys, thanks for taking my questions. First one for me, Zahir, maybe you could just touch on a little bit what you said about the gross margin in Q2. I think you said it was going to be around 60% or so with the retail more heavily weighted. Just kind of walk us through the dynamics of that and remind us kind of why that business shakes out to be a little bit lower margin.

Ryan Meyers: Hey, guys. Thanks for taking my questions first one for me here, maybe can you just touch on a little bit what you said about the gross margin in Q2, I think you said it was going to be around 60% or so with the more heavily weighted towards retail just kind of walk us through the dynamics of that and remind us kind of why that business shakes out to be a little bit lower margin.

Zahir Ibrahim: Sure. So we're seeing now, you know, seven straight quarters of gross margin growth. So that's improvement in both DTC and in the commerce channel over that period of time. It's been driven a lot by improvements in our product costs, both on the toys and consumable side and some, you know, improvement in freight costs as well over that window. We expect all of that to continue during the course of the year.

Speaker Change: Sure.

Speaker Change: So we're seeing now seven straight quarters of gross margin growth.

Zahir Ibrahim: So that's improvement in both D2C and in the commerce channel over that period of time. It's been driven a lot by improvements in our product costs, both on the toys and consumable side, and some improvement in freight costs as well over that window. We expect all of that to continue during the course of the year. The dynamics of Q2, there's a lot of holiday buying. There's a number of opportunities for, as I said on the call, for secondary placement. So off, shut off in line placement. So it could be gone to the end or center floor placement within the store in certain retail customers.

Speaker Change: Improvements in both D C.

Speaker Change: And the commerce channel over that period of time, it's being driven.

Speaker Change: A lot by improvements in our product costs.

Speaker Change: Both on the toys on the consumable side.

Speaker Change: And some improvement in freight costs as well over that window, we expect all of that to continue during the course of the year the dynamics of Q2.

Zahir Ibrahim: The dynamics of Q2, there's a lot of holiday buying. There are a number of opportunities for secondary placement, as I said on the call, for secondary placement, so off-inline placement, so it could be gondola ends or center floor placement within the store in certain retail customers.

Speaker Change: There's a lot of holiday buying.

Speaker Change: There's a number of opportunities for as I said on the call for secondary replacement so off shut offs in line placements or it could be gondola ends all center floor placement within the store and certain.

Speaker Change: Retail customers.

Zahir Ibrahim: And so Q2 is going to be a heavier weighted commerce mix for us than what you'd see on a four-year basis. Our margin on the commerce channel is around the mid 40s. D2C is in the mid 60s. So when you index to a slightly higher mix on commerce, that will impact your gross margin. So that's why we call that gross margin. The important thing to remember, though, is the cost to serve the commerce channel is lower from a shipping and fulfillment and marketing perspective. So, when you look at profitability at the contribution margin level, it's very similar on both channels.

Speaker Change: So Q2 is going to be heavier weighted commerce mix for us than what you'd see on a full year basis.

Zahir Ibrahim: And so Q2 is going to be a heavier weighted commerce mix for us than what you'd see on a full year basis. Our margin on the commerce channel is around the mid-40s, while DTC is in the mid-60s.

Speaker Change: Margin on the Commerce channel is around the mid Forty's D to C is in the mid $60. So when you index to a slightly higher mix on commerce.

Zahir Ibrahim: So when you index to a slightly higher mix on commerce, that'll impact your gross margin. So that's why we call it gross margin. The important thing to remember, though, is the costs of the commerce channel are lower from a shipping and fulfillment and marketing perspective. So when you look at profitability at the contribution margin level, it's very similar on both channels.

Speaker Change: That will impact your gross margin. So that's why we called out gross margin. The important thing to remember, though is the cost serve the ecommerce channel is lower.

Speaker Change: From a shipping and fulfillment and marketing perspective, so when you look at profitability at the contribution margin level its very similar on both channels.

Zahir Ibrahim: God, if that makes sense.

Ryan Meyers: Got it. That makes sense. And then just thinking about the Chewy launch, obviously, congrats on that. But maybe you could walk us through kind of how that developed. I know you guys have been around for a while, and Chewy obviously has been around for a while, but, you know, I don't believe you were selling products to them previously. So maybe walk us through how that sort of developed and kind of how you expect that business to play out. And then, you know, maybe we could expect to see products expanded outside of just toys there?

Speaker Change: Got it that makes sense and then just thinking about the <unk> launch obviously, congrats on that but maybe walk us through kind of how that developed I know you guys have been around for a while and chewy, obviously has been around for a while but I don't believe you guys were selling products to them previously so maybe walk us through how that sort of develop and kind of how you expect that business to play out and then maybe could we expect to see.

Matt Maker: And then just thinking about the truly launch. Obviously, congrats on that. But maybe walk us through kind of how that developed. I know you guys have been around for a while and truly have issues that are around for a while. But you know, I don't believe you guys were selling products to them previously. So maybe walk us through how that sort of developed and kind of how you expect that business to play out to them. You know, maybe we could expect to see products expanded outside of just toys there? Yeah, we've obviously known truly for a very, very long time, going back 12 years or so.

Speaker Change: Products expanded outside of just towards there.

Matt Meeker: Yeah, we've obviously known Chewy for a very, very long time, going back 12 years or so, when we were both very, very young companies, talking about commercial relationships way back then, and more recently about selling our products on their platform over the past couple of years. But it never really clicked into place until earlier this year, and then Michael Black and his team came in.

Speaker Change: Yes.

Speaker Change: We've obviously known chewy for very very long time.

Speaker Change: Going back.

Speaker Change: Yeah.

Speaker Change: 12 years or so.

Matt Maker: So when we were both very, very young companies talking about commercial relationships way back then and more recently about selling our products on their platform over the past couple of years. And it's never really clicked into place until. Earlier this year, and then Michael Black and his team came in. They've got great experience working with Chewy, selling there, so I think they helped us from our side in taking those last steps and getting it over the line and building a really strong relationship there. So we're often running; we're off to a great start. They've been just a fantastic partner so far, and where we're heading is over the course of this year to get our full catalog onto their site and be selling everything, including all the consumables that we can get over there.

Speaker Change: So and we are both very very young companies.

Speaker Change: Talking about commercial relationships way back then and more recently about selling our products on their platform over the past couple of years.

Matt Meeker: And it's never really clicked into place until earlier this year,

Speaker Change: And it's never really clicked into place until.

Speaker Change: Earlier this year.

Michael Black: And then Michael Black and his team came in and they've got great experience working with chewy selling there so.

Matt Meeker: They've got great experience working with Chewy and selling there, so I think they helped us from our side in taking those last steps and getting it over the line and building a really strong relationship there. So we're off and running. We're off to a great start. They've been just a fantastic partner so far, and where we're heading is... over the course of this year, to get our full catalog onto their site and be selling everything, including all the consumables that we can get over there. So, a great start. We think there's a lot of big upside, a lot of potential. They obviously have built a fantastic business. It's been a long time coming, so we're thrilled to be partnered with them.

Michael Black: I think they helped us from our side in and taking those last steps in getting it over the line and building a really strong relationship. There. So we're off and running we're off to a great start.

Speaker Change: They've been just a fantastic partner, so far and where we're heading is over the course of this year to get our full catalog.

Speaker Change: Onto onto their site and be selling everything including all the consumables that we can get over there. So.

Ryan Meyers: So great start. We think there's a lot of big upside, a lot of potential. They obviously have built a fantastic business, and it's a long time coming, so we're thrilled to be a partner with them. Yeah, that's great to see.

Speaker Change: So great start we think there's a lot of big upside a lot of potential there obviously.

Michael Black: We have built a fantastic business.

Michael Black: It's a long time coming so we're thrilled to be partnered with them.

Ryan Meyers: Yeah, that's great to see. Thanks for taking my questions.

Speaker Change: Yeah, that's great to see thanks for taking my questions.

Kaumil Gajrawala: Thanks for taking my questions.

Michael Black: Yes.

Matt Maker: Your next question comes from the line of Kaumil Gajrawala with Jeffries. Your line is open. Thank you, hey everyone. A couple of questions, I guess the first one is a subscriber growth again, great, but it looks like average orders or number of orders still down. So just here's something in that figure that we should be aware of, and maybe what you're doing to try to reverse that. What you're seeing in terms of the subscriber growth is what we're doing to reverse, and it's just the subscriptions take time to compound. And so what we've seen in these last three quarters is not yet made up for the declines that we saw in the first half of fiscal 2024, but we expect that to start to turn not this current quarter that we're in, but next quarter.

Operator: Your next question comes from the line of Camille Gajarwala with Jefferies. Your line is open.

Operator: Your next question comes from the line of Kaumil Gajrawala with Jeffreys. Your line is open.

Speaker Change: Your next question comes from the line of cameo Doug <unk> with Jefferies. Your line is open.

Kaumil Gajrawala: Thank you. Hey everyone.

Speaker Change: Thank you hey, everyone.

Doug: Couple of questions I guess, the first one is <unk>.

Kaumil Gajrawala: A couple of questions. I guess the first one is subscriber growth again. Great. But it looks like average orders or number of orders are still down. So just curious if there's anything in that figure that we should be aware of and maybe what you're doing to try to reverse it.

Doug: Subscriber growth again, great, but it looks like average orders or number of orders still down. So just curious if there's anything in that figure that we should be aware of and maybe what you are.

Speaker Change: Doing to try to reverse that.

Matt Meeker: Oh! We're what you're seeing in terms of subscriber growth is what we're doing to reverse it. It's just that subscriptions take time to compound, and so what we've seen in these last three quarters is not yet making up for the decline that we saw in the first half of fiscal 2024. Err... But we expect that to start to turn, not this current quarter that we're in, but next quarter. And then overall, we expect the D to C revenue to be flattish year over year but really to begin to grow in our fiscal year.

Doug: Oh.

Speaker Change: What youre seeing in terms of the subscriber growth is what we're doing to reverse and it's just the subscriptions take time to compound.

Speaker Change: And so what we've seen in these last three quarters has not yet made up for the declines that we saw in the first half of fiscal 2024.

Speaker Change: But we expect that to start to turn.

Speaker Change: Not not this current quarter that we're in but next quarter.

Matt Maker: And then overall, we expect the D2C revenue to be flatish year over year, but really to begin to grow in our fiscal Q3. Got it. And congrats on the look back. I think you might have hinted at it, but we didn't know for sure.

Speaker Change: And then overall, we expected D to C revenue to be flattish year over year, but really to begin to grow in our fiscal Q3.

Unnamed Analyst: Got it. And congrats on the Chewy launch. Very cool.

Speaker Change: Got it and congrats on the chewy launch very cool.

Kaumil Gajrawala: Got it. And congrats on the CHIWI launch. Very cool. I think you might have hinted at it. If I look back, I think you might have hinted at it, but we didn't know for sure. I believe it's starting with toys, or are your consumables in there as well? And at least on the toy side, how do you differentiate yourself on a site?

Speaker Change: I think you might have hinted at it.

Speaker Change: Look back I think you've kind of hinted at it but we didn't know for sure.

Matt Maker: I believe it's starting with toys, or are your consumables in there as well? And at least on the toy side, how do you differentiate yourself on a site like that? The toys are there, no consumables yet, and wow, how do we differentiate ourselves really anywhere? I think part of that is a marketing challenge of knowing the platform and how to best position ourselves in great photography, great video, making sure that we have the right the right assets and let's say descriptions around our products. Another part of it obviously is having great products and great reputation and high ratings.

Speaker Change: I believe it's starting with toys or are your consumables in there as well.

Speaker Change: At least on the tourist side, how do you differentiate yourself on a on a site like that.

Matt Meeker: The toys are there, but no consumables yet. Wow, how do we really differentiate ourselves anywhere? I think part of that is a marketing challenge of knowing the platform and how to best position ourselves and great photography, great video, making sure that we have the right assets and, I'd say, descriptions around our product. Another part of it, obviously, is having great products and a great reputation and high ratings. And so we have to back that up in our product development and be in tune with the customer. We are fortunate that we have a million plus customers every month who give us feedback about our products, and we feed that into our product development. So that should be a giant.

Speaker Change: Yes.

Speaker Change: The Tories are are there.

Speaker Change: No consumables, yet and.

Speaker Change: Wow, how do we differentiate ourselves really anywhere I think part of that is a marketing challenge of knowing the platform and how to best position ourselves in great photography, great video, making sure that we have the right the right assets.

Speaker Change: <unk>.

Speaker Change: I'd say descriptions around our products.

Speaker Change: Another part of it obviously is having great products and great reputation at high ratings.

Matt Maker: And so we have to back that up into our product development and being in tune with a customer. We are fortunate that we have a million plus customers every month who are giving us feedback about our products, and we feed that into our product development. So that should be a giant advantage over most other toy or product companies. The thing that we've done now since Michael and Michael have joined is we've now put product development together with the marketing side, bringing those two much closer together. So Michael Parnass is making sure that every product that we put out is an expression of the brand and living up to the brand and not just being just another toy.

Speaker Change: So we have to back that up into our product development and being in tune with our customer.

Speaker Change: We are fortunate that we have a million plus customers every month, who are giving us feedback about our products and we feed that into our product development, so that should be giant.

Speaker Change: Advantage over most other toy or product companies.

Matt Meeker: Advantage over most other toy or product companies. The thing that we've done now since Michael and I have joined is that we've now put product development together with the marketing side, bringing those two much closer together. So Michael Parnas is making sure that every product that we put out is an expression of the brand and lives up to the brand and not just another toy. So hopefully, the product development will elevate from where it already is, and that reputation gets out there. It comes with a marketing and brand awareness mindset behind every product. And then we go through and we do the, I'll call them, basics of executing on the platform really, really well.

Speaker Change: The thing that we've done now since Michael and Michael have joined as well.

Speaker Change: We've now put product development together with.

Speaker Change: With the marketing side, bringing those too much closer together, so Mike help harness making sure that.

Speaker Change: Every product that we put out is an expression of the brand and living up to the brand and not just being just another toy so hopefully.

Matt Maker: So hopefully product development elevates from where it already is. That reputation gets out there. It comes with a marketing and brand awareness mindset behind every product. And then we go through and we do the call on the basics of executing on the platform really, really well. Got it.

Speaker Change: Product development elevated from where it already is that reputation gets out there it comes with our marketing and brand awareness mindset behind every product.

Speaker Change: And then we go through and we do that.

Speaker Change: I'll call them, the basics of executed on the platform really really well.

Kaumil Gajrawala: Got it. And I don't know, you probably were busy prepping for earnings, but you got a shout out on CNBC from Shopify. So I guess the transition to the technological transition is happening. Maybe you can just talk a bit about it. Are we there yet? Have you consolidated the various platforms and it's to go forward, and then perhaps what impact that should have on margins as we look in the coming year?

Speaker Change: Got it and I don't know you probably were busy prepping for earnings.

Matt Maker: And I don't know, you probably were busy prepping for earnings, but you got a shout out on CMBC from Shopify. So I get the transition to the technology transition is happening. Maybe you can just talk a bit about, are we there yet? Have you consolidated the various platforms that have to go forward and then perhaps what impact that should have on margins as we look at the coming year? We're not there yet, but we've continued a transition over some of our active customers and a little bit of our ad spend. So we have the, let's say, the technical pieces in place.

Speaker Change: Shut out on CNBC from Shopify.

Speaker Change: So I guess the transition to the technology transition is happening maybe you can just talk a bit about our.

Unnamed Analyst: Are we there yet? Have you consolidated the various platforms and it's to go forward, and then perhaps what impact that should have on margins as we look in the coming year?

Speaker Change: Are we there yet have you consolidated the various platforms and it's to go forward and then perhaps what impact that has on margins as we as we look into the coming year.

Matt Meeker: We're not there yet, but we continue to transition over some of our active customers and a little bit of our ad spend. So we have, let's say, the technical pieces in place, so if we wanted to pick up and move everyone today, we could. What we're getting to is getting the business to be at parity with it, but we still feel like the most realistic timeline for that to happen is fiscal Q4. We could probably do it sooner, but one thing we definitely don't want to do is disrupt our holiday season. So... It's likely in fiscal Q4.

Speaker Change: We're not there yet but we.

Speaker Change: We continue to transition over some of our active customers and.

Speaker Change: And a little bit of our ad spend.

Kaumil Gajrawala: Great, thank you guys. Thanks.

Speaker Change: So we have let's say the technical pieces in place. So if we wanted to pick up and move everyone. Today, we could while were getting to is getting the business to be at parity with it.

Matt Maker: So if we wanted to pick up and move everyone today, we could. What we're getting to is getting the business to be at parity with it. But we're still; we feel like the most realistic timeline for that to happen is fiscal Q4. We could probably do it sooner, but one thing we definitely don't want to do is disrupt our holiday season. So it's likely in fiscal Q4. Great. Thank you, guys. Thanks.

Speaker Change: But we're still we feel like the most realistic timeline for that to happen as fiscal Q4.

Speaker Change: We could probably do it sooner but.

Speaker Change: One thing we definitely don't want to do is disrupt our holiday season.

Speaker Change: So it's likely in fiscal Q4.

Speaker Change: Got it great. Thank you guys.

Carlo: Thanks Carlo.

Kaumil Gajrawala: Your next question comes from the line of y'all Arunian with city. Your line is open. Hey, guys, good afternoon. You have max on free golf. I just want to ask some more, maybe on the comments and partnerships side. I don't know if he's called out Amazon specifically before, but just curious maybe what drove the strength there or if you're doing anything differently. And then just maybe on the treats going in commerce, you know, just any other color there you can provide on how that's been trending, what you're seeing, and then maybe expectations. I know you're in, I think, two stores right now. I'm not sure if you're talking.

Speaker Change: Your next question comes from the line of Jan <unk> with Citi. Your line is open.

Operator: Your next question comes from the line of Ygal Arounian with Citi. Your line is open.

Ygal Arounian: Hey guys, good afternoon. This is Maks on Freegal.

Speaker Change: Hey, guys good afternoon, Max on for Yigal.

Maksim Rakhlenko: I guess I just wanted to ask some more, maybe on the commerce and partnership side, I don't know if you've called out Amazon specifically before, but just curious, maybe what drove the strength there, if you're doing anything differently. And then maybe on the treats going in commerce, you know, any other color you can provide on how that's been trending, what you're seeing, and then, you know, maybe expectations. I know you're in, I think, two stores right now. I'm not sure if you're talking, assuming you're talking with other stores, but maybe just a timeline for how those talks are going and expectations for that to roll out.

Max: I guess I just wanted to ask one maybe on the.

Speaker Change: Commerce and partnership side.

Speaker Change: I don't know if you'd called out Amdocs was difficult before but just curious maybe what drove the strength there if youre doing anything differently.

Speaker Change: And then just maybe on the tweaks going in commerce.

Speaker Change: Any other color there you can provide on how that's been trending and what Youre seeing and then maybe your expectations. I know you are in I think two.

Speaker Change: Stores right now.

Speaker Change: Not sure if you talk I'm, assuming you are talking with other stores, but maybe just a timeline for how those talks are going in expectations for that to roll out.

Zahir Ibrahim: What do you mean you're talking with other stores, but maybe just a timeline for how those tops are going in expectations for that to roll out.

Matt Meeker: Yeah, I'll comment quickly. This is Matt on the Amazon side of it. For Amazon.

Matt Maker: Yeah, I'll comment quickly. This is Matt on the Amazon side of it. For Amazon, you know, again, like pointing to the strength of new leadership, Michael Black coming in with some real strong performance there in some past lives and bringing great talent with him, understanding that platform and really elevating our performance there. Some of that is just the basic blocking and tackling other platforms. Some of it is better marketing. And what's really encouraging there is we're only four months into his tenure and some of his team's tenure here. And so the elevation we're seeing there isn't because we have some fantastic products.

Speaker Change: Yeah, I'll comment quickly and this is Matt on the on the Amazon side of it.

Speaker Change: For Amazon.

Matt Meeker: You know, again, like pointing to the strength of new leadership. Michael Black coming in with some really strong performances there in some past lives and bringing great talent with him, understanding that platform. Err... And really elevating our performance there, some of that is just The Basic Blocking and Tackling of the Platforms, some of it is better marketing, and what's really encouraging there is... We're only four months into his tenure and some of his team's tenure here, and so the elevation we're seeing there isn't because we have some fantastic products. They're using what's lying around today.

Speaker Change: You know again like pointing to the strength of new leadership.

Mike Mougias: Michael Black coming in with some really strong performance there in some past lives and bringing great talent with him, understanding that platform. We're only four months into his tenure and some of his team's tenure here, and so the elevation we're seeing there isn't because

Michael Black: Michael Black coming in.

Speaker Change: With some real strong performance, there and some past lives and bringing great talent with him understanding that platform and.

Speaker Change: And really elevating our performance there some of that is just the basic blocking and tackling another platform. Some of it is better marketing.

Speaker Change: And what's really encouraging there is.

Speaker Change: We're only four months into.

Speaker Change: His tenure in and some of his team's tenure here.

Speaker Change: And so the elevation, we're seeing there is it because we have some fantastic products they're using.

Matt Maker: They're using laying around today. So when we start to create product specifically for that channel or that environment, and we order properly for these sales volumes, I think we have the opportunity to accelerate. So it's as simple as talent.

Speaker Change: Laying around today.

Matt Meeker: So when we start to create products specifically for that channel or that environment, and we order properly for the sales volumes, I think we have the opportunity to really accelerate. So it's as simple as talent. That's what it comes down to. And then Zahir is going to chime in on the second. Sure, so just on the consumables that we launched into retail...

Michael Black: So when we start to create product specifically for that channel or that environment.

Speaker Change: And.

Speaker Change: We order properly for the sales volumes I think we have the opportunity to really accelerate so it's as simple as talent.

Matt Maker: That's what it comes down to.

Speaker Change: That's what it comes down to and then so here is going to chime in on the second sure. So just on the consumables that we launched into retail so we're in with obviously target and petsmart.

Zahir Ibrahim: And then Zahir is going to chime in on the second. Sure. So just on the consumables that we've launched into retail. So we're in with obviously Target and Pet Smart. We're launched with our character treats early days. The feedback from our retail partners is happy with the start that we've made. Obviously, we're continuing to take the learnings of everything that we're doing in terms of shopper marketing, any promotions we run, how we can elevate our performance going forward. So we're continuing to work on that. We've already managed to secure further distribution within those retailers for seasonal offerings in some of the major holiday windows.

Zahir Ibrahim: Sure, so just on the consumables that we launched into retail, so we're in with, obviously, Target and Petsmart. We launched with our character treats in the early days.

here: We launched with our car.

Speaker Change: To treat.

here: Early days.

Zahir Ibrahim: The feedback from our retail partners is that they're happy with the start that we've made. Obviously, we're continuing to take the learnings of everything that we're doing in terms of shopper marketing, any promotions we run, and how we can elevate our performance going forward, so we're continuing to work on that. We've already managed to secure further distribution within those retailers for seasonal offerings and some of the major holiday windows, so that's really a positive signal.

Speaker Change: The feedback from our retail partners is happy with the start that we've made obviously.

Speaker Change: We're continuing to take the learnings of.

Speaker Change: Everything that we're doing in terms of shopper marketing any promotions, we run how we can elevate our performance going forward. So we're continuing to work on that.

Speaker Change: We've already managed to secure further distribution within those retailers fall seasonal offerings and some of the major holiday window. So that's really a positive signal I think just thinking about consumables more broadly.

Zahir Ibrahim: So that's really a positive signal. I think just thinking about consumables more broadly. There's really a size of opportunity for us to expand on Amazon and Shuri fairly quickly, particularly with our dental and toppers products.

Zahir Ibrahim: I think just thinking about consumables more broadly, there's really a sizable opportunity for us to expand on Amazon and Chewy fairly quickly, particularly with our dental and toppers products. And then as you think about the next resets within retail, which would be Q4 this fiscal year going into Q1 next fiscal year, that's when you'd expect to see further impact in terms of more doors and distribution in retail.

Speaker Change: This really sizable opportunity for us to expand on Amazon and chewy fairly quickly, particularly with our dental and toughest products and then as you think about the next resets within retail which.

Zahir Ibrahim: And then, as you think about the next research within retail, which would be Q4 this fiscal year going into Q1 next fiscal year, that's when you'd expect to see further impact in terms of more doors and distribution in retail. Okay. Great. Thanks.

Speaker Change: It would be Q4 of this fiscal year going into Q1 next fiscal year.

Speaker Change: You'd expect to see further impact in terms of more doors.

Speaker Change: In distribution and retail.

Speaker Change: Okay, great guys. Thanks.

Speaker Change: Thanks.

Speaker Change: Yeah.

Operator: This concludes today's conference call. Thank you for attending. You may now disconnect.

Operator: This concludes today's conference call. Thank you for attending. You may now disconnect. Please wait; the conference will begin shortly.

Speaker Change: This concludes today's conference call. Thank you for attending you may now disconnect.

Matt Meeker: If the if or when should I say when the

Operator: Please wait. The conference will begin shortly.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Operator: Yes.

Q1 2025 BARK Inc Earnings Call

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