Q2 2025 BARK Inc Earnings Call
Bailey: Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time I would like to welcome everyone to the BARC second quarter fiscal 2025 earnings conference call.
Bailey: All lines have been placed on mute to prevent any background noise.
Bailey: After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press star and 1. I would now like to turn the call over to Mike Mougias, VP of Investor Relations. You may begin.
Bye-bye.
Mike Mougias: Good afternoon everyone and welcome to BARC's second quarter fiscal year 2025 earnings call. Joining me today are Matt Meeker, co-founder and chief executive officer, and Zahir Ibrahim, chief financial officer.
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.
Mike Mougias: Before I pass it over to Matt, I want to remind you of the following information regarding forward-looking statements.
Mike Mougias: 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 more information on some of the factors that could affect our future results and outcomes.
Mike Mougias: 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 Meeker: And with that, let me now pass it over to Matt.
Matt Meeker: Thanks Mike and good afternoon everyone. On our last earnings call, I shared my enthusiasm for the strategic talent additions we made earlier in the year. Strengthening our talent coupled with improving the foundational components of our P&L meant it was time for us to focus our energy on driving top-line growth.
Matt Meeker: I'm pleased to report that the team is tackling this objective aggressively, laying a foundation for sustainable, long-term growth.
Matt Meeker: Let's start by reviewing some highlights from our fiscal second quarter.
Matt Meeker: Last quarter, we delivered $126.1 million of revenue, surpassing the high end of our guidance range and marking a 2.5% increase compared to the same period last year. While our long-term growth ambitions are far greater, it's worth noting that this was our first quarter of year-over-year revenue growth in eight quarters.
Matt Meeker: This is a return to growth, an important first step, and we remain enthusiastic about what's ahead, especially given that many of the growth initiatives the team has been focused on are just beginning to be reflected in our results.
Matt Meeker: One area that we've highlighted as an important revenue driver is our commerce segment.
Matt Meeker: To that end, I'm pleased to report that this segment grew 26% year-over-year, driven by adding new partners like Chewy.
Matt Meeker: BreastSnap, and expanding with existing partners like Costco, TJ Maxx, and Amazon. I'm also happy to report that, through the first half of our fiscal year, Bark was one of the top-selling new treat brands in both Target and PetSmart.
Matt Meeker: This is very encouraging as our brand and products clearly resonate with these leading retail customers and bode well for future retail expansion.
Matt Meeker: In addition to recent top-line growth, we delivered a 60% consolidated gross margin in the quarter. It's important to note that the proportion of our commerce revenue in the quarter, which was a big positive, impacted our consolidated gross margin. But that's not the full picture.
Matt Meeker: It's key to remember that while the gross margin in our Commerce segment is lower than our D2C segment, the contribution margin is on par, if not slightly higher, than D2C.
Matt Meeker: Today, it's more profitable with a lot more growth potential, which is why we're pushing for commerce to be more than one-third of our revenue and are excited by our progress towards that goal.
Matt Meeker: A strong 60% gross margin and our continued cost improvements in GNA and shipping and fulfillment resulted in an adjusted EBITDA of positive $3.5 million in the quarter.
Matt Meeker: Our strongest EBITDA quarter in the company's history. This was ahead of the high end of our guidance range and reflects a $2.5 million improvement compared to last year.
Matt Meeker: Halfway through our fiscal year, this puts us at positive adjusted EBITDA of $1.7 million and on track for our first full year of profitability. Additionally, we achieved another quarter of positive free cash flow, generating $1 million in the period.
Matt Meeker: As I mentioned earlier, our profitability improvements have been significant, and now we're seeing the top-line growth drivers kick in.
Matt Meeker: As expected, when we started the year, and consistent with our guidance, we expect to deliver full-year profitability for fiscal year 2025 as we start returning to growth, especially in our commerce and air business lines. So let me discuss some of those opportunities.
Matt Meeker: In our D-to-C segment, we delivered our fourth consecutive quarter of year-over-year new subscriber growth.
Matt Meeker: Our new CMO, Michael Parnas, is actively implementing a full funnel strategy designed to showcase not only our exceptional products, but also to elevate brand awareness and reinforce our mission.
Matt Meeker: By fostering stronger connections with our audience, we can reach more dog households, increase basket size, and improve customer retention.
Matt Meeker: The team is developing several new brand-focused campaigns that we're excited to unveil in the coming months.
Matt Meeker: This requires moving some dollars from the bottom of funnel spending that yields new customers immediately into planting seeds of awareness that will unfold over a longer time horizon.
Matt Meeker: We've started that transition now and will continue throughout this year, meaning we will give up some short-term gains in B2C.
for the long-term acceleration we've been lacking.
Those short-term gains are also hollow calories.
Matt Meeker: We can add new customers, but the further we reach into Facebook for them, the more we pay and the lower quality they are. This transition will, in time, take us to a world where we expect to grow faster and more profitably at the same time.
Matt Meeker: Related to this, we've been moving more of our existing customers to our Shopify-based platform at BART.co.
Matt Meeker: We're so encouraged by the progress that we decided to move our D2C ad spending to this new platform in October. Any shift to a new website comes with some bumps in the road, but on the whole, we did this because we saw the opportunity for higher new customer conversion at a lower cost of acquisition in the long term.
Matt Meeker: We can also push those performance marketing savings into our top-of-funnel brand awareness activities, which should lead to a healthier marketing mix over time. This has been a long time coming and something we decided to do earlier than expected given the significant progress we're making in other areas like commerce.
nonetheless
Matt Meeker: Our most immediate opportunity for rapid growth is within our commerce segment.
Matt Meeker: Six quarters ago, we discussed an ambition for our commerce segment to grow from 12% of revenue to over one-third. We're on course for that, with 18.6% of revenue coming from commerce this quarter, and more growth coming.
Matt Meeker: And as I said before, this segment is more profitable than B2C today. The faster growth here translates to faster growth on both the top and bottom lines.
Matt Meeker: The progress is faster than the results due to the long lead times in this channel, but we're highly encouraged by where we see it going.
Matt Meeker: As I mentioned, this segment grew 26% year-over-year, and there's still a significant runway ahead.
Matt Meeker: First, we plan to expand our consumables presence across more retail shelves, including treats, toppers, dental, and kibble.
Matt Meeker: Under Michael Black's leadership, the team has made significant strides, and we have ample opportunities both domestically and internationally. Beyond our brick-and-mortar footprint, we expect sizable growth through Chewy and Amazon.
Matt Meeker: We launched with Chewy in June, and I'm pleased to report that our full suite of products from toys to kibble is now available on their platform.
Matt Meeker: They've been an outstanding partner and we're thrilled with the progress.
Matt Meeker: Additionally, while Amazon was a relatively small revenue contributor last year, we anticipate it will become a much more meaningful driver of our top line over the coming years.
Matt Meeker: These e-commerce channels serve to not only drive long-term revenue growth, but also help raise awareness of our brand and growing product portfolio. Additionally, we entered the second year of our Girl Scouts partnership in September, offering their customers three SKUs up from just one last year.
Matt Meeker: This year's program, which concludes this month, has gone exceptionally well, far outpacing last year's program through their digital channels. We are excited to deepen our partnership in the future and hope to have more to share on that soon.
Matt Meeker: Lastly, I'm excited to announce that we recently released Pet Crocs, created in collaboration with the Crocs team.
Matt Meeker: As of October, BART customers could add croc-style shoes for their dog to their monthly box. We love these types of partnerships as they showcase the fun, and oftentimes quirky, bond between dogs and their humans.
Matt Meeker: Partnerships with Crocs, Dunkin' and Subaru are great examples of how we can broaden our audience and elevate awareness of the Bark brand.
Matt Meeker: Overall, there's a ton of opportunity for us in this segment and we remain confident that commerce will comprise at least a third of our total revenue within the next three to four years.
Matt Meeker: The last area I would like to touch on is Bark Air. To date, we've flown 50 flights, which includes 425 dogs and 449 humans.
Matt Meeker: We've also booked over four and a half million dollars in ticket sales since launch.
Matt Meeker: Last quarter, BarkAir delivered $1.5 million in revenue and positive gross profit in the second quarter, as utilization has been in the mid-90% for the past several months.
Matt Meeker: As this initiative scales, we see opportunities to lower our costs, as well as the costs of the consumer, making air travel accessible to a much wider audience of dog parents. Not only is this initiative driving incredible awareness of bark, but we see a real business opportunity long term.
Matt Meeker: Overall, there are a lot of exciting things happening at BARC.
Matt Meeker: We delivered our strongest Adjusted EBITDA quarter in company history, which represents our ninth consecutive quarter of year-over-year Adjusted EBITDA improvement. We are on track to deliver our first Adjusted EBITDA positive year in history, which is huge progress from losing $57 million only three years ago.
Matt Meeker: We are seeing green shoots on our top line, with our commerce segment expected to grow 30-plus percent this fiscal year and grow even faster next year.
Matt Meeker: We ended the quarter with a healthy cash balance of $115 million, which affords us plenty of flexibility to invest in future growth. This cash balance also reflects the company buying back over 8 million shares over the past 12 months.
Matt Meeker: And the new leaders we added to the team are off to a very strong start in their first six months. Just wait until they've had a full year together.
Matt Meeker: So overall, this is really coming together and I'm excited about what's in store for BARC. With that, I will turn the call over to Zahir.
Thanks, Matt. And afternoon, everyone.
Zahir Ibrahim: Our recent results reflect the tangible progress we have made in improving our profitability profile, with consistent gains in gross margin, adjusted EBITDA, and free cash flow.
Zahir Ibrahim: Under our new leadership team, we're also gaining clearer visibility into the top-line acceleration in Fiscal 26 and beyond, particularly in our commerce channels. Overall, we believe this puts the business in a strong position for profitable long-term growth.
Zahir Ibrahim: Let me dive into our fiscal second quarter results in more detail.
Zahir Ibrahim: Total revenue in the quarter was $126.1 million, a 2.5% increase versus last year.
Zahir Ibrahim: Looking at our revenue in more detail, our D2C segment contributed $102.6 million, which includes $1.5 million of revenue from Barcare.
Zahir Ibrahim: The B2C segment was down 1.6% year-over-year, as total box subscriptions remained below last year's levels.
Zahir Ibrahim: With that said, we have made solid progress over the past 12 months, including four consecutive quarters of year-over-year growth in new subscriptions.
Zahir Ibrahim: As we transition all paid traffic to BART.co, we're adapting and fine-tuning our D2C strategy to optimise for this new platform.
Zahir Ibrahim: While we anticipate a period of more measured B2C performance as we complete this shift, we remain encouraged by our growth trajectory within the commerce segment, which has allowed us to accelerate this transition.
Zahir Ibrahim: On that note, we delivered $23.5 million of commerce revenue last quarter, a 25.6% increase compared to the prior year.
Zahir Ibrahim: For the full year, we now expect the commerce segment to grow at least 30% compared to fiscal 24.
Zahir Ibrahim: The team has done an outstanding job securing new retail partnerships and deepening our relationships with existing ones. We expect this growth profile to continue with a commerce segment projected to account for one-third of our total revenue over the next three to four years.
Zahir Ibrahim: Moving on, our consolidated gross margin was a very healthy 60.4% in the quarter, despite being impacted by the larger share of commerce revenue.
Zahir Ibrahim: On a segment basis, D to C gross margin, excluding bar care, was 65%, in line with last year.
Zahir Ibrahim: Gross margin in our commerce segment was 45% up 250 basis points versus last year
Looking ahead, there are opportunities for small margin improvement.
However, the mixed shift from DTC to Commerce
Zahir Ibrahim: will impact our consolidated gross margin going forward. The good news is the recent contribution margin in commerce is equal to or better than B2C, so our expected growth in that segment should have a positive impact on overall profitability.
Zahir Ibrahim: Shipping and fulfillment expenses were $34.1 million in the quarter, or 27% of total revenue. This is a 100 basis point improvement versus Q2 in fiscal 24, largely reflecting the more favorable shipping terms we secured towards the end of last year.
Zahir Ibrahim: Additionally, we see opportunities for further improvements through network optimization, which the team is laser focused on.
Zahir Ibrahim: Other GNA, which primarily consists of headcount and overhead costs, was $29.1 million in the quarter, a $5.4 million improvement compared to last year.
Zahir Ibrahim: This improvement primarily reflects lower headcount costs associated with managing our organization structure to meet the evolving needs of the business.
Zahir Ibrahim: Total marketing expenses were $18.7 million in the quarter, a $0.9 million increase compared to last year.
Zahir Ibrahim: Michael Parnes and his team have been refining how we invest those marketing dollars, starting to move away from heavy promotions and lower funnel marketing to a more holistic, full-funnel approach.
Zahir Ibrahim: In the long run, we expect this strategy to raise awareness, improve conversion and retention, and reduce customer acquisition costs. Importantly, this is a line item that we can flex up or down depending on the returns we are realizing on those marketing dollars.
Zahir Ibrahim: Lastly, Adjusted EBITDA for the quarter was 3.5 million, a 2.5 million improvement compared to last year and our strongest Adjusted EBITDA quarter as a public company.
Zahir Ibrahim: Additionally, free cash flow in the quarter was positive $1 million. Year-to-date free cash flow is positive $715,000, reflecting a $12 million improvement versus fiscal 24.
Turning to the balance sheet.
Zahir Ibrahim: We ended the quarter with total cash of $115 million, down $3 million versus the previous quarter.
Zahir Ibrahim: reflecting working capital timing, along with repurchasing over 540,000 shares in the second quarter.
Zahir Ibrahim: Following our Q2 repurchases, we have approximately $11 million remaining from our most recent board authorization and plan to continue to opportunistically take advantage of the share price at current levels.
Overall, we see several exciting developments across the organization.
Zahir Ibrahim: from promising revenue opportunities in commerce to continued profitability improvements and a healthy balance sheet. With that in mind, let me turn to our guidance for the fiscal third quarter and for year.
Zahir Ibrahim: Starting with the full year, we reaffirm the initial guidance from our Q4 call. To reiterate, we expect total revenue for the year to be between $490 million and $500 million, representing year-over-year growth between flat to 2%.
Zahir Ibrahim: 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 last year, would mark the first EBITDA positive year in BARC's history.
Zahir Ibrahim: We've had a strong start to the year and we see significant long-term growth potential in the business.
It's also worth reiterating that our Shopify transition is underway.
Zahir Ibrahim: Early indicators are encouraging and we're excited about the enhanced experience and functionality this shift will bring over time. However, we anticipate some early stage learning and refinements along the way.
Zahir Ibrahim: Nonetheless, we believe this is an important step towards a more efficient and impactful D2C business in the long run.
Zahir Ibrahim: For the fiscal third quarter, we anticipate total revenue between $123 and $126 million, the midpoint of which would broadly be in line with last year.
Zahir Ibrahim: As a reminder, this mix will impact our consolidated gross margin in the quarter, however it should provide a tailwind to our contribution margin.
Zahir Ibrahim: For Adjusted EBITDA, we expect a range of breakeven to minus $3 million. The midpoint of this range would reflect a $4.9 million improvement compared to last year and mark our 10th consecutive quarter of year-over-year Adjusted EBITDA improvement.
Zahir Ibrahim: In summary, we have made a lot of progress over a relatively short time horizon. We're on track to deliver our first full year of EBITDA profitability, and the new team has hit the ground running, laying a strong foundation that should enable us to drive sustainable long-term growth.
Zahir Ibrahim: With that, I will turn the call over to the operator for Q&A.
Speaker Change: Thank you. We'll take our first question from Maria Ripps with Canaccord. Your line is open.
Speaker Change: Great, thanks so much for taking my questions and congrats on the strong quarter here.
Speaker Change: And then maybe more broadly, when do you anticipate sort of your brand awareness initiatives to start contributing to stronger order growth?
Hi Maria, thank you. Thanks for the questions.
Speaker Change: So, on the first one, we're getting to that inflection point, and as we said, we've had that progress of four consecutive quarters now with year-over-year improvement in the number of new subscribers added.
We're doing it all with
Speaker Change: with a headwind where the toy industry continues to be down year over year, so that makes it more difficult, but
Speaker Change: We still have those growth opportunities. We're still picking up pace, which is what I've talked about in the past that we have room to To perform better to operate better than we have and we still have that room So we're we're I'll say hopeful or we're looking to
Speaker Change: D to C may return to growth in the second half, but a lot of that's going to depend on this important peak holiday season over the next six weeks.
Speaker Change: And just given the uncertainty that's inherent in transitioning to a new platform from our legacy platform over to Shopify, we've moved all the ad spending now just in the past couple of weeks.
So we're just being more cautious because of that move.
Speaker Change: and we expect a bit more of a measured performance in DSC but
that's that's one aspect of it another is
We're moving away from the heavy promotional type ads.
that give us
Speaker Change: what I call those hollow calorie customers. They might be good for a little bit of revenue in the short term, but ultimately we pay for them in the long term and we don't get that ongoing momentum and growth that compounds over time and the profitability. So that leads into your second question of the brand approach, which
Speaker Change: We're starting right now. You'll see a lot more as we get into calendar year 2025.
Speaker Change: But we know that seeding brand awareness doesn't have the immediate payoff that performance marketing does, so we'll plant those seeds.
We'll continue to build that effort and
Speaker Change: And we'll get back to having really, really great brand awareness that's contributing. It's a playbook we're familiar with. We ran it for our first eight years pretty well. And we've just got to return to that balance. But.
Speaker Change: That's a long way of bringing those two answers together. I hope that answered it well for you.
Speaker Change: No, that's very helpful. Thanks, Matt. And then secondly, sort of given the outcome of the election, could you make the refreshes on your level of exposure to potential tariffs?
Speaker Change: To the extent you can comment, what percentage of your input cost comes from outside of the U.S. and from China, more specifically? And what are some ways that you may be able to mitigate any potential impact?
Yeah, we certainly...
We're certainly watching that and it's something we've.
Speaker Change: I don't want to say just been thinking about it in the last month or two or the last week or two.
Speaker Change: but for well over a year, and maybe longer than that. This is a bit of Groundhog Day for us when ...
Speaker Change: there was a potential for President Trump to be elected in 2016. We had the same kind of fire drill around what do we do if he's elected and if he puts the tariffs in place and we we did a lot of planning, a lot of work, put our
Speaker Change: our mitigation plans in place and then as we know tariffs were introduced in 2018 on many imports from China but we were not impacted materially with our products.
Speaker Change: In addition to that, the potential tariffs that could come would only impact... So, sorry, we've been in that process for a year once again here, and there's...
Speaker Change: There are good plans in place for us to soften the blow if it comes.
The other part of that is...
Speaker Change: The tariffs would only impact our toy business. Consumables, which is a sizable part of the business, are all domestically sourced, so that wouldn't be touched at all.
Speaker Change: And the diversification of the toy buying would be, again, already underway.
Speaker Change: So, the last thing I'd say is, as you know from the results over the past couple of years, we've seen really healthy growth in the gross margin, the contribution margin, and it's given us some flexibility in the P&L.
Speaker Change: If we were going to give up some of that I'd rather give it up to the customer in pursuit of growth than I would to tariffs but...
Speaker Change: We're all in this together as an industry, so if our toys are being
Speaker Change: subject to tariffs so will our competitors and you'll see those reflected in the prices and I think we're in a much better position given our gross margin profile to weather that.
Got it. That's very helpful. Thank you, Matt.
Speaker Change: Your next question comes from the line of Ryan Myers with Lake Street Capital Markets, your line is open.
Hey Ryan, how are you doing? This is Zahir.
Um, I think...
Speaker Change: It's fair to say that the growth was pretty balanced between existing and new customers.
We've been focusing...
Speaker Change: a lot on you know where the customer shops so in the new channels we're looking at things like Chewy and TikTok shop that's where we've
Speaker Change: seeing good expansion, but we've also focused on expanding and other customers like Amazon and TJ Maxx as well.
Speaker Change: and they've driven and delivered strong growth as well. So both of those have been important contributors.
um
Speaker Change: We've been working with partnerships, as you know, in particular with Girl Scouts and We ran a pilot program with them last year
Speaker Change: This year, our demand on the pilot program is almost 2x what we did last year, so that's been...
another important contributor and I suppose
the last piece that's...
and others.
Speaker Change: Got it. And then, you know, thinking about the gross margin, sounds like that obviously is going to come down as the commerce business makes a larger contribution. I mean, given, you know, what you guys reported here in Q2, is there any way to, you know, sort of talk us through the rest of this year, maybe a right number to be at for the full year as that business makes a larger contribution?
Yes, sure, so...
Speaker Change: I think the key, and I think both Matt and I called it out, gross margin obviously in B2C. I think the key, and I think both Matt and I called it out, gross margin obviously in
is about.
Speaker Change: but when you look at the cost to serve across both of those channels,
Speaker Change: commerce is a lot lower cost to serve so when you go down to the contribution level typically they're fairly similar I would say in recent times commerce has actually been on a par if not more more profitable at the contribution margin level for us so
Speaker Change: Lower cost to serve so when you go down to the contribution level.
Speaker Change: Typically that fairly similar I would say in recent times.
Speaker Change: <unk> been on a par if not more.
Speaker Change: More profitable at the contribution margin level for us so.
Speaker Change: In the near term as we look to expand and commerce, that's going to be accretive to the bottom line.
Speaker Change: In the nearer term, as we look to expand in commerce, that's going to be accretive to the bottom line. And so it'll be a positive tailwind for us.
Speaker Change: And so it will be a positive tailwind for us.
Speaker Change: Got it thanks for taking my questions.
Got it. Thanks for taking my questions.
Speaker Change: Thanks Ryan.
I'm trying
Speaker Change: Your next question comes from the line of Eagle Iranian with Citibank. Your line is open.
Speaker Change: And your next question comes from the line of Egal Arunian with Citibank. Your line is open.
Speaker Change: Hey, good evening, guys, Steve Mac on pretty well.
Speaker Change: Hey, good evening guys. Dave Maxon for EGOL. I guess maybe on the Bark.co transition, looking over existing customers and moving all you guys done there. I guess I know this is a little...
Speaker Change: I guess maybe.
Speaker Change: The <unk> transition will be.
Speaker Change: All of our existing customers and will be done there.
Speaker Change: Yes, I know this is a little off.
Speaker Change: Sooner than expected.
Sooner than expected.
Speaker Change: So just curious maybe your thoughts on doing heading into the holiday season, and Thats, a big Big tier one for you.
Speaker Change: So just curious, maybe, you know, your thoughts on doing it heading into the holiday season since that's a big busy year one for you.
Speaker Change: And, you know, how should we think about how long that transition takes with the existing customers? And then Matt, I know you mentioned that, you know, maybe impact, it's maybe having some impact on the DTC business. So just actually think about the timing there.
Speaker Change: <unk>.
How should we think about how long that transition takes would be existing customers.
Speaker Change: And then Matt I know you mentioned that maybe impacted maybe having some impact on the DTC business. So just how should we think about the timing there.
Speaker Change: And would that maybe trade off how should we think about BTC.
Speaker Change: And would that maybe trade off, you know, how should we think about BTC, you know, growth through the rest of this year and into next?
Speaker Change: Growth through the rest of this year at <unk> and connect.
Speaker Change: Yes.
Speaker Change: It's a great question and obviously, we're very focused on it right now.
Speaker Change: And the timing being.
Speaker Change: Certainly as moving to AD spend probably.
Speaker Change: 4% to six months earlier than we expected and right before the holiday season. So so why are we doing that obviously, we were encouraged by what we're seeing in terms of the conversion rate.
Speaker Change: Certainly like that.
Speaker Change: Presentation of the site a lot more and the flexibility of the platform.
Speaker Change: Allows us to move a lot quicker and test more rapidly. So we're liking what we're seeing in comparison.
Speaker Change: And obviously, it's a different story when you have.
Speaker Change: Five or 10% of your traffic levels on one platform versus the other so just seeing a higher conversion rate.
Speaker Change: As.
Speaker Change: Isn't the whole story you expect when you move a lot of traffic over that's going to fall.
But we had a sizable enough lead on it that we thought.
Speaker Change: We thought it would be better to both.
Roll the dice on that if you will and.
Speaker Change: And.
Speaker Change: Do it before the holiday season, and hopefully gather some upside there.
Speaker Change: At the same time, the real benefit is.
Speaker Change: Then we're able to take the strongest performers on our team and point them towards the highest impact tests in activities that drive the holiday season, instead of having those efforts split.
Speaker Change: So again, we just move that AD spending.
Speaker Change: To move it.
Speaker Change: A couple of weeks ago.
Speaker Change: There's a lot that goes into it both on our side and on the AD partner side.
Speaker Change: We've got a retraining or the.
Speaker Change: Various algorithms at Facebook and Google they need to re learn that.
Speaker Change: Learn our business again and.
Speaker Change: That's not in our month long process, but it's not a couple of hours either so we're making our way through that.
Speaker Change: Again.
Speaker Change: Early early days so we're.
Speaker Change: I've got to be cautious about it but we're cautiously optimistic.
Max: Alright, and I think there was a second part of your question that I'm forgetting I'm, sorry about that Max.
Speaker Change: Just maybe like timing like how long, we should expect it to take.
Max: Through the year.
Max: With the move of AD spending we've moved it.
Max: And so then it's.