Q4 2025 BARK Inc Earnings Call
Operator: Please wait, the conference will begin shortly. Hello, and thank you for standing by.
Please wait the conference will begin shortly.
[music].
Speaker Change: Hello, and thank you for standing by at this time I would like to welcome everyone to the bark fiscal fourth quarter and full year 2025 earnings conference call.
Operator: At this time, I would like to welcome everyone to the Bark Fiscal Fourth Quarter and Full Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star 1 on your telephone keypad. Thank you.
Speaker Change: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question during that time simply press star one on your telephone keypad.
Michael Mougias: I will now turn the call over to Mike Mougias, VP of IR and VPA. Mike, please go ahead. Good afternoon, everyone, and welcome to BARC's fiscal fourth quarter and full year 2025 earnings call. Joining me today are Matt Meeker, co-founder and chief executive officer, and Zahir Ibrahim, chief financial officer.
Speaker Change: Thank you I will now turn the call over to Mike majors, VP of IR and B P. A mic. Please go ahead.
Mike Majors: Good afternoon, everyone and welcome Barks fiscal fourth quarter and full year 2025 earnings call. Joining me today are mapmaker co founder and Chief Executive Officer, and he's out here Ebrahim Chief Financial Officer, Today's conference call will be webcast in its entirety on our website and a replay will be made available shortly after the call additional.
Operator: Today's conference call will be webcast in its entirety on our website, and a replay will be made available shortly after the call.
Operator: Additionally, a press release covering the company's financial results was issued this afternoon and can be found in our investor relations website.
Mike Majors: 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. 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 or outcomes to differ.
Michael Mougias: 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. Please refer to our SEC filings for more 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.
Mike Majors: Please refer to our SEC filings for more information on some of the factors that could affect our future results and outcomes.
Speaker Change: We'll also discuss certain non-GAAP financial measures on today's call a 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 Meeker: And with that, let me now pass it over to Matt. Thanks, Mike, and good afternoon, everyone. There are three big takeaways I want to share with you today. First, we delivered our first ever adjusted EBITDA positive year. Second, we intend to remain adjusted to that positive this year and beyond. And third, we plan to accelerate the diversification of our revenue faster than previously planned. My remarks today will expand on each of these three takeaways. First, after 14 years of working at it, we are adjusted to EBITDA positive for the first year ever. This is here.
Matt: Thanks, Mike and good afternoon, everyone.
Matt: There are three big takeaways I want to share with you today.
Speaker Change: First we delivered our first ever adjusted EBITDA positive year.
Speaker Change: Second we intend to remain adjusted EBITDA positive this year and beyond and.
And third we plan to accelerate the diversification of our revenue faster than previously planned.
Speaker Change: My remarks today will expand on each of these three takeaways.
Speaker Change: First after 14 years of working at it were adjusted EBITDA positive for the first year after.
Speaker Change: This is huge in Q4, we delivered $5 2 million and positive adjusted EBITDA.
Matt Meeker: Q4, we delivered $5.2 million in positive adjusted EBITDA, our best quarterly result ever. And for the full year, we achieved $5.4 million, our first full year in the black. Just three years ago, we had lost $58 million and burned nearly $200 million in cash. At the time, many questioned our long-term viability. Now, three years later, we're not only standing, we're in positive, adjusted, Ibiza territory. So here we'll discuss our fourth quarter and full year results in more detail. However, at a high level, revenue for the quarter was $115.4 million, lighter than expected as we pulled back on growth in response to tariff-related uncertainty.
Speaker Change: Best quarterly result ever and for the full year, we achieved $5 $4 million a first full year in the black.
Speaker Change: Just three years ago, we had lost $58 million and burn nearly $200 million in cash.
Speaker Change: At the time, many questioned our long term viability.
Speaker Change: Now three years later, we're not only standing we're in positive adjusted EBITDA territory.
Speaker Change: So here, we will discuss our fourth quarter and full year results in more detail.
Speaker Change: However, at a high level revenue for the quarter was $115 $4 million.
Speaker Change: Later than expected as we pulled back on growth in response to tariff related uncertainty and potential downstream costs.
Matt Meeker: pencil downstream cop. Tariffs, along with softening consumer sentiment, gave us a strong push to accelerate diversification efforts. One area where we've made real progress is our commerce business. This segment grew 27% year-over-year to $68.3 million. We expanded our relationships with retail partners like Chewy, Amazon, TJ Maxx, Target, Costco, the Girl Scouts, and others. Gross margins in commerce expanded by 227 basis points over FY24 and 960 basis points over FY23. All of this makes Barks stronger and more resilient. Speaking of gross margins, we delivered 63.6% in Q4, our highest level ever. For the full year, we achieved 62.4%.
Speaker Change: Tariffs along with softening consumer sentiment.
Speaker Change: Give us a strong push to accelerate diversification efforts.
Speaker Change: One area, where we've made real progress as our commerce business.
Speaker Change: This segment grew 27% year over year to $68 $3 million.
Speaker Change: We expanded our relationships with retail partners like chewy, and Amazon T. J Maxx target Costco, the girl Scouts and others.
Speaker Change: Gross margins in commerce expanded by 227 basis points over FY, 'twenty, four and 960 basis points over FY2023.
Speaker Change: All of this makes bark stronger and more resilient.
Speaker Change: Speaking of gross margins.
Speaker Change: Delivered 63, 6% in Q4.
Speaker Change: Highest level ever.
Speaker Change: For the full year, we achieved 62, 4%.
Matt Meeker: 73 basis point improvement over FY24, and a 480 basis point improvement over FY23. in a world shaped by tariffs and economic uncertainty. Margin strength is a critical buffer and a competitive advantage. All of this and more contributed to our first ever Adjusted EBITDA Positive Year. My second big takeaway is that we intend to stay adjusted EBITDA positive this year and for the foreseeable future. Tariffs and policy shifts under the current administration create a lot of uncertainty. But we have a plan and are committed to achieving it. Here are three ways we're making that happen. First, we're making some updates to the customer experience that save us money and we believe enhance that experience.
Speaker Change: A 73 basis point improvement over FY, 'twenty, four and a 480 basis point improvement over FY2023.
Speaker Change: In a world shaped by tariffs and economic uncertainty.
Speaker Change: Margin strength is a critical backer.
Speaker Change: And a competitive advantage.
Speaker Change: All of this and more contributed to our first ever adjusted EBITDA positive year.
Speaker Change: My second Big takeaway is that we intend to stay adjusted EBITDA positive this year and for the foreseeable future.
Speaker Change: Tariffs and policy shifts under the current administration create a lot of uncertainty.
Speaker Change: But we have a plan and are committed to achieving this.
Speaker Change: Here are three ways, we're making that happen.
Speaker Change: First we're making some updates to the customer experience that save us money and we believe enhance that experience.
Matt Meeker: One example is delivering the monthly Bark Box in a bag with a connected digital-themed AI-driven experience that's personalized for your dog. Another example is going into the archives and using popular themed products of the past and upcoming shipments as a way of using inventory that doesn't carry tariff costs. We are using products we know are loved by dogs and their parents. Second, we are fortunate to have a great supply chain team, and they've responded to each tariff escalation with smart mitigation plans. Some toy products in the near term, namely the first half of the year, will carry the burden of tariffs of up to 80%.
Speaker Change: One example is delivering the monthly bark box in a bag with.
Speaker Change: With a connected digital themed AI driven experience that's personalized for your dock.
Speaker Change: Another example is going into the archives and using popular themed products of the past and upcoming shipments as a way of using inventory that doesn't carry tariff costs and using products. We know our love guide dogs and their parents.
Speaker Change: Second we are fortunate to have a great supply chain team and they've responded to each tariff escalation with smart mitigation plans.
Speaker Change: Thanks Roy products in the near term family the first half of the year.
Speaker Change: Harry that burden of tariffs of up to 80%.
Matt Meeker: But that will decrease significantly in the back half of the year as we strive to deliver productivity improvements and diversify our sourcing footprint. By mid-year, we expect to return to a margin profile similar to how we closed last year. And third, we're shifting our investment dollars more rapidly and aggressively in new product lines, distribution channels, and services than previously planned. And that brings me to my third big takeaway. We will be accelerating our efforts to diversify our product lines, our channels, and our revenue growth away from largely BarkBox subscriptions. Those subscriptions still accounted for around 85% of all revenue last year.
Speaker Change: But that will decrease significantly in the back half of the year as we strive to deliver productivity improvements and diversify our sourcing footprint.
Speaker Change: By midyear, we expect to return to a margin profile similar to how we closed last year.
Speaker Change: And third we are shifting our investment dollars more rapidly and aggressively in new product lines distribution channels and services than previously planned.
Speaker Change: And that brings me to my third big takeaway.
Speaker Change: We will be accelerating our efforts to diversify our product lines or channels at our revenue growth away from largely park box subscriptions.
Speaker Change: So subscription is still accounted for around 85% of all revenue last year.
Matt Meeker: And while that number is coming down from previous years, it's not moving fast enough. And now more than ever, we need for this to happen much faster. We've concentrated our marketing dollars almost exclusively on D2C subscription boxes, leaving little to nothing for new opportunities. So going forward, we'll pull back on such heavy investment in the subscription box business to invest elsewhere, such as our new consumables line coming in August, new services coming from the BarkAir team, further acceleration into the Wholesale Channel and Amazon and Chewy, and even AI-driven apps for dogs and their Last year, we showed what we can do with a bit of focus and investment when we started BarkAir.
Speaker Change: While that number is coming down from previous years, it's not moving fast enough and now more than ever we need for this to happen much faster.
Speaker Change: We've concentrated our marketing dollars almost exclusively on DTC subscription boxes.
Speaker Change: Leaving little to nothing for new opportunities.
Speaker Change: So going forward, we'll pull back on such heavy investment in the subscription box business to invest elsewhere.
Speaker Change: Such as our new consumables line coming in August.
Speaker Change: New services coming from the <unk> team.
Speaker Change: Further acceleration into the wholesale channel and Amazon and chewy.
Speaker Change: And even AI driven apps for docs in their people.
Speaker Change: Last year, we showed what we can do with a bit of focus and investment when we started <unk>.
Matt Meeker: We launched BarkAir one year ago, and it delivered nearly $6 million in revenue in the first year. We flew roughly 1,000 passengers on over 100 flights. We're clearly meeting real demand from dog parents around the world. Many said this couldn't be done, but we're growing fast, opening new routes regularly, and solving a real problem for dogs and their pets.
Speaker Change: We launched <unk>, one year ago, and it delivered nearly $6 million in revenue in the first year.
Speaker Change: Roughly 1000 passengers on over 100 flights.
Speaker Change: We're clearly meeting real demand from dollar parents around the world.
Speaker Change: Many said this couldnt be done, but we're growing fast opening new routes regularly and solving a real problem for dogs and their people.
Matt Meeker: Much has changed in the first half of this year. So much has remained the same for us. The start of this year with tariffs and economic uncertainty have made consumers nervous, and they've pulled back. And tariffs add to the cost of most goods. But that doesn't change the opportunity we still have to build a global brand for dogs. And now we've proven we can do that with a positive bottom line. We know how to do it and we have a plan to remain EBITDA positive in the years ahead.
Speaker Change: Much has changed in the first half of this year.
Speaker Change: So much has remained the same for us.
Speaker Change: <unk> of this year with tariffs and economic uncertainty have made consumers nervous and they pulled back and tariffs add to the cost of most goods.
Speaker Change: But that doesn't change the opportunity we still have to build a global brand for docs and now we've proven we can do that with a positive bottom line.
Speaker Change: Know how to do it and we have a plan to remain EBITDA positive in the years ahead.
Matt Meeker: So in conclusion. Three big takeaways from this call are we delivered our first year of positive adjusted EBITDA. We intend to be EBITDA positive again this year and going forward. We intend to accelerate the diversification of our revenue faster than previously planned.
Speaker Change: So in conclusion.
Speaker Change: Three big takeaways from this call are we.
Speaker Change: We delivered our first year of positive adjusted EBITDA, we intend to be EBITDA positive again, this year and going forward.
Speaker Change: And we intend to accelerate the diversification of our revenue faster than previously planned.
Zahir Ibrahim: Thank you, and now over to Zahir. Thanks, Matt, and good afternoon, everyone. I'll start by reviewing our fiscal fourth quarter and full year 2025 results.
Speaker Change: Thank you and now over to say here.
Speaker Change: Thanks, Matt and good afternoon, everyone.
Speaker Change: I'll start by reviewing our fiscal fourth quarter and full year 2025 results.
Zahir Ibrahim: then share how we're approaching fiscal 2026 particularly in light of the evolving tariff environment. Fiscal 25 was a significant year for BARC. We delivered our first full year of positive adjusted EBITDA driven by ongoing margin expansion and improvements in operating efficiency. These results reflect several years of focused execution and provide a strong financial foundation as we head into what we expect to be a more volatile macroeconomic environment. Starting at the top of the P&L, fourth quarter revenue was $115.4 million, bringing four-year revenue to $484.2 million, down 1.2% year-over-year. The launch of BarkAir coupled with strong growth in our commerce segment were positive top-line drivers.
Speaker Change: Then share how we're approaching fiscal 2026, particularly in light of the evolving tariff environment.
Speaker Change: Fiscal <unk> was a significant year for bulk we just delivered our first full year of positive adjusted EBITDA.
Driven by ongoing margin expansion and improvements in operating efficiency.
Speaker Change: These results reflect several years of focused execution and provide a strong financial foundation as we head into what we expect to be a more volatile macroeconomic environment.
Speaker Change: Starting at the top of the P&L fourth quarter revenue was $115 $4 million, bringing.
Speaker Change: Bringing full year revenue to $484 2 million down one 2% year over year.
Speaker Change: The launch of bulk coupled with strong growth in our commerce segment with positive topline drivers. However, the D to C business faced headwinds, particularly in Q4, primarily due to a deliberate pullback in marketing and promotion spend in response to growing tariff uncertainty and signs of weakening consumer sentiment.
Zahir Ibrahim: However, the D2C business faced headwinds, particularly in Q4, primarily due to a deliberate pullback in marketing and promotion spend in response to growing tariff uncertainty and signs of weakening consumer sentiment. In that environment, we did not believe incremental spend would generate a sound return. This decision also reflects a broader shift in our customer acquisition strategy.
Speaker Change: In that environment, we did not believe incremental spend would generate a sandwich.
Speaker Change: This decision also reflects a broader shift in our customer acquisition strategy.
Zahir Ibrahim: Rather than relying on discount-heavy tactics that often attract lower-retaining customers, we're focusing on driving higher-quality, longer-term relationships that support stronger lifetime value and profitability characteristics. Turning to commerce, revenue was $15.4 million in Q4 and $68.3 million for the full year, both up 27% versus fiscal 2024. Despite outbound shipping timing delays and tariff-related retailer pullback in the quarter, this segment performed well and will be a focus area for significant future growth as we continue to expand our retail footprint and broaden the review assortment across our partner networks. Commerce represented 14% of total revenue in fiscal 25, up from 11% last year, and we continue to expect it to grow approximately one-third of the business over the next two to three years.
Rather than relying on discounting heavy tactics, often lower was checking customers, we're focusing on driving higher quality longer term relationships.
Speaker Change: Stronger lifetime value and profitability characteristics.
Speaker Change: Turning to Commerce revenue was $15 4 million in Q4, and $68 $3 million for the full year, both up 27% versus fiscal 2024.
Speaker Change: Outbound shipping timing delays and tower related retired a pullback in the quarter. This segment performed well and will be a focus area for significant future growth as we continue to expand our retail footprint and broadened the SKU assortment across our partner network.
Speaker Change: <unk> represented 14% of total revenue in fiscal 'twenty five.
Speaker Change: From 11% last year, and we continue to expect it to grow approximately one third of the business over the next two to three years.
Zahir Ibrahim: Barker was another bright spot. The segment delivered $1.8 million in revenue in Q4 and nearly $6 million for the full year, a strong performance for a business launch less than a year ago. We're encouraged by early demand and we see continued opportunity as we scale routes and grow our service offering. We also made meaningful progress on our margin profile. Consolidated gross margin improved 80 basis points year over year in Q4 to 63.6%. For the four-year, gross margin was 62.4%, up 70 basis points reflecting margin expansion in both our D to C and commerce segments, up 120 and 230 basis points respectively, driven by continued focus on unit costs and supply chain optimization.
Speaker Change: Bulk.
Speaker Change: Another bright spot.
Speaker Change: The segment delivered $1 8 million in revenue in Q4, and nearly $6 million for the full year, a strong performance for our business launched less than a year ago were.
Speaker Change: We're encouraged by early demand and we see continued opportunity as we scale routes.
Speaker Change: Our service offering.
Speaker Change: We also made meaningful progress on our margin profile consolidated gross margin improved 80 basis points year over year in Q4 to 63, 6% for the full year gross margin was 62, 4% up 70 basis points, reflecting margin expansion in both our DTC and e-commerce segments up one.
Speaker Change: <unk> hundred 20, and 230 basis points, respectively, driven by continued focus on unit costs and supply chain optimization.
Zahir Ibrahim: Total marketing expense in Q4 was $17.3 million, down roughly $1.5 million from the prior year. But the four-year marketing spend was $83.8 million, up $4.5 million. As mentioned, we adopted a more cautious posture late in the year in response to macrouncertainty, and we expect to maintain this approach in the near term. Shipping and fulfillment expenses were $139 million for the year, roughly flat year over year. G&A expenses were $114 million, down $14 million from the prior year. In Q4, G&A totaled $28.7 million, a $1.6 million decline. These reductions reflect lower headcount and ongoing tighter cost management.
Speaker Change: Total marketing expense in Q4 was $17 $3 million down roughly $1 5 million from the prior year for the full year marketing spend was $83 8 million up $4 $5 million.
Speaker Change: As mentioned, we adopted a more cautious posture late in the year in response to macro uncertainty.
Speaker Change: To maintain this approach in the near term.
Speaker Change: Shipping and fulfillment expenses were $139 million for the year roughly flat year over year.
Speaker Change: G&A expenses were $114 million down $14 million from the prior year in Q4, G&A totaled $28 7 million.
Speaker Change: A $1 $6 million decline these reductions reflect lower head count and ongoing tight cost management.
Zahir Ibrahim: All together, these efforts support meaningful gains in profitability. Adjusted EBITDA was $5.2 million in Q4, a $3 million improvement year over year. For the full year, we delivered $5.4 million in Adjusted EBITDA, a $16 million improvement over fiscal 2024.
Speaker Change: Altogether these asset support meaningful gains in profitability adjusted EBITDA was $5 2 million in Q4, a $3 million improvement year over year for the full year, we delivered $5 4 million and adjusted EBIT.
Speaker Change: $16 million improvement over fiscal 2024 to reiterate matts comments, we've improved the business adjusted EBITDA by over $60 million in the last three years underscoring the leverage and the underlying structural improvements we've built into the business.
Zahir Ibrahim: To reiterate Matt's comments, we've improved the business Adjusted EBITDA by over $60 million in the last three years, underscoring the leverage and underlying structural improvements we've built into the business. Turning to the balance sheet, we ended the year with $94 million in cash, down $21 million in the quarter. This reflects the repurchase of 6 million shares for $10.5 million, as well as working capital timing, including a $7 million reduction in accounts payable. Inventory at year-end was $88 million, down $2 million from Q3. On share buybacks, it's worth noting that for the full year, we repurchased 11.4 million shares for an outlay of $18.5 million.
Speaker Change: Turning to the balance sheet, we ended the year with $94 million in cash down $21 million in the quarter. This reflects the repurchase of 6 million shares for $10 5 million as well as working capital timing, including a $7 million reduction in accounts payable.
Speaker Change: Sorry at year end was $88 million down 2 million from Q3.
Speaker Change: On share buybacks, it's worth noting that for the full year, we repurchased 11 4 million shares for an outlay of $18 $5 million.
Zahir Ibrahim: Looking ahead to fiscal 2026, the recent tariff increases, particularly those targeting Chinese imports, are prompting a broader reassessment of global supply chains. At Bark, we've accelerated several initiatives that were already under evaluation, including productivity programs and changes to sourcing and logistics. Productivity initiatives have played an important role over the past few years in delivering improved margins for Bark. By collaborating with our supply partners, new productivity initiatives for Fiscal 26 will help offset some of the tariff headwinds. As Matt noted, our toys, representing roughly two-thirds of our revenue, are currently sourced from China and subject to the new tariffs.
Speaker Change: Looking ahead to fiscal 2026, the recent tariff increases, particularly those targeting Chinese imports.
Speaker Change: A broader reassessment of global supply chains bulk we've accelerated several of the initiatives that were already under evaluation, including productivity programs and changes to sourcing and logistics.
Speaker Change: Productivity initiatives have played an important role over the past few years and delivering improved margins for bulk by collaborating with our supply partners new productivity initiatives for fiscal 'twenty six.
Speaker Change: Offset some of the tariff headwind.
Speaker Change: As Matt noted toys, representing roughly two thirds of our revenue are currently sourced from China and subject to the new tariffs in response, we will shift a portion of production to other geographies manufacturing in these regions will commence in the coming weeks.
Zahir Ibrahim: In response, we will shift a portion of production to other geographies. Manufacturing in these regions will commence in the coming weeks, and we expect to start shipping products from these facilities in time for the holiday quarter. By the end of fiscal 2026, we anticipate a more diversified and balanced sourcing footprint for our toy production. Additionally, we're evaluating modest price increases to help offset some of the tariff headwinds and maintain our gross margins. Our goal is to absorb as much of the cost pressure as possible while minimizing the impact on our customers. The domestic market is experiencing meaningful headwinds relating to USPS rate changes.
Speaker Change: To start shipping products from these facilities in time for the holiday quarter by the end of fiscal 2026, we anticipate a more diversified sourcing footprint.
Speaker Change: Oil production.
Speaker Change: Additionally, we're evaluating modest price increases to help offset some of the tariff headwinds and maintain our gross margins. Our goal is to absorb as much of the cost pressures possible, while minimizing the impacts on our customers.
Speaker Change: The domestic market is experiencing meaningful headwinds relating to USPS rate changes.
Zahir Ibrahim: However, we are confident we can mitigate these as we progress through the year and come through the other side in an even stronger position. Overall, given the macro volatility and changing tariff landscape, we feel very good about our plan for fiscal 26.
Speaker Change: We are confidence we can mitigate these as we progress through the year and come through the other side and an even stronger position.
Speaker Change: Overall, given the macro volatility and changing landscape, we feel very good about our plans for fiscal 2006 at the same time, though we also appreciate the uncertainty that lies ahead supplier transitions of marketing to carry risk in many key variables such as future tariff actions trade policy in place.
Zahir Ibrahim: At the same time, though, we also appreciate the uncertainty that lies ahead. Supplier transitions of magnitude carry risk, and many key variables such as future tariff actions, trade policy, inflation, and consumer response remain outside of our control.
Speaker Change: Consumer response remains outside of our control given this backdrop, we are unable to provide full year guidance. At this time, we will continue to monitor the environment closely and provide updates as conditions evolve and we gain more clarity.
Zahir Ibrahim: Given this backdrop, we are unable to provide full-year guidance at this time. We will continue to monitor the environment closely and provide updates as conditions evolve and we gain more clarity.
Zahir Ibrahim: Let me now walk you through our outlook for the fiscal first quarter. Shortly after the 145% tariff took effect in early April, we paused inbound shipping and asked suppliers to delay shipping any finished goods from China. Several of our retail partners also asked us to do the same, opting to defer imports as they assessed the situation. While we avoided the steepest portion of tariff exposure, we have purchased inventory with approximately $4 million in additional tariff-related costs, and these will flow through our P&L in H1. Delaying inbound products has also weighed on commerce revenue, as some retailers paused product intake for six to eight weeks.
Speaker Change: Let me now walk you through our outlook for the fiscal first quarter.
Speaker Change: Shortly after the 145% Paris took effect in early April we paused inbound shipping and our suppliers to delay shipping any finished goods from China. Several of our retail partners also asked us to do the same opting to defer unfolds as they assess the situation.
Speaker Change: While we avoided the steepest portion of tariff exposure, we've purchased inventory was approximately $4 million in additional tariff related costs on lease will flow through our P&L in H one.
Speaker Change: Delaying inbound products has also weighed on commerce revenue.
Speaker Change: Some retailers pull as product Didnt take for six to eight weeks.
Zahir Ibrahim: These commerce dynamics, along with our pullback in DTC marketing and promotion spend, will impact revenue in the quarter. As a result, we expect Q1 total revenue of between $99 to $101 million, down 14% at the midpoint versus last year. We anticipate a stronger performance in adjusted EBITDA, with the first quarter coming in between minus $1 million and positive $1 million, the midpoint reflecting a $1.8 million improvement versus last year, despite including higher tariff-related costs. Following the government's temporary rollback of tariffs to 30% We've resumed importing at an accelerated pace, and we expect a notable inventory build this quarter, which we anticipate will unwind through H2.
Speaker Change: These commerce dynamics, along with our pullback in DTC marketing and promotion spend will impact revenue in the quarter.
Speaker Change: As a result, we expect Q1 total revenue of between $99 million to $101 million down 14% at the midpoint versus last year.
Speaker Change: We anticipate a stronger performance in adjusted EBITDA with the first quarter come in between minus $1 million and positive $1 million.
Speaker Change: Mid point, reflecting a $1 million improvement versus last year, despite including the higher tariff related costs.
Speaker Change: Following the government's temporary rollback of tariffs to 30% we.
Speaker Change: We have resumed importing at an accelerated pace and we expect a notable inventory build this quarter, which we anticipate will unwind through H two.
Zahir Ibrahim: Note, this Q1 inventory build will impact our ending cash balance and free cash flow for the quarter.
Speaker Change: Note. This Q1 inventory build will impact our ending cash bonds and free cash flow for the quarter.
Zahir Ibrahim: In closing, we remain focused on what we can control, driving efficiency, staying agile, and investing with discipline. Thanks to the structural improvements we've made over the past several years, Bark is in a much stronger position to navigate this period of uncertainty.
Speaker Change: In closing we remain focused on what we can control driving efficiency, staying agile and investing with discipline.
Speaker Change: Thanks to the structural improvements we have made over the past several years bulk is in a much stronger position to navigate this period of uncertainty while external pressures will persist we're entering fiscal 'twenty six with stronger fundamentals, but more flexible operating model and our focused strategy to manage through near term disruption.
Zahir Ibrahim: While external pressures will persist, we're entering fiscal 26 with stronger fundamentals, a more flexible operating model, and a focused strategy to manage through near-term disruption.
Operator: With that, I'll turn the call over to the operator for Q&A.
Speaker Change: With that I will turn the call over to the operator for Q&A.
Maria Ripps: Your first question comes from Maria Ripps with Canaccord. Please go ahead. Great, good afternoon and thanks so much for taking my questions.
Speaker Change: Your first question comes from Maria <unk> with Canaccord. Please go ahead.
Maria: Great. Good afternoon, and thanks, so much for taking my questions first can you maybe give us a little bit more color on diversifying their supply base outside of China, I guess wanted to control overall.
Zahir Ibrahim: First, can you maybe give us a little bit more color on diversifying your supplier base outside of China? I guess what are some countries that you're considering and are there any incremental expenses sort of to keep in mind as you sort of as a result of this transition? Hi Mark. I'll take... Oh, go ahead, Zahir. Sorry. Hi, Maria. How are you doing? Yeah, we've, you know, for some time, we've been working on looking at alternative geographies in terms of diversifying our manufacturing. And so we're looking at a number of continents where we'll be moving manufacturing to.
Speaker Change: Any incremental expense is set up to keep in mind as Louis sales as a result of this transition.
Mike Majors: Hi, Mike.
Mike Majors: Yes.
Mike Majors: Oh go ahead Sir.
Mike Majors: Sorry, Hi, Maria How're you doing.
Zahir Ibrahim: For some time, we've been working on looking at alternative geographies in terms of diversifying our manufacturing.
Mike Majors: And so we're looking at a number of consequence, while removing manufacturing too.
Zahir Ibrahim: Obviously, the extent of that shift will depend on how the tariff rates move going forward. But we have the flexibility if we wanted to, to manufacture all of our toys outside of China by the end of this fiscal year. Got it, that's helpful.
Mike Majors: We see the extent of our shift Brooks.
Mike Majors: It depends on how rates move going forward, but we have the flexibility if we wanted to to manufacture all of our choice.
Mike Majors: Side of China by the end of this fiscal year.
Mike Majors: Got it that's helpful. And then can you maybe.
Ryan Meyers: And then can you maybe update us on your progress migrating to the Shopify platform? Has it been completed at this point? And can you talk about sort of any recent changes in conversion rates and any other core KPIs sort of as a result?
Mike Majors: Data on your progress migrate over to the Shopify platform has all been completed at this point.
Mike Majors: Can you talk about that.
Ryan Meyers: Mr Thompson conversion rolls on.
Mike Majors: Our core Kpis, so as a result, thanks so much.
Matt Meeker: Thanks so much. Sure. It for the most part has been complete. The only reason I say for the most part is we have, if you were to go to BarkBox.com, you would see that site is still live, but we don't send any traffic there. We don't pick up new subscribers or anything there. So that will sunset as the year goes on. All of our active subscribers and new subscribers are coming through Bark.co. All of our products are listed there. The performance in terms of new customer acquisition and conversion and managing the cost of acquisition has been pretty decent through the early part of this or ever since we started to migrate last October and November in a meaningful way.
Mike Majors: Sure.
Mike Majors: It's for the most part has been completed the only reason I say for the most part as we have.
Mike Majors: If you were to go to park box Dot Com you would see that site is still alive, but we don't send any traffic there we don't pick up new subscribers or anything there. So.
Mike Majors: That will sunset as the year goes on.
Mike Majors:
Mike Majors: But.
Matt Meeker: All of our active subscribers and new subscribers are coming through park Dacko all of our products are listed there.
Mike Majors: The performance in terms of new customer acquisition and conversion and managing the cost of acquisition.
Matt Meeker: <unk> has been pretty decent through.
Mike Majors: Through the early part of this year are ever since we started to migrate last October and November in a meaningful way.
Matt Meeker: Now, there's a lot of experimentation going on, which is some of the benefit of the platform. We've stepped into a platform that is much more nimble and allows us to test and try things much quicker than we were before. So, we're taking advantage of that. And that'll never be done, but we're learning a lot really quickly. And then, as we knew and as we signaled in past calls, when you move over a million people plus onto a new platform, Things won't work the same way they did in the past, and we've identified a lot of those holes or gaps, filled them in, and we've got our functionality in place.
Matt Meeker: Now, there's there's a lot of experimentation going on which is some of the benefit of the platform.
Mike Majors: We have stepped into a platform that is much more nimble.
Mike Majors: And allows us to test and try things much quicker than we were before so we're we're taking advantage of that.
Mike Majors: And that will never be done but.
Mike Majors: We're learning a lot really quickly and then there is as we as we knew and as we signaled in past calls when you move over a million people plus onto a new platform.
Mike Majors: Won't work the same way they did in the past and we've identified a lot of those holes or gaps filled that man.
Mike Majors:
Mike Majors: And we've we've got our functionality.
Matt Meeker: And we're going to continue to do that.
Matt Meeker: Thank you. Back to PAR as to where it was before, or maybe just a little bit ahead of PAR. So from a platform perspective, feeling really good about where we are with Shopify and And how we're operating on it still still a learning curve, but we're we're accelerating every day Great.
Mike Majors: Back to par as to where it was before.
Mike Majors: Maybe just a little bit ahead of par so.
Mike Majors: From a platform perspective, feeling really good about where we are with with shopify and.
Mike Majors: And how we're operating on it still learning curve, but we're accelerating.
Mike Majors: <unk> every day.
Operator: Thanks so much for the call, Amanda.
Speaker Change: Great. Thanks, so much for polymer.
Ryan Meyers: Your next question comes from Ryan Meyers with Lake Street Capital Market. Please go ahead. Yeah, hi guys. Thanks for taking my questions.
Speaker Change: Your next question comes from Brian Meyers with Lake Street Capital markets. Please go ahead, yes.
Brian Meyers: Hey, guys. Thanks for taking my questions.
Ryan Meyers: First one for me, I just want to make sure I fully understand kind of the dynamic in the direct-to-consumer business, because if I think back to last quarter, I believe we were seeing some positive signs out of my kind of subscriber growth there, and it looked like things were kind of pointing in the right direction. So, you know, one, curious what you guys kind of saw throughout the quarter, and then, you know, what really the big dynamic is as far as, you know, why not spend the marketing dollars there and why try to, you know, really diversify out of that business further.
Speaker Change: First one for me I, just want to make sure I fully understand kind of the dynamic in the direct to consumer business, because if I think back to last quarter. I believe we were seeing some positive signs out of subscriber growth there and it looked like things were kind of pointing in the right direction. So one curious what you guys kind of soft throughout the quarter and then what really the big dynamic is as far as.
Speaker Change: Why not spend the marketing dollars there anymore.
Speaker Change: <unk> tried to really diversify out of that business further.
Ryan Meyers: Yeah, thanks, Ryan. And I think you captured it. Well, we had a very strong holiday quarter when it came to acquiring new customers. A lot of that on the strength of the move to the Shopify platform. And we came into calendar 2025 pretty excited about that and January was off to a really great start and You know, just about. I guess if you took like a consumer sentiment chart and overlaid that with the rollout of tariffs and our business performance, they would all look pretty similar. There's a real tracking there. So as the consumer got more nervous and the tariff noise got louder and the consumer got more nervous and round and round, our new customer acquisition and our retention was feeling more and more pressure.
Speaker Change: Yeah.
Brian: Thanks, Brian.
Speaker Change: You captured it well we had.
Speaker Change: Very strong holiday quarter, when it came to acquiring new customers.
Speaker Change: A lot of that on the strength.
Speaker Change: Move to the Shopify platform.
Speaker Change: And we came into.
Speaker Change: Calendar 2025 pretty excited about that.
Speaker Change: And January was off to a really great start and.
Speaker Change: Just about.
I guess, if you took like a consumer sentiment chart.
Speaker Change: And overlaid that with the rollout of tariffs and our business performance. They would all look pretty similar.
Speaker Change: There is a real tracking there so as.
Speaker Change: The consumer got more nervous and the tariff noise got louder than the consumer got more nervous and round and round.
Speaker Change: Our new customer acquisition and our retention.
Speaker Change: I was feeling more and more pressure and we are also looking at the cost side of the business, saying.
Matt Meeker: And we were also looking at the cost side of the business saying, you know, 10, 20, 80, 145% tariff. is a meaningful and unsustainable headwind. And as Zahir talked about, we've done. Our supply chain team, who's phenomenal, has done a great job in mitigation on that, and within the last mile delivery efforts. They've done a fantastic job, but at the same time, we've known for several years, and you all ask the questions about what about the growth into new categories, into new channels. And I don't want to say.
Speaker Change: 10, 2080, 145% tariff is.
Speaker Change: As a meaningful and unsustainable headwind.
Speaker Change: And as.
Speaker Change: Here you talked about we've done.
Speaker Change: Our supply chain team is phenomenal has done a great job and mitigation on that.
Speaker Change: And within the last mile delivery.
Speaker Change: Effort so.
Speaker Change: They've done a fantastic job.
Speaker Change: At the same time, we've known for for several years and you all have asked the questions about.
Speaker Change: What what about the growth in new categories into new channels.
Speaker Change: And I don't want to say we.
Matt Meeker: We haven't taken it seriously, and that's a big reason for the move to the Shopify platform, and now that we're there, we have that flexibility, but There's something about staring, looking yourself in the mirror with 145% tariffs affecting a huge amount of your inbound products and saying, It's long overdue for us to really, really take this seriously and stop pouring every marketing dollar and 99% of our brainpower into a toy business that has those dynamics and really isn't, we know isn't the growth engine of the future. So all of that said to us. Let's start making that transition now.
Speaker Change: We haven't taken it seriously and that's a big reason for the move to the Shopify platform.
Speaker Change: And now that we're there we have that flexibility but.
Matt Meeker: There is something about stirring looking yourself in the mirror with.
Speaker Change: 145% tariffs affecting.
Matt Meeker: A huge amount of your inbound products in Spain.
Speaker Change: It's long overdue for us to really really take this seriously and stopped pouring every marketing dollar in 99% of our brainpower into.
Speaker Change: Our toy business that.
Speaker Change: Has those dynamics and really isn't we know isn't the growth engine of the future. So all of that said to us.
Speaker Change: Let's start in making that transition now, let's make our plan for the future understand that that means.
Matt Meeker: Let's make our plan for the future. Understand that that means in the short term, we're not pulling a lever of growth as hard as we once were or we could because we're gonna take those dollars and those people and refocus them on those growth engines of the future. So that's where we are, and the team and I feel really good about. about where this goes. Yeah.
Speaker Change: In the short term.
Speaker Change: We're not pulling a lever of growth as hard as we once were or are we could because we are going to take those dollars and those people and refocus them on those growth engine in the future.
Matt Meeker: So that's where we are in and.
Speaker Change: The team and I feel really good about.
Speaker Change: Where this goes.
Speaker Change: Got it no that's super helpful. And then lastly, thinking about the ecommerce segment I know there was some stuff that you talked about in the prepared remarks as far as the impact that that's going to have on the first quarter. So understand that but just want to make sure I understand from a demand perspective have you guys seen any significant changes there or.
Speaker Change: The impact Youre expecting to see more just on the timing of orders.
Speaker Change: Just to understand if the demand still remains strong for the ecommerce offerings that you guys.
Speaker Change: Yeah, Hey, Ryan.
Zahir Ibrahim: Hey, Ryan. This is Zahir. Yeah, commerce demand has been pretty strong. You know, we grew 27% in fiscal 25. The one thing we did note as we got into Q4 and you had the tariff noise, a lot of customers slowed down the pace at which they placed their orders, and they adopted more of a wait-and-see approach in terms of placing orders. And so, you know, we experienced some pullback in Q4, continuing into Q1, you know, the highest rate of tariffs kicked in in April. And so at that point, some of the key customers said, look, we'd like to just wait before we place our orders, especially for some of the upcoming seasonal type of items. But as we've gone through and seen the tariff change, you know, a lot of those conversations have reverted back to getting product into the country and fulfilling some of the initial conversations that we had with them.
Speaker Change: Yeah.
Speaker Change: Yes, commerce demand has been.
Speaker Change: Pretty strong we grew 27% in fiscal 'twenty five the one thing we did notes as we got into Q4 and you have the <unk>.
Speaker Change: Tariff noise, a lot of customers slowed down the pace at which they would place our orders and they are adopting more of a wait and see approach.
Speaker Change: In terms of placing orders and so we experienced some pull back in Q4.
Speaker Change: Continuing into Q1, the highest rates of tariffs kicked in in April and so at that point some of the key customer said look wed like to just wait before we place our orders, especially for some of the upcoming <unk>.
Speaker Change: Seasonal type of items.
Speaker Change: But as.
Speaker Change: <unk> gone through and seen the entire change in a lot of those conversations.
Speaker Change: To getting product into the country.
Speaker Change: And fulfilling some of the initial conversations that we have with them as we think about the year as a whole we expect <unk> to grow.
Ryan Meyers: As we think about the year as a whole, we expect commerce to grow, you know, at a similar sort of level as what we saw in fiscal 25. And beyond fiscal 26, we'd expect that pace of growth to actually accelerate and for commerce to be about a third of our business, you know, over the next two to three years. Got it. Thanks for taking my questions, guys. Scholl.
Speaker Change: As a similar sort of level is what we saw in fiscal 'twenty five.
Speaker Change: And beyond fiscal 'twenty, six we would expect that pace of growth to actually accelerate.
Speaker Change: So commerce to be about.
Speaker Change: A third of our business.
Speaker Change: Over the next two to three years.
Speaker Change: Got it thanks for taking my questions guys.
Speaker Change: Sure. Your next question comes from Kamil <unk> with Jefferies. Please go ahead.
Ryan Meyers: Your next question comes from Kaumil Gajrawala with Jeffries. Please go ahead. Hi everyone. I guess digging into the prior question a little more, I guess to understand the consumer sentiment obviously fell off. We saw a slowdown across a whole host of different categories. So it makes sense to sort of pull back marketing. But was any part of that decision or any part of the logic in that there's a certain amount of pricing that you would need to take just each incremental new user was going to be unprofitable anyways and so you didn't want them? Was that also part of it or was it just, hey, we were in this really tricky time where halfway through February till the end of March, the consumer just really fell off?
Speaker Change: I guess digging into.
Speaker Change: On the prior question, a little lowest I guess to understand yes.
Speaker Change: Consumer sentiment, obviously philosophy saw slowdown across a whole host of different CAD.
Speaker Change: So it makes sense to sort of pull back marketing books was any part of that decision or.
Speaker Change: Any part of.
Speaker Change: The logic and that there's a certain amount of pricing that you would need to take or just each incremental new user was going to be unprofitable anyways and so you didnt want them or does that also part of it or was it just hey, we were in this really tricky time, we're halfway through February till the end of March the consumer just really fell.
Speaker Change: Ross.
Matt Meeker: I mean, certainly the consumer fell off, and then you weigh the cost of the product and and building a sustainable business and obviously at 145% If we're passing that through to a consumer who's already feeling a great deal of pressure, we're not fooling ourselves saying they were buying a $30 bark box, but now they'll pay $60 for it or $55. That's just not tenable. And a bit of our vulnerability that we've been talking about for quite a few years of we have a very discretionary product. And if there's, if there's a headwind in terms of how the consumer is feeling or how much disposable income they have, the discretionary products are the ones that are going to take it first.
Speaker Change: I mean, certainly the consumer fell off and then you were.
Speaker Change: The cost of the product and.
Speaker Change: And building a sustainable business and obviously at 145%.
Speaker Change: If we're passing that through to our consumers are already feeling a great deal of pressure.
Speaker Change: We're not fooling ourselves, saying they were buying a 30 dollar dark box, but now they will pay $60 455.
Speaker Change: Yes.
Speaker Change: That's just not not tenable.
Speaker Change: And a bit of our vulnerability that we've been talking about for quite a few years of we have a.
Speaker Change: A very discretionary product.
Speaker Change: And if there is if there is a headwind in terms of how the consumers feeling or how much disposable income they have the.
Speaker Change: The discretionary products are the ones that are going to take it first and where.
Matt Meeker: And we're, we're right there. We've got. Way too much in that segment. So there's also a recognition of we're not going to actively acquire or overpay or pay at all for customers that could potentially have a long-term unprofitable profile and put pressure on our bottom line.
Speaker Change: We're right there we've got.
Speaker Change: Way too much in that segment. So there is also a recognition of we're not going to actively acquire.
Speaker Change: Our overpay or pay it off or.
Speaker Change: For customers that could potentially have a long term unprofitable profile and put pressure on our bottom line.
Matt Meeker: And also, we've just got to get away from being so discretionary in our product line, and we need to do that more urgently. So there was obviously that the tariff conversation has been dominating probably every company for the past 3-4 months. But we've been having a day-to-day, and we like the plan that we put together before, I'll say before February. We felt really good about it as a team, as a board, and then the world changed, and we've got to change with it. As I said on the call, we started from a place of being very happy and very proud that the bottom line was positive.
Speaker Change: And also we've just got to get away from.
Speaker Change: Being so discretionary in our product line and we need to do that more urgently.
Speaker Change: <unk>.
Speaker Change: So there is obviously that the tariff conversation has been dominated in probably every company for.
Speaker Change: Over the past three four months.
Speaker Change: But we've been having a day to day and.
Speaker Change: We like the plan that we've put together before.
Speaker Change: Hum.
Speaker Change: I will say before February.
Speaker Change: We felt really good about it as a team as a board and then the world changed and we've got to change with it so.
Speaker Change: As I said on the call we started from a place of being very happy and very proud that the bottom line was positive.
Ryan Meyers: and a whole lot of resolution that We're not going back. We are going to protect that bottom line. And we're going to make the business more robust, which led us to diversification and making. some of these shorter-term decisions within the quarter. So that's how we got here. Right, okay, that makes sense. As it relates to, you know, what to do now, you know, from a cash perspective, we might be at the, or may have even passed the point of high drama on tariffs. Does it make sense to, you know, be more aggressive on share buybacks?
Speaker Change: And in a whole lot of resolution that.
Speaker Change: We're not going back.
Speaker Change: We're going to protect that bottom line.
Speaker Change: And we're going to make the business more robust, which which allowed us to diversification and making.
Speaker Change: Some of these shorter term decisions within the quarter.
Speaker Change: So that's how we got there.
Speaker Change: Okay, Okay that makes sense.
Speaker Change: As it relates to.
Speaker Change: What to do now.
Speaker Change: From a cash perspective, we might be at the end.
Speaker Change: Maybe if you can pass deployment is high high drama.
Speaker Change: <unk>.
Speaker Change: It makes sense to be more aggressive on share buybacks or.
Matt Meeker: Or given the sort of shakiness of the environment and maybe your cost structure, is it better to conserve at the moment and just take this out and, you know, keep as much cash on your balance sheet as possible? Yeah, we've been pretty aggressive about it through the through the quarter. And, and like you said, now we're here and I wish I felt like everything was settled and predictable. I don't feel that way.
Speaker Change: Given the sort of shakiness of the environment and maybe your cost structure.
Speaker Change: Is it better to conserve at the moment and.
Speaker Change: Just to wait this out.
Speaker Change: Yes, keep as much cash on your balance sheet as possible.
Speaker Change: Yeah, we've been pretty.
Speaker Change: Pretty aggressive about it through that through the quarter.
Speaker Change: And like you said an hour here and.
Speaker Change: <unk>.
Speaker Change: I wish I felt like everything was settled and predictable I don't feel that way and then we're also talking about making some.
Matt Meeker: And then we're also talking about making some meaningful shifts into new categories. Certainly there's some investment that's gone on internally where we've invested in a lot of new brand development and packaging development and new product lines with consumables that we're looking forward to rolling out in August. So there's investment there. There's also the potential of M&A being a tool. So we, and of course we want to manage the cash carefully. So I think we want that dry powder available to us as the year goes on. But if those opportunities are there, I think we've shown we're not shy about jumping in when we think the stock is severely undervalued and buying back more.
Speaker Change: The meaningful shifts into new categories.
Speaker Change: Certainly there is some investment that's gone on internally, where we've invested in a lot of new brand development in packaging development and new product lines with consumables that we're looking forward to rolling out in August.
Speaker Change: So there's there's investment there there's also the potential of M&A being a tool so.
Speaker Change: And of course, we want to manage the cash carefully.
Speaker Change: So I think we want that dry powder available to us as the year goes on but.
Speaker Change: If those opportunities are there I think we've shown we're not shy about jumping in when we think the stock is severely undervalued in and buying back more so we've got to weigh all of those opportunities, but it's it's something we've been really aggressive about over the past year or two.
Matt Meeker: So we've got to weigh all those opportunities. something we've been really aggressive about over the past year or two. Okay. All right. Great. Thank you.
Speaker Change: Okay, Alright, great. Thank you.
Ygal Arounian: Your final question comes from Ygal Arounian with Citigroup. Please go ahead. Hey guys, this is Wayne Trinhan for Ygal. I was hoping to dig into the commerce segment a little bit more. I was just wondering, maybe how your conversations with retailers have trended since that tariff rate came down a bit. And if you could give us maybe any sense of the backlog there of the pullback in deals. And maybe if you could give us a sense of whether these pullbacks are more from your existing customers expanding versus new retail partnerships.
Speaker Change: Your final question comes from Yigal <unk> with Citigroup. Please go ahead.
Speaker Change: Hey, guys. This is Wayne scale on for Yigal, I was hoping to dig into the ecommerce segment, a little bit more I was just wondering.
Speaker Change: Maybe how your conversations with retailers have trended so flat tariff rate came down a bit.
Speaker Change: And then if you could give us maybe any sense of the backlog there of the pullback on deals and.
Speaker Change: Maybe if you could give us a sense of whether these pullbacks or more from your existing customers expanding versus look retail partnerships.
Zahir Ibrahim: Hey Ygal, how are you doing? Just as I was saying to Ryan earlier on the call, we had some pullback that we experienced in Q4 and that rolled into Q1, just retailers being cautious and trying to manage through just a heavy tariff environment. As we've started to see the tariffs come down, you know, to a more reasonable level, I mean, 30% is reasonable but at a more reasonable level, you're seeing that demand and the order placement coming back in. A lot of the seasonal demand that we have that drives Q2 and Q3 in the commerce segment, a lot of those orders have been placed and product is either here or will be here in Q1 of fiscal 26.
Joe: Hey, Joe how are you doing.
Joe: Just a sort of sense of Orion earlier on the call. We had some pullback that we experienced in Q4.
Speaker Change: Im done.
Speaker Change: And that rolled into Q1.
Speaker Change: Swiss re Tyler's b.
Speaker Change: Being cautious.
Speaker Change: And China manage through just heavy tariff environment as we've started to see the tariffs.
Speaker Change: Come down.
Speaker Change: To a more reasonable level.
Speaker Change: 80% is reasonable.
Speaker Change: But.
Speaker Change: At a more reasonable level youre seeing that demand and the <unk>.
Speaker Change: Order placement coming back in a lot of the.
Speaker Change: Seasonal demand that we found that drives that drives.
Speaker Change: Q2, and Q3 in the Commerce segment, a lot of those orders have been placed in product is either here or will be here in Q1 of fiscal 'twenty six.
Zahir Ibrahim: So positive traction, I mean, I'd say there was just a temporary slowdown of placement of orders but things are back on schedule. We expect to see that strong growth continuing across existing customers as well as starting to have conversations with retailers as we launch our consumables offering Bark in the Belly, which we plan to launch later this year. So having a lot of positive conversations on that front as well. We expect our pace of growth to accelerate as we exit fiscal 26 and go into fiscal 27.
Speaker Change: Positive traction.
Speaker Change: I would tell you there was just a temporary slowdown of placement of orders, but things.
Speaker Change: Back on schedule.
Speaker Change: To see that strong growth continuing across existing customers.
Speaker Change: Well is starting to have conversations with retailers as we launch.
Speaker Change: Consumables offering bulk in the belly, which we plan to launch later this year, so having multiple stage conversations on that front as well.
Speaker Change: Outpatient growth to accelerate.
Speaker Change: Fix a fiscal 'twenty into fiscal 2007.
Zahir Ibrahim: Okay, thank you. And I don't know if you guys have broken down before, but have you given the breakdown in commerce between toys and consumables? Should we assume similar to DTC? Yeah, it's more heavily skewed today towards toys. I would say it's at least 90% is toys. There's a small amount of consumables. We started with some of the treats launched last year. With the launch of Bark in the Belly, I think that's where you're going to see a lot more traction. We're seeing some good traction pre the launch on Amazon and Chewy just of our consumables, some strong performance there.
Speaker Change: Okay. Thank you and I don't know if you guys have broken down before it but have you given the breakdown in commerce between toys that consumables should we assume similar to DTC.
Speaker Change: It's more heavily skewed to date towards choice I would say it's.
Speaker Change: At least 90% is choice.
Speaker Change: There's a small amount of consumables.
Speaker Change: We started with some treats launch last year.
Speaker Change: With the launch of Bakken the polyethylene, that's where you're going to see a lot more traction we're seeing some good traction pre the launch on Amazon and chewy just of our consumables. Some strong performance fast. So we expect Amazon or chewy to continue to build performance and then kind of shelf placement and distribution at the backend of this year.
Zahir Ibrahim: We expect Amazon and Chewy to continue to build performance and then get shelf placement and distribution at the back end of this year on the consumables overall launch.
Speaker Change: On the consumables overall launch.
Zahir Ibrahim: All right. Thank you.
Speaker Change: Alright, thank you.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Operator: You may now disconnect.
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