BARK Inc Class A ((BARK)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for BARK Inc. Class A painted a generally optimistic picture for the company’s financial future, despite facing some challenges. The company reported significant enhancements in its EBITDA, robust growth in the Commerce segment, and successful international forays. However, it is also grappling with a decline in the direct-to-consumer (D2C) segment revenue and uncertainties surrounding the timing of its quarterly commerce revenue.
Record EBITDA Improvement
BARK Inc. celebrated its 10th consecutive quarter of year-over-year adjusted EBITDA improvement, marking a $4.9 million enhancement compared to the previous year. This consistent progress puts the company on a solid path toward achieving its first full year of adjusted EBITDA profitability.
Commerce Segment Growth
The company’s Commerce segment experienced substantial growth, delivering $20.3 million in revenue, which represents a 43% increase compared to the previous year and a 27% rise year-to-date. This impressive growth was primarily driven by new partnerships and expanded shelf space.
D2C New Subscriptions Increase
In the direct-to-consumer segment, BARK recorded its highest quarter for new subscriptions in three years, with an 11% year-over-year increase achieved at a lower acquisition cost, marking a significant milestone for the segment.
Successful Platform Transition
BARK successfully transitioned all its paid media traffic to a new Shopify platform, yielding positive early results. Notably, 43% of checkouts were completed using Shop Pay, a feature previously unavailable on older platforms.
Gross Margin Improvement
The company’s consolidated gross margin improved to 63%, up 90 basis points from the previous year. This improvement enables more efficient investment in top-line growth, supporting further expansion initiatives.
International Expansion
BARK continued its international expansion by launching on Amazon Europe and entering markets such as Fressnapf in Europe and Pets at Home in the UK, broadening its global reach.
D2C Revenue Decline
Despite some successes, the D2C segment faced a 4% revenue decline compared to the previous year, with challenges such as shipping delays impacting customer retention.
Uncertainty in Commerce Segment Timing
The company noted that the timing of retailer shipments within the Commerce segment introduces variability, which affects quarterly revenue visibility and planning.
Free Cash Flow Concerns
BARK’s free cash flow was a concern, as it was negative $2 million for the quarter and negative $1.2 million year-to-date. However, the company expects to achieve around breakeven for the full year.
Forward-Looking Guidance
Looking ahead, BARK surpassed its revenue expectations and reported a $4.9 million improvement in adjusted EBITDA year-over-year. The company anticipates its first EBITDA-positive year and projects mid- to high-single-digit top-line growth in fiscal year 2026. This growth is expected to be driven by ongoing improvements in gross margins and strategic partnerships with companies like Chewy and Amazon.
In summary, BARK Inc.’s earnings call highlighted a positive financial trajectory, underscored by record EBITDA improvements and strong commerce segment growth. While challenges remain, particularly within the D2C segment, the company’s strategic initiatives and international expansion efforts position it well for future success.
