BARK Reports Second Quarter Fiscal Year 2022 Results

NEW YORK--(BUSINESS WIRE)--November 10, 2021-- 

The Original BARK Company (NYSE: BARK) ("BARK" or the "Company"), a leading global omnichannel brand for dogs and their parents, today announced its financial results for the fiscal second quarter ended September 30, 2021.

Highlights

   -- Delivered fiscal second quarter 2022 revenue of $120.2 million, a 39.1% 
      increase year-over-year, and a robust gross margin of 58.2%. 
   -- Added approximately 271,000 Active Subscriptions, bringing total to 2.1 
      million as of quarter-end. 
   -- Achieved a quarterly LTV-to-CAC of 4.9x, driven by record Average Order 
      Value, strong customer retention, and continued marketing efficiency. 
   -- The Original Bark Company is changing its corporate name to BARK, Inc.; 
      the Company expects this change to be effective on November 22, 2021. 

"BARK continues to benefit from powerful secular and channel tailwinds, including growing dog ownership, increasing spending on pets, and an expanding share of pet sales occurring online. Last quarter, we delivered strong results across several key metrics, including a 39% increase in Active Subscriptions, a 34% increase in Subscription Shipments, and a record-high Average Order Value of $29.73," said Manish Joneja, Chief Executive Officer of BARK. "Notwithstanding the challenging macro environment with increased freight costs and rising media rates, we delivered a robust gross margin of over 58%, and maintained a very healthy LTV-to-CAC of 4.9x in the quarter, underscoring our strong customer retention, continued marketing efficiency and strategic positioning as one of the largest digitally native dog brands in the world today."

Fiscal Second Quarter 2022 Details:

Revenue

Total revenue increased 39.1% to $120.2 million in the second quarter of fiscal year 2022 as compared to $86.4 million in the second quarter of fiscal year 2021.

   -- Direct to Consumer ("DTC") revenue increased 41.7% to $106.8 million in 
      the second quarter of fiscal year 2022 as compared to the same period 
      last year. The growth in DTC revenue was driven by an increase in 
      Subscription Shipments, Average Order Value ("AOV"), and Add-to-Box 
      revenue. 
   -- Commerce revenue increased 20.8% to $13.3 million in the second quarter 
      of fiscal year 2022 as compared to the same period last year. This growth 
      reflects increases in both the number of retailers we partnered with, as 
      well as volume increases amongst existing retailer partners. 

Gross Profit

Gross profit was $69.9 million in the second quarter of fiscal year 2022 up from $51.6 million in the second quarter of fiscal year 2021. Gross margin was 58.2% in the second quarter of fiscal year 2022 compared to 59.7% in the second quarter of fiscal year 2021. The decrease in gross margin in the second quarter of fiscal year 2022 was primarily due to higher inbound freight costs as a result of worldwide shipping congestion.

Operating Expenses

General and administrative expenses were $68.2 million in the second quarter of fiscal year 2022, versus $39.3 million in the second quarter of fiscal year 2021. The year-over-year increase was driven by greater shipment volume associated with a 34.3% increase in total Subscription Shipments, higher outbound shipping and fulfillment rates associated with industry wide shipping congestion, as well as additional expenses in connection with the build out and staffing of our BARK Eats and BARK Bright businesses. The Company also incurred incremental expenses associated with being a newly public company.

Advertising and marketing expenses increased $4.1 million to $17.1 million in the second quarter of fiscal year 2022 from $13.0 million in the second quarter of fiscal year 2021. This increase was primarily due to the year-over-year increase in Customer Acquisition Costs ("CAC") as media rates exceed pre-COVID levels in comparison with the reduced media rates in the second quarter of fiscal year 2021, stemming from the onset of the COVID-19 pandemic. CAC was $51.71 in the most recent fiscal quarter, compared to $43.98 in the same period last year and $48.36 in the first quarter of fiscal 2022. Our Lifetime Value to CAC was a healthy 4.9x in the second quarter of fiscal year 2022. The Company manages its marketing budget on an LTV-to-CAC basis, targeting an annual ratio of 4x or greater.

Adjusted EBITDA

Adjusted EBITDA was $(8.8) million, with Adjusted EBITDA margin of (7.3)%, in the second quarter of fiscal year 2022, as compared to Adjusted EBITDA of $1.1 million and Adjusted EBITDA margin of 1.2%, in the second quarter of fiscal year 2021. Fiscal year 2022 is deliberately an investment year for BARK; the Company is investing in several strategic areas, including its highly-personalized food business, BARK Eats, as well as self-managed fulfillment assets.

Balance Sheet Highlights

The Company's cash and cash equivalents balance as of September 30, 2021 was $272.6 million. Last quarter, the Company invested in additional inventory in anticipation of the upcoming holiday season, and potential freight congestion surrounding it. As of September 30, 2021, the Company had total debt outstanding of $71.7 million, related to its outstanding convertible notes.

Third Quarter and Fiscal Year 2022 Outlook

Based on information available as of November 10, 2021, BARK is issuing guidance for the fiscal third quarter 2022 and fiscal year 2022 as follows:

   -- For fiscal third quarter 2022, the Company expects total revenue of $137 
      to $139 million. 
   -- For the fiscal year 2022, due to uncertainty surrounding the macro 
      freight and shipping environment, the Company anticipates roughly 2% of 
      risk to the $516 million of revenue guidance originally provided in 
      December of 2020. 
   -- The Company is revising its fiscal year 2022 Adjusted EBITDA guidance to 
      ($38) million to ($40) million, from approximately ($31) million, due to 
      greater-than-expected shipping and fulfillment costs, as a result of 
      macro shipping congestion and rising shipping rates; incremental public 
      company costs, associated with preparing to comply as a large accelerated 
      filer with the requirements of Section 404(b) of the Sarbanes-Oxley Act; 
      higher D&O insurance, as a result of rising demand on insurers; and 
      additional audit fees as a result of the timing of the Company's merger 
      with Northern Star Acquisition Corp. 

Conference Call Information

A conference call to discuss second quarter fiscal year 2022 results will be held today, November 10, 2021, at 4:30 p.m. ET. During the conference call, the Company may make comments concerning business and financial developments, trends and other business or financial matters. The Company's comments, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.

Those who wish to participate in the call may do so by dialing (866) 465-0807 or (639) 716-2121 for international callers, the conference ID 7141738. The conference call will also be available to interested parties through a live webcast at https://investors.bark.co/. A recording will be available for 12 months after the date of the event. Recordings may be accessed at https://investors.bark.co/.

About BARK

BARK is the world's most dog-centric company, devoted to making dogs happy with the best products, services and content. BARK's dog-obsessed team applies its unique, data-driven understanding of what makes each dog special to design playstyle-specific toys, wildly satisfying treats and wellness supplements, and dog-first experiences that foster the health and happiness of dogs everywhere. Founded in 2012, BARK loyally serves dogs nationwide with monthly subscription services, BarkBox and Super Chewer; a curated e-commerce experience on BARKShop.com; custom collections via its retail partner network, including Target and Amazon; wellness products that meet your dogs' needs with BARK Bright; and a personalized meal delivery service for dogs BARK Eats. At BARK, we want to be the people our dogs think we are and promise to be their voice until every dog reaches its full tail-wagging potential. Sniff around at bark.co for more information.

Cautionary Statement Regarding Forward Looking Statements

Certain statements included in this press release are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "would," "plan," "predict," "potential," "seem," "seek," "future," "outlook," and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial and performance metrics, including all statements under the heading "Third Quarter and Fiscal Year 2022 Outlook," and projections of market opportunity.