PLBY Group Inc

Previous wording

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2024 and 2023 and the related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements as of and for the years ended December 31, 2023 and 2022 and the related notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 29, 2024. This discussion contains forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings “Risk Factors”, “Business” and “Cautionary Note Regarding Forward-Looking Statements” contained in our Annual Report on Form 10-K filed with the SEC on March 29, 2024. As used herein, “we”, “us”, “our”, the “Company”, and “PLBY” refer to PLBY Group, Inc. and its subsidiaries.

Current wording

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024 and 2023 and the related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements as of and for the years ended December 31, 2023 and 2022 and the related notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 29, 2024. This discussion contains forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings “Risk Factors”, “Business” and “Cautionary Note Regarding Forward-Looking Statements” contained in our Annual Report on Form 10-K filed with the SEC on March 29, 2024. As used herein, “we”, “us”, “our”, the “Company”, and “PLBY” refer to PLBY Group, Inc. and its subsidiaries.

Previous wording

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting us will be those that we anticipated. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from those discussed in the forward-looking statements. Factors that may cause such differences include, but are not limited to: (1) the inability to maintain the listing of the Company’s shares of common stock on Nasdaq; (2) the risk that the Company’s completed or proposed transactions disrupt the Company’s current plans and/or operations, including the risk that the Company does not complete any such proposed transactions or achieve the expected benefits from any transactions; (3) the ability to recognize the anticipated benefits of corporate transactions, commercial collaborations, commercialization of digital assets, cost reduction initiatives and proposed transactions, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and the Company’s ability to retain its key employees; (4) costs related to being a public company, corporate transactions, commercial collaborations and proposed transactions; (5) changes in applicable laws or regulations; (6) the possibility that the Company may be adversely affected by global hostilities, supply chain delays, inflation, interest rates, foreign currency exchange rates or other economic, business, and/or competitive factors; (7) risks relating to the uncertainty of the projected financial information of the Company, including changes in the Company’s estimates of cash flows and the fair value of certain of its intangible assets, including goodwill; (8) risks related to the organic and inorganic growth of the Company’s businesses, and the timing of expected business milestones; (9) changing demand or shopping patterns for the Company’s products and services; (10) failure of licensees, suppliers or other third-parties to fulfill their obligations to the Company; (11) the Company’s ability to comply with the terms of its indebtedness and other obligations; (12) changes in financing markets or the inability of the Company to obtain financing on attractive terms; and (13) other risks in “Part I—Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We caution that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements.

Current wording

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting us will be those that we anticipated. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from those discussed in the forward-looking statements. Factors that may cause such differences include, but are not limited to: (1) the inability to maintain the listing of the Company’s shares of common stock on Nasdaq; (2) the risk that the Company’s completed or proposed transactions disrupt the Company’s current plans and/or operations, including the risk that the Company does not complete any such proposed transactions or achieve the expected benefits from any transactions; (3) the ability to recognize the anticipated benefits of corporate transactions, commercial collaborations, commercialization of digital assets, cost reduction initiatives and proposed transactions, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and the Company’s ability to retain its key employees; (4) costs related to being a public company, corporate transactions, commercial collaborations and proposed transactions; (5) changes in applicable laws or regulations; (6) the possibility that the Company may be adversely affected by global hostilities, supply chain delays, inflation, interest rates, foreign currency exchange rates or other economic, business, and/or competitive factors; (7) risks relating to the uncertainty of the projected financial information of the Company, including changes in the Company’s estimates of cash flows and the fair value of certain of its intangible assets, including goodwill; (8) risks related to the organic and inorganic growth of the Company’s businesses, and the timing of expected business milestones; (9) changing demand or shopping patterns for the Company’s products and services; (10) failure of licensees, suppliers or other third-parties to fulfill their obligations to the Company; (11) the Company’s ability to comply with the terms of its indebtedness and other obligations; (12) changes in financing markets or the inability of the Company to obtain financing on attractive terms; and (13) other risks in this Quarterly Report on Form 10-Q, including those under “Part II—Item 1A. Risk Factors”, and in “Part I—Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We caution that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements.

Previous wording

We are a global consumer lifestyle company marketing our brands through a wide range of direct-to-consumer products, licensing initiatives, digital subscriptions and content, and online and location-based entertainment businesses. We reach consumers worldwide with products across four key market categories: Style and Apparel, including a variety of apparel and accessories products; Digital Entertainment and Lifestyle, including our creator platform, web and television-based entertainment, and our spirits and hospitality products; Sexual Wellness, including lingerie and intimacy products; and Beauty and Grooming, including fragrance, skincare, grooming and cosmetics.

Current wording

We are a global consumer lifestyle company marketing our brands through a wide range of licensing initiatives, digital subscriptions and content, online and location-based entertainment businesses and direct-to-consumer products. We reach consumers worldwide with products across four key market categories: Style and Apparel, including a variety of apparel and accessories products; Digital Entertainment and Lifestyle, including our creator platform, web and television-based entertainment, and our spirits and hospitality products; Sexual Wellness, including lingerie and intimacy products; and Beauty and Grooming, including fragrance, skincare, grooming and cosmetics.

Previous wording

We have three reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content. The Direct-to-Consumer segment derives its revenue from sales of consumer products sold directly to consumers through our own online channels and our retail stores. The Licensing segment derives revenue from trademark licenses for third-party consumer products, location-based entertainment businesses and online gaming. The Digital Subscriptions and Content segment derives revenue from the subscription of Playboy programming, which is distributed through various channels, including websites and domestic and international television, and sales of creator content offerings and memberships to consumers at the Playboy Club onplayboy.com.

Current wording

We have three reportable segments: Licensing, Digital Subscriptions and Content, and Direct-to-Consumer. The Licensing segment derives revenue from trademark licenses for third-party consumer products, and online and location-based entertainment businesses. The Digital Subscriptions and Content segment derives revenue from the subscription of Playboy programming, which is distributed through various channels, including websites and domestic and international television, and sales of creator content offerings and memberships to consumers at the Playboy Club onplayboy.com. The Direct-to-Consumer segment in prior year comparative periods is comprised of playboy.com e-commerce business, which in the third quarter of 2023 fully transitioned from an owned-and-operated model to a licensing model in the third quarter of 2023. As a result of such transition, the Yandy Sale, the TLA Sale, and the operating activities of Honey Birdette being classified as discontinued operations, there is no Direct-to-Consumer segment results presented for the three and nine months ended September 30, 2024.

Previous wording

We are pursuing a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential. We are doing this by leveraging our flagship Playboy brand to scale our creator platform with influencers who embody the Playboy brand’s aspirational lifestyle and attract best-in-class strategic partners. We are focused on our two key growth pillars: first, investing in the Playboy digital platform as we return to our roots as a place to see and be seen for creators and up and coming cultural influencers; and second, strategically expanding our licensing business in key categories and territories. We will continue to use our licensing business as a marketing tool and brand builder, in particular through our high-end designer collaborations and our large-scale strategic partnerships.

Current wording

We continue to pursue a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential. We are doing this by leveraging our flagship Playboy brand to scale our digital content businesses and attract best-in-class strategic partners. We are focused on our two key growth pillars: first, investing in the Playboy digital platform as we return to our roots as a place to see and be seen for creators and up and coming cultural influencers; and second, strategically expanding our licensing business in key categories and territories. We will continue to use our licensing business as a marketing tool and brand builder, in particular through our high-end designer collaborations and our large-scale strategic partnerships.

Previous wording

Our licensing revenues from China (including Hong Kong) as a percentage of our total revenues from continuing operations were 12% and 21% for the three months ended June 30, 2024 and 2023, respectively, and 8% and 21% for the six months ended June 30, 2024 and 2023, respectively. At the end of the first quarter of 2023, we entered into a joint venture (the “China JV”) with Charactopia Licensing Limited, the brand management unit of Fung Group. The China JV owns and operates the Playboy consumer products business in mainland China, Hong Kong and Macau. In 2023, due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly, and we had to renegotiate terms of, or terminate, certain licenses. Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets. Nonetheless, we continue to work with our China JV partner to re-invigorate our China-market Playboy direct-to-consumer and licensing businesses, by building on Playboy’s current roster of licensees and online storefronts and developing additional revenue through expanding into new product categories with new licensees.

Current wording

Our licensing revenues from China (including Hong Kong) as a percentage of our total revenues from continuing operations were 26% and 40% for the three months ended September 30, 2024 and 2023, respectively, and 24% and 41% for the nine months ended September 30, 2024 and 2023, respectively. At the end of the first quarter of 2023, we entered into a joint venture (the “China JV”) with Charactopia Licensing Limited, the brand management unit of Fung Group. The China JV owns and operates the Playboy consumer products business in mainland China, Hong Kong and Macau. In 2023, due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly, and we had to renegotiate terms of, or terminate, certain licenses. Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets. Nonetheless, we continue to work with our China JV partner to re-invigorate our China-market Playboy direct-to-consumer and licensing businesses, by building on Playboy’s current roster of licensees and online storefronts and developing additional revenue through expanding into new product categories with new licensees.

Previous wording

While we receive revenue throughout the year, our businesses have experienced, and may continue to experience, seasonality. For example, our licensing business historically experienced higher receipts in its first and third fiscal quarters due to the licensing fee structure in our licensing agreements, which typically require advance payment of such fees during those quarters, but such payments can be subject to variations, extensions or delays. Our direct-to-consumer businesses have historically experienced higher sales in the fourth quarter due to the U.S. holiday season, but changing market conditions and demand could affect such sales. Historical seasonality of revenues may be subject to change as increasing pressure from competition and changes in consumer trends and economic conditions impact our licensees and consumers. Transitioning to a capital-light business model with a more streamlined consumer products business may further impact the seasonality of our business in the future.

Current wording

While we receive revenue throughout the year, our licensing business has experienced, and may continue to experience, seasonality. Historical seasonality of revenues may be subject to change as increasing pressure from competition and economic conditions impact our licensees and consumers. The further transition of our business to a capital-light business model may further impact the seasonality of our business in the future.

Previous wording

We generate revenue from sales of consumer products sold through our retail stores or online direct-to-customer, trademark licenses for third-party consumer products and online and location-based entertainment businesses, and sales of creator content offerings and memberships to consumers on our creator-led platform onplayboy.com, in addition to subscriptions to our programming, which is distributed through various channels, including websites and domestic and international television.

Current wording

We generate revenue from sales of trademark licenses for third-party consumer products and online and location-based entertainment businesses, and sales of creator content offerings and memberships to consumers on our creator-led platform onplayboy.com, in addition to subscriptions to our programming, which is distributed through various channels, including websites and domestic and international television.

Previous wording

Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency fees, website expenses, digital platform expenses, marketplace traffic acquisition costs, credit card processing fees, personnel and affiliate costs, including stock-based compensation, costs associated with branding events, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.

Current wording

Cost of sales primarily consist of agency fees, website expenses, digital platform expenses, marketplace traffic acquisition costs, credit card processing fees, personnel and affiliate costs, including stock-based compensation and costs associated with branding events.

Previous wording

Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.

Current wording

Selling and administrative expenses primarily consist of corporate occupancy costs, personnel costs, including stock-based compensation, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.

Previous wording

Impairments consist of the impairments of our art held for sale, certain licensing contracts, right-of-use assets, Playboy-branded trademarks, trade names and goodwill.

Current wording

Impairments consist of the impairments of our artwork held for sale, internally developed software, certain licensing contracts, right-of-use assets, Playboy-branded trademarks, trade names and goodwill.

Previous wording

Other operating income, net consists primarily of gains recognized from the sale of crypto assets and other miscellaneous items.

Current wording

Other operating (expense) income, net consists primarily of gains recognized from the sale of crypto assets and other miscellaneous items.

Previous wording

In the first quarter of 2023, we recorded a loss on partial extinguishment of debt in the amount of $1.8 million related to the write-off of unamortized debt discount and deferred financing costs as a result of $45 million in prepayments of our senior debt pursuant to the third and fourth amendments of our 2021 Credit Agreement in February 2023. In the second quarter of 2023, we recorded a gain on partial extinguishment of debt in amount of $8.0 million upon the amendment and restatement of the 2021 Credit Agreement (as such term is defined in Note 8, Debt within the notes to the financial statements included in this Quarterly Report on Form 10-Q; see Note 8, Debt and “Liquidity and Capital Resources” for additional details).

Current wording

In the first quarter of 2023, we recorded a loss on partial extinguishment of debt in the amount of $1.8 million related to the write-off of unamortized debt discount and deferred financing costs as a result of $45 million in prepayments of our senior debt pursuant to the third and fourth amendments of our 2021 Credit Agreement in February 2023. In the second quarter of 2023, we recorded a gain on partial extinguishment of debt in amount of $8.0 million upon the amendment and restatement of the 2021 Credit Agreement (as such term is defined in Note 10, Debt within the notes to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q; refer to Note 10, Debt and “Liquidity and Capital Resources” for additional details).

Previous wording

Other income (expense), net consists primarily of other miscellaneous nonoperating items, such as bank charges and foreign exchange gains or losses as well as non-recurring transaction fees.

Current wording

Other income, net consists primarily of other miscellaneous nonoperating items, such as foreign exchange gains or losses, bank charges as well as non-recurring transaction fees.

Previous wording

The decrease in net revenues for the six months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to lower licensing revenue of $10.6 million, largely driven by the termination of certain Chinese licensing agreements in 2023, lower direct-to-consumer revenue of $7.2 million, as a result of $4.9 million less revenue from Playboy’s e-commerce site, as it changed from our ownership and operation to a licensed business model in the third quarter of 2023, and a $2.3 million decrease in revenue from Honey Birdette, partly offset by $1.3 million of higher revenue from our creator platform.

Current wording

The decrease in net revenues for the three months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to lower licensing revenue of $3.6 million, largely driven by the termination of certain Chinese licensing agreements in 2023, partly offset by $0.3 million of higher revenue from our creator platform.

Previous wording

The decrease in cost of sales for the three months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to a decrease in inventory reserve charges of $0.7 million, a $2.6 million decrease in direct-to-consumer product costs, as a result of a $1.4 million decrease in product costs from Playboy’s e-commerce site, as it changed from our ownership and operation to a licensed business model in the third quarter of 2023, and a $1.2 million decrease in product costs from Honey Birdette, due to lower revenues, lower licensing product costs of $0.9 million primarily due to the termination of Playboy’s e-commerce licensing agreement in the second quarter of 2024, and lower digital subscriptions product costs of $0.4 million, which was partly offset by a $3.5 million increase in licensing commissions primarily due to a nonrecurring reduction in commission accrual in the prior year related to the termination of certain Chinese licensing agreements.

Current wording

The increase in cost of sales for the three months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to a $4.0 million increase in licensing commissions, primarily due to a nonrecurring reversal of commission accrual in the prior year related to the termination of certain Chinese licensing agreements, which was partly offset by $0.1 million less of licensing product costs, primarily due to the termination of Playboy’s e-commerce licensing agreement in the second quarter of 2024 and a $0.5 million decrease in payment processing and agency fees related to our creator platform.

Previous wording

The decrease in impairments for the three months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to $138.2 million of impairment charges on Playboy-branded trademarks, Honey Birdette’s trade names and goodwill as well as $8.1 million of impairment charges on a certain licensing contract recorded in the prior year comparative period, partly offset by $0.6 million of impairment charges on our corporate leases in the second quarter of 2024.

Current wording

The increase in impairments for the three months ended September 30, 2024, as compared to the prior year comparative period, was related to the write-off of our internally developed software of $4.7 million and the write-down of goodwill of $17.0 million, offset by $0.4 million of impairment charges on a certain licensing contract recorded in the prior year comparative period.

Previous wording

The decrease in other operating income, net was due to the gain on sale of our crypto assets in the prior year comparative period.

Current wording

The decrease in other operating expense, net was due to the loss from settlement of a promissory note in the prior year comparative period.

Previous wording

The increase in interest expense for the six months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to the higher interest rate on our senior secured debt during the six months ended June 30, 2024, compared to the prior year comparative period, as a result of the amendment and restatement of our senior secured debt in May 2023 and the A&R First Amendment in November 2023.

Current wording

The increase in interest expense for the three months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to the higher interest rate on our senior secured debt during the three months ended September 30, 2024, compared to the prior year comparative period, as a result of the amendment and restatement of our senior secured debt in May 2023 and the A&R First Amendment in November 2023.

Previous wording

The change in other (expense) income, net for the three months ended June 30, 2024, as compared to the prior year comparative period, was immaterial.

Current wording

The increase in other income, net for the three months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to foreign exchange adjustment in relation to certain of our Chinese licenses denominated in foreign currency.

Previous wording

The decrease in net revenues for the three months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to lower licensing revenue of $5.0 million, largely driven by the termination of certain Chinese licensing agreements in 2023, lower direct-to-consumer revenue of $5.2 million, as a result of $1.4 million less revenue from Playboy’s e-commerce site, as it changed from our ownership and operation to a licensed business model in the third quarter of 2023, and a $3.8 million decrease in revenue from Honey Birdette, partly offset by $0.3 million of higher revenue from our creator platform.

Current wording

The decrease in net revenues for the nine months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to lower licensing revenue of $14.2 million, largely driven by the termination of certain Chinese licensing agreements in 2023, lower direct-to-consumer revenue as a result of $5.0 million less revenue from Playboy’s e-commerce site, as it changed from our ownership and operation to a licensed business model in the third quarter of 2023, partly offset by $1.7 million of higher revenue from our creator platform.

Previous wording

The decrease in cost of sales for the six months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to a decrease in inventory reserve charges of $7.1 million, a $3.2 million decrease in direct-to-consumer product costs from Playboy’s e-commerce site, as it changed from our ownership and operation to a licensed business model in the third quarter of 2023, lower licensing product costs of $0.9 million due to the termination of Playboy’s e-commerce licensing agreement in the second quarter of 2024, and lower digital subscriptions product costs of $1.2 million, which was partly offset by higher licensing commissions of $1.5 million, primarily due to a partial reversal of commission accrual in the prior year comparative period related to the termination of certain Chinese licensing agreements.

Current wording

The decrease in cost of sales for the nine months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to inventory reserve charges of $3.7 million related to Playboy’s e-commerce site recognized in the prior year comparative period, a $3.4 million decrease in direct-to-consumer product costs from Playboy’s e-commerce site, as it changed from our ownership and operation to a licensed business model in the third quarter of 2023, $1.1 million less of licensing product costs due to the termination of Playboy’s e-commerce licensing agreement in the second quarter of 2024, a $0.5 million decrease in payment processing and agency fees related to our creator platform, and $1.3 million less of digital subscriptions product costs, which were partly offset by $5.5 million of higher licensing commissions, primarily due to a partial reversal of commission accrual in the prior year comparative period related to the termination of certain Chinese licensing agreements.

Previous wording

The decrease in selling and administrative expenses for the six months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to a $5.6 million decrease in stock-based compensation expense, lower technology costs of $4.9 million, primarily due to a $4.6 million restructuring charge taken on direct-to-consumer cloud-based software attributable to continuing operations in 2023, lower payroll expense of $4.0 million due to headcount reductions, lower severance expense of $2.3 million, a $2.1 million decrease in China JV expense due to cost cuts and non-recurring transaction expenses in 2023, lower audit, legal and consulting fees of $2.9 million, a $1.8 million decrease in digital marketing spend related to the Company’s discontinuation of owned-and-operated direct-to-consumer businesses, and lower insurance expense of $1.9 million due to renegotiation of insurance policies.

Current wording

The decrease in selling and administrative expenses for the nine months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to a $4.0 million decrease in stock-based compensation expense, lower technology costs of $1.0 million, primarily due to a restructuring charge taken on direct-to-consumer cloud-based software attributable to continuing operations in 2023, a $3.2 million decline in payroll expense due to headcount reductions, a $1.9 million reduction in severance expense, a $2.7 million decrease in China JV expense due to cost cuts and non-recurring transaction expenses in 2023, lower audit, legal and consulting fees of $3.8 million, a $1.4 million decrease in marketing spend, and a $2.0 million decrease in insurance expense due to the renegotiation of our insurance policies.

Previous wording

The decrease in impairments for the six months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to $138.2 million of impairment charges on Playboy-branded trademarks, Honey Birdette’s trade names and goodwill as well as $8.1 million of impairment charges on a certain licensing contract recorded in the prior year comparative period, partly offset by $2.4 million of impairment charges on our artwork held for sale in the first quarter of 2024 and $0.6 million of impairment charges on our corporate leases in the second quarter of 2024.

Current wording

The decrease in impairments for the nine months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to $65.5 million of impairment charges on Playboy-branded trademarks as well as $8.5 million of impairment charges on a certain licensing contract recorded in the prior year comparative period, partly offset by impairment charges of $17.0 million on our goodwill in the third quarter of 2024, impairment charges of $4.7 million related to our internally developed software in the third quarter of 2024, $2.4 million of impairment charges on our artwork held for sale in the first quarter of 2024 and $0.6 million of impairment charges on our corporate leases in the second quarter of 2024.

Previous wording

The decrease in other operating income, net was due to the gain on sale of our crypto assets in the prior year comparative period.

Current wording

The decrease in other operating income (expense), net was due to the $0.7 million loss from settlement of a promissory note, partly offset by a $0.2 million gain on sale of our crypto assets in the prior year comparative period.

Previous wording

The increase in interest expense for the three months ended June 30, 2024, as compared to the prior year comparative period, was primarily due to the higher interest rate on our senior secured debt in the second quarter of 2024, compared to the prior year comparative period, as a result of the amendment and restatement of our senior secured debt in May 2023 and the A&R First Amendment in November 2023.

Current wording

The increase in interest expense for the nine months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to the higher interest rate on our senior secured debt during the nine months ended September 30, 2024, compared to the prior year comparative period, as a result of the amendment and restatement of our senior secured debt in May 2023 and the A&R First Amendment in November 2023.

Previous wording

Gain on extinguishment of debt for the six months ended June 30, 2023 represented a $8.0 million gain due to the partial extinguishment of debt upon the amendment and restatement of our senior secured credit agreement in the second quarter of 2023, net of a $1.8 million loss recorded in the first quarter of 2023 due to the partial extinguishment of debt related to $45 million of prepayments of our senior debt.

Current wording

Gain on extinguishment of debt for the nine months ended September 30, 2023 represented a $6.1 million gain due to the partial extinguishment of debt upon the amendment and restatement of our senior secured credit agreement in the second quarter of 2023, net of a $1.8 million loss recorded in the first quarter of 2023 due to the partial extinguishment of debt related to $45 million of prepayments of our senior debt.

Previous wording

Fair value remeasurement gain for the six months ended June 30, 2023 represented the remeasurement of our mandatorily redeemable preferred stock liability to its fair value during the period, which was exchanged (and thereby eliminated) in connection with the A&R Credit Agreement in the second quarter of 2023.

Current wording

Fair value remeasurement gain for the nine months ended September 30, 2023 represented the remeasurement of our mandatorily redeemable preferred stock liability to its fair value during the period, which was exchanged (and thereby eliminated) in connection with the A&R Credit Agreement in the second quarter of 2023.

Previous wording

The change in other (expense) income, net for the six months ended June 30, 2024, as compared to the prior year comparative period, was immaterial.

Current wording

The increase in other income, net for the nine months ended September 30, 2024, as compared to the prior year comparative period, was primarily due to foreign exchange adjustment in relation to certain of our Chinese licenses denominated in foreign currency.

Previous wording

The change from benefit from income taxes to expense for the six months ended June 30, 2024, as compared to the prior year comparative period, was primarily driven by the change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities, offset by increased foreign income taxes in the six months ended June 30, 2024.

Current wording

The change from benefit to expense from income taxes for the nine months ended September 30, 2024, as compared to the prior year comparative period, was primarily driven by the change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities, offset by increased foreign income taxes in the nine months ended September 30, 2024.

Previous wording

•Impairments for the six months ended June 30, 2024 related to impairment charges on our artwork held for sale and corporate leases.

Current wording

•Impairments for the nine months ended September 30, 2024 related to impairment charges on our artwork held for sale, corporate leases and assets related to our Digital Subscriptions and Content business.

Previous wording

•Impairments for the three and six months ended June 30, 2023 related primarily to the impairments of intangible assets, including goodwill and impairments on certain of our licensing contracts.

Current wording

•Impairments for the three and nine months ended September 30, 2023 related primarily to the impairments of intangible assets, including goodwill and impairments on certain of our licensing contracts.

Previous wording

•Inventory reserve charges for the six months ended June 30, 2023 related to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the first quarter of 2023 to reflect the restructuring of the Playboy Direct-to-Consumer business.

Current wording

•Inventory reserve charges for the nine months ended September 30, 2023 related to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the first quarter of 2023 to reflect the restructuring of the Playboy Direct-to-Consumer business.

Previous wording

•Mandatorily redeemable preferred stock fair value remeasurement for the three and six months ended June 30, 2023 related to the fair value remeasurement, non-cash fair value gain of the liability for such preferred stock.

Current wording

•Mandatorily redeemable preferred stock fair value remeasurement for the three and nine months ended September 30, 2023 related to the fair value remeasurement, non-cash fair value gain of the liability for such preferred stock.

Previous wording

•Write-down of capitalized software for the six months ended June 30, 2023 related to a $4.6 million restructuring charge taken on direct-to-consumer cloud-based software in the first quarter of 2023, excluding $0.4 million of costs related to discontinued operations.

Current wording

•Write-down of capitalized software for the nine months ended September 30, 2023 related to a restructuring charge taken on direct-to-consumer cloud-based software in the first quarter of 2023, excluding costs related to discontinued operations.

Previous wording

•Adjustments for the three and six months ended June 30, 2024 are primarily related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for the acquisition of GlowUp that remained unsettled as of June 30, 2024, loss on the sale of artwork, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations.

Current wording

•Adjustments for the three and nine months ended September 30, 2024 are primarily related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for the acquisition of GlowUp that remained unsettled as of September 30, 2024, loss on the sale of artwork, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations.

Previous wording

•Adjustments for the three and six months ended June 30, 2023 are related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for the acquisition of GlowUp that remained unsettled as of June 30, 2023, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities, as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations.

Current wording

•Adjustments for the three and nine months ended September 30, 2023 are related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for the acquisition of GlowUp that remained unsettled as of September 30, 2023, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities, as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations.

Previous wording

Our Chief Executive Officer is our Chief Operating Decision Maker. Our segment disclosure is based on our intention to provide the users of our condensed consolidated financial statements with a view of the business from our perspective. We operate our business in three primary operating and reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content. Direct-to-Consumer operations include consumer products sold through brick-and-mortar retail stores and e-commerce sites. Licensing operations include the licensing of one or more of our trademarks, our Playboy retail platform operations effective July 2023, and/or images for consumer products and location-based entertainment businesses. Digital Subscriptions and Content operations include the production, marketing and sales of programming under the Playboy brand name, which is distributed through various channels, including domestic and international television, and sales of creator content offerings and memberships to consumers through the Playboy Club onplayboy.com.

Current wording

Our Chief Executive Officer is our Chief Operating Decision Maker. Our segment disclosure is based on our intention to provide the users of our condensed consolidated financial statements with a view of the business from our perspective. We operate our business in three primary operating and reportable segments: Licensing, Digital Subscriptions and Content and Direct-to-Consumer. Our Licensing segment includes the licensing of one or more of our trademarks, our Playboy retail platform operations effective July 2023, and/or images for consumer products and online and location-based entertainment businesses. Our Digital Subscriptions and Content segment includes the production, marketing and sales of programming under the Playboy brand name, which is distributed through various channels, including domestic and international television, and sales of creator content offerings and memberships to consumers through the Playboy Club onplayboy.com. Effective as of the third quarter of 2024, our Direct-to-Consumer segment constituted discontinued operations. The Direct-to-Consumer segment in prior year comparative periods is comprised ofplayboy.com e-commerce business, which in the third quarter of 2023 fully transitioned from an owned-and-operated model to a licensing model in the third quarter of 2023. The Honey Birdette direct-to consumer business, which derives revenue from sales of consumer products sold online and at Honey Birdette brick-and-mortar stores, met the criteria for discontinued operations classification as of September 30, 2024 (refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations). Therefore, while the Direct-to-Consumer segment is listed in the table below, its results are excluded from the table below and classified as discontinued operations in our condensed consolidated statements of operations for all periods presented.

Previous wording

The improvement from an operating loss to a gain for the three months ended June 30, 2024, compared to the comparable prior year period, was primarily due to $65.5 million of non-cash impairment charges on our trademarks and the $8.1 million impairment of a certain licensing contract in the prior year comparative period, lower licensing product costs of $0.9 million due to the termination of Playboy’s e-commerce licensing agreement in the second quarter of 2024 and a $3.1 million decrease in legal fees and China JV expenses, partly offset by a $4.1 million decrease in licensing gross profit as a result of lower revenue and a $3.5 million increase in licensing commissions primarily due to a nonrecurring reduction in commission accrual in the prior year comparative period related to the termination of certain Chinese licensing agreements.

Current wording

The decrease in operating income for the three months ended September 30, 2024, compared to the comparable prior year period, was primarily due to a $4.0 million increase in licensing commissions primarily due to a nonrecurring reversal of commission accrual in the prior year comparative period related to the termination of certain Chinese licensing agreements and a $3.6 million decrease in licensing gross profit as a result of lower revenue, partly offset by the $0.4 million impairment of a certain licensing contract in the prior year comparative period, $0.1 million less of lower licensing product costs due to the termination of Playboy’s e-commerce licensing agreement in the second quarter of 2024 and a $0.3 million decrease in legal fees and China JV expenses.

Previous wording

The decrease in net revenues for the three months ended June 30, 2024, compared to the comparable prior year period, was primarily due to a $0.3 million increase in net revenue from our creator platform, partly offset by a $0.3 million decrease in other digital subscriptions and content revenue.

Current wording

The increase in net revenues for the three months ended September 30, 2024, compared to the comparable prior year period, was primarily due to a $0.3 million increase in net revenue from our creator platform.