Pattern Group Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Condensed Consolidated Statements of Cash Flows (Unaudited)

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Unaudited)

1. Description of Business

Pattern Group Inc. and its wholly owned subsidiaries (collectively “Pattern” or the “Company”) is a global ecommerce accelerator that leverages its technology platform, data science, and on-demand experts to help brands grow their ecommerce marketplace sales. The Company purchases inventory from its brand partners to sell to consumers, allowing it to manage merchandising, pricing, logistics, and customer experience.

The Company’s brand partners operate across a variety of industries, including health and wellness, beauty and personal care, home and lifestyle, pet, sports and outdoors, and consumer electronics.

Completion of Initial Public Offering

In September 2025, the Company completed its initial public offering of shares of Series A common stock. Immediately prior to the completion of the initial public offering, all the Company’s then-outstanding shares of Series A Preferred Stock and Series B Preferred Stock were converted and reclassified into shares of Series A common stock (see Note 7—Convertible Preferred Stock for more information). In addition, all the Company’s then-outstanding shares of Founder Voting Preferred Stock and Founder Non-Voting Preferred Stock were reclassified and converted into shares of Series A common stock and Series B common stock, as applicable (see Note 8—Stockholders’ Equity for more information).

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Management believes that the unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year due to seasonal and other factors.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management evaluates these estimates and judgments on an ongoing basis.

Significant estimates include, but are not limited to, net realizable value of inventory, allowance for sales returns, allowance for doubtful accounts, valuation allowances on deferred tax assets, reporting unit fair value for evaluating goodwill for impairment, fair value of assets acquired and liabilities assumed in business combinations, the valuation of stock-based awards, fair value of common stock and the incremental borrowing rate (“IBR”) used to measure operating lease liabilities.

The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from these estimates and any such differences may be material to the Company’s consolidated financial statements.

Revenue

The following table presents the Company’s revenues disaggregated by source of revenue:

The following table presents the Company’s revenues disaggregated by geography:

During the year ended December 31, 2025, the Company updated its methodology for determining the geographic classification of revenue to better align with the country in which the marketplace is domiciled and how management evaluates regional performance. As a result, the Company has recast the prior period revenue by geographic region to conform to the current period presentation. This change affected only the allocation of revenue between geographic regions and did not impact total consolidated revenues, operating results, or cash flows for any period presented.

The U.S. was the only individual country accounting for more than 10% of total revenue.

Earnings (loss) per share

Basic and diluted earnings (loss) per share (“EPS”) are calculated using the Company’s weighted-average shares outstanding of common stock. Prior to the Company’s initial public offering, outstanding common stock included Founder Voting Preferred Stock and Founder Non-Voting Preferred Stock. The Founder Voting and Founder Non-Voting Preferred Stock were considered common stock equivalents for purposes of calculating EPS, as they shared equally with common stock in the liquidation of the Company's net assets and did not contain an economic preference. Upon completion of the initial public offering, the Founder Voting and Founder Non-Voting Preferred Stock converted into Series B common stock and Series A common stock, respectively, which have been outstanding since that date. The rights, including the liquidation and dividend rights, of the holders of Series A and Series B common stock are identical, except with respect to voting, conversion and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net income (loss) attributable to common stockholders are the same for both Series A and Series B common stock on both an individual and combined basis.

The dilutive effect of Series A Preferred Stock is reflected in diluted earnings (loss) per share by application of the more dilutive of the two-class method and if-converted method (two-class method only applies for periods of net income). The dilutive effect of Series B Preferred Stock is reflected in diluted earnings (loss) per share under the if-converted method, if dilutive. The if-converted method is calculated by assuming conversion at the beginning of the period or date of issuance, if later; and therefore, no dividend preference would accrue to the Series B Preferred Stock. Restricted stock units (“RSUs”) subject to conditions other than service conditions are considered contingently issuable shares and are included in the computation of dilutive shares only to the extent that the underlying performance condition is satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method (see Note 9—Stock-Based Compensation for more information).

The following table sets forth the computation of earnings (loss) per share attributable to common stockholders:

The following instruments outstanding (prior to consideration of the treasury stock or if-converted methods) as of period end were not reflected in diluted EPS as their effect for the periods presented would be anti-dilutive or the instruments were not exercisable for potential common shares for the periods presented:

Cash and Cash equivalents

As of December 31, 2025 and September 30, 2026, the Company had $243.7 million and $300.0 million, respectively, of cash equivalents measured at fair value on a recurring basis, all of which were classified as Level 1.

Accounts Receivable, net

Accounts receivable, net consisted of the following:

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for measuring expected credit losses on current trade receivables and contract assets arising from revenue transactions within the scope of ASC 606, Revenue from Contracts with Customers. Under the expedient, an entity may assume that the conditions existing as of the reporting date will not change over the remaining life of the asset when estimating expected credit losses. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, including interim reporting periods within that annual period, with early adoption permitted on a prospective basis. The Company adopted ASU 2025-05, electing the practical expedient, effective January 1, 2026 on a prospective basis. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies and enhances the guidance related to the form, content and disclosure requirements of interim financial statements. The amendments reorganize and codify certain interim disclosure requirements, incorporate disclosure guidance from other Topics into ASC 270, and establish a disclosure principle requiring entities to provide disclosures about events and transactions occurring after the most recent annual reporting period that materially affect the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the guidance may be applied prospectively or retrospectively, in whole or in part. The Company adopted ASU 2025-11, effective July 1, 2026 on a prospective basis. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of specific expense categories in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted and can be applied on either a prospective or retroactive basis. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other (Topic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes and clarifies guidance for capitalizing costs related to internal-use software development. The amendments remove stage-based terminology and incorporate guidance for website development costs previously included in ASC 350-50. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within that annual period, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

3. Property and Equipment, net

Property and equipment, net consisted of the following:

Depreciation and amortization expense related to property and equipment was $3.7 million and $4.8 million for the three months ended September 30, 2025 and 2026, respectively. Depreciation and amortization expense related to property and equipment was $10.5 million and $13.2 million for the nine months ended September 30, 2025 and 2026, respectively.

4. Business Acquisitions

On December 1, 2025, the Company completed the acquisition of 100% of the outstanding stock of ROI Hunter a.s., a Czech joint stock corporation (“ROI Hunter”). The acquisition of ROI Hunter expands the Company’s product offerings and enhances its market presence in the advertising intelligence platform sector. On December 18, 2025, the Company completed the acquisition of 100% of the outstanding stock of iDesign Technology USA LLC (“iDesign”). The acquisition of iDesign expands the Company’s product offerings and enhances its market presence in the digital media, influencer marketing and content-creation sectors. These transactions are expected to generate synergies through the integration of the acquired proprietary technologies and customer relationships. These acquisitions were accounted for as business combinations in accordance with ASC 805, Business Combinations.

The following tables summarize the consideration paid for the acquired entities and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

The deferred acquisition consideration represents a liability for indemnification holdbacks that is expected to be paid to the sellers through annual installments ending in December 2028, subject to adjustment under the terms of the agreement.

The goodwill acquired represents the excess of the purchase price over the fair value of net identifiable assets acquired and is attributable to expected synergies, assembled workforce and future growth opportunities. The goodwill acquired is not deductible for tax purposes.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

The fair values of the acquired identifiable net assets reflect updated provisional estimates which are subject to final valuation procedures. A measurement period adjustment of $0.1 million was recognized during the nine months ended September 30, 2026 which resulted in an increase in the amount of goodwill recognized. The financial results of ROI Hunter and iDesign, from their respective acquisition dates through September 30, 2026, were not material to our Consolidated Statements of Operations, nor were they material to our prior period consolidated results on a pro forma basis. Costs related to the ROI Hunter and iDesign acquisitions were not material to our Consolidated Statements of Operations.

5. Operating Leases

The following table provides a summary of supplemental cash flow information related to our operating leases:

The Company entered into a lease agreement for a warehouse and distribution facility located in Pennsylvania, which commenced on June 1, 2026 with an initial term of 7.4 years. The Company classified this lease as an operating lease. Upon commencement, the Company recognized an ROU asset and corresponding lease liability of $20.8 million, measured using a discount rate of 5.26%. During the nine months ended September 30, 2026, the Company entered into amended lease agreements to extend the term for certain office and warehouse spaces, resulting in an increase of $12.0 million to our ROU assets and corresponding lease liabilities.

As of September 30, 2026, the Company had entered into additional operating leases for corporate office spaces that had not yet commenced and, accordingly, are not included in the operating lease right-of-use assets or lease liabilities above. These leases are expected to commence at various dates through 2027 and expire in 2032. Aggregate undiscounted minimum lease payments over the lease terms are approximately $12.6 million.

Maturity of Lease Liabilities

The future minimum lease payments under the Company’s operating lease liabilities as of September 30, 2026 are as follows:

6. Credit Facilities

The Company is party to a revolving credit facility pursuant to a credit agreement, by and among the Company, JPMorgan Chase Bank, N.A., and other lenders listed therein, dated September 4, 2025 (the “Credit Agreement”). The outstanding balance under the Company’s revolving line of credit facility waszero as of September 30, 2026 and the amount available to draw was $150.0 million as of September 30, 2026. The revolving line of credit has a maturity date in September 2030 and bears interest at a variable base rate plus an applicable margin ranging from 0.50% to 2.00%. The commitment fees on the unused portion range from 0.20% to 0.25%.

The Company’s Credit Agreement contains various financial, affirmative and negative covenants. As of September 30, 2026, the Company was in compliance with all covenants outlined in the agreement.

7. Convertible Preferred Stock

In September 2025, the Company completed its initial public offering of shares of Series A common stock. Immediately prior to the completion of the initial public offering,15,750,477 shares of Series A Preferred Stock were converted into an aggregate of 15,750,477 shares of Series A common stock in accordance with the original fixed-price conversion feature of the Series A Preferred Stock. Accordingly, the conversion of the Series A Preferred Stock was accounted for as a conversion with no gain, loss or deemed dividend recognized.

In addition, immediately prior to the completion of the initial public offering,13,215,614 shares of Series B Preferred Stock were converted into an aggregate of 32,129,232 shares of Series A common stock in accordance with the original fixed-percentage conversion feature based on the initial public offering price, after giving effect to the Series B conversion rights. Under the Series B conversion rights, each share of Series B Preferred Stock converted into a number of shares of Series A common stock determined by dividing the original issue price of such share by the lesser of (a) the original issue price of such share (subject to certain anti-dilution adjustments) and (b) the initial public offering price per share discounted by 50.0% (the “Series B Preferred Special Conversion Ratio”). Accordingly, the conversion of the Series B Preferred Stock was accounted for as a redemption. As a result of this redemption feature, the fair value of the Series A common stock issued exceeded the carrying amount of the Series B Preferred Stock redeemed, resulting in a non-cash deemed dividend of $163.9 million during the three and nine months ended September 30, 2025, inclusive of a $67.4 million adjustment for cumulative undeclared dividends previously reported through June 30, 2025. The deemed dividend reduced earnings available to common stockholders in EPS and reduced retained earnings by $94.4 million as of September 30, 2025 with the residual amount charged against additional paid-in capital as the Company did not have sufficient retained earnings to absorb the full amount of the deemed dividend at the time of redemption.

The holders of the Company’s Series A Preferred Stock and Series B Preferred Stock (collectively, “Convertible Preferred Stock”) had certain voting, dividend and redemption rights, as well as liquidation preferences and conversion privileges, in respect of the Convertible Preferred Stock. All of such rights, preferences and privileges associated with the Convertible Preferred Stock were terminated at the time of the Company’s initial public offering in conjunction with the conversion and redemption mentioned above.

The following table summarizes redeemable Convertible Preferred Stock prior to the conversion into common stock upon completion of the initial public offering:

Dividends

The holders of Series B Preferred Stock were entitled to cumulative dividends at a rate of 8.0% of the original issue price, or $17.01 per share, if and when declared by the Company’s board of directors. The holders of Series B Preferred Stock were entitled to receive dividends on a pari passu basis, prior to and in preference to any dividends to common stockholders. After the initial public offering and conversion, these dividend rights ceased, and there wereno accrued and unpaid dividends as of September 30, 2025.

There were no dividends declared or paid during the three and nine months ended September 30, 2025 and 2026.

8. Stockholders’ Equity

Common Stock

The Company hastwo series of common stock: Series A common stock with a par value of $0.001 per share and Series B common stock with a par value of $0.001 per share. The rights of the holders of Series A common stock and Series B common stock are identical, except with respect to voting and conversion rights. Each share of Series A common stock is entitled toone vote. Each share of Series B common stock is entitled to 20 votes and is convertible at any time intoone share of Series A common stock. Holders of common stock are entitled to receive any dividends as may be declared by the board of directors.

Share Repurchase Program

On March 2, 2026, the Company’s board of directors authorized a share repurchase program (the “Share Repurchase Program”), pursuant to which the Company may repurchase up to $100 million in aggregate of its issued and outstanding shares of Series A common stock. Repurchases may be made from time to time through open market transactions, privately negotiated transactions, or other means, including pursuant to Rule 10b5-1 plans.

During the three months ended September 30, 2026, the Company repurchased 938,172 shares of Series A common stock at an average price per share of $19.59 and for an aggregate purchase price of $18.4 million, including transaction costs. During the nine months ended September 30, 2026, the Company repurchased 1,257,703 shares of Series A common stock at an average price per share of $17.56 and for an aggregate purchase price of $22.1 million, including transaction costs. As of September 30, 2026, the Company had $77.9 million remaining authorized for future repurchases.

Shares repurchased under the Share Repurchase Program are accounted for as retired shares. Upon repurchase, the shares are immediately retired and are no longer considered issued or outstanding.

Secondary Offering

On June 17, 2026, the Company entered into an underwriting agreement with the selling stockholder (“Seller”) and J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC as representatives of the underwriters listed thereto (“Underwriters”), relating to the offer and sale by the Seller of 8,000,000 shares of Series A common stock at a price to the public of $19.00 per share (the “Secondary Offering”). In addition, the Seller granted the Underwriters a 30-day option to purchase up to an additional 1,200,000 shares of Series A common stock, which the Underwriters exercised on June 18, 2026 (the “Option Shares Offering”). The Company did not sell any shares of Series A common stock and did not receive any proceeds in connection with the Secondary Offering or Option Shares Offering.

Preferred Stock

In connection with the completion of the initial public offering,17,797,821 shares of Founder Voting Preferred Stock, $0.001 par value per share, were reclassified and converted into an aggregate of 21,702,510 shares of Series B common stock, and 68,994,553 shares of Founder Non-Voting Preferred Stock, $0.001 par value per share, were reclassified and converted into an aggregate of 84,131,370 shares of Series A common stock, based on the initial public offering price, after giving effect to the Founder Preferred Stock Amendment, as described below, and to certain transfers by the co-founder trusts to the co-founders.

Founder Preferred Stock Amendment

In August 2025, the Company, following approval by its board of directors, amended its Certificate of Incorporation to revise the conversion terms of the Founder Voting Preferred Stock and Founder Non-Voting Preferred Stock (collectively, the “Founder Preferred Stock”) (the “Founder Preferred Stock Amendment”). The revised terms provided that upon completion of an initial public offering, the Founder Preferred Stock would convert into Series B common stock or Series A common stock, as applicable, at a ratio that would limit the dilution impact on the holders of such stock to 3.33%, as a result of the special conversion ratio applicable to the Series B Preferred Stock in connection with an initial public offering, provided, no adjustment will be made for any incremental dilution that exceeds 9.00% (see Note 7—Convertible Preferred Stock for additional information on the Series B Preferred Stock conversion rights). If an initial public offering was not completed by December 31, 2025, the Founder Preferred Stock would have reverted to its original 1:1 conversion ratio into Series B common stock or Series A common stock, as applicable. The Founder Preferred Stock were considered to be common stock equivalents for purposes of calculating EPS given that they share equally with common stock in the liquidation of the Company’s net assets. Accordingly, the amended terms represented a non-pro rata distribution to the holders of the Founder Preferred Stock (the “Founder Preferred Stockholders”) and, as a result, the Company recognized a non-cash expense of $32.7 million for the incremental fair value associated with the modified terms within the caption stock amendment expense on our condensed consolidated statement of operations. The conversion of the Founder Preferred Stock under the amended conversion rights was accounted for as an equity conversion with no gain, loss or deemed dividend recognized.

9. Stock-Based Compensation

Stock-based compensation expense is classified within the corresponding operating expense categories in the consolidated statements of operations as follows:

Compensation expense associated with cash-settled RSUs was $2.4 million for the three and nine months ended September 30, 2025, and $0.4 million and $1.8 million for the three and nine months ended September 30, 2026, respectively, and was included in operations, general and administrative in the condensed consolidated statements of operations.

Restricted Stock Units

The following table summarizes the RSU activity:

Upon vesting of RSUs, the Company withholds shares from employees to satisfy the employee portion of payroll tax obligations (“net share settlement”). For the nine months ended September 30, 2025, the Company made payments to taxing authorities of $73.1 million in connection with shares withheld upon vesting of RSUs, which payments were classified as a financing activity in the condensed consolidated statement of cash flows, and an additional $4.6 million was recorded as a liability for shares withheld for which payments were not yet made to taxing authorities by the end of the period. For the nine months ended September 30, 2026, the Company made payments to taxing authorities of $19.6 million in connection with shares withheld upon vesting of RSUs.

The total unrecognized stock-based compensation expense related to these awards was $83.5 million as of September 30, 2026 and the weighted-average remaining requisite service period is 2.38 years.

10. Provision for Income Taxes

The Company calculated the year-to-date provision (benefit) for income taxes by applying the estimated annual effective tax rate to the ordinary year-to-date income (loss) before income taxes for each applicable jurisdiction and adjusted for discrete tax items in the period.

The Company’s provision (benefit) for income taxes was $(32.2) million and $7.9 million for the three months ended September 30, 2025 and 2026, respectively. The Company’s provision (benefit) for income taxes was $(16.2) million and $30.3 million for the nine months ended September 30, 2025 and 2026, respectively, reflecting effective tax rates of 56.5% and 25.4%, respectively.

The effective tax rate for the nine months ended September 30, 2025 represents a benefit on a pre-tax loss. The benefit rate exceeded the U.S. federal statutory rate of 21% primarily due to $19.8 million of net discrete tax benefits related to the Company’s initial public offering (see Note 8—Stockholders’ Equity). These benefits relate to tax-deductible stock compensation in excess of GAAP stock compensation for awards that vested at the time of the initial public offering, partially offset by non-deductible executive compensation and non-deductible stock amendment expense.

The effective tax rate for the nine months ended September 30, 2026 of 25.4% exceeded the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit.

11. Commitments and Contingencies

Purchase Commitments

As of September 30, 2026, the Company didnot have any material future payments under non-cancelable purchase obligations.

Legal Matters

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Loss contingencies are recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Accounting for contingencies requires the use of judgment related to both the likelihood of a loss and the estimate of the amount or range of loss.

As of September 30, 2026, the Company was not involved in any legal proceedings, individually or in the aggregate, that the Company believes are probable or reasonably possible to have a material adverse effect on its business, results of operations, financial condition or cash flows.

Indemnification

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, brand partners, lessors, investors, directors, officers, employees and other parties with respect to certain matters. Indemnification may include losses from the breach of such agreements, services the Company provides or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap.

12. Segment Information

The Company manages its business on a consolidated basis and operates as a single operating and reportable segment. The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer, who reviews financial information on a consolidated basis. The CODM uses consolidated net income to assess financial performance and allocate resources. Net income is used by the CODM to make key operating decisions by comparing actual net income to historical results and previously forecasted financial information. The CODM does not review assets in evaluating the results of the reportable segment.

The following table presents selected financial information with respect to the Company’s single operating and reportable segment:

(1)Fulfillment includes costs incurred from third-party fulfillment centers and cost to operate and staff the Company’s fulfillment centers, excluding share-based compensation and related taxes.

(2)Marketplace commissions includes referral fees charged by the various online marketplaces.

(3)Sales, general and administrative relate to employee headcount, excluding share-based compensation and related taxes, and other selling and general administrative costs.

(4)Technology includes the amortization of capitalized internally developed software costs and items included in research and development within the condensed consolidated statement of operations, excluding share-based compensation and related taxes.

(5)Share-based compensation and related taxes include compensation expense for both stock and cash settled restricted stock units and the related employer taxes.

See Note 2—Summary of Significant Accounting Policies for additional information about revenue disaggregation.

The Company's long-lived tangible assets, as well as the Company's operating lease right-of-use assets recognized on the condensed consolidated balance sheets were located as follows: