Bark, Inc.
For the period ended Mar 31, 2025. Filed Jun 4, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Jun 4, 2025
BARK$9.33+11.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-03-31; filed 2024-06-03.
0001819574-24-000025
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-03-31; filed 2025-06-04.
0001819574-25-000024
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 156 previous paragraphs and 155 current paragraphs.
105 unchanged; 33 reworded; 15 added; 17 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 20 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Expansion within new and existing retail channels
Current report
Our commerce segment continues to be an important growth driver for the business and our ability to expand our product assortment within both new and existing retail partners remains a focus area. This expansion may also require increased investments in trade marketing, merchandising support, and logistics capabilities. If we are unable to successfully grow our retail presence or maintain strong partnerships, our ability to reach new customers and drive incremental revenue may be limited.
Current report
(1) Direct to Consumer Gross Profit and Direct to Consumer Gross Margin does not include the revenue or cost of goods sold from BARK Air.
Current report
This category generated approximately $262.3 million of revenue in fiscal 2025, down 8% compared to fiscal 2024. While toys & accessories remain a core component of our offering and brand identity in fiscal 2026, we are actively reallocating resources toward our consumables and services categories as we expect toys to face headwinds due to macroeconomic factors, shifting consumer behavior, and newly imposed tariffs on imports from China, where the majority of our toys are currently sourced. The allocation between Toys & Accessories and Consumables includes estimates and was determined utilizing data on stand-alone selling prices that the Company charges for similar offerings, and also reflects historical pricing practices.
Current report
Overall, we see significant runway in our consumables category in both our Direct to Consumer and commerce segments, long-term. As of fiscal 2025, consumables represent approximately one-third of total revenue and are sourced almost entirely from domestic partners, providing greater insulation from geopolitical risks and tariff impacts.
Current report
Direct to Consumer revenue decreasedby $20.6 million, or 4.7%, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. This decrease was primarily driven by a 5.1%, or 0.7 million decrease in Total Orders, in addition to a$0.30 or 1.0% decrease in AOV. Fiscal year 2025 Direct to Consumer revenue included $5.8 million of BARK Air revenue.
Current report
General and administrative expense decreased by $15.0 million, or 5.6%, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. This decrease during the period was primarily due to: decreased shipping and fulfillment costs of $0.7 million attributable to lower direct to consumer volumes, decreased compensation expense of $6.7 million due to a decrease in headcount and decreased consulting expense of $2.2 million, as the business continued to manage its cost base. In addition, there was a $2.4 million benefit from the release of sales tax reserves relating to tax years for which the liability has been settled or the statute of limitations has expired. The remaining decrease in general and administrative costs is due to a reduction in rent, office expenses, and other expenses.
Current report
Advertising and marketing expense increased by $4.5 million, or 5.6%, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. The increase is attributable to increased marketing spend to acquire a higher volume of new subscribers.
Current report
Interest income decreased by $2.6 millionfor the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. The decrease in interest income is due to an overall decrease in cash in interest-bearing deposit accounts in line with the deployment of cash for the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023 and share repurchases of $24.7 million as part of the share repurchase program which began during the fiscal second quarter ended September 30, 2023.
Current report
Interest expense decreased by $1.6 million, or 35.9%, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. Interest expense for each period is derived from the Company’s 2025 Convertible Notes. The decrease is attributable to the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023.
Current report
Other income, net decreased by $5.2 millionfor the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. The decrease in other income, net was primarily due to the gain on extinguishment of debt in prior year of $1.8 million, as well as a decrease in the change of the fair value of our warrant liabilities of $3.2 million.
Current report
Other Income, net
Current report
(2)Litigation expenses related to a shareholder class action complaint, see Item 3. Legal Proceedings.
Current report
For the fiscal year ended March 31, 2025, net cash used in operating activities was $7.1 million. The $7.1 million of net cash used in by operating activities consisted of net loss of $32.9 million adjusted for non-cash charges totaling$36.9 million and a net increase of $11.1 million in our net operating assets and liabilities. The non-cash charges primarily consisted of$12.7 million for stock based compensation, $11.2 million for depreciation and amortization, and$4.5 million of non-cash lease expense. The increase in our net operating assets and liabilities was primarily driven by an increase in inventory of $5.5 million, a reduction in our operating lease liabilities of $5.3 million, and a reduction in deferred revenue of $4.7 million, offset by an increase of accounts payable and accrued expenses of $11.7 million.
Current report
For the fiscal year ended March 31, 2025, net cash used in financing activities was $19.9 million, primarily due to payments to repurchase common stock of $18.5 million.
Removed paragraphs (17)
Previous report
Direct to Consumer revenue increased by $23.9 million, or 5.3%, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022. This increase was primarily driven by a $2.18 or 7.3% increase in Average Order Value, due to increased shipping fees and cross selling offset by a 1.8% or 0.3 million decrease in Subscription Shipments during the period.
Previous report
Direct to Consumer and Commerce gross profit increased by $25.2 million and $0.8 million, respectively, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022, driven by the $27.9 million increase in revenue during the period, lower costs from our suppliers and a decrease in inventory write-down charges.
Previous report
Gross profit as a percentage of revenue increased to 57.6% for the fiscal year ended March 31, 2023 compared to 55.6% for the fiscal year ended March 31, 2022. The increase in Direct to Consumer gross profit is primarily attributable to higher subscription AOV, lower costs from our suppliers and a decrease in inventory write-down expenditures.
Previous report
General and administrative expense increased by $1.3 million, or 0.4%, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022. This increase during the period was primarily due to an increase of $2.1 million in right-of-use asset impairment and increased depreciation charges in connection with vacating our prior headquarters, and $1.8 million restructuring costs relating to the cost reduction initiative announced in February 2023. These increases were offset by a decrease in shipping and fulfillment costs which decreased $1.6 million from $158.6 million as of March 31, 2022 to $157.0 million as of March 31, 2023 due to improvements in our distribution network planning, and better shipping rates in addition to a decrease in professional and legal fees attributable to costs incurred in the prior year associated with the Merger.
Previous report
Advertising and marketing expense decreased by $5.6 million, or 7.5%, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022. The decrease during the period is attributable to a lower media spend in connection with acquiring fewer subscribers during the period.
Previous report
Interest income increased by $1.1 million for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022. The increase was attributable to interest derived from our money market account and interest-bearing checking accounts.
Previous report
Interest expense was relatively flat for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
Previous report
Other Income (Expense), Net
Previous report
Other income (expense), net decreased by $24.7 million for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022. The decrease in other income (expense), net was primarily due to the $27.8 million decrease of income related to the changes in fair value of our warrant liabilities, offset by an increase in other income of $1.1 million. Additionally, in fiscal 2022 the Company incurred $2.0 million of expense related to the loss on extinguishment of debt incurred from conversion of the convertible promissory notes issued in 2019 and 2020 in connection with the Merger during the prior period.
Previous report
(2)For the fiscal year ended March 31, 2024 impairment of assets is the non-cash impairment of previously capitalized software and prepaid software licenses. For the fiscal year ended March 31, 2023 impairment of assets is the impairment of the right-of-use asset associated with our previous headquarters which we vacated.
Previous report
(3)Transaction costs represent non-recurring consulting and advisory costs with respect to the merger agreement entered into with Northern Star Acquisition Corp. on December 16, 2020.
Previous report
(4)Demurrage fees are raised when the full container is not moved out of the port/terminal for unpacking within the allowed free days offered by the shipping line. The charge is levied by the shipping line to the importer.
Previous report
For the fiscal year ended March 31, 2022, net cash used in operating activities was $172.3 million. The $172.3 million of net cash used in operating activities consisted of net loss of $68.3 million adjusted for non-cash charges totaling $7.6 million and a net decrease of $111.6 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $33.2 million for changes in fair value of warrants, $17.9 million for stock based compensation, $2.0 million loss on extinguishment of debt and $4.4 million for depreciation and amortization. The decrease in our net operating assets and liabilities was driven by the increase in inventory of $82.9 million to support current demand. Additionally, accounts payable and accrued expenses increased by $13.5 million related to increased expenditures to support general business growth, as well as the timing of payments, other liabilities of $12.6 million, prepaid expenses and other current assets of $1.1 million, and accounts receivable of $1.1 million.
Previous report
The decrease in our net operating assets and liabilities was partially offset by the change in deferred revenue of $4.4 million.
Previous report
For the fiscal year ended March 31, 2022, net cash provided by financing activities was $355.5 million, primarily due to proceeds of $227.1 million proceeds from the Merger and proceeds from the PIPE of $200.0 million. The increase in cash provided by financing activities was partially offset by the repayments of outstanding borrowings on our line of credit of $34.3 million, payments of transaction costs of $25.2 million, payment of deferred underwriting fees $8.9 million, and repayment of the outstanding Paycheck Protection Program loan of $5.2 million.
Previous report
JOBS Act Accounting Election
Previous report
We were an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). However, based on the market value of our common stock held by non-affiliates as of September 30, 2021, we became a large accelerated filer and thus ceased to be an emerging growth company on March 31, 2022. As a result, we were required to adopt new or revised accounting standards as required by public companies, including those standards which we had previously deferred pursuant to the JOBS Act. Additionally, we are no longer able to take advantage of the reduced regulatory and reporting requirements of emerging growth companies.
Reworded paragraphs (33)
Previous wording
We are a vertically integrated, omnichannel brand serving dogs across two key categories: toys & accessories and consumables. All of our products are designed, developed, and branded by BARK. We leverage an ever-growing collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold direct-to-consumer (“DTC”) and through our network of retail partners, which currently spans over 40,000 doors nationwide.
Current wording
We are an omnichannel brand serving dogs across two key categories: toys & accessories and consumables. All of our products are designed, developed, and branded by BARK. We leverage an ever-growing collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold direct-to-consumer (“DTC”) and through our network of retail partners, which currently spans over 50,000 doors nationwide and online marketplaces including Amazon and Chewy.
Previous wording
More recently, we have entered exciting, and much larger categories in the consumables space, which include kibble, treats, toppers, supplements, and dental products. This expansion has significantly increased our total addressable market and the number of customers we can serve. We believe that our growing first-party dataset, strong brand, and loyal customer base afford us a meaningful advantage and opportunity to win market share in these newer categories.
Current wording
In addition to being one of the largest dog toy brands in the U.S. by revenue, we also play in exciting, and much larger categories in the consumables space, which include kibble, treats, toppers, supplements, and dental products. These categories have significantly increased our total addressable market and the number of customers we can serve. We believe that our growing first-party dataset, strong brand, and loyal customer base afford us a meaningful advantage and opportunity to win market share in these newer categories.
Previous wording
Our ability to increase the number of total orders and cross category purchasing is a key factor in our future growth and will be driven by our marketing and from the development of new products, primarily in the consumables space. As a result, we expect to continue to focus on long-term growth through investments in product offerings and the dog and dog parent experience. We are working to enhance our offerings and expand the breadth of the products and offerings especially in consumables. We expect to make additional investments in marketing to acquire new customers.
Current wording
Our ability to increase the number of customers. total orders, and cross category purchasing is a key factor in our future DTC growth and will be driven by our marketing efforts and ability to continue to expand within the toys and consumables categories. As a result, we expect to continue to focus on long-term growth through investments in product offerings and the dog and dog parent experience. We are working to enhance our offerings and expand the breadth of the products and offerings especially in consumables. We expect to make additional investments in marketing to acquire new DTC customers.
Previous wording
In the past, we have experienced increases in inbound freight costs due to the challenges in the import market, as transpacific ships and trade lanes continue to be overburdened with volume and experience a significant shortage of equipment and capacity due to macroeconomic challenges affecting the global supply chain, including, for example, the COVID-19 pandemic. Increases in freight costs and supply chain disruptions may continue and could impact our business, in particular as a result of global conditions that are created or driven by market factors or international events, such as increased inflation, war in Israel and the Ukraine and rising tensions between the U.S. and China.
Current wording
In the past, we have experienced increases in inbound freight costs due to the challenges in the import market, as transpacific ships and trade lanes continue to be overburdened with volume and experience a significant shortage of equipment and capacity due to macroeconomic challenges affecting the global supply chain, including, for example, the COVID-19 pandemic. Increases in cost of goods, freight costs and supply chain disruptions may continue and could impact our business, in particular as a result of the imposition of tariffs and the uncertainty surrounding such tariffs and other global conditions. Other market factors or international events, such as increased inflation, war, rising tensions between the U.S. and China, and continued changes to trade policy, including the imposition of tariffs under alternative authority available to the executive branch of the US government.
Previous wording
Toys & Accessories (“toys”)—The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys and treats that are delivered directly to a dog’s home. Customers have the option to subscribe to these products on a one month, six month, or twelve month basis. Subscription revenue is recognized at a point in time as control is transferred to the subscriber upon delivery of each monthly box. During the life of their subscription, we offer customers incremental products via ATB, which allows us to cross-sell customers into our full portfolio of products, including kibble, treats, toppers, dental and more. ATB revenue is recognized at a point in time as control is transferred to the customer upon delivery of goods to the subscriber.
Current wording
Toys & Accessories (“toys”)—The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys and treats that are delivered directly to a dog’s home. Customers have the option to subscribe to these products on a one month, three month, six month, or twelve month basis. During the life of their subscription, we offer our customers incremental products via ATB, which allows us to cross-sell customers across our full portfolio of products including kibble, treats, toppers, dental, and more.
Previous wording
We also sell toys through our Commerce segment which is a network of retail partners and online major market places. This distribution channel allows us to reach new customers and introduce them to the BARK brand. Commerce revenue derived from our retail partners is recognized net of estimates for sales returns, discounts, markdowns and allowances, after the goods are shipped, or when the retail customer picks up the goods directly from one of our distribution points and control of the goods is transferred to the customer. Online marketplaces revenue is recognized upon delivery of goods to the end customer.
Current wording
We also sell toys through our network of retail partners. Today, the commerce segment accounts for 14% of total revenue. This distribution channel allows us to reach new customers and introduce them to the BARK brand.
Previous wording
Our toys category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other miscellaneous products.
Current wording
Our toys & accessories category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other accessories.
Previous wording
Consumables—The majority of our consumables revenue today is derived from the treats and chews that are included in our BarkBox and Super Chewer boxes. Over the past several years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. To sell these products, the Company recently launched a new website, www.bark.co, which contains the majority of its consumables portfolio, all of which can be purchased on a recurring, auto-ship, or one-off basis. Revenue related to BARK.co is recognized at a point in time, as control is transferred to the customer upon each delivery.
Current wording
Consumables—The majority of our consumables revenue today is derived from the treats and chews that are included in our BarkBox and Super Chewer boxes. Over the past several years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. The Company sells its consumables products both DTC (through Bark.co) and through its retail footprint.
Previous wording
Treats— Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our consumables website. Many of our treats feature monthly themes, similar to our toys. Today, BARK is one of the largest treat brands in the U.S. by revenue. The Company recently began selling its treats through 2,400 Target and PetSmart doors nationwide and anticipates further retail distribution in the future.
Current wording
Treats— Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our Bark.co. Many of our treats feature monthly themes, similar to our toys. Today, BARK is one of the largest treat brands in the U.S. by revenue. The Company also began selling its treats in over 2,400 doors nationwide in Spring of 2024. The Company has been expanding its treat offering among other partners, including Amazon, Chewy, and Meijer and anticipates further expansion in the year ahead.
Previous wording
Toppers—Includes meal-enhancing sprinkles, broths and bites that are added to a dog’s food to enhance the flavor of their food. These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan. Toppers are particularly beneficial for picky eaters.
Current wording
Toppers—Includes meal-enhancing sprinkles, broths, and bites that are added to a dog’s meal to enhance the flavor of their food. These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan. Toppers are particularly beneficial for picky eaters.
Previous wording
Kibble—We sell a variety of kibble, priced to compete with the mass premium category. While our kibble can be purchased on an individual basis, we entered this market with a breed-based approach that recommends meal plans consisting of a mix of kibble, toppers, and supplements based on the characteristics and personalities of various dog breeds. For example,because German Shepherds are prone to hip issues, we recommend hip and joint support supplements with the purchase of their kibble. If that dog is also a picky eater, we will recommend adding one of our toppers. This enhances our average order value and margin profile.
Current wording
Kibble—We sell a variety of kibble, priced to compete with the premium category. Our kibble can be purchased on an individual or autoship basis.
Previous wording
BARK Air—A first-of-its kind air travel experience tailored to dogs. The Company partnered with a jet charter company to begin offering premium flights for customers and their dogs. Interested parties can book flights at dogsflyfirst.com. Our charter partner is responsible for all aircraft, crew, maintenance, and insurance, allowing BARK to focus on creating a great travel experience for dogs and their people worldwide. We believe this initiative exemplifies the Company’s dog-first approach to curating the best products and services.
Current wording
BARK Air—Announced in April 2024, BARK Air is a first-of-its kind air travel experience tailored to dogs. The Company is partnered with several charter companies offering premium flights for customers and their dogs. Interested parties can book flights at dogsflyfirst.com. Our charter partners are responsible for all aircraft, pilots, maintenance, and insurance, allowing BARK to focus on creating a great travel experience for dogs and their people worldwide. We believe this initiative exemplifies the Company’s dog-first approach to curating the best products and services. In its first fiscal year, BARK Air generated $5.8 million of revenue with strong utilization rates and customer demand. As our flagship entry into the services category, BARK Air is part of a broader strategy to expand into premium, differentiated dog services. With new routes, expanded partnerships, and high early engagement, we believe BARK Air and future services represent a meaningful long-term growth opportunity. This category is currently included in our Direct to Consumer segment.
Previous wording
Overall, we see significant runway in our consumables category long-term, and anticipate the majority of our future growth may be driven by these product categories.
Current wording
Overall, we see significant runway in our consumables category long-term, and anticipate the majority of our future to be driven by these product categories along with services, like BARK Air.
Previous wording
Cost of revenue primarily consists of the purchase price of inventory sold, inbound freight costs associated with inventory, shipping supply costs, and inventory shrinkage costs.
Current wording
Cost of revenue primarily consists of the purchase price of inventory sold, duties, inbound freight costs associated with inventory, shipping supply costs, and inventory shrinkage costs.
Previous wording
Commerce revenue increased by $4.0 million, or 6.7%, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022. This increase was primarily driven by the addition of new retail partners since March 31, 2022, as well as volume increases amongst existing retail partners during the period.
Current wording
Commerce revenue increased by$14.6 million, or 27.2%, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. This increase was primarily driven by sales volume from existing and new customers.
Previous wording
General and administrative expense decreased by $34.7 million, or 11.5%, for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023. This decrease during the period was primarily due to a decrease of $17.2 million in shipping and fulfillment expense due to lower volumes and lower rates from vendor consolidation, decreased rent and office expense of $3.5 million and decreased donation expense of $1.5 million. Additionally, as a result of our cost cutting initiatives announced in February of fiscal year 2023 and July of fiscal year 2024, compensation expense decreased $8.7 million due to a decrease in headcount, and consulting and legal fees decreased of $5.1 million.
Current wording
General and administrative expense decreased by $34.7 million, or 11.5%, for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023. This decrease during the period was primarily due to a decrease of $17.2 million in shipping and fulfillment expense due to lower volumes and lower rates from vendor consolidation, decreased rent and office expense of $3.5 million and decreased donation expense of $1.5 million. Additionally, as a result of our cost cutting initiatives announced in February of fiscal year 2023 and July of fiscal year 2024, compensation expense decreased $8.7 million due to a decrease in headcount, and consulting and legal fees decreased by $5.1 million.
Previous wording
We calculate Adjusted Net Loss as net loss, adjusted to exclude: (1) stock-based compensation expense, (2) change in fair value of warrants and derivatives, (3) sales and use tax (income) expense, (4) restructuring charges related to reduction in force payments, (5) (gain) loss on extinguishment of debt, (6) duplicate rent expense incurred as a result of relocating our corporate headquarters, (7) asset impairment charges, (8) transaction costs associated with the Merger, (9) demurrage fees related to freight, (10) technology transformations and (11) other items (as defined below).
Current wording
We calculate Adjusted Net Loss as net loss, adjusted to exclude: (1) stock-based compensation expense, (2) change in fair value of warrants and derivatives, (3) sales and use tax income, (4) restructuring charges related to reduction in force payments, (5) gain on extinguishment of debt, (6) litigation expenses (consisting of legal and related fees for a specific proceeding that is outside of our ordinary course of business), (7) warehouse restructuring costs, (8) non-cash impairment of previously capitalized software and cloud computing implementation costs, (9) technology modernization costs, and (10) other items (as defined below).
Previous wording
We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) interest income, (2) interest expense (3) depreciation and amortization expense, (4) stock-based compensation expense, (5) change in fair value of warrants and derivatives, (6) sales and use tax (income) expense, (7) restructuring charges related to reduction in force payments, (8) (gain) loss on extinguishment of debt, (9) duplicate rent expense incurred during the relocation of our corporate headquarters, (10) impairment of assets (11) transaction costs (12) demurrage fees related to freight, (13) technology transformation and (14) other items (as defined below).
Current wording
We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) interest income, (2) interest expense (3) depreciation and amortization expense, (4) stock-based compensation expense, (5) change in fair value of warrants and derivatives, (6) capitalized cloud computing amortization, (7) sales and use tax income, (8) restructuring charges related to reduction in force payments, (9) gain on extinguishment of debt, (10) litigation expenses (consisting of legal and related fees for a specific proceeding that is outside of our ordinary course of business), (11) warehouse restructuring costs, (12) non-cash impairment of previously capitalized software and cloud computing implementation costs, (13) technology modernization costs, and (14) other items (as defined below).
Previous wording
(5)Includes consulting fees related to technology transformation activities, and payroll costs for employees that dedicate significant time to this project. We believe that these costs are discrete and non-recurring in nature, as they relate to a one-time unification of our product offerings on our new commerce platform. As such, they are not normal, recurring operating expenses and are not reflective of ongoing trends in the cost of doing business.
Current wording
(3)Includes consulting fees related to technology transformation activities, and payroll costs for employees that dedicate significant time to this project. We believe that these costs are discrete and non-recurring in nature, as they relate to a one-time unification of our product offerings on our new commerce platform. As such, they are not normal, recurring operating expenses and are not reflective of ongoing trends in the cost of doing business.
Previous wording
(6)For the fiscal year ended March 31, 2024, other items is comprised of non-recurring retention payments to management of $1.4 million, executive transition costs of $1.3 million, warehouse restructuring costs of $0.8 million, and legal settlements of $0.1 million. For the fiscal year ended March 31, 2023, other items comprised of executive transition costs of $1.7 million and tax penalties of $0.1 million. For fiscal year ended March 31, 2022, other items is comprised of executive transition costs of $1.9 million, costs related to unrealized business ventures of $1.8 million, SOX implementation fees of $0.7 million, and loss on exercise of warrants of $0.1 million.
Current wording
(4)For the fiscal year ended March 31, 2025, other items is comprised of executive transition costs of $0.8 million, costs associated with the share repurchase program of $0.4 million, and duplicate headquarters rent of less than $0.1 million. For the fiscal year ended March 31, 2024, other items comprised of non-recurring retention payments to management of $1.4 million, executive transition costs of $1.3 million, tax penalties of less than $0.1 million, and duplicate headquarters rent of less than $0.1 million. For fiscal year ended March 31, 2023, other items is comprised of executive transition costs of $1.7 million, duplicate headquarters rent of $1.7 million, and tax penalties of $0.1 million.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of approximately $125.5 million. We expect that our cash and cash equivalents, together with cash provided by our operating activities and proceeds from borrowings (as defined below), will be sufficient to fund our operations for at least the next 12 months. We are required to comply with certain financial and non-financial covenants related to our borrowing agreements, which we are in compliance with as of March 31, 2024 and expect to be in compliance with during the next 12 months.
Current wording
As of March 31, 2025, we had cash and cash equivalents of approximately $94.0 million. We expect that our cash and cash equivalents, together with cash provided by our operating activities and proceeds from borrowings (as defined below), will be sufficient to fund our operations for at least the next 12 months. We are required to comply with certain financial and non-financial covenants related to our borrowing agreements, which we are in compliance with as of March 31, 2025 and expect to be in compliance with during the next 12 months.
Previous wording
Our material cash requirements include our lease arrangements for corporate offices, warehouses and certain equipment. As of March 31, 2024, we had fixed lease payment obligations of $47.9 million, with $5.3 million payable within 12 months.
Current wording
Our material cash requirements include our lease arrangements for corporate offices, warehouses and certain equipment. As of March 31, 2025, we had fixed lease payment obligations of $42.6 million, with $5.8 million payable within 12 months.
Previous wording
The 2025 Convertible Notes are governed by the Indenture. The 2025 Convertible Notes bear interest at the annual rate of 5.50%, payable entirely in payment-in-kind annually on December 1 of each year commencing December 1, 2021, compounded annually. As of March 31, 2024, the effective interest rate is 6.60%. The accrued interest of $2.1 million and $4.4 million was paid-in-kind through an increase of the outstanding principal on the 2025 Convertible Notes on December 1, 2023 and 2022, respectively.
Current wording
The 2025 Convertible Notes are governed by the Indenture. The 2025 Convertible Notes bear interest at the annual rate of 5.50%, payable entirely in payment-in-kind annually on December 1 of each year commencing December 1, 2021, compounded annually. As of March 31, 2025, the effective interest rate is 6.60%. The accrued interest of $2.2 million and $2.1 million was paid-in-kind through an increase of the outstanding principal on the 2025 Convertible Notes on December 1, 2024 and 2023, respectively.
Previous wording
Company’s common stock and assumptions regarding the probability that the contingent call or put will be exercised or an event of default will occur. Management determined that the probability that the contingent events will occur was near zero at inception and has remained near zero as of March 31, 2024. Therefore, the Company did not record a derivative liability related to these features as of March 31, 2024. The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes.
Current wording
The 2025 Convertible Notes contain call and put options to be settled in cash contingent upon the occurrence of a change of control and a default interest rate increase of 3.0% applicable upon the occurrence of an event of default that when evaluated under the guidance of ASC 815, Derivatives and Hedging, are embedded derivatives requiring bifurcation at fair value. The fair value calculation includes Level 3 inputs including the estimated fair value of the Company’s common stock and assumptions regarding the probability that the contingent call or put will be exercised or an event of default will occur. Management determined that the probability that the contingent events will occur was near zero at inception and has remained near zero as of March 31, 2025. Therefore, the Company did not record a derivative liability related to these features as of March 31, 2025. The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes.
Previous wording
Pursuant to the Agreement, the Company repurchased $45.0 million in aggregate principal amount of the 2025 Convertible Notes plus $2.2 million of accrued and unpaid interest thereon to, but excluding the repurchase date, from the Holders for a total cash purchase price of $44.4 million. In addition, $1.0 million of unamortized deferred financing fees were derecognized from the Company’s balance sheet on the date of extinguishment. The accelerated deferred financing fees were recognized as a component of gain on extinguishment of debt. The Company recognized a gain on debt extinguishment of $1.8 million in connection with the repurchase. If a Change of Control (as defined in the Indenture) of the Company occurs at any time after the date of the Agreement and prior to the December 1, 2025 maturity date of the Notes, the Holders are also entitled to receive an additional cash “true-up” payment from the Company, totaling, in the aggregate for all Holders, either (i) $11.3 million in the case that the Company elects to redeem all of the Notes outstanding at the time of such Change of Control or (ii) $4.5 million in the case that the Holders elect to require the Company to repurchase all of the 2025 Convertible Notes outstanding at the time of such Change of Control any other case, in each case, in accordance with the terms and conditions specified in the Agreement.
Current wording
Pursuant to the Agreement, the Company repurchased $45.0 million in aggregate principal amount of the 2025 Convertible Notes plus $2.2 million of accrued and unpaid interest thereon to, but excluding the repurchase date, from the Holders for a total cash purchase price of $44.4 million. In addition, $1.0 million of unamortized deferred financing fees were derecognized from the Company’s balance sheet on the date of extinguishment. The accelerated deferred financing fees were recognized as a component of gain on extinguishment of debt. The Company recognized a gain on debt extinguishment of $1.8 million in connection with the repurchase. If a Change of Control (as defined in the Indenture) of the Company occurs at any time after the date of the Agreement and prior to the December 1, 2025 maturity date of the Notes, the Holders are also entitled to receive an additional cash “true-up” payment from the Company, totaling, in the aggregate for all Holders, either (i) $11.3 million in the case that the Company elects to redeem all of the Notes outstanding at the time of such Change of Control or (ii) $4.5 million in the case that the Holders elect to require the Company to repurchase all of the 2025 Convertible Notes outstanding at the time of such Change of Control, in each case, in accordance with the terms and conditions specified in the Agreement.
Previous wording
As of March 31, 2024 and March 31, 2023, the Company had $40.6 million and $83.5 million, respectively, of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.
Current wording
As of March 31, 2025 and March 31, 2024, the Company had $42.9 million and $40.6 million, respectively, of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.
Previous wording
In October 2017, the Company entered into a loan and security agreement and issued a warrant to purchase preferred stock (“Initial Western Alliance Warrant”) to Western Alliance Bank (“Western Alliance”), which provides for a revolving line of credit (as amended, the “Credit Facility”) in an aggregate principal amount of up to $35.0 million, subject to borrowing base limitations derived from advance rates derived from the Company’s eligible subscription revenues and eligible accounts receivable. The Credit Facility has been amended several times, most recently in December 2023. After giving effect to this most recent amendment, the maturity date of the Credit Facility is December 13, 2024. Certain of the Company’s obligations to Western Alliance and under the Credit Facility are guaranteed by certain of its subsidiaries and secured by substantially all of their assets.
Current wording
In October 2017, the Company entered into a loan and security agreement and issued a warrant to purchase preferred stock (“Initial Western Alliance Warrant”) to Western Alliance Bank (“Western Alliance”), which provides for a revolving line of credit (as amended, the “Credit Facility”) in an aggregate principal amount of up to $35.0 million, including a $10.0 million sublimit for letters of credit of which $9.2 million has been issued. The Credit Facility is subject to borrowing base limitations derived from advance rates derived from the Company’s eligible subscription revenues and eligible accounts receivable. The Credit Facility has been amended several times, most recently in January 2025. After giving effect to this most recent amendment, the maturity date of the Credit Facility is September 2, 2025. Certain of the Company’s obligations to Western Alliance and under the Credit Facility are guaranteed by certain of its subsidiaries and secured by substantially all of their assets. The Company is evaluating alternative options or further renewal of this Credit Facility.
Previous wording
As of March 31, 2024 and March 31, 2023, there were no outstanding borrowings under the Credit Facility.
Current wording
As of March 31, 2025 and March 31, 2024, there were no outstanding borrowings under the Credit Facility. As of March 31, 2025 and March 31, 2024, the Company was compliant with its financial covenants.
Previous wording
For thefiscal year ended March 31, 2024, net cash used in investing activities was $8.8 million, primarily due to capital expenditures for software implementations and other capital expenditures.
Current wording
For thefiscal year ended March 31, 2025, net cash used in investing activities was $6.2 million, primarily due to capital expenditures for warehouse equipment and software implementation.
Previous wording
For thefiscal year ended March 31, 2023, and 2022, net cash used in investing activities was $21.1 million and $21.2 million, respectively, primarily due to capital expenditures for warehouse machinery, leasehold improvements, equipment, and software implementations.
Current wording
For thefiscal year ended March 31, 2024, and 2023, net cash used in investing activities was $8.8 million and $21.1 million, respectively, primarily due to capital expenditures for warehouse machinery, leasehold improvements, equipment, and software implementations.
Previous wording
Our primary sources of revenue are from sales of toys and accessories and consumables through our Direct to Consumer and Commerce segments. We recognize revenue upon delivery of products and services to our customer, as applicable. The recognition of revenue is determined through application of the following five-step model:
Current wording
Our primary sources of revenue are from sales of toys & accessories and consumables through our Direct to Consumer and Commerce segments. We recognize revenue upon delivery of products and services to our customer, as applicable. The recognition of revenue is determined through application of the following five-step model:
Previous wording
Inventories consist principally of finished goods, and represent products available for sale and are accounted for using the first-in, first-out (“FIFO”) method and valued at the lower of cost or net realizable value. Inventory costs consist of product and inbound shipping and handling costs. We assess the valuation of inventory and periodically write down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions. Inventory valuation requires us to make judgments, based on information available at each reporting period. Inventory valuation losses are recorded as cost of revenues.
Current wording
Inventories consist principally of finished goods, and represent products available for sale and are accounted for using the first-in, first-out (“FIFO”) method and valued at the lower of cost or net realizable value. Inventory costs consist of product, duties and inbound shipping and handling costs. We assess the valuation of inventory and periodically write down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions. Inventory valuation requires us to make judgments, based on information available at each reporting period. Inventory valuation losses are recorded as cost of revenues.
Previous wording
We review current business trends and forecasts, and inventory aging to determine adjustments which we estimate will be needed to liquidate existing excess inventories and record inventories at either the lower of cost or net realizable value or the lower of cost or market, as applicable. We believe that all inventory write-downs required at March 31, 2024, have been recorded. Our historical estimates of inventory reserves have not differed materially from actual results. If market conditions were to change, including as a result of the current war in the Ukraine and its broader macroeconomic implications or the COVID-19 pandemic and the supply chain and logistics disruptions globally, it is possible that the required level of inventory reserves may need to be adjusted.
Current wording
We review current business trends and forecasts, and inventory aging to determine adjustments which we estimate will be needed to liquidate existing excess inventories and record inventories at either the lower of cost or net realizable value or the lower of cost or market, as applicable. We believe that all inventory write-downs required at March 31, 2025, have been recorded. Our historical estimates of inventory reserves have not differed materially from actual results. If market conditions were to change, including as a result of the current war in the Ukraine and its broader macroeconomic implications or the COVID-19 pandemic and the supply chain, logistics disruptions globally, and potential changes to trade policy, including the imposition of new or increased tariffs it is possible that the required level of inventory reserves may need to be adjusted.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Direct to Consumer gross profit decreased by$8.0 million, and Commerce gross profit increased by $7.9 million, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. The decrease in Direct to Consumer gross profit is primarily attributable to a decrease in revenue. The increase in Commerce gross profit is primarily attributable to an increase in revenue.
Current report — wording carried from elsewhere
Gross profit as a percentage of revenue increased 70 basis points for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024. Direct to Consumer gross margin was 65.1%, 120 basis points and Commerce gross margin was 45.6%, 230 basis points higher than the same period last year, respectively. The increase in gross margin is primarily attributable to lower inbound freight and product cost improvements.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The 2025 Convertible Notes contain call and put options to be settled in cash contingent upon the occurrence of a change of control and a default interest rate increase of 3.0% applicable upon the occurrence of an event of default that when evaluated under the guidance of ASC 815, Derivatives and Hedging, are embedded derivatives requiring bifurcation at fair value. The fair value calculation includes Level 3 inputs including the estimated fair value of the