PLBY Group Reports Second Quarter 2023 Financial Results
“During the second quarter, we continued to make significant progress transitioning the business to a capital-light model and made substantial improvements to our creator platform. The creator platform continues to demonstrate compelling growth at this early stage, and generated GMV that was 2.2x over Q1’23, after another quarter of rapid topline expansion. If you annualize our weekly GMV today, assuming zero growth, we would do in excess of
During the quarter, we focused on continuing to improve the platform through data. The most important improvement was reducing friction in onboarding new creators, a process that historically was very labor intensive because we lacked certain tools that would allow us to open the creator funnel wider. In fact, during the quarter we slowed down the creator acquisition funnel as we focused on rolling out a new process and technology. We fully reworked the onboarding process, and in mid-July opened the platform to all creators that want to join. We reworked our discovery channel so that, from a brand perspective, our editors still control who shows up in discovery. The changes also allow us to reallocate resources and capital to focus more on overall platform marketing versus individual creator recruitment and onboarding. We also started testing legacy content on the platform, porting over 12 former Playmate galleries as part of our plan to consolidate multiple offerings into a single technology stack and platform. In addition, we rolled out a new and improved live feature.
We also made significant progress reducing costs further and moving to a capital-light model. First, we successfully completed the outsourcing of our
In addition, we made progress in our effort to monetize our art collection and other items from our archives. We are in discussions with leading auction houses, including updating appraisals, and intend to commence sales before the end of the year.
We received multiple offers for Lovers, and continue to pursue its sale. Given how far along we are in the sale process, we are no longer reporting Lovers in the direct-to-consumer segment and have moved its results to discontinued operations.
Our second quarter financial results reflect ongoing challenges in the direct-to-consumer space.
While we navigate headwinds impacting our revenue performance, we made progress continuing to reduce the expenses of the business. In addition to the cost cuts we previously outlined, we have identified another
Second Quarter 2023 Financial Highlights
- Revenue from continuing operations was
$35.1 million, and total consolidated revenue, including $10.0 millionfrom discontinued operations was $45.1 million. This represents a 31.0% decline from total consolidated revenue in Q2’22 of $65.4 million, of which $17.5 millionwas from discontinued operations and $47.9 millionwas from continuing operations.1 The decline in revenue was primarily attributable to lower revenue from the Company’s licensing and direct-to-consumer business segments, as well as sale of the Company’s Yandy business in April 2023.
- Net loss from continuing operations was
$134.3 million, largely driven by non-cash asset impairments related to the write-down of goodwill, trademarks and other assets of $148.2 million. The adjusted EBITDA loss from continued operations was $1.3 million, which included $1.7 millionloss attributed to playboy.come-commerce business wind-down costs and Chinajoint venture transition costs. Without these costs, adjusted EBITDA from continued operations would have been $0.4 million. Furthermore, as EBITDA from discontinued operations was $0.6 million, total adjusted EBITDA would have been a $1 million.2
Total revenue from continuing operations in the second quarter was
Direct-to-consumer revenue from continuing operations declined 27.2%% year-over-year to
Licensing revenue declined 35.2% year-over-year to
Legacy digital and creator platform revenue was up mid-single digits compared to a year ago, to
Net loss in Q2’23 expanded to
Adjusted EBITDA loss from continuing operations improved from
The Company ended the second quarter with
The Company will host a question and answer webcast for analysts today at
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ from their expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance, growth plans and anticipated financial impacts of its strategic opportunities and corporate transactions.
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 impact of public health crises and epidemics on the Company’s business and acquisitions; (2) the inability to maintain the listing of the Company’s shares of common stock on Nasdaq; (3) 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; (4) the ability to recognize the anticipated benefits of corporate transactions, commercial collaborations, commercialization of digital assets 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; (5) costs related to being a public company, corporate transactions, commercial collaborations and proposed transactions; (6) changes in applicable laws or regulations; (7) 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; (8) risks relating to the uncertainty of the projected financial information of the Company, including changes in our estimates of the fair value of certain of the Company’s intangible assets, including goodwill; (9) risks related to the organic and inorganic growth of the Company’s businesses, and the timing of expected business milestones; (10) changing demand or shopping patterns for the Company's products and services; (11) failure of licensees, suppliers or other third-parties to fulfill their obligations to the Company; (12) the Company's ability to comply with the terms of its indebtedness and other obligations; (13) changes in financing markets or the inability of the Company to obtain financing on attractive terms; and (14) other risks and uncertainties indicated from time to time in the Company’s annual report on Form 10-K, including those under “Risk Factors” therein, and in the Company’s other filings with the
|Condensed Consolidated Statements of Operations
|(in thousands, except share and per share amounts)
|Three Months Ended
||Six Months Ended
|Costs and expenses:|
|Cost of sales||(10,859||)||(19,545||)||(32,636||)||(37,531||)|
|Selling and administrative expenses||(32,592||)||(38,613||)||(74,179||)||(78,786||)|
|Contingent consideration fair value remeasurement gain||75||8,641||267||27,939|
|Other operating income, net||259||—||249||—|
|Total operating expense||(191,307||)||(53,457||)||(254,489||)||(94,677||)|
|Operating (loss) income||(156,206||)||(5,576||)||(184,185||)||264|
|Nonoperating income (expense):|
|Gain on extinguishment of debt||7,980||—||6,133||—|
|Fair value remeasurement gain||9,523||1,754||6,505||1,754|
|Other income (expense), net||175||(347||)||250||(479||)|
|Total nonoperating income (expense)||11,921||(2,676||)||1,922||(6,858||)|
|Loss from continuing operations before income taxes||(144,285||)||(8,252||)||(182,263||)||(6,594||)|
|Benefit from income taxes||9,950||140||11,620||2,648|
|Net loss from continuing operations||(134,335||)||(8,112||)||(170,643||)||(3,946||)|
|Income (loss) from discontinued operations, net of tax||452||(203||)||(920||)||1,174|
|Net loss attributable to
|Net loss per share from continuing operations, basic and diluted||$||(1.79||)||$||(0.17||)||$||(2.43||)||$||(0.09||)|
|Net income (loss) per share from discontinued operations, basic and diluted||$||0.01||$||—||$||(0.01||)||$||0.03|
|Weighted-average shares outstanding, basic and diluted||74,916,379||46,604,046||70,129,055||46,258,833|
This release presents the financial measure earnings before interest, taxes, depreciation and amortization, or “EBITDA,” and “Adjusted EBITDA” which are not financial measures under the accounting principles generally accepted in
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities and non-recurring non-cash impairments, asset write-downs and inventory reserve charges, the Company typically adjusts for nonoperating expenses and income, such as non-recurring special projects including the implementation of internal controls, expenses associated with financing activities, reorganization and severance resulting in the elimination or rightsizing of specific business activities or operations and non-recurring gains (losses) on the sale of business units.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on the Company’s GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. Investors should review the reconciliation of net (loss) income to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate the Company’s business.
The following table reconciles the Company’s net loss from continued operations to EBITDA and Adjusted EBITDA (in thousands):
|GAAP Net Loss to Adjusted EBITDA Reconciliation
|Three Months Ended
||Six Months Ended
|Net loss from continuing operations||$||(134,335||)||$||(8,112||)||$||(170,643||)||$||(3,946||)|
|Gain on extinguishment of debt||(7,980||)||—||(6,133||)||—|
|Benefit from income taxes||(9,950||)||(140||)||(11,620||)||(2,648||)|
|Depreciation and amortization||1,848||1,992||3,537||5,056|
|Inventory reserve charges||—||—||3,637||—|
|Contingent consideration fair value remeasurement||(75||)||(8,641||)||(267||)||(27,939||)|
|Mandatorily redeemable preferred stock fair value remeasurement||(9,523||)||(1,754||)||(6,505||)||(1,754||)|
|Write-down of capitalized software||—||—||4,632||—|
|Revenue from Continuing Operations to Total Revenue Reconciliation
|(in thousands, except percentages)
|Three Months Ended
|Yandy revenue (discontinued operations)||82||5,812|
|Lovers revenue (discontinued operations)||9,920||11,721|
|Adjusted EBITDA Loss from Continuing Operations to Total Adjusted EBITDA Loss Reconciliation
|(in thousands, except percentages)
|Three Months Ended
|Income (loss) from discontinued operations, net of tax||452||(203||)|
|Lovers depreciation and amortization||139||195|
|Yandy depreciation and amortization||—||269|
|Yandy and Lovers other EBITDA adjustments||39||—|
1 See the revenue reconciliation at the end of this press release.
2 See the adjusted EBITDA reconciliation at the end of this press release.
Source: PLBY Group, Inc.