hello and thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time I would like to welcome everyone to The BARK fiscal fourth quarter and full year 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press Star then the number one on your telephone keypad.

and welcome to BARK's fiscal fourth quarter and full year 2026 earnings call. Joining me today are Matt Meeker Meeker, Co Founder and Chief Executive Officer, and Brian Dossey, Interim Chief Financial Officer. Today's conference call is being webcast in its entirety on our website and a replay of the webcast will be made available shortly after the call. Additionally, a press release covering the company's financial results was issued this afternoon and can be found on our investor relations website.

Before I pass it over to Matt Meeker, I want to remind you of the following information regarding forward looking statements. The statements made on today's call are based on management's current expectations and are subject to risks and uncertainties that could cause actual future results and outcomes to differ. Please refer to our SEC filing for more information on some of the factors that could affect our future results and outcomes. We will also discuss certain non GAAP financial measures on today's call.

Thanks Mike and good afternoon everyone. We set out to do two things in fiscal 2026 sustain adjusted EBITDA profitability despite tariff and macro volatility and accelerate the diversification of our revenue to build a more resilient business while laying out a strategy for the way forward we believe we have delivered on each adjusted EBITDA was positive $0.2 million for the year, marking our second consecutive year of positive adjusted EBITDA and meeting our goal of ending the year on the positive side.

This builds on the progress we made in fiscal 2025 when we achieved our first full year of positive adjusted EBITDA an improvement from a $58 million loss just three years earlier. Additionally, commerce and air represented 21% of total revenue, up from 15% last year, reducing our reliance on any single channel and improving the durability of the model with sufficient cash, a debt free balance sheet and a leaner cost structure. We are well positioned to build on this foundation in fiscal 2027 and beyond as we pursue renewed growth.

Before I discuss the year ahead, let me walk through some of our key highlights from the past year. I will stick to our full year figures and Brian will go into more detail on the quarter and full year. Starting at the top, total revenue was $395 million. This reflects a deliberate decision to pull back on marketing and promotions to prioritize bottom line durability in the face of historic tariffs and a volatile macro environment. We reduced our total marketing investment by over $24 million year over year, choosing to protect our margins rather than chase inefficient growth.

While this approach means we are entering fiscal 2027 with a smaller D2C subscriber base, we believe the underlying quality of that base is stronger as evidenced by our steadily improving retention rates and growing average order values. Our commerce segment delivered $70 million in revenue, a $1.5 million increase over last year. Notably, while this segment remains a growth engine, the first half of the year was marked by caution among our retail partners as tariff uncertainty weighed on the market with greater clarity following the Supreme Court's recent ruling.

We believe the environment is becoming more manageable with these headwinds behind us. We expect strong momentum for Commerce in fiscal 2027 with accelerating expansion across wholesale and marketplaces. BARK Air revenue more than doubled this year to over $12 million, with utilization rates averaging 90% and consistent five star reviews. The business has demonstrated a clear demand and a differentiated customer experience. However, in line with our focus on profitability and cash conversion, our priority for Bark air in fiscal 2027 is the bottom line.

We are focused on improving unit economics over top line expansion and as a result, we do not expect significant revenue growth in Barcaire over the next year. Moving on, we delivered a very healthy consolidated gross margin of 61% for the year, consistent with the prior year over year despite commerce and error representing a larger share of total revenue. On that note, our D2C gross margin was 68%, up over 200 basis points year over year. We also reduced year over year costs by $55 million across GNA, shipping and fulfillment and marketing.

While we expect these efficiencies to benefit the company in the year ahead, we will remain flexible, adjusting our marketing spend up or down based on the returns we see. On that note, let's turn to our focus for fiscal 2027 and our strategy more broadly. I want to start by spending a few minutes talking about the opportunity for the business and why I'm confident in the way forward. Over the past several months, I've spent considerable time listening to our customers, talking with our team, and analyzing the data behind our business.

I've dealt with some hard truths. Company moving at the pace we've been moving doesn't always give itself permission to sit with. At our core, park is a business with generally exceptional foundations. Despite the headline results, more than one and a half million households have invited us into their homes. We built an exceptional supply chain over the past decade. We have direct customer relationships that few consumer companies of our scale can claim.

These are real, durable advantages, but to this point, we haven't fully leveraged them. In many ways, we fought the wrong battles. We've been optimizing a model that the world has started to move past. The revenue trajectory you saw in today's results reflects that. What I want to spend the next few minutes on is what we intend to do about it and why I believe the position we're in is more advantageous than the recent numbers suggest. Let me start with what hasn't changed, because I think it gets lost in the noise around our Results.

And that shift is structural, not cyclical. There's also no dominant leader in this space. No single brand owns the dog. That remains true. The category is enormous, resilient through economic cycles, and wide open at the top. We built this company on that belief, and that belief remains valid. What we need is a sharper answer to the question of where specifically we intend to win and how. The subscription box, the model we built and which took us from zero to over half a billion dollars in annual revenue, was built on a form of personalization that was at the time genuinely differentiated.

We understood that a large dog and a small dog are not the same customer. That insight was right. It still is. But the world has evolved. What was differentiated has become the floor mass personalization. That is knowing your dog's size, your dog's age, whether they're a heavy chewer. That's table stakes now. Our customers know it. Our Retention data reflects it. The opportunity we see and that we are now building toward is a fundamentally deeper level of specificity.

Not size, not age, not shoe style. The actual dog, the specific nature of a specific dog, what that dog needs, how that dog plays, what that dog's health profile looks like, what a community of owners of that same dog cares about. We're not going to do that by adding a few more quiz questions. We're going to do this by rethinking the purpose of our relationship with the customer. The insight that's guiding our next chapter is this barkbox is not a box.

It is a relationship between a brand and a dog mediated by a human who loves that dog. The job is not done when the box arrives. The job is done when the dog is happy. That standard changes everything. What goes in the box, how we measure retention, how we handle service, what we sell, and most importantly, what we build next. We are calling this relationship commerce. It has three dimensions we're building at depth. How well do we truly understand each customer density, how many meaningful touch points exist between us and the customer, and durability.

We have more to share on the specifics of our strategy in the coming quarters. What I can tell you today is that the direction is clear, the team is aligned and the work is underway. The market is huge. The relationship is ours to deepen. For the first time in a while, I feel like we're asking the right questions. As we build for the long term, we are consolidating the brands and products we will build around. As part of this, we will sunset products where we have not seen adequate returns, including our Kibble and Toppers lines.

That decision will allow us to reallocate capital and resources toward higher return categories where we have proven our right to win. This will also simplify the business and help improve overall profitability going forward. On D2C, we are entering the year with a smaller subscriber base following the deliberate pullback in marketing spend last year. We expect D2C revenue to be down year over year in the first half before stabilizing in the second half and returning to growth thereafter.

In Commerce, we expect our momentum to remain strong in FY27 with the segment representing nearly one quarter of total revenue in FY27 versus 18% in FY26 as we continue to expand with both new and existing retail partners. Additionally, our cookie program with the Girl Scouts is expected to launch late in the fiscal year, providing another incremental revenue growth and brand awareness driver. Despite prioritizing gross margin and profitability over near term growth on BARK Air, we expect BARK Air and Commerce to collectively represent over over $100 million of revenue, further advancing our diversification strategy.

Turning to guidance, for the first quarter of fiscal 2027 we expect total revenue of 77 to $79 million and adjusted EBITDA of 0 to $1 million. For the full year, we expect total revenue of 325 to $340 million and adjusted EBITDA of 7 to $10 million, a meaningful step up from fiscal 2026 and consistent with our commitment to sustained profitability. I also want to note that our Board has authorized a share repurchase program of up to $40 million to be funded by ongoing free cash flow.

This reflects the Board's conviction in the long term value of BART and our belief that the stock reflects represents compelling value at current levels. Our debt free balance sheet and improving free cash flow profile give us the flexibility to simultaneously invest in the business and return capital to shareholders. We ended the year with a debt free balance sheet, $19 million of cash and an inventory of $76 million, a reduction of approximately $13 million year over year.

We delivered our second consecutive year of positive adjusted EBITDA and expect to do so again in fiscal 2027 as well as positive free cash flow. Taken together, these improvements, along with a sharper product focus and a more diversified revenue base position us to drive sustained value for our customers, partners and shareholders. We still have work ahead, but we are operating from a stronger foundation and a clearer path to growth. We needed to fix the underlying business so we could actually pursue the growth strategy I've outlined.

Thanks Matt and good afternoon everyone. I'll begin by reviewing our financial results for the fiscal fourth quarter and full year 2026 and then discuss how we're positioning the business for fiscal 2027. Starting at the top fourth quarter revenue was $86.6 million compared to $115.4 million in the prior year period. The full year revenue was totaled $394.8 million versus $484.2 million in fiscal 2025. As Matt mentioned, this top line decline reflects our intentional pullback in marketing spend and promotional activity as we prioritize bottom line durability over inefficient growth.

Turning to Commerce, Full year revenue increased 2% or $69.9 million. Fourth quarter commerce was $12.5 million down about 18.3% versus the prior year period. The fourth quarter variance was largely driven by timing of retail shipments year over year and we continue to view Commerce as an important long term growth driver for the business in fiscal 2027 and beyond. Moving down, the P and L consolidated gross margin was 61.3% for the full year and 62.7% for the full fourth quarter.

Our cost of revenue this quarter reflects 2.7 million of IIPA tariff refunds recorded as a loss recovery. We paid an additional 7.1 million in IPA tariff refunds allocable for our cost of revenue in FY26. This was not yet eligible for submission under the US Customs and Border Protections new IA tariff refund portal. As a result, we were unable to record this amount as a reduction of cost of revenue in FY26 earning operating expenses, fourth quarter marketing spend was 12.6 million, down roughly 4.7 million year over year.

For the full year, total Marketing investment was 59.2 million, down more than 24 million from fiscal 2025. Moving forward, we intend to maintain this discipline in the near term while remaining flexible to reinvest if customer acquisition dynamics improve. Shipping and fulfillment expenses for the full year were $119.4 million, down from $139.1 million last year, primarily driven by lower D to C volume. General Administrative expenses were 103.4 million for the full year, representing 10.8 million Drop from fiscal 2025 for the fourth quarter G&A was $26.8 million, down $1.9 million year over year, reflecting our ongoing efforts to streamline our cost structure. Collectively, these structural cost improvements protected our bottom line and resulted in our second consecutive year of of positive adjusted EBITDA for the full year. Adjusted EBITDA was $200,000, including the fourth quarter where we generated $3.2 million. While macro factors compressed our absolute margins for the year, hitting our full year profitability goal demonstrates the resilience of our leaner operating model. Turning to the balance sheet, we ended the year with a healthy cash balance of $19 million.

Our accounts receivable balance as of March 31, 2026 includes 3.3 million of IA tariff refunds, 2.9 million of which we subsequently received I previously mentioned that not all IPA tariffs paid by the Company were eligible for submission under the CAEP portal. We currently expect an additional 12.1 million of IIPA tariffs, of which $7.1 million relates to cost of revenue in FY26 and $5 million relates to current inventory or cost of revenue for FY27 that we will be able to recognize upon eligibility of submission.

Close the year with 75.5 million in inventory, down nearly 13 million year over year. We expect to drive further inefficiencies throughout fiscal 2027. This disciplined working capital management compliant with our full year free cash flow expectations should result in a strong liquidity position. In summary, the actions we took throughout fiscal 2026 delivered meaningful operational and financial improvement. While those decisions resulted in smaller subscriber base entering fiscal 2027, the underlying quality of this subscriber is higher, reflecting in healthier cohorts and improved retention.

Thank you. Sure. Hi Conti, this is Matt. The levers are, as Brian was saying that throughout the year we've improved our unit economics pretty well across the board. The average order value of a subscriber is higher, the costs have come down and then when you. Last year's product costs were certainly burdened by tariffs and we don't see that burden nearly to the same extent going forward. So that's very helpful. But more efficiency throughout the plan, stronger retention leading to those stronger cohorts. So the quality of the customer is one aspect of that. Another is the cost reduction efforts that we've taken earlier this year, earlier in the calendar year that is downsizing the team really leaning in quite a bit on AI and automation across the team, replacing more expensive SaaS, software contracts, things like that. So across the board just a leaner, more lean operation with much better unit economics all the way through.

It's not entirely true. Now coming into fiscal 26, we, we almost entirely on the toy side of things or non consumable side were almost entirely reliant on China. Once we came into the year and faced the tariff headwinds that the whole world faced, we quickly got got to building diversification throughout our supply chain. So we're now not including the consumables in the US or any other US based products. We at least have the option of bringing products in from a handful of Southeast Asia countries and South America as well. So there's a bit of mixing and matching based on the overall cost, including any cost of tariffs, quality. So we've got much more diversification and flexibility there. And you know, theoretically if a large tariff popped up somehow in China, it's a pretty quick operation for us to fail over or move over to another country.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.