BARK, Inc. (NYSE:BARK) Q3 2023 Earnings Call Transcript

Zahir Ibrahim: Yes, thanks. So really good questions, and I’ll start with the first on the demand environment. It’s again not all revenues created equal, and so we’re seeing that softness and acceleration. I think, it’s similar to what we’re hearing from others in terms of what they’re seeing. So the more discretionary products and for us. The most discretionary would be subscription BarkBox, and those are the ones that are facing the headwinds. Those that are holding up and very resilient and even surging are less discretionary food and health products like our dental product. And we’re seeing that too. We’re seeing it just really, really take on. And for us, that’s really healthy. The great thing about it is the toy and treat businesses offer to us really strong unit economics.

They bring in good cash flow and they also bring in a relatively inexpensive way to acquire customers for the food and dental categories. A toy customer costs a whole lot less out in the market than a food customer. So I think what you’re seeing in the demand environment is the same as us. We’re just growing from a smaller base on those other categories. And then to your — and that dovetails into your LTV to CAC question and the marketing spend. It’s exactly that the strength we’re seeing in those categories and the market opportunity that’s available there, we probably have been too conservative on the cost of acquisition side. And everything is just starting to come together. The cross-selling into that the big pickup quarter-over-quarter in the gross margin, the retention holding up the AOV gain all that came together this quarter.

And we’re probably too conservative about the cost of acquisition. So it’s in the pursuit of positive EBITDA. It’s not going to be a case of us, reigning in the marketing spend. It’ll probably go the other way where we push on it harder and try to grow it faster, because we feel so confident about taking those toy customers and making them food customers.

Ygal Arounian: Great. Thanks so much.

Operator: Thank you for your question. That concludes the conference call. Thank you for your participation. You may now disconnect your lines.