Pet products provider Bark (NYSE:BARK) reported Q2 CY2024 results topping analysts' expectations, with revenue down 3.6% year on year to $116.2 million. The company also expects next quarter's revenue to be around $124.5 million, coming in 1.3% above analysts' estimates. It made a non-GAAP loss of $0.02 per share, improving from its loss of $0.05 per share in the same quarter last year.
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Bark (BARK) Q2 CY2024 Highlights:
- Revenue: $116.2 million vs analyst estimates of $114.3 million (1.7% beat)
- EPS (non-GAAP): -$0.02 vs analyst estimates of -$0.04
- Revenue Guidance for Q3 CY2024 is $124.5 million at the midpoint, above analyst estimates of $123 million
- The company reconfirmed its revenue guidance for the full year of $495 million at the midpoint
- Gross Margin (GAAP): 63%, up from 60.6% in the same quarter last year
- EBITDA Margin: -1.5%, up from -6.2% in the same quarter last year
- Free Cash Flow was -$251,000 compared to -$3.17 million in the previous quarter
- Market Capitalization: $245.1 million
"Fiscal 2025 is off to a strong start, building on the momentum we established last year. Our first quarter results are a testament to our continued progress, and we remain confident in our ability to deliver revenue growth through the year and achieve our first full year of positive Adjusted EBITDA and free cash flow," said Matt Meeker, Co-Founder and Chief Executive Officer.
Making a name for itself with the BarkBox, Bark (NYSE:BARK) specializes in subscription-based, personalized pet products.
Toys and Electronics
The toys and electronics industry presents both opportunities and challenges for investors. Established companies often enjoy strong brand recognition and customer loyalty while smaller players can carve out a niche if they develop a viral, hit new product. The downside, however, is that success can be short-lived because the industry is very competitive: the barriers to entry for developing a new toy are low, which can lead to pricing pressures and reduced profit margins, and the rapid pace of technological advancements necessitates continuous product updates, increasing research and development costs, and shortening product life cycles for electronics companies. Furthermore, these players must navigate various regulatory requirements, especially regarding product safety, which can pose operational challenges and potential legal risks.
Sales Growth
A company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones tend to grow for years. Over the last four years, Bark grew its sales at a solid 18.2% compounded annual growth rate. This shows it was successful in expanding, a useful starting point for our analysis. 
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or emerging trend. Bark's recent history marks a sharp pivot from its four-year trend as its revenue has shown annualized declines of 3.4% over the last two years.
This quarter, Bark's revenue fell 3.6% year on year to $116.2 million but beat Wall Street's estimates by 1.7%. The company is guiding for revenue to rise 1.2% year on year to $124.5 million next quarter, improving from the 14.4% year-on-year decrease it recorded in the same quarter last year. Looking ahead, Wall Street expects sales to grow 2.6% over the next 12 months, an acceleration from this quarter.
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Cash Is King
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Bark broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.
Bark broke even from a free cash flow perspective in Q2. This quarter's result was good as its margin was 11.2 percentage points higher than in the same quarter last year, but we wouldn't read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.
Key Takeaways from Bark's Q2 Results
We were impressed by how significantly Bark blew past analysts' EPS expectations this quarter. We were also glad next quarter's revenue guidance came in higher than Wall Street's estimates. Overall, this quarter was mixed but with some key positives. The stock traded up 9% to $1.43 immediately after reporting.
Bark may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.