1. Homepage
  2. Equities
  3. United States
  4. Nyse
  5. BARK, Inc.
  6. News
  7. Summary
    BARK   US68622E1047

BARK, INC.

(BARK)
  Report
Delayed Nyse  -  04:00 2022-06-29 pm EDT
1.370 USD   -3.52%
06/27Scandinavian Real Heart Recruits New CFO; Shares Jump 10%
MT
06/15INSIDER BUY : Bark
MT
06/14INSIDER BUY : Bark
MT
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

BARK, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

02/11/2022 | 06:48am EDT
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of our condensed
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the unaudited condensed consolidated
financial statements and notes thereto contained in this Quarterly Report on
Form 10-Q and the audited consolidated financial statements and notes thereto
for the year ended March 31, 2021 contained in the Current Report on Form 8-K
filed with the SEC on June 7, 2021. This discussion contains forward-looking
statements and involves numerous risks and uncertainties, including, but not
limited to, those described in the "Risk Factors" sections of this Quarterly
Report on Form 10-Q. Actual results may differ materially from those contained
in any forward-looking statements. Unless the context otherwise requires,
references to "we", "us", "our", "the Company" and "BARK" are intended to mean
the business and operations of BARK, Inc. and its condensed consolidated
subsidiaries. The unaudited condensed consolidated financial statements for the
three and nine months ended December 31,, 2021 and 2020, respectively, present
the financial position and results of operations of BARK, Inc. and its
wholly-owned subsidiaries.
Overview
Founded in 2012, BARK is the world's most dog-centric company, devoted to making
dogs happy with the best products, services and content. Our dog-obsessed team
applies its data-driven understanding of what makes each dog special by
designing playstyle-specific toys, satisfying treats, personal meal plans with
supplements, and dog-first experiences designed to foster health and happiness
of dogs everywhere. We aim to foster lifelong relationships with our customers
and their pups in order to drive strong customer retention and lifetime value.
BARK loyally serves dogs with themed toys and treats subscriptions, BarkBox and
BARK Super Chewer; custom product collections through retail partners, including
Target and Amazon; high-quality, personalized nutrition and meal plans with BARK
Eats; and health and wellness products with BARK Bright. As a direct to
consumer-first company, our growing data and machine-learning capabilities
inform future product development and enable BARK to provide personalized
experiences and product offerings for dog parents nationwide.
Impact of COVID-19
The extent to which the COVID-19 pandemic will continue to impact our business
will depend on future developments related to the geographic spread of the
disease, the duration and severity of the outbreak, travel restrictions,
required social distancing, governmental mandates, business closures or
governmental or business disruptions, and the effectiveness of actions taken in
the United States and other countries to prevent, contain and treat the virus
and any additional government stimulus programs. These impacts are highly
uncertain and cannot be predicted with certainty.
As this crisis unfolded, we monitored conditions closely and adapted our
operations to meet federal, state and local standards, while continuing to meet
the needs of the dogs and dog parents we serve and to ensure the safety and
well-being of our team members. While conditions appear to be improving, we are
still unable to predict the duration of the COVID-19 pandemic, including the
emergence and spread of variants of COVID-19, and therefore the ultimate impact
of the COVID-19 pandemic on our operating results, financial condition and cash
flows. As such, risks still remain. In addition, the COVID-19 pandemic has had,
and continues to have, an unprecedented and unexpected effect on the global
economy, civil society, labor markets, and certain industries. As a result, it
is difficult to predict the magnitude or scope of the impact these effects will
or may have directly, or indirectly, on our business, operating results and
financial condition.
We continued to experience increases in inbound freight costs due to the
challenges in the current 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 the COVID-19 pandemic. We also continued to
experience supply chain disruptions, including increased demurrage fees related
to freight, during the third quarter of fiscal year 2022. We expect increased
freight costs and supply chain disruptions to continue to impact our business,
although we cannot
                                       25
--------------------------------------------------------------------------------

predict the duration or magnitude of such impacts. Please refer to the "Special
Note Regarding Forward-Looking Statements" and the "Risk Factors" in this
Quarterly Report on Form 10-Q.
Key Performance Indicators
We use the following key financial and operating metrics to evaluate our
business and operations, measure our performance, identify trends affecting our
business, project our future performance, and make strategic decisions. These
key financial and operating metrics should be read in conjunction with the
following discussion of our results of operations and financial condition
together with our condensed consolidated financial statements and the related
notes and other financial information included elsewhere in this Quarterly
Report on Form 10-Q.

                                                 Three Months Ended December 31,               Nine Months Ended December 31,
                                                   2021                  2020                   2021                  2020
Subscription Shipments (in thousands)                  3,798                   3,113               10,999                   8,156
Average Monthly Subscription Shipment Churn             6.5%                    6.5%                 7.0%                    6.0%
Active Subscriptions (in thousands)                    2,254                   1,729                2,254                   1,729
New Subscriptions (in thousands)                         371                     381                  922                     936
CAC                                           $        64.42       $           60.50       $        55.80       $           46.44
LTV:CAC                                                 4.5x                    4.4x                 4.7x                    6.3x
Average Order Value                           $        31.10       $           28.98       $        30.03       $           28.53


Subscription Shipments
We define Subscription Shipments as the total number of subscription product
shipments shipped in a given period. Subscription Shipments does not include
gift subscriptions or one-time subscription shipments.
Average Monthly Subscription Shipment Churn
Average Monthly Subscription Shipment Churn is calculated as the average number
of subscription shipments that have been cancelled in the last three months,
divided by the average monthly active subscription shipments in the last three
months. The number of cancellations used to calculate Average Monthly
Subscription Shipment Churn is net of the number of subscriptions reactivated
during the last three months.
Active Subscriptions
Our ability to expand the number of Active Subscriptions is an indicator of our
market penetration and growth. We define Active Subscriptions as the total
number of unique product subscriptions with at least one shipment during the
last 12 months. Active Subscriptions does not include gift subscriptions or
one-time subscription purchases.
New Subscriptions
We define New Subscriptions as the number of unique subscriptions with their
first shipment occurring in a period.
Customer Acquisition Cost
Customer Acquisition Cost ("CAC") is a measure of the cost to acquire New
Subscriptions in our Direct to Consumer business segment. This unit economic
metric indicates how effective we are at acquiring each New Subscription. CAC is
a monthly measure defined as media spend in our Direct to Consumer business
segment in the period indicated, divided by total New Subscriptions in such
period. Direct to Consumer media spend is primarily comprised of internet and
social media advertising fees.
                                       26
--------------------------------------------------------------------------------

Lifetime Value
Lifetime Value ("LTV") is the dollar value of each subscription as measured by
the cumulative Direct to Consumer Gross Profit for the average life of the
subscription.
Average Order Value
Average Order Value ("AOV") is Direct to Consumer revenue for the period divided
by Subscription Shipments for the same period.
Components of Our Results of Operations
We operate with two reportable segments: Direct to Consumer and Commerce, to
reflect the way our chief operating decision maker ("CODM") reviews and assesses
the performance of the business.
Revenue
Direct to Consumer
Direct to Consumer revenue consists of product sales through our monthly
subscription boxes, as well as sales through our website, BarkShop.com
("BarkShop"):
Toys and Treats Subscriptions-Our principal revenue generating products consist
of a tailored assortment of premium and highly durable toys and treats sold
through our BarkBox and Super Chewer monthly subscriptions. BarkBox and Super
Chewer subscription rates vary based on the type of subscription plan selected
by the customer, with Super Chewer's price point being slightly higher based on
additional costs of the more durable product, but resulting in similar gross
margins. Subscription plans are offered as monthly, six month or annual
commitments. Subscription revenue is recognized at a point in time as control is
transferred to the subscriber upon delivery of each monthly box.
On a monthly basis, toys and treats subscription customers have the option to
purchase additional toys, treats, or essential products to add to their
respective subscription boxes, through our add to box ("ATB") offering. ATB
revenue is recognized at a point in time as control is transferred to the
customer upon delivery of goods to the subscriber.
BARK Bright-BARK Bright revenue consists of sales of our health and wellness
solutions, with our initial product being a dental solution, sold primarily
through monthly subscriptions. Subscription revenue is recognized at a point in
time as control is transferred to the subscriber upon delivery of each monthly
box. Revenue for BARK Bright sales to retailers and through marketplaces is
recognized at a point in time upon delivery of goods.
BARK Eats-BARK Eats revenue consists of sales of personalized and nutritious
meals for dogs sold at a meal per day price. Revenue is recognized at a point in
time, as control is transferred to the customer upon delivery of goods.
BarkShop-BarkShop revenue consists of sales of individual toys, treats and other
products through our website, BarkShop. Revenue relating to the sale of goods on
BarkShop is recognized at a point in time as control is transferred to the
customer upon delivery of goods.
Commerce
We also generate revenue from product sales to retailers and through
marketplaces. See below for additional information on each offering.
Retail-Retail revenue consists of sales of individual BARK toys, treats, and
BARK Bright health and wellness solutions, mainly through major retailers.
Revenue is recognized upon delivery to retailer.
                                       27
--------------------------------------------------------------------------------

Online Marketplaces-Online marketplaces revenue consists of sales of toys, BARK
Bright health and wellness solutions and BARK Home products sold through major
marketplaces. BARK Home consists of an assortment of proprietary essential
products for daily life, including dog beds, bowls, collars, harnesses and
leashes. Online marketplaces revenue is recognized upon delivery of goods to the
end customer.
Cost of Revenue
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.
Operating Expenses
Operating expenses consist of general and administrative and advertising and
marketing expenses.
General and Administrative
General and administrative expenses consists primarily of compensation and
benefits costs, including stock-based compensation expense, office expense,
including rent, insurance, professional service fees, and other general overhead
costs including depreciation and amortization of fixed and intangible assets,
account management support teams, and commissions. General and administrative
expenses also includes fees charged by third parties that provide payment
processing services, fulfillment costs, which represent costs incurred in
operating and staffing fulfillment and customer service centers, including costs
attributable to receiving, inspecting, picking, packaging and preparing customer
orders for shipment, outbound freight costs associated with shipping orders to
customers, and responding to inquiries from customers.
We expect to incur additional general and administrative expenses as a result of
becoming a public company, including expenses related to compliance and
reporting obligations of public companies, and increased costs for insurance,
investor relations expenses, and professional services. As a result, we expect
that our general and administrative expenses will increase in absolute dollars
in future periods and vary from period to period as a percentage of revenue.
Advertising and Marketing
Advertising and marketing expense consists primarily of internet advertising,
promotional items, agency fees, other marketing costs and compensation and
benefits expenses, including stock-based compensation expense, for employees
engaged in advertising and marketing.
Interest Expense
Interest expense primarily consists of interest incurred under our line of
credit, term loan and convertible promissory notes agreements, and amortization
of debt issuance costs.
Other Income (Expense), Net
Other income (expense), net, primarily consists of changes in the fair value of
our warrant liabilities and loss on extinguishment of debt.
                                       28
--------------------------------------------------------------------------------

Results of Operations
We operate in two reportable segments to reflect the way our chief operating
decision maker ("CODM") reviews and assesses the performance of the business.
See Note 2, "Summary of Significant Accounting Policies," in our condensed
consolidated financial statements for the three and nine months ended
December 31, 2021 and 2020 included elsewhere in this Quarterly Report on Form
10-Q.
                                  Three Months Ended December 31,                                Nine Months Ended December 31,
                                      2021                2020               % Change               2021                2020               % Change
                                           (in thousands)                                                (in thousands)
Condensed Consolidated Statement
of Operation Data:
Revenue
Direct to Consumer                $  118,124          $  90,201                   31.0  %       $  330,316          $ 232,669                   42.0  %
Commerce                              22,688             14,974                   51.5  %           48,264             33,727                   43.1  %
Total revenue                        140,812            105,175                   33.9  %          378,580            266,396                   42.1  %
Cost of revenue
Direct to Consumer                    47,876             36,866                   29.9  %          131,195             90,034                   45.7  %
Commerce                              14,527              8,808                   64.9  %           29,298             18,387                   59.3  %
Total cost of revenue                 62,403             45,674                   36.6  %          160,493            108,421                   48.0  %
Gross profit                          78,409             59,501                   31.8  %          218,087            157,975                   38.1  %
Operating expenses:
General and administrative            78,636             52,566                   49.6  %          216,369            123,882                   74.7  %
Advertising and marketing             26,828             26,250                    2.2  %           61,053             50,782                   20.2  %
Total operating expenses             105,464             78,816                   33.8  %          277,422            174,664                   58.8  %
Loss from operations                 (27,055)           (19,315)                  40.1  %          (59,335)           (16,689)                      N/M
Interest expense                      (1,284)            (4,961)                 -74.1  %           (4,141)            (8,381)                 -50.6  %
Other income (expense), net           15,098               (696)                      N/M           31,887                736                       N/M
Net Loss before income taxes         (13,241)           (24,972)                 -47.0  %          (31,589)           (24,334)                  29.8  %
Provision for income taxes                 -                  -                    0.0  %                -                  -                    0.0  %
Net Loss                          $  (13,241)         $ (24,972)                 -47.0  %       $  (31,589)         $ (24,334)                  29.8  %

N/M means not meaningful.

                                       29
--------------------------------------------------------------------------------


Comparison of the Three Months Ended December 31, 2021 and December 31, 2020
Revenue
                             Three Months Ended
                                December 31,
                            2021            2020         $ Change      % Change
                                     ( in thousands)
Revenue
Direct to Consumer      $ 118,124       $  90,201       $ 27,923         31.0  %
Commerce                   22,688          14,974          7,714         51.5  %
Total revenue           $ 140,812       $ 105,175       $ 35,637         33.9  %
Percentage of Revenue
Direct to Consumer           83.9  %         85.8  %
Commerce                     16.1  %         14.2  %


Direct to Consumer revenue increased by $27.9 million, or 31.0%, for the three
months ended December 31, 2021 compared to the three months ended December 31,
2020. This increase was primarily driven by the 22.0% or 0.7 million increase in
Subscription Shipments, in addition to a 7.3% increase in average order value.
Commerce revenue increased by $7.7 million for the three months ended
December 31, 2021 compared to the three months ended December 31, 2020. This
increase was primarily driven by volume increases amongst existing retailer
partners, as well as the addition of new retail partners since December 31,
2020.
Gross Profit
                            Three Months Ended
                               December 31,
                           2021           2020         $ Change      % Change
                                    ( in thousands)
Gross Profit
Direct to Consumer        70,248         53,335         16,913         31.7  %
Commerce                   8,161          6,166          1,995         32.4  %
Total gross profit      $ 78,409       $ 59,501       $ 18,908         31.8  %

Percentage of revenue 55.7 % 56.6 %



Direct to Consumer and Commerce gross profit increased by $16.9 million and $2.0
million, respectively, for the three months ended December 31, 2021 compared to
the three months ended December 31, 2020, driven by the $35.6 million increase
in revenue during the period.
Gross profit as a percentage of revenue decreased 0.9% for the three months
ended December 31, 2021 compared to the three months ended December 31, 2020.
This decrease was primarily due to increased costs related to inbound freight.
                                       30
--------------------------------------------------------------------------------

Operating Expenses
General and Administrative Expense
                                                     Three Months Ended December 31,
                                                        2021                   2020              $ Change              % Change
                                                                       ( in thousands)
General and administrative                       $        78,636           $   52,566          $   26,070                49.6%
Percentage of revenue                                       55.8   %             50.0  %


General and administrative expense increased by $26.1 million, or 49.6%, for the
three months ended December 31, 2021 compared to the three months ended
December 31, 2020. This increase during the period was primarily due to:
increased fulfillment and shipping costs of $16.4 million attributable to the
22.0% increase in Subscription Shipments and increased third-party shipping
rates; increased compensation expense of $5.0 million, including total
stock-based compensation expense of $4.2 million; and increased other general
and administrative expenses of $4.7 million primarily related to increased
insurance, audit, professional, and legal fees due to growth of operations and
requirements as a new publicly traded company.

Advertising and Marketing

                                                     Three Months Ended December 31,
                                                        2021                   2020               $ Change              % Change
                                                                       ( in thousands)
Advertising and marketing                        $        26,828           $   26,250          $       578                2.2%
Percentage of revenue                                       19.1   %             25.0  %


Advertising and marketing expense increased by $0.6 million, or 2.2%, for the
three months ended December 31, 2021 compared to the three months ended
December 31, 2020. This increase during the period was primarily due to
increased compensation expense due to headcount growth.
Interest Expense
                                Three Months Ended December 31,
                               2021                            2020         $ Change      % Change
                                               ( in thousands)
Interest expense        $        (1,284)                    $ (4,961)      $  3,677        -74.1%
Percentage of revenue              (0.9)  %                     (4.7) %


Interest expense decreased by $3.7 million, or -74.1%, for the three months
ended December 31, 2021 compared to the three months December 31, 2020. This
decrease was due primarily to lower non-cash interest in connection with our
convertible promissory notes during the period.
                                       31
--------------------------------------------------------------------------------

Other Income (Expense), Net

                                                     Three Months Ended December 31,
                                                         2021                   2020              $ Change              % Change
                                                                       ( in thousands)
Other income (expense), net                      $         15,098           $     (696)         $   15,794                 N/M
Percentage of revenue                                        10.7   %             (0.7) %
N/M means not meaningful.


Other income (expense) increased by $15.8 million for the three months ended
December 31, 2021 compared to the three months ended December 31, 2020. This
increase in other income (expense), net, was primarily due to the $14.5 million
of income related to the changes in fair value of our warrant liabilities during
the period.

Comparison of the Nine Months Ended December 31, 2021 and December 31, 2020
Revenue
                               Nine Months Ended December 31,
                               2021                         2020         $ Change       % Change
                                              ( in thousands)
Revenue
Direct to Consumer      $      330,316                  $ 232,669       $  97,647         42.0%
Commerce                $       48,264                  $  33,727       $  14,537         43.1%
Total revenue           $      378,580                  $ 266,396       $ 112,184         42.1%
Percentage of Revenue
Direct to Consumer                87.3   %                   87.3  %
Commerce                          12.7   %                   12.7  %



Direct to Consumer revenue increased by $97.6 million, or 42.0%, for the nine
months ended December 31, 2021 compared to the nine months ended December 31,
2020. This increase was primarily driven by the 34.9% or 2.8 million increase in
Subscription Shipments, in addition to a 5.3% increase in average order value
during the period.
Commerce revenue increased by $14.5 million for the nine months ended
December 31, 2021 compared to the nine months ended December 31, 2020. This
increase was primarily driven by volume increases amongst existing retailer
partners, as well as the addition of new retail partners since December 31,
2020.
                                       32
--------------------------------------------------------------------------------
Gross Profit
                               Nine Months Ended December 31,
                               2021                         2020         $ Change      % Change
                                             ( in thousands)
Gross Profit
Direct to Consumer      $      199,121                  $ 142,635       $ 56,486         39.6%
Commerce                $       18,966                  $  15,340       $  3,626         23.6%
Total gross profit      $      218,087                  $ 157,975       $ 60,112         38.1%
Percentage of revenue             57.6   %                   59.3  %


Direct to Consumer and Commerce gross profit increased by $56.5 million and $3.6
million, respectively, for the nine months ended December 31, 2021 compared to
the nine months ended December 31, 2020, driven by the $112.2 million increase
in revenue during the period.
Gross profit as a percentage of revenue decreased 1.7% for the nine months ended
December 31, 2021 compared to the nine months ended December 31, 2020. This
decrease was primarily due to increased costs related to inbound freight during
the period.
Operating Expenses
General and Administrative Expense
                                                     Nine Months Ended December 31,
                                                        2021                  2020              $ Change              % Change
                                                                      ( in thousands)
General and administrative                       $      216,369           $  123,882          $   92,487                74.7%
Percentage of revenue                                      57.2   %             46.5  %


General and administrative expense increased by $92.5 million, or 74.7%, for the
nine months ended December 31, 2021 compared to the nine months ended
December 31, 2020. This increase during the period was primarily due to:
increased fulfillment and shipping costs of $49.3 million attributable to the
34.9% increase in Subscription Shipments and increased third-party shipping
rates; increased compensation expense of $23.3 million, including total
stock-based compensation of $11.0 million; and increased other general and
administrative expenses of $20.0 million primarily related to increased
insurance, audit, professional, and legal fees due to growth of operations and
requirements as a new publicly traded company.

Advertising and Marketing
                                                     Nine Months Ended December 31,
                                                        2021                  2020              $ Change              % Change
                                                                      ( in thousands)
Advertising and marketing                        $       61,053           $   50,782          $   10,271                20.2%
Percentage of revenue                                      16.1   %             19.1  %


Advertising and marketing expense increased by $10.3 million, or 20.2%, for the
nine months ended December 31, 2021 compared to the nine months ended
December 31, 2020. This increase was primarily due to additional media
advertising spend to acquire New Subscriptions during the period, the increase
in CAC of $9.36
                                       33
--------------------------------------------------------------------------------

due to media rates exceeding pre-COVID levels during the period, and increased
compensation expense due to headcount growth.
Interest Expense
                               Nine Months Ended December 31,
                               2021                          2020         $ Change      % Change
                                              ( in thousands)
Interest expense        $       (4,141)                   $ (8,381)      $  4,240        -50.6%
Percentage of revenue             (1.1)  %                    (3.1) %


Interest expense decreased by $4.2 million, or -50.6%, for the nine months ended
December 31, 2021 compared to the nine months December 31, 2020. This decrease
was due primarily to lower non-cash interest in connection with our convertible
promissory notes during the period.
Other Income (Expense), Net
                                                      Nine Months Ended December 31,
                                                         2021                   2020              $ Change              % Change
                                                                       ( in thousands)
Other income (expense), net                      $         31,887           $      736          $   31,151                 N/M
Percentage of revenue                                         8.4   %              0.3  %
N/M means not meaningful.


Other income (expense), net increased by $31.2 million for the nine months ended
December 31, 2021 compared to the nine months ended December 31, 2020. This
increase in other income (expense), net, was primarily due to the $34.0 million
of other income related to the changes in fair value of our warrant liabilities,
offset by $2.0 million of expense related to the loss on extinguishment of debt
incurred from conversion of the 2019 and 2020 Notes in connection with the
Merger.
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP. However, management
believes that Adjusted Net Income (Loss), Adjusted Net Income (Loss) Margin,
Adjusted Net Income (Loss) Per Common Share, Adjusted EBITDA and Adjusted EBITDA
Margin, all non-GAAP financial measures (together the "Non-GAAP Measures"),
provide investors with additional useful information in evaluating our
performance.
We calculate Adjusted Net Income (Loss) as net income (loss), adjusted to
exclude: (1) stock-based compensation expense, (2) change in fair value of
warrants and derivatives, (3) sales and use tax expense, (4) one-time
transaction costs associated with the financing and merger, (5) demurrage fees
related to freight and (6) other one-time items.
We calculate Adjusted Net Income (Loss) Margin by dividing Adjusted Net Income
(Loss) for the period by Revenue for the period.
We calculate Adjusted Net Income (Loss) Per Common Share by dividing Adjusted
Net Income (Loss) for the period by weighted average common shares used to
compute net loss per share attributable to common stockholders for the period.
We calculate Adjusted EBITDA as net income (loss), adjusted to exclude: (1)
interest expense, (2) depreciation and amortization, (3) stock-based
compensation expense, (4) change in fair value of warrants and derivatives, (5)
sales and use tax expense, (6) one-time transaction costs associated with the
financing and merger, (7) demurrage fees related to freight and (8) other
one-time items.
                                       34
--------------------------------------------------------------------------------

We calculate Adjusted EBITDA Margin by dividing Adjusted EBITDA for the period
by revenue for the period.
The Non-GAAP Measures are financial measures that are not required by, or
presented in accordance with GAAP. We believe that the Non-GAAP Measures, when
taken together with our financial results presented in accordance with GAAP,
provides meaningful supplemental information regarding our operating performance
and facilitates internal comparisons of our historical operating performance on
a more consistent basis by excluding certain items that may not be indicative of
our business, results of operations or outlook. In particular, we believe that
the use of the Non-GAAP Measures are helpful to our investors as they are
measures used by management in assessing the health of our business, determining
incentive compensation and evaluating our operating performance, as well as for
internal planning and forecasting purposes.
The Non-GAAP Measures are presented for supplemental informational purposes
only, have limitations as an analytical tool and should not be considered in
isolation or as a substitute for financial information presented in accordance
with GAAP. Some of the limitations of the Non-GAAP Measures include that (1) the
measures do not properly reflect capital commitments to be paid in the future,
(2) although depreciation and amortization are non-cash charges, the underlying
assets may need to be replaced and Adjusted EBITDA and Adjusted EBITDA Margin do
not reflect these capital expenditures, (3) Adjusted EBITDA and Adjusted EBITDA
Margin do not consider the impact of stock-based compensation expense, which is
an ongoing expense for our company and (4) Adjusted EBITDA and Adjusted EBITDA
Margin do not reflect other non-operating expenses, including interest expense.
In addition, our use of the Non-GAAP Measures may not be comparable to similarly
titled measures of other companies because they may not calculate the Non-GAAP
Measures in the same manner, limiting its usefulness as a comparative measure.
Because of these limitations, when evaluating our performance, you should
consider the Non-GAAP Measures alongside other financial measures, including our
net income (loss) and other results stated in accordance with GAAP.
The following table presents a reconciliation of Adjusted Net Loss to net loss,
the most directly comparable financial measure stated in accordance with GAAP,
and the calculation of net loss margin, Adjusted Net Loss Margin and Adjusted
Net Loss Per Common Share for the periods presented:
Adjusted Net Loss
                               Three months ended December 31,              

Nine months ended December 31,

                                   2021                   2020                  2021                  2020
                                                  (in thousands, except per share data)
Net loss                    $       (13,241)          $ (24,972)         $      (31,589)          $ (24,334)
Stock-based compensation
expense                               4,209               2,734                  11,036               4,126
Change in fair value of
warrants and derivatives            (14,470)              1,600                 (33,978)                336
Sales and use tax expense
(1)                                      50                 285                      50               1,126
Transaction costs (2)                   324                 630                   5,964                 630
Demurrage fees                        1,303                   -                   2,038                   -
Other one-time items (3)              1,081                   -                   4,693                   -
Adjusted net loss           $       (20,744)          $ (19,723)         $      (41,786)          $ (18,116)
Net loss margin                       (9.40)  %          (23.74) %                (8.34)  %           (9.13) %
Adjusted net loss margin             (14.73)  %          (18.75) %               (11.04)  %           (6.80) %

Adjusted net loss per
common share - basic and
diluted                     $         (0.12)          $   (0.43)         $        (0.28)          $   (0.39)
Weighted average common
shares used to compute
adjusted net loss per share
attributable to common
stockholders - basic and
diluted                             172,554,101         46,192,869              150,313,932         45,867,792


                                       35
--------------------------------------------------------------------------------

The following table presents a reconciliation of Adjusted EBITDA to net loss,
the most directly comparable financial measure stated in accordance with GAAP,
and the calculation of net loss margin and Adjusted EBITDA margin for the
periods presented:
Adjusted EBITDA
                                     Three Months Ended December 31,                Nine Months Ended December 31,
                                        2021                    2020                   2021                   2020
                                              (in thousands)                                (in thousands)
Net loss                         $       (13,241)          $   (24,972)         $      (31,589)          $   (24,334)
Interest expense                           1,284                 4,961                   4,141                 8,381
Depreciation and amortization
expense                                    1,123                   660                   2,924                 1,697
Stock-based compensation expense           4,209                 2,734                  11,036                 4,126
Change in fair value of warrants
and derivatives                          (14,470)                1,600                 (33,978)                  336
Sales and use tax expense (1)                 50                   285                      50                 1,126
Transaction costs (2)                        324                   630                   5,964                   630
Demurrage fees                             1,303                     -                   2,038                     -
Other one-time items (3)                   1,081                     -                   4,693                     -
Adjusted EBITDA                  $       (18,337)          $   (14,102)         $      (34,721)          $    (8,038)
Net loss margin                            (9.40)  %            (23.74) %                (8.34)  %             (9.13) %
Adjusted EBITDA margin                    (13.02)  %            (13.41) %                (9.17)  %             (3.02) %



(1) Sales and use tax expense relates to recording a liability for sales and use
tax we did not collect from our customers. Historically, we had collected state
or local sales, use, or other similar taxes in certain jurisdictions in which we
only had physical presence. On June 21, 2018, the U.S. Supreme Court decided, in
South Dakota v. Wayfair, Inc. that state and local jurisdictions may, at least
in certain circumstances, enforce a sales and use tax collection obligation on
remote vendors that have no physical presence in such jurisdiction. A number of
states have positioned themselves to require sales and use tax collection by
remote vendors and/or by online marketplaces. The details and effective dates of
these collection requirements vary from state to state and accordingly, we
recorded a liability in those periods in which we created economic nexus based
on each state's requirements. Accordingly, we now collect, remit, and report
sales tax in all states that impose a sales tax.
(2)Transactions 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.

(3)For the three months ended December 31, 2021, other one-time items is
primarily comprised of costs related to unrealized business ventures of $1.5
million, gain on extinguishment of debt of $0.6 million, and executive
transition costs, including recruiting, bonus and relocation related expense of
$0.1 million. For the nine months ended December 31, 2021, other one-time items
is comprised of loss on extinguishment of debt of $2.0 million, costs related to
unrealized business ventures of $1.5 million, SOX implementation fees of $0.4
million, executive transition costs, including recruiting, bonus and relocation
related expenses of $0.4 million, loss on exercise of warrants of $0.3 million
and restructuring related expenses of $0.1 million.

Liquidity and Capital Resources
Since inception, we have funded our operations with proceeds from sales of our
capital stock and proceeds from borrowings in addition to cash generated by our
operations. As of December 31, 2021, we had cash and cash equivalents of
approximately $228.7 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 expect to
be in compliance with during the next 12 months. Our future capital requirements
will depend on many factors, including our pace of new and existing
                                       36
--------------------------------------------------------------------------------

customer growth and our investments in partnerships and unexplored channels. We
may be required to seek additional equity or debt financing.
Western Alliance Bank-Line of Credit and Term Loan
In October 2017, we entered into a loan and security agreement (the "Western
Alliance Agreement") and issued a warrant to purchase preferred stock to Western
Alliance Bank ("Western Alliance"), which provides for a secured revolving line
of credit (the "Credit Facility") in an aggregate principal amount of up to
$35.0 million with a maturity date of October 12, 2020.
On December 7, 2018, we amended the Western Alliance Agreement, which included
the issuance of a warrant to purchase common stock to Western Alliance. The
modification to the agreement provided for an additional term loan of $10.0
million at issuance and an incremental seasonal loan of $5.0 million. The
seasonal loan matured and was repaid on March 31, 2020.
On July 31, 2020, we amended the Western Alliance Agreement, and extended the
expiration of the warrants to July 31, 2030. The modification to the Western
Alliance Agreement amended the maturity date of the Credit Facility to August
12, 2021.
On November 27, 2020, we repaid the outstanding $10.0 million principal of the
term loan with Western Alliance Bank, as well as $0.2 million of early repayment
fees, using proceeds from the issuance of the 2025 Convertible Notes (the "2025
Convertible Notes"). See further discussion of the 2025 Convertible Notes
issuance below.
In conjunction with the 2025 Convertible Notes issuance, the Company amended the
Western Alliance Agreement to extend the Credit Facility repayment date from
August 12, 2021 to December 31, 2021.
On January 22, 2021, we amended the Western Alliance Agreement to extend the
Credit Facility maturity date to May 31, 2022.
On June 15, 2021, in connection with the Merger, the Company repaid the
outstanding balance on the Credit Facility, and as of December 31, 2021 there
are no outstanding borrowings under the Credit Facility. The full amount of the
Credit Facility of $35.0 million remains available to be borrowed by the Company
if or when needed through the termination date of the agreement of May 31, 2022.
On October 29, 2021, the Company and Western Alliance entered into the eleventh
loan and security modification agreement, which increased the sublimit for
foreign exchange services and export, import, and standby letters of credit
under the Company's existing loan and security agreement with Western Alliance
to $2.7 million.
The interest rate for borrowings under the Credit Facility, as amended, is equal
to (i) the greater of the prime rate that is published in the Money Rates
section of The Wall Street Journal from time to time (the "Prime Rate") and
5.25%, plus (ii) half of one percent (0.50%), per annum. As of March 31, 2021
and 2020 the weighted-average interest rate for the Western Alliance Credit
Facility and term loans was 5.75% and 6.09%, respectively.
The Credit Facility has a borrowing base subject to an amount equal to eighty
percent (80%) of our trailing three months of subscription revenue. Western
Alliance has a first lien perfected security interest in substantially all of
our assets, including our rights to our intellectual property.
Under the terms of this Credit Facility, we are required to comply with certain
financial and nonfinancial covenants, including covenants to maintain certain
liquidity amounts, as defined in the Western Alliance Agreement, as amended.
Convertible Promissory Notes
On December 19, 2019, we entered into a note purchase agreement and issued
individual convertible promissory notes thereunder, with an option for
subsequent closings through May 1, 2020 for up to $10.0 million in aggregate
principal. We received gross proceeds of $3.9 million in two December 2019
closings. The notes bore
                                       37
--------------------------------------------------------------------------------

interest at a rate of 7% per year, capitalized quarterly, and payable in kind.
The notes have a maturity date of December 19, 2024, unless previously converted
into equity securities pursuant to the terms of the note purchase agreement.
On March 31, 2020, we entered into a note purchase agreement and issued
individual convertible promissory notes thereunder, with an option for
subsequent closings through May 1, 2020 for up to $10.0 million in aggregate
principal. We received gross proceeds of $1.5 million from the initial closing
of the note purchase agreement on March 31, 2020 with employees, founders, and
existing investors, representing a related party transaction. The agreement
consisted of both Pro Rata Notes and Super Pro Rata Notes. Pro-Rata Notes are
defined as one or more promissory notes issued to each lender with respect to
the amount of the lender's consideration, up to the lender's pro rata amount as
set forth in the note purchase agreement. Super Pro-Rata Notes are defined as
one or more promissory notes issued to each lender with respect to the lender's
amount of consideration paid in excess of their pro rata amount. The Super Pro
Rata Notes bore interest at a rate of 10% per year, capitalized quarterly, and
payable in kind, while the Pro Rata Notes bear interest at a rate of 8% per
year, capitalized quarterly, and payable in kind. Both the Pro Rata and Super
Pro Rata notes have a maturity date of March 30, 2023, unless previously
converted into equity securities pursuant to the terms of the note purchase
agreement.
On May 1, 2020, we received gross proceeds of $1.0 million from the second
closing of the March 31, 2020 note purchase agreement with existing investors.
On June 18, 2020, we amended a previously existing term loan agreement, which
extended the initial principal repayment period. In consideration of the
modification, we issued to the lender convertible promissory notes under the
March 31, 2020 note purchase agreement of $0.8 million from the third closing of
the March 31, 2020 note purchase agreement.
On December 16, 2020, in connection with the execution of the Merger Agreement,
we amended the note purchase agreements associated with the convertible notes
issued in 2019 and 2020 to amend the conversion terms of the notes.
On June 1, 2021, in connection with the closing of the Merger, the outstanding
principal and interest of the 2019 Notes and 2020 Notes were converted to
1,135,713 shares of our common stock, with a fair value of $12.8 million. The
conversion of the notes resulted in a loss on extinguishment of $$2.0 million
recorded to other expense included in other income, net on the condensed
consolidated statement of operations and comprehensive loss, as well as a
capital contribution of $0.5 million recorded to additional paid-in-capital on
the condensed consolidated balance sheet for the portion of the loss associated
with the 2020 Notes which were with related parties.
Paycheck Protection Program
On April 24, 2020, we received funds of $5.2 million under the Paycheck
Protection Program ("PPP"), a part of the CARES Act. The loan was serviced by
Western Alliance Bank, and the application for these funds required us to, in
good faith, certify that the current economic uncertainty made the loan
necessary to support ongoing operations. On June 11, 2021, we voluntarily repaid
the outstanding principal and interest amounts outstanding of the PPP loan.
2025 Convertible Notes
On November 27, 2020, we issued $75.0 million aggregate principal amount of 2025
Convertible Notes to Magnetar Capital, LLC ("Magnetar"). We received net
proceeds of approximately $74.7 million from the sale of the 2025 Convertible
Notes, after deducting fees and expenses of approximately $0.3 million.
We used approximately $27.6 million of the net proceeds from the sale of the
2025 Convertible Notes to repay the outstanding term loans with Western Alliance
Bank and Pinnacle Ventures, LLC ("Pinnacle"), which included $2.0 million of
early repayment fees related to the Pinnacle loan.
The 2025 Convertible Notes are governed by an indenture, dated as of November
27, 2020, between us and U.S. Bank National Association, as trustee and
collateral agent. The 2025 Convertible Notes will bear interest at the
                                       38
--------------------------------------------------------------------------------

annual rate of 5.50%, payable annually on December 1st commencing December 1,
2021, compounded annually. The 2025 Convertible Notes will mature on December 1,
2025, unless earlier converted, redeemed or repurchased.

Cash Flows
Comparison of the Nine Months Ended December 31, 2021 and 2020.
The following table summarizes our cash flows for the nine months ended
December 31, 2021 and 2020:
                                                                Nine Months Ended December 31,
                                                                  2021                     2020
                                                                        (in thousands)

Net cash (used in) provided by operating activities $ (146,537) $ (8,757) Net cash used in investing activities

                               (17,605)                (4,017)
Net cash provided by financing activities                           355,382                 55,622
Net increase in cash and restricted cash                  $         191,240 

$ 42,848



Cash flows provided by/used in Operating Activities
Net cash flows in operating activities represent the cash receipts and
disbursements related to our activities other than investing and financing
activities.
Net cash flows used in operating activities is derived by adjusting our net loss
for:
•non-cash operating items such as depreciation and amortization, stock-based
compensation and other non-cash income or expenses;
•changes in operating assets and liabilities reflect timing differences between
the receipt and payment of cash associated with transactions.
For the nine months ended December 31, 2021, net cash used in operating
activities was $146.5 million. The $146.5 million of net cash used in operating
activities consisted of net loss of $31.6 million adjusted for non-cash charges
totaling $17.7 million and a net decrease of $97.2 million in our net operating
assets and liabilities. The non-cash charges primarily consisted of $38.9
million for changes in fair value of warrants, $11.0 million for stock based
compensation, $2.0 million loss on extinguishment of debt and $2.9 million for
depreciation and amortization. The decrease in our net operating assets and
liabilities was driven by the changes in inventory of $73.2 million to support
current demand, accounts payable and accrued expenses of $12.3 million related
to increased expenditures to support general business growth, as well as the
timing of payments, other liabilities of $8.7 million, and prepaid expenses and
other current assets of $0.4 million. The decrease in our net operating assets
and liabilities was partially offset by the change in deferred revenue of $9.0
million, and accounts receivable of $11.3 million.
For the nine months ended December 31, 2020, net cash used by operating
activities was $8.8 million. The $8.8 million of net cash used in operating
activities consisted of net loss of $24.3 million adjusted for non-cash charges
totaling $8.9 million and a net increase of $6.6 million in our net operating
assets and liabilities. The non-cash charges primarily consisted of $1.7 million
for depreciation and amortization, $4.1 million for stock based compensation and
$2.7 million for amortization of debt discount and deferred issuance costs. The
decrease in our net operating assets and liabilities was driven by the changes
in inventory of $32.7 million to support demand and accounts payable and accrued
expenses of $17.2 million related to expenditures to support general business
operations, as well as the timing of payments. The decrease in our net operating
assets and liabilities was partially offset by the change in deferred revenue of
$16.7 million and other liabilities of $13.7 million.
                                       39
--------------------------------------------------------------------------------

Cash flows used in Investing Activities
For the nine months ended December 31, 2021 and 2020, net cash used in investing
activities was $17.6 million and $4.0 million, respectively, primarily due to
capital expenditures.
Cash flows provided by Financing Activities
For the nine months ended December 31, 2021, net cash provided by financing
activities was $355.4 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 PPP loan of $5.2 million.
For the nine months ended December 31, 2020, net cash provided by financing
activities was $55.6 million, primarily due to proceeds from debt of $5.2
million, proceeds from convertible notes of $75.8 million and proceeds from the
exercise of stock options of $0.7 million.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our condensed consolidated financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these
condensed consolidated financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the condensed
consolidated financial statements, as well as the reported revenue generated and
expenses incurred during the reporting periods. Our estimates are based on our
historical experience and various other factors that we believe are reasonable
under the circumstances, the results of which form the basis for making
judgments about items that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.
Except as described in Note 2, "Summary of Significant Accounting Policies -
Recent Accounting Pronouncement Issued but Not Yet Adopted," to our condensed
consolidated financial statements included in this Quarterly Report on Form
10-Q, there have been no material changes to our critical accounting policies
and estimates as compared to the critical accounting policies and estimates
disclosed in our audited consolidated financial statements and notes thereto for
the year ended March 31, 2021 contained in the Current Report on Form 8-K filed
with the SEC on June 7, 2021.
                                       40

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses

All news about BARK, INC.
06/27Scandinavian Real Heart Recruits New CFO; Shares Jump 10%
MT
06/15INSIDER BUY : Bark
MT
06/14INSIDER BUY : Bark
MT
06/08Allup Silica Finds Silica Potential at Pink Bark Tenement; Shares Climb 4%
MT
06/01Salesforce.com, Victoria's Secret rise; S&P, Bark fall
AQ
06/01SECTOR UPDATE : Consumer Discretionary Stocks Back Near Even Again in Late Trade
MT
06/01Top Midday Decliners
MT
06/01SECTOR UPDATE : Consumer Stocks Tumble This Afternoon
MT
06/01SECTOR UPDATE : Consumer
MT
06/01BARK : Hold onto your butts! bark releases limited-edition jurassic world subscription b....
PU
More news
Analyst Recommendations on BARK, INC.
More recommendations