Playboy Inc.
11/12/2025 | Press release | Distributed by Public on 11/12/2025 15:34
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2025 and 2024 and the related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023 and the related notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 13, 2025. This discussion contains forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings "Risk Factors", "Business" and "Cautionary Note Regarding Forward-Looking Statements" contained in our Annual Report on Form 10-K filed with the SEC on March 13, 2025. As used herein, "we", "us", "our", and the "Company" refer to Playboy, Inc. and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. These statements are based on the expectations and beliefs of the management of the Company in light of historical results and trends, current conditions and potential future developments, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements. These forward-looking statements include all statements other than historical fact, including, without limitation, statements regarding the financial position, capital structure, dividends, indebtedness, business strategy and plans and objectives of management for future operations of the Company. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "may", "might", "plan", "possible", "potential", "predict", "project", "should", "strive", "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting us will be those that we anticipated. 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 inability to maintain the listing of the Company's shares of common stock on Nasdaq; (2) 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; (3) the ability to recognize the anticipated benefits of corporate transactions, commercial collaborations, commercialization of digital assets, cost reduction initiatives 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; (4) costs related to being a public company, corporate transactions, commercial collaborations and proposed transactions; (5) changes in applicable laws or regulations; (6) the possibility that the Company may be adversely affected by global hostilities, supply chain delays, inflation, interest rates, tariffs, foreign currency exchange rates or other economic, business, and/or competitive factors; (7) risks relating to the uncertainty of the projected financial information of the Company, including changes in the Company's estimates of cash flows and the fair value of certain of its intangible assets, including goodwill; (8) risks related to the organic and inorganic growth of the Company's businesses, and the timing of expected business milestones; (9) changing demand or shopping patterns for the Company's products and services; (10) failure of licensees, suppliers or other third-parties to fulfill their obligations to the Company; (11) the Company's ability to comply with the terms of its indebtedness and other obligations; (12) changes in financing markets or the inability of the Company to obtain financing on attractive terms; and (13) other risks in this Quarterly Report on Form 10-Q, including those under "Part II-Item 1A. Risk Factors", and in "Part I-Item 1A. Risk Factors" in our most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We caution that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements.
Forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q or any earlier date specified for such statements. We do not undertake any obligation to update or revise any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as may be required under applicable securities laws. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Cautionary Note Regarding Forward-Looking Statements.
Business Overview
We are a global consumer lifestyle company marketing our brands through a wide range of licensing initiatives, direct-to-consumer products, Playboy magazine, digital subscriptions and content, and online and location-based entertainment. As of January 1, 2025, we licensed certain intellectual property and our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses to Byborg Enterprises SA ("Byborg") pursuant to a License & Management Agreement (the "LMA"). As a result, we have two reportable segments: Direct-to-Consumer and Licensing. The Direct-to-Consumer segment derives revenue from sales of consumer products sold directly to consumers by Honey Birdette online or at its brick-and-mortar stores, with 51 stores in three countries as of September 30, 2025. The Licensing segment derives revenue from trademark licenses for third-party consumer products, primarily for various apparel and accessories categories, hospitality, digital gaming and location-based entertainment businesses, and starting January 1, 2025, revenue from licensing our digital subscriptions and content operations to Byborg.
Key Factors and Trends Affecting Our Business
We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and referenced in this Quarterly Report on Form 10-Q under "Part II-Item 1A. Risk Factors", our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 under "Part II-Item 1A. Risk Factors", and in "Part I-Item 1A. Risk Factors" in our most recent Annual Report on Form 10-K.
Pursuing a More Capital-Light Business Model
We continue to pursue a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential. We are doing this by leveraging our flagship Playboy brand to attract best-in-class operators. We also use our licensing business as a marketing tool and brand builder, including through high profile collaborations and our large-scale strategic partnerships.
In the fourth quarter of 2024, we entered into the LMA with Byborg to license intellectual property and select Playboy digital assets for $300.0 million in minimum guaranteed payments over the initial 15-year term of the license, which began January 1, 2025.
After having stabilized Playboy's China business in 2024 and 2025, in the fourth quarter of 2025, we transitioned our joint venture for the Playboy business in China (the "China JV") into a more typical licensing structure, with our former China JV partner, CT Licensing Limited, a brand management unit of Fung Group, becoming our licensing agent in China, and which will continue to support our consumer products licensing business in mainland China (inclusive of Hong Kong and Macau). We expect our licensing business in China to continue to represent a material part of our overall business. Our licensing revenues from China as a percentage of our total revenues were 11% for the three months ended September 30, 2025 and 2024, respectively, and 11% and 9% for the nine months ended September 30, 2025 and 2024, respectively.
We are focused on strategically expanding our Playboy licensing business into new categories and territories with high quality strategic partners and supporting them with brand marketing in the form of content, experiences and editorial works, including through our re-launch of Playboymagazine in 2025.
For our Honey Birdette business, we intend to focus on the U.S. market, where the brand's stores, on average, generate more revenue and better margins, and generally have customers who tend to spend more and are less price sensitive.
Recent Trade Developments
We continue to monitor ongoing changes in U.S. trade policies, including increasing tariffs on imports, in some cases significantly, and changes to existing international trade agreements. These actions have prompted retaliatory tariffs and other measures by a number of countries. Starting in the second quarter of 2025, actions were taken by the U.S. and certain other countries to modify the timing, rates and/or other aspects of certain of these tariffs. However, some of the new tariffs remain in effect, including tariffs between the U.S. and China, where we source the manufacturing of our Honey Birdette products and where many of our licensees source their products. While the impact of such trade policies on our business remains uncertain, we continue to closely monitor such matters and potential impacts, including increased production costs and higher pricing to our customers, either of which could negatively affect our business, results of operations and financial condition.
Seasonality of Our Consumer Product Sales
While we receive revenue throughout the year, our Honey Birdette direct-to-consumer business has experienced, and may continue to experience, seasonality. Historical seasonality of revenues may be subject to change as increasing pressure from competition and economic conditions impact our licensees and consumers. The further transition of our business to a capital-light business model may further impact the seasonality of our business in the future.
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of the business are revenues, salaries and benefits, and selling and administrative expenses. To help assess performance with these key indicators, we use Adjusted EBITDA as a non-GAAP financial measure. We believe this non-GAAP measure provides useful information to investors and expanded insight to measure revenue and cost performance as a supplement to the GAAP consolidated financial statements. See the "EBITDA and Adjusted EBITDA" section below for reconciliations of Adjusted EBITDA to net loss, the closest GAAP measure.
Components of Results of Operations
Revenues
We generate revenue from sales of consumer products sold through our Honey Birdette retail stores or online directly to customers, trademark licenses for third-party consumer products and online and location-based entertainment businesses, and starting January 1, 2025, licensing the operation of our digital subscriptions and content businesses, which were owned and operated by us in the prior year comparative period.
Consumer Products
Revenue from sales of online apparel and accessories is recognized upon delivery of the goods to the customer. Revenue from sales of apparel at our retail stores is recognized at the time of transaction. Revenue is recognized net of incentives and estimated returns. We periodically offer promotional incentives to customers, which include basket promotional code discounts and other credits, which are recorded as a reduction of revenue.
Licensing
We license trademarks under multi-year arrangements to consumer products and online and location-based entertainment businesses. Typically, the initial contract term ranges between one to 15 years. Renewals are separately negotiated through amendments. Under these arrangements, we generally receive an annual non-refundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year. Earned royalties received in excess of the minimum guarantee ("Excess Royalties") are typically payable quarterly. We recognize revenue for the total minimum guarantee specified in the agreement on a straight-line basis over the term of the agreement and recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned. In the event that the collection of any royalty becomes materially uncertain or unlikely, we recognize revenue from our licensees up to the cash we have received.
Starting January 1, 2025, we licensed the operation of our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses, which was previously owned and operated by us and included in our Digital Subscriptions and Content reportable segment in the prior year comparative period, to Byborg pursuant to the LMA.
Prior to January 1, 2025, digital subscription revenue was derived from subscription sales of playboyplus.comand playboy.tv, which are online content platforms. We received fixed consideration shortly before the start of the subscription periods from these contracts, which were primarily sold in monthly, annual, or lifetime subscriptions. Revenues from lifetime subscriptions were recognized ratably over a five-year period, representing the estimated period during which the customer accesses the platforms. Revenues from digital subscriptions were recognized ratably over the subscription period. Revenues generated from the sales of creator content offerings and memberships to consumers via our creator platform on playboy.comwere recognized at the point in time when the sale is processed. Revenues generated from subscriptions to our creator platform are recognized ratably over the subscription period.
Prior to January 1, 2025, we also licensed programming content to certain cable television operators and direct-to-home satellite television operators who paid royalties based on monthly subscriber counts and pay-per-view and video-on-demand buys for the right to distribute our programming under the terms of affiliation agreements. Royalties were generally collected monthly and recognized as revenue as earned.
Cost of Sales
Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency and commission fees, website expenses, marketplace traffic acquisition costs, digital platform expenses (prior to January 1, 2025), transition expenses per the TSA (commencing January 1, 2025 through June 30, 2025), credit card processing fees, personnel costs, including stock-based compensation, costs associated with branding events, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.
Selling and Administrative Expenses
Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, transition expenses per the TSA (commencing January 1, 2025 through June 30, 2025), brand marketing costs, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.
Impairments
Impairments consist of the impairments of our artwork held for sale, right-of-use assets related to our corporate leases, internally developed software and goodwill.
Other Operating Income (Expense), Net
Other operating income (expense), net consists primarily of gains and losses on disposal of assets and other miscellaneous items.
Nonoperating (Expense) Income
Interest Expense, Net
Interest expense, net consists of interest on our long-term debt and the amortization of deferred financing costs and debt premium/discount.
Other Income, Net
Other income, net consists primarily of other miscellaneous nonoperating items, such as nonrecurring transaction fees, foreign exchange realized and unrealized transaction gains or losses, bank charges and interest income.
Benefit (expense) from Income Taxes
Benefit (expense) from income taxes consists of an estimate for U.S. federal, state, and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Due to cumulative losses, we maintain a valuation allowance against our definite-lived U.S. federal and state deferred tax assets, as well as our Australia, U.K. and China deferred tax assets.
Results of Operations
Comparison of the Three Months Ended September 30, 2025 and 2024
The following table summarizes key components of our results of operations for the periods indicated (in thousands, except percentages):
|
Three Months Ended September 30, |
|||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Net revenues | $ | 28,994 | $ | 29,438 | $ | (444) | (2) | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of sales | (6,954) | (11,475) | 4,521 | (39) | % | ||||||||||||||||||
| Selling and administrative expenses | (20,434) | (24,521) | 4,087 | (17) | % | ||||||||||||||||||
| Impairments | (245) | (21,706) | 21,461 | (99) | % | ||||||||||||||||||
|
Other operating income, net
|
5 | - | 5 | 100 | % | ||||||||||||||||||
| Total operating expense | (27,628) | (57,702) | 30,074 | (52) | % | ||||||||||||||||||
| Operating income (loss) | 1,366 | (28,264) | 29,630 | (105) | % | ||||||||||||||||||
| Nonoperating (expense) income: | |||||||||||||||||||||||
| Interest expense, net | (1,926) | (6,666) | 4,740 | (71) | % | ||||||||||||||||||
| Other income, net | 460 | 1,769 | (1,309) | (74) | % | ||||||||||||||||||
| Total nonoperating expense, net | (1,466) | (4,897) | 3,431 | (70) | % | ||||||||||||||||||
| Loss before income taxes | (100) | (33,161) | 33,061 | (100) | % | ||||||||||||||||||
| Benefit (expense) from income taxes | 560 | (594) | 1,154 | over 150% | |||||||||||||||||||
| Net income (loss) | 460 | (33,755) | 34,215 | (101) | % | ||||||||||||||||||
| Net income (loss) attributable to Playboy, Inc. | $ | 460 | $ | (33,755) | $ | 34,215 | (101) | % | |||||||||||||||
The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated:
|
Three Months Ended September 30, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Net revenues | 100% | 100% | |||||||||
| Costs and expenses: | |||||||||||
| Cost of sales | (24) | (39) | |||||||||
| Selling and administrative expenses | (70) | (83) | |||||||||
| Impairments | (1) | (74) | |||||||||
|
Other operating income, net
|
- | - | |||||||||
| Total operating expense | (95) | (196) | |||||||||
| Operating income (loss) | 5 | (96) | |||||||||
| Nonoperating (expense) income: | |||||||||||
| Interest expense, net | (7) | (23) | |||||||||
| Other income, net | 2 | 6 | |||||||||
| Total nonoperating expense, net | (5) | (17) | |||||||||
| Loss before income taxes | - | (113) | |||||||||
| Benefit (expense) from income taxes | 2 | (2) | |||||||||
| Net income (loss) | 2 | (115) | |||||||||
| Net income (loss) attributable to Playboy, Inc. | 2% | (115)% | |||||||||
Net Revenues
The following table sets forth net revenues by reportable segment (in thousands):
|
Three Months Ended September 30, |
|||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Direct-to-consumer | $ | 16,388 | $ | 16,576 | $ | (188) | (1) | % | |||||||||||||||
| Licensing | 11,995 | 7,439 | 4,556 | 61 | % | ||||||||||||||||||
|
Corporate
|
98 | 66 | 32 | 48 | % | ||||||||||||||||||
|
All Other
|
513 | 5,357 | (4,844) | (90) | % | ||||||||||||||||||
| Total | $ | 28,994 | $ | 29,438 | $ | (444) | (2) | % | |||||||||||||||
Direct-to-Consumer
Direct-to-consumer net revenues, compared to the prior year comparative period, remained largely consistent due to continued improvement in consumer perception of the Honey Birdette brand, which resulted in increased sales of full-price products, offset by lower sales of discounted products.
Licensing
The increase in licensing net revenues, compared to the prior year comparative period, was primarily due to $5.0 million of minimum guaranteed royalties recognized pursuant to the LMA, $0.3 million of royalty overages recorded for one of our licensees, partly offset by $1.3 million of revenue from an inventory sale to a licensee in the prior year comparative period that did not recur in 2025.
Corporate
Corporate revenues for the three months ended September 30, 2025 and 2024 related to corporate branding activities, primarily from payments for access to our iPlayboy archives.
All Other
The decrease in all other net revenues, compared to the prior year comparative period, was primarily due to the licensing of our digital subscriptions and content operations to Byborg pursuant to the LMA, effective as of January 1, 2025. As a result, our previously reported Digital Subscriptions and Content operating and reportable segment was eliminated and its operations in the prior year comparative period were recast to be included in "All Other" for comparative purposes. "All Other" net revenues for the three months ended September 30, 2025 related to the amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
Cost of Sales
The following table sets forth cost of sales and gross margin by reportable segment (in thousands):
|
Three Months Ended September 30, |
|||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
|
Cost of sales:
|
|||||||||||||||||||||||
| Direct-to-consumer | $ | (6,428) | $ | (7,659) | $ | 1,231 | (16) | % | |||||||||||||||
| Licensing | (525) | (1,513) | 988 | (65) | % | ||||||||||||||||||
|
Corporate
|
- | - | - | - | |||||||||||||||||||
| All Other | (1) | (2,303) | 2,302 | (100) | % | ||||||||||||||||||
| Total | $ | (6,954) | $ | (11,475) | $ | 4,521 | (39) | % | |||||||||||||||
| Direct-to-consumer gross profit | $ | 9,960 | $ | 8,917 | $ | 1,043 | 12 | % | |||||||||||||||
| Direct-to-consumer gross margin | 61 | % | 54 | % | |||||||||||||||||||
| Licensing gross profit | $ | 11,470 | $ | 5,926 | $ | 5,544 | 94 | % | |||||||||||||||
| Licensing gross margin | 96 | % | 80 | % | |||||||||||||||||||
| Corporate gross profit | $ | 98 | $ | 66 | $ | 32 | 48 | % | |||||||||||||||
| Corporate gross margin | 100 | % | 100 | % | |||||||||||||||||||
| All Other gross profit | $ | 512 | $ | 3,054 | $ | (2,542) | (83) | % | |||||||||||||||
| All Other gross margin | 100 | % | 57 | % | |||||||||||||||||||
| Total gross profit | $ | 22,040 | $ | 17,963 | $ | 4,077 | 23 | % | |||||||||||||||
| Total gross margin | 76 | % | 61 | % | |||||||||||||||||||
Direct-to-Consumer
The decrease in direct-to-consumer cost of sales, compared to the prior year comparative period, was primarily due to a $0.8 million decrease in Honey Birdette's product, shipping and fulfillment costs due to lower sales of discounted products. The increase in gross profit and gross margin was due to continued improvement in consumer demand at Honey Birdette, which resulted in increased sales of full-price products at a higher margin.
Licensing
The decrease in licensing cost of sales and the corresponding increase in gross margin, compared to the prior year comparative period, was primarily due to a $0.9 million increase in licensing product costs in the prior year comparative period due to the sale of inventory.
Corporate
The corporate gross profit during the three months ended September 30, 2025 and 2024 primarily related to payments from access to our iPlayboy archives.
All Other
The decrease in all other cost of sales and increase in gross margin, compared to the prior year comparative period, was primarily related to the licensing of our digital subscriptions and content operations to Byborg pursuant to the LMA, effective as of January 1, 2025.
Selling and Administrative Expenses
The decrease in selling and administrative expenses for the three months ended September 30, 2025, as compared to the prior year comparative period, was primarily due to lower payroll expense of $2.0 million and a $0.3 million decrease in stock-based compensation expense, mainly due to the transition of our digital operations into a licensing model, a decrease in various professional services of $0.8 million, lower rent expense of $0.7 million, lower bad debt expense of $0.4 million and a $0.3 million decrease in depreciation, partly offset by $0.6 million in additional legal expenses related to ongoing material litigation.
Impairments
The decrease in impairments for the three months ended September 30, 2025, as compared to the prior year comparative period, was due to impairment charges recognized in the prior year comparative period of $17.0 million related to our goodwill and $4.7 million related to our internally developed software, partly offset by impairment charges on our artwork held for sale of $0.2 million in the third quarter of 2025.
Other Operating Income, Net
The change in other operating income, net for the three months ended September 30, 2025, as compared to the prior year comparative period, was immaterial.
Nonoperating (Expense) Income
Interest Expense, Net
The decrease in interest expense, net for the three months ended September 30, 2025, as compared to the prior year comparative period, was primarily due to a reduction of our debt balance and amortization of debt premium in connection with the A&R Third Amendment in 2024.
Other Income, Net
The change in other income, net for the three months ended September 30, 2025, as compared to the prior year comparative period, was primarily due to unrealized gains and losses related to foreign currency transactions.
Benefit (expense) from Income Taxes
The change from expense to benefit from income taxes for the three months ended September 30, 2025, as compared to the prior year comparative period, was primarily driven by the change in valuation allowance due to the reduction in net indefinite-lived deferred tax liabilities, offset by increased foreign income taxes in the three months ended September 30, 2025.
Comparison of the Nine Months Ended September 30, 2025 and 2024
The following table summarizes key components of our results of operations for the periods indicated (in thousands, except percentages):
|
Nine Months Ended September 30, |
|||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Net revenues | $ | 86,017 | $ | 82,642 | $ | 3,375 | 4 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of sales | (25,746) | (32,000) | 6,254 | (20) | % | ||||||||||||||||||
| Selling and administrative expenses | (68,197) | (71,863) | 3,666 | (5) | % | ||||||||||||||||||
| Impairments | (2,087) | (24,722) | 22,635 | (92) | % | ||||||||||||||||||
|
Other operating expense, net
|
(764) | (441) | (323) | 73 | % | ||||||||||||||||||
| Total operating expense | (96,794) | (129,026) | 32,232 | (25) | % | ||||||||||||||||||
|
Operating loss
|
(10,777) | (46,384) | 35,607 | (77) | % | ||||||||||||||||||
| Nonoperating (expense) income: | |||||||||||||||||||||||
| Interest expense, net | (5,721) | (19,681) | 13,960 | (71) | % | ||||||||||||||||||
| Other income, net | 1,662 | 1,474 | 188 | 13 | % | ||||||||||||||||||
|
Total nonoperating expense, net
|
(4,059) | (18,207) | 14,148 | (78) | % | ||||||||||||||||||
| Loss before income taxes | (14,836) | (64,591) | 49,755 | (77) | % | ||||||||||||||||||
|
Expense from income taxes
|
(1,424) | (2,263) | 839 | (37) | % | ||||||||||||||||||
|
Net loss
|
(16,260) | (66,854) | 50,594 | (76) | % | ||||||||||||||||||
|
Net loss attributable to Playboy, Inc.
|
$ | (16,260) | $ | (66,854) | $ | 50,594 | (76) | % | |||||||||||||||
The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated:
|
Nine Months Ended September 30, |
|||||||||||
| 2025 | 2024 | ||||||||||
| Net revenues | 100 | % | 100 | % | |||||||
| Costs and expenses: | |||||||||||
| Cost of sales | (30) | (39) | |||||||||
| Selling and administrative expenses | (79) | (87) | |||||||||
| Impairments | (2) | (30) | |||||||||
|
Other operating expense, net
|
(1) | (1) | |||||||||
| Total operating expense | (112) | (157) | |||||||||
|
Operating loss
|
(12) | (57) | |||||||||
| Nonoperating (expense) income: | |||||||||||
| Interest expense, net | (7) | (24) | |||||||||
| Other income, net | 2 | 2 | |||||||||
|
Total nonoperating expense, net
|
(5) | (22) | |||||||||
| Loss before income taxes | (17) | (79) | |||||||||
|
Expense from income taxes
|
(2) | (3) | |||||||||
|
Net loss
|
(19) | (82) | |||||||||
|
Net loss attributable to Playboy, Inc.
|
(19) | % | (82) | % | |||||||
Net Revenues
The following table sets forth net revenues by reportable segment (in thousands):
|
Nine Months Ended September 30, |
|||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Direct-to-consumer | $ | 49,212 | $ | 49,820 | $ | (608) | (1) | % | |||||||||||||||
| Licensing | 34,312 | 16,921 | 17,391 | 103 | % | ||||||||||||||||||
|
Corporate
|
546 | 201 | 345 | 172 | % | ||||||||||||||||||
|
All Other
|
1,947 | 15,700 | (13,753) | (88) | % | ||||||||||||||||||
| Total | $ | 86,017 | $ | 82,642 | $ | 3,375 | 4 | % | |||||||||||||||
Direct-to-Consumer
The decrease in direct-to-consumer net revenues, compared to the prior year comparative period, was primarily due to a decrease in Honey Birdette revenue as a result of a large sale in March of 2024 that did not recur in 2025, as part of the broader initiative to improve margins and consumer perception of the Honey Birdette brand.
Licensing
The increase in licensing net revenues, compared to the prior year comparative period, was primarily due to $15.0 million of minimum guaranteed royalties recognized pursuant to the LMA, and a $2.1 million increase in minimum guarantees recognized from other licensing partners, out of which $2.2 million pertained to a licensing agreement with one of our Chinese licensees signed in the second quarter of 2024.
Corporate
The increase in corporate revenues, compared to the prior year comparative period, was due to corporate branding activities related to Playboymagazine and sponsorship events, which did not occur in the prior year comparative period.
All Other
The decrease in all other net revenues, compared to the prior year comparative period, was primarily due to the licensing of our digital subscriptions and content operations to Byborg pursuant to the LMA, effective as of January 1, 2025. As a result, our previously reported Digital Subscriptions and Content operating and reportable segment was eliminated and its operations in the prior year comparative period were recast to be included in "All Other" for comparative purposes. "All Other" net revenues for the nine months ended September 30, 2025 related to the amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
Cost of Sales
The following table sets forth cost of sales and gross margin by reportable segment (in thousands):
|
Nine Months Ended September 30, |
|||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
|
Cost of sales:
|
|||||||||||||||||||||||
| Direct-to-consumer | $ | (20,170) | $ | (22,828) | $ | 2,658 | (12) | % | |||||||||||||||
| Licensing | (3,624) | (1,423) | (2,201) | over 150% | |||||||||||||||||||
|
Corporate
|
- | - | - | - | |||||||||||||||||||
| All Other | (1,952) | (7,749) | 5,797 | (75) | % | ||||||||||||||||||
| Total | $ | (25,746) | $ | (32,000) | $ | 6,254 | (20) | % | |||||||||||||||
| Direct-to-consumer gross profit | $ | 29,042 | $ | 26,992 | $ | 2,050 | 8 | % | |||||||||||||||
| Direct-to-consumer gross margin | 59 | % | 54 | % | |||||||||||||||||||
| Licensing gross profit | $ | 30,688 | $ | 15,498 | $ | 15,190 | 98 | % | |||||||||||||||
| Licensing gross margin | 89 | % | 92 | % | |||||||||||||||||||
| Corporate gross profit | $ | 546 | $ | 201 | $ | 345 | 172 | % | |||||||||||||||
| Corporate gross margin | 100 | % | 100 | % | |||||||||||||||||||
| All Other gross profit | $ | (5) | $ | 7,951 | $ | (7,956) | (100) | % | |||||||||||||||
| All Other gross margin | - | % | 51 | % | |||||||||||||||||||
| Total gross profit | $ | 60,271 | $ | 50,642 | $ | 9,629 | 19 | % | |||||||||||||||
| Total gross margin | 70 | % | 61 | % | |||||||||||||||||||
Direct-to-Consumer
The decrease in direct-to-consumer cost of sales and the increase in gross profit, compared to the prior year comparative period, was primarily due to a $2.5 million reduction in Honey Birdette's product, shipping and fulfillment costs due to lower sales of discounted products as a result of reduced promotional activity in 2025 as part of the broader initiative to improve margins and consumer perception of the Honey Birdette brand, which resulted in stronger sales of full-price products.
Licensing
The increase in licensing cost of sales and corresponding decrease in gross margin, compared to the comparable prior year period, was primarily due to a $2.2 million increase in licensing commissions expense, reflecting a one-time settlement amount of $2.4 million to pay current and future commissions to a licensing agent.
Corporate
Corporate gross profit during the nine months ended September 30, 2025, compared to the comparable prior year period, was primarily related to payments from access to our iPlayboyarchives, Playboymagazine and sponsorship events. There were no activities related to Playboymagazine and sponsorship events in the prior year comparative period.
All Other
The decrease in all other cost of sales and gross margin, compared to the comparable prior year period, was primarily related to the licensing of our digital subscriptions and content operations to Byborg pursuant to the LMA, effective as of January 1, 2025, and the inclusion of transition expenses incurred pursuant to the TSA during the nine months ended September 30, 2025.
Selling and Administrative Expenses
The decrease in selling and administrative expenses for the nine months ended September 30, 2025, compared to the prior year comparative period, was primarily due to a $1.7 million decrease in technology costs, a $1.4 million decrease in depreciation, a decrease in various professional services of $2.0 million, lower rent expense of $1.2 million, lower insurance cost of $0.3 million, lower payroll expense of $1.6 million and a $1.2 million decrease in stock-based compensation expense, partly offset by $2.4 million of additional legal expenses related to ongoing material litigation and an increase in severance and related compensation of $3.0 million due to the transition of our digital operations into a licensing model.
Impairments
The decrease in impairments for the nine months ended September 30, 2025, as compared to the prior year comparative period, was primarily due to impairment charges recognized in the prior year comparative period of $17.0 million related to our goodwill and $4.7 million related to our internally developed software, as well as a decrease of $1.9 million in impairment charges on our artwork held for sale, partly offset by a $0.9 million increase in impairment charges on our right-of-use assets related to our corporate leases.
Other Operating Expense, Net
The increase in other operating expense, net, as compared to the prior year comparative period, was primarily due to the write off of certain property, plant and equipment items in the second quarter of 2025 as a result of our decision to sublease certain of our office space.
Nonoperating (Expense) Income
Interest Expense, Net
The decrease in interest expense, net for the nine months ended September 30, 2025, as compared to the prior year comparative period, was primarily due to a reduction of our debt balance and amortization of debt premium in connection with the A&R Third Amendment in 2024.
Other Income, Net
The change in other income, net for the nine months ended September 30, 2025, as compared to the prior year comparative period, was immaterial.
Expense from Income Taxes
The decrease in expense from income taxes for the nine months ended September 30, 2025, as compared to the prior year comparative period, was primarily driven by the change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities, offset by increased foreign income taxes in the nine months ended September 30, 2025.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.
EBITDA and Adjusted EBITDA
"EBITDA" is defined as net income or loss before interest, income tax expense or benefit, and depreciation and amortization. "Adjusted EBITDA" is defined as EBITDA adjusted for stock-based compensation and other special items determined by management. Adjusted EBITDA is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating EBITDA and Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate Adjusted EBITDA in the same fashion.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities, non-recurring non-cash impairments and asset write-downs, we typically adjust for non-operating expenses and income, such as nonrecurring special projects, including related consulting expenses, transition expenses, settlements, nonrecurring gain or loss on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.
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. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. Investors should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income (loss) | $ | 460 | $ | (33,755) | $ | (16,260) | $ | (66,854) | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Interest expense | 1,926 | 6,666 | 5,721 | 19,681 | |||||||||||||||||||
| (Benefit) expense from income taxes | (560) | 594 | 1,424 | 2,263 | |||||||||||||||||||
| Depreciation and amortization | 747 | 1,861 | 2,329 | 6,172 | |||||||||||||||||||
| EBITDA | 2,573 | (24,634) | (6,786) | (38,738) | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Licensing commissions settlement | - | - | 2,400 | - | |||||||||||||||||||
| Transition expenses | - | - | 5,000 | - | |||||||||||||||||||
| Severance | 116 | 141 | 2,709 | 310 | |||||||||||||||||||
| Stock-based compensation | 1,149 | 1,502 | 3,502 | 5,341 | |||||||||||||||||||
| Impairments | 245 | 21,706 | 2,087 | 24,722 | |||||||||||||||||||
| Adjustments | (18) | 647 | 1,001 | 2,242 | |||||||||||||||||||
| Adjusted EBITDA | $ | 4,065 | $ | (638) | $ | 9,913 | $ | (6,123) | |||||||||||||||
•Licensing commissions settlement for the nine months ended September 30, 2025 represents a one-time settlement amount of $2.4 million to pay current and future commissions to a licensing agent, which will be fully paid by the end of 2025.
•Transition expenses for the nine months ended September 30, 2025 represent costs associated with the digital operations licensed to Byborg, solely during the transition period pursuant to the TSA.
•Severance expenses for the three and nine months ended September 30, 2025 were primarily due to the reduction of headcount related to the transition of our digital subscriptions and content operations into a licensing model.
•Impairments for the three months ended September 30, 2025 related to impairment charges on our artwork held for sale.
•Impairments for the nine months ended September 30, 2025 related to impairment charges on our artwork held for sale and our right-of-use assets related to our corporate leases.
•Impairments for the three months ended September 30, 2024 related to impairments of our internally developed software and goodwill related to our former Digital Subscriptions and Content segment.
•Impairments for the nine months ended September 30, 2024 related to impairment charges on our artwork held for sale, right-of-use assets related to our corporate leases and assets related to our former Digital Subscriptions and Content segment.
•Adjustments for the three months ended September 30, 2025 are primarily related to the non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for our 2021 acquisition of GlowUp Digital, Inc. that remained unsettled as of September 30, 2025, as well as consulting, advisory and other costs relating to corporate transactions.
•Adjustments for the nine months ended September 30, 2025 are primarily related to the non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for our 2021 acquisition of GlowUp Digital, Inc. that remained unsettled as of September 30, 2025, loss on the sale of artwork, loss on disposal of assets, consulting, advisory and other costs relating to corporate transactions, as well as reorganization costs resulting from the elimination or rightsizing of specific business activities or operations.
•Adjustments for the three and nine months ended September 30, 2024 are related to the non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for our 2021 acquisition of GlowUp Digital, Inc. that remained unsettled as of September 30, 2024, loss on the sale of artwork, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities, as well as reorganization costs resulting from the elimination or rightsizing of specific business activities or operations.
Non-GAAP Segment Information
Our Chief Executive Officer is our Chief Operating Decision Maker ("CODM"). Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources. Total asset information is not included in the tables below as it is not provided to and reviewed by our CODM. The "All Other" columns relate to the previously identified operating and reportable segment, Digital Subscriptions and Content, which was eliminated upon its transition into a licensing model under the LMA. The "Corporate" column in the tables below includes certain operating revenues associated with Playboymagazine, events and sponsorships and expenses that are not allocated to the reportable segments presented to our CODM. Such expenses include legal, human resources, information technology and facilities, accounting/finance and brand marketing costs. Expenses associated with Playboymagazine, events and sponsorships are included in brand marketing costs. The accounting policies of the reportable segments are the same as those described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
"Adjusted Operating Income (Loss)" is defined as operating income or loss adjusted for stock-based compensation and other special items determined by management. Adjusted operating income (loss) is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of adjusted operating income (loss) provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating adjusted operating income (loss), we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Our computation of adjusted operating income (loss) may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate adjusted operating income (loss) in the same fashion.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities, nonrecurring non-cash impairments and asset write-downs, we typically adjust for nonrecurring special projects, including for related consultant expenses, nonrecurring gain on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.
Because of the limitations described above, adjusted operating income (loss) should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using adjusted operating income (loss) on a supplemental basis. Investors should review the reconciliation of operating loss to adjusted operating income (loss) below and not rely on any single financial measure to evaluate our business.
Comparison of the Three Months Ended September 30, 2025 and 2024
The following table reconciles Operating (Loss) Income to Adjusted Operating Income (Loss) by reportable segment (in thousands):
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| Direct-to-Consumer | Licensing | Corporate | All Other | Total | |||||||||||||||||||||||||
| Operating (loss) income | $ | (221) | $ | 7,705 | $ | (6,630) | $ | 512 | $ | 1,366 | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||||||||
| Depreciation and amortization | 600 | - | 147 | - | 747 | ||||||||||||||||||||||||
| Severance | 23 | 147 | (54) | - | 116 | ||||||||||||||||||||||||
| Stock-based compensation | - | - | 1,149 | - | 1,149 | ||||||||||||||||||||||||
| Impairments | - | - | 245 | - | 245 | ||||||||||||||||||||||||
| Adjustments | - | - | (18) | - | (18) | ||||||||||||||||||||||||
| Adjusted operating income (loss) | $ | 402 | $ | 7,852 | $ | (5,161) | $ | 512 | $ | 3,605 | |||||||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||
| Direct-to-Consumer | Licensing | Corporate | All Other | Total | |||||||||||||||||||||||||
| Operating (loss) income | $ | (897) | $ | 2,777 | $ | (6,842) | $ | (23,302) | $ | (28,264) | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||||||||
| Depreciation and amortization | 819 | - | 150 | 892 | 1,861 | ||||||||||||||||||||||||
| Severance | 8 | - | 130 | 3 | 141 | ||||||||||||||||||||||||
| Stock-based compensation | - | - | 873 | 629 | 1,502 | ||||||||||||||||||||||||
| Impairments | - | - | - | 21,706 | 21,706 | ||||||||||||||||||||||||
| Adjustments | 267 | 152 | 232 | (4) | 647 | ||||||||||||||||||||||||
| Adjusted operating income (loss) | $ | 197 | $ | 2,929 | $ | (5,457) | $ | (76) | $ | (2,407) | |||||||||||||||||||
Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Non-GAAP Financial Measures" for descriptions of the adjustments to reconcile net loss to Adjusted EBITDA, certain of which adjustments are listed in the table above and the descriptions used for the reconciliation of net loss to Adjusted EBITDA are also applicable for the table above.
Direct-to-Consumer
Net Revenues and Gross Margin: Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations" for a discussion of changes in net revenues and gross profit in our Direct-to-Consumer segment from 2024 to 2025.
Operating Loss: The decrease in operating loss, compared to the prior year comparative period, was primarily due to a $1.0 million increase in Honey Birdette's gross profit as a result of the continued improvement in consumer perception of the Honey Birdette brand, which resulted in increased sales of full-price products.
Adjusted Operating Income: The increase in adjusted operating income, compared to the prior year comparative period, was primarily due to the decrease in operating loss discussed above.
Licensing
Net Revenues and Gross Margin: Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations" for a discussion of changes in net revenues and gross profit in our Licensing segment from 2024 to 2025.
Operating Income: The increase in operating income, compared to the prior year comparative period, was primarily due to a $5.5 million increase in licensing gross profit, primarily as a result of higher revenues resulting from the LMA, partly offset by a $0.7 million increase in legal expenses.
Adjusted Operating Income:The increase in adjusted operating income, compared to the prior year comparative period, was primarily due to the decrease in operating loss discussed above. Adjustments to licensing operating income for the three months ended September 30, 2024 related to the write-off of receivables resulting from a terminated licensing agreement.
Corporate
The decrease in operating loss, compared to the prior year comparative period, was primarily due to lower rent expense of $0.6 million, and a $0.3 million decrease in various professional services, partly offset by higher stock-based compensation expense of $0.3 million and higher brand marketing expenses of $0.3 million.
The decrease in adjusted operating loss, compared to the prior year comparative period, was primarily due to a decrease in operating loss discussed above.
All Other
Net Revenues and Gross Margin: Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations" for a discussion of changes from 2024 to 2025 in net revenues and gross profit classified as All Other.
Operating Income: The change from operating loss to operating income, compared to the prior year comparative period, was due to the transition of our digital operations into a licensing model pursuant to the LMA.
Adjusted Operating Income: The change from adjusted operating loss to adjusted operating income, compared to the prior year comparative period, was due to the transition of our digital operations into a licensing model pursuant to the LMA.
Comparison of the Nine Months Ended September 30, 2025 and 2024
The following table reconciles Operating (Loss) Income to Adjusted Operating Income (Loss) by reportable segment (in thousands):
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| Direct-to-Consumer | Licensing | Corporate | All Other | Total | |||||||||||||||||||||||||
| Operating (loss) income | $ | (1,501) | $ | 22,148 | $ | (26,850) | $ | (4,574) | $ | (10,777) | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||||||||
| Depreciation and amortization | 1,765 | - | 564 | - | 2,329 | ||||||||||||||||||||||||
| Licensing commissions settlement | - | 2,400 | - | - | 2,400 | ||||||||||||||||||||||||
| Transition expenses | - | - | - | 5,000 | 5,000 | ||||||||||||||||||||||||
| Severance | 75 | 147 | 1,299 | 1,188 | 2,709 | ||||||||||||||||||||||||
| Stock-based compensation | - | - | 3,502 | - | 3,502 | ||||||||||||||||||||||||
| Impairments | - | - | 2,087 | - | 2,087 | ||||||||||||||||||||||||
| Adjustments | - | - | 1,001 | - | 1,001 | ||||||||||||||||||||||||
| Adjusted operating income (loss) | $ | 339 | $ | 24,695 | $ | (18,397) | $ | 1,614 | $ | 8,251 | |||||||||||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||
| Direct-to-Consumer | Licensing | Corporate | All Other | Total | |||||||||||||||||||||||||
| Operating (loss) income | $ | (4,207) | $ | 9,242 | $ | (25,555) | $ | (25,864) | $ | (46,384) | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||||||||
| Depreciation and amortization | 2,990 | - | 566 | 2,616 | 6,172 | ||||||||||||||||||||||||
| Severance | 35 | - | 171 | 104 | 310 | ||||||||||||||||||||||||
| Stock-based compensation | - | - | 2,726 | 2,615 | 5,341 | ||||||||||||||||||||||||
| Impairments | - | - | 3,016 | 21,706 | 24,722 | ||||||||||||||||||||||||
| Adjustments | 1,362 | 152 | 788 | (60) | 2,242 | ||||||||||||||||||||||||
| Adjusted operating income (loss) | $ | 180 | $ | 9,394 | $ | (18,288) | $ | 1,117 | $ | (7,597) | |||||||||||||||||||
Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Non-GAAP Financial Measures" for descriptions of the adjustments to reconcile net loss to Adjusted EBITDA, certain of which adjustments are listed in the table above and the descriptions used for the reconciliation of net loss to Adjusted EBITDA are also applicable for the table above.
Direct-to-Consumer
Net Revenues and Gross Margin: Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations" for a discussion of changes in net revenues and gross profit in our Direct-to-Consumer segment from 2024 to 2025.
Operating Loss: The decrease in operating loss, compared to the prior year comparative period, was primarily due to a $2.1 million increase in direct-to-consumer gross profit, as a result of improvement in consumer perception of and demand for Honey Birdette products, as well as a reduction in depreciation and amortization expenses of $1.2 million.
Adjusted Operating Income: The increase in adjusted operating income, compared to the prior year comparative period, was immaterial.
Licensing
Net Revenues and Gross Margin: Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations" for a discussion of changes in net revenues and gross profit in our Licensing segment from 2024 to 2025.
Operating Income: The increase in operating income, compared to the prior year comparative period, was primarily due to a $15.2 million increase in licensing gross profit, primarily as a result of higher revenues resulting from the LMA, as well as certain other licensing agreements signed in the second quarter of 2024.
Adjusted Operating Income:Adjustments to licensing operating income for the nine months ended September 30, 2025 related to a one-time settlement amount of $2.4 million to pay current and future commissions to a licensing agent, which will be paid in full by the end of 2025. Adjustments to licensing operating income for the nine months ended September 30, 2024 related to the write-off of receivables resulting from a terminated licensing agreement.
Corporate
The increase in operating loss, compared to the prior year comparative period, was primarily due to an increase in severance and employee benefits expense of $1.2 million related to headcount reductions as a result of shifting to a capital-light business model, a $0.9 million increase in impairment charges on our right-of-use assets related to our corporate leases, a $1.7 million increase in payroll expense, a $0.8 million increase in stock-based compensation expense and brand marketing expenses of $0.8 million, partly offset by a $1.9 million decrease in impairment charges on our artwork held for sale, a $0.8 million decrease in rent expense and a $0.6 million decrease in various professional services.
Adjusted operating loss was largely consistent with the prior year comparative period.
All Other
Net Revenues and Gross Margin: Refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations" for a discussion of changes from 2024 to 2025 in net revenues and gross profit classified as All Other.
Operating Loss: The decrease in operating loss, compared to the prior year comparative period, was due to the transition of our digital operations into a licensing model pursuant to the LMA and inclusion of $5.0 million of transition expenses pursuant to the TSA.
Adjusted Operating Income: The increase in adjusted operating income, compared to the prior year comparative period, was due to the transition of our digital operations into a licensing model pursuant to the LMA.
Liquidity and Capital Resources
Sources of Liquidity
Our sources of liquidity are cash generated from operating activities, which primarily includes cash derived from revenue generating activities, from financing activities, including proceeds from our issuance of debt, and proceeds from stock offerings (as described further below), and from investing activities, which includes the sale of assets (as described further below). As of September 30, 2025, our principal source of liquidity was cash in the amount of $27.5 million, which is primarily held in operating and deposit accounts.
In the third quarter of 2025, we sold shares of our common stock pursuant to our previously registered and announced at-the-market ("ATM") offering, selling a total of 191,260 shares for net proceeds of $0.3 million which were paid to us in the third quarter of 2025. As of September 30, 2025, we had $14.7 million of remaining capacity under the ATM.
On November 5, 2024, we issued 14,900,000 unregistered shares of our common stock in a private placement to the Purchaser (defined below), at a price of $1.50 per share, for total proceeds to us of $22.4 million.
Pursuant to the LMA entered into in December 2024, Byborg agreed to operate our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses and to license the right to use certain Playboy trademarks and other intellectual property for related businesses and certain other categories. Pursuant to the LMA, Byborg was also granted exclusive rights to use Playboy trademarks for certain new adult content services and digital products to be developed. The LMA has an initial term of 15 years, with the operations and license rights pursuant to the LMA commencing as of January 1, 2025, and the possibility for up to nine renewal terms of 10 years each, subject to the terms and conditions set forth in the LMA. Pursuant to the LMA, starting in 2025, Playboy began receiving minimum guaranteed royalties of $20.0 million per year of the term, which royalties are paid in installments during each year of the LMA's term. In addition, Byborg will prepay the minimum guaranteed amount for the second half of year 15 of the initial term of the LMA. Playboy is also entitled to receive excess royalties from the businesses licensed and operated by Byborg, on the terms and conditions set forth in the LMA.
In the fourth quarter of 2023, we began the sale of our art assets, and we have continued the sale of our art assets in 2024 and 2025.
Since going public in 2021, we have yet to generate year-to-date operating income from our core business operations and have incurred significant operating losses, including $10.8 million of operating losses for the nine months ended September 30, 2025. We expect our capital expenditures and working capital requirements in 2025 to be largely consistent with 2024.
Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Quarterly Report on Form 10-Q. We may seek additional equity or debt financing in the future to satisfy capital requirements, respond to adverse changes in our circumstances or unforeseen events, or fund growth opportunities. However, in the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.
Debt
On March 27, 2024, we entered into Amendment No. 2 to the A&R Credit Agreement (the "A&R Second Amendment), which provided for, among other things:
(a) the amendment of the Total Net Leverage Ratio covenant to (i) suspend testing of such covenant until the quarter ending June 30, 2026, (ii) adjust the Total Net Leverage Ratio financial covenant levels once the covenant testing is resumed, and (iii) add a mechanism for the Total Net Leverage Ratio to be eliminated permanently upon the satisfaction of certain prepayment-related conditions;
(b) the addition of a covenant to maintain a $7.5 million minimum balance of unrestricted cash and cash equivalents (on a consolidated basis), subject to periodic testing and certification, as well as the ability to cure a below-minimum balance, and which covenant will be in effect (i) from March 27, 2024 until March 31, 2026 and (ii) from and after the Financial Covenant Sunset Date; and
(c) that assignments of commitments or loans under the A&R Credit Agreement from existing lenders to certain eligible assignees under the A&R Credit Agreement (i.e. a commercial bank, insurance company, investment or mutual fund or other entity that is an "accredited investor" (as defined in Regulation D under the Securities Act of 1933) and which extends credit or buys loans in the ordinary course of business) shall not require consent from us while the minimum cash balance financial covenant is in effect.
On November 11, 2024, we entered into Amendment No. 3 to the A&R Credit Agreement (the "A&R Third Amendment").
The A&R Third Amendment provides for, among other things:
(a) reducing the outstanding aggregate term loan amounts under the facility from approximately $218.4 million to approximately $153.1 million in exchange for $28.0 million of Series B Convertible Preferred Stock, to be issued pursuant to an Exchange Agreement, dated November 11, 2024 (the "Exchange Agreement"), between the Company and the lenders party to the A&R Third Amendment;
(b) resetting the interest rate margin for both tranche A term loans under the A&R Credit Agreement ("Tranche A") and tranche B term loans under the A&R Credit Agreement ("Tranche B", and together with Tranche A, the "A&R Term Loans") to the same applicable U.S Federal Reserve Secured Overnight Financing Rate ("SOFR"), plus a 0.10% credit spread adjustment, plus 6.25% (with corresponding changes necessary so that all but 1.00% of the interest rate margin can be paid in-kind); and
(c) applying amortization of 1% per year to all loans, which is to be paid quarterly starting in the fourth quarter of 2025.
The other terms of the A&R Credit Agreement prior to the A&R Third Amendment remained substantially unchanged, and the new terms went into effect upon the closing of the Exchange Agreement and the issuance of the Series B Convertible Preferred Stock, which occurred on November 13, 2024. The Series B Convertible Preferred Stock was established pursuant to the filing of a Certificate of Designation with the state of Delaware, which certificate set forth the terms of the Series B Convertible Preferred Stock. Upon the filing of such certificate, we issued to the Lenders an aggregate of 28,000.00001 shares of Series B Convertible Preferred Stock with a stated value of $28.0 million. The Series B Convertible Preferred Stock includes a 12% annual dividend rate, which commenced accruing six months after the issuance date, which was payable in cash or in-kind, solely at our discretion. We had the right to redeem for cash (at any time) or convert the Series B Convertible Preferred Stock at any time, provided that the five-day volume-weighted average price of our common stock is $1.50 or above, with a conversion price floor of $1.50 and a cap of $4.50. As a result of conversions of the Series B Convertible Preferred Stock in January and August of 2025, all outstanding shares of the Series B Convertible Preferred Stock were converted to common stock, and we no longer had any shares of preferred stock outstanding as of August 22, 2025. Refer to Note 10, Convertible Preferred Stock, for further information on our Series B Convertible Preferred Stock and its conversion resulting in the elimination of all outstanding shares of our Series B Convertible Preferred Stock as of August 22, 2025.
On March 12, 2025, we entered into Amendment No. 4 to the A&R Credit Agreement (the "A&R Fourth Amendment"). The A&R Fourth Amendment sets the total net leverage ratio levels applicable under the A&R Credit Agreement, once net leverage testing is resumed as of the quarter ending June 30, 2026. For the quarter ending June 30, 2026, the total net leverage ratio will be initially set at 9.00:1.00, reducing over time until the ratio reaches 7.75:1.00 for the quarter ending June 30, 2027 and any subsequent quarter. In the event we prepay at least $15 million of the principal debt under the A&R Credit Agreement, the total net leverage ratio levels are reduced such that they would be initially set at 7.75:1.00 for the quarter ending June 30, 2026, and would reduce over time until the ratio reaches 6.50:1.00 for the quarter ending June 30, 2027 and any subsequent quarter.
On August 11, 2025, we entered into Amendment No. 5 to the A&R Credit Agreement (the "A&R Fifth Amendment"). The A&R Fifth Amendment revises the definition of Consolidated EBITDA in the A&R Credit Agreement to allow for $2.4 million of non-cash rent expense related to our Miami Beach office lease to be added back when calculating such Consolidated EBITDA for applicable periods.
The stated interest rate of each of Tranche A and Tranche B of the A&R Term Loans as of September 30, 2025 was 10.49%. The stated interest rate of each of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2024 was 11.01%. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of September 30, 2025 was 0.59% and 4.44%, respectively. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2024 was 1.05% and 4.93%, respectively.
We were in compliance with applicable financial covenants under the terms of the A&R Credit Agreement and its amendments as of September 30, 2025 and December 31, 2024.
On November 10, 2025, we entered into a sixth amendment of the A&R Credit Agreement. Refer to Note 18, Subsequent Events, of the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, for further details.
Leases
Our principal lease commitments are for office space and operations under several noncancelable operating leases with contractual terms expiring through 2033. Some of these leases contain renewal options and rent escalations. As of September 30, 2025 and December 31, 2024, our fixed leases were $22.8 million and $25.5 million, respectively, with $7.3 million and $6.6 million due in the next 12 months, respectively. We also have certain finance lease obligations; however, those are not material to our liquidity or capital resources.
On August 11, 2025, through our wholly-owned subsidiary, Playboy Enterprises, Inc., we entered into a triple net lease (the "Lease") with RK Rivani LLC, a Florida limited liability company (the "Landlord"), pursuant to which, among other matters and on the terms and subject to the conditions set forth in the Lease, we leased from the Landlord approximately 20,169 square feet of office space in Miami Beach, Florida, for a term of 11 years, with lease payments commencing in August 2026. The future undiscounted fixed non-cancelable payment obligation pertaining to the Lease is approximately $27.1 million.
For further information on our lease obligations, refer to Note 12, Commitments and Contingencies, of the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Net cash (used in) provided by: | |||||||||||||||||||||||
| Operating activities | $ | (1,378) | $ | (19,300) | $ | 17,922 | (93) | % | |||||||||||||||
| Investing activities | 261 | (128) | 389 | (304) | % | ||||||||||||||||||
| Financing activities | (97) | (557) | 460 | (83) | % | ||||||||||||||||||
Cash Flows from Operating Activities
The decrease in net cash used in operating activities for the nine months ended September 30, 2025, compared to the prior year comparable period, was primarily due to a reduction in net loss of $50.6 million, partly offset by changes in assets and liabilities that had a current period cash flow impact, such as $6.8 million of net changes in working capital and $39.4 million of changes in non-cash charges. The change in assets and liabilities, as compared to the prior year comparable period, was primarily driven by a $10.5 million increase in deferred revenues primarily due to the timing of revenue recognition, a $5.1 million increase in other liabilities and accrued expenses, a $2.0 million increase in accrued agency fees and commissions, primarily due to the accrual of a one-time settlement to pay current and future commissions to a licensing agent, a $0.9 million decrease in accounts receivable due to the timing of royalty collections, and a $1.8 million increase in operating lease liabilities, partly offset by a $4.4 million increase in prepaid expenses primarily due to the timing of payments, a $3.8 million decrease in accounts payable due to the timing of payments, a $3.6 million lower decrease in inventories, net due to higher inventory turnover in the prior year comparative period as a result of a large sale in March 2024 that did not recur in 2025, a $1.0 million decrease in other assets and liabilities, and a $0.7 million increase in contract assets, primarily due to the nonrecurring impairment, modification or termination of certain trademark licensing contracts in the prior year comparative period. The change in non-cash charges, compared to the change in the prior year comparable period, was primarily driven by a $22.6 million decrease in impairment charges, primarily due to impairment charges recognized in the prior year comparative period of $17.0 million related to our goodwill and $4.7 million related to our internally developed software, a $10.5 million decrease in the amortization of debt premium/discount and issuance costs due to the A&R Third Amendment, a $3.8 million decrease in depreciation and amortization, primarily due to the write-off of our internally developed software in 2024, a $1.8 million decrease in stock-based compensation expense, and a $1.8 million decrease in amortization of right-of-use assets, partly offset by a $1.0 million increase in capitalized paid-in-kind interest.
Cash Flows from Investing Activities
The change from net cash used in investing activities to net cash provided by investing activities for the nine months ended September 30, 2025, compared to the prior year comparable period, was primarily due to a $1.0 million decrease in purchases of property and equipment, offset by lower proceeds from the sale of our artwork of $0.6 million.
Cash Flows from Financing Activities
The change from net cash used in financing activities to net cash provided by financing activities for the nine months ended September 30, 2025, compared to the prior year comparable period, was primarily due to proceeds from sale of common stock during the three months ended September 30, 2025 and repayment of long-term debt in the prior year comparative period that did not recur in 2025.
Contractual Obligations
For the nine months ended September 30, 2025, there were no material changes to our contractual obligations from December 31, 2024, as disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K filed on March 13, 2025.
Critical Accounting Estimates
Our interim condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these 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 as of the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Estimates and judgments used in the preparation of our interim condensed consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, such as demand for our products, inflation, foreign currency exchange rates, economic conditions and other current and future events, such as the impact of public health crises and epidemics and global hostilities. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
During the nine months ended September 30, 2025, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-Kfiled with the SEC on March 13, 2025.
Recent Accounting Pronouncements
Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and results of operations.
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