Playboy - Earnings Call - Q1 2025
May 15, 2025
Executive Summary
- Q1 2025 delivered modest top-line growth ($28.9M, +2% YoY), a sharply narrower net loss ($9.0M; $0.10 loss per share), and the first positive adjusted EBITDA since 2023 ($2.4M), driven by the asset-light pivot to licensing and improved Honey Birdette margins.
- Licensing revenue surged 175% YoY to $11.4M, including $5.0M in guaranteed royalties from the Byborg partnership (15-year, $20M/year MG), while direct-to-consumer declined 13% as management reduced promotional days to protect brand health.
- Management highlighted upcoming $20M of cash inflows from Byborg by July 1 ($5M for last two quarters of 2025 + $10M security deposit), with transition expenses largely done by end of May; pipeline building in gaming and land-based entertainment/hospitality (Playboy Club concept), and monetization from the successful magazine relaunch (paid voting, events, calendars).
- Street consensus for Q1 2025 (EPS, revenue) was unavailable via S&P Global; estimate comparisons are therefore not provided (values retrieved from S&P Global).
What Went Well and What Went Wrong
What Went Well
- Licensing scale and visibility: Licensing revenue +175% YoY to $11.4M (including $5.0M Byborg MG), underpinning an asset-light model that produced positive adjusted EBITDA; “we achieved our first positive adjusted EBITDA quarter since 2023”.
- Honey Birdette margin and mix: Gross margin expanded to 58% from 52% YoY; full-price sales +8% YoY and now 80% of sales (vs. 65%), reflecting disciplined promotional reductions and focus on brand health.
- Cash inflow visibility: Expect $20M payment from Byborg by July 1 (minimum guarantee for last two quarters of 2025 + $10M security deposit), and reimbursement of remaining legacy digital costs after May transition expenses.
What Went Wrong
- Direct-to-consumer revenue softness: DTC fell 13% YoY to $16.3M as promotional days were cut; management emphasizes this was intentional to strengthen brand/price integrity.
- Transition costs weighed on Q1: ~$3.8M nonrecurring transition expenses with another ~$1.2M expected by end of May tied to the Byborg migration, temporarily burdening profitability.
- Limited Street estimates: S&P Global consensus data not available for Q1 2025, constraining “beat/miss” context (values retrieved from S&P Global).
Transcript
Operator (participant)
Greetings and welcome to the PLBY Group's First Quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Matt Chesler. Thank you. You may begin.
Matt Chesler (Head of Investor Relations)
Thank you, Operator, and good afternoon, everyone. I'd like to remind you that the information discussed today is qualified in its entirety by the Form 8-K and Form 10-Q filed today by PLBY Group, which may be accessed on the SEC's website and on PLBY Group's website. Today's call is also being webcast, and a replay will be posted to the company's investor relations website. Please note that statements made during this call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. Such statements are made on the basis of PLBY Group's views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements.
Forward-looking statements are subject to risk and could cause the company's actual results to differ from its historical results and forecasts, including those set forth in the company's filings with the SEC, and you should refer to and carefully consider those for more information. This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statements. During this, the company may refer to non-GAAP financial measures. Such non-GAAP measures are not prepared in accordance [inaudible]
Operator (participant)
Ladies and gentlemen, please stand by. We're having some technical difficulties. [inaudible] Matt, you may proceed.
Matt Chesler (Head of Investor Relations)
With that, I will hand the call back over to the Operator to begin the Q&A session. Operator.
Operator (participant)
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question.
George Kelly (Managing Director)
Hey, everyone. Thanks for taking my questions. First, if we could start with Honey Birdette, I was wondering if you could give us your expectations just as you look out for the next couple of quarters with respect to growth. When does the compare for the discounting quarters last year, when does that compare ease? Also, with gross margin, should we expect much sort of change in gross margin in the near term?
Matt Chesler (Head of Investor Relations)
Hey George, it's Matt. In terms of comps, we're lapping after the first quarter. In the second quarter, we're going to be up against an easy comparable from a sales standpoint. We're already seeing that we're ahead of plan right now in the second quarter. Things look good at Honey Birdette.
Do you have a second part to that question?
George Kelly (Managing Director)
Yeah, just on the near-term gross margin expectations there too. I guess the second part of that would be any kind of impact from Chinese tariffs.
Matt Chesler (Head of Investor Relations)
Yeah, so the near-term right now, all the product that we're selling pretty much in the second quarter is product that was brought in prior to the tariffs. When we look at the tariff impact going into 3Q and 4Q, it's tough to quantify right now if you were to assume the tariffs that they have right now. It's about a $1 million impact, which is not that big of a number. Now, to help combat that, we put 10% price increases in already. In addition to that, we're changing some of our shipping thresholds for free shipping. There are a number of levers that we can pull. The good thing about the price increases is that should the tariffs stay where they are, not go back up, the price increases stay in regardless, so we'd get a pickup from that.
Ben Kohn (CEO)
Yeah. So George, it's been, remember, the U.S. is roughly $35 million of the business, and so we've put a 10% price increase in on that. Should tariffs go back up, we have additional levers that we can pull as other companies have. The goal was to keep the price increases as permanent. If tariffs stay the same, there should actually be a pickup, assuming there's no degradation in volume moving forward.
George Kelly (Managing Director)
The million that you mentioned, that's for the back two quarters?
Matt Chesler (Head of Investor Relations)
Yeah, it's for the back two quarters.
George Kelly (Managing Director)
Okay. Second topic I was hoping you could chat on is the Byborg. What are their plans as far as new product development timeline? Anything you're comfortable sharing on the call, just sort of that's in the works with Byborg?
Ben Kohn (CEO)
Yeah. So we've been working actively with them. We've seen the new designs they have for the existing products as well as a live cams business. We're excited by it. If you remember, we have a great deal with them. It's a $20 million a year minimum guarantee. We get a significant percentage of the ops of 25% above that. I think, as I've stated previously, I think that over the life of the deal, we should hopefully see profits well in excess of the MGs. In the beginning years, they're developing and spending money building out those products. For our purposes, we're assuming it's $20 million a year right now as the MG. Moving forward, we will receive a further $20 million payment from them this year. It's scheduled for July 1.
That is $5 million for the last two quarters of the year, plus what is effectively a $10 million security deposit, which is a prepayment of the last six months of year 15 licensing term.
George Kelly (Managing Director)
Okay. Okay. And that second equity investment, remind me on the vote date, got moved to the annual meeting? Is that correct? Is that later in May?
Ben Kohn (CEO)
Yeah. The dates were sort of coming together. We decided, just based on participation, typically in the annual meeting, to put that to the shareholders as part of the annual meeting. That is scheduled for June 16th.
George Kelly (Managing Director)
Okay. Last question for me is about the other licensing business. You made comments in the press release about enthusiasm or what you think is potential around certain other categories. I think you mentioned a club and something, maybe hospitality or something else.
Ben Kohn (CEO)
Yeah.
George Kelly (Managing Director)
What stage is that something we could start to see in the back half of this year? Do you feel like you're getting close? Just any more context around those comments would be helpful.
Ben Kohn (CEO)
Yeah. I think it's important to level set sort of where we are and what we've done, right? Then I'll talk about that. Almost two years ago, we embarked on this asset-light model. Q1 was our first positive EBITDA quarter since 2023. I feel really good where we are now as a company and what the future looks like for the balance of this year and moving forward, especially with our adjusted EBITDA positive $2.4 million. There was actually $1 million of cost in the first quarter related to personnel that we've already eliminated at the end of the quarter. That would have actually been positive $3.4 million. What we have is a portfolio of really stable, high-margin licensing deals.
Now what we are actually able, because we have a plan to continue to reduce overhead, but we are in a position now where we should start to produce cash as a company, we can now sort of focus on growth. I think that comes from two areas. As we mentioned in the press release, we are seeing a lot of traction in what I would say is gaming. Then in the hospitality or LBE side of things, we have actually been approached by two, what I would say is some of the best operators we know of in the United States to develop some form of, for lack of a better term, Playboy Club. The physical build-out of that and the development of that would actually take a while. That is a one to two-year project.
The licensing deals themselves for gaming and some of the other stuff we have in our strong pipeline, that is something that we should see in the back half of this year starting. Obviously, revenue recognition, when you do a multi-year deal, that is subject to sort of straight-lining the accountants. In addition to that, what is really interesting is what happened with the magazine. We sold out of the magazine, albeit a small print run online. The sell-through at Barnes & Noble was unbelievable. They were our exclusive brick-and-mortar or newsstand sale. What we have seen come out of that, actually, and we are going to do one additional issue this year as we ramp up to hopefully four issues next year, is the ancillary revenue streams that come off of that. Think about these as quasi-licensing streams, actually, from a margin profile perspective.
When we start to get into opportunities around mainstream content, so TV shows, both linear and digital, as well as paid voting, we actually have a history of doing paid voting before. Back when we were not asset-light, we had launched Playboy Lingerie, and we had actually done a paid voting campaign to find the next phase of Playboy. That generated a significant amount of revenue and EBITDA for us. This deal that we are doing is slightly different, and we will talk about that on the next call. It is something that we think is an always-on, ongoing competition, really embracing our community and allowing them to help pick or dominate who might become the next Playmate as we gear up for 12 Playmates a year. The ancillary products around that, not only the magazine, but calendars.
We had a long history of producing a Playmate calendar that used to produce multiple millions of dollars a year in sales. There is a lot of other revenue streams that can come on the back of what we are doing from a content perspective. In addition to that, we get the benefit of what I would say is really the strong brand awareness and rebuilding the brand. I feel really good with where we are from our plan to continue to reduce overhead moving forward, continuing to increase EBITDA. What is the growth opportunities, which I would say if I look over the last three to five years, they are probably the strongest growth opportunities we have seen. It does not mean it will hit in 2025. We are really focused on sort of 2026 and beyond.
You could see paid voting in the second half of this year. You could start to see a calendar that we are planning for the magazine, which will come out in November. You also saw in the first quarter some sponsorship revenue. We think that will continue and grow moving forward as we continue to refine what I would say is our media and content strategy moving forward, George.
George Kelly (Managing Director)
Okay. Okay. Gotcha. Thank you very much.
Operator (participant)
Thank you. I would like to hand it over back to Matt Chesler for further questions.
Matt Chesler (Head of Investor Relations)
Yeah. Operator, we had an additional question on the drivers of the licensing business, actually in the quarter, from the team at Jefferies, Saleel Sanjeev and James Heeney. Ben, I think you answered a lot of this. If you'd like to provide any more details on the drivers of the quarter, go ahead. If not, perhaps we turn it over and have some concluding remarks.
Ben Kohn (CEO)
Sure. I'll just reiterate. So obviously, licensing was up huge, 175% year-over-year. With Byborg, without Byborg, it was still up over 50%. The two primary reasons for that were, one, the Byborg deal went into effect January 1. They've already made their first two payments. The second payment came in after the quarter ended as the contract calls for. But that's $5 million a quarter. In addition to that, it's the year-over-year improvement in rebuilding our China licensing business. We're encouraged by what we see. Obviously, a tough environment with the tariff war, but our partner is doing well. We think there's continued growth there.
What we've been really working on is the pipeline moving forward, which we should start to see the benefit of in the third and fourth quarter with that pipeline and getting some of these deals across the finish line, which we're very close on in gaming and other areas. I'm excited by that and really excited, as I mentioned, with some of the opportunities we have around content licensing, fast channels, paid Playmate voting, et cetera, as we move forward. Anything else, Matt, for questions that came in online?
Matt Chesler (Head of Investor Relations)
Let me take a quick look. We do not have any more questions online.
Ben Kohn (CEO)
Great. I'll conclude it by thanking everyone for joining our Q1 2025 call. I look forward to talking to you sometime in the beginning of August when we report our Q2 earnings. Thank you, everyone.
Operator (participant)
Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a great day.