Playboy - Earnings Call - Q2 2025

Executive Summary

• Q2 revenue was $28.1M, up 13% year over year; adjusted EBITDA improved to $3.5M from a loss of $2.9M in Q2 2024, while net loss narrowed to $7.7M from $16.7M; licensing revenue more than doubled (+105%) and Honey Birdette DTC grew 14% with gross margin up ~200 bps to 59%.
• Results included $1.3M incremental legal expenses that reduced adjusted EBITDA; excluding these, adjusted EBITDA would have been ~$4.8M; one-time charges included $1.9M impairments (LA office sublease) and $2.1M settlement of licensing agent commissions, together equal to ~$0.04 EPS impact; absent these, net loss would have been ~$$3.7M and EPS $(0.04).
• Management emphasized progress on asset-light licensing, new content monetization (Great Playmate Search paid voting), and hospitality plans (Miami Beach venue); cash “in excess of $30M” as of the call supports deleveraging opportunities given improving credit markets.
• No formal update to prior FY2025 revenue outlook (~$120M shared in March); Byborg licensing provides at least $20M per year MG over 15 years, underpinning licensing mix, with new gaming/beauty/beverage deals signed and more in pipeline.

What Went Well and What Went Wrong

What Went Well

• Licensing revenue surged 105% YoY to $10.9M on $5M minimum guaranteed royalties, new partners, and renegotiated minimums; pipeline includes new deals in gaming and beauty/grooming.
• Honey Birdette performance improved: revenue +14% YoY to $16.5M, same-store sales +28%, promotional days reduced 40%, gross margin up to 59% from 57%; management expects continued growth in the back half.
• Strategic shift to content and experiences: launch of Great Playmate Search (paid fan voting) with multi-thousand registrations early in the sign-up window and intent to run quarterly contests; planning a Miami Beach Playboy Club with identified space and operating partner interest.

What Went Wrong

• Legal expenses of $1.3M related to litigation with former licensees reduced adjusted EBITDA; litigation drag may continue depending on timing, though management is confident on merits and potential settlements.
• One-time charges: $1.9M impairment tied to LA office sublease and fixed assets; $2.1M settlement of present/future licensing agent commissions, together impacting EPS by ~$0.04.
• No formal Q2 update to FY2025 revenue guidance; content/hospitality initiatives are multi-year and may not materially contribute in 2025; licensing is step-function and timing-dependent (management reiterates caution on deal pacing and brand protection).

Transcript

Speaker 5

Greetings and welcome to the PLBY Group Ashley DeSimone second quarter 2025 earnings conference call. At this time, all participants are in a listening-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. As a reminder, this conference is being recorded. It is now my pleasure to introduce Rob Fink, Chief Executive Officer at PLBY Group.

Speaker 0

Thank you, Operator, and good afternoon, everyone, and welcome to PLBY Group's second quarter earnings call. Hosting today's call is Ben Kohn, PLBY Group's Chief Executive Officer. Before turning the call over to Ben, I'd like to remind everyone 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 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 risks, which could cause the company's actual result to differ from its historical result and forecast, including those risks that are set forth in the company's filing 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, and we ask you not to place undue reliance on any forward-looking statement. During the call, the company may refer to non-GAAP financial measures.

Such non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings release that PLBY Group filed with its 8-K earlier today, and it's also in its Form 10-Q, which was also filed today. With all that said, I'd now like to turn the call over to Ben. Ben, the call is yours.

Speaker 2

Thank you, Rob. We have made significant progress in our evolution to a licensing-focused, asset-light business. The second quarter results are proof of just how far we've come. We delivered a significant financial improvement in the quarter, and we also laid an important groundwork for the next leg of growth as we continue to sharpen our focus around the PLBY Group brand. Revenue climbed 13% year over year, with licensing revenue surging 105%, and our adjusted EBITDA was $3.5 million, a $6.4 million positive swing compared to a loss of $2.9 million in last year's second quarter. Our net loss included $1.9 million in impairment charges related to the sublease of our Los Angeles office and $2.1 million related to a one-time settlement of present and future licensing agent commissions.

Excluding those charges, our net loss would have been approximately $3.7 million, and our earnings per share would have been negative $0.04. Additionally, the quarter's results included $1.3 million in incremental legal expenses related to litigation with two former licensees that we terminated for contractual breaches. Excluding those costs, adjusted EBITDA would have been approximately $4.8 million, a positive swing of more than $7.7 million year over year. We are now in a strong financial position with over $30 million in cash on hand as of today and a clear plan to continue reducing debt and lowering our cost of capital. This strength gives us the flexibility to invest confidently in the next stage of PLBY Group's growth. That next stage centers on returning to the roots that made PLBY Group an icon as an aspirational men's lifestyle brand.

Working with one of the top brand agencies in the world, we're focused on bringing the brand to life through compelling content and unforgettable experiences. The Playboy magazine is back, not as our core revenue engine, but as a powerful driver of brand relevance. Earlier this year, we relaunched the magazine, and our next issue is scheduled to be released in November. The landmark issue will feature 12 Playmates in one edition, a first in our history, and they'll also star in our 2026 calendar. Both of those are available for pre-sale on our website today. We're reintroducing the Playmate of the Month and have launched The Great Playmate Search, a global paid voting contest that's already exceeded our expectations. These contests will run quarterly, delivering fresh content, fan engagement, sponsorship opportunities, and meaningful revenue. Experiences are another pillar of our growth.

We're planning to relocate our corporate headquarters to Miami Beach, a vibrant city that has become the hub of our content creation and event strategy. We're also developing a new Playboy Club concept there in partnership with a leading hospitality company, blending a luxury dining experience with an exclusive private club designed to be as iconic as the original Playboy Mansion. We believe experiences will become another significant revenue driver for us in the future as we expand this concept to major markets around the world. Our licensing business is thriving with new agreements in gaming, beauty and grooming, energy drinks, and fashion. Our partnership with Byborg Enterprises remains a cornerstone, guaranteeing $300 million in minimum royalties over 15 years for our digital business. Our Honey Birdette business and brand continues to improve.

Q2 revenues rose 14%, with gross margins expanding and brand perception strengthening thanks to new collections, higher full-price sell-through, and a refreshed customer experience online and in store. Put simply, PLBY Group is stronger, nimbler, and better positioned than it was a year ago. Looking ahead, I am confident that we have the right strategy, the right team, and the right momentum to keep building on this success. With that, Operator, I will open it up to Q&A.

Speaker 5

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. The confirmation tone will indicate you're monitoring 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 your handset before pressing the star key. Your first question comes from George Kelly with Jefferies. Please go ahead.

Speaker 3

Hey, everyone. Thanks for taking my questions. I just have a few. Hey, Ben. A few for you. Maybe I'll start with paid playmate voting. I saw the announcement a few weeks back. I was curious if you could give us a little bit more just about what the opportunity is there for the company, what the registrations have looked like so far, and what is your expectation for repeating a similar kind of contest in 2026?

Speaker 2

Great. Thanks for the question, George. Look, paid voting, this is our first time doing it. What I would say, without getting into specific numbers because they're in the, you know, in the multiple thousands already, but we signed up in the first few days, more than 50% of what we are expecting for the whole entire sign-up period, which is eight weeks. We haven't turned on any marketing yet. There are various things that we will be testing with this first contest. We plan on doing this for every single issue of the magazine going forward. This contest, we actually have two contests going on. One is for a Playmate of the Month, and the second is for an Inside Cover Star. More importantly, what we're testing is how do we integrate this whole entire global Playboy ecosystem.

We have signed up our international editions, which are licensing deals, as affiliates to bring in women from around the world into the contest. We integrated, with PSD, a licensing partner, a significant licensing partner of ours for underwear, where they are marketing this contest and also participating in the giveaway and the prize selection. We did the same thing with Honey Birdette. I'm excited. You know, based on other contests, this could be millions and millions of dollars of revenue for us. We have to execute on that. We've done this in a model that's very similar to licensing, where we partnered with a technology partner, and we have an economic arrangement very similar to what our licensing business is on a gross margin basis.

Speaker 3

Okay. Okay. That's helpful. Thank you. Another topic I wanted to cover is, in your letter, you mentioned, I think it was two new license deals in gaming, one in beauty and grooming, and another in beverages. I think in your prepared remarks, you said there was another one. I forget the category. I was curious if you could just talk to the materiality of those deals and the timing. What's like, not to ask for specific guidance for 2026, but as you look at these deals, I know this year has benefited from Byborg. Going forward, what's just a good sort of medium-term growth expectation in that business?

Speaker 2

Sure. Unfortunately, I'm not going to answer that question, because as I've said historically, licensing is a step function. We have to be very careful with the brand. As we're focusing on really the relevancy of the brand, we make sure we do the right deals. There are a lot of deals out there to sign. It's just a question of do you want to sign those deals, because there's brand dilution. We are very focused right now on the health of the brand. We have the company, financially speaking, in a really good place, and we're not forced to do deals. What's more important is doing the right deals that we can build meaningful partnerships with moving forward. The deals that we signed on an annual basis are in excess of $1 million, and they're multi-year deals. It's significant for us. I think we've only scratched the surface.

There's a lot more that we have in our pipeline and a lot of other categories that we are targeting to continue to grow that licensing business. I don't want to get into 2026. We're just barely halfway past the midway point of 2025, and it'll depend on when and the number of deals that we get done. As we approach the year-end, we can talk more about that. One thing I can tell you, and this speaks to why we're investing in content, it's our marketing engine for the brand. It always has been. This is not a company that goes and spends millions of dollars in what I would say is paid marketing. We use content as that marketing vehicle. We have some huge stars potentially lined up for next year, centered around the magazine, and that by itself brings an amazing amount of audience to the business.

Those things can have meaningful impacts on the future licensing business as well. When we did this last time and we invested in content, we saw a significant positive downstream impact to our licensing business. That's why the business strategy we're embarking on is so key.

Speaker 3

Understood. I had to try, Ben. Just a couple more quick ones. On the hospitality venue in Miami Beach, wondering how you're structuring that and what stage of development those plans are?

Speaker 2

I think I'm going to sort of say high level again. We are very focused on remaining asset-light, you know, with high margin revenues. I don't want to get into the specifics of how we're structuring it, but, you know, we have a space identified. We are working through plans with a partner, an operating partner on that, and also, you know, what would the programming around that be. Miami will most likely be the first, but we actually have interest in other cities as well for different Playboy hospitality venues. To the extent we're successful with this one, and you know, we are moving the corporate headquarters to Miami. We're excited to be in a very pro-business environment, especially coming out of Los Angeles. I think Miami is a city that embodies, you know, the core tenets of Playboy.

I think this could be a huge opportunity for us, should we get the deal done and open. I think there's a lot of excitement down there for Playboy, and I think there's a lot of excitement for our Playboy Club. Our biggest thing and why we've been so patient with this is it all comes down to making sure we have the right partner, right? There's been tons of opportunities to do Playboy hospitality. They just haven't been the right partner. For us, picking the right partner when a consumer can come in and truly experience in real life the Playboy brand, the partner is more important than anything.

Speaker 3

Okay. Last question from you is just about the licensing agent commissions settlement, right. What does that do for the expense structure on the licensing business going forward? Is anything to note there?

Speaker 4

Yeah. No, I would, George, it's Mark. It obviously will bring down China. We've talked about the % commissions that we pay, and so it's, I would say it's material, but not material enough for us to talk about in 2025.

Speaker 2

Yeah. I mean, I think, George, just for competitive reasons, we're not going to get into details, but we were able to reduce our expenses moving forward at a significant discount to what we thought they would be. We are opportunistic in doing that this quarter to improve our results in future quarters.

Speaker 3

Do the changes start in the back half of 2025?

Speaker 2

Yeah. The changes will start this quarter and moving forward. It's more complicated than that because of how it's accounted for, but for us, it was an opportunistic deal and the right thing to do moving forward as we continue to look for ways to enhance our margins. We're doing that across the board. As we've talked about historically, we've been spending a lot of time with AI. We think there's a lot of things that we can do operationally with AI to enhance the margins. We're actually using, about to use, AI as part of the paid Playmate voting contest as well. There's a lot of things where you can integrate various AI applications to become more efficient in what we're doing.

Speaker 3

Okay, I'll hop back in the queue. Thank you very much.

Speaker 2

Thanks, George.

Speaker 5

Alex Furman with Lucid Capital. Please go ahead.

Speaker 1

Hey, guys. Thanks very much for taking my question. I wanted to ask about Honey Birdette here. You know, nice to see that brand is back with strong growth, and the gross margins are up compared to last year. Can you just kind of level set for us? What's kind of the base case heading into the next couple of quarters? Comparisons get a lot more difficult. You know, should we expect the brand to continue to grow over the next couple of quarters, or is that just going to be hard as you start to lap more difficult comparisons?

Speaker 4

Alex, that's Mark. No, we continue to expect to see growth in the back half of the year. If you really look at what's underpinning that, our retail business at full price is going very strong, and the comp that we saw for that business, we had stated it was about 28%. That was not an easy comp against what we did because we had talked about how online had been, had really been where we'd seen the pressure. We can say we expect that business to continue to grow going forward.

Speaker 2

Yeah, I mean, we.

Speaker 4

That's really helpful.

Speaker 2

Proved gross margins at, what, 200 points over the quarter, 100 points over the quarter. The business is strong. We've actually integrated that into the Playmate contest as well, and so they're actually marketing the contest to their creators, where the winner is getting a year of free Honey Birdette. There might be a modeling opportunity for the winner with Honey Birdette. I think this goes to the larger strategy, which is how do we take these various components of the business and integrate them all together so that hopefully the Playmate contest, which, you know, we have thousands and thousands of women who have signed up, they might also be getting an email from Honey Birdette with the ability to buy Honey Birdette at a slight discount for new customers.

What's so exciting for us as we move forward is bringing these various components of the business together to try to benefit each other.

Speaker 1

Okay. That's really helpful. And then, you know, Honey Birdette, I mean, obviously, the total company here showed pretty nice profitability for the total quarter. Sounds like it would have been a lot stronger if not for the legal expenses and some of the other kind of one-time things that you had. Those legal expenses, is that pretty much over now? Should we expect that to be a drag on the third quarter if it does well?

Speaker 2

We can't predict when cases will be resolved. In the second quarter, we had two major litigations ongoing. One of those, we are done with the litigation portion of it, but we still have one ongoing. We feel very confident in our cases against both of our former partners. You will continue to see some drag on the business. I just don't know for how long, depending on when that case is eventually heard. We are prepared to defend our trademarks, and to the extent we win, we could see significant settlements in those cases.

Speaker 1

Okay. That's very helpful. Thank you.

Speaker 5

Once again, if you would like to ask a question, please press star one on your telephone keypad. You received a pre-submitted question that the IR team will read.

Speaker 0

Ben, George touched on this a little, but the research team at Jefferies wanted to know, as you've signed several new deals with partners in categories like gaming and beauty, can you help investors think about the TAM there and the opportunity PLBY Group has for these types of deals going forward?

Speaker 2

Sure. As I mentioned, I think George asked this question, but we signed multiple new deals in the quarter. Those deals in total exceed $1 million on an annual basis. I would tell you we are just scratching the surface. I think there's a lot of categories that we've identified and extensions of categories like gaming, where we are significantly underpenetrated for what this brand means in that area, that we can continue to grow each of those categories moving forward. We want to be strategic in the deals that we do. We want to make sure we do the right deals that are not just an MG, but provide upside above that, picking the right partners. We just need to be patient.

I think that the part of the brand work we're doing, and part of the content strategy that we're embarking on, will help continue to grow the markets that we are or categories that we're already in, plus open up new categories for us moving forward. Any other questions, Operator?

Speaker 5

No further questions. I'd like to turn the floor over to Ben for closing remarks.

Speaker 2

Yeah. As I said in our opening remarks, we are very excited about where the business sits financially, the growth prospects that we have, and the new legs of growth we have, both from content and experiential, in addition to the continued growth in our licensing business. We appreciate you all listening for our second quarter results and look forward to talking to you in November for our third quarter results. Thank you for joining today.

Speaker 5

This concludes today's teleconference. We may disconnect your line at this time, and thank you for your participation.