PLBY continues to narrow losses on cost-cutting, business reshuffle

PLBY Group said total revenue fell 20% to $28.3 million for the first quarter, hit by two licensees terminations in China and the Playboy e-commerce business no longer being operated by the company.

Direct-to-consumer revenue from continuing operations declined 10% year-over-year to $18.7 million. Revenues from Playboy.com e-commerce declined by $3.5 million, as the company transitioned it from an owned-and-operated model to a licensing model, while revenue from Honey Birdette increased by 8% year-over-year, to $18.7 million.

Licensing revenue declined 58% year-over-year to $4.1 million, primarily attributable to China and the termination of two of the company’s three largest licensing agreements in late 2023. The company said management believes the new license agreements will begin to remedy in future periods.

Digital subscriptions and content revenue increased 16%, to $5.5 million, with an increase in creator platform revenue more than offsetting declines in legacy media.

Net loss from continuing operations was $16.4 million, an improvement of $19.9 million from a net loss from continuing operations of $36.3 million in the prior year period, as the “company significantly cut costs and expenses.”

Total net loss was $16.4 million, an improvement of $21.2 million from a total net loss of $37.7 million in the first quarter of 2023.

“Over the past several months, we have stabilized our core business as we have executed on the key goals from 2023, and we can now shift our focus to accelerating growth in our areas of strategic priority. Net loss from continuing operations narrowed 55% and adjusted EBITDA loss narrowed 74% compared to the first quarter of 2023, as costs and expenses were reduced significantly more than revenues. This progress comes even with $5.5 million less revenue from China and $3.5 million less e-commerce revenue in the first quarter of 2024, as compared to the first quarter of 2023. Our first quarter 2024 numbers also do not yet include any contribution from the largest new licensing deal we have recently signed for China, which is expected to contribute in the second quarter of 2024,” said Ben Kohn, chief executive officer of PLBY Group.

“In China, through our joint venture we have entered into multiple new brand licensing agreements, each with shorter terms and achievable minimum guarantees designed to incentivize investment in the brand by licensees while we retain flexibility. The new agreements are highlighted by a five-year license agreement with Guandong Duhan Industrial Co., Ltd., which is required to pay minimum royalties of approximately $37 million (based on current exchange rates) over the term, as well as any excess royalties. We are now focused on identifying additional new licensees for our remaining unlicensed product categories. We are seeing positive momentum in the rest of the world from first quarter 2024 sales by our licensees and royalties reported thus far.

“At Honey Birdette, we posted a second consecutive quarter of positive sales growth, while expanding gross margins and significantly improving profitability, both year-over-year and sequentially. Specifically, our sales grew 8% quarter-over-quarter and our gross margin expanded from 43% to 52% during the same period. With new momentum based on recent growth, we believe the time is right to actively seek a new partner or owner of the Honey Birdette business that can invest the capital necessary to expand the brand’s presence globally. A sale of all or a portion of the Honey Birdette business would allow us to focus our capital and attention on our key strategic priorities for the year: growing the Playboy brand and de-levering our balance sheet.”