a.k.a. Brands (AKA) Q3 2024 earnings summary

Executive summary

• Q3 net sales reached $150 million, up 6.4% year-over-year, with U.S. sales up 19.5% to $100.2 million, driven by strong customer acquisition and retention.

• Net loss narrowed significantly to $5.4 million from $70.4 million in Q3 2023; adjusted EBITDA rose 75% to $8.2 million, with margin expanding to 5.5%.

• Active customer base grew 14% year-over-year to 4.05 million, and gross margin hit a three-year high at 58%.

• Omnichannel expansion advanced, with Princess Polly opening new stores and Petal & Pup expanding into 40 Nordstrom locations.

• Strategic priorities include customer acquisition, omnichannel expansion, and operational efficiency.

Financial highlights

• Net sales: $150 million (+6.4% YoY); U.S. net sales: $100 million (+19.5% YoY); gross margin: 58% (+260 bps YoY), highest in three years.

• Adjusted EBITDA: $8.2 million (+75% YoY); margin: 5.5% (+220 bps YoY); net loss: $5.4 million, improved from $70.4 million loss.

• Total orders: 1.84 million (+6.4% YoY); average order value: $81 (flat YoY); active customers: 4.05 million (+14% YoY).

• Cash: $23.1 million; Debt: $111.9 million; Inventory: $106 million (+6% YoY).

• Free cash flow for nine months: $(14.0) million, down from $12.6 million in 2023, due to higher inventory and capex.

Outlook and guidance

• Raised full-year net sales guidance to $567–$572 million; adjusted EBITDA forecasted at $22–$23 million.

• Anticipates gross margin of ~57%, selling expenses at ~27% of net sales, marketing at ~12.5%, and G&A at ~$100 million.

• Expects capex of $10–$12 million and effective tax rate of -4% for 2024.

• Guidance assumes stable FX rates, three new Princess Polly stores in Q4, and ongoing macroeconomic pressures in Australia and New Zealand.

• Management expects existing cash, operations, and credit facilities to meet needs for the next 12 months.