Playing the Long Game

Research evidence excerpt

Playing the Long Game

bility (vs growth) *Rev. (MM)

for the Bark Air business (21% of sales). That said, the Commerce segment remains a bright spot

($100m F27 net sales guide; +43% y/y). Minimal GM erosion (-63bp) and lighter opex (377bp y/y

improvement) lead us to raise our F27 Adj EBITDA estimate to $8.4m (from $2.4m).

Direction of Travel (3 months) - Mixed: The tough external environment will likely remain

challenging for the portfolio and gross margins. This makes it hard to know when Bark can return

to offense. That said, self-help progress on customer acquisition costs, revenue diversification and

a debt-free balance sheet should minimize risk down the P&L.

18-Month Outlook - Positive: In our view, Bark's focus on diversifying the portfolio towards more

non-discretionary categories should put the portfolio on the right track LT. Commerce boasts a long

growth runway (modeling a 3Y CAGR of +20.7% through F28), and a normalized demand backdrop

could bring the DTC segment back to growth. A leaner customer acquisition model and a more

favorable subscriber base provide a framework for better Adj. EBITDA profitability beyond the next

twelve months.

Investment Thesis: We acknowledge Bark remains focused on developing a more efficient

operating model and protecting the P&L. The balance sheet is clean, and cash flows are in a good

spot. We believe Bark can play the long game through the cycle. We maintain our Buy rating.

Valuation: Our $19 PT is based on a 0.5x EV/Sales on our F28 sales estimate of $361m. Changes

Kaumil Gajrawala * | Equity Analyst

to our price target are due to a recent 20-for-1 reverse stock split. +1 (212) 778-8937 | kgajrawala@jefferies.com

FY (Mar) 2025A 2026A 2027E 2028E Keith Devas * | Equity Analyst

+1 (212) 778-8233 | kdevas@jefferies.com

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