Playboy, Inc. ($PLBY)

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Playboy's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Monday, March 16, 2026, and the earnings press release accompanying this conference call was issued after the market closed today. On our call today is Playboy's Chief Executive Officer, Ben Kohn; and its Chief Financial Officer and Chief Operating Officer, Marc Crossman. I'd like to remind you that the information discussed today is qualified in its entirety by the Form 8-K and Form 10-K filed today by Playboy Inc., which may be accessed on the SEC's website and on Playboy's website. Please note that statements made during this call, including financial projections and other statements that are not historical in nature, may constitute forward-looking statements. Such statements are made on the basis of Playboy'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 them. Forward-looking statements are subject to risks, which could cause the company's actual results to differ from its historical results and forecast, including those risks set forth in the SEC filings, 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. In addition, throughout today's call, the company may refer to adjusted EBITDA, a non-GAAP financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis. A reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure is included in today's earnings release, which is available on the Playboy Investor Relations website. At this time, I'd like to turn the call over to Chief Executive Officer, Ben Kohn. Ben, the floor is yours.

Thank you, operator, and thank you to everyone for joining us today. Welcome to our fourth quarter and full year 2025 earnings conference call. I am pleased to share that we've made meaningful progress across all 4 pillars of our strategy, delivered strong financial results, including our fourth consecutive quarter of positive adjusted EBITDA and made 2 senior hires who will be instrumental in driving our next phase of growth. Let me walk you through what we've accomplished and where we are headed. 2025 was a defining year for Playboy. We completed a strategic transformation that has fundamentally repositioned the company for sustainable, profitable growth. We exited the year with 4 consecutive quarters of positive adjusted EBITDA, reduced debt by $58 million since the third quarter of 2024 as well as defined a pathway to reduce debt by a further almost $52 million through our UTG China deal and built a clear diversified platform around 4 pillars: Media and experiences, licensing, hospitality and our Honey Birdette direct-to-consumer business. Every part of this business is now oriented towards high margins, recurring revenue and brand-led growth. We are actively investing in the business across 2 key areas: content and media to drive audience growth, subscription revenue and experiences and building out our digital and hospitality footprint. To execute on these priorities, we recently made 2 critical senior hires, David Miller as President, Media and Brand; and Phillip Picardi as Chief Brand Officer and Editor in Chief, both world-class leaders with deep experience scaling iconic media brands. Additionally, our UTG China partnership, which we expect to close as early as this week, will further accelerate our deleveraging and provide flexibility to invest in growth. There is a generational white space in the men's lifestyle category. Young men are consuming content at record volumes, but remain underserved by sophisticated trusted voices. No one can match Playboy's 70-year legacy of speaking credibly about relationships, intimacy and culture and because women are at the center of our brand, our message connects with men through women, not an opposition to them. That positioning directly supports every pillar of our strategy. Let me walk you through our progress. Pillar 1, media and experiences. Content is our brand marketing. It drives relevancy, expands our audience and creates IP we monetize across the ecosystem. Under Phillip Picardi's leadership as our new Chief Brand Officer and Editor and Chief, we are rebuilding our editorial engine with high-quality journalism and photography across our core authority areas, relationships, dating, intimacy and modern masculinity with expansion into entertainment, sports, gaming and fashion. We are also rebuilding our website from the ground up with a full relaunch expected later this year. The new digital platform will be the hub for a subscription-based revenue model so [indiscernible] content drives top-of-the-funnel audience growth, while premium content and experiences sit behind the paywall, creating predictable recurring revenue. The magazine remains the top of funnel differentiator. Being featured in, it captures creators and celebrities whose content powers our social channels and drives audience growth. The magazine relaunch is going exceptionally well. We will feature a major female music star with over 70 million Instagram followers as our newest cover feature, which underscores the caliber of talent that wants to be associated with the Playboy brand today. These magazine-related brand initiatives serve as the top of the funnel -- our funnel, driving massive awareness and engagement that we then convert downstream. We have over 25 million social followers generating billions of impressions annually. The Playmate Search has been the standout with tens of thousands of creators entering, mobilizing their followings and producing daily user-generated content that reduces our production costs while keeping channels active. Each month, we will feature our Playboy of the month, launch her across our social channels and then drive our audience behind our paywall, converting free engagement into paying subscribers. Paid voting, which we successfully launched in Q4, is proving to be a scalable recurring revenue mechanism with multimillion dollar potential and significant room to grow. On the programming side, we are developing original content inspired by historic franchises like the Playboy Interview and Playboy after Dark, including a feature film with Heftor Capital and a television adaptation of the Great Playmate search, structured as a licensing revenue and profit share to keep us asset-light. Beyond film and television, we are building out original audio and video content that will live on our owned platforms and be distributed across third-party channels, creating new monetization pathways through advertising, sponsorships and paid subscriptions. The content strategy works hand-in-hand with our events and experiences business, and we continue converting lifestyle aspiration into participation revenue through curated experiences, mid-summer night Dream parties, poker and golf tournaments and more. Collectively, our media and experiences pillar is being built to generate revenue across advertising, sponsorships, paid voting, subscription, events and experiences, multiple streams from a single content investment. Pillar 2, licensing. Licensing is the most predictable, highest margin part of our business. We generated over $46 million in licensing revenue in fiscal year 2025, over 38% of total revenue and a 90% gross margin. 90% of that revenue was guaranteed through contractual commitments, and we have over $343 million in unrecognized future revenue. The most significant development is our partnership with the UTG Brands Management Group. In February 2026, we announced the sale of 50% of our China licensing business to UTG for $122 million in total cash, $45 million in purchase price, $67 million in guaranteed minimum distributions over the next 8 years and $10 million in brand support payments. This partnership delivers immediate balance sheet improvement with almost $52 million earmarked for debt reduction and is immediately accretive to earnings while we retain 50% ownership with profit share upside. Looking ahead, we see significant white space in EMEA, Latin America and APAC. Playboy's global recognition far exceeds its licensing penetration with their digital licensing anchored by the $20 million a year annual minimum guaranteed Byborg strategic partnership. Going forward, we are being more selective in our licensing approach, focusing on fewer, bigger, higher-quality partners who can drive meaningful scale and strengthen the brand in the marketplace. This disciplined strategy improves the quality of licensed products, supports pricing power and enhances our long-term contractual value. Licensing gets stronger with increased brand awareness, which is exactly what our media pillar delivers. And with David and Miller now overseeing both media and licensing, we have the leadership alignment to fully capitalize on that strategy. Pillar 3, hospitality. Over 72 years, Playboy has owned and licensed 45 clubs across 9 countries. We are now relaunching membership club, starting with our Miami Beach Club as the new mansion. We have signed a [indiscernible] letter of intent to raise capital from third parties for the build-out and have selected a highly experienced hospitality operating partner to bring this vision to life. This structure limits CapEx for Playboy while allowing to participate through licensing, membership revenue and brand association. We are making meaningful progress and are excited about the potential for this concept to become an exciting pillar of our business moving forward. Pillar 4, Honey Birdette. The Honey Birdette story is about brand health and cash flow, and Q4 delivered strong results. Sales grew 9% year-over-year on a reported basis with full price sales up 21%. Gross product margin expanded to 77.8%, up 140 basis points, driven by our focus on full price selling and more disciplined discounting. Retail was a standout channel, up 17% like-for-like with every market positive. The U.K. led to a 36% and the U.S. a 21% growth. Digital grew 7%, with the U.S. up 16% and average order value lifted 17% across all regions. In mid-October, we launched the Honey Club, our loyalty program, which has already reached approximately 80,000 members. The combination of a healthier retail base and growing digital channel positions, Honey Birdette for durable, profitable growth. We believe this asset could serve as a strong monetization opportunity down the line, helping us to further delever. In summary, 2025 was the year we completed Playboy's transformation into a focused, high-margin asset-light platform. The cultural moment is ours. Our licensing foundation is robust. Honey Birdette is profitable and accelerating, and we have the strategy and brand equity to execute. I'd now like to turn the call over to Marc to walk through some key financial details.

Thank you, Ben. Revenue increased to $34.9 million as compared to $33.5 million in the fourth quarter of 2024. The increase reflects the continued strength in the company's global licensing business, further supported by strong Honey Birdette performance. Operating expenses, excluding impairments, decreased to $32.2 million as compared to $37.9 million in the fourth quarter of 2024. The decrease was due primarily to a 15% reduction in selling and administrative expenses as a result of the company's continuing effort to improve operational efficiency, including converting its adult business from an operating model into a licensing model. It is important to note that selling and administrative expenses in the fourth quarter of '25 were burdened with approximately $1.2 million of transaction expenses related to the UTD transaction as well as $2.1 million of additional brand marketing expense. Net income increased to $3.6 million or $0.03 per share, a significant improvement as compared to a net loss of $12.5 million or a net loss of $0.15 per share in the fourth quarter of 2024. The improvement reflects higher gross margins, the company's continued focus on cost management as well as ongoing deleveraging efforts and a benefit from income taxes. Adjusted EBITDA increased to $7.1 million, representing our fourth consecutive quarter of positive adjusted EBITDA compared to an adjusted EBITDA loss of $100,000 in the fourth quarter of 2024. Excluding litigation expenses, adjusted EBITDA would have been $8 million in the fourth quarter. On the balance sheet, we reduced senior debt by nearly $58 million to approximately $160 million from the third quarter of 2024. With the UTG transaction, almost $52 million of proceeds will go towards further debt reduction, and we expect the transaction to be immediately accretive, including the anticipated reduction in interest expense. This completes my prepared comments. Let me turn the call back to Ben for closing remarks.

Thank you, Marc. We have built a focused, financially disciplined platform that is generating positive adjusted EBITDA, aggressively paying down debt and executing across all 4 pillars of our business. The UTG China partnership, which we expect to close as early as this week, validates the enormous untapped value of the Playboy brand globally. It delivers $122 million in contracted cash payments with nearly $52 million earmarked for debt reduction and is immediately accretive to earnings. Beyond the financial impact, it gives us a world-class operating partner in the largest consumer market in the world and the flexibility to continue investing in growth. We are investing in this business with conviction. We made 2 transformational senior hires in David Miller and Phillip Picardi. We are rebuilding our website and digital platform from the ground up. We are developing original audio and video content, and we have built a subscription and membership revenue model that we believe can scale significantly. Our magazine relaunch is generating real cultural momentum. Our newest cover star, a major female musician with over 70 million Instagram followers is a testament to the caliber of talent that wants to be part of the Playboy brand. On the hospitality side, we have selected an operating partner for our Miami Beach membership club and are making meaningful progress towards bringing that vision to life. On licensing, we are seeing more disciplined and selective, focusing on bigger, higher-quality partners who can drive scale while strengthening the brand. We are entering 2026 with momentum, conviction and a clear line of sight into the value we can create for shareholders. Every pillar of this business is executing, and I firmly believe we have the team, the strategy and the brand equity to deliver sustainable long-term value to my fellow shareholders. With that, operator, let's open the line for questions.

[Operator Instructions] Our first question comes from the line of James Heaney with Jefferies.

Could you just talk about the rebuild of your website? I'm curious what are some of the objectives that you hope to achieve from that relaunch? And how big of a focus will monetization be as part of the strategy?

James, it's Ben Kohn. Thanks for the question. Our website today is dated. Our single one goal on the website is brand. Second goal is monetization, which will be a short follow from that. And so what that website is going to be is a digital hub for all of our content and the subscription or membership offering that we've begun to roll out with the last issue of the magazine, $79 on a digital basis, $149 on a digital plus print. We will look to expand that membership offering moving forward, meaning we'll continue to add utility or more opportunities with that management, including the -- with that membership, including the opportunity to participate in Playboy events. And so we're excited by it. We've hired a great digital agency to help us with it. And with David and Phillip on board, I would think that there'll be a much improved consumer experience really focused on conversion, and we now have the data tools to help us with that.

That's great. And maybe just another question. I think you spoke on the last call and obviously came up again today about taking the Playboy brand back to its roots this year. Can you just talk about some of the ways in which you're repositioning the brand and so far, how that's resonating with the target audience of sort of 18- to 40-year-old males?

Look, the brand is resonating well. I'm not getting into any of the specifics yet because we're testing a ton of content out there, but we're seeing meaningful engagement in the content that we are producing. and we're using the data to inform our content strategy moving forward. As we talked about in previous calls, we did hire a brand agency. We spent about 6 months last year working with that brand agency, really looking at what consumers thought about the brand, internal voices as well. And what that led us to is really taking Playboy back to its roots, really being that modern guide for everything worth wanted. And we're doing that through the voice of women, as we mentioned in the prepared remarks. And it starts with the Playmate. So the Playmate, obviously, one of the best brand ambassadors you can have. We did that last year with the contest, tens of thousands of women's registered. They brought us hundreds of thousands of users. That's our top of the funnel. We've now signed a deal with Propagate to turn that into a television show. But think about that -- think about Playboy really returning to its roots of what made the company famous in the 50s and 60s and 70s.

Our next question comes from the line of Alex Fuhrman with Lucid Capital Markets.

I wanted to ask about the Honey Birdette business. It looks like a really strong fourth quarter, both on the top line and in terms of gross margin. Can you talk about what's driving that? I know in the past, you've said that you've had a much more success with full price selling and pulling back on the discounting. Have you continued to see strong full price sell-through? And then just year-to-date, any comments on how the Valentine's Day season went for the brand?

Sure, Alex. Good to speak to you. We'll start with the first part of that question. From a full price standpoint, our business is firing on all cylinders. Really, what we're seeing, too, is we put a 10% price increase in place. This was right around when the tariffs went into effect. And what we've seen is there has been 0 pushback from the customer, and that's really what's helped lift our margin. So it's coming from 2 places. One is price increase and the second is pulling away from the sale periods. In terms of Valentine's Day, I can't give you the exact numbers, but it was our best Valentine's Day that we've ever had. We were less promotional, and we're able to move full price goods at a very quick pace. It was up year-over-year.

Yes. Alex, I'll just add to that, too. As we look into '26, obviously, we've talked previously about raising some equity to grow the business. But given where we are as a company as well, we are putting some money into the growth there. We think there's a huge opportunity to expand the store footprint in the United States where we see massive AOV. And we're seeing growth on the digital side as well. So we will continue to expand the business as long as we own it. We think it's -- the management team has done a great job with the product, and it's definitely resonating with the consumer.

Okay. That's really helpful. And then I know you guys have done some kind of small-scale testing of ways to kind of excite the Honey Birdette business from what you're doing with Playboy, promotions for merchandise, things like that. Has that kind of moved the needle? Is there any kind of takeaways from that in ways that you could really help to cross-market the brands?

That's a great question and very timely because we are launching a Playboy capsule collection by Honey Birdette. And there might or might not be a paid voting contest tied to that as well as we think through the marketing angle of that coming up here shortly.

And this concludes our question-and-answer session. I'll now hand the call back to Chief Executive Officer, Ben Kohn, for his closing remarks.

Thank you, operator, and thank you for everyone for joining us today. 2025 was a year of transformation, and the results speak for themselves. As we move into 2026, we are executing with discipline and urgency across all 4 pillars. We appreciate your continued support and look forward to updating you on our progress in the months to come. If you have any further questions, please feel free to reach out to our IR firm, MZ Group, and we would be happy to answer them. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.