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What changed in Bark, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Bark, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+213 added−235 removedSource: 10-K (2024-06-03) vs 10-K (2023-06-01)

Top changes in Bark, Inc.'s 2024 10-K

213 paragraphs added · 235 removed · 175 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe believe that this is a key competitive advantage as it enables us to deliver highly personalized products and experiences for each and every dog that we serve. We are able to tailor our products to each customer by collecting proprietary product and customer data with each interaction.
Biggest changeOur Strengths 5 Table of Contents Ever-Growing Data Drives Personalization at Scale: We know the names, age, breed, birthdays, play style, allergies, and more for over 6 million dogs. We believe that this is a key competitive advantage as it enables us to deliver highly personalized products and experiences for each and every dog that we serve.
Some of these suppliers operate their own manufacturing facilities and others subcontract the manufacturing to other parties. BARK’s manufacturers generally agree to terms that are substantially similar to its standard manufacturer terms, which govern its business relationships. BARK has long-standing relationships with a diverse base of vendors that BARK believes to be mutually satisfactory.
Some of these suppliers operate their own manufacturing facilities and others subcontract the manufacturing to other parties. BARK’s manufacturers generally agree to terms that are substantially similar to its standard manufacturer terms, which govern its business relationships. BARK has long-standing relationships with a base of vendors that BARK believes to be mutually satisfactory.
Public Filings Copies of the our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are made available free of charge at https://investors.bark.co/financials/sec-filings/default.aspx as soon as reasonably practicable after being filed electronically with the United States Securities and 9 Table of Contents Exchange Commission (the “SEC”).
Public Filings Copies of the our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are made available free of charge at https://investors.bark.co/financials/sec-filings/default.aspx as soon as reasonably practicable after being filed electronically with the United States Securities and Exchange Commission (the “SEC”).
We do this by focusing on four key areas: 7 Table of Contents • Diversity Sourcing & Recruitment: Promote an inclusive approach to hiring diverse talent through our recruiting processes and sourcing pools. • Continuous Learning & Communication: Make diversity and inclusion everyone’s responsibility by providing training and educational opportunities. • Employee Resource Groups: Provide employees with opportunities and resources to build a shared, supportive community while also advancing the team’s Diversity Equity and Inclusion mission. • Accountability: Ensure accountability while committing to focus on retention, advancement, and equity.
We do this by focusing on four key areas: • Diversity Sourcing & Recruitment: Promote an inclusive approach to hiring diverse talent through our recruiting processes and sourcing pools. • Continuous Learning & Communication: Make diversity and inclusion everyone’s responsibility by providing training and educational opportunities. • Employee Resource Groups: Provide employees with opportunities and resources to build a shared, supportive community while also advancing the team’s Diversity Equity and Inclusion mission. • Accountability: Ensure accountability while committing to focus on retention, advancement, and equity.
We are focused on several key areas that we believe will be significant drivers to our business, long-term. 6 Table of Contents Growth across our consumables products: While we are one of the largest treat companies in the U.S. by revenue today, we have only just begun to tap into the broader consumables opportunity.
We are focused on several key areas that we believe will be significant drivers to our business, long-term. Growth across our consumables products: While we are one of the largest treat companies in the U.S. by revenue today, we have only just begun to tap into the broader consumables opportunity.
On a regular basis, we review all grants of equity for parity across gender and race to ensure that we are taking a consistent approach to compensation for all team members based on market data, role, and level. Manufacturing BARK purchases substantially all of its merchandise directly from third-party manufacturers.
On a regular basis, we review all grants of equity for parity across gender and race to ensure that we are taking a consistent approach to compensation for all team members based on market data, role, and level. Manufacturing 7 Table of Contents BARK purchases substantially all of its merchandise directly from third-party manufacturers.
Our Key Products: Toys & Accessories (“toys”)— The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys and treats that are delivered directly to a dog’s home.
Our Key Products: Toys & Accessories (“toys”)— The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys 4 Table of Contents and treats that are delivered directly to a dog’s home.
Competition The dog products industry is highly competitive, fragmented, and spread across four primary segments: • supermarkets, warehouse clubs, and mass merchants; • specialty pet store chains; • traditional or neighborhood pet stores; and • subscription service businesses and e-tailers.
Competition The dog products industry is highly competitive, fragmented, and spread across four primary segments: • supermarkets, warehouse clubs, and mass merchants; • specialty pet store chains; • traditional or neighborhood pet stores; and 8 Table of Contents • subscription service businesses and e-tailers.
We leverage an ever-growing collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold direct-to-consumer (“DTC”) and through our network of retail partners, which currently spans over 40,000 doors across the U.S.
We leverage an ever-growing 3 Table of Contents collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold Direct-to-Consumer (“DTC”) and through our network of retail partners, which currently spans over 40,000 doors nationwide.
Treats — Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our consumables website. Many of our treats feature monthly themes, similar to our toys. Today, BARK is one of the largest treat brands in the U.S. by revenue, even without any current sales of treats in retail.
Treats — Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our consumables website. Many of our treats feature monthly themes, similar to our toys. Today, BARK is one of the largest treat brands in the U.S. by revenue.
Toppers are particularly beneficial for picky eaters. Supplements —Includes a variety of dog supplements such as hip and joint support, and skin and coat support. These products are often targeted at specific breeds that are prone to certain ailments. Kibble —We sell a variety of kibble, priced to compete with the mass premium category.
Supplements —Includes a variety of dog supplements such as hip and joint support, and skin and coat support. These products are often targeted at specific breeds that are prone to certain ailments. Kibble —We sell a variety of kibble, priced to compete with the mass premium category.
By designing our own products, we have the opportunity to achieve higher price points, therefore expanding our gross margins. Omnichannel: While the majority of our revenues are driven by our DTC business, we derived $63 million, or 11.8% of our revenues from the sale of BARK products in retail stores and other e-tailers in fiscal 2023.
By designing our own products, we have the opportunity to achieve higher price points, therefore expanding our gross margins. Omnichannel: While the majority of our revenues are driven by our DTC business, we derived $54 million, or 11.0% of our revenue from the sale of BARK products in retail stores and other e-tailers in fiscal 2024.
We expect to pursue additional trademark registrations to the extent we believe such registrations would be beneficial and cost-effective. 8 Table of Contents In addition to trademark protection, we own numerous domain names, including www.bark.co, www.barkbox.com, and www.barkshop.com.
We expect to pursue additional trademark registrations to the extent we believe such registrations would be beneficial and cost-effective. In addition to trademark protection, we own numerous domain names, including www.bark.co, www.air.bark.co www.barkbox.com, www.barkshop.com, and www.dogsflyfirst.com.
As of March 31, 2023, 67% of our employees, 31% of our management team, and 33% of our Board of Directors identified as female or nonbinary. Employee Engagement Team communication is frequent and direct, allowing for a high level of transparency and feedback.
As of March 31, 2024, 68% of our employees, 38% of our management team, and 43% of our Board of Directors identified as female or nonbinary. Employee Engagement Team communication is frequent and direct, allowing for a high level of transparency and feedback.
Our Industry Large, growing, and resilient market for pet products: According to the American Pet Products Association (“APPA”), annual spend on pets in the U.S. was approximately $137 billion in 2022, an increase of over $13 billion, or nearly 11%, compared to 2021.
Our Industry Large, growing, and resilient market for pet products: According to the American Pet Products Association (“APPA”), annual spend on pets in the U.S. was approximately $147 billion in 2023, an increase of over $10 billion, or approximately 7%, compared to 2022.
Our employee population includes approximately 488 BARK Happy Ambassadors and their leadership, 95 engineers, data scientists, and technology staff, 66 designers and creative team members, 101 operations and fulfillment center employees, and 149 marketing, general, and administrative employees.
Our employee population includes approximately 393 BARK Happy Ambassadors and their leadership, 76 engineers, data scientists, and technology staff, 59 designers and creative team members, 81 operations and fulfillment center employees, and 101 marketing, general, and administrative employees.
We also leverage our machine learning technology and first-party data set to compare dogs’ attributes against our available inventory when recommending products for purchase via cross-selling or ATB. In addition, we believe that personalization requires more than curation.
We are able to tailor our products to each customer by collecting proprietary product and customer data with each interaction. We also leverage our machine learning technology and first-party data set to compare dogs’ attributes against our available inventory when recommending products for purchase via cross-selling or ATB. In addition, we believe that personalization requires more than curation.
With the introduction of innovative new products across kibble, toppers, supplements, and dental products, we have significantly increased our addressable market and the number of customers we can serve. In the near-term, one of our biggest opportunities is to begin selling treats across our approximately 40,000 retail doors.
With the introduction of innovative new products across kibble, toppers, supplements, and dental products, we have significantly increased our addressable market and the number of customers we can serve. In the near-term, one of our biggest opportunities is to grow our consumables presence in retail.
Each of these businesses had distinct websites, dashboards, and logins. We are currently in the process of unifying our brand under the bark.co domain so all of our products are sold under one roof. This will improve the customer experience, raise awareness of our full suite of products, and enhance our cross-selling capabilities.
We are currently in the process of unifying our brand under the bark.co domain so all of our products are sold under one roof. This will improve the customer experience, raise awareness of our full suite of products, and enhance our cross-selling capabilities. We anticipate migrating all of our platforms to bark.co this fiscal year.
The Company is currently in discussions with its retail partners to begin selling treats through its retail network. Toppers —Includes meal-enhancing sprinkles, broths, and bites that are added to a dog’s food to enhance the flavor of their food. These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan.
The Company also began selling its treats in over 2,400 doors nationwide this year. Toppers —Includes meal-enhancing sprinkles, broths, and bites that are added to a dog’s food to enhance the flavor of their food. These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan. Toppers are particularly beneficial for picky eaters.
Over the years, we have become increasingly more effective at cross-selling to customers. For example, in fiscal 2023, cross-selling revenue was $41 million, up 35% compared to the prior year. We also sell toys through our network of retail partners. Today, the commerce segment accounts for roughly 11.8% of total revenue.
Over the years, we have become increasingly more effective at cross-selling to customers. Total cross sell revenue was $38 million in fiscal 2024. We also sell toys through our network of retail partners. Today, the commerce segment accounts for 11% of total revenue. This distribution channel allows us to reach new customers and introduce them to the BARK brand.
BARK seeks to be there every step of the way serving dogs with the best products and services. Our ambition is to grow BARK to be the world’s favorite dog brand.
Growth Opportunities We strive to be a dog parent’s partner from those first days with a puppy throughout their dog’s entire adult life. BARK seeks to be there every step of the way serving dogs with the best products and services. Our ambition is to grow BARK to be the world’s favorite dog brand.
The Company has executed agreements that will bring BARK products to over 40,000 retail doors, including Target, Walmart, Kroger, Petco, and PetSmart. We believe that these partnerships significantly broaden our customer reach and raise awareness for the BARK brand.
The Company currently sells products in over 40,000 retail doors nationwide, including Target, Walmart, Kroger, Petco, and PetSmart. We believe that these partnerships significantly broaden our customer reach and raise awareness for the BARK brand. We believe that this business also serves to introduce first-time customers to BARK who later could become loyal subscribers of our DTC business.
This distribution channel allows us to reach new customers and introduce them to the BARK brand. Our toys category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other miscellaneous products. This category generated approximately $307.0 million of revenue in fiscal 2023, up 4.3% compared to fiscal 2022.
Our toys & accessories category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other accessories. This category generated approximately $284.7 million of revenue in fiscal 2024, down 7% compared to fiscal 2023.
Our commerce business, which reflects the sale of BARK products in retail stores and other e-tailers, significantly broadens our customer reach and raises awareness for the BARK brand. Today, BARK products are sold in over 40,000 retail doors, including Target, Walmart, Kroger, Petco, and PetSmart. This segment represented 11.8% of our total revenue in fiscal 2023.
Our DTC business drives the majority of our revenues and represented 89.0% of total revenue in fiscal 2024. Our commerce business, which reflects the sale of BARK products in retail stores and other e-tailers, significantly broadens our customer reach and raises awareness for the BARK brand.
By 2026, Packaged Facts estimates roughly 45% of all U.S. pet sales will occur online. Our Segments and Products 4 Table of Contents We operate two business segments: direct to consumer and commerce. Our DTC business drives the majority of our revenues and represented 88.2% of total revenue in fiscal 2023.
According to the market research firm Packaged Facts, an estimated 37% of all pet product sales occurred online in 2023. By 2028, Packaged Facts estimates roughly 44% of all U.S. pet sales will occur online. Our Segments and Products We operate two business segments: direct to consumer and commerce.
Sales of dog-related products have mirrored this trend as dog owners increasingly shift a greater share of their dog-related purchasing to online options and subscription-based offerings across all categories. According to the market research firm Packaged Facts, an estimated 36% of all pet product sales occurred online in 2022.
An accelerating shift to digital and e-commerce: E-commerce sales continue to grow faster than the overall retail sales market and are increasingly taking significant share from brick-and-mortar retail. Sales of dog-related products have mirrored this trend as dog owners increasingly shift a greater share of their dog-related purchasing to online options and subscription-based offerings across all categories.
While our kibble can be purchased on an individual basis, we entered this market with a breed-based approach that recommends meal plans consisting of a mix of kibble, toppers, and supplements based on the characteristics and personalities of various dog breeds.
While our kibble can be purchased on an individual basis, we often recommend meal plans consisting of a mix of kibble, toppers, and/or supplements based on the characteristics and personalities of each dog. For example, because German Shepherds are prone to hip issues, we often recommend hip and joint support supplements with the purchase of their kibble.
Dog ownership is growing quickly: According to the 2021-22 APPA Survey, dogs are the most popular pet in the U.S., with more than 69 million households having a dog as a member of their family. This reflects an increase of roughly 6 million, compared to 2020.
Dogs are the most popular pet in the U.S.: According to the 2022-23 APPA Survey, dogs are the most popular pet in the U.S., with more than 65 million households having a dog as a member of their family. We believe we have an opportunity to significantly expand our customer base, both in the U.S. and globally.
Dental—Also known as BARK Bright, this category includes a variety of chews and toothpastes aimed at improving your dog’s dental health. BARK Bright eliminates the arduous task of brushing a dog’s teeth while still effectively fighting germs and bad breath. Our BARK Bright dental kit provides an innovative regimen for dog dental care.
BARK Bright eliminates the arduous task of brushing a dog’s teeth while still effectively fighting germs and bad breath. Our BARK Bright dental kit provides an innovative regimen for dog dental care. Overall, we see significant runway in our consumables category long-term, and anticipate the majority of our future growth may be driven by these product categories.
The work we are doing is inherently joyful, optimistic, and humorous because our primary customers, dogs, possess those same characteristics. To that end, our company culture is centered around service, creativity, and a high level of ambition to serve all dogs and their humans.
Our People and Culture The Team As dog people, BARK employees join the company because they are aligned with our mission to make all dogs happy. The work we are doing is inherently joyful, optimistic, and humorous because our primary customers, dogs, possess those same characteristics.
These product lines are relatively small for BARK today, however, with millions of customers, strong brand awareness, and a healthy balance sheet, we see significant opportunity to grow these products, long-term. Unified Customer Experience Expected to Enhance Cross-Selling and Awareness: Historically, BARK operated five siloed businesses and customer experiences – BarkBox, SuperChewer, BarkBright, BarkFood, and BarkShop.
Unified Customer Experience Expected to Enhance Cross-Selling and Awareness: 6 Table of Contents Historically, BARK operated five siloed businesses and customer experiences – BarkBox, SuperChewer, BarkBright, BarkFood, and BarkShop. Each of these businesses had distinct websites, dashboards, and logins.
At the end of fiscal 2023, BARK employed approximately 900 full-time and part-time employees, with 511 employees based in the U.S. and 384 employees based in the Philippines.
To that end, our company culture is centered around service, creativity, and a high level of ambition to serve all dogs and their humans. At the end of fiscal 2024, BARK employed approximately 708 full-time and part-time employees, with 377 employees based in the U.S. and 331 employees based in the Philippines.
For example, because German Shepherds are prone to hip issues, we recommend hip and joint 5 Table of Contents support supplements with the purchase of their kibble. If that dog is also a picky eater, we will recommend adding one of our toppers. This increases our Average Order Value and margin profile.
If that dog is also a picky eater, we will recommend adding one of our toppers. This increases our average order value and margin profile. Dental —Also known as BARK Bright, this category includes a variety of chews and toothpastes aimed at improving your dog’s dental health.
Over the past two years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. To sell these products, the Company recently launched a new consumables website, food.BARK.co, which contains the majority of our consumables portfolio, all of which can be purchased on a recurring, auto-ship, or one-off basis.
Over the past several years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. The Company sells its consumables products both DTC (through Bark.co) and through its retail footprint.
Removed
We believe we have an opportunity to significantly expand our customer base, both in the U.S. and globally. An accelerating shift to digital and e-commerce: E-commerce sales continue to grow faster than the overall retail sales market and are increasingly taking significant share from brick-and-mortar retail.
Added
Today, BARK products are sold in over 40,000 retail doors, including Target, Walmart, Kroger, Petco, and PetSmart. This segment represented 11.0% of our total revenue in fiscal 2024. We see a significant opportunity to grow our presence in retail. Today, the majority of our commerce revenue consists of selling our toys in retail.
Removed
We see a significant opportunity to grow our presence in retail. Today, virtually all of our commerce revenue consists of selling our toys in retail. The Company is currently in the process of pitching its retail partners on new treat designs, which could meaningfully increase its revenue in this segment, long-term.
Added
Recently, we began selling our new treat offering in over 2,400 Target and PetSmart doors nationwide. The Company anticipates further expanding its consumables presence in retail in the future.
Removed
Overall, we see significant runway in our consumables category long-term, and anticipate the majority of our future growth may be driven by these product categories. Our Strengths Ever-Growing Data Drives Personalization at Scale: We know the names, age, breed, birthdays, play style, allergies, and more for over 6 million dogs.
Added
BARK Air —Announced in April 2024, BARK Air is a first-of-its kind air travel experience tailored to dogs. The Company partnered with a jet charter company to begin offering premium flights for customers and their dogs. Interested parties can book flights at dogsflyfirst.com.
Removed
We believe that this business also serves to introduce first-time customers to BARK who later could become loyal subscribers of our DTC business. Growth Opportunities We strive to be a dog parent’s partner from those first days with a puppy throughout their dog’s entire adult life.
Added
Our charter partner is responsible for all aircraft, crew, maintenance, and insurance, allowing BARK to focus on creating a great travel experience for dogs and their people worldwide. We believe this initiative exemplifies the Company’s dog-first approach to curating the best products and services.
Removed
We are currently in the process of pitching retail partners on a new treat design, and we we believe we will ability to introduce treats in some of our retail network by the end of fiscal 2024 and continue expanding this in fiscal 2025. We are also seeing healthy growth in our newer categories like kibble and dental.
Added
We currently sell our treats across 2,400 Target and PetSmart doors, and aim to expand our consumables presence across our retail footprint. We are also seeing healthy growth in our newer consumables categories across our DTC segment. While these product lines are relatively small for BARK today, we see significant a opportunity to grow these products, long-term.
Removed
We have made notable progress on this initiative by bringing our consumables under the food.bark.co domain, and we will continue to introduce additional products to the bark.co domain. Our People and Culture The Team As dog people, BARK employees join the company because they are aligned with our mission to make all dogs happy.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn particular, we intend to continue to invest substantial resources to grow and diversify our product offerings and in marketing to acquire new customers. Our operating expenses may also be adversely impacted by increased costs and delays in launching in new markets and expanding fulfillment center capacity, in particular as a result of the COVID-19 pandemic and other macro-economic conditions.
Biggest changeOur operating expenses may also be adversely impacted by increased costs and delays in launching in new markets and expanding fulfillment center capacity, in particular as a result of the COVID-19 pandemic and other macro-economic conditions. Our future growth and operating performance must eventually offset our operating losses or we may not be able to achieve or sustain profitability.
The market price of our common stock may fluctuate significantly or decline in response to numerous factors, many of which are beyond our control, including: actual or anticipated fluctuations in our revenue and results of operations; financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; failure of securities analysts to maintain coverage of BARK, changes in financial estimates or ratings by any securities analysts who follow BARK or our failure to meet the estimates or the expectations of investors; announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; changes in operating performance and stock market valuations of other retail or technology companies generally, or those in our industry in particular; price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; trading volume of our common stock; the inclusion, exclusion or removal of our common stock from any indices; changes in members of our Board of Directors or management; transactions in our common stock by directors, officers, affiliates and other major investors; lawsuits threatened or filed against us; changes in laws or regulations applicable to our business; changes in our capital structure, such as future issuances of debt or equity securities; short sales, hedging and other derivative transactions involving our capital stock; general economic conditions in the U.S. or global markets; other events or factors, such as the COVID-19 pandemic, the war in the Ukraine, increased inflation, bank failures, incidents of terrorism or responses to these events; and the other events or factors described in this “Risk Factors” section.
The market price of our common stock may fluctuate significantly or decline in response to numerous factors, many of which are beyond our control, including: actual or anticipated fluctuations in our revenue and results of operations; financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; failure of securities analysts to maintain coverage of BARK, changes in financial estimates or ratings by any securities analysts who follow BARK or our failure to meet the estimates or the expectations of investors; announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; changes in operating performance and stock market valuations of other retail or technology companies generally, or those in our industry in particular; price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; trading volume of our common stock; the inclusion, 21 Table of Contents exclusion or removal of our common stock from any indices; changes in members of our Board of Directors or management; transactions in our common stock by directors, officers, affiliates and other major investors; lawsuits threatened or filed against us; changes in laws or regulations applicable to our business; changes in our capital structure, such as future issuances of debt or equity securities; short sales, hedging and other derivative transactions involving our capital stock; general economic conditions in the U.S. or global markets; other events or factors, such as the COVID-19 pandemic, the war in the Ukraine, increased inflation, bank failures, incidents of terrorism or responses to these events; and the other events or factors described in this “Risk Factors” section.
We have limited control over our suppliers, contract manufacturers, and logistics partners, which subjects us to the following risks, many of which have materialized during the COVID-19 pandemic, including: failure to satisfy demand for our products; reduced control over delivery timing, product reliability, the manufacturing process and components used in our products; limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions; variance in the manufacturing capability of our third-party 13 Table of Contents manufacturers; price increases; failure of a significant supplier, manufacturer, or logistics partner to perform its obligations for technical, market, or other reasons; misappropriation of our intellectual property; changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics partners are located; the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
We have limited control over our suppliers, contract manufacturers, and logistics partners, which subjects us to the following risks, many of which materialized during the COVID-19 pandemic, including: failure to satisfy demand for our products; reduced control over delivery timing, product reliability, the manufacturing process and components used in our products; limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions; variance in the manufacturing capability of our third-party manufacturers; price increases; failure of a significant supplier, manufacturer, or logistics partner to perform its obligations for technical, market, or other reasons; misappropriation of our intellectual property; changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics partners are located; the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
In the consumables category, there are numerous brands and products that compete for shelf space and sales, with competition based primarily upon brand recognition and loyalty, product packaging, quality and innovation, taste, nutrition, breadth of product line, price and convenience.
For example, in the consumables category, there are numerous brands and products that compete for shelf space and sales, with competition based primarily upon brand recognition and loyalty, product packaging, quality and innovation, taste, nutrition, breadth of product line, price and convenience.
We must be able to appropriately, effectively and efficiently allocate our marketing spend for multiple products, including: accurately identifying, targeting and reaching our audience of current and potential customers with our marketing messages; selecting the right marketplace, media and specific media vehicle in which to advertise; 10 Table of Contents adapting quickly to changes in the algorithmic logic, privacy policies, and other procedures used by search engines, social media platforms and other third party platforms; identifying the most effective and efficient level of spending in each marketplace, media and specific media vehicle; determining the appropriate creative message and media mix for advertising, marketing and promotional expenditures; managing marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs; differentiating our products as compared to other products; creating greater brand awareness; driving traffic to our websites, and websites of our retail partners and adapting our marketing tactics as e-commerce, search, and social networking evolve.
We must be able to appropriately, effectively and efficiently allocate our marketing spend for multiple products, including: accurately identifying, targeting and reaching our audience of current and potential customers with our marketing messages; selecting the right marketplace, media and specific media vehicle in which to advertise; adapting quickly to changes in the algorithmic logic, privacy policies, and other procedures used by search engines, social media platforms and other third party platforms; identifying the most effective and efficient level of spending in each marketplace, media and specific media vehicle; determining the appropriate creative message and media mix for advertising, marketing and promotional expenditures; managing marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs; differentiating our products as compared to other products; creating greater brand awareness; driving traffic to our websites, and websites of our retail partners and adapting our marketing tactics as e-commerce, search, and social networking evolve.
Our ability to leverage our competitive strengths and execute on our strategy is subject to numerous challenges and uncertainties including, but not limited to, the following: • costs or other issues with acquiring new customers and retaining existing customers; • adverse impacts on shipping and fulfillment services and costs; • changes in trends and consumer preferences; • interruptions in our business due to technology failures, cybersecurity breaches or labor shortages; • our ability to retain existing suppliers and attract new suppliers and scale our supply chain; • our ability to develop a unified, scalable, high-performance technology and fulfillment infrastructure; • our ability to hire and retain talented, experienced people at all levels of our organization; • impacts related to the COVID-19 pandemic; and • changes in the macro-economic environment, such as inflation, increasing interest rates, instability in the banking system or financial markets, changes in the labor markets, and political, economic and social instability, such as war in the Ukraine, in particular as such changes impact consumer discretionary spending.
Our ability to leverage our competitive strengths and execute on our strategy is subject to numerous challenges and uncertainties including, but not limited to, the following: • costs or other issues with acquiring new customers and retaining existing customers; • adverse impacts on shipping and fulfillment services and costs; • changes in trends and consumer preferences; • interruptions in our business due to technology failures, cybersecurity breaches or labor shortages; • our ability to retain existing suppliers and attract new suppliers and scale our supply chain; • our ability to develop a unified, scalable, high-performance technology and fulfillment infrastructure; • our ability to hire and retain talented, experienced people at all levels of our organization; and • changes in the macro-economic environment, such as inflation, increasing interest rates, instability in the banking system or financial markets, changes in the labor markets, and political, economic and social instability, such as war in Israel and the Ukraine or pandemics such as COVID 19, in particular as such changes impact consumer discretionary spending.
In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by factors beyond our and these providers’ control, including inclement weather, natural disasters, fire, flood, power loss, earthquakes, pandemics, acts of war or terrorism or other events specifically impacting our or other shipping partners, such as labor disputes, financial difficulties, system failures and other disruptions to the operations of the shipping companies on which we rely.
In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by factors beyond our and these providers’ control, including inclement weather, natural disasters, fire, flood, power loss, earthquakes, pandemics, acts of war or terrorism or other events specifically impacting our or 13 Table of Contents other shipping partners, such as labor disputes, financial difficulties, system failures and other disruptions to the operations of the shipping companies on which we rely.
Some of the factors that may negatively influence consumer spending include high levels of unemployment; higher consumer debt levels; reductions in net worth, declines in asset values, and related market uncertainty; home foreclosures and reductions in home values; fluctuating interest rates and credit availability; bank failures; global pandemics, including the COVID-19 pandemic and the loosening of restrictions as the pandemic conditions improve; fluctuating fuel and other energy costs; fluctuating commodity prices; and the high rate of inflation and general uncertainty regarding the overall future political and economic environment.
Some of the factors that may negatively influence consumer spending include high levels of unemployment; higher consumer debt levels; reductions in net worth, declines in asset values, and related market uncertainty; home foreclosures and reductions in home values; fluctuating interest rates and credit availability; bank failures; global pandemics, and the loosening of restrictions as the pandemic conditions improve; fluctuating fuel and other energy costs; fluctuating commodity prices; and the high rate of inflation and general uncertainty regarding the overall future political and economic environment.
If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card payments 15 Table of Contents from customers or facilitate other types of online payments.
If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card payments from customers or facilitate other types of online payments.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity as of the date of the financial statements, and the amount of revenue and expenses, during the periods presented, that are not readily apparent from other sources.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity as of the date of the financial statements, and the amount of revenue 19 Table of Contents and expenses, during the periods presented, that are not readily apparent from other sources.
While it is difficult at this time to predict how this 22 Table of Contents provision may adversely impact our stockholders, it is possible that we could not be offered the opportunity to participate in a future transaction that might have resulted in a financial benefit to us, which could, in turn, result in a material adverse effect on our business, financial condition, results of operations, or prospects.
While it is difficult at this time to predict how this provision may adversely impact our stockholders, it is possible that we could not be offered the opportunity to participate in a future transaction that might have resulted in a financial benefit to us, which could, in turn, result in a material adverse effect on our business, financial condition, results of operations, or prospects.
While we have some limited disaster recovery arrangements in place, our preparations may not be adequate to account for disasters or similar events that may occur in the future and may not 16 Table of Contents effectively permit us to continue operating in the event of any problems with respect to our systems or those of our third-party data centers or any other third-party facilities.
While we have some limited disaster recovery arrangements in place, our preparations may not be adequate to account for disasters or similar events that may occur in the future and may not effectively permit us to continue operating in the event of any problems with respect to our systems or those of our third-party data centers or any other third-party facilities.
For example, the State of California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which requires companies that process information on California residents make new disclosures to customers about the collection of their data, use and sharing practices, and allow customers to opt out of certain data sharing with third parties and provides a new cause of action for data breaches.
For example, the State of California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which requires companies that 17 Table of Contents process information on California residents make new disclosures to customers about the collection of their data, use and sharing practices, and allow customers to opt out of certain data sharing with third parties and provides a new cause of action for data breaches.
Any litigation or other administrative, regulatory, or legal proceedings against us could result in substantial costs, and divert management’s attention and resources. Although 19 Table of Contents we generally maintain insurance to mitigate certain costs, there can be no assurance that costs associated with lawsuits or other legal proceedings will not exceed the limits of our insurance policies.
Any litigation or other administrative, regulatory, or legal proceedings against us could result in substantial costs, and divert management’s attention and resources. Although we generally maintain insurance to mitigate certain costs, there can be no assurance that costs associated with lawsuits or other legal proceedings will not exceed the limits of our insurance policies.
If we fail to effectively meet the challenges described above our business and future operating results will be materially adversely affected. Risks Related to the Macro-Economic Environment and the COVID-19 Pandemic We rely on consumer discretionary spending, which may be adversely affected by economic downturns and other macroeconomic conditions or trends. Our business depends on consumer discretionary spending.
If we fail to effectively meet the challenges described above our business and future operating results will be materially adversely affected. Risks Related to the Macro-Economic Environment We rely on consumer discretionary spending, which may be adversely affected by economic downturns and other macroeconomic conditions or trends. Our business depends on consumer discretionary spending.
Our operations, including our manufacturing partners, are subject to regulation by the Occupational Safety and Health Administration, the Food and Drug Administration, the Department of Agriculture and by various other federal, state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising, labeling and export of our products, including food safety standards.
Our operations, including our manufacturing partners, are subject to regulation by the Occupational Safety and Health Administration, the Food 18 Table of Contents and Drug Administration, the Department of Agriculture and by various other federal, state, local and foreign authorities regarding the processing, packaging, storage, distribution, advertising, labeling and export of our products, including food safety standards.
We face a number of risks relating to these providers, including: • our suppliers, manufacturers or logistics partners could be impacted by a natural disaster, an epidemic such as the COVID-19 pandemic, or other interruptions at a particular location; • our manufacturers and suppliers are primarily located in Asia, which introduces risks related to geopolitical developments and differences in regulatory standards and legal systems; • our existing supply channels may not be able to satisfy a significant increase in demand for our products, or we may need to replace an existing manufacturer or supplier.
We face a number of risks relating to these providers, including: • our suppliers, manufacturers or logistics partners could be impacted by a natural disaster, an epidemic or pandemic, or other interruptions at a particular location; • our manufacturers and suppliers are primarily located in Asia, which introduces risks related to geopolitical developments and differences in regulatory standards and legal systems; • our existing supply channels may not be able to satisfy a significant increase in demand for our products, or we may need to replace an existing manufacturer or supplier.
We sell some of our products through a network of retailers and e-tailers (in addition to our direct sales channel). Our products are available through Amazon.com as well as in retail locations including Target, Petco, PetSmart, Costco, Walmart, Kroger and CVS, and many others.
We sell some of our products through a network of retailers and e-tailers (in addition to our direct sales channel). Our products are available through Amazon.com as well as in retail locations including Target, Petco, 11 Table of Contents PetSmart, Costco, Walmart, Kroger and CVS, and many others.
Any decline in consumer 12 Table of Contents discretionary spending could negatively impact our revenue, which could have a material adverse effect on our business, financial condition and results of operations. We may continue to be impacted by the COVID-19 global pandemic.
Any decline in consumer discretionary spending could negatively impact our revenue, which could have a material adverse effect on our business, financial condition and results of operations. We may continue to be impacted by the COVID-19 global pandemic.
Limitations on our use of “cookies” may impact our ability to cost-effectively acquire new customers. Federal and state governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes.
Limitations on our use of “cookies” may impact our ability to cost-effectively acquire new customers. 15 Table of Contents Federal and state governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes.
Our internal 20 Table of Contents systems and tools have a number of limitations, and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our key performance indicators, including the metrics or estimates that we publicly disclose.
Our internal systems and tools have a number of limitations, and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our key performance indicators, including the metrics or estimates that we publicly disclose.
If we cannot raise funds on acceptable terms, we may be forced to raise funds on undesirable terms, or 21 Table of Contents our business may contract or we may be unable to grow our business or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition, and results of operations.
If we cannot raise funds on acceptable terms, we may be forced to raise funds on undesirable terms, or our business may contract or we may be unable to grow our business or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition, and results of operations.
Our issuance of additional shares of common stock or other 23 Table of Contents equity securities of equal or senior rank would dilute our existing shareholders and may cause the market price of our common stock to decline. Risks Related to the 2025 Convertible Notes Our obligation to redeem the 2025 Convertible Notes may not protect holders.
Our issuance of additional shares of common stock or other equity securities of equal or senior rank would dilute our existing shareholders and may cause the market price of our common stock to decline. Risks Related to the 2025 Convertible Notes Our obligation to redeem the 2025 Convertible Notes may not protect holders.
In addition, we may be unable to obtain or utilize on terms that are favorable to us, or at all, licenses or other 17 Table of Contents rights with respect to intellectual property we do not own. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.
In addition, we may be unable to obtain or utilize on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual property we do not own. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.
We also anticipate the need to add additional fulfillment center and shipping capacity as our business continues to grow. We may not be able to locate suitable facilities or services on commercially acceptable terms in 14 Table of Contents accordance with our expansion plans, or recruit qualified managerial and operational supply personnel to support our expansion plans.
We also anticipate the need to add additional fulfillment center and shipping capacity as our business continues to grow. We may not be able to locate suitable facilities or services on commercially acceptable terms in accordance with our expansion plans, or recruit qualified managerial and operational supply personnel to support our expansion plans.
We may be unable to maintain a high level of customer engagement or protect our brand and reputation. Our strong customer relationships and our brand and reputation are the basis for the high-level customer engagement that drives increases to our average order volume and our overall growth.
We may be unable to maintain a high level of customer engagement or protect our brand and reputation. 10 Table of Contents Our strong customer relationships and our brand and reputation are the basis for the high-level customer engagement that drives increases to our average order volume and our overall growth.
No market for the 2025 Convertible Notes exists and may not develop. Even if a market develops, it may not persist. We do not intend to apply for listing of the 2025 Convertible Notes on any securities exchange or other market.
No market for the 2025 Convertible Notes exists and may not develop. Even if a market develops, it may not persist. We do not intend to apply for listing of the 2025 Convertible Notes on any securities exchange or other 23 Table of Contents market.
Our success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled personnel and senior management. 11 Table of Contents Our ability to maintain our competitive position is largely dependent on the contributions of our senior management and other key personnel.
Our success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled personnel and senior management. Our ability to maintain our competitive position is largely dependent on the contributions of our senior management and other key personnel.
The techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target, and we, and our vendors, may be unable to anticipate these techniques or to implement adequate preventative measures.
The techniques used to obtain unauthorized access or to sabotage 16 Table of Contents systems change frequently and generally are not identified until they are launched against a target, and we, and our vendors, may be unable to anticipate these techniques or to implement adequate preventative measures.
The dog products and services retail industry, in particular on the Internet, is highly competitive and we expect this competition to continue to increase. We compete with pet product retail stores, supermarkets, warehouse clubs and other mass and general retail and online merchandisers.
The dog products and services retail industry, in particular on the Internet, is highly competitive and we expect this competition to continue to increase. We compete with pet product retail stores, supermarkets, warehouse clubs 14 Table of Contents and other mass and general retail and online merchandisers.
We also have the ability to issue equity awards that are convertible into shares of our common stock under our 2021 Equity Incentive Plan and under our Employee Stock Purchase Plan, see Note 7 — Debt, and Note 8 — Stock-Based Compensation Plans, to our consolidated financial statements set forth in this annual report on Form 10-K.
We also have the ability to issue equity awards that are convertible into shares of our common stock under our 2021 Equity Incentive Plan and under our Employee Stock Purchase Plan, see Note 6 — Debt, and Note 9 — Stock-Based Compensation Plans, to our consolidated financial statements set forth in this quarterly report on Form 10-K.
We also compete with a number of specialty dog supply stores and independent dog stores, catalog retailers and other specialty e-tailers. As we expand our offerings, such as our BARK Food line, we will face additional competition.
We also compete with a number of specialty dog supply stores and independent dog stores, catalog retailers and other specialty e-tailers. As we expand our offerings, such as consumables and BARK Air, we will face additional competition.
Significant assumptions and estimates used in preparing our consolidated financial statements include those related to determination of fair value of the Company’s allowance for uncollectible accounts receivable, excess and obsolete inventory reserve, stock-based compensation, fair value of right-of-use assets and the valuation of embedded derivatives.
Significant assumptions and estimates used in preparing our consolidated financial statements include those related to determination of fair value of the Company’s allowance for uncollectible accounts receivable, excess and obsolete inventory reserve, stock-based compensation, stand-alone selling price of Direct to Consumer offerings, the fair value of right-of-use assets, and the valuation of embedded derivatives.
These provisions include: a classified board; removal of directors only for cause or a super majority vote; super majority vote required to amend of certain provisions of our certificate of incorporation and any provisions of our bylaws; issuance of “blank check” preferred stock authorized; stockholders may not call special stockholder meetings; stockholder action by written consent prohibited; indemnification of our director and officers; Board of Directors is expressly authorized to make, alter, or repeal our bylaws; and advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
These provisions include: a classified board; removal of directors only for cause or a super majority vote; super majority vote required to amend of certain provisions of our certificate of incorporation and any provisions of our bylaws; issuance of “blank check” preferred stock authorized; stockholders may not call special stockholder meetings; stockholder action by written consent prohibited; indemnification of our director and officers; Board of Directors is expressly authorized to make, alter, or repeal our bylaws; and advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. 22 Table of Contents Substantially all disputes between BARK and our stockholders are subject to exclusive forum provisions.
See "Cautionary Note Regarding Forward-Looking Statements.” Risks Related to Our Strategy Our future operating performance is subject to numerous challenges and uncertainties. Our recent rapid growth may not be indicative of our future operating performance, which will depend on our ability to leverage our competitive strengths and execute on our strategy.
See also "Cautionary Note Regarding Forward-Looking Statements.” 9 Table of Contents Risks Related to Our Strategy Our future operating performance is subject to numerous challenges and uncertainties. Our past operating performance may not be indicative of our future operating performance, which will depend on our ability to leverage our competitive strengths and execute on our strategy.
In addition, our future success depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. The market for such positions is competitive, in particular, due to the ongoing labor market effects or distortions from the COVID-19 pandemic. Qualified individuals are in high demand and we may incur significant costs to attract and retain them.
In addition, our future success depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. The market for such positions is competitive, in particular, due to the ongoing labor market effects or continuing distortions from the COVID-19 pandemic.
Foreign labor laws, standards and customs may vary greatly from those in the U.S. The U.S. or foreign countries could enact legislation or impose regulations, including unfavorable labor regulations, tax policies or economic sanctions that could have an adverse impact on our ability to conduct our business in the countries in which we have relationships.
The U.S. or foreign countries could enact legislation or impose regulations, including unfavorable labor regulations, tax policies or economic sanctions that could have an adverse impact on our ability to conduct our business in the countries in which we have relationships.
In addition, the loss of any of our senior management or other key employees or our inability to recruit and develop mid-level managers could impede our ability to execute our business plan and we may be unable to find adequate replacements.
Qualified individuals are in high demand and we may incur significant costs to attract and retain them. In addition, the loss of any of our senior management or other key employees or our inability to recruit and develop mid-level managers could impede our ability to execute our business plan and we may be unable to find adequate replacements.
Further, due to the effects of the COVID-19 pandemic, there may continue to be disruptions and delays in national, regional and local shipping, which may negatively impact our customers’ experience.
Further, there may continue to be disruptions and delays in national, regional and local shipping, which may negatively impact our customers’ experience.
As a result, it is difficult to predict the magnitude or scope of the adverse impacts that these effects may have directly, or indirectly, on our business, operating results and financial condition in the future. Risks Related to our Manufacturing, Inventory and Supply Chain Our business critically relies on a limited number of suppliers, manufacturers, and logistics partners.
As 12 Table of Contents a result, it is difficult to predict the magnitude or scope of the adverse impacts that these effects may have directly, or indirectly, on our business, operating results and financial condition in the future.
We rely on a limited number of contract manufacturers, suppliers and logistics providers to manufacture and transport our products. We do not currently have alternative or replacement providers and we do not generally maintain long-term supply contracts with any of these providers.
We do not currently have alternative or replacement providers and we do not generally maintain long-term supply contracts with any of these providers.
In addition, failure of our vendors to comply with 18 Table of Contents applicable laws and regulations and contractual requirements could lead to litigation against us, resulting in increased legal expenses.
In addition, failure of our vendors to comply with applicable laws and regulations and contractual requirements could lead to litigation against us, resulting in increased legal expenses. Furthermore, the failure of any vendors to provide safe and humane factory conditions at their facilities could damage our reputation with our customers and result in legal claims against us.
Our future growth and operating performance must eventually offset our operating losses or we may not be able to achieve or sustain profitability. We may fail to manage or integrate acquisitions of, or investments in, new or complementary businesses, facilities, technologies or products, or through strategic alliances.
We may fail to manage or integrate acquisitions of, or investments in, new or complementary businesses, facilities, technologies or products, or through strategic alliances.
Furthermore, the failure of any vendors to provide safe and humane factory conditions at their facilities could damage our reputation with our customers and result in legal claims against us. Our international relationships also require us to overcome logistical and other challenges based on differing languages, cultures, legal and regulatory schemes and time zones.
Our international relationships also require us to overcome logistical and other challenges based on differing languages, cultures, legal and regulatory schemes and time zones. Foreign labor laws, standards and customs may vary greatly from those in the U.S.
Removed
Substantially all disputes between BARK and our stockholders are subject to exclusive forum provisions.
Added
Risks Related to our Manufacturing, Inventory and Supply Chain Our business critically relies on a limited number of suppliers, manufacturers, and logistics partners. We rely on a limited number of contract manufacturers, suppliers and logistics providers to manufacture and transport our products.
Added
In particular, we intend to continue to invest substantial resources to grow and diversify our product offerings and in marketing to acquire new 20 Table of Contents customers.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth the location, use and size of certain of our properties as of March 31, 2023: Location Use Ownership Status Approximate Area in Square Feet New York, New York Office Space Leased 26,300 New York, New York Office Space Leased 51,220 New York, New York Photo Studio Leased 1,850 Columbus, Ohio Warehouse and distribution Center Leased 97,934 Columbus, Ohio Office Space Leased 12,978 Columbus, Ohio Office Space Leased 34,238 Hebron, Kentucky Warehouse and distribution Center Leased 201,600 Las Vegas, Nevada Warehouse and distribution Center Leased 400,593
Biggest changeThe following table sets forth the location, use and size of certain of our properties as of May 31, 2024: Location Use Ownership Status Approximate Area in Square Feet New York, New York Office Space Leased 5,500 New York, New York Office Space Leased 51,220 New York, New York Photo Studio Leased 1,850 Columbus, Ohio Warehouse and distribution Center Leased 97,934 Columbus, Ohio Office Space Leased 34,238 Hebron, Kentucky Warehouse and distribution Center Leased 201,600 Las Vegas, Nevada Warehouse and distribution Center Leased 400,593

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor this same reason, we cannot currently estimate the loss or the range of possible losses we may experience in connection with this litigation. In addition, we are from time to time subject to, and are presently involved in, litigation and other legal proceedings in the ordinary course of business.
Biggest changeAt this time, the Company is not able to quantify any potential liability in connection with this litigation because the case is in its early stages. In addition, we are from time to time subject to, and are presently involved in, litigation and other legal proceedings in the ordinary course of business.
Our view and estimate related to these matters may change in the future, as new events and circumstances arise and as the matters continue to develop. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 Table of Contents PART II.
Our views and estimates related to these matters may change in the future, as new events and circumstances arise and as the matters continue to develop. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 26 Table of Contents PART II.
Removed
ITEM 3. LEGAL PROCEEDINGS 24 Table of Contents On September 1, 2022, plaintiff Amber Farmer filed a complaint against BarkBox, Inc., in the U.S. District Court for the Central District of California. Farmer v. BarkBox, Inc., No. 2:22-cv-06242 (C.D. Cal.).
Added
ITEM 3. LEGAL PROCEEDINGS 25 Table of Contents On March 20, 2024, three alleged shareholders filed a putative class action complaint in the lawsuit styled Kenville v. Northern Star Sponsor LLC, et al., Case No. 2024-276, which is pending in the Delaware Court of Chancery.
Removed
The plaintiff alleges that BarkBox violates California’s Automatic Renewal Law, Unfair Competition Law, and Consumers Legal Remedies Act by failing to adequately disclose the automatic renewal of BarkBox’s subscription plans. The plaintiff seeks to represent a class containing all consumers who purchased a subscription from BarkBox in California.
Added
The complaint is brought against (a) certain officers and directors of Northern Star Acquisition Corp. at the time of its proposed acquisition of Legacy BARK, (b) Northern Star Sponsor, LLC, and (c) two of the founders of Legacy BARK.
Removed
We filed a Motion to Dismiss and Motion to Compel Arbitration on November 4, 2022. While we intend to vigorously defend against this litigation, this case is at a very early stage and there can be no assurance that we will be successful in our defense.
Added
The alleged class consists of Company stockholders who held stock as of the redemption deadline and who elected not to redeem all or some of their stock, and the claims alleged are for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and unjust enrichment.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 25 Part II. 26 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. [Reserved] 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 26 Part II. 27 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. [Reserved] 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 49 Item 8.
Financial Statements and Supplementary Data 50 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 35 Item 9A. Controls and Procedures 36
Financial Statements and Supplementary Data 49 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 35 Item 9A. Controls and Procedures 36 Item 9B. Other Information 36

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities None. 26 Table of Contents Performance Graph The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s (“S&P”) 500 index and the S&P Retail Internet Select Industry index.
Biggest changeA summary of our repurchases of common stock is as follows: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value that May Yet be Purchased Under the Plans or Programs (in thousands) January 1-31, 2024 — $— — $— February 1-29, 2024 1,575,905 1.12 1,575,905 1,587 March 1-31, 2024 — — — — Total 1,575,905 $1.12 1,575,905 $1,587 27 Table of Contents Performance Graph The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s (“S&P”) 500 index and the S&P Retail Internet Select Industry index.
Dividend Policy We have never declared or paid any cash dividends on our common stock to date. We may retain future earnings, if any, for future operations, expansion and debt repayment and we do not anticipate declaring or paying any cash dividends in the foreseeable future.
Dividend Policy We have not declared or paid any cash dividends on our common stock to date. We may retain future earnings, if any, for future operations, expansion and debt repayment and we do not anticipate declaring or paying any cash dividends in the foreseeable future.
Payment of cash dividends, if any, in the future will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, results of operation, contractual restrictions and other factors our Board of Directors may deem relevant. In addition our ability to pay dividends is limited by covenants in our existing outstanding indebtedness.
Payment of cash dividends, if any, in the future will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions and other factors our Board of Directors may deem relevant. In addition our ability to pay dividends is limited by covenants in our existing outstanding indebtedness.
The graph assumes an initial investment of $100 in our common stock at the market close on December 18, 2020, which was the first day on which our common stock commenced trading on its own through March 31, 2023 the last business day of our fiscal year.
The graph assumes an initial investment of $100 in our common stock at the market close on December 18, 2020, which was the first day on which our common stock commenced trading on its own through March 31, 2024 the last business day of our fiscal year.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock and warrants to purchase common stock are traded on the NYSE under the symbols “BARK” and “BARK WS,” respectively. Holders As of May 29, 2023 there were approximately 107 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock and warrants to purchase common stock are traded on the New York Stock Exchange under the symbols “BARK” and “BARK WS,” respectively. Holders As of May 29, 2024 there were approximately 104 stockholders of record.
The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in “street name” by banks, brokers and other financial institutions. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Added
Recent Sales of Unregistered Securities and Use of Proceeds None. Issuer Purchases of Equity Securities During the three months ended March 31, 2024, we repurchased $1.8 million of common stock, or approximately 1.6 million shares, under our repurchase program. As a result, $1.6 million remained available under the current authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+27 added−50 removed55 unchanged
Biggest changeFiscal Year Ended March 31, 2023 2022 2021 2023 vs 2022 2022 vs 2021 (in thousands) Consolidated Statement of Operation Data: Revenue Direct to Consumer $ 471,994 $ 448,074 $ 333,970 5.3 % 34.2 % Commerce 63,321 59,332 44,634 6.7 % 32.9 % Total revenue 535,315 507,406 378,604 5.5 % 34.0 % Cost of revenue Direct to Consumer 186,666 187,991 128,044 (0.7) % 46.8 % Commerce 40,534 37,309 24,620 8.6 % 51.5 % Total cost of revenue 227,200 225,300 152,664 0.8 % 47.6 % Gross profit 308,115 282,106 225,940 9.2 % 24.9 % Operating expenses: Advertising and marketing 68,807 74,417 67,029 (7.5) % 11.0 % General and administrative 303,139 301,870 179,510 0.4 % 68.2 % Total operating expenses 371,946 376,287 246,539 (1.2) % 52.6 % Loss from operations (63,831) (94,181) (20,599) (32.2) % 357.2 % Interest expense (4,372) (5,464) (10,923) (20.0) % -50.0 % Other income (expense), net 6,684 31,346 131 N/M N/M Net loss before income taxes (61,519) (68,299) (31,391) (9.9) % 117.6 % Provision for income taxes — — — 0.0 % 0.0 % Net loss $ (61,519) $ (68,299) $ (31,391) (9.9) % 117.6 % N/M means not meaningful. 35 Table of Contents Comparison of the Fiscal Years Ended March 31, 2023 and March 31, 2022 Revenue Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Revenue Direct to Consumer 471,994 448,074 23,920 5.3 % Commerce 63,321 59,332 3,989 6.7 % Total revenue $ 535,315 $ 507,406 $ 27,909 5.5 % Percentage of Revenue Direct to Consumer 88.2 % 88.3 % Commerce 11.8 % 11.7 % Direct to Consumer revenue increased by $23.9 million, or 5.3% , for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
Biggest changeFiscal Year Ended March 31, 2024 2023 2022 2024 vs 2023 2023 vs 2022 (in thousands) Consolidated Statement of Operation Data: Revenue Direct to Consumer $ 436,446 $ 471,994 $ 448,074 (7.5) % 5.3 % Commerce 53,738 63,321 59,332 (15.1) % 6.7 % Total revenue 490,184 535,315 507,406 (8.4) % 5.5 % Cost of revenue Direct to Consumer 157,578 186,666 187,991 (15.6) % (0.7) % Commerce 30,454 40,534 37,309 (24.9) % 8.6 % Total cost of revenue 188,032 227,200 225,300 (17.2) % 0.8 % Gross profit 302,152 308,115 282,106 (1.9) % 9.2 % Operating expenses: Advertising and marketing 79,282 68,807 74,417 15.2 % (7.5) % General and administrative 268,390 303,139 301,870 (11.5) % 0.4 % Total operating expenses 347,672 371,946 376,287 (6.5) % (1.2) % Loss from operations (45,520) (63,831) (94,181) (28.7) % (32.2) % Interest income 7,533 1,056 — 613.4 % N/M Interest expense (4,351) (5,428) (5,464) (19.8) % (0.7) % Other income, net 5,328 6,684 31,346 (20.3) % (78.7) % Net loss before income taxes (37,010) (61,519) (68,299) (39.8) % (9.9) % Provision for income taxes — — — 0.0 % 0.0 % Net loss $ (37,010) $ (61,519) $ (68,299) (39.8) % (9.9) % N/M means not meaningful. 33 Table of Contents Comparison of the Fiscal Years Ended March 31, 2024 and March 31, 2023 Revenue Fiscal Year Ended March 31, 2024 2023 $ Change % Change ( in thousands) Revenue Direct to Consumer 436,446 471,994 (35,548) (7.5) % Commerce 53,738 63,321 (9,583) (15.1) % Total revenue $ 490,184 $ 535,315 $ (45,131) (8.4) % Percentage of Revenue Direct to Consumer 89.0 % 88.2 % Commerce 11.0 % 11.8 % Direct to Consumer revenue decreased by $35.5 million, or 7.5% , for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023.
Some of the limitations of the Non-GAAP Measures include that (1) the measures do not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect these capital expenditures, (3) Adjusted EBITDA and Adjusted EBITDA Margin do not consider the impact of stock-based compensation expense, which is an ongoing expense for our company, (4) Adjusted EBITDA, (5) Free cash flow does not represent the total residual cash flow available for discretionary purposes and does not reflect our future contractual commitments. and Adjusted EBITDA Margin do not reflect other non-operating expenses, including interest expense.
Some of the limitations of the Non-GAAP Measures include that (1) the measures do not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect these capital expenditures, (3) Adjusted EBITDA and Adjusted EBITDA Margin do not consider the impact of stock-based compensation expense, which is an ongoing expense for our company, (4) Adjusted EBITDA and Adjusted EBITDA Margin do not reflect other non-operating expenses, including interest expense, and (5) Free cash flow does not represent the total residual cash flow available for discretionary purposes and does not reflect our future contractual commitments.
Gross Profit Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Gross Profit Direct to Consumer $ 285,328 $ 260,083 $ 25,245 9.7 % Commerce 22,787 22,023 764 3.5 % Total gross profit $ 308,115 $ 282,106 $ 26,009 9.2 % Percentage of revenue 57.6 % 55.6 % Direct to Consumer and Commerce gross profit increased by $25.2 million and $0.8 million, respectively, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022, driven by the $27.9 million increase in revenue during the period, lower costs from our suppliers and a decrease in inventory write-down charges .
Gross Profit Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Gross Profit Direct to Consumer $ 285,328 $ 260,083 $ 25,245 9.7 % Commerce 22,787 22,023 764 3.5 % Total gross profit $ 308,115 $ 285,106 $ 26,009 9.2 % Percentage of revenue 57.6 % 55.6 % Direct to Consumer and Commerce gross profit increased by $25.2 million and $0.8 million, respectively, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022, driven by the $27.9 million increase in revenue during the period, lower costs from our suppliers and a decrease in inventory write-down charges.
Revenue related to food.BARK.co is recognized at a point in time, as control is transferred to the customer upon each delivery. Treats — Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our consumables website. Many of our treats feature monthly themes, similar to our toys.
Revenue related to BARK.co is recognized at a point in time, as control is transferred to the customer upon each delivery. Treats — Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our consumables website. Many of our treats feature monthly themes, similar to our toys.
Since our founding in 2011, we have happily served millions of dogs and their people. We are a vertically integrated, omnichannel brand serving dogs across two key categories: toys & accessories and consumables. All of our products are designed, developed, and branded BARK.
Since our founding in 2011, we have happily served millions of dogs and their people. We are a vertically integrated, omnichannel brand serving dogs across two key categories: toys & accessories and consumables. All of our products are designed, developed, and branded by BARK.
We expect to make additional investments in marketing to acquire new customers. 28 Table of Contents Expansion of new offerings Another key factor in our future performance is our ability to increase our average order value (“AOV”), which involves introducing new products into our portfolio.
We expect to make additional investments in marketing to acquire new customers. 29 Table of Contents Expansion of new offerings Another key factor in our future performance is our ability to increase our average order value (“AOV”), which involves introducing new products into our portfolio.
See Note 2, “Summary of Significant Accounting Policies,” in our audited consolidated financial statements for the fiscal years ended March 31, 2023, 2022, and 2021 included elsewhere in this Annual Report on Form 10-K.
See Note 2, “Summary of Significant Accounting Policies,” in our audited consolidated financial statements for the fiscal years ended March 31, 2024, 2023, and 2022 included elsewhere in this Annual Report on Form 10-K.
This increase was primarily driven by a $2.18 or 7.3% increase in A verage Order Value, due to increased shipping fees and cross selling offset by a 1.8% or 0.3 million decrease in Subscription Shipments during the period.
This increase was primarily driven by a $2.18 or 7.3% increase in Average Order Value, due to increased shipping fees and cross selling offset by a 1.8% or 0.3 million decrease in Subscription Shipments during the period.
Management determined that the probability that the contingent events will occur was near zero at inception and has remained near zero as of March 31, 2023. Therefore, the Company did not record a derivative liability related to these features as of March 31, 2023.
Management determined that the probability that the contingent events will occur was near zero at inception and has remained near zero as of March 31, 2024. Therefore, the Company did not record a derivative liability related to these features as of March 31, 2024.
The increase in Direct to Consumer gross profit is primarily attributable to higher subscription AOV, lower costs from our suppliers and a decrease in inventory write-down expenditures. 36 Table of Contents Operating Expenses General and Administrative Expense Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) General and administrative $ 303,139 $ 301,870 $ 1,269 0.4 % Percentage of revenue 56.6 % 59.5 % General and administrative expense increased by $1.3 million, or 0.4%, f or the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
The increase in Direct to Consumer gross profit is primarily attributable to higher subscription AOV, lower costs from our suppliers and a decrease in inventory write-down expenditures. 37 Table of Contents Operating Expenses General and Administrative Expense Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) General and administrative $ 303,139 $ 301,870 $ 1,269 0.4 % Percentage of revenue 56.6 % 59.5 % General and administrative expense increased by $1.3 million, or 0.4%, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
For the fiscal year ended March 31, 2022, net cash provided by financing activities was $355.5 million, primarily due to proceeds of $227.1 million p roceeds from the Merger and proceeds from the PIPE of $200.0 million.
For the fiscal year ended March 31, 2022, net cash provided by financing activities was $355.5 million, primarily due to proceeds of $227.1 million proceeds from the Merger and proceeds from the PIPE of $200.0 million.
The 2025 Convertible Notes contain call and put options to be settled in cash contingent upon the occurrence of a change of control and a default interest rate increase of 3.0% applicable upon the occurrence of an event of default 44 Table of Contents that when evaluated under the guidance of ASC 815, Derivatives and Hedging , are embedded derivatives requiring bifurcation at fair value.
The 2025 Convertible Notes contain call and put options to be settled in cash contingent upon the occurrence of a change of control and a default interest rate increase of 3.0% applicable upon the occurrence of an event of default that when evaluated under the guidance of ASC 815, Derivatives and Hedging , are embedded derivatives requiring bifurcation at fair value.
Off-Balance Sheet Arrangements 47 Table of Contents We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
The audited consolidated financial statements as of March 31, 2023 and 2022 and for the fiscal years ended March 31, 2023, 2022 and 2021, respectively, present the financial position and results of operations and cash flows of BARK, Inc. and its wholly-owned subsidiaries.
The audited consolidated financial statements as of March 31, 2024 and 2023 and for the fiscal years ended March 31, 2024, 2023 and 2022, respectively, present the financial position and results of operations and cash flows of BARK, Inc. and its wholly-owned subsidiaries.
As a result, we were required to adopt new or revised accounting standards as required by public companies, including those standards which we had previously deferred pursuant to the JOBS Act. Additionally, we are no longer able to take advantage of the reduced regulatory and reporting requirements of emerging growth companies. 49 Table of Contents
As a result, we were required to adopt new or revised accounting standards as required by public companies, 47 Table of Contents including those standards which we had previously deferred pursuant to the JOBS Act. Additionally, we are no longer able to take advantage of the reduced regulatory and reporting requirements of emerging growth companies. 48 Table of Contents
General and administrative expenses also includes fees charged by third parties that provide payment processing services, office expense, including rent, insurance and professional service fees. 33 Table of Contents Advertising and Marketing Advertising and marketing expense consists primarily of internet advertising, promotional items, agency fees, other marketing costs and compensation and benefits expenses, including stock-based compensation expense, for employees engaged in advertising and marketing.
General and administrative expenses also includes fees charged by third parties that provide payment processing services, office expense, including rent, insurance and professional service fees. Advertising and Marketing Advertising and marketing expense consists primarily of internet advertising, promotional items, agency fees, other marketing costs and compensation and benefits expenses, including stock-based compensation expense, for employees engaged in advertising and marketing.
Because of these limitations, when evaluating our performance, you should consider the Non-GAAP Measures alongside other financial measures, including our net income (loss) and other results stated in accordance with U.S. GAAP. The following table presents a reconciliation of Adjusted net loss to net loss, the most directly comparable financial measure stated in accordance with U.S.
Because of these limitations, when evaluating our performance, you should consider the Non-GAAP Measures alongside other financial measures, including our net loss and other results stated in accordance with U.S. GAAP. 40 Table of Contents The following table presents a reconciliation of Adjusted net loss to net loss, the most directly comparable financial measure stated in accordance with U.S.
These include all orders across all of our product categories, regardless of whether they are purchased on a subscription, auto-ship, or one-off basis. Average Order Value Average Order Value (“AOV”) is Direct to Consumer revenue for the period divided by Total Orders for the same period.
These include all orders across all of our product categories, regardless of whether they are purchased on a subscription, auto-ship, or one-off basis. 30 Table of Contents Average Order Value Average Order Value (“AOV”) is Direct to Consumer revenue for the period divided by Total Orders for the same period.
In particular, we believe that the use of the Non-GAAP Measures are helpful to our investors as they are measures used by management in 41 Table of Contents assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.
In particular, we believe that the use of the Non-GAAP Measures are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.
Other Income (Expense), Net Other income (expense), net, primarily consists of changes in the fair value of our warrant liabilities and loss on extinguishment of debt. 34 Table of Contents Results of Operations We operate in two reportable segments to reflect the way our CODM reviews and assesses the performance of the business.
Other Income, Net Other income, net, primarily consists of changes in the fair value of our warrant liabilities and loss on extinguishment of debt. 32 Table of Contents Results of Operations We operate in two reportable segments to reflect the way our CODM reviews and assesses the performance of the business.
Over the past two years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. To sell these products, the Company recently launched a new consumables website, food.BARK.co, which contains the majority of its consumables portfolio, all of which can be purchased on a recurring, auto-ship, or one-off basis.
Over the past several years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. To sell these products, the Company recently launched a new website, www.bark.co, which contains the majority of its consumables portfolio, all of which can be purchased on a recurring, auto-ship, or one-off basis.
We leverage an ever-growing collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold direct-to-consumer (“DTC”) and through our network of retail partners, which currently spans over 40,000 doors across the U.S.
We leverage an ever-growing collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold direct-to-consumer (“DTC”) and through our network of retail partners, which currently spans over 40,000 doors nationwide.
The fair value calculation includes Level 3 inputs including the estimated fair value of the Company’s common stock and assumptions regarding the probability that the contingent call or put will be exercised or an event of default will occur.
The fair value calculation includes Level 3 inputs including the estimated fair value of the 43 Table of Contents Company’s common stock and assumptions regarding the probability that the contingent call or put will be exercised or an event of default will occur.
Revenue Recognition Our primary sources of revenue are from sales of toys and accessories and consumables through our Direct to Consumer and Commerce segments. We recognize revenue upon delivery of products and services to our customer, as applicable.
Revenue Recognition 46 Table of Contents Our primary sources of revenue are from sales of toys and accessories and consumables through our Direct to Consumer and Commerce segments. We recognize revenue upon delivery of products and services to our customer, as applicable.
Cash flows provided by (used in) Financing Activities For the fiscal year ended March 31, 2023, net cash used in financing activities was $2.1 million, primarily due to payments for finance lease obligations.
For the fiscal year ended March 31, 2023, net cash used in financing activities was $2.1 million, primarily due to payments for finance lease obligations.
The increase in cash provided by financing activities was partially offset by the repayments of outstanding borrowings on our line of credit of $34.3 million, payments of transaction costs of $25.2 million, p ayment of deferred underwriting fees $8.9 million, and rep ayment of the outstanding Paycheck Protection Program loan of $5.2 million .
The increase in cash provided by financing activities was partially offset by the repayments of outstanding borrowings on our line of credit of $34.3 million, payments of transaction costs of $25.2 million, payment of deferred underwriting fees $8.9 million, and repayment of the outstanding Paycheck Protection Program loan of $5.2 million.
We calculate Adjusted Net Loss as net loss, adjusted to exclude: (1) stock-based compensation expense, (2) change in fair value of warrants and derivatives, (3) sales and use tax expense (income), (4) restructuring charges related to reduction in force payments, (5) executive transition costs, (6) duplicate rent expense incurred as a result of relocating our corporate headquarters, (7) asset impairment charges, (8) transaction costs associated with the Merger, (9) demurrage fees related to freight, and (10) other items (as defined below).
We calculate Adjusted Net Loss as net loss, adjusted to exclude: (1) stock-based compensation expense, (2) change in fair value of warrants and derivatives, (3) sales and use tax (income) expense, (4) restructuring charges related to reduction in force payments, (5) (gain) loss on extinguishment of debt, (6) duplicate rent expense incurred as a result of relocating our corporate headquarters, (7) asset impairment charges, (8) transaction costs associated with the Merger, (9) demurrage fees related to freight, (10) technology transformations and (11) other items (as defined below).
Cash Flows Comparison of the Fiscal Years Ended March 31, 2023, 2022 and 2021.
Cash Flows Comparison of the Fiscal Years Ended March 31, 2024, 2023 and 2022.
Subscription revenue is recognized at a point in time as control is transferred to the subscriber upon delivery of each monthly box. During the life of their subscription, we offer customers incremental products via ATB, which enables us to cross-sell customers into our full portfolio of products, including kibble, treats, toppers, dental and more.
During the life of their subscription, we offer customers incremental products via ATB, which allows us to cross-sell customers into our full portfolio of products, including kibble, treats, toppers, dental and more. ATB revenue is recognized at a point in time as control is transferred to the customer upon delivery of goods to the subscriber.
As of March 31, 2023, we had fixed lease payment obligations of $53.2 million, with $5.6 million payable within 12 months. 2025 Convertible Notes On November 27, 2020, the Company issued $75.0 million aggregate principal amount of 2025 Convertible Notes (the “2025 Convertible Notes”) to Magnetar Capital, LLC (“Magnetar”) under an indenture, dated as of November 27, 2020, between Legacy BARK and U.S.
As of March 31, 2024, we had fixed lease payment obligations of $47.9 million, with $5.3 million payable within 12 months. 2025 Convertible Notes On November 27, 2020, the Company issued $75.0 million aggregate principal amount of 2025 Convertible Notes (the “2025 Convertible Notes”) to Magnetar Capital, LLC (“Magnetar”) under an indenture, dated as of November 27, 2020, between Legacy BARK and U.S.
In the past, we have experienced increases in inbound freight costs due to the challenges in the import market, as transpacific ships and trade lanes continue to be overburdened with volume and experience a significant shortage of equipment and capacity due to the COVID-19 pandemic and other macroeconomic challenges affecting the global supply chain.
Certain macroeconomic and global events, conditions and challenges In the past, we have experienced increases in inbound freight costs due to the challenges in the import market, as transpacific ships and trade lanes continue to be overburdened with volume and experience a significant shortage of equipment and capacity due to macroeconomic challenges affecting the global supply chain, including, for example, the COVID-19 pandemic.
Non-GAAP Financial Measures We report our financial results in accordance with U.S. GAAP. However, management believes that Adjusted Net Loss, Adjusted Net Loss Margin, Adjusted Net Loss Per Common Share, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow, all non-GAAP financial measures (together the “Non-GAAP Measures”), provide investors with additional useful information in evaluating our performance.
However, management believes that Adjusted Net Loss, Adjusted Net Loss Margin, Adjusted Net Loss Per Common Share, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow, all non-GAAP financial measures (together the “Non-GAAP Measures”), provide investors with additional useful information in evaluating our performance.
Increases in freight costs and supply chain disruptions may continue and could impact our business, in particular as a result of global conditions that are created or driven by market factors or international events, such as increased inflation and the war in the Ukraine.
Increases in freight costs and supply chain disruptions may continue and could impact our business, in particular as a result of global conditions that are created or driven by market factors or international events, such as increased inflation, war in Israel and the Ukraine and rising tensions between the U.S. and China.
We also sell toys through our Commerce segment which is a network of retail partners and online major market places. Today, the commerce segment accounts for 11.8% of total revenue. This distribution channel allows us to reach new customers and introduce them to the BARK brand.
We also sell toys through our Commerce segment which is a network of retail partners and online major market places. This distribution channel allows us to reach new customers and introduce them to the BARK brand.
Deferred revenue is recognized as revenue upon the delivery of the box or product. Inventories 48 Table of Contents Inventories consist principally of finished goods, and represent products available for sale and are accounted for using the first-in, first-out (“FIFO”) method and valued at the lower of cost or net realizable value.
Deferred revenue is recognized as revenue upon the delivery of the box or product. Inventories Inventories consist principally of finished goods, and represent products available for sale and are accounted for using the first-in, first-out (“FIFO”) method and valued at the lower of cost or net realizable value. Inventory costs consist of product and inbound shipping and handling costs.
Cash flows used in Investing Activities For the fiscal year ended March 31, 2023, net cash used in investing activities was $21.1 million, primarily due to capital expenditures for software implementations, new head office leasehold improvements, and warehouse machinery, leasehold improvements and equipment.
For the fiscal year ended March 31, 2023, and 2022, net cash used in investing activities was $21.1 million and $21.2 million, respectively , primarily due to capital expenditures for warehouse machinery, leasehold improvements, equipment, and software implementations.
We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) interest expense (2) depreciation and amortization expense, (3) stock-based compensation expense, (4) change in fair value of warrants and derivatives, (5) sales and use tax expense (income), (6) restructuring charges related to reduction in force payment, (7) executive transition costs (8) duplicate rent expense incurred during the relocation of our corporate headquarters, (9) impairment of assets (10) transaction costs (11) demurrage fees related to freight and (11) other items (as defined below).
We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) interest income, (2) interest expense (3) depreciation and amortization expense, (4) stock-based compensation expense, (5) change in fair value of warrants and derivatives, (6) sales and use tax (income) expense, (7) restructuring charges related to reduction in force 39 Table of Contents payments, (8) (gain) loss on extinguishment of debt, (9) duplicate rent expense incurred during the relocation of our corporate headquarters, (10) impairment of assets (11) transaction costs (12) demurrage fees related to freight, (13) technology transformation and (14) other items (as defined below).
The $172.3 million of net cash used in operating activities consisted of net loss of $68.3 million adjusted for non-cash charges totaling $7.6 million and a net decrease of $111.6 million in our net operating assets and liabilities.
For the fiscal year ended March 31, 2022, net cash used in operating activities was $172.3 million. The $172.3 million of net cash used in operating activities consisted of net loss of $68.3 million adjusted for non-cash charges totaling $7.6 million and a net decrease of $111.6 million in our net operating assets and liabilities.
Toys & Accessories (“toys”)— The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys and treats that are delivered directly to a dog’s home. Customers have the option to subscribe to these products on monthly, six month, or annual basis.
Toys & Accessories (“toys”)— The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys and treats that are delivered directly to a dog’s home.
The following table summarizes our cash flows for the fiscal years ended March 31, 2023, 2022 and 2021: Fiscal Year Ended March 31 2023 2022 2021 (in thousands) Net cash provided by (used in) operating activities $ 4,694 $ (172,338) $ (19,618) Net cash used in investing activities (21,145) (21,172) (4,825) Net cash provided by (used in) financing activities (2,099) 355,458 54,498 Effect of exchange rate changes on cash (62) — — Net increase (decrease) in cash and restricted cash $ (18,612) $ 161,948 $ 30,055 Cash flows provided by (used in) Operating Activities Net cash flows in operating activities represent the cash receipts and disbursements related to our activities other than investing and financing activities.
The following table summarizes our cash flows for the fiscal years ended March 31, 2024, 2023 and 2022: Fiscal Year Ended March 31 2024 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 6,060 $ 4,694 $ (172,338) Net cash used in investing activities (8,831) (21,145) (21,172) Net cash provided by (used in) financing activities (49,615) (2,099) 355,458 Effect of exchange rate changes on cash 24 (62) — Net increase (decrease) in cash and restricted cash $ (52,362) $ (18,612) $ 161,948 Cash flows provided by (used in) Operating Activities Net cash flows in operating activities represent the cash receipts and disbursements related to our activities other than investing and financing activities.
While our kibble can be purchased on an individual basis, we entered this market with a breed-based approach that recommends meal plans consisting of a mix of kibble, toppers, and supplements based on the characteristics and personalities of various dog breeds.
Kibble —We sell a variety of kibble, priced to compete with the mass premium category. While our kibble can be purchased on an individual basis, we entered this market with a breed-based approach that recommends meal plans 31 Table of Contents consisting of a mix of kibble, toppers, and supplements based on the characteristics and personalities of various dog breeds.
These key financial and operating metrics should be read in conjunction with the following discussion of our results of operations and financial condition together with our audited consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K.
These key financial and operating metrics should be read in conjunction with the following discussion of our results of operations and financial condition together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K may not be comparable to similarly titled performance indicators used by other companies.
As of March 31, 2023, there were no borrowings under the Credit Facility. 45 Table of Contents The interest rate for borrowings under the Credit Facility, as amended, is equal to (i) the greater of the prime rate that is published in the Money Rates section of The Wall Street Journal from time to time (the “Prime Rate”) and five and one quarter percent (5.25%), plus (ii) half of one percent (0.50%), per annum.
The interest rate for borrowings under the Credit Facility is equal to (a)(i) the greater of the prime rate that is published in the Money Rates section of The Wall Street Journal from time to time and (ii) five and one quarter percent (5.25%), plus (ii) half of one percent (0.50%), per annum.
Inventory costs consist of product and inbound shipping and handling costs. We assess the valuation of inventory and periodically write down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions. Inventory valuation requires us to make judgments, based on information available at each reporting period.
We assess the valuation of inventory and periodically write down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions. Inventory valuation requires us to make judgments, based on information available at each reporting period. Inventory valuation losses are recorded as cost of revenues.
GAAP, for each of the periods indicated: Free Cash Flow Fiscal Year Ended March 31 2023 2022 2021 Free cash flow reconciliation: Net cash provided by (used in) operating activities $ 4,694 $ (172,338) $ (19,618) Capital expenditures (21,320) (21,172) (4,825) Free cash flow $ (16,626) $ (193,510) $ (24,443) Liquidity and Capital Resources As of March 31, 2023, we had cash and cash equivalents of approximately $177.9 million.
GAAP, for each of the periods indicated: Free Cash Flow Fiscal Year Ended March 31 2024 2023 2022 Free cash flow reconciliation: Net cash provided by (used in) operating activities $ 6,060 $ 4,694 $ (172,338) Capital expenditures (8,831) (21,320) (21,172) Free cash flow $ (2,771) $ (16,626) $ (193,510) Liquidity and Capital Resources As of March 31, 2024, we had cash and cash equivalents of approximately $125.5 million.
GAAP, and the calculation of net loss margin, Adjusted net loss margin and Adjusted net loss per common share for the periods presented: Adjusted Net Loss Fiscal Year Ended March 31, 2023 2022 2021 Net loss $ (61,519) $ (68,299) $ (31,391) Stock-based compensation expense 14,811 17,861 6,522 Change in fair value of warrants and derivatives (5,350) (33,196) 931 Sales and use tax expense (income) (1) (365) 648 1,211 Restructuring 1,763 86 — Executive transition costs 1,680 1,930 — Duplicate headquarters rent 1,747 — — Impairment of assets 2,065 — — Transaction costs (2) — 6,053 1,545 Demurrage fees (3) — 2,610 — Other items (4) 104 4,638 Adjusted net loss $ (45,064) $ (67,669) $ (21,182) Net loss margin (11.49) % (13.46) % (8.29) % Adjusted net loss margin (8.42) % (13.34) % (5.59) % Adjusted net loss per common share - basic and diluted $ (0.26) $ (0.43) $ (0.45) Weighted average common shares used to compute adjusted net loss per share attributable to common stockholders - basic and diluted 176,717,509 156,201,601 46,297,847 42 Table of Contents The following table presents a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with U.S.
GAAP, and the calculation of net loss margin, Adjusted net loss margin and Adjusted net loss per common share for the periods presented: Adjusted Net Loss Fiscal Year Ended March 31, 2024 2023 2022 Net loss $ (37,010) $ (61,519) $ (68,299) Stock-based compensation expense 12,931 14,811 17,861 Change in fair value of warrants and derivatives (2,738) (5,350) (33,196) Sales and use tax (income) expense (1) (487) (365) 648 Restructuring 1,660 1,763 86 (Gain) loss on extinguishment of debt (1,828) — 2,024 Duplicate headquarters rent 93 1,747 — Impairment of assets (2) 3,079 2,065 — Transaction costs (3) — — 6,053 Demurrage fees (4) — — 2,610 Technology transformation (5) 684 — — Other Items (6) 3,594 1,784 4,544 Adjusted net loss $ (20,022) $ (45,064) $ (67,669) Net loss margin (7.55) % (11.49) % (13.46) % Adjusted net loss margin (4.08) % (8.42) % (13.34) % Adjusted net loss per common share - basic and diluted $ (0.11) $ (0.26) $ (0.43) Weighted average common shares used to compute adjusted net loss per share attributable to common stockholders - basic and diluted 177,260,581 176,717,509 156,201,601 41 Table of Contents The following table presents a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with U.S.
Inventory valuation losses are recorded as cost of revenues. We review current business trends and forecasts, and inventory aging to determine adjustments which we estimate will be needed to liquidate existing excess inventories and record inventories at either the lower of cost or net realizable value or the lower of cost or market, as applicable.
We review current business trends and forecasts, and inventory aging to determine adjustments which we estimate will be needed to liquidate existing excess inventories and record inventories at either the lower of cost or net realizable value or the lower of cost or market, as applicable. We believe that all inventory write-downs required at March 31, 2024, have been recorded.
The decrease in our net operating assets and liabilities was driven by the changes in inventory of $82.9 million to support current demand, accounts payable and accrued expenses of $13.5 million related to increased expenditures to support general business growth, as well as the timing of payments, other liabilities of $12.6 million, prepaid expenses and other current assets of $1.1 million, and accounts receivable of $1.1 million.
Additionally, accounts payable and accrued expenses increased by $13.5 million related to increased expenditures to support general business growth, as well as the timing of payments, other liabilities of $12.6 million, prepaid expenses and other current assets of $1.1 million, and accounts receivable of $1.1 million. 45 Table of Contents The decrease in our net operating assets and liabilities was partially offset by the change in deferred revenue of $4.4 million.
Interest Income (Expense), Net Interest income (expense), net, primarily consists of interest incurred under our line of credit, term loan and convertible promissory notes agreements, and amortization of debt issuance costs, net of income earned on our money market funds and interest-bearing checking accounts.
Interest Income Interest income primarily consists of income earned on our money market funds and interest-bearing deposit accounts. Interest Expense Interest expense primarily consists of interest incurred under our 2025 Convertible Notes, and amortization of debt issuance costs.
GAAP, and the calculation of net loss margin and Adjusted EBITDA margin for the periods presented: Adjusted EBITDA Fiscal Year Ended March 31 2023 2022 2021 (in thousands) Net loss $ (61,519) $ (68,299) $ (31,391) Interest expense 4,372 5,464 10,923 Depreciation and amortization expense 9,427 4,403 2,405 Stock-based compensation expense 14,811 17,861 6,522 Change in fair value of warrants and derivatives (5,350) (33,196) 931 Sales and use tax expense (income) (1) (365) 648 1,211 Restructuring 1,763 86 — Executive transition costs 1,680 1,930 — Duplicate headquarters rent 1,747 — — Impairment of assets 2,065 — — Transaction costs (2) — 6,053 1,545 Demurrage fees (3) — 2,610 — Other Items (4) 104 4,638 — Adjusted EBITDA $ (31,265) $ (57,802) $ (7,854) Net loss margin (11.49) % (13.46) % (8.29) % Adjusted EBITDA margin (5.84) % (11.39) % (2.07) % (1) Sales and use tax expense relates to recording a liability for sales and use tax we did not collect from our customers.
GAAP, and the calculation of net loss margin and Adjusted EBITDA margin for the periods presented: Adjusted EBITDA Fiscal Year Ended March 31 2024 2023 2022 (in thousands) Net loss $ (37,010) $ (61,519) $ (68,299) Interest income (7,533) (1,056) — Interest expense 4,351 5,428 5,464 Depreciation and amortization expense 12,602 9,427 4,403 Stock-based compensation expense 12,931 14,811 17,861 Change in fair value of warrants and derivatives (2,738) (5,350) (33,196) Sales and use tax (income) expense (1) (487) (365) 648 Restructuring 1,660 1,763 86 (Gain) loss on extinguishment of debt (1,828) — 2,024 Duplicate headquarters rent 93 1,747 — Impairment of assets (2) 3,079 2,065 — Transaction costs (3) — — 6,053 Demurrage fees (4) — — 2,610 Technology transformation (5) 684 — — Other items (6) 3,594 1,784 4,544 Adjusted EBITDA $ (10,602) $ (31,265) $ (57,802) Net loss margin (7.55) % (11.49) % (13.46) % Adjusted EBITDA margin (2.16) % (5.84) % (11.39) % (1) Sales and use tax (income) expense relates to recording a liability for sales and use tax we did not collect from our customers.
We are required to comply with certain financial and non-financial covenants related to our borrowing agreements, which we are in compliance with as of March 31, 2023 and expect to be in compliance with during the next 12 months.
We are required to comply with certain financial and non-financial covenants related to our borrowing agreements, which we are in compliance with as of March 31, 2024 and expect to be in compliance with during the next 12 months. Our material cash requirements include our lease arrangements for corporate offices, warehouses and certain equipment.
Fiscal Year Ended March 31, 2023 2022 Total Orders (in thousands) 14,888 15,143 Average Order Value $31.70 $29.59 Direct to Consumer Gross Profit (in thousands) $285,328 $260,084 Direct to Consumer Gross Margin 60.5% 58.0% Total Orders We define Total Orders as the total number of orders shipped in a given period.
Fiscal Year Ended March 31, 2024 2023 Total Orders (in thousands) 13,924 14,888 Average Order Value $31.34 $31.70 Direct to Consumer Gross Profit (in thousands) $278,868 $285,328 Direct to Consumer Gross Margin 63.9% 60.5% Total Orders We define Total Orders as the total number of orders shipped in a given period.
Average Order Value (Subscription Shipments) Historically, we calculated Average Order Value (Subscription Shipments) as Direct to Consumer revenue for the period divided by Subscription Shipments for the same period. 31 Table of Contents Components of Our Results of Operations We operate with two reportable segments: Direct to Consumer and Commerce, to reflect the way our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), reviews and assesses the performance of the business.
Components of Our Results of Operations We operate with two reportable segments: Direct to Consumer and Commerce, to reflect the way our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), reviews and assesses the performance of the business.
The non-cash charges primarily consisted of $33.2 million for changes in fair value of warrants, $17.9 million for stock based compensation, $2.0 million loss on extinguishment of debt and $4.4 million for depreciation and amortization.
The non-cash charges primarily consisted of $33.2 million for changes in fair value of warrants, $17.9 million for stock based compensation, $2.0 million loss on extinguishment of debt and $4.4 million for depreciation and amortization. The decrease in our net operating assets and liabilities was driven by the increase in inventory of $82.9 million to support current demand.
The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes. As of March 31, 2023 and March 31, 2022, the Company had $83.5 million and $79.2 million, respectively, of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.
As of March 31, 2024 and March 31, 2023, the Company had $40.6 million and $83.5 million, respectively, of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.
Western Alliance Bank—Line of Credit and Term Loan In October 2017, the Company entered into a loan and security agreement (the “Western Alliance Agreement”) and issued a warrant to purchase preferred stock (“Initial Western Alliance Warrant”) to Western Alliance Bank (“Western Alliance”), which provided for a secured revolving line of credit (the “Credit Facility”) in an aggregate principal amount of up to $35.0 million with a maturity date of October 12, 2020.
Western Alliance Bank—Line of Credit and Term Loan In October 2017, the Company entered into a loan and security agreement and issued a warrant to purchase preferred stock (“Initial Western Alliance Warrant”) to Western Alliance Bank (“Western Alliance”), which provides for a revolving line of credit (as amended, the “Credit Facility”) in an aggregate principal amount of up to $35.0 million, subject to borrowing base limitations derived from advance rates derived from the Company’s eligible subscription revenues and eligible accounts receivable.
Interest Income (Expense), Net Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Interest income (expense), net $ (4,372) $ (5,464) $ 1,092 (20.0) % Percentage of revenue (0.8) % (1.1) % Interest income (expense), net decreased by $1.1 million, or 20.0% , for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
Other Income, net Fiscal Year Ended March 31, 2024 2023 $ Change % Change ( in thousands) Other income, net 5,328 6,684 $ (1,356) (20.3) % Percentage of revenue 1.1 % 1.2 % Other income, net decreased by $1.4 million for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023.
We had previously used the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. Since becoming a public company in 2021, our business has undergone significant changes.
Key Performance Indicators We use the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions.
The $19.6 million of net cash provided by operating activities consisted of net loss of $31.4 million adjusted for non-cash charges totaling $13.4 million and a net increase of $1.6 million in our net operating assets and liabilities.
For the fiscal year ended March 31, 2024, net cash provided by operating activities was $6.1 million. The $6.1 million of net cash provided by operating activities consisted of net loss of $37.0 million adjusted for non-cash charges totaling $30.5 million and a ne t decrease of $12.5 million in our net operating assets and liabilities.
This decrease was primarily attributable to reduced levels of debt in the fiscal year ended March 31, 2022. Other Income (Expense), Net Fiscal Year Ended March 31, 2022 2021 $ Change % Change ( in thousands) Other income (expense), net 31,346 131 $ 31,215 N/M Percentage of revenue 6.2 % — % N/M means not meaningful.
Other Income (Expense), Net Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Other income (expense), net 6,684 31,346 $ (24,662) N/M Percentage of revenue 1.2 % 6.2 % N/M means not meaningful.
Online marketplaces revenue is recognized upon delivery of goods to the end customer. Our toys category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other miscellaneous products. The Toys & Accessories product category generated approximately $307.0 million of revenue in fiscal 2023, up 4.3% compared to fiscal 2022.
Online marketplaces revenue is recognized upon delivery of goods to the end customer. Our toys category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other miscellaneous products. Consumables— The majority of our consumables revenue today is derived from the treats and chews that are included in our BarkBox and Super Chewer boxes.
The 2025 Convertible Notes bear interest at the annual rate of 5.50%, payable entirely in payment-in-kind annually on December 1 of each year commencing December 1, 2021, compounded annually. The accrued interest of $4.4 million and $4.2 million was paid-in-kind through an increase of the outstanding principal on the 2025 Convertible Notes on December 1, 2022 and 2021, respectively.
As of March 31, 2024, the effective interest rate is 6.60%. The accrued interest of $2.1 million and $4.4 million was paid-in-kind through an increase of the outstanding principal on the 2025 Convertible Notes on December 1, 2023 and 2022, respectively.
Interest Expense Fiscal Year Ended March 31, 2022 2021 $ Change % Change ( in thousands) Interest expense $ (5,464) $ (10,923) $ 5,459 (50.0) % Percentage of revenue (1.1) % (2.9) % 40 Table of Contents Interest expense decreased by $5.5 million, or 50.0% , for the fiscal year ended March 31, 2022 compared to the fiscal year ended March 31, 2021.
Interest Income Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Interest income $ 1,056 $ — $ 1,056 N/M Percentage of revenue 0.2 % — % Interest income increased by $1.1 million for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
(3) Demurrage fees are raised when the full container is not moved out of the port/terminal for unpacking within the allowed free days offered by the shipping line. The charge is levied by the shipping line to the importer. (4) For fiscal year ended March 31, 2023, one-time items is comprised of tax penalties of $0.1 million.
(4) Demurrage fees are raised when the full container is not moved out of the port/terminal for unpacking within the allowed free days offered by the shipping line. The charge is levied by the shipping line to the importer. (5) Includes consulting fees related to technology transformation activities, and payroll costs for employees that dedicate significant time to this project.
We believe that all inventory write-downs required at March 31, 2023, have been recorded. Our historical estimates of inventory reserves have not differed materially from actual results.
Our historical estimates of inventory reserves have not differed materially from actual results.
Toppers —Includes meal-enhancing sprinkles, broths and bites that are added to a dog’s food to enhance the flavor of their food. These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan. Toppers are particularly beneficial for picky eaters.
These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan. Toppers are particularly beneficial for picky eaters. Supplements —Includes a variety of dog supplements such as hip and joint support, and skin and coat support. These products are often targeted at specific breeds that are prone to certain ailments.
This decrease was primarily due to the interest income of $1.1 million derived from our money market account and interest-bearing checking accounts. 37 Table of Contents Other Income (expense), net Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Other income (expense), net 6,684 31,346 $ (24,662) N/M Percentage of revenue 1.2 % 6.2 % N/M means not meaningful.
The increase was attributable to interest derived from our money market account and interest-bearing checking accounts. 38 Table of Contents Interest Expense Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Interest expense $ (5,428) $ (5,464) $ (36) (0.7) % Percentage of revenue (1.0) % (1.1) % Interest expense was relatively flat for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
Please refer to the “Cautionary Note Regarding Forward-Looking Statements” and those factors described under “Risk Factors” in this Annual Report on Form 10-K. 29 Table of Contents Key Performance Indicators We are introducing the following key performance indicators ("KPIs") to more accurately align with the Company's current business operations and strategic focus.
We cannot predict the duration or magnitude of the risks and challenges discussed above. Please refer to the “Cautionary Note Regarding Forward-Looking Statements” and those factors described under “Risk Factors” in this Annual Report on Form 10-K.
The increase in our net operating assets and liabilities was driven by a change in inventory of $33.5 million and proceeds from tenant improvement allowances of $7.4 million. 46 Table of Contents For the fiscal year ended March 31, 2022, net cash used in operating activities was $172.3 million.
The non-cash charges primarily consisted of $14.8 million for stock based compensation, $9.4 million for depreciation and amortization, and $4.9 million of non-cash lease expense. The increase in our net operating assets and liabilities was driven by a reduction in inventory of $33.5 million and proceeds from tenant improvement allowances of $7.4 million.
For the fiscal year ended March 31, 2022, and 2021, net cash used in investing activities was $21.2 million and $4.8 million, respectively , primarily due to capital expenditures for warehouse machinery, leasehold improvements, equipment, and the capitalization of labor and license costs associated with software development for internal use.
Cash flows used in Investing Activities For the fiscal year ended March 31, 2024, net cash used in investing activities was $8.8 million, primarily due to capital expenditures for software implementations and other capital expenditures.
Overall, we see significant runway in our consumables category long-term, and anticipate the majority of our future growth may be driven by these product categories. A table detailing our DTC segment by category can be found below.
Overall, we see significant runway in our consumables category long-term, and anticipate the majority of our future growth may be driven by these product categories. BARK Air —A first-of-its kind air travel experience tailored to dogs. The Company partnered with a jet charter company to begin offering premium flights for customers and their dogs.
Western Alliance has first perfected security in substantially all of the Company’s assets, including its rights to its intellectual property. As of March 31, 2023 and March 31, 2022, there were no outstanding borrowings under the Credit Facility.
Western Alliance has first perfected security in substantially all of the Company’s assets, including its rights to its intellectual property. The Credit Facility requires the Company to comply with certain financial and performance covenants, including, among other things, minimum cash deposits with Western Alliance.
For fiscal year ended March 31, 2022, one-time items is comprised of loss on extinguishment of debt of $2.0 million, costs related to unrealized business ventures of $1.8 million, SOX implementation fees of $0.7 million, and loss on exercise of warrants of $0.1 million. 43 Table of Contents The following table presents a reconciliation of Free Cash Flow to Net cash provided by (used in) operating activities, the most directly comparable financial measure prepared in accordance with U.S.
For fiscal year ended March 31, 2022, other items is comprised of executive transition costs of $1.9 million, costs related to unrealized business ventures of $1.8 million, SOX implementation fees of $0.7 million, and loss on exercise of warrants of $0.1 million.
This increase was primarily driven by a 3.3 million, or 28.3%, increase in Subscription Shipments, in addition to a 4.6% increase in average order value during the period. Commerce revenue increased by $14.7 million, or 32.9%, for the fiscal year ended March 31, 2022 compared to the fiscal year ended March 31, 2021.
This decrease was primarily driven by a 6.5%, or $1.0 million decrease in Total Orders , in addition to a $0.36 or 1.1% decrease in AOV. Commerce revenue decreased by $9.6 million, or 15.1% , for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023.
Additionally, in fiscal 2022 the Company incurred $2.0 million of expense related to the loss on extinguishment of debt incurred from conversion of the convertible promissory notes issued in 2019 and 2020 in connection with the Merger during the prior period. 38 Table of Contents Comparison of the Fiscal Years Ended March 31, 2022 and March 31, 2021 Revenue Fiscal Year Ended March 31, 2022 2021 $ Change % Change ( in thousands) Revenue Direct to Consumer $ 448,074 $ 333,970 $ 114,104 34.2 % Commerce 59,332 44,634 14,698 32.9 % Total revenue $ 507,406 $ 378,604 $ 128,802 34.0 % Percentage of Revenue Direct to Consumer 88.3 % 88.2 % Commerce 11.7 % 11.8 % Direct to Consumer revenue increased by $114.1 million, or 34.2% , for the fiscal year ended March 31, 2022 compared to the fiscal year ended March 31, 2021.
The decrease in other income, net was primarily due to the $2.6 million decrease of income related to the changes in fair value of our warrant liabilities, offset by the gain on extinguishment of debt for $1.8 million. 36 Table of Contents Comparison of the Fiscal Years Ended March 31, 2023 and March 31, 2022 Revenue Fiscal Year Ended March 31, 2023 2022 $ Change % Change ( in thousands) Revenue Direct to Consumer $ 471,994 $ 448,074 $ 23,920 5.3 % Commerce 63,321 59,332 3,989 6.7 % Total revenue $ 535,315 $ 507,406 $ 27,909 5.5 % Percentage of Revenue Direct to Consumer 88.2 % 88.3 % Commerce 11.8 % 11.7 % Direct to Consumer revenue increased by $23.9 million, or 5.3%, for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.
Subsequently, as certain of these liabilities are waived by tax authorities or the applicable statute of limitations expires, the related accrued liability is reversed. (2) Transactions costs represent non-recurring consulting and advisory costs with respect to the merger agreement entered into with Northern Star Acquisition Corp. on December 16, 2020.
Subsequently, as certain of these liabilities are waived by tax authorities or the applicable statute of limitations expires, the related accrued liability is reversed. (2) For the fiscal year ended March 31, 2024 impairment of assets is the non-cash impairment of previously capitalized software and prepaid software licenses.
For the fiscal year ended March 31, 2021, net cash provided by financing activities was $54.5 million, primarily due to proceeds of $75.8 million from the issuance of convertible notes and proceeds of $5.2 million from the loan issued under the PPP.
Cash flows provided by (used in) Financing Activities For the fiscal year ended March 31, 2024, net cash used in financing activities was $49.6 million, primarily due to the partial payment of long-term debt of $42.3 million and payments to repurchase common stock of $6.2 million.
The 2025 Convertible Notes will mature on December 1, 2025, unless earlier converted, redeemed or repurchased.
The 2025 Convertible Notes will mature on December 1, 2025, unless earlier converted, redeemed or repurchased. The 2025 Convertible Notes are governed by the Indenture. The 2025 Convertible Notes bear interest at the annual rate of 5.50%, payable entirely in payment-in-kind annually on December 1 of each year commencing December 1, 2021, compounded annually.
The non-cash charges primarily consisted of $14.8 million for stock based compensation, $9.4 million for depreciation and amortization, and $4.9 million of right-of-use asset amortization .
The non-cash charges primarily consisted of $12.9 million for stock based compensation, $12.6 million for depreciation and amortization, and $4.1 million of non-cash lease expense . The decrease in our net operating assets and liabilities was primarily driven by a reduction in inventory of $40.7 million offset by a decrease of accounts payable and accrued expenses of $17.8 million.
Gross Profit Fiscal Year Ended March 31, 2022 2021 $ Change % Change ( in thousands) Gross Profit Direct to Consumer $ 260,083 $ 205,926 $ 54,157 26.3 % Commerce 22,023 20,014 2,009 10.0 % Total gross profit $ 282,106 $ 225,940 $ 56,166 24.9 % Percentage of revenue 55.6 % 59.7 % Direct to Consumer and Commerce gross profit increased by $54.2 million and $2.0 million, respectively, for the fiscal year ended March 31, 2022 compared to the fiscal year ended March 31, 2021, driven by the $128.8 million increase in revenue during the period.
Gross Profit Fiscal Year Ended March 31, 2024 2023 $ Change % Change ( in thousands) Gross Profit Direct to Consumer $ 278,868 $ 285,328 $ (6,460) (2.3) % Commerce 23,284 22,787 497 2.2 % Total gross profit $ 302,152 $ 308,115 $ (5,963) (1.9) % Percentage of revenue 61.6 % 57.6 % Direct to Consumer gross profit decreased by $6.5 million, and Commerce gross profit increased by $0.5 million, for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of March 31, 2023, we had cash and cash equivalents of approximately $177.9 million consisting of bank deposits and money market accounts.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of March 31, 2024, we had cash and cash equivalents of approximately $125.5 million consisting of bank deposits and money market accounts.
We are primarily exposed to changes in short-term interest rates with respect to our cost of borrowing under our Western Alliance Agreement. As of March 31, 2023 there are no outstanding borrowings under the Credit Facility. We monitor our cost of borrowing under our facility, taking into account our funding requirements, and our expectations for short-term rates in the future.
We are primarily exposed to changes in short-term interest rates with respect to our cost of borrowing under our Western Alliance Agreement. As of March 31, 2024 there are no outstanding borrowings under the Credit Facility. We monitor our cost of borrowing under our facility, taking into account our funding requirements, and our expectations for short-term rates in the future.
As a result, we have only limited foreign translation or exchange risk, which we do not expect to have a material impact on our consolidated financial statements. We have not utilized hedging strategies with respect to such limited foreign translation or exchange risk. 50 Table of Contents
As a result, we have only limited foreign translation or exchange risk, which we do not expect to have a material impact on our consolidated financial statements. We have not utilized hedging strategies with respect to such limited foreign translation or exchange risk. 49 Table of Contents

Other BARK 10-K year-over-year comparisons