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

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Paragraph-level year-over-year comparison of Playboy, 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.

+370 added−324 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-29)

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

370 paragraphs added · 324 removed · 241 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur content creator platform on playboy.com (“Playboy Club”) lets customers interact directly with influencers and other creators that generate their own array of content. Playboy programming distributed through various websites and domestic and international TV providers offers on-demand entertainment.
Biggest changePlayboy-branded product and experience offerings are primarily delivered by our strategic licensing partners, and some products are offered for resale on shop.playboy.com , the operation of which we have licensed to third-parties since the third quarter of 2023. • Digital : Our digital operations build upon our legacy in visual media and entertainment and include our content creator platform on playboy.com (“Playboy Club”), which lets customers interact directly with influencers and other creators that generate their own array of content, and Playboy programming distributed through various websites and domestic and international television providers offering on-demand entertainment.
However, we believe we have successfully competed, and will continue to do so, with such companies because of our strong brands with extensive consumer followings, high quality products and relationships with creators and influencers that we have developed. Our Corporate History Playboy was founded in 1953 as a men’s lifestyle magazine.
However, we believe we have successfully competed, and will continue to do so, with such companies because of our strong brands with extensive consumer followings, high quality products, and relationships with creators and influencers that we have developed. 7 Our Corporate History Playboy was founded in 1953 as a men’s lifestyle magazine.
Accordingly, investors should monitor this portion of our website, in addition to following our press releases, SEC filings, public conference calls and webcasts. The information on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K and is not part of this report. 9
Accordingly, investors should monitor this portion of our website, in addition to following our press releases, SEC filings, public conference calls and webcasts. The information on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K and is not part of this report. 10
Our mission—to create a culture where all people can pursue pleasure—builds upon seven decades of creating groundbreaking media and hospitality experiences and fighting for cultural progress rooted in the core values of equality, freedom of expression and the idea that pleasure is a fundamental human right.
Our mission—to create a culture where all people can pursue pleasure—builds upon over seven decades of creating groundbreaking media and hospitality experiences and fighting for cultural progress rooted in the core values of equality, freedom of expression and the idea that pleasure is a fundamental human right.
Our proprietary digital content and services compete with social media sites, creator-led platforms, distributors of paid and free adult content, and providers of digital art and collectibles. We compete with much larger companies, including the brands referenced above, that have significantly greater financial and operational resources and pose meaningful competitive challenges.
Our proprietary digital content and services compete with social media sites, content creator platforms, distributors of paid and free adult content, and providers of digital art and collectibles. We compete with much larger companies, including the brands referenced above, that have significantly greater financial and operational resources and pose meaningful competitive challenges.
We are bold and thoughtful in challenging the status quo and finding fault in the default, even when it seems we are alone. We are okay with uncertainty, and we aim to adapt quickly and be resourceful in an ever-changing environment. Debate, Then Commit . We take the time to make sure we are informed.
We are bold and thoughtful in challenging the status quo and finding fault in the default, even when it seems we are alone. We are okay with uncertainty, and we aim to adapt quickly and be resourceful in an ever-changing environment. 8 Debate, Then Commit . We take the time to make sure we are informed.
We manage the inventory and shipping for our owned digital and retail commerce channels through a combination of our own warehouse and fulfillment centers and through third-party logistics centers, providing a flexible and scalable base from which to continue the expansion of our direct-to-consumer sales platform model.
We manage the inventory and shipping for such owned digital and retail commerce channels through a combination of our own warehouse and fulfillment centers and through third-party logistics centers, providing a flexible and scalable base from which to continue the expansion of our direct-to-consumer sales platform model.
Most jurisdictions allow for an unlimited number of renewals provided that the criteria to apply for renewal are met in the applicable jurisdiction. Available Information We are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the U.S.
Most jurisdictions allow for an unlimited number of renewals provided that the criteria to apply for renewal are met in the applicable jurisdiction. 9 Available Information We are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the U.S.
We provide consumers around the world with products, content and experiences that help them lead happier, healthier and more fulfilling lives. Our flagship consumer brand, Playboy, is one of the most recognizable brands in the world, with products and content available in approximately 180 countries.
We provide consumers around the world with products, content and experiences that help them lead happier, healthier and more fulfilling lives. Our flagship consumer brand, Playboy, is one of the most recognizable brands in the world, with Playboy-branded products and content available in approximately 180 countries.
Our failure to comply with applicable laws and regulations could adversely affect the Company. See “Item 1A. Risk Factors” for additional information regarding regulatory risks to the Company. Intellectual Property We own various trademarks, copyrights and software comprising our intellectual property holdings, including, without limitation, the “Playboy” name, the “RABBIT HEAD DESIGN” logo and the “Honey Birdette” name.
Our failure to comply with applicable laws and regulations could adversely affect the Company. Refer to “Item 1A. Risk Factors” for additional information regarding regulatory risks to the Company. Intellectual Property We own various trademarks, copyrights and software comprising our intellectual property holdings, including, without limitation, the “Playboy” name, the “RABBIT HEAD DESIGN” logo and the “Honey Birdette” name.
As we have shifted to a more capital-light business model, we signed new license agreements for e-commerce, lingerie, underwear and costumes. Such licensed Playboy-branded products and our Honey Birdette brand compete with Skims, Fleur du Mal, Victoria’s Secret, Fashion Nova and other brands and retailers.
As we have shifted to a more capital-light business model, we signed new license agreements for e-commerce, lingerie, underwear and costumes. Such licensed Playboy-branded products and our Honey Birdette brand compete with Agent Provocateur, Skims, Fleur du Mal, Victoria’s Secret, Fashion Nova and other brands and retailers.
We pride ourselves in being able to pick ourselves up, be positive about our mistakes (while learning from them) and move forward. We celebrate creativity and the importance of trying new things out. We know how to have a good time and we understand boundaries. We celebrate each other.
We pride ourselves in being able to pick ourselves up, be positive about our mistakes (while learning from them) and move forward. We celebrate creativity and the importance of trying new things out. We know how to have a good time and we understand boundaries. We celebrate each other. We value our time both in and out of work.
Our Employees As of December 31, 2023, we had a total of 628 employees, of whom 249 were full-time and full-time-equivalent employees and 379 were part-time employees. None of our employees are represented by a labor union. Our team values support our employee relations, which we believe to be positive and productive.
Our Employees As of December 31, 2024, we had a total of 615 employees, of whom 249 were full-time and full-time-equivalent employees and 366 were part-time employees. None of our employees are represented by a labor union. Our team values support our employee relations, which we believe to be positive and productive.
We value our time both in and out of work. 8 Government Regulation In connection with the products we provide, we must comply with various laws and regulations from federal, state, local and foreign regulatory agencies. We believe that we are in material compliance with regulatory requirements applicable to our business.
Government Regulation In connection with the products we provide, we must comply with various laws and regulations from federal, state, local and foreign regulatory agencies. We believe that we are in material compliance with regulatory requirements applicable to our business.
We seek to build the leading pleasure and leisure lifestyle platform for all people around the world. For the fiscal years ended December 31, 2023 and 2022, our consolidated revenue was $143.0 million and $185.5 million, respectively, and our consolidated net loss was $180.4 million and $277.7 million, respectively.
We seek to build the leading pleasure and leisure lifestyle platform for all people around the world. For the fiscal years ended December 31, 2024 and 2023, our consolidated revenue was $116.1 million and $143.0 million, respectively, and our consolidated net loss was $79.4 million and $180.4 million, respectively.
Our Business Segments We generate revenue through the sales of our products and content services to consumers around the world. We employ multiple business models, including brand licensing, direct-to-consumer and third-party retail sales, and digital sales and subscriptions, to help maximize the value of our assets and promote long-term revenue and profitability growth.
We employ multiple business models, including direct-to-consumer and third-party retail sales, brand licensing, and digital sales and subscriptions, to help maximize the value of our assets and promote long-term revenue and profitability growth.
Our Products & Services Our products and content delivery services connect consumers to a lifestyle of pleasure and leisure. Our offerings help consumers around the world look good, feel good and enjoy their lives.
Our Products & Services Our products and content delivery services connect consumers to a lifestyle of pleasure and leisure. Our offerings help consumers around the world look good, feel good and enjoy their lives. Our offerings are available to consumers through our two brands, Playboy and Honey Birdette.
In 2023, we also entered into a joint venture, Playboy China Limited (the “China JV”), with Charactopia Licensing Limited, a Fung Retailing brand management company, representing many global brands in China, to jointly own and operate the Playboy licensed business in China (including Hong Kong and Macau).
In the first quarter of 2023, we entered into a joint venture for Playboy’s China business (the “China JV”), with CT Licensing Limited, a brand management unit of Fung Group, representing many global brands in China, to jointly own and operate the Playboy business in China (including Hong Kong and Macau).
We report on our business operations in three segments: 5 • Direct-to-Consumer , through our owned-and-operated e-commerce platform, retail stores and sales of our proprietary products through third-party retailers; • Licensing , including licensing our brand to third parties for products, services, venues, online gaming and events; and • Digital Subscriptions and Content , including revenues generated from the sales of creator offerings to consumers through the Playboy Club, and the sale of subscriptions to Playboy programming, which is distributed through various channels, including websites and domestic and international TV.
We report on our business operations in three segments: • Direct-to-Consumer , through our owned-and-operated Honey Birdette e-commerce sites and retail stores, which has constituted the entire segment since the third quarter of 2023, as Playboy e-commerce transitioned to a licensing model and we sold our former Yandy and Lovers businesses in 2023; • Licensing , including licensing our Playboy brand to third parties for products, services, venues, online gaming and events; and • Digital Subscriptions and Content , including revenues generated from the sales of creator content offerings to consumers through the Playboy Club, and the sale of subscriptions to Playboy programming, which is distributed through various channels, including websites and domestic and international television.
In October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which comprised $152.2 million of unrecognized licensing revenue under our long-term contracts as of the termination date and resulted in a decrease in licensing revenue of $16.6 million in 2023. See Note 4, Revenue Recognition, for further information.
As part of the realignment of our China licensing business, in October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which comprised $152.2 million of unrecognized licensing revenue under our long-term contracts as of the termination date.
Digital Subscriptions and Content Our Digital Subscriptions and Content today comprise the Playboy Club, our creator-led platform on playboy.com , and Playboy’s adult content offerings, including playboyplus.com and playboy.tv . In addition, Playboy TV is offered through leading MSOs (multiple-system operators) around the globe, including U.S. MSOs DIRECTV, Comcast, Dish, Charter, Cox, Altice, and Mediacom.
Digital Subscriptions and Content Through the end of 2024, our Digital Subscriptions and Content segment was comprised of the Playboy Club, our content creator platform on playboy.com , and Playboy’s adult content offerings, including playboyplus.com and playboy.tv . In addition, Playboy TV is offered through leading MSOs (multiple-system operators) around the globe, including the U.S.
The publicly traded parent company, MCAC, changed its name to “PLBY Group, Inc.” upon consummation of the Business Combination. 7 Over the past several years, we have undertaken a process of transforming and streamlining our business model to transition Playboy’s primary business from a print and digital media entity, generating advertising and sponsorship revenues, to our primarily commerce business which markets consumer products and digital content.
Over the past several years, we have undertaken a process of transforming and streamlining our business model to transition Playboy’s primary business from a print and digital media entity, generating advertising and sponsorship revenues, to our primarily commerce business which licenses our trademarks and sells consumer products and digital content.
A set of fundamental values guide our thinking and actions both inside the company and as we pursue our mission through our interaction with our consumers and our partners around the world.
We believe that creating a respectful and inclusive environment where team members can be themselves and be supported is critical to attracting, developing and retaining talent. A set of fundamental values guide our thinking and actions both inside the company and as we pursue our mission through our interaction with our consumers and our partners around the world.
Each of the foregoing categories represent very large and growing markets, providing us with significant opportunities for growth from the increased sales of our current products and content, as well as through the introduction of new products and content within these categories.
The product categories under our two brands comprise large and growing markets, providing us with significant opportunities for growth from the increased sales of our current products and content, as well as through the introduction of new products and content within current and previously unexploited product categories and geographies. 5 Our Business Segments We generate revenue through the sales of our products and content services to consumers around the world.
In 2023, we began pursuing a commercial strategy that relies on a more capital-light model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential. We intend to do this by leveraging our flagship Playboy brand to attract best-in-class strategic partners and scale the Playboy Club with creators who embody Playboy’s aspirational lifestyle.
In 2023, we began pursuing a commercial strategy that relies on a more capital-light model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential.
As of December 31, 2023, our licensing contracts included future royalty guarantee payments of approximately $41.5 million through 2031, assuming no renewals or modifications of such contracts.
As of December 31, 2024, our licensing contracts included future royalty guarantee payments of approximately $67.4 million through 2034, assuming no renewals or modifications of such contracts. During the year ended December 31, 2024, our Licensing segment contributed $24.6 million in revenue and $14.4 million in operating income.
Direct-to-Consumer In 2022, our owned and operated digital commerce retail platforms included playboy.com, honeybirdette.com and Honey Birdette retail stores, yandy.com , and loversstores.com and Lovers retail stores. In April 2023, we sold our Yandy business, and in November 2023, we sold our Lovers business. We also licensed operation of our Playboy retail platform as of July 2023.
Prior to the third quarter of 2023, we also owned and operated digital commerce retail stores, including on playboy.com (transitioned to a licensing model effective July 2023), yandy.com (sold in April 2023), and loversstores.com , as well as Lovers retail stores (the entire Lovers business was sold in November 2023).
Our consolidated net loss for the year ended December 31, 2023 was largely driven by non-cash asset impairment charges of $154.9 million related to the write-down of intangible assets, including goodwill, and impairment of certain of our licensing contracts during the year of 2023.
Our consolidated net loss for the year ended December 31, 2024 was largely driven by non-cash asset impairment charges of $26.1 million related to the write-down of intangible assets, including goodwill, a $24.8 million decrease in licensing gross profit, due to lower revenues and commission accrual reversals in the prior comparative period, and a $8.2 million increase in expenses related to the revamp of our digital business that started in the first half of 2024.
Our top five active license agreements range from three to six years in length and generated approximately $7.0 million of revenue for the year ended December 31, 2023, excluding $25.3 million of revenue from terminated licensing agreements.
Revenue recognized in connection with such contract terminations was $27.1 million during the year ended December 31, 2023, out of which $5.1 million was attributable to prepaid royalty guarantees recorded as revenue in the fourth quarter of 2023 . 6 Our top five active license agreements range from three to six years in length and generated approximately $11.6 million of revenue for the year ended December 31, 2024.
See “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations--Key Factors and Trends Affecting Our Business”, for additional matters that affect our consumer products business, including seasonality. Licensing We license the Playboy name, Rabbit Head Design, and other trademarks and related properties to partners around the world.
During the year ended December 31, 2024, our Direct-to-Consumer segment contributed $69.7 million in revenue and $2.3 million in operating loss. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Trends Affecting Our Business”, for additional matters that affect our consumer products business, including seasonality.
Pursuant to its agreements with the MSOs, Playboy provides programs for Playboy TV and typically receives a royalty based on the numbers of subscribers to the service. 6 During the year ended December 31, 2023, our Digital Subscriptions and Content segment contributed $20.7 million in revenue and $2.4 million of operating loss.
MSOs DIRECTV, Comcast, Dish, Charter, Cox, Altice, and Mediacom. Pursuant to its agreements with the MSOs, Playboy provides programs for Playboy TV and typically receives a royalty based on the numbers of subscribers to the service.
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Our offerings are focused on four areas: • Style and Apparel includes a variety of apparel and accessories products for men and women globally, including one of the leading licensed lifestyle brands worldwide, featuring high profile brand collaborations with fashion and streetwear brands such as PacSun, OVO, PSD, Culture Kings, Miss Papp and Lids, which are available to consumers in the United States and in a variety of international markets.
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We also own and operate the brand Honey Birdette, which specializes in luxury lingerie that it sells online and at physical stores in Australia, the United States and the United Kingdom.
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Our style and apparel offerings build on seven decades of standing for free expression and a rich archive of heritage intellectual property assets. • Digital Entertainment and Lifestyle is a category that encompasses all the ways we stand for sophisticated, fun and leisure-filled living.
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Playboy Products & Services Playboy products and experiences are offered through its licensing and digital operations. • Licensing : We have primarily licensed the Playboy brand for consumer products, leveraging our Playboy archive and intellectual property assets built over more than 70 years, to allow fans and consumers to experience the Playboy image and lifestyle through (i) apparel and accessories products sold globally, featuring such high profile brand collaborations as PacSun, OVO, PSD, Missguided and Lids, (ii) collaborations with strategic partners in the nightlife, hospitality, digital casino and online gaming industries, and in the metaverse, including Draft Kings and Sandbox, (iii) premium spirits sold under the Rare Hare brand and ready-to-drink cocktails under the Play Hard brand, (iv) beauty and grooming offerings, including skincare, haircare, bath and body, cosmetics and fragrance, and (v) sexual wellness products.
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Our spirits joint venture, Playboy Spirits, offers premium spirits under the Rare Hare brand and ready-to-drink cocktails under the Play Hard brand, and shop.playboy.com also sells a variety of Playboy-branded goods.
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In the fourth quarter of 2024, we entered into a licensing agreement with Byborg Enterprises SA (“Byborg”) to license intellectual property and certain Playboy digital assets, as well as for the operation of our digital businesses, which will continue to be owned by us. Honey Birdette Products Our Honey Birdette business currently comprises our entire direct-to-consumer segment.
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Collaborations with strategic partners in the nightlife, hospitality, and digital casino and online gaming industries and the metaverse allow our customers to further experience the Playboy lifestyle in-person and from their electronic devices. • Sexual Wellness encompasses products, content and experiences that enable a state of physical, emotional, mental, and social sexual health and fulfillment.
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Honey Birdette sells its products, including lingerie and certain other apparel, bedroom accessories, intimacy products and other adult products, online and through its 54 physical stores in Australia, the United States and the United Kingdom.
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Offerings include products that enhance sexual experience and help to improve sexual health. Our sexual wellness offerings include lingerie, bedroom accessories, intimacy products and other adult products. • Beauty and Grooming builds on our long role serving as a platform for beauty and the brand’s commercial success in the fragrance category.
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Direct-to-Consumer Since the third quarter of 2023, our Direct-to-Consumer segment has only consisted of our Honey Birdette business, which primarily sells luxury lingerie online and at physical stores in Australia, the United States and the United Kingdom.
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Today, we approach this category through the lens of confidence, providing our consumers with products and content that inspire body positivity and creative expression. With strong adjacency to Sexual Wellness, Beauty and Grooming offerings include skincare, haircare, bath and body, grooming, cosmetics and fragrance.
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Licensing We license the Playboy name, Rabbit Head Design, and other trademarks and related properties to strategic partners around the world.
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These offerings are primarily delivered by our strategic licensing partners, and some products are offered for resale on shop.playboy.com .
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In the fourth quarter of 2024, we entered into a licensing agreement with Byborg to license intellectual property and certain Playboy digital assets for $300 million in minimum guaranteed payments over the initial 15-year term of the license, which began as of January 1, 2025.
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During the year ended December 31, 2023, our Direct-to-Consumer segment contributed $78.0 million in revenue and $98.9 million in operating loss, of which $72.6 million was due to non-cash impairment charges on certain of our intangible assets, including goodwill.
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As a result, for periods after 2024, our Licensing segment will include revenues from licensing the Playboy Club, Playboy Plus and Playboy TV businesses to Byborg, as described further below.
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This represents a significant drop from prior years, due to challenging economic conditions in China in 2023, which resulted in reduced collections from Chinese licensees, the termination of certain licensing agreements and the impairment of corresponding assets.
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In the fourth quarter of 2024, we entered into a licensing agreement with Byborg to license intellectual property and certain Playboy digital assets for $300 million in minimum guaranteed payments over the initial 15-year term of the license, which began as of January 1, 2025.
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We are working to replace terminated licensees, including through our China JV (as defined below).
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As a result, Playboy Club, Playboy Plus and Playboy TV operations switched from an owned-and-operated model to a licensing model effective January 1, 2025. During the year ended December 31, 2024, our Digital Subscriptions and Content segment contributed $21.9 million in revenue and $27.2 million of operating loss.
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During the year ended December 31, 2023, our Licensing segment contributed $44.3 million in revenue and $46.9 million in operating loss, which was due to $71.3 million of non-cash impairment charges on Playboy-branded trademarks in the second half of 2023.
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In 2024, we entered into a licensing agreement with Byborg to operate our digital business, including the Playboy Club, which will further improve our margins and lower our working capital requirements.
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We are refocusing on two key growth pillars. First, strategically expanding our licensing business in key categories and territories. Our China JV is intended to reinvigorate our China-market Playboy apparel business through expanding Playboy’s reach and online storefronts by adding new licensees.
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For Playboy, we are now focused on expanding our licensing business into new geographies and categories by partnering with best-in-class operators and supporting them with brand marketing in the form of content, experiences and editorial works.
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In the U.S., we will continue to use our licensing business as a marketing tool and brand builder, in particular through our high-end designer collaborations and our large-scale partnerships. Second, investing in our Playboy digital platform as we return to our roots as a place to see and be seen for creators and up-and-coming cultural influencers.
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Given our historical focus on North America and China, largely in the apparel and accessories categories, we believe there is significant white space to grow the business in unexploited product categories and geographies. For our Honey Birdette business, in 2024, we were focused on reducing inventory levels and days on sale and improving the profitability of the business.
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The Playboy Club, which is dedicated to creative freedom, artistic expression and sex positivity, is the cornerstone of our digital strategy. Creators’ fans can subscribe or pay to view exclusive content, message with Playboy creators directly, and receive special access to their daily lives.
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As a part of that focus, we closed seven underperforming stores in Australia and reduced days on sale by 30%. In 2025, we are focusing on the U.S. market. The U.S. customer is less price sensitive and represents a bigger growth market for the brand with better economics.
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Top creators earn special opportunities throughout the Playboy ecosystem including Playboy photo shoots, fashion design collaborations and the opportunity to serve as Playboy brand ambassadors.
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For example, the average store in the U.S. generates more than twice the amount of revenue and double the EBITDA margin of an average store in Australia. In addition, the average transaction value for online customers in the U.S. is two times higher than that in Australia.
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Our Team We seek to recruit, retain, and incentivize highly talented existing and future employees. We believe that creating a respectful and inclusive environment where team members can be themselves and be supported is critical to attracting, developing and retaining talent.
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We believe there is significant growth potential for Honey Birdette based on the changes implemented last year and our current consumer trends.
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The publicly traded parent company, MCAC, changed its name to “PLBY Group, Inc.” upon consummation of the Business Combination.
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In the fourth quarter of 2024, we also entered into a licensing agreement with Byborg to license intellectual property and certain Playboy digital assets for $300 million in minimum guaranteed payments over the initial 15-year term of the license, which began as of January 1, 2025, as well as for the operation of our digital businesses, which will continue to be owned by us.
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As a result, Playboy Club, Playboy Plus and Playboy TV operations switched from an owned-and-operated model to a licensing model effective January 1, 2025. Our Team We seek to recruit, retain, and incentivize highly talented existing and future employees.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe also have registered on Forms S-8 a total of 14,161,508 shares of common stock underlying awards that we have issued, or may in the future issue, under our employee equity incentive plans.
Biggest changeOn February 11, 2025, the SEC declared effective our resale registration statement on Form S-3 (File No. 333-284632), pursuant to which certain existing stockholders of the Company are able to sell up to 25,494,268 shares of common stock in the public market (which aggregate total includes 2,581,218 shares which were previously registered under the above-referenced Form S-3, File No. 333-264515, but were moved under this resale registration statement). 34 We also have registered on Forms S-8 a total of 17,062,858 shares of common stock underlying awards that we have issued, or may in the future issue, under our employee equity incentive plans.
Transactions of this sort could involve numerous risks, including: • unforeseen operating difficulties and expenditures arising from the process of integrating any new business, product or technology, including related personnel; • diversion of a significant amount of management’s attention from the ongoing development of our business; • dilution of existing stockholders’ ownership interest in us; • incurrence of additional debt; • exposure to additional operational risk and liability, including risks arising from the operating history of any new or modified businesses; • entry into markets and geographic areas where we have limited or no experience; • loss of key employees; • adverse effects on our relationships with suppliers and customers; and • adverse effects on any existing relationships, including suppliers and customers.
Transactions of this sort could involve numerous risks, including: • unforeseen operating difficulties and expenditures arising from the process of integrating any new business, product or technology, including related personnel; • diversion of a significant amount of management’s attention from the ongoing development of our business; • dilution of existing stockholders’ ownership interest in us; • incurrence of additional debt; • exposure to additional operational risk and liability, including risks arising from the operating history of any new or modified businesses; • entry into markets and geographic areas where we have limited or no experience; • loss of key employees; • adverse effects on our relationships with suppliers and customers; and 21 • adverse effects on any existing relationships, including suppliers and customers.
The market price of the Company’s common stock is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following: • the inability to obtain or maintain the listing of our shares of common stock on Nasdaq; • the inability to recognize the anticipated benefits of any strategic opportunities or corporate transactions, which may be affected by, among other things, competition, our ability to grow and manage growth profitably, and our ability to retain our key employees; • changes in applicable laws or regulations; • risks relating to the uncertainty of our projected financial information; and • risks related to the organic and inorganic growth of our business and the timing of expected business milestones.
The market price of the Company’s common stock is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following: • the inability to obtain or maintain the listing of our shares of common stock on Nasdaq; • the inability to recognize the anticipated benefits of any strategic opportunities or corporate transactions, which may be affected by, among other things, competition, our ability to grow and manage growth profitably, and our ability to retain our key employees; 33 • changes in applicable laws or regulations; • risks relating to the uncertainty of our projected financial information; and • risks related to the organic and inorganic growth of our business and the timing of expected business milestones.
Our international operations expose us to numerous challenges and risks, including, but not limited to, the following: • adverse political, regulatory, legislative and economic conditions in various jurisdictions; • costs of complying with varying governmental regulations; • fluctuations in currency exchange rates; • difficulties in developing, acquiring or licensing programming and products that appeal to a variety of audiences and cultures; • global supply chain disruptions; • scarcity of attractive licensing and joint venture partners; • the potential need for opening and managing distribution centers abroad; and • difficulties in protecting intellectual property rights in foreign countries.
Our international operations expose us to numerous challenges and risks, including, but not limited to, the following: • adverse political, regulatory, legislative and economic conditions in various jurisdictions; • costs of complying with varying governmental regulations; • fluctuations in currency exchange rates; • difficulties in developing, acquiring or licensing programming and products that appeal to a variety of audiences and cultures; • global supply chain disruptions; • scarcity of attractive licensing and joint venture partners; 19 • the potential need for opening and managing distribution centers abroad; and • difficulties in protecting intellectual property rights in foreign countries.
Any failure by our management team to perform as expected may have a material adverse effect on our business, prospects, financial condition and results of operations. Geopolitical risks, such as those associated with Russia’s war with Ukraine and armed conflicts in the Middle East, could result in a decline in the outlook for the U.S. and global economies.
Any failure by our management team to perform as expected may have a material adverse effect on our business, prospects, financial condition and results of operations. 37 Geopolitical risks, such as those associated with Russia’s war with Ukraine and armed conflicts in the Middle East, could result in a decline in the outlook for the U.S. and global economies.
The covenants restrict our ability to, among other things: • incur or guarantee additional indebtedness; 21 • make loans and investments; • enter into agreements restricting our subsidiaries’ abilities to pay dividends; • create liens; • sell or otherwise dispose of assets; • enter new lines of business; • merge or consolidate with other entities; and • engage in transactions with affiliates.
The covenants restrict our ability to, among other things: • incur or guarantee additional indebtedness; • make loans and investments; • enter into agreements restricting our subsidiaries’ abilities to pay dividends; • create liens; • sell or otherwise dispose of assets; • enter new lines of business; • merge or consolidate with other entities; and • engage in transactions with affiliates.
The occurrence of any of these events may have a material adverse effect on our business, prospects, financial condition, results of operations or cash flows, as well as the trading price of our securities. 12 Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property of third parties.
The occurrence of any of these events may have a material adverse effect on our business, prospects, financial condition, results of operations or cash flows, as well as the trading price of our securities. Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property of third parties.
Federal NOL carryforwards generated by us before January 1, 2018 will continue to have a twenty-year carryforward period and will not be subject to the taxable income limitation. 14 We are subject to taxation related risks in multiple jurisdictions. We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions.
Federal NOL carryforwards generated by us before January 1, 2018 will continue to have a twenty-year carryforward period and will not be subject to the taxable income limitation. We are subject to taxation related risks in multiple jurisdictions. We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions.
Our failure to fully realize the expected financial benefits from our asset dispositions and cost reduction actions could also lead to the implementation of additional restructuring-related activities in the future, which could exacerbate these risks or introduce new risks which could materially adversely affect our business, financial position, liquidity and results of operations.
Our failure to fully realize the expected financial benefits from our asset dispositions, business transitions and cost reduction actions could also lead to the implementation of additional restructuring-related activities in the future, which could exacerbate these risks or introduce new risks which could materially adversely affect our business, financial position, liquidity and results of operations.
We cannot assure you that one or more of these factors or the demands on our management and financial resources would not adversely affect any current or future international operations and our business as a whole. 18 We are exposed to fluctuations in currency exchange rates.
We cannot assure you that one or more of these factors or the demands on our management and financial resources would not adversely affect any current or future international operations and our business as a whole. We are exposed to fluctuations in currency exchange rates.
Furthermore, we may not be successful in identifying appropriate strategic transaction candidates or consummating transactions on terms favorable or acceptable to us or at all. 20 When we pursue new strategic opportunities or corporate transactions, our due diligence reviews are subject to inherent uncertainties and may not reveal all potential risks.
Furthermore, we may not be successful in identifying appropriate strategic transaction candidates or consummating transactions on terms favorable or acceptable to us or at all. When we pursue new strategic opportunities or corporate transactions, our due diligence reviews are subject to inherent uncertainties and may not reveal all potential risks.
In addition, an adverse resolution of any lawsuit or claim against us could negatively impact our reputation and our brand image and could have a material adverse effect on our business. 35 In addition, we rely on our employees, consultants and sub-contractors to conduct our operations in compliance with applicable laws and standards.
In addition, an adverse resolution of any lawsuit or claim against us could negatively impact our reputation and our brand image and could have a material adverse effect on our business. In addition, we rely on our employees, consultants and sub-contractors to conduct our operations in compliance with applicable laws and standards.
If we do not have fully offsetting revenues in these currencies and if the value of the U.S. dollar depreciates significantly against these currencies, our costs as measured in U.S. dollars as a percent of our revenues will correspondingly increase and our margins will suffer. As a result, our operating results could be harmed.
If we do not have fully offsetting revenues in the relevant currencies and if the value of the U.S. dollar depreciates significantly against these currencies, our costs as measured in U.S. dollars as a percent of our revenues will correspondingly increase and our margins will suffer. As a result, our operating results could be harmed.
If any of these risks occur and we do not achieve the intended or expected benefits of our licensing strategy, our results of operations, and financial condition could be materially adversely affected. The terms of our licensing arrangements vary. These different terms could have a material impact on our performance.
If any of these risks occur and we do not achieve the intended or expected benefits of our licensing strategy, our results of operations, and financial condition could be materially adversely affected. 27 The terms of our licensing arrangements vary. These different terms could have a material impact on our performance.
While we are not able to reliably predict particular regulatory developments that could affect us adversely, those regulations related to adult content, the Internet, consumer products and commercial advertising illustrate some of the potential difficulties we face. 17 Adult content.
While we are not able to reliably predict particular regulatory developments that could affect us adversely, those regulations related to adult content, the Internet, consumer products and commercial advertising illustrate some of the potential difficulties we face. Adult content.
The standstill period means any period from and after January 30, 2023 in which RT and their affiliates collectively own, beneficially or of record, more than 14.9% of the total outstanding shares of our common stock.
The standstill period for RT means any period from and after January 30, 2023 in which RT and their affiliates collectively own, beneficially or of record, more than 14.9% of the total outstanding shares of our common stock.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in our annual or interim consolidated financial statements might not be prevented or detected on a timely basis, as occurred with certain of our interim consolidated financial statements in 2023, which were then restated and corrected in amended Quarterly Reports on Form 10-Q prior to the filing of this Annual Report on Form 10-K.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in our annual or interim consolidated financial statements might not be prevented or detected on a timely basis, as occurred with certain of our interim consolidated financial statements in 2023, which were then restated and corrected in amended Quarterly Reports on Form 10-Q prior to the filing of our Annual Report on Form 10-K for 2023.
Our access to transponders may also be restricted or denied if: 29 • we or the satellite transponder providers are indicted or otherwise charged as a defendant in a criminal proceeding; • the Federal Communications Commission issues an order initiating a proceeding to revoke the satellite owner’s authorization to operate the satellite; • the satellite transponder providers are ordered by a court or governmental authority to deny us access to the transponder; • we are deemed by a governmental authority to have violated any obscenity law; or • the satellite transponder providers fail to provide the required services.
Our access to transponders may also be restricted or denied if: 30 • we or the satellite transponder providers are indicted or otherwise charged as a defendant in a criminal proceeding; • the Federal Communications Commission issues an order initiating a proceeding to revoke the satellite owner’s authorization to operate the satellite; • the satellite transponder providers are ordered by a court or governmental authority to deny us access to the transponder; • we are deemed by a governmental authority to have violated any obscenity law; or • the satellite transponder providers fail to provide the required services.
Summary of Risk Factors We have in the past been adversely affected by certain of, and may in the future be materially and adversely affected by, the following risks: • our ability to maintain the value and reputation of the Playboy brand; • operating in highly competitive industries; • our ability to anticipate changes in the market for our products and services and rapidly adapt; • our ability to obtain, maintain and protect our intellectual property rights, in particular trademarks and copyrights; • business constraints, negative publicity, lawsuits and boycotts as a result of our business involving the provision of products with adult or sexually explicit content; • material weaknesses identified with respect to our internal controls over financial reporting; • potential impairments of our intangible assets; • potential limitations on the use of our net operating losses; • various taxation related risks in multiple jurisdictions; • potential systems failures or network access challenges and our exposure to cybersecurity and data privacy risks; • compliance with payment processor requirements and government regulations; • interest rate risk that could cause our debt service obligations to increase significantly; • foreign exchange rate and other operational risks related to the significant portion of our business outside the U.S.; • challenges relating to operations and expansion outside of the U.S.; • litigation expenses and potential adverse results; • the costs to the Company and management’s time needed to comply with public company requirements; • our ability to attract and retain key employees and hire qualified management and personnel; • difficulties in pursuing and completing corporate transactions on economically acceptable terms; • realizing the business benefits of our strategic objectives, including through joint ventures, dispositions or other strategic transactions; • limitations imposed by our debt and other financial obligations; • our ability to attract and retain new customers and subscribers through our marketing efforts; • the demand for our products and services; • changing global economic conditions and standards, including with respect to international trade tensions; • our ability to manage the various licensing and selling models in our operations; 10 • the concentration of a substantial portion of our licensing revenue with a limited number of licensees and retail partners; • supply chain risk to us and our licensees; • our dependence on third parties to help operate certain aspects of our e-commerce business; • the adoption, implementation and performance of new enterprise systems; • increasing competition for and changing dynamics in the marketplace for our adult content, digital and consumer products; • our ability to maintain our agreements with multiple system operators and direct-to-home operators on favorable terms; • challenges in growing our Playboy Club business, including through the sale of digital memberships; • our ability to identify, fund investment in and commercially exploit new technology; • shifts in consumer behavior as a result of technological innovations and changes in the distribution and consumption of content; • our ability to meet the listing requirements to be listed on the Nasdaq Stock Market and maintain the listing of our securities in the future; • the limited liquidity, significant volatility and potential for further dilution of our common stock; and • our need for additional capital, and constraints to obtaining it, to fund future operations.
Summary of Risk Factors We have in the past been adversely affected by certain of, and may in the future be materially and adversely affected by, the following risks: • our ability to maintain the value and reputation of the Playboy brand; • operating in highly competitive industries; • our ability to anticipate changes in the market for our products and services and rapidly adapt; • our ability to obtain, maintain and protect our intellectual property rights, in particular trademarks and copyrights; • business constraints, negative publicity, lawsuits and boycotts as a result of our business involving the provision of products with adult or sexually explicit content; • material weaknesses identified with respect to our internal controls over financial reporting; • potential impairments of our intangible assets; • potential limitations on the use of our net operating losses; • various taxation related risks in multiple jurisdictions; • potential systems failures or network access challenges and our exposure to cybersecurity and data privacy risks; • compliance with payment processor requirements and government regulations; • interest rate risk that could cause our debt service obligations to increase significantly; • foreign exchange rate and other operational risks related to the significant portion of our business outside the U.S.; • challenges relating to operations and expansion outside of the U.S.; • litigation expenses and potential adverse results; • the costs to the Company and management’s time needed to comply with public company requirements; • our ability to attract and retain key employees and hire qualified management and personnel; • difficulties in pursuing and completing corporate transactions on economically acceptable terms; • realizing the business benefits of our strategic objectives, including through joint ventures, dispositions or other strategic transactions; • limitations imposed by our debt and other financial obligations; • our ability to attract and retain new customers and subscribers through our marketing efforts; • the demand for our products and services; • changing global economic conditions and standards, including with respect to international trade tensions; • our ability to manage the various licensing and selling models in our operations; 11 • the concentration of a substantial portion of our licensing revenue with a limited number of licensees and retail partners; • supply chain risk to us and our licensees; • our dependence on third parties who operate certain Playboy businesses pursuant to license agreements; • the adoption, implementation and performance of new enterprise systems; • increasing competition for and changing dynamics in the marketplace for our adult content, digital and consumer products; • our ability to maintain our agreements with multiple system operators and direct-to-home operators on favorable terms; • challenges in growing our Playboy Club business, including through the sale of digital memberships; • our ability to identify, fund investment in and commercially exploit new technology; • shifts in consumer behavior as a result of technological innovations and changes in the distribution and consumption of content; • our ability to meet the listing requirements to be listed on the Nasdaq Stock Market and maintain the listing of our securities in the future; • the limited liquidity, significant volatility and potential for further dilution of our common stock; and • our need for additional capital, and constraints to obtaining it, to fund future operations.
Our direct-to-consumer business has historically experienced higher sales in the fourth quarter due to the end-of-year holiday season, but changing market conditions and demand could affect such sales. To the extent that we continue to experience seasonality, or there are material changes in our seasonal business and revenues, such factors may result in volatility in our financial results.
Our Honey Birdette direct-to-consumer business has historically experienced higher sales in the fourth quarter due to the end-of-year holiday season, but changing market conditions and demand could affect such sales. To the extent that we continue to experience seasonality, or there are material changes in our seasonal business and revenues, such factors may result in volatility in our financial results.
If we are unable to provide retail and digital experiences that align with consumer expectations and preferences, it could have an adverse impact on our revenues, business and results of operations. 25 We often make advance commitments to purchase products, which may make it more difficult for us to adapt to rapidly-evolving changes in consumer preferences.
If we are unable to provide retail and digital experiences that align with consumer expectations and preferences, it could have an adverse impact on our revenues, business and results of operations. 26 We often make advance commitments to purchase products, which may make it more difficult for us to adapt to rapidly-evolving changes in consumer preferences.
Any write-down of intangible assets resulting from future periodic evaluations could, as applicable, have a material effect on our financial results. 24 Additional Risks Related to Our Licensing and Direct-to-Consumer Businesses We utilize various licensing and selling models in our operations, and our success is dependent on our ability to manage these different models.
Any write-down of intangible assets resulting from future periodic evaluations could, as applicable, have a material effect on our financial results. 25 Additional Risks Related to Our Licensing and Direct-to-Consumer Businesses We utilize various licensing and selling models in our operations, and our success is dependent on our ability to manage these different models.
On November 3, 2023, we received a letter (the “Nasdaq Staff Deficiency Letter”) from Nasdaq indicating that, for the prior thirty consecutive business days, the bid price for PLBY’s common stock had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Global Market under Nasdaq Listing Rule 5450(a)(1).
On November 3, 2023, we received a letter (a “Nasdaq Staff Deficiency Letter”) from Nasdaq indicating that, for the prior thirty consecutive business days, the bid price for PLBY’s common stock had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Global Market under Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Rule”).
Because we are dependent on these licensees for a significant portion of our licensing revenue, if any of our material licensees have financial difficulties affecting their ability to make payments, cease operations, or if any such licensees do not renew or extend any existing agreements, or significantly reduce their sales of licensed products under any agreement, we were, and could continue to be, required to adjust how we account for revenue pursuant to such licenses, and our revenue and cash flows were, and could continue to be, reduced substantially, which has had, and could continue to have, a material adverse impact on our financial condition, results of operations and business.
As we are dependent on these licensees for a significant portion of our revenue, if any of our material licensees have financial difficulties affecting their ability to make payments, cease operations, or if any such licensees do not renew or extend any existing agreements, or significantly reduce their sales of licensed products under any agreement, we were, and could continue to be, required to adjust how we account for revenue pursuant to such licenses, and our revenue and cash flows were, and could continue to be, reduced substantially, which has had, and could continue to have, a material adverse impact on our financial condition, results of operations and business.
We cannot assure you that we can remain competitive with companies that have greater resources or that offer alternative product, entertainment or content offerings. 11 The market for our physical and digital products is changing rapidly, and unless we are able to anticipate these changes and rapidly adapt, we will lose market share.
We cannot assure you that we can remain competitive with companies that have greater resources or that offer alternative product, entertainment or content offerings. 12 The market for our physical and digital products is changing rapidly, and unless we are able to anticipate these changes and rapidly adapt, we will lose market share.
We may not be able to fully implement all asset dispositions or intended cost reduction actions or realize their benefits, including within the anticipated timeline, nor may we be able to identify and/or implement additional asset dispositions or cost reduction actions necessary to achieve positive cash flows, including potentially as a result of factors outside of our control.
We may not be able to fully implement all asset dispositions, business transitions or intended cost reduction actions or realize their benefits, including within the anticipated timeline, nor may we be able to identify and/or implement additional asset dispositions or cost reduction actions necessary to achieve positive cash flows, including potentially as a result of factors outside of our control.
In addition, a portion of our costs and expenses have been, and we anticipate will continue to be, denominated in foreign currencies.
In addition, a portion of our revenue, costs and expenses have been, and we anticipate will continue to be, denominated in foreign currencies.
A weak economy or softness in sectors of licensees of our consumer business could exacerbate this risk. This, in turn, could decrease our potential revenues and cash flows. 27 We rely on our suppliers, and the suppliers of our licensees, to comply with our terms and conditions, regulatory requirements and the quality and delivery expectations of our customers.
A weak economy or softness in sectors of licensees of our consumer business could exacerbate this risk. This, in turn, could decrease our potential revenues and cash flows. 28 We rely on our suppliers, and the suppliers of our licensees, to comply with our terms and conditions, regulatory requirements and the quality and delivery expectations of our customers.
The debt under our senior secured credit facility accrues interest subject to variable rates of interest, which exposes us to interest rate risk. Reference rates used to determine the applicable interest rates for our variable rate debt began to rise significantly in the second half of fiscal year 2022 and continued through fiscal year 2023.
The debt under our senior secured credit facility accrues interest subject to variable rates of interest, which exposes us to interest rate risk. Reference rates used to determine the applicable interest rates for our variable rate debt began to rise significantly in the second half of fiscal year 2022 and continued through fiscal year 2024.
A decline in Playboy Club membership levels and revenues of the creator platform could have an adverse effect on our business, results of operations and financial condition. 30 Our digital content business involves risks of liability claims for media content, which could adversely affect our business, financial condition or results of operations.
A decline in Playboy Club membership levels and revenues of the creator platform could have an adverse effect on our business, results of operations and financial condition. 31 Our digital content business involves risks of liability claims for media content, which could adversely affect our business, financial condition or results of operations.
In addition, the implementation of these dispositions, cost reduction actions and changes to our workforce could have unintended consequences to us, including negatively impacting our sales, diversion of management attention, employee attrition beyond workforce reductions, and lower employee morale among our current employees.
In addition, the implementation of these dispositions, business transitions, cost reduction actions and changes to our workforce could have unintended consequences to us, including negatively impacting our sales, diversion of management attention, employee attrition beyond workforce reductions, and lower employee morale among our current employees.
During the fourth quarter of 2023, due to the aforementioned factors, we recorded $5.8 million of additional non-cash impairment charges related to our trademarks and $2.3 million of impairment charges related to certain Honey Birdette right-of-use assets and related leasehold improvements.
At the impairment date during the fourth quarter of 2023, due to the aforementioned factors, we recorded $5.8 million of additional non-cash impairment charges related to our trademarks and $2.3 million of impairment charges related to certain Honey Birdette right-of-use assets and related leasehold improvements.
In addition, some of our agreements with our vendors and sellers do not indemnify us from product liability. 28 Our consumer business is subject to additional risks associated with our international licensees. Many of the licensees of our consumer business are located outside the U.S.
In addition, some of our agreements with our vendors and sellers do not indemnify us from product liability. 29 Our consumer business is subject to additional risks associated with our international licensees. Many of the licensees of our consumer business are located outside the U.S.
No evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the business will have been detected. Our use of certain tax attributes may be limited. We had significant net operating losses (“NOLs”) as of December 31, 2023.
No evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the business will have been detected. 15 Our use of certain tax attributes may be limited. We had significant net operating losses (“NOLs”) as of December 31, 2024.
RT may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Stockholders should consider that the interests of RT may differ from their interests in material respects.
RT and/or Byborg may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Stockholders should consider that the interests of RT and Byborg may differ from their interests in material respects.
Additionally, RT is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or supply us with goods and services.
Additionally, each of RT and Byborg is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or supply us with goods and services.
Promptly following the filing of this Annual Report on Form 10-K, we intend to register more than 2.9 million new shares of common stock and over 300,000 shares of common stock that were returned to our equity incentive plans (due to their cancellation or forfeiture, which may be reissued under such plans) on another Form S-8 for future issuances under our equity incentive plans, in accordance with the terms thereof.
Promptly following the filing of this Annual Report on Form 10-K, we intend to register more than 3.6 million new shares of common stock and over 300,000 shares of common stock that were returned to our equity incentive plans (due to their cancellation or forfeiture, which may be reissued under such plans) on another Form S-8 for future issuances under our equity incentive plans, in accordance with the terms thereof.
In addition, RT’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our stockholders from realizing a premium over the market price for their common stock.
In addition, each of RT’s and Byborg’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our stockholders from realizing a premium over the market price for their common stock.
Our digital operations are subject to systems failures and disruptions. The uninterrupted performance of our computer systems is critical to the operations of our websites. Certain of our computer systems are located on-site and others are at external third-party sites, and, as such, may be vulnerable to fire, loss of power, telecommunications failures, cybersecurity breaches and other similar catastrophes.
The uninterrupted performance of our computer systems is critical to the operations of our websites. Certain of our computer systems are located on-site and others are at external third-party sites, and, as such, may be vulnerable to fire, loss of power, telecommunications failures, cybersecurity breaches and other similar catastrophes.
The international scope of our operations has contributed, and may continue to contribute, to volatile financial results and difficulties in managing our business. For the years ended December 31, 2023 and 2022, we derived approximately 57% and 59%, respectively, of our consolidated revenues from countries outside the U.S., and we experienced significant challenges in the China market during those years.
The international scope of our operations has contributed, and may continue to contribute, to volatile financial results and difficulties in managing our business. For the years ended December 31, 2024 and 2023, we derived approximately 52% and 57%, respectively, of our consolidated revenues from countries outside the U.S., and we experienced significant challenges in the China market during those years.
RT may have interests that are different from yours and may vote in a way with which you disagree and that may be adverse to your interests.
Both RT and Byborg may have interests that are different from yours and may vote in a way with which you disagree and that may be adverse to your interests.
No assurance can be given that we will be able to effectively compete against the tube sites and other internet products. Failure to maintain our agreements with multiple system operators, or MSOs, and direct-to-home, or DTH, operators on favorable terms could adversely affect our business, financial condition or results of operations.
No assurance can be given that we will be able to effectively compete against the tube sites and other internet products. Failure to maintain our agreements with multiple system operators (“MSOs”) and direct-to-home (“DTH”) operators on favorable terms could adversely affect our business, financial condition or results of operations.
The Secured Overnight Financing Rate (“SOFR”), which we use as a benchmark for establishing the interest rate applicable to our debt, was 4.3% and 5.4% as of December 31, 2022 and December 31, 2023, respectively.
The Secured Overnight Financing Rate (“SOFR”), which we use as a benchmark for establishing the interest rate applicable to our debt, was 4.5% and 5.4% as of December 31, 2024 and December 31, 2023, respectively.
During the second quarter of 2023, due to further impacts to our revenue, including declines in consumer demand and discontinued operations, we recorded non-cash asset impairment charges related to the write-down of goodwill of $66.7 million, indefinite-lived trademarks of $65.5 million, and trade names of $5.1 million.
At the impairment date during the second quarter of 2023, due to impacts to our revenue, including declines in consumer demand and discontinued operations, we recorded non-cash asset impairment charges related to the write-down of goodwill of $66.7 million, indefinite-lived trademarks of $65.5 million and trade names and other assets of $5.1 million.
Because of the prominence of the Playboy brand, we (and/or third parties we use) have been and may continue to be a particularly attractive target for such attacks, and from time to time, we have experienced the unauthorized access of certain digital data.
Because of the prominence of the Playboy and Honey Birdette brands, we (and/or third parties we use) have been and may continue to be a particularly attractive target for such attacks, and from time to time, we have experienced the unauthorized access of certain digital data.
Our senior secured credit agreement contains various covenants, restrictions and required financial ratios and tests that limit our operating flexibility. The violation of one or more of these covenants, ratios or tests could have a material adverse effect on our business, financial condition and operating results. Our senior secured credit agreement contains covenants that limit our actions.
The violation of one or more of these covenants, ratios or tests could have a material adverse effect on our business, financial condition and operating results. Our senior secured credit agreement contains covenants that limit our actions.
Any of these factors could harm our financial results. We may not realize the expected financial benefits from our disposition of assets and/or our cost reductions, including within the anticipated timelines. Our strategic initiatives include identifying and implementing actions designed to shift to a more capital-light business model and significantly reduce our expenses.
Any of these factors could harm our financial results. We may not realize the expected financial benefits from our disposition of assets, transition of owned-and-operated businesses to licensing arrangements and/or our cost reductions, including within the anticipated timelines. Our strategic initiatives include identifying and implementing actions designed to shift to a more capital-light business model and significantly reduce our expenses.
While none of our content is directed at children under 13-years of age, if COPPA were to apply to us, failure to comply with COPPA may increase our costs, subject us to expensive and distracting government investigations and could result in substantial fines.
While none of our content is directed at children under 13-years of age, if COPPA or other age verification or limitation laws were to apply to us, failure to comply with such laws may increase our costs, subject us to expensive and distracting government investigations and could result in substantial fines.
In Australia, we also have $11.4 million of NOLs available to carry forward indefinitely. The statute of limitations for tax years 2018 and forward remains open to examination by the major U.S. taxing jurisdictions to which we are subject. The statute of limitations for tax year 2017 and forward remain open to examination in Australia.
In Australia, we also have $8.6 million of NOLs available to carry forward indefinitely. The statute of limitations for tax years 2020 and forward remains open to examination by the major U.S. taxing jurisdictions to which we are subject. The statute of limitations for tax year 2018 and forward remain open to examination in Australia.
In October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which comprised $152.2 million of unrecognized licensing revenue under our long-term contracts as of the termination date and resulted in a decrease in licensing revenue of $16.6 million in 2023.
In October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which comprised $152.2 million of unrecognized licensing revenue under our long-term contracts as of the termination date.
In addition to the licensing model, we operate online and brick-and-mortar retail stores and we produce and sell directly to customers. Although we believe these various models could have certain benefits, these models could themselves be unsuccessful and our beliefs could turn out to be wrong.
In addition to the licensing model, we operate online and brick-and-mortar retail stores for Honey Birdette which sell products directly to customers. Although we believe these various models could have certain benefits, these models could themselves be unsuccessful and our beliefs could turn out to be wrong.
Risks that impact our business as a whole may also impact the success of our direct-to-consumer, or DTC, business. We may not successfully execute on our DTC strategy (which includes our online and brick-and-mortar retail platforms). Consumers may not be willing to pay for an expanding set of DTC products, potentially exacerbated by an economic downturn.
Risks that impact our business as a whole may also impact the success of our direct-to-consumer (“DTC”) business. We may not successfully execute on our DTC strategy (which is currently comprised of Honey Birdette online and brick-and-mortar retail platforms). Consumers may not be willing to pay for an expanding set of DTC products, potentially exacerbated by an economic downturn.
Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity, along with proceeds from asset dispositions and savings from cost reductions initiatives, will be sufficient to meet our obligations as they become due under the A&R Credit Agreement (as defined herein) and our other obligations for at least one year following the date of the filing of this Annual Report on Form 10-K.
Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity will be sufficient to meet our obligations as they become due under the A&R Credit Agreement (as defined herein) for our senior secured debt and our other obligations for at least one year following the date of the filing of this Annual Report on Form 10-K.
The imposition by tax authorities of sales tax collection obligations on out-of-jurisdiction sellers could also create additional administrative burdens for us, put us at a perceived competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could adversely affect our business and operating results.
The imposition by tax authorities of sales tax collection obligations on out-of-jurisdiction sellers could also create additional administrative burdens for us, put us at a perceived competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could adversely affect our business and operating results. 16 Our digital operations are subject to systems failures and disruptions.
For instance, during the years ended December 31, 2023 and 2022, the five largest license agreements comprised 21% and 25%, respectively, of our consolidated revenues. In 2023 and 2022, our largest licensee, which was terminated in October 2023, contributed 16% and 12%, respectively, of our consolidated revenues.
For instance, during the years ended December 31, 2024 and 2023, the five largest license agreements comprised 10% and 21%, respectively, of our consolidated revenues. In 2023, our largest licensee, which was terminated in October 2023, contributed 16% of our consolidated revenues. In 2024, our largest licensee contributed 5% of our consolidated revenues.
The directors RT elects have the authority to incur additional debt, issue or repurchase stock, declare dividends and make other decisions that could be detrimental to stockholders.
The directors RT and Byborg designate have the authority to cause us to incur additional debt, issue or repurchase stock, declare dividends and make other decisions that could be detrimental to stockholders.
Pursuant to the Standstill Agreement, among other limitations, RT and their affiliates agreed not to purchase shares of our common stock to the extent that RT and their affiliates’ ownership would exceed 29.99% of our outstanding shares of common stock in the aggregate following any acquisition of common stock during the standstill period.
Pursuant to the Standstill Agreements, among other limitations, each of RT and Byborg and their respective affiliates agreed not to purchase shares of our common stock to the extent that each of them together with their affiliates’ ownership would exceed 29.99% of our outstanding shares of common stock in the aggregate following any acquisition of common stock during the standstill period.
Adverse developments affecting economies throughout the world, including a general tightening of the availability of credit, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, increased energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could lead to a further reduction in discretionary spending. • Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) could have a material adverse effect on our costs, gross margins and profitability. • If retailers of our licensed products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in late licensee payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense. • If licensees or retailers of our products experience severe financial difficulty, including becoming insolvent or ceasing business operations, this could negatively impact the sale of our products to consumers and the ability of such licensees or retailers to make required payments to us. 23 • Our business is particularly sensitive to reductions from time to time in discretionary consumer spending.
Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies could have a significant impact on our reported operating results and financial condition. • Adverse developments affecting economies throughout the world, including a general tightening of the availability of credit, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, increased energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could lead to a further reduction in discretionary spending. • Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) could have a material adverse effect on our costs, gross margins and profitability. 24 • If retailers of our licensed products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in late licensee payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense. • If licensees or retailers of our products experience severe financial difficulty, including becoming insolvent or ceasing business operations, this could negatively impact the sale of our products to consumers and the ability of such licensees or retailers to make required payments to us. • Demand for entertainment and leisure activities can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control.
If we are not able to fully achieve the expected financial benefits of our asset dispositions and cost reduction actions within the anticipated timeline, we may not be able to effectively mitigate the negative impacts of the current ongoing negative macroeconomic conditions on our business, which in turn, could weaken our ability to support our ongoing operations, satisfy covenants under our A&R Credit Agreement and otherwise meet our obligations as they become due, and further, cause management to change its assessment of our ability to continue as a going concern (see Note 1 to our consolidated financial statements included in this Annual Report on Form 10-K for further discussion of management’s most recent assessment).
If we are not able to fully achieve the expected financial benefits of our asset dispositions, business transitions and cost reduction actions within the anticipated timelines, we may not be able to effectively mitigate the negative impacts of the current ongoing negative macroeconomic conditions on our business, which in turn, could weaken our ability to support our ongoing operations, satisfy covenants under our A&R Credit Agreement and otherwise meet our obligations as they become due, and further, cause management to change its assessment of our liquidity (refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of management’s most recent assessment).
To fund our operations and develop and commercialize our products, we have relied primarily on equity and debt financings. We expect our capital expenditures and working capital requirements in 2024 to be largely consistent with 2023, as we continue to invest in our creator platform.
To fund our operations and develop and commercialize our products, we have relied primarily on equity and debt financings. We expect our capital expenditures and working capital requirements in 2025 to be largely consistent with 2024.
Even though RT may own or control less than a majority of our total outstanding shares of our common stock, it is able to influence the outcome of corporate actions so long as it owns a significant portion of our total outstanding shares of our common stock.
Even though RT and Byborg may own or control less than a majority of our total outstanding shares of our common stock, they are able to influence the outcome of corporate actions so long as they each own a significant portion of our total outstanding shares of our common stock.
In addition, we derive affiliate fees and royalties from the distribution of our programming, sales of our licensed goods and services by third parties, and the management of businesses operated under brands licensed from us, and we are therefore dependent on the success of those third parties for that portion of our revenue.
Moreover, the costs of protecting against such incidents reduce the profitability of our operations. 23 In addition, we derive affiliate fees and royalties from the distribution of our programming, sales of our licensed goods and services by third parties, and the management of businesses operated under brands licensed from us, and we are therefore dependent on the success of those third parties for that portion of our revenue.
There are also numerous processes, policies, procedures, operations, technologies and systems that are impacted by our corporate transactions. There are many factors beyond our control that could affect the total amount or timing of expenses related to such transactions. These costs and expenses could reduce the benefits and income we expect to achieve from our corporate transactions.
There are also numerous processes, policies, procedures, operations, technologies and systems that are impacted by our corporate transactions. There are many factors beyond our control that could affect the total amount or timing of expenses related to such transactions.
Compliance with existing, proposed and recently enacted laws (including implementation of the privacy and process enhancements called for under GDPR and CCPA) and regulations can be costly and time consuming, and any failure to comply with these regulatory standards could subject us to legal and reputational risks. 16 In addition, customer interaction with our content is subject to our privacy policy and terms of service.
Compliance with existing, proposed and recently enacted laws (including implementation of the privacy and process enhancements called for under GDPR and CCPA) and regulations can be costly and time consuming, and any failure to comply with these regulatory standards could subject us to legal and reputational risks.
In the U.S. we had $328.0 million of federal NOLs available to carry forward to future periods, of which $182.3 million will expire between 2028 and 2037, and we had $137.8 million of state and local NOLs available to carry forward to future periods, of which $8.0 million can be carried forward indefinitely.
In the U.S. we had $346.0 million of federal NOLs available to carry forward to future periods, of which $182.5 million will expire between 2028 and 2037, and we had $145.9 million of state and local NOLs available to carry forward to future periods, of which $9.6 million can be carried forward indefinitely.
See Note 22, Subsequent Events, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. for further details.
Refer to Note 10, Debt, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details.
Sales of additional shares of our common stock or securities convertible into shares of common stock will dilute our stockholders’ ownership in us. 33 Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
We could be forced to enter into business arrangements on terms less favorable to us than we might otherwise obtain, which could lead to our doing business with less competitive terms, higher transaction costs and more inefficient operations than if we were able to maintain such business relationships or find replacement service providers.
We could be forced to enter into business arrangements on terms less favorable to us than we might otherwise obtain, which could lead to our doing business with less competitive terms, higher transaction costs and more inefficient operations than if we were able to maintain such business relationships or find replacement service providers. 14 If we are unable to advertise on certain platforms because of our brand or products, our revenue could be adversely impacted.
We may be subject to product liability claims when people or property are harmed by the products we sell or manufacture. Some of the products we sell have exposed us, and may continue to expose us, to product liability claims relating to personal injury or illness, death, or environmental or property damage, and can require product recalls or other actions.
Some of the products we have sold have exposed us, and products we continue to sell may further expose us, to product liability claims relating to personal injury or illness, death, or environmental or property damage, and can require product recalls or other actions.
We transact business globally in multiple currencies and have foreign currency risks related to our revenue, costs of revenue and operating expenses. To the extent we have significant revenues denominated in such foreign currencies, any strengthening of the U.S. dollar would tend to reduce our revenues as measured in U.S. dollars, as we have historically experienced, and are currently experiencing.
To the extent we have significant revenues denominated in such foreign currencies, any strengthening of the U.S. dollar would tend to reduce our revenues as measured in U.S. dollars, as we have historically experienced, and are currently experiencing.
Our insurance policies may not adequately compensate us for any losses that may occur due to any failures in our systems or the external systems used by our customers. 15 Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyberattacks, could result in the interruption of operations, unauthorized access, disclosure or destruction of data, including customer, employee and corporate information, or theft of intellectual property, including digital assets, which could adversely impact our business.
Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyberattacks, could result in the interruption of operations, unauthorized access, disclosure or destruction of data, including customer, employee and corporate information, or theft of intellectual property, including digital assets, which could adversely impact our business.
Finally, we cannot ensure that our Playboy Club, e-commerce platforms, strategic partnerships or physical stores will be well received and achieve intended net sales or profitability levels.
We cannot ensure that our Playboy Club or other digital businesses, e-commerce platforms for Playboy or Honey Birdette products, strategic partnerships and licensing deals or Honey Birdette physical stores will be well received and achieve intended net sales or profitability levels.
Our existing competitors, as well as potential new competitors, may not face such obstacles and be able to undertake more extensive marketing campaigns and reach a broader consumer base, making it more difficult for us to compete with them with similar products. 13 We have experienced, and may continue to experience, seasonality in our revenues, which may result in volatility in our financial results.
Our existing competitors, as well as potential new competitors, may not face such obstacles and be able to undertake more extensive marketing campaigns and reach a broader consumer base, making it more difficult for us to compete with them with similar products.
The presence of counterfeit versions of our products in the market and of prestige products in mass distribution channels could also dilute the value of our brands, force us and our distributors to compete with heavily discounted products, cause us to be in breach of contract (including license agreements), impact our compliance with distribution and competition laws in jurisdictions including the E.U. and China, or otherwise have a negative impact on our reputation and business, prospects, financial condition or results of operations.
The presence of counterfeit versions of our products in the market and of prestige products in mass distribution channels could also dilute the value of our brands, force us and our distributors to compete with heavily discounted products, cause us to be in breach of contract (including license agreements), impact our compliance with distribution and competition laws in jurisdictions including the E.U. and China, or otherwise have a negative impact on our reputation and business, prospects, financial condition or results of operations. 13 In order to protect or enforce our intellectual property and other proprietary rights, we may initiate litigation or other proceedings against third parties, such as infringement suits, opposition proceedings or interference proceedings.
In October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which had comprised $152.2 million of unrecognized licensing revenue over the remaining terms of such long-term contracts as of the termination date, and resulted in a decrease in licensing revenue of $16.6 million in 2023.
The changes from 2023 to 2024 were driven by GAAP-required revenue recognition related to terminated licenses. In October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which had comprised $152.2 million of unrecognized licensing revenue over the remaining terms of such long-term contracts as of the termination date.
Our products and content may be considered discretionary items for consumers. Many factors impact discretionary spending, including general economic conditions, unemployment, the availability of consumer credit and inflationary pressures and consumer confidence in future economic conditions.
Many factors impact discretionary spending, including general economic conditions, unemployment, the availability of consumer credit and inflationary pressures and consumer confidence in future economic conditions.
We cannot guarantee that, if and when needed, additional financing will be available to us on acceptable terms or at all. If additional capital is needed and is either unavailable or cost prohibitive, our growth may be limited as we may need to change our business strategy to slow the rate of, or eliminate, our expansion plans.
If additional capital is needed and is either unavailable or cost prohibitive, our growth may be limited as we may need to change our business strategy to slow the rate of, or eliminate, our expansion plans.
Increased scrutiny by regulatory agencies, such as the Federal Trade Commission and state agencies, of the use of employee and customer information could also result in additional expenses if we are obligated to reengineer systems to comply with new regulations or to defend investigations of our privacy practices.
If any such attempts are successful in the future and materially impact our business, employees and/or customers, we could be subject to liability which could negatively impact our financial condition and damage our business. 17 Increased scrutiny by regulatory agencies, such as the Federal Trade Commission and state agencies, of the use of employee and customer information could also result in additional expenses if we are obligated to reengineer systems to comply with new regulations or to defend investigations of our privacy practices.
We currently anticipate we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.
Because we do not anticipate paying any cash dividends in the foreseeable future, capital appreciation, if any, would be your sole source of gain. We currently anticipate we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.
If Nasdaq delists our common stock, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • loss of eligibility to use or rely on our existing and/or any new registration statements on Form S-3; • a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock; • a limited amount of news and analyst coverage for our company; and • a decreased ability to issue additional securities or obtain additional financing in the future.
If Nasdaq delists our common stock, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • loss of eligibility to use or rely on our existing and/or any new registration statements on Form S-3; • a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock; • a limited amount of news and analyst coverage for our company; and • a decreased ability to issue additional securities or obtain additional financing in the future. 32 Our Chairman, Suhail Rizvi, together with entities he controls (“RT”), and our director Gyorgy Gattyan, together with entities he controls (which are affiliates of Byborg), each own a significant percentage of our common stock, and they may effectively control our major corporate decisions, and their interests may conflict with your interests as an owner of our common stock and with our interests.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity leaders report to our Chief Operating Officer and General Counsel on cybersecurity matters and collaborate with technical and business stakeholders across our business units to assess risks and implement strategies. 36 With the assistance of third-party software, including appropriate firmware, we manage cybersecurity risk through establishing defenses against incidents, detecting and reporting cybersecurity incidents, analyzing and assessing incidents and potential responses, implementing applicable containment, eradication and recovery actions, and understanding the reasons leading to a cybersecurity incident and appropriate changes to avoid further incidents.
Biggest changeWith the assistance of third-party software, including appropriate firmware, we manage cybersecurity risk through establishing defenses against incidents, detecting and reporting cybersecurity incidents, analyzing and assessing incidents and potential responses, implementing applicable containment, eradication and recovery actions, and understanding the reasons leading to a cybersecurity incident and appropriate changes to avoid further incidents.
Our General Counsel, Chief Operating Officer and/or our Interim Chief Information Officer (as applicable) provide information to the Audit Committee on cybersecurity risks from time to time or as needed. These briefings include assessments of cybersecurity risks, information regarding any incidents, and cybersecurity risk management needs.
Our General Counsel and/or Chief Operating Officer (as applicable) provide information to the Audit Committee on cybersecurity risks from time to time or as needed. These briefings include assessments of cybersecurity risks, information regarding any incidents, and cybersecurity risk management needs.
During the years ended December 31, 2022 and 2023, we did not, to our knowledge, experience any cybersecurity incidents or breaches that materially impacted our business, performance or results. Governance Our Board has overall responsibility for risk oversight, with its committees assisting the Board in performing this function based on their respective areas of expertise.
During the years ended December 31, 2024 and 2023, we did not, to our knowledge, experience any cybersecurity incidents or breaches that materially impacted our business, performance or results. Governance Our Board has overall responsibility for risk oversight, with its committees assisting the Board in performing this function based on their respective areas of expertise.
In the event of a potentially material cybersecurity event, the Chair of the Audit Committee is notified and briefed, and meetings of the Audit Committee and/or full Board would be held, as appropriate.
In the event of a potentially material cybersecurity event, the Chair of the Audit Committee is notified and briefed, and meetings of the Audit Committee and/or full Board would be held, as appropriate. 38
We perform routine reviews of our service providers, for third-party risk management, and regularly push out security updates across our business. Our cybersecurity measures are intended to protect against unauthorized access to information, and they include authentication technology, entitlement management, access control, anti-malware software, and transmission of data firewalls.
We perform periodic reviews of our service providers for third-party risk management, and we routinely push out security updates across our business. Our cybersecurity measures are intended to protect against unauthorized access to information, and they include authentication technology, entitlement management, access control, anti-malware software, and transmission of data firewalls.
Our cybersecurity program is primarily overseen by our Interim Chief Information Officer and Senior Director of IT Infrastructure. They work closely with their information technology team and our senior management to develop and advance our cybersecurity strategy, as well as to respond to cybersecurity incidents.
Our cybersecurity program is primarily overseen by our Senior Director of IT Infrastructure, who works closely with our information technology team and our senior management to develop and advance our cybersecurity strategy, as well as to respond to cybersecurity incidents.
To defend, detect and respond to cybersecurity incidents, we, among other things: conduct routine privacy and cybersecurity reviews of systems and applications, conduct employee training, monitor emerging laws and regulations related to data protection and information security (including with respect to our digital products) and implement changes as necessary.
To defend, detect and respond to cybersecurity incidents, we conduct routine privacy and cybersecurity reviews of systems and applications, monitor emerging laws and regulations related to data protection and information security and implement changes as necessary.
Our Interim Chief Information Officer and his team, including the Senior Director of IT Infrastructure have extensive experience in cybersecurity, complemented by industry-standard certifications, and are committed to safeguarding organizational assets and mitigating cybersecurity risks effectively while efficiently leveraging cloud technologies to meet the needs of our business.
Our Senior Director of IT Infrastructure is committed to safeguarding organizational assets and mitigating cybersecurity risks effectively while efficiently leveraging cloud technologies to meet the needs of our business.
Added
Our cybersecurity leader reports to our Chief Operating Officer and General Counsel on cybersecurity matters and collaborates with stakeholders across our business units to assess risks and implement strategies.
Added
Our Senior Director of IT Infrastructure holds industry-standard certifications and has extensive experience in cybersecurity, including implementing security frameworks, compliance policies, and risk management strategies across multiple organizations, and applying that experience to cloud security, endpoint security and network security.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in Los Angeles, California, where we lease and occupy approximately 45,000 square feet of office space. Our Licensing, Direct-to-Consumer and Digital Subscriptions and Content segments all use our corporate headquarters. Through Honey Birdette, we also have over 15,000 square feet of leased office and warehouse space in the Sydney, Australia area.
Biggest changeItem 2. Properties Our corporate headquarters is located in Los Angeles, California, where we lease and occupy approximately 45,000 square feet of office space. Our Direct-to-Consumer, Licensing, and Digital Subscriptions and Content segments all use our corporate headquarters. Through Honey Birdette, we also have over 15,000 square feet of leased office and warehouse space in the Sydney, Australia area.
As of December 31, 2023, Honey Birdette operated 62 retail locations in Australia, the U.S. and the U.K., ranging in size between approximately 400 and 1,200 square feet per location. The Honey Birdette properties are used by our Direct-to-Consumer segment. We believe our properties are suitable for the purposes for which they are being used and fit our needs.
As of December 31, 2024, Honey Birdette operated 54 retail locations in Australia, the U.S. and the U.K., ranging in size between approximately 400 and 1,200 square feet per location. The Honey Birdette properties are used by our Direct-to-Consumer segment. We believe our properties are suitable for the purposes for which they are being used and fit our needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile PEII believes it has strong claims against New Handong, and that the facts of the matter support those claims, even in the event PEII were to obtain all the relief it seeks from the Arbitration, PEII can provide no assurance or guarantee that it will be able to enforce the results of the Arbitration against New Handong or recover any or all monetary awards from New Handong.
Biggest changeWhile PEII believes it has strong claims against New Handong, and that the facts of the matter support those claims, even in the event PEII were to obtain all the relief it seeks from the Arbitration, PEII can provide no assurance or guarantee that it will be able to enforce the results of the Arbitration against New Handong or fully recover any monetary awards from New Handong. 39 Former Model Case On July 5, 2024, a former Playboy model filed a complaint against the Company, certain of the Company’s affiliates and A&E Television Networks LLC (“A&E”, and collectively, with the Company and its affiliates, the “Defendants”) in California Superior Court for claims arising from A&E’s “Secrets of Playboy” show (the “A&E Show”) which showed certain Playboy videos that depicted the former model.
On February 6, 2021, PEII received a letter from counsel to AVS alleging that the termination of the contract was improper, and that PEII failed to meet its contractual obligations, preventing AVS from fulfilling its obligations under the license agreement. 37 On February 25, 2021, PEII brought suit against AVS in Los Angeles Superior Court to prevent further unauthorized sales of Playboy-branded products and for disgorgement of unlawfully obtained funds.
On February 6, 2021, PEII received a letter from counsel to AVS alleging that the termination of the contract was improper, and that PEII failed to meet its contractual obligations, preventing AVS from fulfilling its obligations under the license agreement.
AVS’ contract-related claims remain to be determined at trial, which is set for September 30, 2024. The parties are currently engaged in discovery. We believe AVS’ remaining claims and allegations are without merit, and we will defend this matter vigorously.
The parties in the AVS and Sunrise Brand cases are currently engaged in discovery, and both cases been related together by the court and will be tried together, for both pretrial and trial purposes. We believe AVS’ remaining claims and allegations are without merit, and we will defend this matter vigorously.
On March 1, 2021, PEII also brought a claim in arbitration against AVS for outstanding and unpaid license fees.
On February 25, 2021, PEII brought suit against AVS in Los Angeles Superior Court to prevent further unauthorized sales of Playboy-branded products and for disgorgement of unlawfully obtained funds. On March 1, 2021, PEII also brought a claim in arbitration against AVS for outstanding and unpaid license fees.
Removed
TNR Case On December 17, 2021, Thai Nippon Rubber Industry Public Limited Company, a manufacturer of condoms and lubricants and a publicly traded Thailand company (“TNR”), filed a complaint in the U.S. District Court for the Central District of California against PEII and its subsidiary Products Licensing, LLC.
Added
AVS’ contract-related claims remain to be determined at trial, which is set for September 2025. In addition, PEII filed a new, related complaint against Sunrise Brands based on their participation in AVS’s misconduct, as well as their own direct misconduct. Sunrise Brands has submitted an answer to that complaint.
Removed
TNR alleges a variety of claims relating to the termination of a license agreement with TNR and the business relationship between PEII and TNR prior to such termination. TNR alleges, among other things, breach of contract, unfair competition, breach of the implied covenant of good faith and fair dealing, and interference with contractual and business relations due to PEII’s conduct.
Added
Neither the Company nor its affiliates participated in any way in the creation, production, distribution or airing of the A&E Show, nor did the Company or its affiliates license or otherwise authorize use of the videos in the A&E Show.
Removed
TNR is seeking over $100 million in damages arising from the loss of expected profits, declines in the value of TNR’s business, unsalable inventory and investment losses. After PEII indicated it would move to dismiss the complaint, TNR received two extensions of time from the court to file an amended complaint. TNR filed its amended complaint on March 16, 2022.
Added
The complaint alleges, among other things, invasion of privacy, appropriation, distribution of private explicit video, negligence and unfair competition by the Defendants to the detriment of the former model. The lawsuit seeks at least $2 million in damages from the Defendants.
Removed
On April 25, 2022, PEII filed a motion to dismiss the complaint. That motion was partially granted, and the court dismissed TNR’s claims under California franchise laws without leave to amend. A trial date has been set for October 1, 2024. We believe TNR’s claims and allegations are without merit, and we will defend this matter vigorously.
Added
The Company believes the plaintiff’s claims and allegations with respect to the Company and its affiliates are without merit, and it will defend itself vigorously in this matter. Item 4. Mine Safety Disclosures Not applicable. 40 PART II
Removed
Item 4. Mine Safety Disclosures Not applicable. 38 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSuch shares were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act, as they were issued pursuant to a private placement to an accredited investor.
Biggest changeWe intend to use such proceeds for general corporate purposes. The shares were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act, as they were issued pursuant to a private placement to an accredited investor.
Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 of this Annual Report on Form 10-K and Note 14, Stock-Based Compensation of the Notes to the Consolidated Financial Statements included herein for additional information required.
Securities Authorized for Issuance Under Equity Compensation Plans Refer to Part III, Item 12 of this Annual Report on Form 10-K and Note 14, Stock-Based Compensation, of the Notes to the Consolidated Financial Statements included herein for additional information required.
In addition to holders of record of our common stock we believe there is a substantially greater number of “street name” holders or beneficial holders whose common stock is held of record by banks, brokers and other financial institutions. Dividend Policy PLBY has not paid any cash dividends on our common stock to date.
In addition to holders of record of our common stock, there are a substantially greater number of “street name” holders or beneficial holders whose common stock is held of record by banks, brokers and other financial institutions. Dividend Policy PLBY has not paid any cash dividends on our common stock to date.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information PLBY’s common stock trades on the Nasdaq Global Market under the symbol “PLBY”. Holders As of March 22, 2024, there were 71 holders of record of our outstanding common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information PLBY’s common stock trades on the Nasdaq Global Market under the symbol “PLBY”. Holders As of March 10, 2025, there were 79 holders of record of our outstanding common stock.
In addition, the terms of our New Credit Agreement (defined below) also restrict our ability to pay dividends, and we may also enter into credit agreements or other borrowing arrangements in the future that may restrict our ability to declare or pay cash dividends on our capital stock.
In addition, the terms of the credit agreement for our senior secured debt also restrict our ability to pay dividends, and we may also enter into credit agreements or other borrowing arrangements in the future that may restrict our ability to declare or pay cash dividends on our capital stock.
Removed
Recent Sales of Unregistered Securities On March 3, 2023, we issued 3,312 shares of our common stock to an independent contractor based on a price of $37.7444 per share as payment for services pursuant to the terms of a license, services and collaboration agreement.
Added
Recent Sales of Unregistered Securities On November 5, 2024, pursuant to a securities purchase agreement entered into on October 30, 2024, we issued 14,900,000 unregistered shares of our common stock in a private placement to a third-party investor, at a price of $1.50 per share, for total proceeds of $22.4 million.
Removed
Use of Proceeds from Registered Offerings On September 13, 2022, the SEC declared effective our shelf registration statement on Form S-3 (File No. 333-267273), pursuant to which we registered up to $250 million of primary issuances of certain securities listed in such registration statement.
Added
Pursuant to an Exchange Agreement, dated November 11, 2024 (the “Exchange Agreement”), between us and our senior secured lenders (the “Investors”), we issued to the Investors an aggregate of 28,000.00001 shares of Series B Convertible Preferred Stock on November 13, 2024, in exchange for an aggregate reduction by the Investors of approximately $65.3 million of the outstanding principal under our senior secured debt.
Removed
On January 24, 2023, we took down $16.25 million of such shelf registration for the issuance of 6,357,341 shares of our common stock in a registered direct offering to a limited number of investors.
Added
The offer and sale of the shares of Series B Convertible Preferred Stock through the Exchange Agreement was made in reliance upon an exemption from registration under the Securities Act, pursuant to Section 4(a)(2) thereof.
Removed
We received net proceeds of approximately $13.75 million from the registered direct offering, after the payment of offering fees and expenses, with such net proceeds to be used for general corporate purposes, which could include the repayment of debt under our senior credit agreement.
Added
On January 29, 2025, we completed the conversion (the “Conversion”) of 7,000 shares of our 28,000.00001 outstanding shares of Series B Convertible Preferred Stock into 3,784,688 shares of our common stock, at a conversion price of $1.84956 per share, in accordance with the terms of the Series B Convertible Preferred Stock.
Removed
We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock. We received net proceeds of approximately $47.6 million from the rights offering, after the payment of offering fees and expenses.
Added
As a result of the Conversion, we reduced the number of shares of Series B Convertible Preferred Stock outstanding to 21,000.00001 shares. Holders of the Series B Convertible Preferred Stock had their shares converted to common stock on a pro rata basis. We did not receive any proceeds in connection with the Conversion.
Removed
We used $45 million of the net proceeds from the rights offering for repayment of debt under our senior credit agreement, with the remainder for use on other general corporate purposes. Purchases of Equity Securities by the Issuer and Affiliated Purchasers The table below provides information regarding our share repurchases made by the Company during the fourth quarter of 2023.
Added
The common stock issued in the Conversion was issued as restricted stock and in reliance upon the exemption from registration in Section 3(a)(9) of the Securities Act.
Removed
All repurchased shares became treasury shares of the Company. 39 Month of Fourth Quarter of 2023 Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (3) October 1 through October 31 — $ — — $ — November 1 through November 30 810,463 0.49 810,463 49,589,252 December 1 through December 31 739,466 0.78 739,466 49,000,011 Total for Quarter 1,549,929 $ 0.69 1,549,929 $ 49,000,011 _________________ (1) Excludes commissions paid.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the year ended December 31, 2024, we did not repurchase any shares of our common stock pursuant to the 2022 Stock Repurchase Program, which was authorized by the Board of Directors on May 14, 2022. Item 6. [Reserved] 41
Removed
(2) Our 2022 Stock Repurchase Program (the “Repurchase Program”) was approved by the Board on May 14, 2022 and announced on May 17, 2022. The Repurchase Program authorizes the Company to purchase up to an aggregate of $50 million worth of its outstanding shares of common stock, and such authorization expires on May 31, 2024.
Removed
(3) Amounts represent the approximate dollar value of the maximum dollar value of shares that may yet be purchased under the Repurchase Program as of the end of the applicable period, inclusive of any applicable commission costs paid during the period. Item 6. [Reserved] 40

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 57 Index to Consolidated Financial Statements 57 Report of Independent Registered Public Accounting Firm (BDO USA, P.C.) 58 Consolidated Statements of Operations 60 Consolidated Statements of Comprehensive Loss 61 Consolidated Balance Sheets 62 Consolidated Statements of Stockholders’ Equity 63 Consolidated Statements of Cash Flows 64 Notes to the Consolidated Financial Statements 66
Biggest changeFinancial Statements and Supplementary Data 60 Index to Consolidated Financial Statements 60 Report of Independent Registered Public Accounting Firm (BDO USA, P.C.) 61 Consolidated Statements of Operations 63 Consolidated Statements of Comprehensive Loss 64 Consolidated Balance Sheets 65 Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit) 66 Consolidated Statements of Cash Flows 68 Notes to the Consolidated Financial Statements 70
Item 6. [ Reserved] 40 Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8.
Item 6. [ Reserved] 41 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59 Item 8.

Item 7. Management's Discussion & Analysis

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

82 edited+63 added−35 removed35 unchanged
Biggest changeInvestors should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business. 48 The following table reconciles net loss to EBITDA and Adjusted EBITDA (in thousands): Year Ended December 31, 2023 2022 Net loss $ (180,418) $ (277,704) Adjusted for: (Income) loss from discontinued operations, net of tax (6,030) 27,013 Net loss from continuing operations (186,448) (250,691) Adjusted for: Interest expense 23,293 17,719 (Gain) loss on extinguishment of debt (6,133) 1,266 Benefit from income taxes (13,770) (55,704) Depreciation and amortization 7,199 12,721 EBITDA (175,859) (274,689) Adjusted for: Stock-based compensation 9,597 20,540 Impairments 154,884 283,500 Contingent consideration fair value remeasurement (436) (29,173) Mandatorily redeemable preferred stock fair value remeasurement (6,505) (9,401) Recognition of prepaid royalty guarantees (5,084) — Write-down of capitalized software 5,051 — Inventory reserve charges 3,637 3,083 Gain on sale of the Aircraft — (5,689) Adjustments 7,415 7,335 Adjusted EBITDA $ (7,300) $ (4,494) • Impairments for the year ended December 31, 2023 relate primarily to the impairments of intangible assets, including goodwill, and impairments on certain of our licensing contracts, and impairments of certain Honey Birdette right-of-use assets and related leasehold improvements. • Impairments for the year ended December 31, 2022 relate to the impairments of digital assets and other intangible assets, including goodwill. • Contingent consideration fair value remeasurement for the year ended December 31, 2023 relates to non-cash fair value gain due to the fair value remeasurement of contingent liabilities related to our acquisition of GlowUp that remained unsettled as of December 31, 2023. • Contingent consideration fair value remeasurement for the year ended December 31, 2022 relates to non-cash fair value change due to contingent liabilities fair value remeasurement resulting from the acquisition of Honey Birdette and GlowUp. • Mandatorily redeemable preferred stock fair value remeasurement for the years ended December 31, 2023 and 2022 relates to the fair value remeasurement, non-cash fair value gain of the liability for our Series A Preferred Stock. • Recognition of prepaid royalty guarantees for the year ended December 31, 2023 relates to $5.1 million of prepaid royalty guarantees recognized as revenue in connection with termination of a licensing contract in the fourth quarter of 2023. • Write-down of capitalized software for the year ended December 31, 2023 relates to restructuring charges taken on direct-to-consumer cloud-based software in the first and fourth quarters of 2023, excluding $0.4 million of costs related to discontinued operations. • Inventory reserve charges for the year ended December 31, 2023 relate to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the first quarter of 2023 to reflect the restructuring of the Playboy Direct-to-Consumer business. • Inventory reserve charges for the year ended December 31, 2022 relate to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the third and fourth quarters of 2022 to reflect the restructuring of the Playboy Direct-to-Consumer business. 49 • Gain on sale of the Aircraft for the year ended December 31, 2022 related to its sale in September 2022. • Adjustments for the year ended December 31, 2023 are primarily related to consulting, advisory and other costs relating to corporate transactions and other strategic opportunities, as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations. • Adjustments for the year ended December 31, 2022 are related to amortization of the previously capitalized fees allocated to the second issuance of our Series A Preferred Stock in August 2022, severance, consulting, advisory and other costs relating to special projects, including the implementation of internal controls over financial reporting and adoption of accounting standards.
Biggest changeThe following table reconciles net loss to EBITDA and Adjusted EBITDA (in thousands): Year Ended December 31, 2024 2023 Net loss $ (79,397) $ (180,418) Adjusted for: Income from discontinued operations, net of tax — (6,030) Net loss from continuing operations (79,397) (186,448) Adjusted for: Interest expense 23,689 23,293 Gain on extinguishment of debt — (6,133) Expense (benefit) from income taxes 3,148 (13,770) Depreciation and amortization 7,007 7,199 EBITDA (45,553) (175,859) Adjusted for: Stock-based compensation 7,311 9,597 Impairments 26,078 154,884 Mandatorily redeemable preferred stock fair value remeasurement — (6,505) Recognition of prepaid royalty guarantees — (5,084) Write-down of capitalized software — 5,051 Inventory reserve charges — 3,637 Adjustments 5,911 6,979 Adjusted EBITDA $ (6,253) $ (7,300) • Impairments for the year ended December 31, 2024 relate to impairment charges on our artwork held for sale, corporate leases and assets related to our Digital Subscriptions and Content business. 49 • Impairments for the year ended December 31, 2023 relate primarily to the impairments of intangible assets, including goodwill, and impairments on certain of our licensing contracts, and impairments of certain Honey Birdette right-of-use assets and related leasehold improvements. • Mandatorily redeemable preferred stock fair value remeasurement for the year ended December 31, 2023 relates to the fair value remeasurement, non-cash fair value gain of the liability for such preferred stock. • Recognition of prepaid royalty guarantees for the year ended December 31, 2023 relates to $5.1 million of prepaid royalty guarantees recognized as revenue in connection with termination of a licensing contract in the fourth quarter of 2023. • Write-down of capitalized software for the year ended December 31, 2023 relates to restructuring charges taken on direct-to-consumer cloud-based software in the first and fourth quarters of 2023, excluding costs related to discontinued operations. • Inventory reserve charges for the year ended December 31, 2023 relate to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the first quarter of 2023 to reflect the restructuring of the Playboy Direct-to-Consumer business. • Adjustments for the year ended December 31, 2024 are primarily related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable with respect to a past acquisition that remained unsettled as of December 31, 2024, loss on the sale of artwork, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations. • Adjustments for the year ended December 31, 2023 are related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable with respect to a past acquisition that remained unsettled as of December 31, 2023, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities, as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations.
Cost of Sales Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency fees, website expenses, digital platform expenses, marketplace traffic acquisition costs, credit card processing fees, personnel and affiliate costs, including stock-based compensation, costs associated with branding events, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.
Cost of Sales Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency fees, website expenses, digital platform expenses, marketplace traffic acquisition costs, credit card processing fees, personnel and affiliate costs, including stock-based compensation and costs associated with branding events, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.
We received $15 million in gross proceeds from the registered direct offering, and net proceeds of $13.9 million, after the payment of offering fees and expenses. 51 We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock.
We received $15 million in gross proceeds from the registered direct offering, and net proceeds of $13.9 million, after the payment of offering fees and expenses. We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock.
Benefit from Income Taxes Benefit from income taxes consists of an estimate for U.S. federal, state, and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law.
(Expense) Benefit from Income Taxes (Expense) benefit from income taxes consists of an estimate for U.S. federal, state, and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law.
(“TLA”), on November 2, 2023, we entered into Amendment No. 1 to the A&R Credit Agreement (the “A&R First Amendment”), to permit, among other things: (a) the sale of TLA and the sale of certain other assets (and the proceeds of such sales will not be required to prepay the A&R Term Loans); and (b) the Company to elect, through August 31, 2025, to pay in cash accrued interest equal to the applicable SOFR plus 1.00%, with the remainder of any applicable accrued interest not paid in cash capitalized into the A&R Term Loans.
In connection with the sale of TLA, on November 2, 2023, we entered into Amendment No. 1 to the A&R Credit Agreement (the “A&R First Amendment”), to permit, among other things: (a) the sale of TLA and the sale of certain other assets (and the proceeds of such sales will not be required to prepay the A&R Term Loans); and (b) the Company to elect, through August 31, 2025, to pay in cash accrued interest equal to the applicable SOFR plus 1.00%, with the remainder of any applicable accrued interest not paid in cash capitalized into the A&R Term Loans.
This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements.
This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements.
Gain (Loss) on Extinguishment of Debt Gain (loss) on extinguishment of debt for the year ended December 31, 2023 represents a $6.1 million gain due to the partial extinguishment of debt upon the amendment and restatement of our senior secured debt credit agreement in the second quarter of 2023, net of a $1.8 million loss recorded in the first quarter of 2023 due to the partial extinguishment of debt related to $45 million of prepayments of such senior debt.
Gain on Extinguishment of Debt Gain on extinguishment of debt for the year ended December 31, 2023 represents a $6.1 million gain due to the partial extinguishment of debt upon the amendment and restatement of our senior secured debt credit agreement in 2023, net of a $1.8 million loss recorded in 2023 due to the partial extinguishment of debt related to $45 million of prepayments of such senior debt.
We periodically offer promotional incentives to customers, which include basket promotional code discounts and other credits, which are recorded as a reduction of revenue. 42 Trademark Licensing We license trademarks under multi-year arrangements to consumer products, online gaming and location-based entertainment businesses. Typically, the initial contract term ranges between one to ten years. Renewals are separately negotiated through amendments.
We periodically offer promotional incentives to customers, which include basket promotional code discounts and other credits, which are recorded as a reduction of revenue. 43 Trademark Licensing We license trademarks under multi-year arrangements to third-party consumer products and online and location-based entertainment businesses. Typically, the initial contract term ranges between one to ten years. Renewals are separately negotiated through amendments.
The key indicators of the financial condition and operating performance of the business are revenues, salaries and benefits, and selling and administrative expenses. To help assess performance with these key indicators, we use Adjusted EBITDA as a non-GAAP financial measure.
The key indicators of the financial condition and operating performance of the business are revenues, salaries and benefits, and selling and administrative expenses. To help assess performance with these key indicators, we use EBITDA and Adjusted EBITDA as non-GAAP financial measures.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities and non-recurring non-cash impairments, asset write-downs and inventory reserve charges, we typically adjust for nonoperating expenses and income, such as non-recurring special projects, including the implementation of internal controls, non-recurring gain on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities and non-recurring non-cash impairments, asset write-downs and inventory reserve charges, we typically adjust for nonoperating expenses and income, such as nonrecurring special projects, including for related consultant expenses, nonrecurring gain on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.
Leases Our principal lease commitments are for office space and operations under several noncancelable operating leases with contractual terms expiring from 2023 to 2033. Some of these leases contain renewal options and rent escalations.
Leases Our principal lease commitments are for office space and operations under several noncancellable operating leases with contractual terms expiring from 2025 to 2033. Some of these leases contain renewal options and rent escalations.
Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity, along with proceeds from asset dispositions and savings from cost reductions initiatives, will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Annual Report on Form 10-K.
Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Annual Report on Form 10-K.
Key Factors and Trends Affecting Our Business We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K titled “ Risk Factors .” Shifting to a Capital-Light Business Model In pursuit of a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential, we continue to review the cost structure of our businesses and additional cost rationalization.
Key Factors and Trends Affecting Our Business We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K titled “ Risk Factors .” Pursuing a More Capital-Light Business Model We continue to pursue a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential.
In the event that the collection of any royalty becomes materially uncertain or unlikely, we recognize revenue from our licensees on a cash basis. Digital Subscriptions Digital subscription revenue is derived from subscription sales of playboyplus.com and playboy.tv , which are online content platforms.
In the event that the collection of any royalty becomes materially uncertain or unlikely, we recognize revenue from our licensees up to the cash we have received. Digital Subscriptions Digital subscription revenue is derived from subscription sales of playboyplus.com and playboy.tv , which are online content platforms.
Components of Results of Operations Revenues We generate revenue from sales of consumer products sold through our retail stores or online direct-to-customer, trademark licenses for third-party consumer products, online gaming and location-based entertainment businesses, and sales of creator offerings to consumers on our creator-led platform on playboy.com, in addition to subscriptions to our programming, which is distributed through various channels, including websites and domestic and international television.
Components of Results of Operations Revenues We generate revenue from sales of consumer products sold through our Honey Birdette retail stores or online directly to customers, trademark licenses for third-party consumer products and online and location-based entertainment businesses, and sales of creator content offerings and memberships to consumers on our content creator platform on playboy.com , in addition to subscriptions to our programming, which is distributed through various channels, including websites and domestic and international television.
Recent Accounting Pronouncements See Note 1 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and results of operations.
Recent Accounting Pronouncements Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and results of operations. 58
We experienced further declines in revenue and profitability (including due to discontinued operations) during the year ended December 31, 2023, which caused us to test the recoverability of our indefinite-lived and long-lived assets and resulted in the impairments set forth in our consolidated financial statements.
We experienced further declines in revenue and profitability during the year ended December 31, 2024, which caused us to test the recoverability of our indefinite-lived and long-lived assets and resulted in the impairments set forth in our consolidated financial statements for the year ended December 31, 2024.
We believe this non-GAAP measure provides useful information to investors and expanded insight to measure revenue and cost performance as a supplement to the GAAP consolidated financial statements. See the “ EBITDA and Adjusted EBITDA ” section below for reconciliations of Adjusted EBITDA to net loss, the closest GAAP measure.
We believe these non-GAAP measures provide useful information to investors and expanded insight to measure revenue and cost performance as a supplement to the GAAP consolidated financial statements. Refer to the “ EBITDA and Adjusted EBITDA ” section below for reconciliations of EBITDA and Adjusted EBITDA to net loss, the closest GAAP measure.
Our Digital Subscriptions and Content segment derives revenue from subscriptions to Playboy programming and content, which is distributed through various channels, including websites and domestic and international TV, and sales of creator content offerings and memberships through the Playboy Club on playboy.com .
The Digital Subscriptions and Content segment derives revenue from the subscription of Playboy programming that is distributed through various channels, including Playboy websites and domestic and international television, and sales of creator content offerings and memberships to consumers through the Playboy Club on playboy.com .
As of the date of this Annual Report on Form 10-K, $1.3 million of such escrow funds had been released to us. In November 2023, we also sold a small amount of our art assets. We expect to continue the sale of our art assets in 2024.
As of the date of this Annual Report on Form 10-K, such escrow funds had been released to us in full. In November 2023, we also sold a small amount of our art assets, and we continued the sale of our art assets in 2024.
On March 27, 2024, we entered into a second amendment of the A&R Credit Agreement. See Note 22, Subsequent Events, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for further details.
On March 12, 2025, we entered into a fourth amendment of the A&R Credit Agreement. Refer to Note 22, Subsequent Events, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for further details.
Revenues generated from the sales of creator offerings to consumers via our creator platform on playboy.com are recognized at the point in time when the sale is processed. Revenues generated from subscriptions to our creator platform are recognized ratably over the subscription period.
Revenues generated from the sales of creator content offerings to consumers via our creator platform on playboy.com are recognized at the point in time when the sale is processed. Revenues generated from subscriptions to our creator platform and memberships to consumers are recognized ratably over the subscription/membership period. Revenues generated from events and sponsorships are recognized when the event occurs.
As a result of the Restatement, fees of $0.3 million were expensed as incurred and $0.4 million of debt issuance costs were capitalized in the second quarter of 2023. In connection with the sale of TLA Acquisition Corp.
As a result of the Restatement, fees of $0.3 million were expensed as incurred and $0.4 million of debt issuance costs were capitalized in the second quarter of 2023.
As of December 31, 2023 and 2022, our fixed lease obligations were $31.6 million and $33.0 million, respectively, with $7.0 million and $6.3 million due in the next 12 months, respectively.
As of December 31, 2024 and 2023, our fixed lease obligations were $25.5 million and $31.6 million, respectively, with $6.6 million and $7.0 million due in the next 12 months, respectively.
On April 4, 2023, we completed the Yandy Sale to an unaffiliated, third-party buyer. The consideration we received for the Yandy Sale consisted of $1.0 million in cash and a $2.0 million secured promissory note payable over three years (which note was then settled in the third quarter of 2023 for a cash payment to us of $1.3 million).
The consideration we received for the Yandy Sale consisted of $1.0 million in cash and a $2.0 million secured promissory note payable over three years (which note was then settled in the third quarter of 2023 for a cash payment to us of $1.3 million). On November 3, 2023, we completed the sale of TLA Acquisition Corp.
Transitioning to a capital-light business model with a more streamlined consumer products business may further impact the seasonality of our business in the future. How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures.
The further transition of our business to a capital-light business model may further impact the seasonality of our business in the future. How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures.
Impairment of Long-Lived Assets The carrying amounts of long-lived assets, including property and equipment, stores, acquired intangible assets and right-of-use operating lease assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.
If an impairment test is necessary, we will estimate the fair value of a related reporting unit. 57 Impairment of Long-Lived Assets The carrying amounts of long-lived assets, including property and equipment, stores, acquired intangible assets and right-of-use operating lease assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.
If we continue to experience declines in revenue or profitability, which could occur upon further declines in consumer demand or additional discontinued operations, we may record further non-cash asset impairment charges as of the applicable impairment testing date. Seasonality of Revenues While we receive revenue throughout the year, our businesses have experienced, and may continue to experience, seasonality.
However, if we continue to experience declines in revenue or profitability, which could occur upon further declines in consumer demand or additional discontinued operations, we may record further non-cash asset impairment charges as of the applicable impairment testing date.
Business Overview We are a large, global consumer lifestyle company marketing our brands through a wide range of direct-to-consumer products, licensing initiatives, and digital subscriptions and content.
Business Overview We are a global consumer lifestyle company marketing our brands through a wide range of direct-to-consumer products, licensing initiatives, digital subscriptions and content, and online and location-based entertainment businesses. We have three reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content.
Digital Subscriptions and Content operations include the production, marketing and sales of programming under the Playboy brand name, which is distributed through various channels, including domestic and international television, sales of tokenized digital art and collectibles, and sales of creator content offerings to consumers through the Playboy Club on playboy.com .
Our Digital Subscriptions and Content segment includes the production, marketing and sales of programming under the Playboy brand name, which is distributed through various channels, including domestic and international television, sales of creator content offerings and memberships to consumers through the Playboy Club on playboy.com , as well as events and sponsorships.
Nonoperating (Expense) Income Interest Expense The increase in interest expense as compared to the prior year comparative period was primarily due to the higher interest rates on our senior secured debt in 2023 and a decrease in amortization payments in the second half of 2023.
Nonoperating (Expense) Income Interest Expense The increase in interest expense, compared to the prior year comparative period, was primarily due to higher interest rates on our senior secured debt in 2024 compared to the prior year comparative period.
Selling and Administrative Expenses Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.
Selling and Administrative Expenses Selling and administrative expenses primarily consist of corporate and retail store occupancy costs, personnel costs, including stock-based compensation and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities, and insurance, offset by a reversal of related selling and administrative expenses due to settlement at a discount of certain account payable balances in 2024.
As of the Restatement Date, Tranche B accrues interest at SOFR plus 4.25% with a 0.10% SOFR adjustment, and has a SOFR floor of 0.50%. The stated interest rate of Tranche A and Tranche B term loans as of December 31, 2023 was 11.41% and 9.41%, respectively.
As of the Restatement Date, Tranche B accrues interest at SOFR plus 4.25% with a 0.10% SOFR adjustment, and has a SOFR floor of 0.50%.
Our performance-based restricted stock units (“PSUs”) vest upon achieving each of certain PLBY’s stock price milestones during the contractual vesting period. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations.
For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations.
The change in assets and liabilities as compared to the prior year comparable period was primarily driven by a $7.5 million decrease in accounts receivable due to the timing of royalty collections and modifications of certain trademark licensing contracts, a decrease of $9.7 million in prepaid expenses and other assets primarily due to restructuring charges on direct-to-consumer cloud-based software in 2023, a $2.5 million increase in deferred revenues due to the timing of direct-to-consumer order shipments, a $1.3 million increase in accounts payable due to the timing of payments, and a $9.6 million increase in other liabilities, net, partly offset by a $11.3 million decrease in accrued agency fees and commissions related to the impairment, modification or termination of certain trademark licensing contracts, and a $2.4 million increase in contract assets due to the timing of licensing payments.
The change in assets and liabilities as compared to the prior year comparable period was primarily driven by a $19.8 million change in deferred revenues due to the termination of certain Chinese licensing agreements in the prior year comparative period, a $6.7 million change in accrued agency fees and commissions primarily due to a nonrecurring reversal of commission accrual in the prior year comparative period related to the termination of certain Chinese licensing agreements, a $5.1 million decrease in inventories, net due to reduced purchasing, and a $2.1 million decrease in contract assets due to the timing of licensing payments, partly offset by a $5.6 million increase in accounts receivable due to the timing of royalty collections and modifications of certain trademark licensing contracts, an increase of $5.4 million in prepaid expenses and other assets, a $3.8 million decrease in accounts payable due to the timing of payments, and a $1.8 million decrease in operating lease liabilities.
Revenue recognized in connection with such contracts that were terminated was $27.1 million during the year ended December 31, 2023. Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets.
Revenue recognized in connection with such terminated contracts was $27.1 million during the year ended December 31, 2023, out of which $5.1 million was attributable to prepaid royalty guarantees recorded as revenue in the fourth quarter of 2023 . F uture contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets.
Cash Flows from Financing Activities The increase in net cash provided by financing activities from continuing operations for the year ended December 31, 2023 over the prior year comparable period was due to net proceeds of $13.9 million from our registered direct offering in January of 2023, net proceeds of $47.6 million from our rights offering in February 2023, gross proceeds of $11.8 million from the amendment and restatement of our senior secured credit agreement in the second quarter of 2023, and a $2.0 million decrease in the payment of financing costs, partly offset by $48.3 million of proceeds from the issuance of Series A Preferred Stock in the prior year comparable period, a $9.7 million increase in the repayment of long-term debt, the repurchase of $1.0 million of our outstanding common stock in the fourth quarter of 2023, and $1.9 million of proceeds from the exercise of stock options in the prior year comparable period. 54 Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Cash Flows from Financing Activities The decrease in net cash provided by financing activities from continuing operations for the year ended December 31, 2024 over the prior year comparable period was due to reduced capital raising transactions in 2024, resulting in $22.2 million of net proceeds from the issuance of common stock in a private placement, while in 2023 we received net proceeds of $13.9 million from our registered direct offering in January of 2023, net proceeds of $47.6 million from our rights offering in February 2023, and gross proceeds of $11.8 million from the amendment and restatement of our senior secured credit agreement in the second quarter of 2023, which were partly offset by a $45.4 million repayment of long-term debt in early 2023 and the repurchase of $1.0 million of our outstanding common stock in the fourth quarter of 2023.
As a result of the amendment and restatement of the Credit Agreement (the “Restatement”), in the second quarter of 2023, we recorded $8.0 million of gain for partial debt extinguishment and capitalized an additional $21.3 million of debt discount while deferring and continuing to amortize an existing discount of $2.6 million, which will be amortized over the remaining term of our senior secured debt and recorded in interest expense in our consolidated statements of operations.
We obtained additional leverage covenant relief through the first quarter of 2025, with testing of a total net leverage ratio covenant commencing following the quarter ending March 31, 2025, which covenant will be initially set at 7.25:1.00, reducing in 0.25 increments per quarter until the ratio reaches 5.25:1.00 for the quarter ending March 31, 2027. 54 As a result of the amendment and restatement of the Credit Agreement (the “Restatement”), in the second quarter of 2023, we recorded $8.0 million of gain for partial debt extinguishment and capitalized an additional $21.3 million of debt discount while deferring and continuing to amortize an existing discount of $2.6 million, which will be amortized over the remaining term of our senior secured debt and recorded in interest expense in our consolidated statements of operations.
Other Operating (Expense) Income, Net The change in other operating (expense) income, net as compared to the prior year comparative period was primarily due to a $0.7 million loss from settlement of a promissory note recognized in the third quarter of 2023, and $0.2 million higher gain on the sale of crypto assets during the year ended December 31, 2022.
Other Operating Expense, Net The decrease in other operating expense, net, compared to the prior year comparative period, was primarily due to a $0.4 million loss on sale of assets, including our artwork held for sale, in 2024, and a $0.3 million gain on the sale of crypto assets during the year ended December 31, 2023, partly offset by a $0.7 million loss from settlement of a promissory note recognized in 2023 and other miscellaneous items.
Debt On April 4, 2023, we entered into Amendment No. 5 (the “Fifth Amendment”) to our senior secured Credit and Guaranty Agreement, dated as of May 25, 2021 (as previously amended on August 11, 2021, August 8, 2022, December 6, 2022 and February 17, 2023, and as further amended by the Fifth Amendment, the “Credit Agreement”) to permit, among other things, the sale of our wholly-owned subsidiary, Yandy Enterprises, LLC (the “Yandy Sale”), and that the proceeds of such sale would not be required to prepay the loans under the Credit Agreement (as amended through the Fifth Amendment); provided that at least 30% of the consideration for the Yandy Sale was paid in cash.
On April 4, 2023, we entered into Amendment No. 5 to the Credit Agreement (the “Fifth Amendment”) to permit, among other things, the Yandy Sale, and that the proceeds of such sale would not be required to prepay the loans under the Credit Agreement (as amended through the Fifth Amendment); provided that at least 30% of the consideration for the Yandy Sale was paid in cash.
Due to challenging economic conditions in China, collections from certain of our Chinese licensees have slowed significantly, and we have renegotiated terms of certain agreements. In October 2023, we also terminated licensing agreements with certain Chinese licensees, which comprised $152.2 million of the unrecognized trademark licensing revenue under our long-term contracts as of the termination date.
In 2023, due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly, and we had to renegotiate terms of, or terminate, certain licens es, resulting in $152.2 million of unrecognized Licensing revenue under our long-term contracts as of the applicable termination dates.
Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets. At the end of the first quarter of 2023, we entered into the China JV with Charactopia Licensing Limited, the brand management unit of Fung Group, which operates the Playboy consumer products business in mainland China, Hong Kong and Macau.
At the end of the first quarter of 2023, we entered into the China JV with CT Licensing Limited, a brand management unit of Fung Group. The China JV owns and operates the Playboy consumer products business in mainland China, Hong Kong and Macau.
On November 3, 2023, we completed the sale of TLA to an unaffiliated, third-party buyer for approximately $13.5 million in cash (the “Purchase Price”).
(“TLA”) to an unaffiliated, third-party buyer for approximately $13.5 million in cash (the “Purchase Price”).
Goodwill and Other Intangible Assets, Net Goodwill and certain other intangible assets deemed to have indefinite useful lives are not amortized. Rather, goodwill and indefinite-lived intangible assets are assessed for impairment at least annually.
We adjust how we account for revenue pursuant to licenses, if collectability on their related billings becomes improbable. Goodwill and Other Intangible Assets, Net Goodwill and certain other intangible assets deemed to have indefinite useful lives are not amortized. Rather, goodwill and indefinite-lived intangible assets are assessed for impairment at least annually.
However, in the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.
We may seek additional equity or debt financing in the future to satisfy capital requirements, respond to adverse changes in our circumstances or unforeseen events, or fund growth opportunities. However, in the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.
Since going public in 2021, we have yet to generate operating income from our core business operations and have incurred significant operating losses of $190 million for the year ended December 31, 2023. We expect to continue to incur operating losses for the foreseeable future.
Since going public in 2021, we have yet to generate operating income from our core business operations and have incurred significant operating losses, including $50.8 million of operating losses for the year ended December 31, 2024. We expect our capital expenditures and working capital requirements in 2025 to be largely consistent with 2024.
On May 10, 2023 (the “Restatement Date”), we entered into the A&R Credit Agreement to reduce the interest rate applicable to our senior secured debt and the implied interest rate on our Series A Preferred Stock, exchange (and thereby eliminate) our outstanding Series A Preferred Stock, and obtain additional covenant relief and funding. 52 In connection with the A&R Credit Agreement, Fortress Credit Corp. and its affiliates (together, “Fortress”) became our lender with respect to approximately 90% of the term loans under the A&R Credit Agreement (the “A&R Term Loans”).
On May 10, 2023 (the “Restatement Date”), we entered into an amendment and restatement of the Credit Agreement for our senior secured debt (the “A&R Credit Agreement”) to reduce the interest rate applicable to our senior secured debt and the implied interest rate on our then outstanding Series A Preferred Stock, exchange (and thereby eliminate) our then outstanding Series A Preferred Stock, and obtain additional covenant relief and funding.
We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance. EBITDA and Adjusted EBITDA “EBITDA” is defined as net income or loss before interest, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management.
EBITDA and Adjusted EBITDA “EBITDA” is defined as net income or loss before interest, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management.
While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the accounting policies below are most critical to understanding our financial condition and historical and future results of operations. Licensing Revenue Recognition We license trademarks under multi-year arrangements with consumer products, online gaming and location-based entertainment businesses.
We believe the following accounting estimates to be the most critical in understanding the judgments and estimates we use in preparing our consolidated financial statements. Licensing Revenue Recognition We license trademarks under multi-year arrangements with consumer products, online and location-based entertainment businesses.
Liquidity and Capital Resources Sources of Liquidity Our sources of liquidity are cash generated from operating activities, which primarily includes cash derived from revenue generating activities, from financing activities, including proceeds from our issuance of debt, and proceeds from stock offerings (as described further below), and from investing activities, which included the sale of assets in 2022 and 2023 (as described further below).
The decrease in adjusted corporate expenses, compared to the prior year comparative period, was primarily due to lower insurance costs and a decrease in audit and consulting expenses, reflecting ongoing cost rationalization. 52 Liquidity and Capital Resources Sources of Liquidity Our sources of liquidity are cash generated from operating activities, which primarily includes cash derived from revenue generating activities, from financing activities, including proceeds from our issuance of debt and stock offerings (as described further below), and from investing activities, which included the sale of assets (as described further below).
In the first quarter of 2023, we recorded a loss on partial extinguishment of debt in the amount of $1.8 million related to the write-off of unamortized debt discount and deferred financing costs as a result of $45 million in prepayments of our debt pursuant to amendments of our senior secured credit agreement in December 2022 and February 2023.
Gain on Extinguishment of Debt, Net In the first quarter of 2023, we recorded a loss on partial extinguishment of debt in the amount of $1.8 million related to the write-off of unamortized debt discount and deferred financing costs as a result of $45 million in prepayments of our debt pursuant to amendments of our senior secured credit agreement in December 2022 and February 2023. 44 In the second quarter of 2023, we recorded a gain on partial extinguishment of debt in the amount of $8.0 million upon the amendment and restatement of the Credit Agreement (as such term is defined in Note 10, Debt, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, refer to such Note 10, Debt and “Item 7.
The decrease in operating loss as compared to the prior year comparative period was primarily due to $44.7 million lower non-cash impairment charges on our trademarks, partly offset by a $3.5 million decrease in licensing gross profit, the $8.7 million impairment of certain licensing contracts, $3.6 million of costs associated with the formation and operation of the China JV, and a $1.9 million increase in legal fees and special projects.
Operating Income: The change from operating loss in the prior year comparative period to operating income in 2024 was primarily due to $71.3 million of non-cash impairment charges on our trademarks and the $8.7 million impairment of certain licensing contracts in the prior year comparative period, a $3.1 million decrease in China JV expenses, out of which $1.5 million was due to organizational expenses incurred in the prior year comparative period, and a $3.0 million reduction in legal expenses, partly offset by a $24.8 million decrease in licensing gross profit, resulting from lower revenues and commission accrual reversals in the prior period.
The change in non-cash charges compared to the change in the prior year comparable period was primarily driven by a $128.6 million decrease in non-cash impairment charges, a $10.9 million decrease in stock-based compensation expense, a $7.4 million change due to extinguishment of debt, and a $5.5 million decrease in depreciation and amortization, partly offset by a $31.6 million change in fair value remeasurement charges, a $44.8 million increase in deferred income taxes, a $3.8 million increase in inventory reserves, $1.8 million of capitalized payment-in-kind interest, the $5.7 million gain on sale of the Aircraft in the third quarter of 2022, and a $3.7 million increase in other non-cash charges, net.
The change in non-cash charges compared to the change in the prior year comparable period was primarily driven by a $128.8 million decrease in non-cash impairment charges, a $8.0 million decrease in inventory reserve charges, and a $2.3 million decrease in stock-based compensation expense, partly offset by a $19.0 million increase in deferred income taxes, a $7.1 million change in fair value remeasurement charges, a $6.1 million change due to extinguishment of debt, $5.1 million of capitalized payment-in-kind interest in 2024, and a $1.4 million increase in the amortization of right of use assets. 56 Cash Flows from Investing Activities The decrease in net cash provided by investing activities from continuing operations for the year ended December 31, 2024 over the prior year comparable period was due to $14.3 million of proceeds from the sale of TLA, $1.0 million of proceeds from the Yandy Sale and the $1.3 million repayment of a related promissory note in the prior year comparative period, partly offset by $1.9 million in proceeds from the sale of artwork, and a $1.3 million decrease in purchases of property and equipment.
Fair Value Remeasurement Gain Fair value remeasurement gain consists of changes to the fair value of mandatorily redeemable preferred stock liability related to its remeasurement. Other Income (Expense), Net Other income (expense), net consists primarily of other miscellaneous nonoperating items, such as bank charges and foreign exchange gains or losses as well as non-recurring transaction fees.
Other (Expense) Income, Net Other (expense) income, net consists primarily of other miscellaneous nonoperating items, such as foreign exchange realized and unrealized transaction gains or losses, bank charges as well as nonrecurring transaction fees.
The performance obligation is a license of symbolic IP that provides the customer with a right to access the IP, which represents a stand-ready obligation that is satisfied over time.
The performance obligation is a license of symbolic IP that provides the customer with a right to access the IP, which represents a stand-ready obligation that is satisfied over time. Under these arrangements, we generally receive an annual nonrefundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year.
The other terms of the A&R Credit Agreement will remain substantially unchanged from those prior to the A&R First Amendment. Compliance with the financial covenants as of December 31, 2023 and 2022 was waived pursuant to the terms of the A&R Credit Agreement and the third amendment of the Credit Agreement, respectively.
The other terms of the A&R Credit Agreement will remain substantially unchanged from those prior to the A&R First Amendment.
For further information on our lease obligations, see Note 15 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 53 Cash Flows The following table summarizes our cash flows from continuing operations for the periods indicated (in thousands): Year Ended December 31, 2023 2022 $ Change % Change Net cash provided by (used in): Operating activities $ (42,788) $ (64,042) $ 21,254 (33) % Investing activities 13,060 9,377 3,683 39 Financing activities 26,184 11,559 14,625 127 Cash Flows from Operating Activities The decrease in net cash used in operating activities from continuing operations for year ended December 31, 2023 over the prior year comparable period was due to a $64.2 million decrease in net loss from continuing operations, as well as changes in assets and liabilities that had a current period cash flow impact, such as $17.8 million of changes in working capital, partly offset by $60.8 million of changes in non-cash charges.
Cash Flows The following table summarizes our cash flows from continuing operations for the periods indicated (in thousands): Year Ended December 31, 2024 2023 $ Change % Change Net cash provided by (used in): Operating activities $ (19,139) $ (42,788) $ 23,649 (55) % Investing activities (318) 13,060 (13,378) (102) Financing activities 21,595 26,184 (4,589) (18) Cash Flows from Operating Activities The decrease in net cash used in operating activities from continuing operations for year ended December 31, 2024 over the prior year comparable period was due to a $107.1 million decrease in net loss from continuing operations, as well as changes in assets and liabilities that had a current period cash flow impact, such as $17.1 million of changes in working capital, partly offset by $100.5 million of changes in non-cash charges.
The decrease in operating loss as compared to the prior year comparative period was primarily due to a decrease of $87.5 million of non-cash impairment charges on certain of our intangible assets, including goodwill, $6.4 million of reduced digital marketing spend, $3.1 million lower trade name amortization due to accelerated amortization recognized in the prior year period, $5.0 million lower payroll expense as we shift to a capital-light business model, and a $3.1 million decrease in other selling and administrative expenses, partly offset by $14.3 million of lower gross profit as a result of lower revenue in connection with the Company’s discontinuation of owned-and-operated direct-to-consumer businesses, $4.1 million of higher technology costs, primarily due to restructuring charges taken on direct-to-consumer cloud-based software attributable to continuing operations in 2023, a $3.8 million increase in inventory reserve charges, impairment charges of $2.3 million on certain Honey Birdette right-of-use assets and related leasehold improvements, and approximately $1.2 million of severance charges. 50 Licensing The decrease in net revenues as compared to the prior year comparative period was primarily due to the decline in contractual revenue and overages from our licensing partners due to weaker consumer demand, net of $5.1 million of prepaid royalty guarantees recognized as revenue in the fourth quarter of 2023 in connection with the termination of a licensing contract.
Operating Loss: The decrease in operating loss, compared to the prior year comparative period, was primarily due to non-cash impairment charges in the prior year comparative period of $72.6 million on certain of our intangible assets (including goodwill), a $2.3 million impairment on certain Honey Birdette right-of-use assets and related leasehold improvements, an increase of $7.7 million of gross profit, $7.1 million of lower technology costs, primarily due to restructuring charges taken on direct-to-consumer cloud-based software attributable to continuing operations in 2023, lower payroll expense of $4.0 million, of which $2.2 million was due to the transition of Playboy’s e-commerce site from our ownership and operation to a licensed business model in the third quarter of 2023, and $1.6 million in reduced marketing spend related to our discontinued e-commerce site.
Non-GAAP Financial Measures In addition to our results being determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.
We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.
As of December 31, 2023, our principal source of liquidity was our unrestricted cash in the amount of $28.1 million which is primarily held in operating and deposit accounts.
As of December 31, 2024, our principal source of liquidity was unrestricted cash in the amount of $30.9 million, which is primarily held in operating and deposit accounts. On January 24, 2023, we issued 6,357,341 shares of our common stock in a registered direct offering to a limited number of investors.
The stated interest rate of the term loan pursuant to the Credit Agreement as of December 31, 2022 was 11.01%. The effective interest rate of Tranche A and Tranche B term loans as of December 31, 2023 was 12.03% and 13.30%, respectively.
The stated interest rate of Tranche A and Tranche B term loans as of December 31, 2023 was 11.41% and 9.41%, respectively. The effective interest rate of Tranche A and Tranche B A&R Term Loans as of December 31, 2024 was 1.05% and 4.93%, respectively.
We recognize revenue for the total minimum guarantee specified in the agreement on a straight-line basis over the term of the agreement and recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned.
We recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned. Excess Royalties are payable quarterly.
The decrease in operating loss as compared to the prior year comparative period was primarily attributable to a $2.0 million increase in net revenues, a $2.0 million decrease in expenses related to our creator platform, and the $6.3 million impairment of digital and other assets in the comparable prior year period.
Digital Subscriptions and Content The decrease in digital subscriptions and content cost of sales and increase in gross margin, compared to the comparable prior year period, was primarily due to $2.0 million in lower cost of sales related to our creator platform largely as a result of nonrecurring creator platform expenses in 2023 and lower payment processing fees.
Other Operating (Expense) Income, Net Other operating (expense) income, net primarily consists of gains on the sale of certain digital assets and the loss resulting from the settlement of a secured promissory note. 43 Nonoperating (Expense) Income Interest expense Interest expense consists of interest on our long-term debt and the amortization of deferred financing costs and debt discount.
Nonoperating (Expense) Income Interest expense Interest expense consists of interest on our long-term debt and the amortization of deferred financing costs and debt premium/discount.
The valuation of inventory could be impacted by changes in public and consumer preferences, demand for product, changes in the buying patterns of both retailers and consumers and inventory management of customers. 55 Stock-Based Compensation We measure compensation expense for all stock-based payment awards, including stock options, restricted stock units and performance stock units granted to employees, directors, and nonemployees, based on the estimated fair value of the awards on the date of grant.
Stock-Based Compensation Our equity awards granted generally consist of stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”). We measure compensation expense for all stock-based payment awards, including stock options, RSUs and PSUs granted to employees, directors, and non-employees, based on the estimated fair value of the awards on the date of grant.
Our direct-to-consumer business has historically experienced higher sales in the fourth quarter due to the U.S. holiday season, but changing market conditions and demand could affect such sales. Historical seasonality of revenues may be subject to change as increasing pressure from competition and changes in consumer trends and economic conditions impact our licensees and consumers.
Seasonality of Revenues While we receive revenue throughout the year, our Honey Birdette direct-to-consumer business has experienced, and may continue to experience, seasonality. Historical seasonality of revenues may be subject to change as increasing pressure from competition and economic conditions impact our licensees and consumers.
Benefit from Income Taxes The change in benefit from income taxes as compared to the prior year comparative period was primarily due to a loss on the sale of a subsidiary, a shortfall of stock-based compensation and a change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities, offset by increased foreign income taxes in the year ended December 31, 2023.
(Expense) Benefit from Income Taxes The change from benefit from income taxes to income tax expense as compared to the prior year comparative period was primarily driven by lower pretax book loss, a change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities, and increased foreign Subpart F income in the year ended December 31, 2024. 48 Non-GAAP Financial Measures In addition to our results being determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance.
Due to cumulative losses, we maintain a valuation allowance against our U.S. federal and state deferred tax assets, as well as Australia, U.K. and China deferred tax assets. 44 Results of Operations Comparison of Fiscal Years Ended December 31, 2023 and 2022 The following table summarizes key components of our results of operations for the periods indicated (in thousands): Year Ended December 31, 2023 2022 $ Change % Change Net revenues $ 142,950 $ 185,536 $ (42,586) (23) % Costs and expenses: Cost of sales (54,777) (82,945) 28,168 (34) Selling and administrative expenses (123,554) (150,535) 26,981 (18) Impairments (154,884) (283,500) 128,616 (45) Contingent consideration fair value remeasurement gain 436 29,173 (28,737) (99) Gain on sale of the aircraft — 5,689 (5,689) (100) Other operating (expense) income, net (540) 482 (1,022) (212) Total operating expense (333,319) (481,636) 148,317 (31) Operating loss (190,369) (296,100) 105,731 (36) Nonoperating (expense) income: Interest expense (23,293) (17,719) (5,574) 31 Gain (loss) on extinguishment of debt 6,133 (1,266) 7,399 (584) Fair value remeasurement gain 6,505 9,401 (2,896) (31) Other income (expense), net 806 (711) 1,517 (213) Total nonoperating expense (9,849) (10,295) 446 (4) Loss from continuing operations before income taxes (200,218) (306,395) 106,177 (35) Benefit from income taxes 13,770 55,704 (41,934) (75) Net loss from continuing operations (186,448) (250,691) 64,243 (26) Income (loss) from discontinued operations, net of tax 6,030 (27,013) 33,043 (122) Net loss (180,418) (277,704) 97,286 (35) Net loss attributable to PLBY Group, Inc. $ (180,418) $ (277,704) $ 97,286 (35) % 45 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated: Year Ended December 31, 2023 2022 Net revenues 100 % 100 % Costs and expenses: Cost of sales (38.3) (44.7) Selling and administrative expenses (86.4) (81.1) Impairments (108.3) (152.8) Contingent consideration fair value remeasurement gain 0.3 15.7 Gain on sale of the aircraft — 3.1 Other operating (expense) income, net (0.4) 0.3 Total operating expense (233.1) (259.5) Operating loss (133.1) (159.5) Nonoperating (expense) income: Interest expense (16.3) (9.6) Gain (loss) on extinguishment of debt 4.3 (0.7) Fair value remeasurement gain 4.6 5.1 Other income (expense), net 0.6 (0.4) Total nonoperating expense (6.8) (5.6) Loss from continuing operations before income taxes (139.9) (165.1) Benefit from income taxes 9.6 30.0 Net loss from continuing operations (130.3) (135.1) Income (loss) from discontinued operations, net of tax 4.2 (14.6) Net loss (126.1) (149.7) Net loss attributable to PLBY Group, Inc.
Results of Operations Comparison of Fiscal Years Ended December 31, 2024 and 2023 The following table summarizes key components of our results of operations for the periods indicated (in thousands): Year Ended December 31, 2024 2023 $ Change % Change Net revenues $ 116,135 $ 142,950 $ (26,815) (19) % Costs and expenses: Cost of sales (41,780) (54,777) 12,997 (24) Selling and administrative expenses (98,716) (123,118) 24,402 (20) Impairments (26,078) (154,884) 128,806 (83) Other operating expense, net (399) (540) 141 (26) Total operating expense (166,973) (333,319) 166,346 (50) Operating loss (50,838) (190,369) 139,531 (73) Nonoperating (expense) income: Interest expense (23,689) (23,293) (396) 2 Gain on extinguishment of debt, net — 6,133 (6,133) (100) Fair value remeasurement gain — 6,505 (6,505) (100) Other (expense) income, net (1,722) 806 (2,528) (314) Total nonoperating expense (25,411) (9,849) (15,562) 158 Loss from continuing operations before income taxes (76,249) (200,218) 123,969 (62) (Expense) benefit from income taxes (3,148) 13,770 (16,918) (123) Net loss from continuing operations (79,397) (186,448) 107,051 (57) Income from discontinued operations, net of tax — 6,030 (6,030) (100) Net loss (79,397) (180,418) 101,021 (56) Net loss attributable to PLBY Group, Inc. $ (79,397) $ (180,418) $ 101,021 (56) % 45 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated: Year Ended December 31, 2024 2023 Net revenues 100 % 100 % Costs and expenses: Cost of sales (36.0) (38.3) Selling and administrative expenses (85.0) (86.1) Impairments (22.5) (108.3) Other operating expense, net (0.3) (0.4) Total operating expense (143.8) (233.1) Operating loss (43.8) (133.1) Nonoperating (expense) income: Interest expense (20.4) (16.3) Gain on extinguishment of debt, net — 4.3 Fair value remeasurement gain — 4.6 Other (expense) income, net (1.5) 0.6 Total nonoperating expense (21.9) (6.8) Loss from continuing operations before income taxes (65.7) (139.9) (Expense) benefit from income taxes (2.7) 9.6 Net loss from continuing operations (68.4) (130.3) Income from discontinued operations, net of tax — 4.2 Net loss (68.4) (126.1) Net loss attributable to PLBY Group, Inc.
Disposition of Businesses See Note 3, Assets and Liabilities Held for Sale and Discontinued Operations for information regarding our business dispositions.
Disposition of Businesses Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding our business dispositions.
Direct-to-Consumer operations include consumer products sold through brick-and-mortar retail stores and e-commerce sites. Licensing operations include the licensing of one or more of our trademarks, our Playboy retail platform operations effective July 2023, and/or images for consumer products and location-based entertainment businesses.
Therefore, they were excluded from the table below and classified as discontinued operations in our consolidated statements of operations for the year ended December 31, 2023. Our Licensing segment includes the licensing of one or more of our trademarks, our Playboy retail platform operations effective July 2023, and/or images for consumer products and online and location-based entertainment businesses.
Year Ended December 31, 2023 2022 $ Change % Change Net revenues Direct-to-consumer $ 77,984 $ 105,177 $ (27,193) (26) % Licensing 44,292 60,861 (16,569) (27) Digital subscriptions and content 20,670 18,709 1,961 10 All other 4 789 (785) (99) Total $ 142,950 $ 185,536 $ (42,586) (23) % Operating (loss) income Direct-to-consumer $ (98,886) $ (177,388) $ 78,502 (44) % Licensing (46,898) (73,979) 27,081 (37) Digital subscriptions and content (2,440) (13,016) 10,576 (81) Corporate (42,132) (32,428) (9,704) 30 All other (13) 711 (724) (102) Total $ (190,369) $ (296,100) $ 105,731 (36) % Direct-to-Consumer The decrease in net revenues as compared to the prior year comparative period was primarily due to a $10.6 million decrease in Honey Birdette revenue as a result of a decline in consumer demand and a $16.6 million decrease in revenue from playboy.com e-commerce related to our completion of the transition from an owned-and-operated model to a licensing model in the third quarter of 2023.
(68.4) % (126.1) % Net Revenues The following table sets forth net revenues by reportable segment (in thousands): Year Ended December 31, 2024 2023 $ Change % Change Direct-to-consumer $ 69,729 $ 77,984 $ (8,255) (11) % Licensing 24,552 44,292 (19,740) (45) Digital subscriptions and content 21,854 20,670 1,184 6 All other — 4 (4) (100) Total $ 116,135 $ 142,950 $ (26,815) (19) % Direct-to-Consumer The decrease in direct-to-consumer net revenues, compared to the prior year comparative period, was primarily due to a $5.0 million decrease in revenue from playboy.com e-commerce related to our completion of the transition from an owned-and-operated model to a licensing model in the third quarter of 2023 and a $3.2 million decrease in Honey Birdette revenue as a result of a 30% reduction in days on sale and weaker consumer demand.
Impairments The decrease in impairments as compared to the prior year comparative period was primarily due to lower impairment charges of $132.3 million on Playboy-branded trademarks, Honey Birdette’s trade names and goodwill, $4.9 million of higher impairment charges related to our digital assets during the year ended December 31, 2022 as a result of their fair value decreasing below their carrying value, and the $2.4 million impairment of certain other assets in the second quarter of 2022, partly offset in 2023 by $8.7 million in impairments of certain licensing contracts and $2.3 million in impairments of certain Honey Birdette right-of-use assets and related leasehold improvements.
Selling and Administrative Expenses The decrease in selling and administrative expenses, compared to the prior year comparative period, was primarily due to $7.1 million of lower technology costs, primarily due to restructuring charges taken on direct-to-consumer cloud-based software attributable to continuing operations in 2023, lower audit, legal and consulting fees of $4.6 million as a result of business downsizing and cost rationalization, a $2.7 million reduction in severance expense, a $3.1 million decrease in China JV expense due to cost cuts and nonrecurring transaction expenses in 2023, lower stock-based compensation expense of $2.3 million and payroll expense of $0.8 million due to headcount reductions, and a $2.3 million decrease in insurance expense due to the renegotiation of our insurance policies. 47 Impairments The decrease in impairments, compared to the prior year comparative period, was primarily due to impairment charges in the prior year comparative period of $143.9 million on Playboy-branded trademarks, Honey Birdette’s trade names and goodwill, $8.7 million in impairments of certain licensing contracts, and $2.3 million in impairments of certain Honey Birdette right-of-use assets and related leasehold improvements, partly offset by impairment charges of $2.4 million and $1.4 million on our artwork held for sale in the first and fourth quarters of 2024, respectively, $0.6 million on our corporate leases in the second quarter of 2024, $17.0 million on our goodwill for Digital Subscriptions and Content and $4.7 million of impairment charges related to our internally developed software in the third quarter of 2024.
Corporate The increase in corporate expenses as compared to the prior year comparative period was primarily due to $28.5 million less in non-cash contingent liabilities fair value remeasurement gain relating to our 2021 acquisitions and a $5.7 million gain on the sale of the Aircraft recorded in September 2022, partly offset by $9.3 million of lower stock-based compensation expense, net of $2.3 million of additional stock-based compensation expense (due to the acceleration of certain equity awards in connection with severance payments), $4.6 million lower professional services costs, the elimination of $4.3 million of Aircraft costs following the sale of the Aircraft in the third quarter of 2022, $1.3 million of lower depreciation expense due to the sale of the Aircraft, the $1.1 million impairment of certain assets in the prior year comparative period, and $1.5 million and $1.7 million of lower payroll and recruiting expenses, respectively.
Corporate The decrease in corporate expenses, compared to the prior year comparative period, was primarily due to a $5.3 million decrease in stock-based compensation expense, a decrease of $2.2 million in insurance expense, a decrease of $2.2 million in audit and consulting services as a result of business downsizing and cost rationalization, a $0.7 million decrease in payroll expenses due to headcount reductions, and a $1.0 million decrease in severance costs, partly offset by impairment charges of $2.4 million and $1.4 million on our artwork held for sale in the first and fourth quarters of 2024, respectively, and $0.6 million on our corporate leases in the second quarter of 2024.
Due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly, and we had to renegotiate terms of, or terminate, certain licenses.
Playboy is also entitled to receive Excess Royalties from the businesses licensed and operated by Byborg, on the terms and conditions set forth in the LMA. 53 Due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly in 2022 and 2023, leading us to renegotiate terms of, or terminate, certain licens es i n October 2023.
The net realizable value is determined based on historical sales experience on a style-by-style basis.
The net realizable value is determined based on historical sales experience on a style-by-style basis. The valuation of inventory could be impacted by changes in public and consumer preferences, demand for product, changes in the buying patterns of both retailers and consumers and inventory management of customers.
Fair Value Remeasurement Gain The decrease in fair value remeasurement gain as compared to the prior year comparative period was due to the remeasurement of our mandatorily redeemable preferred stock liability to its fair value in 2023 upon its exchange (and thereby elimination) in connection with the A&R Credit Agreement in the second quarter of 2023. 47 Other Income (Expense), Net The decrease in other income (expense), net as compared to the prior year comparative period was primarily due to a $0.7 million increase in interest income, and the amortization of $0.6 million of previously capitalized fees allocated to an issuance of our mandatorily redeemable preferred stock in the third quarter of 2022.
Fair Value Remeasurement Gain Fair value remeasurement gain for the year ended December 31, 2023 represented the remeasurement of our mandatorily redeemable preferred stock liability to its fair value in 2023, which was exchanged (and thereby eliminated) in connection with our A&R Credit Agreement for our senior secured debt in the second quarter of 2023.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
(126.1) % (149.7) % Net Revenues The decrease in net revenues as compared to the prior year comparative period was primarily due to $27.2 million less of direct-to-consumer revenue, $16.6 million of which was due to changing Playboy’s e-commerce site from owned-and-operated to a licensed business model in the third quarter of 2023, a $16.6 million decrease in licensing revenue (which was net of $5.1 million of prepaid royalty guarantees recognized as revenue in the fourth quarter of 2023 in connection with termination of a licensing agreement), a $1.6 million decrease in TV and cable programming revenue, and a $1.5 million decrease in magazine and digital subscriptions revenue, all due to weaker consumer demand, partly offset by $4.2 million of increased revenue from our creator platform.
Licensing The decrease in licensing net revenues, compared to the prior year comparative period, was primarily due to the termination of licensing agreements with certain Chinese licensees in the fourth quarter of 2023 due to material, uncured breaches resulting in collectability issues, $5.1 million of prepaid royalty guarantees recognized as revenue in the fourth quarter of 2023 in connection with the termination of one such licensing contract, the decline in contractual revenue and overages from our licensing partners due to weaker consumer demand, as well as lower licensee audit revenues.
We have three reportable segments: Direct-to-Consumer, Licensing and Digital Subscriptions and Content. Our Direct-to-Consumer segment derives its revenue from sales of consumer products sold directly to consumers through our own online channels and retail stores.
The Direct-to-Consumer segment derives revenue from sales of consumer products sold online direct-to-customer or at brick-and-mortar retail stores through our lingerie business, Honey Birdette, with 54 stores in three countries as of December 31, 2024.
Digital Subscriptions and Content The increase in net revenues as compared to the prior year comparative period was primarily due to a $4.2 million increase in net revenues from our creator platform, partly offset by a $2.2 million decrease in other digital subscriptions and content revenue.
Adjusted Operating Income: The decrease in adjusted operating income, compared to the prior year comparative period, was primarily due to a decrease in licensing gross profit, largely due to the termination of two China licensing agreements in the fourth quarter of 2023. Digital Subscriptions and Content Net Revenues and Gross Margin: Refer to “Item 7.

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