Good afternoon. Thank you attending today’s BARK’s Fiscal Fourth Quarter and Full Year 2022 Earnings Call. My name is Hannah, and I will be your moderator for today’s call. [Operator Instructions]. I would now like to pass the conference over to our host, Mike Mougias, Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone. And welcome to BARK’s fiscal fourth quarter and full year 2022 earnings call. Joining me today are Matt Meeker, Co-Founder and CEO; and Howard Yeaton. Interim CFO. Today’s conference call is being webcast and its entirety on our website, and a replay of the webcast will be made available shortly after the call. Additionally, a press release covering the company’s financial results was issued this afternoon and can be found on our Investor Relations website. Before we begin, I would like to remind you of the following information regarding forward-looking statements. The statements made on today’s call are based on management’s current expectations and are subject to risks and uncertainties that could cause actual future results and outcomes to differ. Please refer to our SEC filings for more information on some of the factors that could affect our future results and outcomes. Also during today’s call, we will discuss certain non-GAAP financial measures. Reconciliation to our non-GAAP financial measures is also contained in this afternoon’s press release. With that, let me now turn the call over to Matt.

Thanks, Mike, and good afternoon, everyone. This past year was significant for BARK. Our customer base grew rapidly, we became great at cross-selling more products to our customers. And we launched new and innovative products that expanded our addressable market by at least 10x to over $40 billion. We also took the company public and bulk up our balance sheet ending this year with $200 million in cash, putting us on solid footing for many years ahead. Over the past few years through the pandemic, we nearly doubled our customer base and the number of orders we ship and we increased the value of our customer by nearly $5 per unit shipped. While this growth is exciting. It also challenged us to scale in unprecedented ways. We made significant hires across our leadership team. We invested in our infrastructure, we upgraded our supply chain, and we entered the next fiscal year in a solid foundation with a path to profitability. We are now in position to become the preeminent dog company of the 21st century. So our best years are yet to come. This year we are focused on three priorities. Our first priority is to sell more food to our customers and to all dog parents. Our second priority is to become BARK. This means breaking down the silos between our five individual websites and serving our customer holistically. And our third priority is to make significant strides towards profitability. We believe that making meaningful progress across these three priorities will drive sustainable long-term value creation for BARK, its customers and its shareholders. Before I discuss our strategy and roadmap for the year ahead in more detail, let me begin with our results in fiscal year 2022. Howard will then discuss our financial results in more detail. During fiscal…

Thanks, Matt, and good afternoon, everyone. Fiscal 2022 was a productive year for BARK. We significantly expanded our customer base. We increased the average spend per customer and we made exciting progress in our newer categories. And while we did incur some incremental expenses, we believe that the business is in a much better place. As a result, we are entering fiscal 2023 with scale, exciting cross-selling opportunities, a sensible path to profitability and a very healthy balance sheet. Let me take you through our fiscal fourth quarter and full year 2022 results in more detail. Fourth quarter revenue was 128.9 million up 15% year-over-year. For the full year, revenue came in at 507.4 million up 34% compared to last year, and above our guidance of 505 million. Looking at our revenue in more detail, direct-to-consumer revenue increased 16% to 117.8 million in the fourth quarter. For the full year, DTC revenue was 448.1 million up 34% versus last year. Several factors contributed to our healthy growth in this segment. First, subscription shipments increased 28% to 14.9 million last year, largely driven by a 24% increase in total active subscriptions. And second, we have become more effective at cross selling and upselling our customer base, which helped drive a $1.32 increase in our average order value per shipment. We also saw healthy growth in our commerce business last year. Last quarter this segment contributed 11.1 million of revenue up 1%. For the full year, commerce revenue was 59.3 million up 33% compared to fiscal 2021. As a reminder, this is a lumpier business for us and year-over-year comparisons, particularly for a given quarter can be impacted by the timing of orders from our partners. Nonetheless, we signed 23 new retail partners last year, which resulted in BARK products now being…

Thank you. The question-and-answer session will now begin. [Operator Instructions]. The first question is from the line of Maria Ripps with Canaccord. Please proceed.

Good afternoon and thanks for taking my questions. First, I just wanted to ask about your revenue outlook. So your guidance sort of implies about 10% growth for the year, I guess what is embedded in your outlook from the standpoint of macro headwinds and product repositioning? Or maybe asked another way, where do you see sort of a more normalized growth rate for the business over time?

Sure, that's a great question Maria. And as we said there, it is somewhat of a conservative outlook given just all those macro possibilities that you're talking about, the conflict in Ukraine and supply chain issues with Shanghai so far this year. The recessionary or possible recessionary pressure and inflationary pressure that consumers feeling. So just without visibility as to how those things will play out, we took a more conservative view to that. So that's one part of it. The second part is, the focus is really about the path to profitability, and getting ourselves organized around that. So, if you think about the long-term, we need to build from a very solid, strong, sustainable and profitable foundation, which means as I said, in the call back in February, there's going to be a period here. We have to slow down in order to speed up. And so that's what you're seeing there is reflected is, we will slow down in order to speed up, that means part of that is a rotation of lower value subscribers into higher value subscribers, who are then giving us greater margin at the same cost of acquisition, continuing to invest in our cross-selling capabilities, continuing to invest in our new categories, like food and dental. And once you have that rotation, and it takes a bit in a subscription business, as you know, but once that rotation happens, we'll have a much more sustainable profitable model underneath us off of which we can then grow. So those factors led to our slower revenue guidance for this year with the -- going into the second part of your question there the anticipation that we see that accelerating off of that strong foundation in the years to come.

That's very helpful. And maybe my other question is on your Eats progress, sort of, broadly speaking, how's your new offering there is different from what was originally launched there last year? And then, can you maybe talk about your geographical presence for Eats? And is there anything you can share about Eats sort of upsell to your existing customers at this point?

Sure. So I mentioned some of it within the remarks there. There's really good progress in terms of getting feedback from the existing customers, and what their experience is like, what they like what they don't like. On the whole, they like what we're offering them with net promoter scores in the mid 70s. But there's still really good feedback about how we can improve it. Or we're fortunate that some of those improvements align with a better margin profile. So again, really tightening up the unit economics. So when we hit the gas that we're hitting on a model that has tighter unit economics, just like we did with Bright last year, that 11 point jump in year-over-year gross margin. And so that's what you're going to see in terms of a revamped format very soon here. In terms of the cross-selling, the cross-selling has been almost entirely the new customer acquisition into that product this year, or this calendar year, it's been almost entirely cross-selling. Now, if somebody wanders in there, and buys of course, we serve them, but we're not out there advertising and bringing people into it -- new to the BARK ecosystem. In addition, we’ve broadened-out beyond offering food to our -- in our add-to-box program, to what I mentioned, we're now offering toppers for food as part of the onboarding funnel, when you're buying a BarkBox versus Super Chewer subscription you're coming in. We offer you toppers in addition to Bright Dental, in addition to an extra toy, but people are really selecting it. And we found that the toppers tend to be a gateway product to lead you to a more fulsome food relationship. So it's been really, really great where we see on the whole 35% of customers who are upgrading to a premium product or subscribers who are coming into BarkBox or Super Chewer 35% are upgrading to a premium relationship with us and 40% of those are choosing products outside of play so in dental or food. So again, broadening our cross-selling opportunities or channels, learning a lot about food, have a new format coming very soon pretty enthusiastic about our progress there.

Great. It’s very helpful. Thanks, Matt.

Thank you, Ms. Ripps. The next question is from the line of Steph Wissink with Jefferies. Please proceed.

Hi, thank you for taking our questions. We have two really quick ones. The first is just to understand the scope of the inventory write down? Was it the full scope of what you have lingering and not expected to take any further write down? I think you mentioned shrink and I'm just trying to understand a little bit about how shrink evolves in your business. If you could talk a little bit about that. That would be great. Thank you.

Yes. So the first question, yes, I think that characterization is correct. It's where I came back in, in mid-January here, step back into the role, really taking a look at the business analyzing it across the board, one of those key areas is inventory and it had expanded a lot in fiscal 21. And so, we spent this time really diving deep and understanding what's there, how it aligned to my strategic plan, and taking the quick actions that we needed to take in order to be more efficient and set ourselves up for profitability going forward. So I think the way you characterize it is correct. And then on the second half of the question, I think I'll hand it to Howard.

Sure. So in terms of shrink, so in our business, where for the most part, for the play business, we're purchasing components, bringing them in to our warehouse, and facility and fulfillment partners locations, and building kits for the most part and coordinating the shipment both of the outbound kits and for our retail business. And so throughout that process, there have been places where there's been some slippage in terms of the build out of the kits. And where we weren't quite as tight as we would like to be and the way we worked with our partners. And so as Matt has spoken about earlier, so we're working with each of those partners to really tighten up both the tracking and the accountability, as we work with those partners to make sure that things like this slippage or shrink become a kind of de minimis part of our process going forward.

Howard, if I may, I just add to that. We mentioned it in February, I mentioned all the time that part of that process is with we brought in a couple of great leaders last year, who have been, I'd say auditing that entire process that the supply chain end-to-end. And this is another reflection of their work and tightening up as Howard said.

Yes, agree.

Okay. That's helpful. And then, I wanted to just isolate the margin, or excuse me the sales guidance one more time, and just make sure we understand, are you seeing this as a temporary setback to allow your business to grow on a higher quality basis and building a foundation for future growth that's accelerated? Or do you see this as a more normalized rate of growth, and you would prefer to have slower higher quality versus faster lower quality?

The former. So again, it's a slow down to speed up and there's a portion of that which is a rotation of a lower value customer for a higher value customer. But again, bringing that to a foundation that's a more profitable, sustainable foundation on which we then can accelerate and grow much faster off of that. But I don't want to hit the gas as hard as we can, until we really have that solid foundation in place.

Very helpful. Thank you very much, both of you.

Thank you, Ms. Wissink. That concludes the Q&A session as well as today's call. Thank you for your participation. You may now disconnect your lines.