A.K.A. BRANDS HOLDING CORP. Q3 FY2024 earnings call

• Strong net sales growth: Net sales surpassed expectations at $150 million, 6.4% y-o-y growth. U.S. net sales up 19.5% y-o-y.
• Active customer base: 14% year-over-year growth in active customer base.
• Gross margin: 58% gross margin achieved, highest in three years, driven by test and repeat model and operational efficiency.
• Brand expansions: Petal & Pub and Princess Polly launched in Nordstrom stores; Princess Polly opened new brick-and-mortar stores in San Diego, Scottsdale, and Boston; Culture Kings leveraging test-and-repeat strategy with Loiter showing triple-digit revenue growth.

Net sales increased more than 6% to approximately $150 million compared to the same period last year, driven by strength in the U.S. business where net sales increased 19.5% y-o-y. Australia and New Zealand had softer sales, contracting 12% y-o-y. Gross margin expanded to 58% in the third quarter, the highest in three years. Adjusted EBITDA was $8.2 million, a 75% increase from the same period last year. U.S. net sales contributed $100 million, accounting for a significant portion of the overall revenue growth.

• Full year net sales outlook: Anticipates $567 million to $572 million in net sales.
• Margin expectations: Gross margin approximately 57%, selling expenses ~27% of net sales, marketing expenses ~12.5%, G&A expenses ~$100 million for the full year.
• Adjusted EBITDA: Expecting between $22 million to $23 million for the year, with an effective tax rate of negative 4%.

• Tariffs: Majority of goods imported from China; actively working to reduce concentration in China, with plans to adjust sourcing and pricing if tariffs impact.

Q: Help us unpack the guide for 4Q, balance between AOV and order growth, and current trends quarter-to-date A: Expecting same regional growth rates as Q3/Q2 to continue in Q4. Slight increase in AOV year-over-year with growth coming from order volume Q: Thoughts on additional marketplace and wholesale expansion, and strategy for other brands A: Happy with performance of Petal & Pup on Nordstrom.com, open to continued expansion; strategy of putting product in front of customers wherever they are applies to other brands too Q: Potential for tariffs, percent of goods from China, and offsetting tariffs A: Majority of goods from China; working to reduce concentration, can take pricing actions if needed Q: Learning from Century City store and transport to other stores, and California stores for holiday A: First store in Century City performing well, newer stores bigger with more styles; working to open two California stores, though may not be open before Thanksgiving but soon after Q: Percent of Culture Kings using test-and-repeat model and opportunity A: About 50% of Culture Kings' first party exclusive brands can use test-and-repeat model, with Loiter showing over 100% comp growth