Pet products provider Bark (NYSE: BARK) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 5% year on year to $115.4 million. Its non-GAAP profit of $0.01 per share was in line with analysts’ consensus estimates.
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Bark (BARK) Q1 CY2025 Highlights:
- Revenue: $115.4 million (5% year-on-year decline)
- Adjusted EPS: $0.01 vs analyst estimates of $0 (in line)
- Revenue Guidance for Q2 CY2025 is $100 million at the midpoint, below analyst estimates of $127.5 million
- EBITDA guidance for Q2 CY2025 is $0 at the midpoint, below analyst estimates of $1.21 million
- Operating Margin: -5.7%, in line with the same quarter last year
- Market Capitalization: $228.6 million
StockStory’s Take
Bark’s first quarter results were shaped by management’s deliberate pullback in marketing and promotions in response to rising tariff-related uncertainty and softening consumer sentiment. CEO Matt Meeker explained that the company slowed growth initiatives, especially in its direct-to-consumer (DTC) subscription box business, to preserve profitability and focus on higher-quality customer relationships. Meeker highlighted the company’s progress in expanding its commerce segment, which grew 27% year over year, and the successful launch of BARK Air as bright spots. CFO Zahir Ibrahim noted that while DTC revenue faced headwinds, commerce expansion and margin improvements in both core segments reflected ongoing supply chain optimization and tighter cost control. Management acknowledged that, despite these achievements, the macro environment and tariff situation weighed on overall top-line performance.
Looking ahead, Bark’s guidance reflects a cautious approach as management expects continued volatility from tariffs, evolving trade policies, and uncertain consumer demand. CEO Matt Meeker stated, “Tariffs and policy shifts under the current administration create a lot of uncertainty, but we have a plan and are committed to achieving adjusted EBITDA profitability.” The company is accelerating diversification beyond its core subscription box business, shifting investment towards new product lines, wholesale channels, and services such as the upcoming BARK in the Belly consumables launch. CFO Zahir Ibrahim added that Bark is responding to tariff headwinds by diversifying its supply base, introducing productivity initiatives, and considering modest price increases to protect gross margins. Management emphasized its intent to maintain adjusted EBITDA profitability while navigating a challenging environment.
Key Insights from Management’s Remarks
Management attributed first quarter performance to a combination of external tariff pressures, intentional marketing reductions, and ongoing efforts to diversify revenue streams beyond DTC subscriptions.
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Tariff-related supply chain adjustments: Bark faced substantial cost pressures from new tariffs on Chinese imports, leading the company to pause inbound shipments, delay retailer orders, and accelerate plans to shift manufacturing to alternative geographies. Management indicated this transition will carry incremental costs but is necessary to reduce exposure to future tariff changes.
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Marketing strategy shift: The company significantly reduced marketing and promotional spend for DTC subscriptions, especially as consumer sentiment weakened. CEO Matt Meeker stated this decision was aimed at driving higher-quality, longer-term customer relationships, rather than relying on discount-heavy tactics that attract lower-retaining subscribers.
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Commerce segment momentum: Despite broader headwinds, Bark’s commerce business—sales through retail partners like Amazon, Target, and Chewy—grew 27% year over year. Management sees this channel as a critical area for future growth, aiming for commerce to represent one-third of total revenue within two to three years.
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Gross margin expansion: Bark delivered its highest-ever gross margin of 63.6% in the quarter by optimizing unit costs, supply chain efficiency, and product mix. Management views margin strength as a key buffer against volatility from tariffs and consumer softness.
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Product and channel diversification: Responding to ongoing risks, Bark is prioritizing new product development (notably a consumables line launching in August), expanding wholesale distribution, and scaling services like BARK Air. The company intends to shift investment away from its core box business to build a more resilient, diversified revenue base.
Drivers of Future Performance
Management expects continued macro and tariff headwinds, but is prioritizing supply chain shifts and new product launches to support a return to revenue growth and margin stability.
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Supply chain diversification: Bark is actively moving toy production out of China to mitigate tariff risk and expects to begin shipping from new facilities in time for the holiday season. Management cautioned that supplier transitions carry operational risks, but views this as essential for long-term cost stability.
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New product and channel focus: The upcoming launch of the BARK in the Belly consumables line, along with expanded retail partnerships and increased investment in non-box offerings, are expected to drive incremental growth. Management is also investing in digital and AI-driven experiences to enhance customer engagement and retention.
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Margin protection measures: To offset tariff-related expenses, the company is considering modest price increases and continued productivity initiatives. Management believes that maintaining gross margin strength will be critical, while also acknowledging the potential for temporary margin pressure as new supply chain strategies are implemented.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) tracking Bark’s execution on supply chain diversification and its ability to mitigate tariff-related cost pressures, (2) monitoring the rollout and retail traction of the BARK in the Belly consumables launch and other new products, and (3) assessing commerce segment growth as the company targets a higher mix from wholesale channels. Additionally, we will watch for sustained gross margin performance and signs that Bark can maintain adjusted EBITDA profitability despite near-term volatility.
Bark currently trades at a forward P/E ratio of 67.8×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it’s free).
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