Playboy, Inc.

Good afternoon. Thank you for standing by. Welcome to Playboy Inc.' 's first quarter 2026 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. This conference is being recorded today, May 11, 2026, and the earnings press release and Form 10Q, from which information may be referenced during this call. were issued after the market closed today. On our call today are Playboy Inc's Chief Executive Officer, Ben Cohn, and Chief Financial Officer and Chief Operating Officer, Mark Crossman. I would like to remind you that the information discussed today is qualified in its entirety by the Form 8K and Form 10Q filed today by Playboy Inc, which may be accessed on SEC's website and on Playboy Inc's website. Please note that statements made during this call, financial projections and other statements that are not historical in nature may constitute forward-looking statements. Such statements are made on the basis of Playboy Inc.' 's views and assumptions regarding future events and business performance at the time they are made and we do not undertake any obligation to update them. Forward-looking statements are subject to risks which could cause the company's actual results to differ from its historical results and forecast, including those risks set forth in the SEC filings, and you should refer to and carefully consider those for more information. This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statements. In addition, throughout today's call, the company may refer to adjusted EBITDA, a non-GAAP financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis. A reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure is included in today's earnings release, which is available on the Playboy Inc. Investor Relations website. At this time, I would like to turn the call over to Playboy's Chief Executive Officer, Ben Cohn. Ben, the floor is yours.

Thank you, operator, and thank you to everyone for joining us today. Welcome to our first quarter 2026 earnings conference call. When we spoke in March, I told you 2025 was the year we largely completed Playboy's transformation into a focused, high-margin, asset-led platform focused on four verticals, licensing, meeting and experiences, hospitality, and honey for debt. I want to use my time this afternoon to walk you through what that platform produced in Q1, 2026, because that was the quarter where that strategy showed up as visible, tangible progress across almost every part of the business, as well as why we're excited about meaningful growth going forward. Headline first. and then we'll get into the substance. Consolidated revenue grew to approximately 30.2 million, up from 28.9 million a year ago. Adjusted EBITDA was approximately $5 million, up 111% compared to the prior year, marking our fifth consecutive quarter of positive adjusted EBITDA. Excluding litigation expenses, adjusted EBITDA would have been approximately $5.8 million. We closed the UTG China transaction, pay down $15 million of debt, reducing our gross debt to $145 million, and plan to further delever by almost $37 million more from future UTG payments, which will bring our net debt well below $100 million. Honey for Debt grew top-line double digits with full-price sales accelerating, gross product margin expanding, and adjusted EBITDA margins continuing to improve. Given the operational improvements and part of our larger business plan, we have also started terminating or non-renewing licensees that do not fit with that plan so that we may bring on fewer and bigger licensees that better fit the Playboy brand. During Q1, we made key hires to reinvigorate our growth. David Miller joined as president of media and brand, and Philip Picardi joined as chief brand officer and editor-in-chief. David has taken direct ownership of the consumer-facing platform, the website, the media and experiences business, and the day-to-day alignment between content, commerce, and licensing. Philip is reshaping the editorial voice of Playboy. Journalism, photography, and cultural authority at a level the brand has not operated at in a long time. The clearest proof point is Philip's first issue, the Spring 2026 magazine. Our cover star was Carol G, one of the most followed artists in the world with more than 70 million Instagram followers. We generated more than 3 billion media impressions, over 40 million video views across social platforms, and the earned media value was in the tens of millions of dollars. The issue puts Playboy back at the center of culture, speaking to the value the magazine brings to the company. This is not a one-off. We have two other major celebrity covers lined up following Carol G., and our editorial calendar for the balance of 2026 continues to get stronger by the day. When artists of this caliber and the photographers, stylists, and writers who work with them actively want to be on the cover of Playboy, that tells you the brand's health is real. Practically, it is the engine that pulls audience onto our platform and the value into our licensing conversations. Under David's leadership, we launched a preliminary subscription offering for both digital and print content. Executing on the architecture we have been describing to investors for more than a year. Free content drives top of funnel audience, premium content, and member experiences sit behind the paywall. We will continue to add utility, event access, exclusive drops, community features as we scale Playboy.com through the balance of 2026. Building upon our first paid voting contest, the Great Playmate Search, which drove more than 1.7 million votes from over 17,000 contestants, we recently launched our next model, Search Contest, a collaboration between Playboy and Honey Burdette. This is the second paid voting contest we have taken to market. It is a brand collaboration between our two largest assets and the winner becomes the face of a global advertising campaign and is featured in the Playboy quarterly magazine with a $100,000 prize. It is also a revenue and audience engine. Every vote is a paid engagement. Registration runs through June 8th and voting closes July 31st. Two weeks into the contest registration, We are on track to exceed 30,000 contestants, a significant improvement from our last contest. Paid voting has the potential to become a real revenue lever for us. We will continue to layer it into additional programs throughout the year. Now that UTG has closed and their balance sheet is in a good place, we are proactively optimizing our rest of the world licensing business, not renewing off-brand licensees and creating new white space as we align our content strategy with our licensing business under David's leadership. This continues the strategy we have been describing. Fewer, bigger, high-quality partners focus on a consistent global brand. With Q1, Honey Burdette has now delivered six consecutive quarters of double-digit brick-and-mortar comparable store sales growth and four consecutive quarters of combined brick-and-mortar and online comparable store sales growth. Valentine's Day 2026 was Honey Burdette's best yet. The multi-piece full-price set strategy is working. Our Valentine's assortment all drove record average order values, or AOV, weeks. Our Honey Burnett Club loyalty program, which we launched in mid-October, has now crossed 110,000 members. And in early Q2, the Addison Leopard launch has already set the tone, our best-performing launch of 2026 so far. The U.S., now Honey Burnett's largest market, led the quarter. Retail and online both expanded, and the U.S. store base was nearly unanimously positive on a like-for-like basis. The U.S. economics are clearer. U.S. stores are meaningfully more productive and profitable than their counterparts in any other region, with four-wall adjusted EBITDA margins at approximately 40%. With that profile in mind, we have redesigned the future of HoneyBreadX stores, reducing our future build-out costs by almost 40%, which will significantly increase our ROI. We have received great interest from third parties in our capital-based efforts at HoneyBreadX and we intend to open five new HoneyBreadette stores in top-tier U.S. malls over the next 12 months. These are the highest return investments available to us anywhere in the HoneyBreadette portfolio, and they clearly fit with our existing capital plan. So when I look at Q1 2026, I see a quarter of not only execution against our four pillars, licensing, media, and experiences, hospitality, and how many of that, but also the groundwork laid for substantial growth in the future. It starts with bringing in the right leaders, putting Playboy back in the cultural conversation with Karol G on the cover and two more major names lined up behind her, launching a new subscription offering, building momentum with a new paid voting contest, closing the UTG transaction, as well as five other new licensing deals. creating a clear path to further de-lever the company, continuing to make progress on a new Playboy Club of Miami, and further growing the Honey Burdette business 15% year over year. Every one of those is a decision, not a headlight, and taken together, they give us real compounding momentum as we move forward. With that, I'll hand the call over to Mark to walk through the financial details.

Thank you, Ben. Consolidated revenue in the first quarter grew to $30.2 million compared to $28.9 million in the first quarter of 2025, an increase of $1.4 million or 5% year-over-year. Year-over-year increases led by strong Honey Burdette performance. Honey Burdette net revenue grew to $18.8 million, up 15.4% year-over-year. Retail delivered double-digit comp store growth across every region. With Q1, Honey Burdette has now delivered six consecutive quarters of double-digit brick-and-mortar comparable store sales growth and four consecutive quarters of consolidated brick-and-mortar and online comparable store sales growth. Full-price sales through drove the quarter. Full-price sales were up 23% year-over-year. EBITDA margins at Honey Burdette continued to improve. I'd like to spend a moment on the U.S. specifically because that is where we see the most attractive incremental return on capital. Our U.S. stores are running at approximately twice the sales productivity of the rest of our portfolio of stores and approximately three times the per-store profitability. Four-wall margins in the U.S. were approximately 40% in a quarter. With those economics in mind, we intend to open five new Honey Burdette stores and top-tier U.S. malls over the next 12 months. The capital cost is modest. The payback is fast. and we already have the playbook, the supply chain, and the brand recognition in place to execute. Licensing revenue is $10.9 million in the first quarter, slightly below the prior year quarter. The year-over-year decrease in licensing net revenues is consistent with repositioning our brand and licensing strategy for fewer and bigger deals. Accordingly, we let a number of off-brand legacy licenses expire, which is partially offset by five new licensing deals in the quarter spanning apparel, sleepwear, direct-to-retail, and headwear across North America, EMEA, and APAC. In addition, we did not sign any new deals in China during our UTG negotiations. Our ByBorg strategic partnership contributed $5 million of digital licensing revenue in the quarter, consistent with the contractual minimum guarantee. Corporate operating expenses on an adjusted basis, excluding stock-based compensation, transaction expenses, and other items we normalized for adjusted EBITDA, were approximately $7.1 million, a reduction of approximately $1.6 million versus the prior year quarter. Within that total, corporate operating expenses, excluding brand investment, were approximately $6.2 million, with personnel and occupancy savings driving the year-over-year reductions. The remaining approximately $900,000 represents direct investment in the Playboy brand, the magazine, editorial, and the consumer platform. We view that spend as an investment, not overhead. Net loss for the quarter was $4 million, or 3 cents per share, which included $3.5 million of transaction expenses related to the UTG deal, compared to a net loss of $9 million, or 10 cents per share, in the first quarter of 2025. an improvement of approximately $5.1 million year-over-year. Adjusted EBITDA for the first quarter was $5 million, an increase of $2.6 million versus the prior year quarter. This represents our fifth consecutive quarter of positive adjusted EBITDA. Excluding litigation expenses, adjusted EBITDA would have been $5.8 million. On the balance sheet, we ended the quarter with approximately $34.7 million in total cash, including restricted cash. Total debt was $144.9 million, down from $159.9 million at year end 2025, reflecting the $15 million pay down from the initial UTG proceeds following the close of that transaction on March 20th. That concludes our prepared comments.

With that, operator, let's open the line for questions. Thank you, sir.

We will now begin the question and answer session. If you have a question, please press the star followed by the one on your touch-tone phone. If you would like to withdraw your question, please press the star followed by the two. If you are using speaker equipment, you will need to lift the handset before making your selection. I will now pause as we assemble the queue.

The first question we have is from George Kelly. of Roth Capital Partners.

Please go ahead.

Hey, everyone. Thanks for taking my questions. First one for you, Ben, you mentioned in your prepared remarks about capital raise efforts at Honey Burdette. I was wondering if you could give any more detail on that process.

George, thanks for the question. Good afternoon. Look, we've had a lot of interest. It's a great brand. The business is performing well. Um, and irrespective of the capital raise and based on the new store designs where we've, uh, we do start our build out costs substantially. We're going to be opening five new stores, but, um, you know, I would say things are looking good on the capital raise and we'll see what happens in the future without, you know, can't really speak more to that. Um, just given that it's an ongoing process.

Okay. Fair enough. And then with respect to this, the stores that you're opening, can you just walk us through the four wall? the build cost, the AUV and margin, just the key aspects of the four-wall that you're underwriting as you plan new stores?

Yeah, so we said that our four-wall margin was about 40%. In terms of productivity, we're seeing about $1,500 a square foot is what we're getting on the average in our U.S. stores. And then in terms of build-out, We think we're at about $500,000 all in, and that's before TIs. And we'll probably have $30,000 to $40,000 of pre-opening expenses, and you have about $35,000 of inventory.

And, George, that's substantially from what used to be about $900,000 to open a store. And so if you look at from an ROI, and especially with what we're seeing for full-price items in the U.S., You know, it's a good use of capital, and, you know, there's a ton of growth left in that brand.

And remind me of an average square footage per store.

About 800,000 square feet. 800 square feet. 800 square feet, sorry.

Okay, great. And then just one last Honey Burdette question, and then I wanted to ask about one other topic. Your year-over-year compares get harder starting in 2Q for Honey Burdette. Aside from store growth, do you think you can maintain, I don't know, high single-digit, low double-digit growth, just given the more challenging comparison, or how should we think about growth for the remaining quarters of 2026?

You know, we don't want to give guidance. I don't think you'll be too far off of where we are right now going forward. Yeah, retail is a little bit more difficult comp, but online is obviously a lower comp that's getting better.

Okay. Okay, fair enough. And then last question from me just with respect to UTG. I know it's early days there that the deal didn't close that long ago, but can you just update us on the status of that business and how far along it is and what the kind of plan is in the near term and just any kind of update on UTG post-close? And that's all I had. Thank you.

Sure. So, you know, UTG is off to a good start. Again, as you said, we're only, what, eight weeks into it, something like that, not even. You know, they've been working with our existing partners, making sure there's a smooth transition. You know, I think we feel comfortable with where they're going to come out for the year from a revenue perspective. It's important to note also, George, that when you look at Q1 for us and really going back to late in Q4, we stopped signing new deals in China, any new deals. And that was because part of what UTG wanted to do was free up categories for themselves as well because they are an operator. And so we feel good. I think it's a good relationship. We've known them for a long time. and we're excited about their plans and the investment they're gonna make into the brand and the marketing of the brand. And so I think China's in the best place it's been in years. We're actually making progress also on our recovery of the litigation award that we won last year. So we finally got through the Chinese courts and they're helping us begin the enforcement action against our former partner.

The next question we have is from Alex Furman of Lucid Capital Markets.

Please go ahead.

Hey, guys. Thanks very much for taking my question. Ben, you talked about letting some licensees kind of run off as they expire. How many more could there be, and how long do you think it's going to take just if you let all of the kind of underperforming licensees naturally expire? How long would it take? to kind of get through that process. And can you just kind of help us to size up, you know, what is ultimately the opportunity here? Are there, you know, big categories, big regions that you really haven't been taking advantage of that you think you could unlock if you kind of clear out some of these underperforming legacy relationships?

Sure, and thanks for the question. Look, I don't want to say they're underperforming. I think these are proactive decisions we're making based on the improvement to the company. When we had balance sheet issues, which I think we have largely solved at this point, we took a lot of deals on the licensing side, some of them small, but stacking a lot of nickels shows real revenue. And I think we're taking, especially with David on board and the editorial strategy we have, We're taking a much more deliberate approach to long-term brand health. And so some of the deals are just not underperforming. They're just deals that are off-brand. And so we're looking for fewer and bigger partners. That should allow us in the future to be much more efficient operating anyways for the business. And so it's hard to sort of give guidance on it because it's sort of a step function, as I've always described licensing. But licensing has the potential to be substantially larger than it is today. And that is going to come down to what we're doing on the editorial side of the business as well. We are one brand, which is Playboy. And we have to make sure that what we do on the editorial side aligns with what we do on the licensing side, especially in the Western hemisphere. And that's what we're focused on. And so, you know, part of that Alex was China. We just, we didn't do new deals in China. There are some deals that were expiring there because the UTG, we put all of that on hold. And then part of that is proactively in the U S is a couple of deals came up, decided that we're not going to renew them as we have a larger strategy for us licensing moving forward.

Got it. Okay.

And then to answer your question, there's a lot of, there's a lot of categories that we are targeting. right now, but that will tie directly to what we're doing on the content side. So, you know, as we relaunched, you know, this Playmate franchise, which is off to a great start, there's a lot of opportunity for products around Playmate. So when you think about color cosmetics, you think about lingerie, you think about swimming or move to Miami, there's some opportunities there that we're excited about. moving forward. And then, you know, rest of the world, obviously, you know, putting Carol G on the cover, phenomenal influencer and musician. But there's a lot of white space in South America. And so that is deliberate, you know, moving forward, which is, you know, you start with content that opens the doors for us, and then you start to build around it.

Yeah, that makes sense, Ben.

Thanks for that. And then you mentioned paid voting, some pretty big early numbers there. You know, can you talk about how profitable that business is and how big that could get for you?

Well, yeah, let's just start. So, you know, we're only a couple of weeks into this new contest, which is a collaboration between Playboy and Honey Burnett. Honey Burnett has designed a capsule collection of Playboy lingerie, and we're excited to see how that performs. We have already now surpassed, I think as of today, the 17,000 contestants that we had registered in the last contest, and we still have about a month to go in registration. And we think paid voting could be millions and millions of dollars a year. Let's see how this contest does, but the early economics of the first one, even with all of our technical issues we have, and that we have now resolved with a new partner, You know, it was very, very promising on an annualized basis that was multiple seven figures. And I think if we do this one right and you get up to 30,000 plus contestants, you know, this contest alone should be multiple seven figures from a revenue perspective. And the profitability is great, but more importantly, it's the top of the funnel. So remember, you know, as I sort of said in the prepared remarks, you know, between sort of free content that sits out there, as well as some of these contests. The last time we did this in the fall, we had 500,000 users register at Playboy.com. We own that data moving forward. And so that allows us to now go back and market membership or subscription and other offerings to those users. So not only is paid voting extremely profitable for us, but it's an unbelievable top of the funnel. which is, you know, the woman signed up to win the cash prize and to become the face of the Honey Burdette Playboy lingerie line, they go out to social, they ask their fans to vote for them, their fans vote for them, but they're voting for them at Playboy, and then we own that data moving forward. So it serves multiple purposes for us as part of our larger, you know, content, media, and experiences strategy. and we're excited to see how the Playboy Honeybird line performs as well.

Great. That's really helpful. Thank you very much. Thanks, Alex. The next question we have is from James Heaney of Jefferies.

Please go ahead. Yeah, great. Thank you, guys. Ben, can we just get an update on the success that you're seeing with the magazine? I mean, obviously, you've generated a lot of hype with the Carol G cover. So we'd just be keen to hear about that release and how it's driving halo effects and traffic into your digital properties as well.

Yeah, James, thanks for the question. Look, obviously Carol G is a huge name, but most importantly, we have two other huge names lined up behind her for the balance of this year. And the conversations we're having with talent, I would say are getting easier and easier. Um, you know, as far as traffic, you know, we, we launched what I would say is a very preliminary membership or subscription, uh, with the Carol G cover. Uh, we, we have a lot of learnings from it, but very pleased with the initial results of the number of people that have subscribed actually a little bit shocking that in, in some of the earlier things we did, we saw more people subscribe for print this one. We're actually seeing a lot of people subscribing for digital. The print magazine sold out, as I think we said, within the first day online. So wish we had more because we obviously left some on the table there. And the sell-through at Newsstand was very, very strong as well. And that's all part of our top of the funnel, right? It's getting those names to drive traffic that we then drive into a paywall situation moving forward. So without getting into specific numbers yet because it's still really early and we have a lot of learnings, but very encouraged by the early results. And we're seeing the same thing with Playmates, right? Launching Playmates on a monthly basis on social and then getting them to drive to see their galleries behind a paywall at playboy.com is also showing very positive results and something that we've learned a lot from. And as I've said before in previous calls, You know, everything with us is now about testing and iterating, testing and iterating. We will continue to put resources behind things that are working and won't put resources behind things that aren't working. But early on, what we're doing on the media side, especially with Philip and David now on board, are very promising sides for a lot of growth in the future.

Yeah, that's great. And maybe just one for Mark. I was hoping you could talk about some of the OpEx levers that you continue to see in the business. I mean, you've done a great job taking out OpEx over the last year. Particularly, I think sales and marketing was strong. But I'm interested kind of where you see potential for additional cost savings going forward.

Yes, I think we, and thank you for the question, but I think we have a lot of room in, you know, the tech space with our tech stack. We're integrating AI throughout the company. We're finding that to, you know, to help just on an overall basis bring costs down. In addition to that, there are probably a few other things we can do that we probably shouldn't be talking about. Like I said, there are still levers there, and we'll continue to pull them.

Great. Thank you.

Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to Ben Cohn for closing remarks.

Thank you, Operator, and thank you to everyone for joining us today. Q1 was a quarter of visible execution across all four pillars, revenue growth, our fifth consecutive quarter of positive adjusted EBITDA, the closing of the UTG transaction, and continued double-digit growth at Honeybird Debt. As we move through the balance of 2026, we remain focused on disciplined capital allocation, putting Playboy back at the center of culture, and further delevering the balance sheet. We appreciate your continued support and look forward to updating you on our progress in the months to come. If you have any further questions, please feel free to reach out to our IR firm, MZ Group, who would be happy to answer them. Thank you. We look forward to talking to you on the Q2 call.

That concludes today's conference. Thank you for joining us. You may now disconnect your lines.