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spk00: Good day and thank you for standing by. Welcome to BARC's second quarter fiscal year 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. And please be advised that today's conference may be recorded. Thank you. I would now like to hand the conference over to your first speaker today, Mr. Michael Mugius. Vice President, Investor Relations.
spk01: Good afternoon, everyone, and welcome to BARC's second quarter fiscal 2022 earnings call. Joining me today are Manish Joneja, CEO, and John Toth, CFO. Today's conference call is being webcast in 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 are also contained in this afternoon's press release. With that, let me now turn the call over to Manish.
spk02: Thanks, Mike, and good afternoon, everyone. Thank you for joining our fiscal second quarter earnings call. I'm pleased to report we delivered another strong quarter underscored by sizable growth in active subscriptions, a robust increase in subscription shipments, and record high average order value. I'd like to begin today's call with some highlights from the most recent quarter, followed by an update on our progress across our key categories and some of our strategic priorities for the year. John will then walk you through our financial results from the quarter and provide guidance for the remainder of fiscal year. Beginning with last quarter's results, we continue to benefit from sector and channel tailwinds, including growing drug ownership, increasing spend on pets, and an expanding share of pet sales occurring online. I'm pleased to report we delivered strong results across several key metrics last quarter. We added 271,000 active subscriptions, bringing our total to 2.1 million as of quarter end, a 39% increase compared to the same quarter last year. We delivered 3.6 million shipments in the quarter, a 34% increase year over year. Furthermore, we achieved a record average order value of $29.73, a $1.55 increase compared to the same period last year, and a 52 cent increase compared to our fiscal first quarter. This drove total revenue of $120.2 million, up 39% year over year, and resulted in a very healthy gross margin of 58%. These figures are impressive, especially considering how strongly the company performed during the COVID-19 period last year, which highlights the resiliency of our business model. I would also like to provide some perspective on a couple of topics very important to our business that have been top of mind and on the front pages for what seems like months. namely how we are navigating inventory levels, the global supply chain congestion, and the rising cost of digital advertising. As many of you are aware, the cost of media advertising has increased significantly this year, and many companies are reporting material increases in customer acquisition costs as a result. At Bark, we have effectively managed these challenges to date through highly engaging content, a significant social media following, and a tactical approach to marketing, which leverages our unique customer relationships, strong word of mouth, and a growing data set. Last quarter, our customer acquisition cost was up just 7% compared to the previous quarter, which resulted in a very healthy LTV to CAC of 4.9 times. In other words, for every dollar we spent in marketing, we generated roughly $5 of gross profit, a highly attractive return. Internally, we target an annual LTV to CAC of 4x. As LTV grows, we are well positioned to spend more in marketing to acquire those high-value customers. In our view, our efficiency at profitably acquiring new customers is a key differentiator for our business and something that sets us apart from not only other companies in the dog space, but the broader DDC and retail segments as a whole. From an inventory perspective, we believe that we are well positioned to meet the strong demand we expect this holiday season. While global freight congestion and increased shipping costs are likely to impact many retail companies' ability to meet demand during the holidays, our team identified this challenge early on and accelerated the shipping of our D2C product for the back half of the year. As a result, our warehouses in the U.S. are already stocked with the holiday inventory that we anticipate needing, which significantly de-risks the potential impact that future freight congestion could have on our D2C business this holiday season. Nonetheless, we are experiencing rising costs on our shipping and fulfillment line as rates continue to increase, and we are often paying for premium shipping to ensure our customers receive their shipments in a timely manner. We do not expect these headwinds to subside for the foreseeable future. However, we are encouraged by the continued growth in new subscriptions and AOV, as well as our healthy LTV to CAC metric, which in our view are most important indicators of the health of our business long term. Looking ahead, we are optimistic about our ability to meet customer demand going into what is traditionally our strongest two months of the year. While it is still early days, we are encouraged by our start to the current quarter, and early signs are indicating healthy consumer demand this holiday season. I'd like to now spend some time discussing some of our key categories, beginning with our play business, which includes our themed toys and treats subscription, Bog Box and Super Chewer. We continue to see robust growth in new subscriptions, subscription shipments, and average order value. While the play business is currently our largest category, we believe we still have a significant runway for growth in this category. We ended the quarter with over 2 million active subscriptions, and the total addressable market, the roughly 70 million households in the U.S. with a dog, continues to grow. Our mission is to be in all of them, be it through a single dog toy or through multi-line subscriptions. The market opportunity therefore remains significant. Furthermore, we continue to see a rising share of pet sales occur online. In 2015, e-commerce sales represented a 3% of total pet sales. By 2020, that number jumped to 25%, and that trend is expected to continue with 35% of sales expected to occur online by 2024, according to third-party sources. This shift will serve as a long-term channel tailwind for our business, Especially given we offer one of the best online experiences for dog owners and we plan to continue to invest and win in this category. Put simply, we are still in the early innings of our play business and bark as a whole. The extent of these tailwinds and our ability to execute on this runway is underscored by a recent revenue growth. In the first half of fiscal 2022, our top line is up nearly 50% compared to last year. and we believe we are only just beginning to materially benefit from our cross-selling and add-to-box functionality. Add-to-box is a significant driver of revenue that is bolstered by our innovative data analytics and machine learning tools that enable us to recommend highly tailored items that customers can quickly add to their existing subscriptions each month. Last quarter, our Add to Box feature drove roughly $6 million of DDC revenue, a 75% increase compared to the same period last year. Through the first half of fiscal 2022, ATB revenue was up over 117% compared to the first half of fiscal 2021. Moreover, we expect our newer categories, like food and health, to serve as additional opportunities to cross-sell and attach new products to existing subscriptions. Again, we have made important investments in this area, which we feel will continue to drive top-line growth and strong margins. Moving on, we continue to ramp up our Bark Eats operation, a growth initiative we are very excited about. For those newer to Barg's story, Barg Eats is a highly personalized, subscription-based meal plan that we think has the capability to disrupt the premium pet food market by completely tailoring your dog's food by breed, size, age, and lifestyle. Our offering evolves as the dog matures and their dietary needs change. In essence, we have a highly innovative product offering that affords customers the same high-tech relationship that experience in our Play category at a similar price point to higher-end kibble purchased at a pet retailer. We remain on target to launch this product nationwide in 2022, and we have executed several important initiatives to enable us to achieve that objective. First, we have enhanced our user experience to better appeal to a wider range of customers. Customers now have the ability to quickly purchase a predetermined meal plan based on data they have collected from other dogs in a similar demographic. This shortens the funnel for customers that don't want to speak to a nutritionist up front and prefer a quicker checkout experience. And for customers that do prefer a higher touch or more customized experience, our nutritionists and wellness advisors are on hand. We are also launching an affiliate and referral program for Eats, which will serve as an additional customer acquisition funnel. Second, we recently expanded our Ohio-based Bark Eats Fulfillment Center from 12,000 square feet to 100,000 square feet. This expansion significantly augments our ability to ship to customers throughout the lower 48 in a timely and cost-effective manner. We have also introduced certain operational efficiencies, such as automated packaging. Third, we have bolstered the team supporting EATS. Mike Novotny, who served as chief operating officer since 2019 and has been instrumental in expanding BARC's key businesses since joining the company in 2015, is now president of EATS and works alongside Carly Strife, one of BARC's co-founders. Together, they helped grow BARC to a $500 million revenue business, and I'm excited to have them leading the EATS opportunity. The addressable market for each is massive. To put it in perspective, the dog toy market in the U.S. is roughly $3 to $4 billion, while the dog food market is between $30 to $40 billion. The food category is also less discretionary, resulting in higher customer retention and lifetime value. Based on our data thus far, the average order value for bar keys is also roughly two times higher than that of the play category. Turning to Bark Bright, which is a dental hygiene offering and the first product we launched in our health vertical, I'm pleased to report that we began selling our Bright product in PetSmart last quarter. This product is an exciting opportunity for Bark as we are able to sell it through multiple channels. We sell it on a D2C subscription basis as a one-off add-to-box item as well as in retail stores. We believe Bright also serves as an additional tool to grow average order value and extend customer retention. Health is another exciting opportunity, and we expect to broaden our health offering with unique and innovative products over time. The last yet meaningful strategic initiative that I would like to touch on is called One Bark. One Bark is an opportunity to create a unified customer experience across our various product categories. enabling customers to easily attach different products to their current subscriptions, and offering multi-line subscribers an even more premium experience. Currently, the customer experience across the various vertical fields stand alone. Subscribing to Bark Eats is a different experience, for example, on a different website than Bark Box. We are in the process of evolving this to create a unified experience that not only makes it easier to purchase across our various product categories, that also rewards customers that have multi-line subscriptions and remain Bark customers for extended periods of time. One Bark will deepen our relationship with our customers, positioning us as a company that understands the full demands of living with your dog and easily and effectively services all of your needs as a dog parent. This will be an ongoing and evolving initiative, but we expect to offer this unified experience live in the first half of calendar 2022. Megan Null, who joined BARC in 2015 and has been overseeing our SuperTour business, is currently leading this effort, and I'm highly confident in her ability to execute this key strategic initiative. The power of a brand is not only evidenced by our recent performance, but also by the other world-class brands that lean into Bark. To date, we have partnered with Universal Studios, Warner Brothers, the NBA, NCAA college football, the WWE, Dunkin' Donuts, and Subaru, to name a few. And as we mentioned in the last call, we have partnerships with Netflix and many others to come. During the current quarter, we continue to invest in new talent to help support the continued growth of Bark ecosystem. Anil Nair, who I work closely with at Amazon, is now our Chief Supply Chain Officer and is leading all of our global supply chain operations effort. Supporting him in these efforts are two seasoned operation leaders, James O'Leary and Tyler Bronson. James also comes from Amazon, while Tyler Bronson spent the previous 12 years at Dick's Sporting Goods. I'm also excited to note that Ollie Downs recently joined the team as VP of Data and Machine Learning. Ali is an accomplished machine learning scientist and will lead Bark's machine learning and data capabilities with the ultimate goal of expanding our existing personalization and user experience efforts. All in all, there are a lot of exciting things happening at Bark. We have a world-class team in place, our player vertical continues to grow at a healthy clip, we're making a notable progress on our new categories like food and health, and we're improving the overall customer experience across the Bark ecosystem. Collectively, we believe these efforts will have a meaningful impact on customer retention and will help drive cross-selling revenue across our categories. I'm also pleased with our team's ability to navigate the challenging macro environment of increasing shipping costs, freight congestion, and rising media rates. While we are not immune to these challenges, our anticipated DTC product inventory for the holiday season is already stateside. Our gross margins remained strong, and we maintained a healthy customer acquisition cost, underscoring our marketing team's continued effectiveness, our strong customer engagement, and a powerful brand. In conclusion, Bach remains one of the largest digitally native dog brands in the world today. We are benefiting from both secular and channel tailwinds, which we believe enable us to grow at scale. Furthermore, a technology stack allows us to foster meaningful customer relationships that result in strong customer retention and some of the highest NPS scores in the broader consumer space. And before I turn it over to John, I'd like to provide an update on our CFO search. Over the past couple of months, we have interviewed a number of high-quality candidates and believe that we will bring this process to a close in near term. In the meantime, we have appointed Howard Heaton to serve as interim CFO and assist in managing the company's day-to-day finance responsibilities. Howard worked closely with us during our merger with Northern Star and is very familiar with Bark and the team. He has over 25 years of senior financial and strategic business experience, including as CFO for other public companies, and will be steady hand as we conduct our ongoing search. To that end, this will be John's last week as a full-time employee at Bark. John will remain an advisor to the company as the onboard permanent replacement, and I want to personally thank him for his valuable contributions to the company. He was crucial in building a strong financial and reporting infrastructure for Bark and helping us get to where we are today. With that, I will turn the call over to John.
spk05: Thanks, Manish, and good afternoon, everyone. We are very pleased to report our strong fiscal second quarter results, which are all the more impressive considering the surge in growth we experienced during the same period last year. Our recent results were underscored by continued growth in new subs, robust subscription shipment figures, growing revenue per order, and a very healthy LTV to CAC. In our view, our recent results demonstrate the strength of our brand, our strong customer retention, and the powerful secular and channel tailwinds that we benefit from as one of the largest digitally native dog brands in the world today. Beginning at the top of the P&L, total revenue came in at $120.2 million, a 39% increase compared to the same period last year. On a segment basis, direct-to-consumer revenue was $106.8 million, up 42%. This growth was largely driven by a 34% increase in subscription shipments, as well as a $1.55 increase in average order value. Our performance in this segment largely reflects the continued growth of our BarkBox and SuperChewer businesses. However, as we scale bright and launch our food business, Bark Eats, we expect these high TAM categories to provide meaningful tailwinds to our business. Revenue from our commerce segment, which reflects our selling of bark products in retail stores such as Target and Costco, was $13.3 million, up 21% year-over-year. This was slightly lower than expected as we experienced a shift in certain commerce revenue between our fiscal second and our fiscal third quarters due to delays in our retail partners' ability to get shipping containers into the U.S. on time. Roughly 75% of that shifted revenue has already been realized in the first months of this fiscal quarter, so this appears to be a true shift as opposed to a loss of revenue. Once again, our strong top-line results were accompanied by healthy gross margins, underscoring the value of our vertically integrated direct-to-consumer business model. Gross profit was $69.9 million, resulting in a gross margin of 58%. On a segment basis, our DTC gross margin was 60 percent, while the commerce segment came in at 42 percent. Note that we accept a lower gross margin in our commerce segment because that segment requires significantly less marketing expense, thus resulting in a comparable contribution margin. These gross margin results are particularly impressive considering they are in line with previous quarters, notwithstanding the rising freight rates that we and the rest of the world are experiencing. As I mentioned on our fiscal Q1 call, the team has done an excellent job addressing these macro headwinds by optimizing the timing of certain shipments, investing in additional self-fulfillment assets, and improving the focus of our network of freight partners. Moving on, we added roughly 271,000 new subscriptions in the quarter. Our customer acquisition cost came in at $51.71, up only 7% compared to the prior quarter. We've been impressed with our recent CAC figures considering that media rates are also significantly above even pre-COVID levels. We continue to believe that our efficiency in acquiring new customer speaks to the power of our brand, our high social media engagement with over 9 million followers, and our marketing team's tactical approach to channel and promotion management. Total advertising and marketing expense associated with these new subscriptions was $17.1 million in the quarter. Our marketing efficiency, coupled with our strong gross margins, resulted in a very healthy LTV to CAC of approximately five times. On that note, our marketing team's budget is driven by the lifetime value of customers we are acquiring. As Manish mentioned, we target an LTV to CAC of 4X, or a minimum return of $4 of gross profit for every $1 of marketing dollars we deploy. Nonetheless, we are highly disciplined in this approach, and if we see this ratio varying from our target, we will adjust our marketing investment. We believe that the relationships we foster with our customers, and the data we are able to leverage as a result is a key differentiator for BARC. The strength of these relationships is illustrated by our above average NPS scores, high customer retention, and growing lifetime value. Last quarter, the average subscription shipment churn was 7.1%, roughly 30 basis points below the previous quarter. Nonetheless, this figure remained above our 6% historical level, as a result of shipping delays, as well as the surge in customers that we acquired during COVID last year. We see these as relatively short-term influences, and longer term, as categories like food and health become more meaningful contributors to the business, we expect our average shipment churn to improve relative to historic levels, given the stickier nature of these categories. Also, Remember that shipment churn does not equal customer churn. For example, if a customer chooses to get a BarkBox every other month, they would count as shipment churn every other month. We think shipment churn is the most meaningful way to look at churn as we can tie the metric directly to revenue and therefore the P&L. If we look at active subscription churn, which is defined as If a customer received a product in the previous 364-day period, our churn rate is in the 2.5% range. Moving on, total G&A in the quarter was $68.2 million versus $39.3 million in the fiscal second quarter of last year. The year-over-year increase is a function of several factors. Roughly $16 million of this $29 million increase is due to the year-over-year increase in volume shipped as well as higher shipping rates. Another approximately $8.4 million is due to an increase in compensation, including $3.7 million of stock-based compensation, as we continue to invest in people and technology to launch and scale our new business lines. And the remaining roughly $5 million is a combination of demurrage fees, additional insurance, professional and legal costs associated with being a newly public company, and other general and administrative expenses. Interest expense, which is associated with our outstanding convertible note, was $1.3 million in the quarter. Other income came in at $23.2 million, which reflects the $23.4 million change in the fair value of our outstanding warrants during the period. As a result, GAAP net income for the quarter was positive $6.5 million compared to a loss of $1.4 million in the same period last year. On an adjusted basis, net loss, which excludes stock-based compensation, the impact of outstanding warrants, and other one-time items, was $11 million compared to adjusted net income of $1.4 million in the second quarter last year. And lastly, adjusted EBITDA was negative $8.8 million in the quarter. As I mentioned on a previous call, fiscal 2022 and 2023 are investment years for BARC. We are investing in people, products, technology, and other operational assets that we expect will enable BARC to grow at scale. As I've mentioned before, our play category is already profitable and helps subsidize these investments. Given our strong margins and our opportunity to take market share in the food and health verticals, we are confident in our ability to profitably scale our business in the medium to long term. Turning to the balance sheet, We ended the quarter with $273 million of cash. As Manish mentioned, we made certain working capital investments in the fiscal second quarter, including securing additional inventory ahead of the holiday season. We ended the fiscal second quarter with a total inventory of $130 million, up 68% year over year. This investment is intended to significantly reduce the effects of potential holiday season freight congestion, and to enable us to meet the growing demand of our DTC subscription base. I'd like to now provide guidance for the remainder of the year. We continue to monitor the macro environment of ongoing freight congestion, rising shipping and fulfillment costs, and higher public company costs, and the impact that those factors could have on our top and bottom lines. While we remain optimistic, we see roughly 2 percent risk to the $516 million revenue guidance for the full year given back in December, again, due to the volatility of the macro environment. For the third quarter of fiscal 2022, we expect total revenue to be between $137 and $139 million. On an adjusted EBITDA basis, We currently expect a loss between $38 and $40 million for the full fiscal year 2022. The delta versus our previous guidance of negative $30.5 million is largely the result of increased shipping and fulfillment costs, which include higher shipping rates, demurrage port fees, and our decision to upgrade certain customer shipments to offset potential delays associated with broader shipping congestion We expect these factors to represent roughly net $5 to $7 million of incremental expense to our contribution profit. Secondly, we are seeing increased expenses associated with being a newly public company. These include higher than expected D&O insurance as a result of rising demand from insurers, additional audit fees associated with the timing of our merger with Northern Star, and costs associated with preparing to comply as a large accelerated filer with the requirements of Section 404 of the Sarbanes-Oxley Act. Collectively, these fees represent roughly $3 million of incremental expenses. In summary, the change in guidance is largely the result of macro headwinds in shipping and fulfillment costs, and secondarily, certain increased expenses associated with being a newly public company, expenses we expect not to reoccur next year. To conclude, it is an exciting time to be at BARC. We continue to grow our top line in the 35 to 40 percent per year range, notwithstanding the challenging year-over-year comparisons we face coming into the fiscal year. Our gross margin is strong, We are developing larger TAM opportunities like food and health to afford the company with an attractive runway to significantly grow our business over time. We believe our unique position as one of the largest digitally native dog brands affords us highly attractive economics and unparalleled customer relationships. In our view, these factors, coupled with our healthy balance sheet, strongly position Bark to capitalize on the exciting opportunities ahead. And for my part, I'm very excited for Howard to be joining the team. He is excellent and a terrific addition. With that, I will turn the call over to the operator for Q&A.
spk00: Thank you very much. Ladies and gentlemen, as a reminder, if you would like to ask a question, you may press star then the number one on your telephone keypad. Once again, you may press star one to ask a question. Please stand by while we compile the Q&A roster. Your first question is from the line of staff we think from Jeffries. Your line is open.
spk03: Thank you, everyone. And, John, best wishes to you. It's been a pleasure working with you. My question is for either of you, actually, is on the CAC costs and what your assumptions are. Go forward. What's embedded in the back half guidance for your LTV to CAC? Any sort of change off of that 4.9 times that we saw in the first half? Thank you.
spk05: Thanks so much, Steph. Back at you. We continue to target, you know, somewhere between four and five times LTV to CAC as the ratio. So you can see CAC go up as LTV goes up with AOV and the addition of new products. We continue to try and stay real nimble. You're going to see seasonal adjustment. Q3 is going to be higher because of As with every year, everybody's in the market. Layered onto that is the more secular increase. Everybody's seeing in-media rates go up. We've been able to fend off that more secular increase, because Megan and Will are really great at managing our business. So if you're sort of suggesting we see a seasonal kind of 10% increase in CACs, That sounds about right for me. I don't expect to see it much more than that. And then returning to a non-seasonal level in Q4. Does that speak to your question?
spk03: It does. That's very helpful. Manish, if I could ask a quick question on the out-of-box. You talked a bit more about it on this call versus prior calls, and I wanted to just give you a chance to share with us some of the data or statistics behind that. That piece of the business is quite small still, but it seems like it's quite powerful as well. Can you just share with us a little bit of how you look at that business as a complement to the core business and how does that business fare in terms of profitability when you start driving incremental value through your existing customer relationship?
spk02: Yes, sure. So Add to Box, the way it works right now is think about it as essentially upselling and cross-selling. What we do is we have machine learning engines that work on the data that we have collected for you and your dog. So that surfaces curated selection of toys, and now we have added Bright as well as Eats to that. That leads to higher gross margins. So for example, if you think about shipping a Bark Box or a Super Chewer Box, and you're able to add two or three toys or treats or chews to it, that's significantly higher margin since it's shipped in the same box. So that's the way we think about add-to-box. And if you've seen our AOV, that's continued to increase quarter-by-quarter. We are $1.55 over the last year's same quarter. So we're pretty bullish on optimizing and improving further.
spk00: Thank you. Once again, if you would like to ask a question, you may press star 1 on your telephone keypad. Your next question is from the line of Maria Rips of Canaccord. Your line is open.
spk04: Great. Thank you for taking my questions. Can you maybe just talk about your thoughts around passing some of these elevated expenses here in the near term to your subscribers versus absorbing them to drive higher volumes? And do you see a lot of price sensitivity among your customer base?
spk02: Hey, Maria. This is Manish. I'll start, and John can add. So, there are a variety of ways to offset rising costs, and I believe that raising base prices is the simplest of choices, which we continue to test. Now, we look at the overall ecosystem, starting from CAC to cross-selling and retention, which ties back to the add-to-box conversation we just had. Now, we found Focusing on average order value is a really good lever. So if we continue to improve our ability to recommend ATV products that resonate well with you and cross-sell via smarter machine learning engines, which Ollie Downs, the gentleman I mentioned who's joined this team, is focused on, it drives higher AOV, in effect driving stronger revenue and margin. As you've seen, our AOV continues to grow, and that's the way we are optimizing our AOV and ATV, which leads to higher margins and offsetting those rising costs.
spk04: Yeah, I'm not sure I have much to add to that.
spk05: We really prefer to add value to the box and make that a net price increase and a net margin expansion so that consumers get value add and not just a price increase pass through. We're always looking at the optimum relationship between price and LTV. And we feel pretty good about where we are right now. feel like we're managing some of the input cost increases. And so don't anticipate just a flat list price increase at this time, but we're constantly evaluating that.
spk04: Got it. That's very helpful. And John, you shared with us that your play subscription vertical was adjusted with a positive last year. As you're rolling out, how long do you think it may take for that segment to achieve profitability? And is it fair to assume that your path to profitability for this segment could be accelerated, given that there is a lot of cross-sell opportunity here? So it would be great to hear your thoughts on that.
spk05: Yeah, we really like the structure of the product, if you will, the personalization, the product offering, enable a higher gross margin than what other food companies are used to. And that affords us the opportunity to be profitable at an operating income level faster. The question becomes growth and how much marketing do you pour into it to grow it. And per your point, Because we have the opportunity to cross-sell to our existing 2 million customers and we have 9 million social followers, our marketing and we expect our marketing in this line to be more efficient and so allow us to get profitable faster. It's such a big TAM, we're moving to scale fast. So we want this to be, you know, hundreds of millions of dollars business as quick as we can. So even with the more efficient marketing, I expect us to have a healthy absolute dollar marketing budget against the business. But on a unit economic basis, it should be profitable much faster than our core play business.
spk04: Got it. Thanks a lot. And John, best of luck.
spk05: Thanks, Maria.
spk00: Thank you. Speakers, I am no longer seeing any other questions on the queue.
spk01: Great. Thank you.
spk00: This concludes today's conference call. Thank you all for joining. You may now disconnect.
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