BARK (NYSE:BARK) reported third quarter fiscal 2026 results that reflected a continued emphasis on profitability, cash generation, and operating discipline, while management acknowledged—but did not comment on—recent headlines about potential strategic proposals. The company held its earnings call without a question-and-answer session and focused on prepared remarks covering performance, cost actions, and progress on diversification initiatives.
Management declines to address strategic proposal headlines
Chief Executive Officer Matt Meeker opened the call by noting “recent headlines regarding potential strategic proposals.” He said the company was unable to comment “given the nature of those proposals,” and emphasized the call would instead center on third quarter results and ongoing efforts to strengthen the business amid a volatile macro environment.
Revenue below guidance as BARK pulls back on marketing
Meeker said marketing expense was approximately $11 million lower than the third quarter of the prior year, reflecting a focus on “bottom-line durability and disciplined capital deployment” rather than chasing short-term growth. Ibrahim quantified marketing spend at $16.1 million, down $11.3 million year-over-year, and said the company continues to prioritize premium customers, CAC efficiency, and profit performance.
In direct-to-consumer (D2C), management said the strategy has shifted toward customer quality over sheer volume. Meeker said that approach has contributed to the subscriber base shrinking over time, pressuring D2C revenue—an outcome management said it is “comfortable with” given the focus on profitability and cash conversion. The company expects that trend to continue in coming quarters.
Margins improve; tariff mitigation and pricing actions highlighted
Despite lower revenue, BARK reported a “healthy” consolidated gross margin of 62.5%, with management pointing to year-over-year and sequential improvements in both D2C and Commerce. Ibrahim provided segment margin detail:
- D2C gross margin (including air): 66.4%, up 10 basis points year-over-year
- Commerce gross margin: 46.3%, up 240 basis points year-over-year
Ibrahim said margin improvements reflected both the “quality of revenue” and actions taken to mitigate tariff impacts through “a variety of tactics,” including alternative sourcing, packaging changes, and in Commerce, instituting a price increase. Meeker also pointed to the benefits of entering the second half of fiscal 2026 “debt-free with a leaner cost structure and greater financial flexibility,” which he said helped the company navigate tariffs and broader uncertainty.
Adjusted EBITDA flat year-over-year; free cash flow turns positive
BARK reported Adjusted EBITDA of -$1.6 million, which management said was within guidance and consistent with the year-ago quarter. The company generated $1.6 million of positive free cash flow, which Meeker said was driven in part by inventory normalizing after a first-half buildup as tariff rates came down.
Operating expense trends discussed on the call included:
- Shipping and fulfillment expense: $29.1 million, down nearly $8 million year-over-year, driven largely by lower D2C volume
- G&A expense: $25.4 million, down $2.1 million year-over-year, reflecting lower headcount and cost management initiatives
Ibrahim said the company remains focused on building a leaner organization while maintaining the capabilities needed to support future growth. As one example of cost actions, he said BARK downsized its office footprint, moving from 120 Broadway to a smaller space in Brooklyn, generating more than $2 million in annualized savings.
Diversification grows as BARK Air and Commerce gain share
Management highlighted diversification as a key theme for fiscal 2026. Meeker said that during the quarter, BARK Air and Commerce represented approximately 23% of total revenue, up from 18% in the prior year period.
In Commerce, BARK reported $18.8 million in revenue. Ibrahim said this was roughly $1.5 million below last year, partially due to timing shifts, but described Commerce as a key contributor from both a growth and margin perspective. He said the company expects Commerce to remain important as it adds new partners, introduces additional SKUs, and expands distribution within existing retailers.
BARK Air generated $3.4 million in revenue, up 71% year-over-year, according to Meeker. Management described both Commerce and BARK Air as scaling and becoming a more meaningful part of the overall revenue mix, supporting resilience as the company navigates changes in cost and demand.
Within D2C, both executives pointed to improved customer quality metrics. Meeker cited a prior-quarter total customer acquisition cost (CAC) decrease of 7% year-over-year and described it as the most efficient quarter in nearly three years. He also said average order value reached $31.41 last quarter, the strongest quarter in nearly two years, as more customers opted for Double Deluxe, extra toys, and Add-to-Box options. Ibrahim added that retention remains stable and said customers acquired now are higher value than those brought in through more promotionally driven strategies.
Meeker also highlighted a shipping change: in the second quarter, the company transitioned last-mile delivery to Amazon, meaning BARK products now arrive on Amazon’s delivery trucks. He said the change should reduce shipping costs and improve delivery speed.
On the balance sheet, Ibrahim said BARK ended the quarter with approximately $22 million of cash after repaying $45 million of convertible notes in November. Inventory ended at $91 million, down roughly $10 million from the prior quarter, and management expects inventory levels to continue to decline in the fourth quarter as the company sells through the earlier build.
Overall, management framed the quarter as the outcome of intentional trade-offs—accepting lower revenue in the near term to improve margins, efficiency, and cash flow—while continuing to invest selectively and expand revenue diversification.
About BARK (NYSE:BARK)
BARK is a consumer products and services company focused on the canine market, offering a suite of subscription-based and direct‐to‐consumer offerings designed to meet the everyday needs of dogs and their owners. The company’s core business revolves around carefully curated boxes of toys, treats and chews, which are delivered monthly to subscribers through its flagship BarkBox service. Over time, BARK has expanded its reach beyond subscription, tapping into e-commerce and wholesale channels to broaden its customer base.
In addition to BarkBox, the company operates BarkShop, an online storefront that allows customers to purchase toys, grooming supplies and nutrition products on an a la carte basis.
