Playboy, Inc. Common Stock 2026 Q2 Earnings Call

Thank you, operator, and good afternoon, everyone. I appreciate you joining us. Two years ago, we articulated a clear strategy: make the Playboy brand culturally relevant, build a profitable asset-light business model with significant growth potential around three verticals, licensing, media and experiences, and hospitality, alongside Honey Birdette, all while deleveraging the balance sheet. Two years on, we are executing, and the balance sheet is dramatically stronger. The second quarter is the clearest evidence yet that the strategy is working. We are culturally relevant. We are profitable. We have set the stage for significant growth. Testing, measuring what actually converts, leaning into what works, and being fiscally responsible with every dollar. Let me take the pieces one at a time, starting with the results, because they are the truest test of any strategy. Revenue grew to approximately $31.2 million, up roughly 11% year-over-year.

Adjusted EBITDA was approximately $7 million, including more than $700,000 of litigation expenses, nearly double a year ago, and our sixth consecutive quarter of positive adjusted EBITDA. Adjusted EBITDA on a trailing 12-month basis is now $23.2 million and would have been approximately $28 million excluding litigation expenses. Just as important, we swung to positive operating income of roughly $3 million, compared with an operating loss a year ago, and we reached essentially break even at the bottom line, a swing of nearly $8 million from the net loss we reported in the same quarter last year. It is turning into cash.

We generated positive operating cash flow in the quarter, and with the UTG transaction and the deal cost that came with it now behind us, that cash flow is beginning to reflect the ongoing business we have built, rather than the two years of transactions and repositioning it took to get there. The headline is that the trajectory for growth is unmistakable. That turnaround is what lets us be aggressive about creating value. We have taken total debt down from a peak of $218 million to roughly $145 million today, and we have a clear path to $108 million of gross debt by January of 2028 as the remaining $36.7 million of UTG proceeds are applied.

We ended the quarter with approximately $37.1 million in total cash, including restricted cash, bringing our net debt down to $108 million, and with our trailing 12-month adjusted EBITDA of $28 million, excluding litigation expenses, bringing us to just under four turns of leverage. We expect we will be under three turns of leverage once we have received the remaining UTG proceeds, a very manageable place moving forward. This quarter, we added a lever that we have not used at this scale before, a meaningful share repurchase, and here is why it matters. The shares we are buying back are essentially the same block we issued last year to convert debt into equity at a conversion price of roughly $1.75 a share.

We agreed to repurchase approximately 16.6 million of them, nearly 15% of the total shares outstanding for the company, at a fixed price of $1.05, below where we issued them and below where the stock trades today. We are doing installments backstopped by significant long-term stockholders, so it never competes with the cash we need to run and delever the business. We were also added to the Russell 2000 and the Russell 3000 in late June, which should broaden our ownership over time. Retiring debt over time and shrinking the share count at a discount are two of the most direct ways we can reward the shareholders who stay with us. Now the brand itself. We said we could put Playboy back at the center of culture, and the proof is on the newsstands and in our feed.

Our spring issue with Karol G sold out at newsstands and generated more than 5 billion media impressions and over 70 million video views around its launch. Our summer issue arrived with Cara Delevingne on the cover, two consecutive covers with talent that kindly would not have taken our calls a couple of years ago. We already have two more major covers lined up for the back half of the year. Across our own platforms, we generated more than 1 billion engagements and views in the quarter. We are leaning hard into the franchises our audience tell us they want most, The Playboy Interview, 20 Questions, and above all, more content built around our Playmates, where features like Miss June are crossing 1 million organic views on their own. Our editorial voice is the sharpest it has been in years.

Our audience is growing at home and abroad. Our content calendar for the back half is the strongest we have had in a long time. Talent, press, and partners want to be associated with Playboy again. That pulls the raw material for everything else we do. We also said that attention is worth little unless we own it and can monetize it directly. This is a quarter that stopped being a slide and became a business we are actively building and testing in real time. Our site drew roughly 2 million unique visitors in the quarter. The subscription we launched on playboy.com, live for its first full quarter, is converting. We are turning that traffic into paying memberships. July was our strongest month yet. We are testing different price points, different content, and different conversion funnels. We are being disciplined about it.

As we continue to refine this, we will begin to spend to grow faster. The early signs are exactly what we hope for, an anonymous audience becoming a known addressable one that we can market to directly. Here is why we are investing behind this. We are building the media and experiences business over time into a high margin, recurring asset-light business, a meaningful driver of top-line growth with several revenue streams today generated from the same audience, subscriptions, sponsorships, paid voting, and more. On the sponsorship side, we already have sponsors lined up for our short-term video content across social and editorial. That revenue will begin to show in our third quarter results. Each piece feeds next. The magazine and our platforms create relevance. Relevance builds an audience we own. That audience subscribes, pays to vote, and attracts sponsors.

The scale and data behind the audience make our brand more valuable to every licensing partner we sit across from. That is what we mean when we call this a platform, not a slogan, but a set of businesses that compound one another. Paid voting is another proof point. Our first contest drew roughly 17,000 contestants. Our second, the model search we ran with Honey Birdette, drew nearly 50,000 and generated about 2.5 times the revenue of the first. Because voting closed just after the quarter ended, none of those economics are in today's numbers. Those will land in the third quarter. We are funneling that engaged audience straight into our digital subscription, exactly the self-reinforcing cycle we are building. This is not a promotion, it is a franchise.

We have one more major contest planned before year-end, our Great Playmate Search, and we hope to deliver even stronger results from what is a more compelling offer. We find by what we have learned each time, and the economics do not stop at voting. The Honey Birdette collaboration tied to the contest launches in September, adding a product revenue stream on top. On licensing, we said we would trade a long tail of small deals for fewer, bigger, better partners. In this quarter, that discipline is showing up in the quality of our partnerships. To lead that effort, we brought in Krystle Bach as our Vice President of Global Licensing and Partnerships. She joins us from Authentic Brands Group and brings a track record across Coach, Victoria's Secret, and Juicy Couture. The clearest example of this strategy is in apparel.

We dramatically scaled back our largest apparel licensee, a major T-shirt and hoodie partner, and that decision opened the category for Missguided, one of our strongest partners, to expand. Because we pulled back that other licensee, Missguided can invest behind the market without the two cannibalizing each other. We are now working with them to grow it into additional categories. Our Supreme collaboration, which sold out, was another standout. In China, our new partner, UTG, is off to a good start transitioning the business to an owner-operator strategy. Because of this transition, the small new deals that we historically signed were largely absent in the first and second quarters. A modest reduction of a couple hundred thousand dollars a quarter while the transition sets in. Across the segment, more than $320 million of contracted, not yet recognized future licensing revenue gives this business both durability and runway.