# Playboy, Inc.: Form 10-Q for the period ended Mar 31, 2026

- Company: [Playboy, Inc.](/companies/plby.md) (CIK 1803914)
- Form: 10-Q
- Filed: 2026-05-11
- Accepted by EDGAR: May 11, 2026, 16:31 ET
- Period: 2026-03-31
- Accession: 0001628280-26-033562
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1803914/000162828026033562/ply-20260331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1803914/000162828026033562/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2026-01-01 to 2026-03-31 | $30.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2026-01-01 to 2026-03-31 | $9.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2026-01-01 to 2026-03-31 | $20.7m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2026-01-01 to 2026-03-31 | $23.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2026-01-01 to 2026-03-31 | −$1.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2026-01-01 to 2026-03-31 | $2.5m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2026-01-01 to 2026-03-31 | $850.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2026-01-01 to 2026-03-31 | −$4.0m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2026-01-01 to 2026-03-31 | −$0.03 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2026-01-01 to 2026-03-31 | −$0.03 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2026-01-01 to 2026-03-31 | 114,184,037 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2026-01-01 to 2026-03-31 | −$8.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2026-01-01 to 2026-03-31 | $632.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2026-03-31 | $30.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-03-31 | $59.5m | us-gaap:AssetsCurrent |
| Total assets | at 2026-03-31 | $285.8m | us-gaap:Assets |
| Current liabilities | at 2026-03-31 | $59.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-03-31 | $251.7m | us-gaap:Liabilities |
| Long-term debt | at 2026-03-31 | $157.5m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2026-03-31 | $0 | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2026-03-31 | $33.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 53,680 characters.

*You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2026 and 2025 and the related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024 and the related notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 16, 2026. This discussion contains forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings “Risk Factors”, “Business” and “Cautionary Note Regarding Forward-Looking Statements” contained in our Annual Report on Form 10-K filed with the SEC on March 16, 2026. As used herein, “we”, “us”, “our”, and the “Company” refer to Playboy, Inc. and its subsidiaries.*

### Cautionary Note Regarding Forward-Looking Statements

*This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. These statements are based on the expectations and beliefs of the management of the Company in light of historical results and trends, current conditions and potential future developments, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements. These forward-looking statements include all statements other than historical fact, including, without limitation, statements regarding the financial position, capital structure, dividends, indebtedness, business strategy and plans and objectives of management for future operations of the Company. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management.*

*The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting us will be those that we anticipated. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from those discussed in the forward-looking statements. Factors that may cause such differences include, but are not limited to: (1) the inability to maintain the listing of the Company’s shares of common stock on Nasdaq; (2) the risk that the Company’s completed or proposed transactions disrupt the Company’s current plans and/or operations, including the risk that the Company does not complete any such proposed transactions or achieve the expected benefits from any transactions; (3) the ability to recognize the anticipated benefits of corporate transactions, commercial collaborations, cost reduction initiatives and proposed transactions, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and the Company’s ability to retain its key employees; (4) costs related to being a public company, corporate transactions, commercial collaborations and proposed transactions; (5) changes in applicable laws or regulations; (6) the possibility that the Company may be adversely affected by global hostilities, supply chain delays, inflation, interest rates, foreign currency exchange rates or other economic, business, and/or competitive factors; (7) risks relating to the uncertainty of the projected financial information of the Company, including changes in the Company’s estimates of cash flows and the fair value of certain of its intangible assets, including goodwill; (8) risks related to the organic and inorganic growth of the Company’s businesses, and the timing of expected business milestones; (9) changing demand or shopping patterns for the Company’s products and services; (10) failure of licensees, suppliers or other third-parties to fulfill their obligations to the Company; (11) the Company’s high concentration of licensing revenue from a small number of licensees; (12) the Company’s ability to comply with the terms of its indebtedness and other obligations; (13) changes in financing markets or the inability of the Company to obtain financing on attractive terms; and (14) other risks and uncertainties indicated in this Quarterly Report on Form 10-Q, including those under “Part II—Item 1A. Risk Factors”, and in “Part I—Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We caution that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements.*

*Forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q or any earlier date specified for such statements. We do not undertake any obligation to update or revise any forward-looking statements to reflect any change in our expectations or any change in events, conditions, or circumstances on which any such statement is based, except as may be required under applicable securities laws. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Cautionary Note Regarding Forward-Looking Statements.*

### Business Overview

We are a global consumer lifestyle company marketing our brands through a wide range of licensing initiatives, direct-to-consumer products, *Playboy* magazine, digital subscriptions and content, and online and location-based entertainment. We have two reportable segments: Direct-to-Consumer and Licensing. Our Direct-to-Consumer segment derives revenue from sales of consumer products sold directly to consumers by Honey Birdette online or at its brick-and-mortar stores, with 50 stores in three countries as of March 31, 2026. Our Licensing segment derives revenue from trademark licenses for third-party consumer products, primarily for various apparel and accessories categories, hospitality, digital gaming and location-based entertainment businesses.

### Key Factors and Trends Affecting Our Business

We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and referenced in this Quarterly Report on Form 10-Q under “Part II—Item 1A. Risk Factors”, and in “Part I—Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K.

### Pursuing a More Capital-Light Business Model

We continue to pursue a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential. We are doing this by leveraging our flagship Playboy brand to attract best-in-class operators. We also use our licensing business as a marketing tool and brand builder, including through high profile collaborations and our large-scale strategic partnerships.

In the fourth quarter of 2024, we entered into a License & Management Agreement (the “LMA”) with Byborg Enterprises SA (“Byborg”) to license intellectual property and select Playboy digital assets for $300.0 million in minimum guaranteed payments over the initial 15-year term of the license, which began January 1, 2025.

After having stabilized Playboy’s China business in 2024 and 2025, in the fourth quarter of 2025, we transitioned our joint venture for the Playboy business in China into a more typical licensing structure, with an affiliate of our former China joint venture partner becoming our licensing agent in China. On February 9, 2026, we terminated such licensing agent in preparation for the New China JV (defined below). Also on February 9, 2026, we entered into a share purchase agreement (the “Purchase Agreement”) with UTG Brands Management Group Limited (“UTG”) for a new joint venture for the Playboy business in China (the “New China JV”), in which UTG is to ultimately own a 50% interest and operate Playboy’s China licensing business. The initial closing pursuant to the Purchase Agreement (the “New China JV Initial Closing”) occurred, and the New China JV was established, on March 20, 2026. As of the New China JV Initial Closing, we owned 83.33% of the New China JV and UTG owned 16.67%. While we retain majority control of the New China JV, UTG manages all operational aspects of Playboy’s licensing business in China, Hong Kong and Macau.

We expect our licensing business in China to continue to represent a material part of our overall business. Our licensing revenues from China as a percentage of our total revenues were 10% and 11% for the three months ended March 31, 2026 and 2025, respectively.

We are focused on strategically expanding our Playboy licensing business into new categories and territories with high quality strategic partners and supporting them with brand marketing in the form of content, experiences and editorial works, including through our *Playboy* magazine.

For our Honey Birdette business, we intend to focus on the U.S. market, where the brand’s stores, on average, generate more revenue and better margins, and generally have customers who tend to spend more and are less price sensitive.

### Recent Trade Developments

We continue to monitor ongoing changes in U.S. trade policies, including increasing tariffs on imports, in some cases significantly, and changes to existing international trade agreements. These actions have prompted retaliatory tariffs and other measures by a number of countries. Starting in the second quarter of 2025, actions were taken by the U.S. and certain other countries to modify the timing, rates and/or other aspects of certain of these tariffs. However, some of the new tariffs remain in effect, including tariffs between the U.S. and China, where we source the manufacturing of our Honey Birdette products and where many of our licensees source their products. While the impact of such trade policies on our business remains uncertain, we continue to closely monitor such matters and potential impacts, including increased production costs and higher pricing to our customers, either of which could negatively affect our business, results of operations and financial condition. We are also pursuing refunds of tariffs paid to the U.S. government, to the extent such tariffs are determined to be refundable by the U.S. government.

### Seasonality of Our Consumer Product Sales

While we receive revenue throughout the year, our Honey Birdette direct-to-consumer business has experienced, and may continue to experience, seasonality. Historical seasonality of revenues may be subject to change as increasing pressure from competition and economic conditions impact our licensees and consumers. The further transition of our business to a capital-light business model may further impact the seasonality of our business in the future.

### How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of the business are revenues, salaries and benefits, and selling and administrative expenses. To help assess performance with these key indicators, we use Adjusted EBITDA as a non-GAAP financial measure. We believe this non-GAAP measure provides useful information to investors and expanded insight to measure revenue and cost performance as a supplement to the GAAP consolidated financial statements. See the “*EBITDA and Adjusted EBITDA”* section below for reconciliations of Adjusted EBITDA to net loss, the closest GAAP measure.

### Components of Results of Operations

### Revenues

We generate revenue from sales of consumer products sold through our Honey Birdette retail stores or online directly to customers, trademark licenses for third-party consumer products and online and location-based entertainment businesses, and licensing the operation of digital subscriptions and content businesses, which were previously owned and operated by us, to Byborg pursuant to the LMA.

#### Consumer Products

Revenue from sales of online apparel and accessories is recognized upon delivery of the goods to the customer. Revenue from sales of apparel at our retail stores is recognized at the time of transaction. Revenue is recognized net of incentives and estimated returns. We periodically offer promotional incentives to customers, which include basket promotional code discounts and other credits, which are recorded as a reduction of revenue.

#### Licensing

We license trademarks under multi-year arrangements to consumer products and online and location-based entertainment businesses. Typically, the initial contract term ranges between one to 15 years. Renewals are separately negotiated through amendments. Under these arrangements, we generally receive an annual non-refundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year. Earned royalties received in excess of the minimum guarantee (“Excess Royalties”) are typically payable quarterly. We recognize revenue for the total minimum guarantee specified in the agreement on a straight-line basis over the term of the agreement and recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned. In the event that the collection of any royalty becomes materially uncertain or unlikely, we recognize revenue from our licensees up to the cash we have received. We also license the operation of our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses, which were previously owned and operated by us, to Byborg pursuant to the LMA.

### Cost of Sales

Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency and commission fees, website expenses, marketplace traffic acquisition costs, transition expenses per the TSA (commencing January 1, 2025 through June 30, 2025), credit card processing fees, personnel costs, costs associated with branding events, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.

### Selling and Administrative Expenses

Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, transition expenses per the TSA (commencing January 1, 2025 through June 30, 2025), brand marketing costs, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.

### Impairments

Impairments consist of the impairments of our artwork held for sale during the 2025 period.

### Other Operating Income (Expense), Net

Other operating income (expense), net consists primarily of gains and losses on the disposal of assets and other miscellaneous items.

### Nonoperating (Expense) Income

#### Interest Expense, Net

Interest expense, net consists of interest on our long-term debt and the amortization of deferred financing costs and debt premium/discount.

#### Other Income, Net

Other income, net consists primarily of other miscellaneous nonoperating items, such as nonrecurring transaction fees, foreign exchange realized and unrealized transaction gains or losses, early termination fees, debt related costs, bank charges and interest income.

### Expense from Income Taxes

Expense from income taxes consists of an estimate for U.S. federal, state, and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Due to cumulative losses, we maintain a valuation allowance against our definite-lived U.S. federal and state deferred tax assets, as well as our Australia and U.K. deferred tax assets.

### Results of Operations

### Comparison of the Three Months Ended March 31, 2026 and 2025

The following table summarizes key components of our results of operations for the periods indicated (in thousands, except percentages):

|  | Three Months Ended March 31, 2026 | 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net revenues | $30,236 | $28,875 | $1,361 | 5% |
| Costs and expenses: |  |  |  |  |
| Cost of sales | (9,544) | (9,053) | (491) | 5% |
| Selling and administrative expenses | (23,234) | (25,397) | 2,163 | (9)% |
| Impairments | — | (301) | 301 | (100)% |
| Other operating income (expense), net | 901 | (384) | 1,285 | over 150% |
| Total operating expense | (31,877) | (35,135) | 3,258 | (9)% |
| Operating loss | (1,641) | (6,260) | 4,619 | (74)% |
| Nonoperating (expense) income: |  |  |  |  |
| Interest expense, net | (2,499) | (1,888) | (611) | 32% |
| Other income, net | 1,027 | 202 | 825 | over 150% |
| Total nonoperating expense, net | (1,472) | (1,686) | 214 | (13)% |
| Loss before income taxes | (3,113) | (7,946) | 4,833 | (61)% |
| Expense from income taxes | (850) | (1,095) | 245 | (22)% |
| Net loss | (3,963) | (9,041) | 5,078 | (56)% |

29

The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated:

|  | Three Months Ended March 31, 2026 | 2025 |
| --- | ---: | ---: |
| Net revenues | 100% | 100% |
| Costs and expenses: |  |  |
| Cost of sales | (32) | (31) |
| Selling and administrative expenses | (77) | (88) |
| Impairments | — | (1) |
| Other operating income (expense), net | 3 | (1) |
| Total operating expense | (106) | (121) |
| Operating loss | (6) | (21) |
| Nonoperating (expense) income: |  |  |
| Interest expense, net | (8) | (7) |
| Other income, net | 3 | 1 |
| Total nonoperating expense, net | (5) | (6) |
| Loss before income taxes | (11) | (27) |
| Expense from income taxes | (3) | (4) |
| Net loss | (14) | (31) |

### Net Revenues

The following table sets forth net revenues by reportable segment (in thousands):

|  | Three Months Ended March 31, 2026 | 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Direct-to-consumer | $18,847 | $16,331 | $2,516 | 15% |
| Licensing | 10,932 | 11,451 | (519) | (5)% |
| Corporate | 138 | 247 | (109) | (44)% |
| All Other | 319 | 846 | (527) | (62)% |
| Total | $30,236 | $28,875 | $1,361 | 5% |

#### Direct-to-Consumer

The increase in direct-to-consumer net revenues, compared to the prior year comparative period, was driven by continued strong sales of full price Honey Birdette products, particularly in the United States.

#### Licensing

The decrease in licensing net revenues, compared to the prior year comparative period, was primarily due to the expiration of a small number of licensing agreements, some of which are expected to be replaced in subsequent quarters.

#### Corporate

The decrease in corporate revenues for the three months ended March 31, 2026 was primarily due to a decrease in corporate branding activities, primarily sponsorship events, as a result of changes in brand strategy.

#### All Other

The decrease in all other net revenues, compared to the prior year comparative period, was primarily due to lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.

### Cost of Sales and Gross Margin

The following table sets forth cost of sales and gross margin by reportable segment (in thousands):

| Cost of sales: | Three Months Ended March 31, 2026 | 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Direct-to-consumer | $(8,053) | $(6,907) | $(1,146) | 17% |
| Licensing | (1,491) | (596) | (895) | 150% |
| Corporate | — | — | — | — |
| All Other | — | (1,550) | 1,550 | (100)% |
| Total | $(9,544) | $(9,053) | $(491) | 5% |
| Direct-to-consumer gross profit | $10,794 | $9,424 | $1,370 | 15% |
| Direct-to-consumer gross margin | 57% | 58% |  |  |
| Licensing gross profit | $9,441 | $10,855 | $(1,414) | (13)% |
| Licensing gross margin | 86% | 95% |  |  |
| Corporate gross profit | $138 | $247 | $(109) | (44)% |
| Corporate gross margin | 100% | 100% |  |  |
| All Other gross profit | $319 | $(704) | $1,023 | (145)% |
| All Other gross margin | 100% | (83)% |  |  |
| Total gross profit | $20,692 | $19,822 | $870 | 4% |
| Total gross margin | 68% | 69% |  |  |

#### Direct-to-Consumer

The increase in direct-to-consumer cost of sales, compared to the prior year comparative period, was primarily due to a $0.4 million increase in Honey Birdette’s product, shipping and fulfillment costs as a result of revenue growth, and higher inventory reserves and related write-offs of $0.7 million due to an increase in Honey Birdette’s inventory balance as it prepares for growth. The increase in gross profit was due to higher revenue, particularly driven by sales of full-price products, partly offset by an increase in inventory reserves.

#### Licensing

The increase in licensing cost of sales and the corresponding decrease in gross margin, compared to the prior year comparative period, was primarily due to a $0.9 million licensing commission payment to our China licensing agent as compared to no commission in the prior year comparative period when the agent was instead a joint venture partner. Furthermore, there was a $0.3 million payment to the China licensing agent as a result of the termination of our agency relationship.

#### Corporate

Corporate gross profit during the three months ended March 31, 2026 and 2025 primarily related to payments from sales of access to our *iPlayboy* archives and the 2025 winter issue of *Playboy* magazine.

#### All Other

The decrease in all other cost of sales and the increase in the related gross margin, compared to the prior year comparative period, was primarily related to the licensing of our digital subscriptions and content operations to Byborg pursuant to the LMA, effective as of January 1, 2025, and the inclusion of transition expenses incurred pursuant to the TSA during the three months ended March 31, 2025.

### Selling and Administrative Expenses

The decrease in selling and administrative expenses for the three months ended March 31, 2026, as compared to the prior year comparative period, was primarily due to lower payroll expense of $4.6 million, mainly due to the transition of our digital operations into a licensing model during the prior year comparative period, lower rent expense of $0.3 million primarily due to higher sublease income, and a decrease in various professional services of $0.6 million, partly offset by transaction expenses of $2.8 million related to the formation of the New China JV, higher stock-based compensation expense of $0.5 million and a $0.5 million increase in legal expenses related to ongoing litigations.

### Impairments

The decrease in impairments for the three months ended March 31, 2026, as compared to the prior year comparative period, was due to impairment charges of $0.3 million related to our artwork held for sale, which was recognized in the prior year comparative period and did not recur in the first quarter of 2026.

### Other Operating Income (Expense), Net

The change from other operating expense, net to other operating income, net for the three months ended March 31, 2026, as compared to the prior year comparative period, was due to a loss on the disposal of assets that did not recur in the first quarter of 2026.

### Nonoperating (Expense) Income

#### Interest Expense, Net

The increase in interest expense, net for the three months ended March 31, 2026, as compared to the prior year comparative period, was primarily due to lower amortization of debt premium.

#### Other Income, Net

The increase in other income, net for the three months ended March 31, 2026, as compared to the prior year comparative period, was primarily due to a $0.5 million fee to vacate a leased store space early and unrealized gains and losses related to foreign currency transactions.

### Expense from Income Taxes

The decrease in expense from income taxes for the three months ended March 31, 2026, as compared to the prior year comparative period, was primarily driven by the decrease in pretax book loss and a change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities.

### Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.

### EBITDA and Adjusted EBITDA

“EBITDA” is defined as net income or loss before interest, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management. Adjusted EBITDA is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating EBITDA and Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate Adjusted EBITDA in the same fashion.

In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities, non-recurring non-cash impairments and asset write-downs, we typically adjust for non-operating expenses and income, such as nonrecurring special projects, including related consulting expenses, transition expenses, settlements, nonrecurring gain or loss on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. Investors should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.

The following table reconciles net loss to EBITDA and Adjusted EBITDA (in thousands):

|  | Three Months Ended March 31, 2026 | 2025 |
| --- | ---: | ---: |
| **Net loss** | $(3,963) | $(9,041) |
| **Adjusted for:** |  |  |
| Interest expense | 2,499 | 1,888 |
| Expense from income taxes | 850 | 1,095 |
| Depreciation and amortization | 945 | 804 |
| **EBITDA** | 331 | (5,254) |
| **Adjusted for:** |  |  |
| Transaction expenses | 3,474 | — |
| Stock-based compensation | 1,169 | 687 |
| Transition expenses | — | 3,830 |
| Severance | 67 | 2,271 |
| Impairments | — | 301 |
| Adjustments | (25) | 542 |
| **Adjusted EBITDA** | $5,016 | $2,377 |

- Transaction expenses for the three months ended March 31, 2026 represent transaction costs of $2.8 million related to the formation of the New China JV, termination expenses of $0.3 million related to our former China joint venture arrangements, and $0.3 million of expenses related to the seventh amendment of our senior secured credit agreement.
- Transition expenses for the three months ended March 31, 2025 represent costs associated with the digital operations licensed to Byborg.
- Severance expenses for the three months ended March 31, 2025 were primarily due to the reduction of headcount related to the transition of our digital subscriptions and content operations into a licensing model.
- Impairments for the three months ended March 31, 2025 related to impairment charges on our artwork held for sale.
- Adjustments for the three months ended March 31, 2026 are related to a non-cash fair value change related to the contingent liabilities fair value remeasurement with respect to potential shares issuable for our 2021 acquisition of GlowUp Digital, Inc. that remained unsettled as of March 31, 2026 and other miscellaneous items.
- Adjustments for the three months ended March 31, 2025 are primarily related to a non-cash fair value change related to the contingent liabilities fair value remeasurement with respect to potential shares issuable for our 2021 acquisition of GlowUp Digital, Inc. that remained unsettled as of March 31, 2025, loss on the sale of artwork, consulting, advisory and other costs relating to corporate transactions, as well as reorganization costs resulting from the elimination or rightsizing of specific business activities or operations.

### Non-GAAP Segment Information

Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources. Total asset information is not included in the tables below as it is not provided to and reviewed by our CODM. The “All Other” columns relate to the previously identified operating and reportable segment, Digital Subscriptions and Content, which was eliminated upon its transition into a licensing model under the LMA. The “Corporate” column in the tables below includes certain operating revenues associated with *Playboy* magazine, events and sponsorships and expenses that are not allocated to the reportable segments presented to our CODM. Such expenses include legal, human resources, information technology and facilities, accounting/finance and brand marketing costs. Expenses associated with *Playboy* magazine, events and sponsorships are included in brand marketing costs. The accounting policies of the reportable segments are the same as those described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

“Adjusted Operating Income (Loss)” is defined as operating income or loss adjusted for stock-based compensation and other special items determined by management. Adjusted operating income (loss) is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of adjusted operating income (loss) provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating adjusted operating income (loss), we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Our computation of adjusted operating income (loss) may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate adjusted operating income (loss) in the same fashion.

In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities, nonrecurring non-cash impairments and asset write-downs, we typically adjust for nonrecurring special projects, including for related consultant expenses, nonrecurring gain on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.

Because of the limitations described above, adjusted operating income (loss) should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using adjusted operating income (loss) on a supplemental basis. Investors should review the reconciliation of operating loss to adjusted operating income (loss) below and not rely on any single financial measure to evaluate our business.

### Comparison of the Three Months Ended March 31, 2026 and 2025

The following table reconciles Operating (Loss) Income to Adjusted Operating Income (Loss) by reportable segment (in thousands):

|  | Three Months Ended March 31, 2026 Direct-to-Consumer | Licensing | Corporate | All Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| **Operating (loss) income** | $1,563 | $7,919 | $(11,442) | $319 | $(1,641) |
| **Adjusted for:** |  |  |  |  |  |
| Depreciation and amortization | 804 | — | 141 | — | 945 |
| Transaction expenses | — | 329 | 2,833 | — | 3,162 |
| Severance | 25 | — | 42 | — | 67 |
| Stock-based compensation | — | — | 1,169 | — | 1,169 |
| Adjustments | — | — | (90) | — | (90) |
| **Adjusted operating income (loss)** | $2,392 | $8,248 | $(7,347) | $319 | $3,612 |

34

|  | Three Months Ended March 31, 2025 Direct-to-Consumer | Licensing | Corporate | All Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| **Operating (loss) income** | $(530) | $8,957 | $(10,361) | $(4,326) | $(6,260) |
| **Adjusted for:** |  |  |  |  |  |
| Depreciation and amortization | 581 | — | 223 | — | 804 |
| Transition expenses | — | — | — | 3,830 | 3,830 |
| Severance | 27 | — | 1,236 | 1,008 | 2,271 |
| Stock-based compensation | — | — | 687 | — | 687 |
| Impairments | — | — | 301 | — | 301 |
| Adjustments | — | — | 542 | — | 542 |
| **Adjusted operating income (loss)** | $78 | $8,957 | $(7,372) | $512 | $2,175 |

Refer to “*Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures”* for descriptions of the adjustments to reconcile net loss to Adjusted EBITDA, certain of which adjustments are listed in the table above and the descriptions used for the reconciliation of net loss to Adjusted EBITDA are also applicable for the table above.

### Direct-to-Consumer

*Net Revenues and Gross Margin:* Refer to “*Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations”* for a discussion of changes in net revenues and gross profit in our Direct-to-Consumer segment from 2025 to 2026.

*Operating Income (Loss):* The change from operating loss to operating income, compared to the prior year comparative period, was primarily due to a $1.4 million increase in Honey Birdette’s gross profit as a result of continued revenue growth, particularly driven by sales of full-price products.

*Adjusted Operating Income:* The increase in adjusted operating income, compared to the prior year comparative period, was primarily due to the change from operating loss to operating income discussed above.

### Licensing

*Net Revenues and Gross Margin:* Refer to “*Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations”* for a discussion of changes in net revenues and gross profit in our Licensing segment from 2025 to 2026.

*Operating Income:* The decrease in operating income, compared to the prior year comparative period, was primarily due to a $1.4 million decrease in licensing gross profit, mainly resulting from a $0.9 million increase in cost of sales due to commission expense for our China licensing agent as compared to no commission in the prior year comparative period when the agent was a joint venture partner, and a $0.3 million payment to such agent as a result of the termination of the agency relationship.

*Adjusted Operating Income:* The decrease in adjusted operating income, compared to the prior year comparative period, was primarily due to the decrease in operating income discussed above. Adjustments to licensing operating income for the three months ended March 31, 2026 related to the termination of the China licensing agent relationship.

### Corporate

The increase in operating loss, compared to the prior year comparative period, was primarily due to transaction expenses of $2.8 million related to the formation of the New China JV, higher stock-based compensation expense of $0.5 million and higher legal expenses of $0.4 million due to ongoing litigations, partly offset by lower payroll and severance costs of $2.4 million, lower rent expense of $0.5 million, primarily as a result of higher sublease income, and lower brand marketing expenses of $0.4 million.

Adjusted operating loss, compared to the prior year comparative period, remained consistent.

### All Other

*Net Revenues and Gross Margin:* Refer to “*Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations”* for a discussion of changes from 2025 to 2026 in net revenues and gross profit classified as All Other.

*Operating Income:* The change from operating loss to operating income, compared to the prior year comparative period, was due to the transition of our digital operations into a licensing model pursuant to the LMA in the prior year comparative period.

*Adjusted Operating Income:* The decrease in adjusted operating income, compared to the prior year comparative period, was primarily due to lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.

### Liquidity and Capital Resources

### Sources of Liquidity

Our sources of liquidity are cash generated from operating activities, which primarily includes cash derived from revenue generating activities, from financing activities, including proceeds from our issuance of debt, and proceeds from stock offerings (as described further below), and from investing activities, which includes the sale of assets (as described further below). As of March 31, 2026, our principal source of liquidity was cash and cash equivalents in the amount of $30.2 million, which is primarily held in operating and deposit accounts.

During the three months ended March 31, 2026, we sold shares of our common stock pursuant to our previously registered and announced at-the-market offering (the “ATM”), selling a total of 1,389,751 shares for net proceeds of $2.5 million. As of March 31, 2026, we had $197.2 million of remaining capacity under the ATM.

Pursuant to the LMA entered into in December 2024, Byborg agreed to operate our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses and to license the right to use certain Playboy trademarks and other intellectual property for related businesses and certain other categories. Pursuant to the LMA, Byborg was also granted exclusive rights to use Playboy trademarks for certain new adult content services and digital products to be developed. The LMA has an initial term of 15 years, with the operations and license rights pursuant to the LMA commencing as of January 1, 2025, and the possibility for up to nine renewal terms of 10 years each, subject to the terms and conditions set forth in the LMA. Pursuant to the LMA, starting in 2025, Playboy began receiving minimum guaranteed royalties of $20.0 million per year of the term, which royalties are paid in installments during each year of the LMA’s term. In addition, Byborg prepaid the minimum guaranteed amount for the second half of year 15 of the initial term of the LMA. Playboy is also entitled to receive Excess Royalties from the businesses licensed and operated by Byborg, on the terms and conditions set forth in the LMA.

In the fourth quarter of 2023, we began the sale of our art assets, and we have continued the sale of our art assets through 2025 and 2026.

Since going public in 2021, we have yet to generate year-to-date operating income from our core business operations and have incurred significant operating losses, including $1.6 million of operating losses for the three months ended March 31, 2026. We expect our capital expenditures and working capital requirements in 2026 to be largely consistent with 2025.

Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Quarterly Report on Form 10-Q. We may seek additional equity or debt financing in the future to satisfy capital requirements, respond to adverse changes in our circumstances or unforeseen events, or fund growth opportunities. However, in the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.

#### Debt

On March 12, 2025, we entered into Amendment No. 4 (the “A&R Fourth Amendment”) to our amended and restated senior secured credit agreement (the “A&R Credit Agreement”). The A&R Fourth Amendment set the total net leverage ratio levels applicable under the A&R Credit Agreement, once net leverage testing resumes as of the quarter ending June 30, 2026. For the quarter ending June 30, 2026, the total net leverage ratio will be initially set at 9.00:1.00, reducing over time until the ratio reaches 7.75:1.00 for the quarter ending June 30, 2027 and any subsequent quarter. In the event we prepay at least $15 million of the principal debt under the A&R Credit Agreement, the total net leverage ratio levels are reduced such that they would be initially set at 7.75:1.00 for the quarter ending June 30, 2026, and would reduce over time until the ratio reaches 6.50:1.00 for the quarter ending June 30, 2027 and any subsequent quarter.

On August 11, 2025, we entered into Amendment No. 5 to the A&R Credit Agreement (the “A&R Fifth Amendment”). The A&R Fifth Amendment revised the definition of Consolidated EBITDA in the A&R Credit Agreement to allow for $2.4 million of non-cash rent expense related to our Miami Beach office lease to be added back when calculating such Consolidated EBITDA for applicable periods.

On November 10, 2025, we entered into Amendment No. 6 to the A&R Credit Agreement (the “A&R Sixth Amendment”). The A&R Sixth Amendment, among other things, (i) extended the maturity of the A&R Credit Agreement to May 25, 2028, (ii) provided that the cash interest rate would be reduced by 0.15% or 0.50% in the event of certain prepayments of $25 million and $50 million, respectively (both of which did not occur), and (iii) provided that upon the first such prepayment made on the terms and conditions set forth in the A&R Sixth Amendment, the total net leverage ratio would be set at 9.00:1.00 for the quarter ending June 30, 2026, and step down over time until the ratio reached 7.25:1.00 for the quarter ending December 31, 2027 and any subsequent quarter. The other terms of the A&R Credit Agreement prior to the A&R Sixth Amendment remain substantively unchanged.

On February 9, 2026, we entered into Amendment No. 7 to the A&R Credit Agreement (“A&R Seventh Amendment”) to, substantially concurrently with the New China JV Initial Closing, amend the terms of the A&R Credit Agreement, to, among other things: (i) permit the New China JV transactions, (ii) permit the contribution of certain intellectual property from us to the New China JV at the second closing pursuant to the Purchase Agreement, and (iii) provide for additional representations, covenants, and mandatory prepayments related to the New China JV transaction (including the entire $45,000,000 Purchase Price and an additional $6.666 million directly from us).

We performed an assessment of the A&R Seventh Amendment, on a lender-by-lender basis, and accounted for the transaction as a debt modification. As a result of the A&R Seventh Amendment, fees of $0.3 million were expensed as incurred and recorded in Other income, net and $0.2 million were capitalized in the first quarter of 2026 as a result of the A&R Seventh Amendment.

The stated interest rate of each of the Tranche A and Tranche B term loans under the A&R Credit Agreement (the “A&R Term Loans”) as of March 31, 2026 was 10.02%. The stated interest rate of each of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2025 was 10.08%. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of March 31, 2026 was 2.93% and 5.74%, respectively. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2025 was 3.88% and 6.34%, respectively.

We were in compliance with applicable financial covenants under the terms of the A&R Credit Agreement and its amendments as of March 31, 2026 and December 31, 2025.

#### Leases

Our principal lease commitments are for office space and operations under several noncancelable operating leases with contractual terms expiring through 2033. Some of these leases contain renewal options and rent escalations. As of March 31, 2026 and December 31, 2025, our fixed leases were $20.5 million and $22.2 million, respectively, with $7.3 million and $7.4 million due in the next 12 months, respectively. We also have certain finance lease obligations; however, those are not material to our liquidity or capital resources.

On August 11, 2025, through our wholly owned subsidiary, Playboy Enterprises, Inc., we entered into a triple net lease (the “Lease”) with RK Rivani LLC, a Florida limited liability company (the “Landlord”), pursuant to which, among other matters and on the terms and subject to the conditions set forth in the Lease, we leased from the Landlord approximately 20,169 square feet of office space in Miami Beach, Florida, for a term of 11 years, with lease payments commencing in August 2026. The future undiscounted fixed non-cancelable payment obligation pertaining to the Lease is approximately $27.1 million.

For further information on our lease obligations, refer to Note 13, Commitments and Contingencies, of the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

### Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):

| Net cash (used in) provided by: | Three Months Ended March 31, 2026 | 2025 | $ Change | % Change |
| --- | ---: | ---: | ---: | --- |
| Operating activities | $(8,057) | $(7,620) | $(437) | 6% |
| Investing activities | 14,371 | (34) | 14,405 | over (150 %) |
| Financing activities | (14,503) | (40) | (14,463) | over 150 % |

### Cash Flows from Operating Activities

The increase in net cash used in operating activities for the three months ended March 31, 2026, compared to the prior year comparative period, was primarily due to unfavorable changes in assets and liabilities that had a current period cash flow impact, such as a $4.1 million unfavorable change in working capital and a $1.4 million net decrease in non-cash charges, offset by an improvement in net loss of $5.1 million. The unfavorable change in working capital was primarily driven by a $3.0 million increase in accounts receivable reflecting the timing of royalty collections from licensees, a $0.9 million increase in contract assets and a $0.8 million increase in deferred revenues primarily due to the timing of revenue recognition, partly offset by a $0.9 million decrease in other liabilities and accrued expenses.

The net decrease in non-cash charges was primarily driven by the elimination of $2.0 million in capitalized paid-in kind interest that was present in the prior year comparative period and a $1.5 million decrease in deferred income expense primarily due to the release of valuation allowance against indefinite-lived deferred tax liabilities recognized in the prior year comparative period, partly offset by an increase in stock-based compensation of $0.5 million and a $0.8 million reduction in the amortization of debt premium/discount and issuance costs.

### Cash Flows from Investing Activities

The change from net cash used in investing activities to net cash provided by investing activities for the three months ended March 31, 2026, compared to the prior year comparative period, was primarily due to proceeds of $15.0 million received in connection with the initial closing of the New China JV transaction.

### Cash Flows from Financing Activities

The increase in net cash used in financing activities for the three months ended March 31, 2026, compared to the prior year comparative period, was primarily due to a $15.0 million repayment of long-term debt in connection with the initial closing of the New China JV transaction.

### Contractual Obligations

For the three months ended March 31, 2026, there were no material changes to our contractual obligations from December 31, 2025, as disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K filed on March 16, 2026.

### Critical Accounting Estimates

Our interim condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Estimates and judgments used in the preparation of our interim condensed consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, such as demand for our products, inflation, foreign currency exchange rates, economic conditions and other current and future events, such as the impact of public health crises and epidemics and global hostilities. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2026, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March 16, 2026.

### Recent Accounting Pronouncements

Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and results of operations.

## Market risk

As filed, 5,868 characters.

We are exposed to a variety of market and other risks, including the effects of changes in interest rates, inflation, and foreign currency exchange rates, as well as risks to the availability of funding sources, hazard events, and specific asset risks.

### Interest Rate Risk

The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of March 31, 2026 and December 31, 2025, we had cash of $30.2 million and $37.8 million, respectively, primarily held in interest-bearing deposit accounts for which the fair market value would be affected by changes in the general level of U.S. interest rates. As of March 31, 2026 and December 31, 2025, we had restricted cash of $4.5 million and $5.0 million, respectively, of which $3.5 million was held in interest-bearing deposit accounts. However, an immediate 10% change in interest rates would not have a material effect on the fair market value of our cash and restricted cash and cash equivalents.

In order to maintain liquidity and fund business operations, our long-term A&R Term Loans are subject to a variable interest rate based on prime, federal funds, or the secured overnight financing rates. The nature and amount of our long-term debt can be expected to vary as a result of future business requirements, market conditions, and other factors. We may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations, but as of March 31, 2026, we have not entered into any such contracts.

As of March 31, 2026 and December 31, 2025, we had outstanding debt obligations of $144.9 million and $159.9 million, respectively, which accrued interest at a rate of 10.02% for Tranche A and Tranche B A&R Term Loans as of March 31, 2026. Based on the balance outstanding under our A&R Term Loans at March 31, 2026, we estimate that a 0.5% or 1% increase or decrease in underlying interest rates would increase or decrease annual interest expense by $0.1 million, in any given fiscal year. See also our “Risk Factors—Risks Related to Our Business and Industry—*Our variable rate debt subjects us to interest rate risk that could cause our debt service obligations to increase significantly.”* included in Item 1A of our Annual Report on Form 10-K filed on March 16, 2026.

### Foreign Currency Risk

We transact business in various foreign currencies and have significant international revenues, as well as costs denominated in foreign currencies other than the U.S. dollar, primarily the Australian dollar and Chinese renminbi. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, have in the past, and may in the future, negatively affect our revenue and other operating results as expressed in U.S. dollars. For each of the three months ended March 31, 2026 and 2025, we derived approximately 65% of our revenue from international customers, out of which 60% and 31%, respectively, was denominated in foreign currency. We expect the percentage of revenue derived from outside the United States to increase in future periods as we continue to expand globally. Revenue and related expenses generated from our international operations (other than most international licenses) are denominated in the functional currencies of the corresponding country. The functional currency of our subsidiaries that either operate in or support these markets is generally the same as the corresponding local currency. The majority of our international licenses are denominated in U.S. dollars. The results of operations of, and certain of our intercompany balances associated with, our international operations are exposed to foreign exchange rate fluctuations. Upon consolidation, as exchange rates vary, our revenue and other operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances. We do not have an active foreign exchange hedging program.

There are numerous factors impacting the amount by which our financial results are affected by foreign currency translation and transaction gains and losses resulting from changes in currency exchange rates, including, but not limited to, the volume of foreign currency-denominated transactions in a given period. Foreign currency transaction exposure from a 10% movement of currency exchange rates would have a material impact on our results, assuming no foreign currency hedging. For the three months ended March 31, 2026 and 2025, we recorded an unrealized gain of $0.6 million and an unrealized loss of $0.7 million, respectively, which is included in accumulated other comprehensive loss as of March 31, 2026. This was primarily related to the strengthening of the Australian dollar against the U.S. dollar during the three months ended March 31, 2026.

### Inflation Risk

Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations in recent periods, a high rate of inflation in the future may have an adverse effect on our ability to maintain or improve current levels of revenue, gross margin and selling and administrative expenses, or the ability of our customers to make discretionary purchases of our goods and services. See our “Risk Factors—Risks Related to Our Business and Industry—*Our business depends on consumer purchases of discretionary goods and content, which can be negatively impacted during an economic downturn or periods of inflation. This could materially impact our sales, profitability and financial condition,”* included in Item 1A of our Annual Report on Form 10-K filed on March 16, 2026.

## Controls and procedures

As filed, 8,356 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not yet effective; however, we have made demonstrable progress in remediating those material weaknesses in our internal control over financial reporting, as described below.

We have been actively remediating our material weaknesses with the guidance of a global accounting and consulting firm, and the results of those efforts are reflected in this disclosure. Our material weaknesses will not be considered fully remediated until the applicable controls have operated for a sufficient period of time and our management concludes, following testing, that such controls are operating effectively. We intend to reach that conclusion as expeditiously as possible.

Management has identified the following areas where material weaknesses in its internal control over financial reporting previously existed and where the Company has achieved demonstrable remediation progress:

#### Control Environment, Risk Assessment, and Monitoring

We continue to make strides in strengthening our entity-level controls across the control environment, risk assessment procedures, and monitoring functions. While prior periods reflected deficiencies in these areas, we have undertaken remediation efforts, including establishing clearer organizational structure and accountability, building out a qualified internal controls department, and implementing enhanced oversight mechanisms designed to prevent or detect material misstatements to our condensed consolidated financial statements. We have meaningfully improved our risk identification and assessment processes and have made progress in evaluating whether the components of internal control are present and function effectively.

#### Control Activities and Information and Communication

We have directed focused remediation efforts on the following areas for which material weaknesses were previously identified, and on which we have achieved measurable progress:

- We have advanced the design and implementation of general information technology controls across program change management, user access, and segregation of duties for systems supporting our internal control processes. We have strengthened our automated process-level controls, which has meaningfully improved the reliability of manual controls dependent on information technology-derived data.
- We have made progress in designing, implementing, and documenting formal accounting policies, procedures, and controls across our key business processes to support timely, complete, and accurate financial accounting, reporting, and disclosures. We have enhanced our corporate-level oversight controls to provide a more appropriate level of precision and supervision over business process activities and related controls.
- We have redesigned and implemented management review controls over complex accounting areas and disclosures, including asset impairments, revenue contracts, income tax, stock-based compensation, leases, debt amendments, and preferred stock accounting.
- We have redesigned and implemented controls over the existence, accuracy, completeness, valuation and cutoff of inventory, representing an improvement over prior control in this area.

The material weaknesses described above did not result in any material misstatement of our condensed consolidated financial statements for the periods presented.

### Remediation Efforts

We have made progress in designing and implementing effective internal control measures to improve our internal control over financial reporting and remediate the identified material weaknesses. Our ongoing internal control remediation efforts include the following:

- We successfully hired additional qualified accounting resources to oversee risk assessment procedures and drive remedial actions over internal controls, meaningfully strengthening our overall control environment.
- We have substantially completed the reassessment and formalization of our accounting and information technology policies relating to security and change management controls, establishing a more robust and sustainable control framework.
- We engaged an outside firm to assist us with reviewing our current processes, procedures, and systems, and we have acted on the resulting recommendations, enhancing control design to address relevant risks and implementing protocols to retain sufficient documentary evidence of the operating effectiveness of such controls.

In addition to the progress we have achieved above, we are continuing to advance the following activities, which are well underway:

- Continuing to enhance and formalize our accounting, business operations, and information technology policies, procedures, and controls to achieve complete, accurate, and timely financial accounting, reporting, and disclosures, with significant foundational work already completed.
- Establishing effective general controls over our accounting and operating systems to ensure that our automated process-level controls and information produced and maintained in our information technology systems are relevant and reliable, with certain key system control improvements already implemented.
- Designing and implementing controls that address the completeness and accuracy of underlying data used in the performance of controls over accounting transactions and disclosures, with initial phases of this work substantially complete.
- Enhancing our policies and procedures to retain adequate documentary evidence for management review controls, including precision of review and evidence of procedures performed, an area where we have already achieved improvements in documentation standards.
- Developing monitoring controls and protocols that allow us to timely assess the design and operating effectiveness of our controls over financial reporting and make necessary changes to the design of controls, if any.

Our remediation program reflects a strong, organization-wide commitment to build a sustainable and effective internal control environment. While continued validation and testing over sustained financial reporting cycles remain necessary to fully demonstrate remediation, we remain committed to the continuous improvement of our internal control over financial reporting.

### Changes in Internal Control over Financial Reporting

As described above, we are in the process of implementing changes to our internal control over financial reporting to remediate the material weaknesses described herein. There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on Effectiveness of Controls and Procedures

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute, assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.

## Risk factors

As filed, 666 characters.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, please carefully consider the risk factors described under the heading “Part I – Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Such risks described are not the only risks facing us. Additional risks and uncertainties not currently known to us, or that our management currently deems to be immaterial, also may adversely affect our business, financial condition and/or operating results. There have been no material changes to the risk factors since their disclosure in our most recent Annual Report on Form 10-K.

Filed May 11, 2026.
Source: SEC EDGAR, the filing index for accession 0001628280-26-033562. Last ingested by Listed: Oct 29, 2026, 04:31 ET. No prices; not investment advice.