0001811935-25-000057
SEC filingRevenue surged 45.6% YoY to $639.7M in Q3 2025, driven by existing brand growth, but non-cash stock charges caused a net loss.
For the three months ended September 30, 2025, revenue increased 45.6% to $639.7 million from $439.4 million in the prior year period, while for the nine-month period, revenue grew 38.8% to $1.78 billion. The growth was driven almost entirely by existing brand partners, as evidenced by a net revenue retention rate (NRR) of 122% for the trailing twelve months. Revenue from Amazon marketplaces grew 43% (38% for nine months), non-Amazon marketplaces grew 90% (51% for nine months), and international revenue grew 72% (61% for nine months).
Gross margin declined slightly from 43.8% to 43.6% (nine months), with cost of goods sold increasing in line with revenue. Operating income swung to a loss of $0.6 million from a gain of $64.1 million in the prior year nine-month period, primarily due to recognition of $91.7 million in share-based compensation and $32.7 million in stock amendment expense, both IPO-related. Adjusted EBITDA, which excludes these non-cash items, improved to $110.0 million from $73.7 million in the prior year nine-month period, indicating strong underlying earnings growth. Net loss was $12.5 million for the nine months, compared to net income of $49.7 million a year ago, with the benefit from income taxes partially offsetting the non-cash charges.
The MD&A does not report formal segment financials, but revenue is driven by consumer product sales across multiple categories (health & wellness, beauty, home, pet, sports, electronics) and geographies (Americas, Europe, Australia, Asia). All major channels—Amazon, non-Amazon, and international—contributed to growth, with non-Amazon and international channels outpacing Amazon. The company's platform serves over 200 brands, and the high NRR indicates strong cross-selling and expansion within existing relationships. Investments in technology and warehouse automation are cited as efficiency drivers.
Management expressed confidence that existing cash ($312.8 million), cash from operations, and a $150 million revolving credit facility (undrawn) are sufficient to fund working capital, capital expenditures, and contractual obligations for at least the next twelve months. No specific revenue or margin guidance was provided for future periods. The company emphasized its focus on scaling the platform, deepening brand relationships, and investing in technology and automation. The stock amendment expense is non-recurring, and share-based compensation related to the IPO vesting is a one-time event, suggesting normalized profitability should improve.
As of September 30, 2025, Pattern Group held $312.8 million in cash and cash equivalents, up from $175.6 million at December 31, 2024, primarily due to IPO proceeds. The company has no outstanding debt under its revolving credit facility, which provides $150 million in available liquidity. Total stockholders' equity increased to $541.4 million from $108.7 million, reflecting the IPO and conversion of preferred stock. Inventory remained relatively stable at $268.9 million.
The company reported no future payments under non-cancelable purchase obligations as of September 30, 2025. Operating lease liabilities totaled $31.0 million, split between current ($9.6 million) and non-current ($21.4 million). There are no material legal proceedings or indemnification liabilities expected to have a material adverse effect.
No share repurchases were authorized or executed. No dividends were declared or paid during the period. The company incurred capital expenditures of $15.2 million for the nine months ended September 30, 2025, primarily for internal-use software and machinery. The credit facility bears variable interest and remained undrawn. The IPO generated $135.0 million in net proceeds.
Pattern operates as a single operating segment. For the nine months ended September 30, 2025, revenues were $1.78 billion, with 92.2% from the U.S. and 7.8% from international markets. Amazon.com accounted for $1.55 billion (87.0%) of total revenue. The CODM uses consolidated net income to evaluate performance, which was a loss of $12.5 million for the period.
Net loss of ($12.5M) contrasts with strong operating cash flow of $90.9M, driven by significant non-cash adjustments: stock-based compensation ($84.7M), stock amendment expense ($32.7M), depreciation ($12.5M), and deferred taxes ($16.0M). Working capital changes were minor, with accounts receivable and inventory increases largely offset by payables and accrued expenses. Capex intensity (16.7% of CFO) is moderate. Free cash flow of $75.7M amply covers no capital returns. Financing activities raised $135M from stock sales but paid $73.1M for tax withholding on vesting, plus $52.1M in preferred conversions. The company's cash position increased by $137.2M to $312.8M. Overall, cash generation is robust despite net losses, though reliance on non-cash items warrants monitoring.