0001811935-26-000039
SEC filingRevenue surged 43% to $774M with strong NRR of 127%, but operating margin compressed to 5.1% due to investment spend.
For the three months ended March 31, 2026, revenue increased 43.2% to $773.7 million from $540.4 million in the prior year period. Gross profit rose 44.3% to $340.2 million, with gross margin improving to 44.0% from 43.6%, driven by favorable product and brand mix. Operating income grew 34.6% to $39.6 million, but operating margin declined to 5.1% from 5.4% as operating expenses increased 43.8%, slightly outpacing revenue growth. Net income increased 28.1% to $29.2 million. Adjusted EBITDA, a non-GAAP measure, grew 58.6% to $53.7 million.
Cost of goods sold increased 42.3% to $433.5 million, slightly lower than revenue growth due to mix. Operations, general and administrative expenses rose 45.6% to $145.7 million, driven by higher fulfillment costs and stock-based compensation. Sales and marketing expenses increased 42.8% to $143.7 million, largely in line with revenue, with higher marketplace commissions and advertising. Research and development costs surged 98.3% to $11.2 million, reflecting headcount additions in technology and data science.
Revenue growth was broad-based across channels and geographies. Amazon marketplace revenue increased 38% year-over-year to approximately $706.7 million, while non-Amazon revenue more than doubled, rising 119% to $71.4 million, highlighting successful marketplace diversification. International revenue grew 101% to $90.2 million, indicating strong geographic expansion. The net revenue retention rate (NRR) reached 127%, up from 115% in the prior year, reflecting deepening relationships with existing brand partners.
The MD&A does not provide explicit forward guidance, but the company emphasizes continued investment in technology, headcount, and warehouse automation to drive operational efficiencies and support growth. The strong cash position ($344.2 million) and undrawn $150 million credit facility provide ample liquidity for working capital and strategic investments. Management expects current resources to fund operations for at least twelve months. No material changes to contractual obligations were noted.
As of March 31, 2026, Pattern Group held $344.2 million in cash and cash equivalents, up from $289.0 million at December 31, 2025. The company maintains a $150.0 million revolving credit facility with JPMorgan Chase, undrawn as of period end, and was in compliance with all covenants. Total assets stood at $967.2 million, with stockholders' equity of $609.7 million. Goodwill and intangible assets totaled $53.1 million, reflecting recent acquisitions.
The company disclosed no material future payments under non-cancelable purchase obligations as of March 31, 2026. Operating lease liabilities totaled $31.1 million ($9.0 million current, $22.0 million non-current). There were no significant legal contingencies.
In Q1 2026, Pattern Group initiated a $100 million share repurchase program (authorized March 2, 2026), repurchasing 311,731 shares for $3.6 million at an average price of $11.61, leaving $96.4 million remaining. No dividends were declared or paid. Capital expenditures were $9.3 million, primarily for internal-use software and equipment. The company did not issue or repay any debt.
Pattern Group operates as a single reportable segment. For the three months ended March 31, 2026, revenue was $773.7 million, up 43.2% year-over-year. The U.S. contributed 88% of revenue ($683.4 million), with international markets accounting for 12% ($90.3 million). Revenue by channel: Amazon.com $651.1 million (84%), other online marketplaces $57.2 million, and SaaS/logistics $14.1 million. The company's long-lived assets were 79% U.S.-based and 21% international.