PLBY reports 3Q results on Monday after the close. This is an important quarter for PLBY, not so much because of the quarter to be reported, but rather the forward outlook and commentary from the company with several key initiatives all accelerating the monetization of one of the most recognizable consumer brands in the world and starting to close the massive gap between brand power and relevance versus what is recognized on the P&L and in the company valuation. Since last quarter, the company has launched a unique NFT/metaverse offering with Playboy Rabbitars and announced a creator led content platform called CENTERFOLD that will compete with OnlyFans. Both were not in the consensus view of where the Playboy brand is going, and they are in addition to several business initiatives in sexual wellness, style and apparel, beauty and grooming, and gaming and lifestyle. Maybe the company has too many opportunities in front of it, juggling multiple initiatives presents some challenges, but just a couple need to be successful for the value creation here to be immense, and over the long term lots of the growth businesses can be home runs for PLBY. As the company executes the strategy, and the market wakes up to the new identity of Playboy and profit potential of PLBY group, we think this company is headed to an enterprise value of $10bn+ over a 3-5 year timeframe.
On the quarter itself, we are inline with the (limited) consensus, $57.5mm in revenue and $4mm in EBITDA. There will likely be some puts and takes, the company is investing in talent and systems to grow, and you still likely have some supply chain noise for Yandy and pockets of covid impact. Recall most Honey Birdette stores in Australia were closed at the time of the deal closing due to Covid lockdowns. Some regions just reopened last month. The company guided to $25mm to $30mm in revenue contribution in 2H from the Honey Birdette deal that closed August 9. We’re at $8mm this Q and $22mm for 4Q. Overall, 4Q is where much more is happening… the first full quarter of Birdette on the P&L, an expected spirits launch, the marketing initiative that is the Big Bunny Jet and coming Big Bunny brand, the Rabbitar launch sale in late October, and the pending launch of Playboy’s CENTERFOLD.
The 4Q outlook and business updates are much more what we care about for this print. The Rabbitar NFT sale should be a material P&L driver in 4Q. The sale was about $9mm in revenue at the original ETH price, while ETH is up over 10% since. Then the secondary market has already traded about 1700 ETH, where PLBY gets a 10% cut, so about another million in high margin revenue coming from that in 4Q. The Rabbitar sales will be a tough compare into late 2022, but that’s where CENTERFOLD comes in. CENTERFOLD is a big call option. At the moment, we are being very conservative as to how we are modeling CENTERFOLD’s fundamental contribution. We want to see/hear more about the platform before we get too bulled up, after all we had a $10bn EV target without contemplating a creator platform with the profit potential of CENTERFOLD. It’s being created to take share from OnlyFans. Per Axios, referencing an OnlyFans pitch deck from March, the company did $2.2bn in GMV in 2020, trending to $5.9bn in 2021, that translates to $375mm in revenue in 2020 and $1.2bn in estimated revenue in 2021 with Free Cash Flow of $150mm in 2020 and up to $620mm in 2021. Then PLBY will be able to feature its vast catalog of sexual wellness and lingerie/apparel offerings with creators on the platform to drive demand. We also definitely want to hear more details on timing and strategy for some key upcoming category launches with beauty lines planned for 2022, and planned spirits launches (Whiskey and Tequila mentioned so far). A spirit line was originally expected around year end in Asia, but perhaps Covid has delayed that. On top of all that, the new and improved Big Bunny Jet has been in the news over the last week, with an updated luxury private jet experience and some throwback elements to the original 70s plane. This should be a unique marketing tool elevating both the Playboy brand and the aspirational luxury sub brand Big Bunny as the company showcases the brand with celebrities and influencers enjoying what the Big Bunny has to offer.
A side note on OnlyFans. When you see the trouble OnlyFans had in trying to raise capital, it demonstrates why PLBY Group got a SPAC deal done at a relatively low valuation. Getting public to raise awareness, allow interested investors to buy, have quick access to capital for growth, and attract new talent with equity compensation was the goal. Trying to do a traditional IPO would have forced PLBY to play by the bankers’ rules, which tried to destroy elements of the OnlyFans business model. The Playboy brand is forming a new identity and the consumers/investors that understand that have an opportunity to buy the equity at great price today.
Business initiatives are moving along, the P&L is accelerating, and the catalyst calendar is lining up. We see TAIL revenue and earnings at more than twice the consensus. Best Idea Long.
