Solid quarter from PLBY. With growth stories dropping like flies here in 1H 2022, PLBY’s growth story remains on track. Revenue came in about 1mm ahead of consensus, while EBITDA was below, but with the company reiterating its full year guidance of $350mm in revenue and $55mm of EBITDA. The messaging was more focused on the real value drivers, those are global products (which today is concentrated in apparel), CENTERFOLD, and Honey Birdette. CENTERFOLD is clearly at the center of the ecosystem and the company is investing in the platform citing $2.6mm in investment this quarter and adding new development team talent from some top tech companies. It also highlighted the just announced new high profile creator Amber Rose. The company sees the opportunity behind a creator platform in CENTERFOLD that can be a marketing engine for global products that creates revenue instead of consuming it. Patiently and successfully building it can have massive value. The company isn’t giving explicit targets, but thinks if it can execute its plan successfully, it thinks revenue and EBITDA for CENTERFOLD has the potential to be as large as the global products business by 2025. We think that might be low balling it, at least in terms of the total profits it drives both directly and in product sales. That suggests $1.2bn in consolidated revenue – which is 2x the consensus and about in line with our model. Honey Birdette delivered $23mm of revenue in the quarter, slightly ahead of our expectation, even with Omicron. The new Aventura Mall store is already one of the top performing stores, and the company continues towards its 10 new store opening target. On recent trends, management noted demand has remained strong for the core brands of Playboy and Honey Birdette, and in China the lockdowns impact on the P&L is manageable for now as partners work hard to keep business chugging along and avoiding disruption, the impact to PLBY is less volatile given the license structure. China is around $40mm in full year revenue based on minimum guarantees. Cash balance was down in the Q, but that was explained away by the CFO around payments timing. The balance is already in excess of 40mm with more inflows to come. FCF generation should support the business going forward. We continue to think that this is one of the best growth stories in consumer, as PLBY can transform the monetization of one of the most relevant global brands and drive revenue and profits worthy of $5 to $10bn in EV over 3 to 5 years. The market doesn’t care about that today as we sit in Macro Quad4, but if the company continues to execute, investors will take notice in the coming 2-4 quarters.
Takeaway: A rare growth company to deliver and maintain the near-term guide in Quad 4. Stealthily took up long term rev forecasts dramatically.
