Pattern (PTRN) Q1 2026 Earnings Transcript

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Date

Wednesday, May 6, 2026 at 5 p.m. ET

Call participants

• Co-Founder and Chief Executive Officer — David Wright
• Chief Financial Officer — Jason Beesley
• Head of Investor Relations — Hamish Chung

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Takeaways

• Revenue -- $774 million, up 43% year over year, driven by new brand partner additions, and broad-based expansion across geographies and marketplaces.
• Adjusted EBITDA -- $54 million, increasing 59% year over year, reflecting operating leverage from scale and disciplined spending, despite higher R&D costs.
• Net Revenue Retention (NRR) -- 127%, up from 115% last year, marking an all-time high, and signaling expansion within the existing brand portfolio.
• Non-Amazon Revenue Growth -- 119% year over year, with pronounced strength in TikTok Shop, Walmart, and Coupang channels.
• International Revenue Growth -- 101% year over year, converting international scale into improved efficiency and margin performance.
• Other Monetization Strategies -- Revenue up 173% year over year, contributing additional sources of growth beyond core marketplace offerings.
• Cash Position -- $344 million in cash and cash equivalents at quarter-end, no outstanding debt, and $150 million revolving credit facility available.
• Operating and Free Cash Flow -- Trailing twelve-month operating cash flow of $124 million; free cash flow of $99 million, supporting sustained investment and strategic flexibility.
• Same-Day/One-Day Delivery Share -- Approximately 57% of total clicks get a same-day or one-day delivery promise, up from around 52%, with this segment achieving around an 18% conversion rate versus around 9% for slower delivery options.
• R&D Expenses (Excluding Stock-Based Compensation) -- $10.1 million, rising 77% year over year, as the company accelerates technology and AI investments ahead of revenue growth.
• Full-Year Revenue Outlook Raised -- Now forecast at approximately $3.3 billion, up 32% year over year, increased from prior guidance implying 26% growth.
• Full-Year Adjusted EBITDA Outlook Raised -- Now projected at approximately $200 million, up 31% year over year at the midpoint, elevated from previous guidance indicating 18% growth.
• Q2 Guidance -- Revenue expected in the $10 million to $820 million range (35%-37% growth), with adjusted EBITDA of $45 million to $46 million (30%-33% growth), including incremental costs for the Accelerate conference, R&D, and the East Coast facility ramp.
• Pipeline Commentary -- CEO Wright said, "There are very few businesses that have a pipeline of what we measure as $5 billion and growing. Of course, that is a long-term pipeline."
• Marketplace Diversification -- Amazon revenue still grew 38%, but management indicated ongoing focus on expansion in non-Amazon channels to mirror evolving consumer online spending patterns.
• Social Commerce Performance -- Achieved "triple-digit" growth, launched over 100 brands via TikTok Shop and 365,000 creators, and recognized as TikTok Shop’s Strategic Partner of the Year.
• Platform Execution & Technology -- Technology-driven optimization accounted for roughly three-fourths of Q1 growth, with the AI-native layer driving improved conversion, traffic, and availability.
• Brand-Specific Case Study -- Example cited of improving one premium hair care brand’s in-stock rate from 79.6% to 96.1%, increasing conversions by 23%, and growing revenue more than 15x.

Summary

Pattern Group (NASDAQ:PTRN) delivered a record quarter with revenue and adjusted EBITDA growth that both substantially surpassed management’s original expectations, underpinned by notable acceleration in international, non-Amazon, and social commerce channels. Management significantly raised both full-year revenue and adjusted EBITDA outlooks, pointing to broad-based growth and increased confidence in the business model’s scalability and resilience. Implementation of an AI-native intelligence layer and continued R&D acceleration, particularly in technology and platform optimization, reinforced the company’s ability to efficiently drive multi-vector expansion for brand partners under varying macroeconomic conditions. The balance sheet remains highly liquid with zero debt, positioning Pattern Group for continued aggressive investment and strategic flexibility.

• Management acknowledged that "agentic transactions are developing more slowly than we initially expected," but noted that LLM-driven product discovery is already materially influencing customer journeys.
• Brand partner agreements provide a structural buffer against global logistics and fulfillment cost increases, as most cost changes, including marketplace-initiated fuel surcharges, are contractually passed on.
• "Category diversification is not a primary focus," according to the CEO, with growth still occurring as the addressable product set for ecommerce widens, and new brands onboard.
• Operating metrics revealed that efficiency gains in same-day and one-day delivery correlate to materially higher conversion rates, underlining the strategic importance of logistics investment.
• The pipeline of potential deals was explicitly quantified by management at $5 billion and "growing," signaling long-term growth potential even if realization is not immediately forecast.
• R&D spend is expected to "outpace revenue growth," as stated by the CFO, and management emphasized responsible investment while projecting some margin volatility tied to quarterly cost timing.
• The 127% NRR in Q1 elevates the company’s projected year-end NRR to approximately 119%, which exceeds Pattern Group’s stated long-term target of 115%.
• Amazon-specific growth remained solid at 38%, but relative outperformance in other channels is driving sustained mix diversification across marketplaces and geographies.

Industry glossary

• Net Revenue Retention (NRR): A metric expressing the year-over-year percentage of revenue retained and expanded from existing customers, inclusive of upsell, cross-sell, contractions, and churn.
• LLM (Large Language Model): An AI system trained on vast datasets to understand and generate human language, increasingly used to power commerce product search and discovery surfaces.
• Agentic Shopping: Automated, AI-driven shopping via algorithms or digital agents that search, recommend, and sometimes transact on behalf of the consumer.
• Social Commerce: E-commerce driven by social media platforms, influencer collaborations, and user-generated content, facilitating product discovery and sales.

Full Conference Call Transcript

Hamish Chung: Thank you, operator. Good afternoon, and thank you for joining Pattern Group Inc. Series A Common Stock’s earnings call for the first quarter 2026. Before we begin, I would like to remind everyone that today's discussion may contain forward-looking statements based on our current expectations, assumptions, and forecasts about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our latest filings with the Securities and Exchange Commission for more information on these risks and uncertainties. We may also refer to certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release.

We will focus our remarks today on the key highlights and drivers. Additional detail is available in the earnings release. Joining us today are David Wright, our Co-Founder and Chief Executive Officer, and Jason Beesley, our Chief Financial Officer. Today’s earnings call is being webcast, and a replay will be available on our Investor Relations website following the call. Following our prepared remarks, we will open the call to questions. I will now turn the call over to our CEO, David Wright. David, please go ahead.

David Wright: We delivered another record quarter to start 2026. In Q1, revenue grew 43% year over year to $774 million. Adjusted EBITDA was $54 million, up 59% year over year. Before Jason walks through the financials, four metrics stand out to me. First, net revenue retention. We have said previously that NRR is one of the clearest indicators of the health and durability of our model. In Q1, NRR reached another record at 127%, up from 115% last year, reflecting the impact of optimization, marketplace expansion, and deeper brand relationships. Second, international growth. International revenue increased 101% year over year. We are beginning to convert international scale into improved efficiency and profitability, and we expect that to continue. Third, non-Amazon growth.

Non-Amazon revenue grew 119% year over year with strength across TikTok Shop, Walmart, and Coupang. And fourth, our other monetization strategies grew 173% year over year, reflecting continued momentum beyond our core marketplace offering. To understand the drivers behind these results, it is helpful to step back and look at the platform and data that power them. Ecommerce performance is driven by four variables: traffic, conversion, price, and availability—the same ecommerce equation we have referenced previously. These levers are highly interdependent and continuously shifting, as changes in one area, like price or availability, dynamically influence performance in others, like conversion or traffic.

Optimizing them together is complex, but with scale across brands, data, geographies, logistics, technology, and AI, that complexity becomes an advantage for us. Our platform is designed to operate across these variables simultaneously—marketplaces, geographies, and channels. That scale allows us to improve outcomes for our brand partners while lowering costs across fulfillment, ad spend, and operations in ways that are difficult for a single brand to replicate. In our primary monetization model, we purchase inventory, which aligns our incentives with our brand partners’ objective to grow consumer sales. We win when they win. The movement of physical goods under this model also creates a durable and competitive moat as AI continues to evolve.

AI makes us more efficient, rather than commoditizing what we do for brands. In simple terms, we break down a complex system into controllable levers at scale. That becomes both a growth driver and a cost advantage for our brand partners. Across brands, we see a consistent pattern: when these levers are aligned, they can unlock a step-function improvement in performance. For example, when a premium hair care brand started with us, in-stock was 79.6%. Since then, we improved in-stock to 96.1%, increased conversion 23%, which resulted in revenue growth of more than 15x.

For a global tools brand, we launched their products across 25 marketplaces in one year, generating millions in international revenue and selling more than 100 thousand units. These outcomes are the result of coordinated optimization across availability, content, pricing, logistics, and marketplace execution. Once the foundation is in place, we expand where demand is shifting—across geographies, marketplaces, social commerce, and AI-driven discovery. That is the brand journey on our platform, and it continues to evolve. Two areas changing quickly for brands are social commerce and AI-driven discovery. We were recently named TikTok Shop’s Strategic Partner of the Year, reflecting our leadership on the platform.

Over the last 12 months, we have launched more than 100 brands on 365 thousand creators, and grown our social commerce business triple digits again in Q1. One of the most competitive categories on TikTok Shop is beauty, and over the last few months, we have served as a launch partner for some of the largest beauty brands in the world. Social commerce has become a meaningful contributor for Pattern Group Inc. Series A Common Stock and the brands we work with. It has become an important entry point, and as these brands grow with us, the opportunity to expand across marketplaces, geographies, and channels grows with them.

LLMs are increasingly used at the start of product research—how consumers find, compare, and evaluate products before reaching a marketplace. Both channels operate on intent. Social commerce captures it through creators and content. LLMs surface it through semantic understanding—interpreting what a customer means, not just what they typed. Pattern Group Inc. Series A Common Stock is built to win in both. While full agentic transactions are developing more slowly than we initially expected, their influence on the customer journey is already meaningful. There are varying ranges and some debate on what percentage of purchases are influenced by LLMs, but I do not think there is much debate on the fact that it is significant and growing.

We approach this from a data-first perspective. We have deep bottom-of-funnel search and conversion data across categories, which allows us to identify where brands have the highest probability of winning in LLM-driven discovery. We also have a strong understanding of consumer personas and intent, which we use to map how products should be positioned in these LLMs’ environments. Taken together, this allows us to evaluate a brand's current presence versus its potential across LLM-driven surfaces and to optimize content, positioning, and availability accordingly. As agentic shopping develops, brand execution becomes even more important.

Buyers’ agents are likely to evaluate not only product relevance, but also whether a brand consistently delivers on what it promises—availability, delivery speed, customer service, returns, and overall brand experience. Those execution signals will have significant staying power in an LLM world, which will have meaningful influence on how products are surfaced and selected over time. We are laser-focused on these key metrics on behalf of our brand partners, to ensure they perform well against these metrics for years to come. We are excited about the opportunities ahead and believe Pattern Group Inc. Series A Common Stock is well positioned as commerce continues to evolve. With that, I will turn it over to Jason.

Jason Beesley: Thank you, David, and thank you to everyone for joining us today. We entered this year with a high degree of confidence in our business, and Q1 validated that. Revenue grew 43% year over year to $774 million, driven by continued new brand partner revenue growth and healthy expansion within our existing brand partners. What is particularly encouraging is that the strength was broad-based across many brand partners, geographies, and marketplaces. We are just starting the diversification journey, and the growth we are seeing further validates the opportunity in front of us. This strong performance gives us confidence to raise our full-year outlook. I will talk more about our biggest portion of revenue and biggest growth area—existing brand partner revenue.

We believe the best measure of this is our NRR, which was 127% in Q1 compared to 115% last year. We have three distinct drivers of that growth. First, technology-driven optimization. This remains the foundation of our growth formula and the primary driver of our growth, representing approximately three-fourths of growth in Q1. Our unified, AI-native intelligence layer monitors and acts across every marketplace we operate in, driving stronger conversion, traffic, and availability. Because it operates across multiple variables simultaneously, the impact compounds. A good example of how these optimizations work together are improvements in our supply chain or availability tech that continue to improve the proportion of same-day and one-day delivery times, which mathematically increases our conversion.

Second, new marketplaces and geographies. In Q1, non-Amazon revenue grew 119%. Three regions we operate in grew over 100% in the quarter, and we had another quarter of triple-digit growth in several marketplaces, including TikTok Shop, Walmart, and Coupang. Third, product depth. We also grow by expanding the product selection from our brand partners, either by bringing on more product lines or launching new products on existing marketplaces. We give brands visibility into consumer intent and category whitespace to help them innovate faster. These opportunities to expand product selection come every year but can vary in timing across quarters. Turning to operating expenses and profitability.

Adjusted EBITDA was $54 million in Q1, representing 59% growth year over year, primarily driven by revenue growth as well as some leverage in our sales, marketing, and operations costs, despite increased R&D spend. Excluding stock-based compensation, R&D was $10.1 million, up 77% year over year. We are doubling down on our tech spend, which includes AI token usage, and continue to expect R&D growth to outpace revenue growth. However, as our Q1 results indicate, we are doing so responsibly. This spend, as well as our spend in sales and marketing and the start-up costs related to our new East Coast facility, will create some timing variations within quarterly adjusted EBITDA margin.

For example, we will expense marketing spend related to our May Accelerate conference in the second quarter. Our variable cost components—cost of goods sold, marketplace commissions, and fulfillment—grew slightly slower than revenue. This was primarily driven by revenue mix across various products and other monetization strategies. We generated $124 million of operating cash flow for the trailing twelve-month period and $99 million of free cash flow. We ended Q1 with $344 million in cash and cash equivalents, no outstanding debt, and $150 million of borrowing capacity available under our revolving credit facility. Before we turn to guidance, I want to briefly address the macro environment and what we are seeing.

While the Middle East is an immaterial portion of our revenue today, geopolitical tensions have introduced volatility into global logistics and energy costs, as well as uncertainty around consumer sentiment. In response to increased energy costs, various marketplaces implemented fuel surcharges for sellers during the quarter. Generally, our agreements with brand partners allow us to pass through such cost changes for marketplaces, including fulfillment costs, providing a structural buffer against cost pressure. On the revenue side, we are not currently seeing any indication of meaningful consumer weakness in the categories or markets in which we operate.

We believe our portfolio approach and category diversification leave us well positioned to weather macro headwinds, including our position in nondiscretionary categories, which we believe are less sensitive to potential changes in consumer spending. We will continue to monitor developments across all regions we operate in, and we believe our Q1 results demonstrate our relative resilience. Turning to our outlook. We had an exceptional start to 2026 and are seeing strong and consistent momentum heading into the rest of the year. We are meaningfully increasing our full-year outlook. We now expect revenue of approximately $3.3 billion, up 32% year over year, an increase from our prior guidance, which implied approximately 26% growth.

We are also raising our full-year adjusted EBITDA outlook to approximately $200 million, up 31% year over year at the midpoint, an increase from our prior guidance, which implied approximately 18% growth. Consistent with the guidance framework we laid out in March, there are a few things to keep in mind as you think about the shape of the year. First, as a reminder, we will face stronger comps in the back half of the year as we lap the record growth rates and therefore expect year-over-year growth to moderate in Q3 and Q4. Second, we are maintaining our middle-of-the-road approach to new brand partner revenue assumptions and new product expansion, given the inherent variability in these factors.

Third, we will continue to invest in R&D ahead of our new growth, consistent with our strategy of strengthening our technology moat and expanding our AI capabilities. We are extremely pleased with our NRR performance of 127%, and this updated outlook will elevate the ending point of NRR this year to approximately 119%, above our long-term target of 115%. For the second quarter, we expect revenue in the range of $10 million to $820 million, representing 35% to 37% growth year over year. We expect Q2 adjusted EBITDA in the range of $45 million to $46 million, up 30% to 33% year over year.

We expect to see incremental costs in the quarter related to Accelerate, our annual global ecommerce summit, our continued investment in R&D, and start-up costs related to our East Coast facility. We are confident that these short-term investments will drive continued growth in the future. We are extremely pleased with the momentum we have seen so far this year. We believe our results and outlook reflect the durable, compounding nature of this business. We continue to operate from a position of strength, supported by a healthy balance sheet and robust consumer demand within our categories. We remain fully committed to delivering long-term value to our shareholders.

With that, I will turn it back to David before we open the call for questions.

David Wright: Thanks, Jason. Q1 was a strong start to the year, and a quarter that continues to strengthen the foundation of our model—NRR at a record 127%, international doubling, non-Amazon up 119%, and our agentic investments are delivering. We enter Q2 with a pipeline and a platform we feel great about. Ecommerce is being built around AI—how products are discovered, how decisions are made, how transactions are completed—and Pattern Group Inc. Series A Common Stock is built to operate at the center of that stage. We remain focused on optimizing the ecommerce equation, removing friction for brands, and delivering measurable outcomes at scale. Thank you for your continued support. We will now open the call for questions.

Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Ralph Schackart of William Blair. Your line is now open.

Ralph Schackart: Maybe just kind of highlight, if you can, what drove the exceptionally strong performance in the quarter. Is it just a bunch of factors coming together? The performance is really strong—any color you could add there? And then maybe on the non-Amazon channel, that growth was obviously very strong. Maybe talk more specifically about what is driving that. You mentioned some channel partners in the script, but just more color around that and maybe some of the initiatives you have there to keep driving that growth further would be great. Thank you.

Jason Beesley: Thanks, Ralph. Q1 was a great performance. To give you a sense of what drove it, it was really hitting on all cylinders across the many levers we have for growth. I mentioned some of those in the prepared remarks, but with an existing brand, we can grow them with better tech, more marketplaces, more products, and then we are bringing on new brand partners all the time. You also mentioned the non-Amazon marketplace growth—that hit in a really nice way as well. In terms of marketplaces, we called out some of the ones we already had in the prepared remarks—Coupang, TikTok, Walmart specifically. All of those worked well.

I think the biggest takeaway for me is this business model has a lot of ways to help brands grow across multiple vectors. When we hit on all of them, that gives us confidence to raise the outlook, and that is what we did with the 32% growth for the full year.

David Wright: Yeah, Ralph, thanks for the question. I will do a quick follow-on. It is just a tremendous business, quite frankly. There are very few businesses that have a pipeline of what we measure as $5 billion and growing. Of course, that is a long-term pipeline. We are not making any immediate statements there, but if we continue to execute like I know we are capable of, I think you will just see measured improvement quarter over quarter—better execution, broader reach across geographies, across markets and places. And then the technology is moving at a speed that I never anticipated two years ago.

The roadmap and the deliverables that we are able to finish—sometimes we are able to complete things that used to take an entire sprint in hours. So, it is acceleration on all levels. Much of it is driven by advancements in technology, but we are positioned well, and we have the infrastructure and scale to take advantage of them.

Operator: One moment for our next question. Our next question comes from the line of Eric Sheridan of Goldman Sachs. Your line is now open.

Eric Sheridan: Thanks so much for taking the question. Maybe building on Ralph's question and asking it a little bit differently. When you look at the exit velocity of the business at Q1 and the backlog of both partners and platforms that you are discussing the business with longer term, how should we think about industry vertical diversification deeper into 2026, and platform diversification as we exit 2026 as well, and how some of those could be drivers of the business or even how mix might change?

David Wright: We get a lot of questions on category. Internally, category diversification is not a primary focus. We are simply focused on the brand. The brands that would like our help worldwide—we will jump in. Now, when you think of the technology, of course there are product sets that are good for ecommerce. But that set is widening quickly. It used to be that there were some things that were just completely off limits—like having your diet soda delivered to your doorstep. Now many of those things are coming into focus for us. Every time we take another look at the pipeline, we can see the categories and product sets expanding.

Jason Beesley: In terms of marketplaces, to finish on that question there, Eric, we are seeing our non-Amazon platform growth at much larger rates than our Amazon growth. The non-Amazon growth you saw is over 100%. The good news is Amazon growth is still very healthy at 38% in Q1. That will continue to diversify us over time. We are pretty comfortable that we have the right initiatives in place to continue that journey, and there is a lot of whitespace for brands to grow everywhere across many marketplaces. Pretty much, long term, our view is that however consumers are spending online is what our revenue mix should look like long term.

Operator: One moment for our next question. Our next question comes from the line of Douglas Anmuth of JPMorgan Chase. Your line is now open.

Brian Smilak: Great. Thanks for taking the questions. It is Brian Smilak on for Doug. Obviously, good to see the continued supply chain efficiencies. I guess, David and Jason, can you talk about how much more room there is to optimize inbound and outbound fulfillment? Specifically, David, you had mentioned same-day and one-day delivery capturing a greater share of overall units. Could you talk to the velocity of delivery speeds improving across the platform, and more broadly, how that could change with Amazon expanding multichannel fulfillment more broadly? Thank you.

David Wright: I love the question—very insightful and something we focus on. In terms of numbers, in Q1, approximately 57% of our total clicks get a same-day or one-day delivery promise, up from around 52%. The conversion rate in that group is around 18%, versus if you go to two-day or two-plus, it comes in at around 9%. So, of course, the closer you can get to the consumer, the better your conversion rate is. It is a dramatic focus for us.

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