Greetings. Welcome to Playboy, Inc.'s Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Matt Chesler, Investor Relations. Thank you. You may begin.

Thank you, Operator, and good afternoon, everyone. I'd like to remind you that the information discussed today is qualified in its entirety by the Form 8-K and Form 10-K filed today by Playboy, Inc., which may be accessed on the SEC's website and on Playboy's website. Today's call is also being webcast, and a replay will also be posted to the company Investor Relations website. Please note that statements made during this call, including financial projections and other statements that are not historical in nature, may constitute forward-looking statements. Such statements are made on the basis of Playboy's views and assumptions regarding future events and business performance at the time they are made. We do not undertake any obligation to update them. Forward-looking statements are subject to risks, which could cause the company's actual results to differ from its historical results and forecasts, including those risks set forth in the SEC filings, and you should refer to and carefully consider those for more information. This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statements. During this call, management may refer to non-GAAP financial measures. Such non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation to the most directly comparable GAAP measure is available in the earnings release filed with our Form 10-Ks today, and in our Form 10-Q filed today as well. I'd now like to turn the call over to Ben Kohn.

Thanks, Matt. Good afternoon, everyone, and thank you for joining us today for our Q3 earnings call. This past year or so has been all about transforming Playboy into a high-margin, asset-light business. And I'm pleased to say that the results of that hard work are now becoming clear. This quarter marks our third consecutive quarter of positive adjusted EBITDA and, importantly, our first quarter of positive net income since going public. These results validate the strategy we've been executing to stabilize the business around our licensing foundation and now position us to focus on growth moving forward. Let me start with a quick review of the quarter. Revenue for the third quarter was $29 million. Net income came in at $500,000, and adjusted EBITDA was $4.1 million. It's important to note that adjusted EBITDA was inclusive of $2.5 million of litigation expenses. Excluding those expenses, adjusted EBITDA would have been $6.6 million. Our revenue trend is particularly encouraging when you normalize for one-time items in last year's quarter, so Q3 2024. Adjusting for the 2024 revenue related to the e-commerce outsourcing and Honey Birdette store closures, revenue would have been up just over 4% year over year with basically no investment. So the underlying numbers are even better than what we reported. Licensing continues to be a bright spot for us, with revenue up 61% year over year. We signed six new licensing deals during the quarter, bringing our total for the year so far to 14. We also restructured our China partnership with a subsidiary of Li & Fung, moving them to a revenue-based structure that better aligns our interests moving forward. As previously disclosed, we were awarded $81 million in damages through a Hong Kong arbitration against a former Chinese licensee. We are taking all appropriate steps to enforce that award in China, and while it may take time to work through that process, we remain committed to pursuing recovery in full. We are just as confident about prevailing in our other litigation with a former licensee domestically. Although legal expenses have been high, we feel very good about our case and will pursue this to completion. Honey Birdette continues to perform well, reflecting the hard work we have done to improve the brand and the performance of the business. Comparable store sales grew 22% year over year, and gross margins expanded by 700 basis points from 54% to 61%. We've intentionally reduced the number and depth of promotional events, and that strengthened the brand while also seeing full-price items increase by 15%. Now I'd like to turn to our go-forward strategy, which is all about growth. As we detailed in the stockholder letter, which you can find on our investor website, we believe the next phase of Playboy's growth will be substantial, and importantly, it will be achieved in a measured way without requiring significant investment. The first step in this is clearly defining how we want to leverage the Playboy brand. Over the past four months, we've been working with a third-party agency on comprehensive brand positioning work, and it fully supports our strategy centered around content. Playboy is returning to its roots as an aspirational men's lifestyle brand with beautiful women and compelling storytelling at its core. For more than seventy years, content has been the heartbeat of Playboy. It's what fuels our cultural relevance and drives every aspect of our business. Looking ahead, our model will be focused around three verticals: licensing, media and experiences, and hospitality. First, our recurring high-margin licensing business remains the cornerstone of our profitability and visibility. The new content we're creating will open new doors for licensing opportunities and strengthen our brand across categories and geographies. The last time we invested meaningfully in content, we saw major collaborations and revenue emerge, from PacSun to Saint Laurent to Amiri. And we expect to replicate that success moving forward. Second, our media and experiential business will be driven by new content and monetized through subscriptions, paid voting, community engagement, and brand sponsorships. We've already begun testing new offerings with encouraging results. The relaunch of the Playboy magazine has generated meaningful demand, and our trial of the Great Playmate Search exceeded expectations, with around 16,000 contestants entering, representing a combined social media following of more than 200 million. We've had over a million votes cast to date by over 100,000 users. It's important to note that we have spent almost no money on this contest. The Playmate competition remains ongoing, and we plan to launch the next one in early 2026. Based on what we've learned, we expect paid voting to become a multimillion-dollar annual business moving forward. Yesterday, our winter 2025-2026 issue of the Playboy magazine hit newsstands across the US and Europe. It's a beautiful 240-page issue featuring 12 Playmates of the month and archival images of Jane Birkin on the cover. I would encourage you to go to playboy.com and buy your copy. We've also been developing a bundled subscription offering that combines access to the quarterly magazine, exclusive new content, seven decades of archives, and unique interactive experiences like subscriber-only interviews and voting for the Playmate of the Year. This strategy is designed to deepen engagement and build loyalty within our community. Second, beyond subscriptions, we're expanding into a moderate entertainment and media strategy. We signed two new deals, one with Cooper Hefner for a feature film titled 'Dead After Dark,' and another with Ben Silverman's Propagate Content to develop the Great Playmate Search into a reality television show. Both of these are structured as licensing-style deals. They provide for a licensing fee plus upside participation in related profits. Over time, we also plan to reintroduce experiential elements as part of our subscription or membership offering that capture the spirit of Playboy, like exclusive golf outings and poker tournaments hosted by our Playmates. Our third vertical, hospitality, will center around membership experiences. We are making great progress towards launching a Playboy Club in Miami Beach as part of our relocation to that city. We signed a nonbinding term sheet with a group of Miami investors for a $25 million investment into Playboy Hospitality, and we're finalizing the selection of our operating partner. Similar to licensing, Playboy will contribute the brand IP while partners contribute the capital. We see hospitality as a natural and powerful extension of the Playboy brand. At Honey Birdette, we're focused on maintaining its luxury positioning and expanding high-margin full-price sales through e-commerce in key flagship locations. We recently relaunched our website with enhancements aimed at increasing conversion, average order value, and engagement. Since we launched, average order value is up 9%, and we will be launching a loyalty program within the next two weeks. With e-commerce leading the way, we're preparing to expand into the Middle East and the Asia Pacific markets. From a retail perspective, we'll continue to invest in our flagship US stores, where sales growth is outpacing the rest of the portfolio with margins exceeding 30%, while evaluating underperforming locations. We are also thinking hard about raising capital at the Honey Birdette level to accelerate the growth there while not diverting capital away from the Playboy growth. As we move into 2026, we're excited to roll out our new brand positioning across every touchpoint of the Playboy ecosystem. This includes enhanced website functionality, subscription offerings, and premium content behind the paywall, all leading to the launch of a redesigned playboy.com. From a balance sheet perspective, we ended Q3 with over $32 million in cash, and we amended our debt facility, extending the maturity until May 2028 and reducing interest rates upon prepayments. With the progress we are making with our brand revitalization, a clear strategic vision, and a business model built to balance strong profitability with meaningful growth, we're entering the next phase of Playboy's journey from a position of real strength. Thank you all for your continued support and belief in what we're building. Operator, I'd now like to take questions.

Thank you. Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. Our first question is from George Kelly with ROTH Capital Partners. Please proceed.

Hey, everybody. Thanks for taking my questions. Maybe if we could start with Honey Birdette, there was a lot you just went through, a lot of sort of initiatives and capital raising, etc., that you went through in the letter. I was curious just what is the goal there? And how should we think about that business growth margin, you know, the store base? Just any more context you can provide over sort of what you're shooting for over the next couple of years?

Hey, George. It's Ben. Thanks for the question, and I'll let Marc Crossman pipe in as well. Look, I think as we've talked about for the past couple of years, we were all about fixing Honey Birdette and stabilizing the business, and I think we've done that. Right? We've reduced our inventory substantially. We're seeing same-store sales even though we're down seven stores year over year. Right? And we've talked about that as level setting the revenue. You know, the same-store sales are up 22%. We're seeing full-price items up 15%. We've seen 700 basis points of margin expansion. There is significant demand for the business. The issue we have moving forward is, you know, our goal is to continue to delever the company. We see a massive growth opportunity with Playboy. And so any free cash we have, we want to invest in that because we're seeing the data behind it. And so the question is, what do you do with Honey Birdette knowing that we fixed the business, it's on really stable footing, and we know there's growth there? And that leads to thinking about raising capital at the Honey Birdette level so that it doesn't divert resources away from Playboy and allows that business to continue to grow. I think, you know, long term, as we've talked about previously, you know, let's see where that process goes and whether or not Honey Birdette, you know, on the long term, should be part of Playboy as a 100% or something less than a 100% moving forward.

And the reason you're considering capital, is it just opening more stores, or is there some other investment you're contemplating?

I would say, again, you know, it would be some flagship stores that we're seeing 30% four-wall EBITDA margins on. And then, obviously, continuing to grow our e-commerce business. You know, if you look at what we've done since we've taken over the business, you know, e-commerce as a percentage of total revenue, you know, has basically flipped from when we took it on the brick-and-mortar. And I think we want to continue to expand into new territories. The demand and growth is there. We just need the capital to do it. And, you know, again, growth doesn't come for free. You have to make an investment. Again, we're not talking about big dollars. But right now, given that we still have a desire to continue to delever this business and invest in Playboy, I think based on where Honey Birdette is now, I think there's a good chance we could raise money from, you know, third parties to continue to grow that business. Marc, anything you want to add on that?

No. I think you pretty much touched on every bit of it.

Okay. Okay. That's helpful. Thank you. And then next question is on your licensed business outside of Viborg. It stepped up in Q3 sequentially. And I know you've signed all these new license deals. I think you said fourteen year to date. Are the deals you've signed contributing now? Is that cool? What explained the step-up, and how significant are the fourteen? I'm just kind of thinking about, you know, what kind of growth those new deals should drive in the coming quarters?

Yeah. So go ahead. Go ahead. No. No. Here you go. I would say, look. Again, remember, there's always a lag for when you sign a new deal because we as a business have to use 606 accounting. So you straight line it. So there's always a lag between signing deals and revenue recognition. You know, look. The pipeline is strong. I expect, you know, should the year finish strong, we should be able to sign more deals in the fourth quarter than we signed in the third quarter based on our pipeline today. And so I think we remain optimistic. You know, we put things out there in the past showing sort of the revenue by geography. And we've also put something out there in the past in our previous investor decks and hope to have a new one out shortly. But that shows by category. There's a lot of white space. The thing I would tell you, George, and we did this before. We did this back in 2018-2019 when we invested in content, and that led to, you know, the PacSun and the Amiris and these other deals. Investing in content actually really drives growth in licensing. It gives us new IP actually to somewhat to license, and it leads to brand relevancy. And so that's why content is the center of our strategy moving forward. We'll drive all three facets or all three verticals of our business moving forward. And so I would expect moving forward that will continue to accelerate as we move into 2026 and 2027.

Okay. Okay. Helpful. And just one last question for me. Sort of a multipart one. There's a lot of different initiatives that you talked about in the letter and in your prepared remarks. Media and hospitality, all the different stuff. As we think about 2026, what opportunities do you think have the most potential to drive revenue growth? And will any of these initiatives require kind of front-loaded OpEx investments that could pressure EBITDA growth into next year?

Yeah. So I know there's a lot in the letter, and it's a good question. I want to say that, you know, the biggest investment we're making, and we're doing this in a very measured way, okay? And we already started this year with the magazine. That is our marketing for the brand. Right? We're not a brand of said this before, that spends millions of dollars, you know, taking out billboards and doing everything else. Right? Our brand relevancy and the marketing for the brand comes to the content. We're just going to monetize that content moving forward. And so it might sound like a lot, and I understand that. It's actually not a lot from an operational perspective because we've already started some of that this year. The tweaks that we're talking about, we're selling the magazine on an a la carte individual basis. We're selling the archives today on an individual basis. It's just not easy to find it. It's not done in a bundled offering. And so moving forward, you know, as we return Playboy to its roots as an aspirational men's lifestyle brand, you know, I think there's a massive opportunity when you look at the data, you know, really around relationships and sex and what's happening to men in society today. Where people are having less sex than ever before. You know, relationships are harder to come by. That's core to the Playboy brand in our brand work and what we got from consumer surveys. That is stuff that consumers will pay for, giving people relationship advice, giving people dating advice, giving people sex advice. That's the type of content that can sit behind the paywall, and then you surround that with four issues in the magazine, the Playmate calendar that is also for sale today on playboy.com, because we did 12 Playmates in this issue. You know, a great example of moving forward, and we are already doing this, is we have 12 Playmates. But instead of launching this January, February, March in the March issue, we can launch this January digitally on a safer work environment leveraging her social media as well as our social media. YouTube, get to know her, Instagram, you know, TikTok lives, all of that. But then to see her photo spreads early and behind-the-scenes content from that photo spread, you would need to be a subscriber on an annual basis to see that. And so those are the low list that we're talking about. And, again, as I said, we're going to be very disciplined in how much money we invest. We're going to do this in small increments. But, yeah, there could be substantial growth based on the data if it works, and we're seeing that with paid voting. Right? You know, paid voting on an annualized basis is already multiple millions of dollars. Right? Obviously, not this year because the contest has only been running for a short period of time. But as we move into next year, I see us not only having one contest, I see us having multiple contests during the course of the year. And what we've been able to do with paid voting when you look at the data, you know, we've acquired over 100,000 users. Okay? And we've had some real tech challenges on this first one that we have now fixed. Engaging those creators. So we got 16,000 creators sign up, but we acquired over 100,000 users with zero customer acquisition cost. Right? And so last night, we actually started emailing a small group of those users to buy the magazine in the calendar, and that would then lead to emailing those users to actually become a Playboy subscriber or member, however you want to call it. And maybe as we move into next year, the voting packages that people are buying to are integrated into different levels of membership. The hospitality, let me be clear, you know, very excited by the response we've received. We signed a term sheet with a group of investors to fund Playboy Hospitality. Again, it's going to be a licensing deal. We'll take fees out for contributing the brand. We're not putting capital up. That is a longer lead time to get that Playboy Club in Miami open. When we start selling memberships, I don't want to comment on at this point, but it will be a membership club. But the first thing is getting the capital and getting the operating partner, and then you can start to begin to sell members. I don't think in 2026 you'll see meaningful revenue from that. I think, you know, I think wise, I think the media and the subscription side of the business, you could start to see real revenue there next year. I think 2027 will be about getting that club going, and you'll start to see membership sales come in then.

Okay. Okay. That's helpful. Thank you.

Thanks, George.

Our next question is from Alex Joseph Fuhrman with Lucid Capital Markets. Please proceed.

Hey, guys. Thanks very much for taking my question. You know, nice to see really nice free cash flow here in the third quarter. It looks like you're getting a lot of traction with some of these high-margin initiatives. One in particular I wanted to ask you about, Ben, you mentioned paid voting. Sounds like you have a lot of confidence that that's going to be a multimillion-dollar business. Can you tell us a little bit about what you've seen so far that gives you that confidence in terms of, you know, numbers of users and spend and things like that?

Sure. So, you know, let's just talk about the way we set this up, Alex, and go from there. So we set this up as a licensing deal. So there was really zero capital outlay on our part. There were some technical challenges we had when we first launched this that we have now fixed, and there's also, you know, the partner that we have on this is a good partner, and there are some flow issues that we had to fix in the beginning. The biggest issue we had was actually our SMS provider. We lost in the beginning. And so we had 16,000 people register. We unfortunately couldn't actually take advantage of our partnership with Viborg on this one, who has a large amount of international creators. We lost the ability to actually message the international creators right when this started. The second big thing was because this was our first one, instead of having, like, a rolling vote where someone signs and you're immediately in a bracket and they could share a link, we had a period of two months where we basically went dark with the creator where they would sign up, you know, call it August 1, but they didn't get their link to share in their bio on social until October 1. Okay? So there were some challenges, and then we reengaging them because you lose a lot of momentum. All of those will be fixed for the next one. But if you look at it, you know, we had 16,000 creators. The actual number of engaged creators was much smaller than that because we lost the international creators. And we spent no money on marketing on this. So we actually think it would warrant small investments moving forward to build the momentum here. But we've generated over a million votes. We've generated over 130,000 unique users signing up for this. Okay? On what was, you know, 16,000 creators, obviously, is smaller than that because some of them weren't able to participate in the contest because we couldn't engage with the international creators. So I think the momentum will build on that. On top of that, we've signed a deal with Ben Silverman's Propagate to take the Great Playmate Search and actually develop this into a reality television show. So the way we're thinking about this long term, and again, you know, we're working on that as a licensing deal too, but the awareness like a television show could bring to this overall, the way that you would do the casting is through the digital paid voting side, which then leads to basically the casting for who would be on the television show. And so this is all part of this, like, 360-degree media strategy. Again, we have to execute. It's going to take some time to do this, but I would tell you that, you know, the data alone on the revenue that we're generating, if you look at our days on an annualized basis, and we still have, what, almost a month to go in this contest. There is no revenue in the third quarter from it because voting didn't start till October 1. But when you look at this moving forward, yeah, this is already on track if you annualize sort of where we are through the first month of voting, you know, where it's already annualized out a multimillion-dollar business. And this is on one contest, and I would say next year, yeah, we're thinking about, you know, four to ten different contests that you run during the course of the year.

I mean, I'll give you an example also. We're working on a where Honey Birdette can do a Playboy lingerie line. We're thinking about running a voting contest to find the next phase of the Playboy Honey Birdette collaboration line. Right? And so not just appear on the magazine, but how could you extend this to other parts of the business? Again, think about the top of the funnel. 130,000 people we have verified emails for zero customer acquisition cost against that. Now the question is, can we start to market them other products and services as well? That's great. A lot of reasons to be excited there. If I could also ask some more questions on Honey Birdette following up on some of George's. You know, that's nice to see really big comp store sales growth and gross margin growth. Can you just remind us the seven stores that were closed since last year, how were those stores underperforming? Are there any other stores that need to be closed before you can really get this brand back to very significant growth?

Yes. So, Alex, it's Marc. In terms of our store base, what we really look at when we talk about the flagships, it's about our top 20 stores, and we have 51 stores right now. So those stores are running close to 40% four-wall margin. And so we're really looking at, you know, the bottom 20. I'm not saying it's 20 stores that we would close, but we're really focusing on those stores as, alright. We're the ones that we think are underperforming. And don't see that path forward for those stores. But, again, that's a multiyear process, and it is definitely not 20 stores, but I do think the base needs to be rationalized a little bit.

Right. And bigger flagships could there be? I imagine those are mostly in big markets.

Yeah. But it may mainly be one in the US, and there are plenty of big cities that we have not hit. We basically hit the Southeast, you know, in the Southwest. And so there's we've got the entire US to tackle. We only have 10 stores in the US. And then there are a lot of other places around the world. You can see, you know, Dubai, Vietnam. There are a lot of different places where you would go in. Korea and have just one big flagship store in that country. And then, you know, one of the examples we can do is if we want to be in the Middle East, we want to be in APAC, because we have a distribution center in Australia, can ship out of Australia, and we don't have to deal with the duties that we're seeing coming into the US. So it's you have the entire world that you can now you can start opening these flagship stores in.

Yeah. I mean, Alex, I'd also tell you that, like, you look at a market like Miami just because we've been spending a lot of time down there. You know, that's a great performing store for us. But the Miami market is huge and growing. Right? Especially after what happened in the elections this past week. So you look at South Florida in general, Miami could easily take, you know, two to four more stores down there. A question of having the right capital to invest in it, and it's why we're thinking about, you know, now that the business is on stable financial footing, there'll still be growth there. But how do we actually accelerate that growth moving forward?

No. That's great. Really appreciate the answers. Thank you both.

Thanks, Alex. Appreciate it. Ben, let's ask one more analyst question before we move on to the retail investor portion of the Q&A session. This one is from James Heeney and team from Jefferies. It's actually a two-parter, and the first one is licensing. With licensing revenue up 51% in the quarter and signing 14 deals year to date, what are the categories or geographies where you see as the next frontiers for growth?

So, yeah, Matt, I would answer this very similarly to, you know, comments I've already made on the call, which is when you look at the geographical dispersion of our licensing deals in the categories, there's a lot of room to grow. Now the question is making sure that we do the right deals. And so I think there's growth across geographies, and I think there's growth across categories as well. It's just a question of making sure that we continue to focus on bigger and fewer deals versus, you know, smaller deals that add more complication from an operations perspective to the business. And so the pipeline is strong. And I think our investment in content moving forward will continue to enhance that pipeline. What's the second portion of the question?

The second portion of the question is can you give any more details or metrics on, you know, engagement or monetization from some of the efforts you highlighted, such as the magazine relaunch, although, I guess, this launched yesterday. The Great Playmate Search, and then the studio production deals that you talked about.

Sure. So I think we've, you know, we've commented on the metrics around the Great Playmate Search. You know, the magazine just launched yesterday. Presales were strong. And Books A Million yesterday. You know, it went on sale at Barnes and Nobles. And A million. Then the studio deals are quasi-licensing deals. Right? They are they call for a licensing fee plus a percentage of the profits.

Yeah. And I'd also want to add that the calendar had the same level of distribution that we had with the magazine itself, and All Doors Books A Million, All Doors Barnes and Noble.

Okay. Thank you for those questions. Let's now move on to the retail questions. I'd like to say we really appreciate all the thoughtful questions submitted ahead of today's call. What we've done is taken the time to carefully review and group them. We've summarized them into some common themes so that we could address as many as possible during today's session. The first question is also a licensing question. Can you talk about any of the new deals, particularly the land-based entertainment deals? And whether the new China licensees are showing any signs of growth.

Sure. So I think there's sort of two parts to this question. I think, you know, just to reiterate, we signed 14 new licensing deals, including six in the last quarter. We are targeting to sign more in the fourth quarter than we did in the third quarter. You know, as far as China, that's its own animal. You know, we obviously won the lawsuit there. That was a huge overhang on the business because of what our ex-licensing partner was sort of threatening new partners for us. That they were going to win. And therefore, if they signed with Playboy, you know, they would be throwing their money away. You know, now that that is behind us, and we'll do everything we possible to enforce that award. That, you know, we expect China to return to a more normal market still with issues in the market with high unemployment and, obviously, home values within China have, you know, been decimated. I think, again, you know, investment in content is really going to drive licensing growth moving forward and accelerate that growth. You know, as far as LBE, I think it really speaks to the partnership we're starting with in Miami. You know, we're setting it up as a licensing deal, but we put together, you know, a term sheet with a group of investors that have come to us that want to invest in it, that see the opportunity. Let's get Miami off the ground. And then we'll look at how to expand that to other cities around the world.

Ben, I'm going to move to a question on digital. If that's okay. Right. So let me summarize this one. It's related to Viborg. A lot of interest in getting an update on how that partnership is evolving, including potential opportunities to collaborate with some of their platforms such as, you know, Vibe Jasmine or new digital initiatives such as Centerfold and Playboy TV.

Yeah. And if you while you're answering that, if you could also address the questions around whether, you know, when do we expect that the revenue to exceed the $20 million base? Sure. So I think let's just level set that this partnership is even though we signed the deal actually a year ago next month, you know, the transition of the sites and the channels to Viborg wasn't really completed until the summer. Right? So it went in different phases. So we're very, very new in that partnership. I think we've also previously commented that, you know, we are not counting on overages in the first couple of years of that business. We're not counting on overages the way we built our organization in the restructuring of Playboy at all. That's all gravy to our earnings moving forward. But they're investing in those businesses, and we invest in the business, you're doing it because there will be future growth. That just takes time, and I think we have to be patient. As far as collaboration, we've already started it. So as I mentioned a few minutes ago, we had some issues in the beginning on the international creators. We lost the ability to message them. But regardless of that, we did some various tests with Viborg, all with good results. So we had Viborg sign up creators send out an email to their universe. We got creators to sign up. Unfortunately, in this contest, we couldn't monetize them. We had Viborg send out an email to their users to vote for the next Playmate. Again, you know, these were good results. And then lastly, we had Viborg send out an email to a select group of their users to buy the Playboy magazine. All again, we're testing everything right now. And, again, you know, we're pleased with the results. So we're beginning that testing on how to work together outside of just the licensing deal that we have in place.

And now building on the Viborg topic, and where that could go over time, you know, given their significant financial commitment, and the shared synergies that exist between the two companies. Has Playboy considered a potential merger or some sort of deeper strategic integration to unlock additional scale and value?

Sure. So we can't comment on any corporate transactions. You know, what I could say, and this is all publicly disclosed, is that we have a standstill with Viborg, including an ownership cap of 29.9%. And any other transaction would have to be done through, you know, the proper channels.

Understood. So now let's talk about other avenues of growth. Beyond these current initiatives, are there other green shoots you see emerging that could drive momentum in Playboy's business? Such as fan voting and licensing. I think you've talked about both of those a bit. Or the revival of the Playboy Club concept perhaps.

Sure. So, again, I think this is a question George had as well, but we're staying very, very focused. Right? We are making very small bets moving forward, making sure that before we commit real dollars to anything that we've tested it and we know the data supports a further investment. But, you know, to the extent we can set things up like a licensing deal, all the better. The place where really we'll be investing small amounts of money in content. We've already started that this year with the magazine. Now we're going to roll out the second phase of that, which is sort of the subscription side of it. You know, we think the media and experiential business, you know, could be larger than the licensing business over time if we execute it properly. I think on the Playboy Club, we're, you know, we're well on the way to getting that one off the ground in Miami. There's still a lot of work to be done. But we are working on that. And outside of that and growing, you know, investing in content to continue to grow licensing, we are not distracting ourselves with anything else. We have a small team. We have to stay super, super focused. And, you know, we're in the process of making sure that we can bring in the right people with the right skill sets to help us execute properly in these areas.

Okay. There is an additional question about Honey Birdette that I'll ask if there's anything incremental to offer here. How is Honey Birdette positioned competitively as the premium lingerie market strengthens, and what are the brand's priorities to sustain growth in '26?

So, look, the brand's positioned really well. You know, that's what we did, Marc, two years ago, I guess. We started really cutting down the number of days on sale, focusing on brand health. You know, we've seen the results. So, again, we could drive a lot more revenue if we wanted to. Okay? There's the growth is there. But that means I got to take more inventory. Right? We've reduced our inventory to approximately nine and change. Down from, like, 13. Right. So we've substantially reduced inventory because that's cash tied up in the balance sheet. Right? That limits what you can do from a business perspective with the business. The growth is there, but you have to then say, I want to invest the capital to do it. So we focus on brand health because coming out of COVID, you remember, we bought the business in '21. August '21, if I remember properly. It's been a long time. And the week after we bought the business, I think Australia went on, like, a three-month lockdown. Okay? And on top of that, we had a lot of inventory that the previous owner had bought, and so we ended up having to sell that at discounts coming out of COVID lockdowns because on top of that, you already had your inventory plan for, you know, October, November, December in addition to all the stuff you got stuck with. So we revitalized the brand. I think the brand is doing really well. We've improved the margins. There's still growth to be had even with our inventory levels. But to really accelerate that growth, I think we need to raise some third-party capital. Or if we had extra capital, we could do it, but we don't because we want to invest in the content, and we still need to continue to delever the business. I don't mind selling a piece of that business today if I know that my remaining stake is going to be worth a lot more because the growth is there. And so that's how we're thinking about it.

A different topic here. What steps is the board taking to ensure strong accountability and alignment between management and shareholder interests? Given the stock's performance and investor concerns.

Yeah. So, look, let me comment first and foremost that I think the management is fully aligned with the board, and we're fully aligned with investors. And I think, you know, the turnaround in the company, we're showing that. I understand the frustration more than anyone. I know people might not think I do. I hate losing money. It drives me absolutely crazy. And I understand how frustrating this journey has been. But we have done the right things and taken the necessary steps. I want to also comment that no one on the senior team has sold any shares for personal gain. I'm actually one of the largest individual shareholders in the company. And I also want to clear up that I've actually invested my own money in this business. On three different occasions. I put almost $3 million of my own capital buying shares. One at the IPO, I bought shares at $10 a share. Second, when the stock was in the teens, I bought stock then. And then I participated in the rights offering as well. So I've invested approximately $3 million in my own capital into the business. Most of our compensation as management comes in the form of stock grants. Right? So in addition to the stock grants, I've actually put real money out of my savings into the business, which is the right thing to do as the CEO of the company. So we are fully aligned. I also think it's important to level set what's happened to us and why we got to this point. Right? So when we went public, in '21, we had a business in China that was doing about $42 million of revenue, call it $32 million and change of net profits to us. After agency fees and withholding taxes. Okay? We definitely have screwed up things. I take full responsibility for the mistakes we've made as a business. There are also things like China that went against us that you just couldn't forecast. We had $32 million of cash flow that basically evaporated overnight. Forget about the accounting treatment of it. I'm talking about cash coming into the business. At the same time, we had just bought companies and taken on a mass amount of fixed liabilities to actually integrate those businesses. And at the same time, our cost of debt because we were levered, being a levered retail play at the time wasn't the greatest thing. Our cost of debt more than doubled. So you should think about, like, the cash flow swing in the business of, like, $45 million between the loss of China and the extra interest cost that we started to absorb. Because of the debt. Right? And no question about it. We made mistakes, but those are things that we just couldn't forecast at the time. You wouldn't have thought that based on the stability of the business beforehand. You know? So we had two options. Right? You either grind it out or you could give the company to the lenders with the debt. And, you know, I'm a fighter. I think everyone on this team is a fighter. There's not a person that has sold shares here. And we did what we needed to do to survive, and it came at a huge personal cost. Right? Seeing the comments, I understand people's frustration with the business. But, you know, there's a human side of this too, which is we had to part with a lot of really good colleagues along the way. But we did what we had to do to survive. And I think now you're seeing the flip side of that. Right? I also had a really good personal relationship based on my private equity days with their lenders. I got them to amend the debt facilities six times with no amendment fees, right, including a $40 million extinguishment of debt. And then rolling another big chunk of debt into a convert. If you actually look at the convert, that we converted, plus the $40 million of debt forgiveness they gave us, it's actually, like, over, like, $4.50 a share if you combine the two of those for what the actual conversion price would be. That hard work that the team has put in, right, and has not been fun, but you're trying to get to the other side of it. Right? You first quarter since, I think, in the company's history that we now have net income at least since we went public. You're seeing sequential EBITDA growth every single quarter. The business is on a solid financial footing. We've reduced the cost infrastructure. But now what's actually becoming fun for the first time is we actually can focus on growth moving forward. So we've invested some money this year. On the brand. That was a first and foremost thing. Obviously, coming out of the mid-2020s, we went way too woke with the brand, etcetera. I've commented on that in the past. We have a really clean mission statement moving forward. We have a really clean vision. We're going to roll that out to investors in 2026. But then you'll start to see us align the rest of the company's properties around that. And I see there's a real opportunity. We know the data on because of when we had the Playboy Plus and Playboy TV websites, of what people will pay for. So we have a real path to actually monetize this moving forward and accelerate the growth with a really stable base of licensing revenue and a much lower cost infrastructure than we ever have before. So are we aligned? I think we're 100% aligned, you know, with investors both through our equity holdings, my personal investment in the company, and the path moving forward. Next question.

Can you provide an update on the efforts to enforce and collect the $81 million arbitration award related to the former China licensee? And what impact could this have on cash flow on the balance sheet once received?

Sure. I'm going to be slightly careful on how I answer this, but, you know, what I'd say is first and foremost, you know, we are very happy with the results of the arbitration, and we believe justice has been served. You can't get into all the particulars, but I can say that we and our counsel in China are working with the appropriate local court to formally recognize the award in Mainland China and seek enforcement. You know, we also have another litigation going on, and I understand it's more frustrating for us than anyone of what we're spending with litigation, but it's the right thing to do. We have a domestic case, you know, that we're in the process of. We feel strongly about our case in the other arbitration or the other litigation than we did in the China. And we are going to pursue that one to the end. And believe that we will be successful in that case as well. We are going to do everything in our power to collect as much of that $81 million as we possibly can. I want that money more than anyone. We deserve that money. And we're going to do everything we possibly can to collect that money. And if we collect it, it's going to be all gravy to the business. Because we're in a good place overall with the company now.

We have two more questions. I promise we'll get through it. Stock buyback. Is the authorization still active? And, you know, under what conditions would management consider utilizing it given the share price levels?

So let me just say the following. The authorization is not currently active. Our number one priority is to continue to I'll double check it if I'm wrong, but I believe it's not. It's not something that we're focused on right now. Our number one priority is to make sure that we continue to delever the company. You know, lenders were great again. We've extended our debt maturity into May 2028. So, you know, we don't have to worry about that right now. We also have the ability to actually reduce our interest costs by making certain prepayments to the lenders. So we're very focused on that. And then our focus is on making sure that we make smart small investments to fuel the growth of the company. So first and foremost, I want to delever this business because that takes away cash that we could otherwise invest in growth. And so we need to solve that. Once we solve that issue, we invest in growth, then you can decide what to do with, you know, the free cash flow afterwards. But right now, the priority is not to buy back shares. It's to continue to delever the company. What's left?

Let's end on one final paid voting question, and then I'll turn it over to you for final remarks. Which is, you know, what kind of revenue contribution engagement are you seeing? Are you expecting? And I think most importantly, who's the winner?

Well, here's what I'd encourage. Is one is all of our investors should go out and buy the magazine on our website. Please do that. Also, please go to the website and vote for who should become the winner. The competition is still going. It will end in the beginning of December, second week. Or give or take in December. So there's still live voting. We'd love for everyone to buy a package of votes. Help us on the revenue perspective. And then we can talk about that in March. I don't know who the winner is. I can tell you that, you know, we weren't sure about the quality of contestant that would enroll. And I would tell you that both us and our partner are very, very happy with the quality of contestant. You know, the contestants represented over 200 million social media followers. Now, obviously, we couldn't activate with all of those contestants because I described the technical issues. Those will be fixed for the next contest, and then we'll also take the contestants and make sure that we reach back out to them. You know, we've also done other things like we've emailed all the contestants the opportunity to buy Honey Birdette at a discount. So there's a lot of great stuff coming out of this. That we're testing, and we'll get smarter as we go. And, you know, to generate what we've generated, it will be definitely profitable for us. Because we haven't spent any money. And I think the real opportunity then is to understand how do we smartly start to spend a little bit of money to amplify this contest. If we do it the right way, this should be a multimillion-dollar business for us as we move into '20 and beyond. And more importantly, it's community engagement. Right? That to me is the most thing. The most important thing is, you know, the question is, how do I take those 130,000 fans that have, you know, actually registered and start to sell other things to them. Not going to answer the exact question outside of the numbers we've already given.

Okay. Okay. Ben, thank you for taking the time to go through those retail questions. I want to thank our retail investors for submitting them. And so with that, I'd like to turn it back to you, Ben, for closing remarks.

No. I really, Matt, I just want to sort of echo what you just said. I think we should make this part of our earnings call moving forward. I do this is a retail stock at the end of this day. You know, again, I want to fully acknowledge the mistakes that we've made as a team. You know, I always believe in making mistakes is okay. Just don't want to make the same mistake twice. I think we've learned from those. We're a better, more nimble, more organized management team coming out of this. I think we're starting to finally hit our stride and get some breathing room to focus on growth. I want to thank the investors for staying with us. I know it's not been easy. I will say personally, it's not easy looking at my brokerage account either, but I finally feel like we're in a place where we're taking two steps forward and one step back versus taking one step forward and two steps back. So I feel like we've turned that corner, and there's some good things happening here. And I just want to acknowledge, you know, the frustration because I see it. I do sometimes look at social media comments, and so I acknowledge it and just want to thank people, and hopefully, we can continue to deliver good results moving forward, and we look forward to talking to you guys in the March timeframe when we announce annual year. We have a couple of investor conferences that we'll be announcing soon that we're participating in. And hopefully, in the short term, we'll get a new investor deck up on our website that really clearly outlines our strategy moving forward. And then as we get into 2026, we'll start to roll out, you know, this new brand positioning, which is really taking the company back to its roots, looking at that core DNA, knowing that, you know, our core audience is an 18 to 40-year-old male and making sure that we deliver the content experiences and products to satisfy that customer. So I appreciate everyone joining. I know it's been a much longer call, but I think it's important that we took the questions. And thank you all for listening.

Thank you. This concludes today's sorry, ma'am. Good.

I was going to say what you're this concludes the call. You may now disconnect your lines.

Thank you.