You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2026 and 2025 and the related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024 and the related notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 16, 2026. This discussion contains forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings “Risk Factors”, “Business” and “Cautionary Note Regarding Forward-Looking Statements” contained in our Annual Report on Form 10-K filed with the SEC on March 16, 2026. As used herein, “we”, “us”, “our”, and the “Company” refer to Playboy, Inc. and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. These statements are based on the expectations and beliefs of the management of the Company in light of historical results and trends, current conditions and potential future developments, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements. These forward-looking statements include all statements other than historical fact, including, without limitation, statements regarding the financial position, capital structure, dividends, indebtedness, business strategy and plans and objectives of management for future operations of the Company. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting us will be those that we anticipated. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from those discussed in the forward-looking statements. Factors that may cause such differences include, but are not limited to: (1) the inability to maintain the listing of the Company’s shares of common stock on Nasdaq; (2) the risk that the Company’s completed or proposed transactions disrupt the Company’s current plans and/or operations, including the risk that the Company does not complete any such proposed transactions or achieve the expected benefits from any transactions; (3) the ability to recognize the anticipated benefits of corporate transactions, commercial collaborations, cost reduction initiatives and proposed transactions, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and the Company’s ability to retain its key employees; (4) costs related to being a public company, corporate transactions, commercial collaborations and proposed transactions; (5) changes in applicable laws or regulations; (6) the possibility that the Company may be adversely affected by global hostilities, supply chain delays, inflation, interest rates, foreign currency exchange rates or other economic, business, and/or competitive factors; (7) risks relating to the uncertainty of the projected financial information of the Company, including changes in the Company’s estimates of cash flows and the fair value of certain of its intangible assets, including goodwill; (8) risks related to the organic and inorganic growth of the Company’s businesses, and the timing of expected business milestones; (9) changing demand or shopping patterns for the Company’s products and services; (10) failure of licensees, suppliers or other third-parties to fulfill their obligations to the Company; (11) the Company’s high concentration of licensing revenue from a small number of licensees; (12) the Company’s ability to comply with the terms of its indebtedness and other obligations; (13) changes in financing markets or the inability of the Company to obtain financing on attractive terms; and (14) other risks and uncertainties indicated in this Quarterly Report on Form 10-Q, including those under “Part II—Item 1A. Risk Factors”, and in “Part I—Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We caution that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements.
Forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q or any earlier date specified for such statements. We do not undertake any obligation to update or revise any forward-looking statements to reflect any change in our expectations or any change in events, conditions, or circumstances on which any such statement is based, except as may be required under applicable securities laws. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Cautionary Note Regarding Forward-Looking Statements.
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Business Overview
We are a global lifestyle, media and licensing company built on the Playboy brand—one of the world’s most recognizable and enduring consumer brands, with Playboy-branded products and content available in over 100 countries. We pursue a capital-light business model in which the Playboy brand serves as the foundation for three brand-powered activities, licensing, media and experiences, and hospitality, which is further complemented by Honey Birdette, our premium direct-to-consumer lingerie business, which operates as a separate direct-to-consumer growth engine. We report our operations in two reportable segments: Direct-to-Consumer and Licensing. Our Direct-to-Consumer segment derives revenue from consumer products sold directly to consumers by Honey Birdette online and through its brick-and-mortar stores, with 48 stores in three countries as of June 30, 2026. Our Licensing segment derives revenue from trademark licenses for third-party consumer products across various apparel and accessories categories, as well as hospitality, digital gaming and location-based entertainment. Effective January 1, 2025, we license our adult businesses, including Playboy Club, Playboy Plus, and Playboy TV digital assets to Byborg Enterprises SA (“Byborg”) pursuant to a License & Management Agreement (the “LMA”). We continue to directly publish editorial and Playmate content in support of our brand and licensing, media and experiences activities.
Key Factors and Trends Affecting Our Business
We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and referenced in this Quarterly Report on Form 10-Q under “Part II—Item 1A. Risk Factors”, and in “Part I—Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K.
Pursuing a More Capital-Light Business Model
We continue to pursue a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential. We are doing this by leveraging our flagship Playboy brand to attract best-in-class operators. We also use our licensing business as a marketing tool and brand builder, including through high profile collaborations and our large-scale strategic partnerships.
In the fourth quarter of 2024, we entered into the LMA with Byborg to license intellectual property and select Playboy digital assets for $300.0 million in minimum guaranteed payments over the initial 15-year term of the license, which began January 1, 2025.
After having stabilized Playboy’s China business in 2024 and 2025, in the fourth quarter of 2025, we transitioned our joint venture for the Playboy business in China into a more typical licensing structure, with an affiliate of our former China joint venture partner becoming our licensing agent in China. On February 9, 2026, we terminated such licensing agent in preparation for the New China JV (defined below). Also on February 9, 2026, we entered into a share purchase agreement (the “Purchase Agreement”) with UTG Brands Management Group Limited (“UTG”) for a new joint venture for the Playboy business in China (the “New China JV”), in which UTG is to ultimately own a 50% interest and operate Playboy’s China licensing business. The initial closing pursuant to the Purchase Agreement (the “New China JV Initial Closing”) occurred, and the New China JV was established, on March 20, 2026. As of the New China JV Initial Closing and June 30, 2026, we owned 83.33% of the New China JV and UTG owned 16.67%. While we retain majority control of the New China JV, UTG manages all operational aspects of Playboy’s licensing business in China, Hong Kong and Macau.
We are in the early stages of building out our media and experiences areas of focus. During the quarter ended June 30, 2026, we published Playboy magazine, featuring Karol G as a cover star, and introduced a new subscription offering across our print and digital content. Subsequent to quarter-end, in July 2026, we featured Cara Delevingne as an additional cover star, continuing our magazine relaunch effort. We are also investing in expanding our social media reach to drive brand engagement, and are planning consumer-facing events designed to bring the Playboy brand to life. Subscriptions and sponsorships represent net new revenue lines for the Company, and we believe these initiatives, together with the integration of licensing and sponsorship opportunities, will support commercial growth and our ability to expand into new licensing verticals and brand categories over time.
We expect our licensing business in China to continue to represent a material part of our overall business. Our licensing revenues from China as a percentage of our total revenues were 10% and 11% for each of the three and six months ended June 30, 2026 and 2025, respectively.
We are focused on strategically expanding our Playboy licensing business into new categories and territories with high quality strategic partners and supporting them with brand marketing in the form of content, experiences and editorial works, including through our Playboy magazine.
For our Honey Birdette business, we intend to focus on the U.S. market, where the brand’s stores, on average, generate more revenue and better margins, and generally have customers who tend to spend more and are less price sensitive.
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Recent Trade Developments
We continue to monitor ongoing changes in U.S. trade policies, including increasing tariffs on imports, in some cases significantly, and changes to existing international trade agreements. These actions have prompted retaliatory tariffs and other measures by a number of countries. Starting in the second quarter of 2025, the U.S. and certain other countries have taken actions to modify the timing, rates and/or other aspects of certain of these tariffs. However, some of the new tariffs remain in effect, including tariffs between the U.S. and China, where we source the manufacturing of our Honey Birdette products and where many of our licensees source their products. While the impact of such trade policies on our business remains uncertain, we continue to closely monitor such matters and potential impacts, including increased production costs and higher pricing to our customers, either of which could negatively affect our business, results of operations and financial condition. Certain of these tariffs were imposed under the International Emergency Economic Powers Act (“IEEPA”). In February 2026, the U.S. Supreme Court issued a decision that the tariffs imposed under IEEPA were not authorized under such statute, and U.S. Customs and Border Protection has since established a process for claiming refunds of tariffs paid under IEEPA. As of June 30, 2026, we had a determinable claim for $1.1 million of such refunds, which was recorded as a reduction of cost of sales in our condensed consolidated statements of operations for the three and six months ended June 30, 2026. Substantially all of this amount was collected in July 2026, with the remainder received prior to June 30, 2026. We have also submitted claims for additional IEEPA tariffs paid. Such additional claims remain subject to ongoing legal, regulatory, and administrative developments, and the timing, amount, and availability of any further refunds remain uncertain. Accordingly, we have not recognized any additional receivable or reduction of cost of sales relating to such claims because realization is not assured.
Seasonality of Our Consumer Product Sales
While we receive revenue throughout the year, our Honey Birdette direct-to-consumer business has experienced, and may continue to experience, seasonality. Historical seasonality of revenues may be subject to change as increasing pressure from competition and economic conditions impact our licensees and consumers. The further transition of our business to a capital-light business model may further impact the seasonality of our business in the future.
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of the business are revenues, salaries and benefits, and selling and administrative expenses. To help assess performance with these key indicators, we use Adjusted EBITDA as a non-GAAP financial measure. We believe this non-GAAP measure provides useful information to investors and expanded insight to measure revenue and cost performance as a supplement to the GAAP consolidated financial statements. See the “EBITDA and Adjusted EBITDA” section below for reconciliations of Adjusted EBITDA to net loss, the closest GAAP measure.
Components of Results of Operations
Revenues
We generate revenue from sales of consumer products sold through our Honey Birdette retail stores or online directly to customers, trademark licenses for third-party consumer products and online and location-based entertainment businesses, and licensing the operation of our digital subscriptions and content businesses, which were previously owned and operated by us, to Byborg pursuant to the LMA.
Consumer Products
Revenue from sales of online apparel and accessories is recognized upon delivery of the goods to the customer. Revenue from sales of apparel at our retail stores is recognized at the time of transaction. Revenue is recognized net of incentives and estimated returns. We periodically offer promotional incentives to customers, which include basket promotional code discounts and other credits, which are recorded as a reduction of revenue.
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Licensing
We license trademarks under multi-year arrangements to consumer products and online and location-based entertainment businesses. Typically, the initial contract term ranges between one to 15 years. Renewals are separately negotiated through amendments. Under these arrangements, we generally receive an annual non-refundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year. Earned royalties received in excess of the minimum guarantee (“Excess Royalties”) are typically payable quarterly. We recognize revenue for the total minimum guarantee specified in the agreement on a straight-line basis over the term of the agreement and recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned. In the event that the collection of any royalty becomes materially uncertain or unlikely, we recognize revenue from our licensees up to the cash we have received. We also license the operation of our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses, which were previously owned and operated by us, to Byborg pursuant to the LMA.
Cost of Sales
Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency and commission fees, website expenses, marketplace traffic acquisition costs, transition expenses per the TSA (commencing January 1, 2025 through June 30, 2025), credit card processing fees, personnel costs, costs associated with branding activities, including the magazine, net of brand expense reimbursement pursuant to the terms of a Brand Support Services Agreement with UTG (the “BSSA”), customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.
Selling and Administrative Expenses
Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, transition expenses per the TSA (commencing January 1, 2025 through June 30, 2025), brand marketing costs, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.
Impairments
Impairments consist of the impairments of our artwork held for sale during the 2025 period and right-of-use assets related to our corporate leases during the 2025 period.
Other Operating (Expense) Income, Net
Other operating (expense) income, net consists primarily of losses on the disposal of assets and other miscellaneous items.
Nonoperating (Expense) Income
Interest Expense, Net
Interest expense, net consists of interest on our long-term debt and the amortization of deferred financing costs and debt premium/discount.
Other Income (Expense), Net
Other income (expense), net consists primarily of other miscellaneous nonoperating items, such as nonrecurring transaction fees, foreign exchange realized and unrealized transaction gains or losses, early termination gains, debt related costs, bank charges and interest income.
Expense from Income Taxes
Expense from income taxes consists of an estimate for U.S. federal, state, and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Due to cumulative losses, we maintain a valuation allowance against our definite-lived U.S. federal and state deferred tax assets, as well as our Australia and U.K. deferred tax assets.
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Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table summarizes key components of our results of operations for the periods indicated (in thousands, except percentages):
Three Months Ended June 30,
2026 2025 $ Change % Change
Net revenues $ 31,218 $ 28,148 $ 3,070 11 %
Costs and expenses:
Cost of sales (8,396) (9,739) 1,343 (14) %
Selling and administrative expenses (19,756) (22,366) 2,610 (12) %
Impairments — (1,541) 1,541 (100) %
Other operating expense, net (91) (385) 294 (76) %
Total operating expense (28,243) (34,031) 5,788 (17) %
Operating income (loss) 2,975 (5,883) 8,858 151 %
Nonoperating (expense) income:
Interest expense, net (2,218) (1,907) (311) 16 %
Other income, net 500 1,000 (500) (50) %
Total nonoperating expense (1,718) (907) (811) 89 %
Income (loss) before income taxes 1,257 (6,790) 8,047 119 %
Expense from income taxes (1,059) (889) (170) 19 %
Net income (loss) 198 (7,679) 7,877 103 %
The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated:
Three Months Ended June 30,
2026 2025
Net revenues 100% 100%
Costs and expenses:
Cost of sales (27) (35)
Selling and administrative expenses (63) (79)
Impairments — (5)
Other operating (expense) income, net — (2)
Total operating expense (90) (121)
Operating income (loss) 10 (21)
Nonoperating (expense) income:
Interest expense, net (7) (7)
Other income, net 2 4
Total nonoperating expense (5) (3)
Income (loss) before income taxes 5 (24)
Expense from income taxes (3) (3)
Net income (loss) 2 (27)
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Net Revenues
The following table sets forth net revenues by reportable segment (in thousands):
Three Months Ended June 30,
2026 2025 $ Change % Change
Direct-to-consumer $ 19,487 $ 16,493 $ 2,994 18 %
Licensing 11,169 10,932 237 2 %
Corporate 307 135 172 127 %
All Other 255 588 (333) (57) %
Total $ 31,218 $ 28,148 $ 3,070 11 %
Direct-to-Consumer
The increase in direct-to-consumer net revenues, compared to the prior year comparative period, was driven by continued strong performance of Honey Birdette products, both full price and discounted items, particularly e-commerce sales in the United States and retail sales in Australia.
Licensing
The increase in licensing net revenues, compared to the prior year comparative period, was primarily due to higher overage royalty revenues from existing licensing partners.
Corporate
The increase in corporate revenues for the three months ended June 30, 2026 was primarily driven by sales of the 2026 spring issue of Playboy magazine, which launched in April 2026.
All Other
The decrease in all other net revenues, compared to the prior year comparative period, was primarily due to lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
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Cost of Sales and Gross Margin
The following table sets forth cost of sales and gross margin by reportable segment (in thousands):
Three Months Ended June 30,
2026 2025 $ Change % Change
Cost of sales:
Direct-to-consumer $ (6,808) $ (6,835) $ 27 — %
Licensing (475) (2,503) 2,028 (81) %
Corporate (1,113) — (1,113) 100 %
All Other — (401) 401 (100) %
Total $ (8,396) $ (9,739) $ 1,343 (14) %
Direct-to-consumer gross profit $ 12,679 $ 9,658 $ 3,021 31 %
Direct-to-consumer gross margin 65 % 59 %
Licensing gross profit $ 10,694 $ 8,429 $ 2,265 27 %
Licensing gross margin 96 % 77 %
Corporate gross profit $ (806) $ 135 $ (941) over 150%
Corporate gross margin (263) % 100 %
All Other gross profit $ 255 $ 187 $ 68 36 %
All Other gross margin 100 % 32 %
Total gross profit $ 22,822 $ 18,409 $ 4,413 24 %
Total gross margin 73 % 65 %
Direct-to-Consumer
The slight decrease in direct-to-consumer cost of sales, compared to the prior year comparative period, was primarily due to a $0.8 million increase in Honey Birdette’s product, shipping and fulfillment costs driven by higher revenues, offset by tariff refunds. The improvement in gross margin reflects continued revenue growth, outpacing the increase in product, shipping and fulfillment costs, as well as improvement in quality of inventory and related reserves.
Licensing
The decrease in licensing cost of sales and the corresponding increase in gross margin, compared to the prior year comparative period, were primarily due to a $2.0 million reduction in licensing commissions expense. This reduction was driven by the prior year comparative period, which included a one-time $2.4 million settlement to pay current and future commissions to a licensing agent.
Corporate
The increase in corporate cost of sales and the corresponding decrease in gross margin, compared to the prior year comparative period, primarily related to the 2026 spring issue of the Playboy magazine and implementation of a revamped magazine subscription model in the second quarter of 2026. As the magazine is in an early relaunch phase, its production costs currently exceed its revenues, resulting in a negative gross margin. The increase was partially offset by $1.3 million of brand expense reimbursement applied against the cost of sales during the second quarter of 2026, representing a portion of the $4.0 million advance received from UTG under the BSSA. In the prior year comparative period, corporate revenues related primarily to payments from sales of access to our iPlayboy archives and carried a de minimis cost of sales.
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All Other
The decrease in all other cost of sales and related increase in gross margin, compared to the prior year comparative period, was primarily related to the licensing of our digital subscriptions and content operations to Byborg pursuant to the LMA, effective as of January 1, 2025, and the inclusion of transition expenses incurred pursuant to the TSA during the three months ended June 30, 2025, which did not recur in 2026.
Selling and Administrative Expenses
The decrease in selling and administrative expenses for the three months ended June 30, 2026, as compared to the prior year comparative period, was primarily due to lower payroll and payroll related expenses of $1.1 million, lower professional and other outside services costs of $0.3 million, a $0.9 million decrease in legal expenses, lower China operating costs of $0.4 million, and a number of offsetting changes in other accounts.
Impairments
The decrease in impairments for the three months ended June 30, 2026, as compared to the prior year comparative period, was due to impairment charges of $1.5 million related to our right-of-use assets for corporate leases that were recognized in the prior year comparative period and did not recur.
Other Operating Expense, Net
The decrease in other operating expense, net for the three months ended June 30, 2026, as compared to the prior year comparative period, was primarily due to lower losses on the disposal of store and other fixed assets.
Nonoperating (Expense) Income
Interest Expense, Net
The increase in interest expense, net for the three months ended June 30, 2026, as compared to the prior year comparative period, was primarily due to lower amortization of debt premium, net, partially offset by lower interest expense on our borrowings, reflecting senior secured debt repaid with proceeds from the New China JV transaction.
Other Income, Net
The decrease in other income, net for the three months ended June 30, 2026, as compared to the prior year comparative period, was primarily due to lower unrealized gains and losses related to foreign currency transactions.
Expense from Income Taxes
The increase in income taxes for the three months ended June 30, 2026, as compared to the prior year comparative period, was primarily driven by the change in valuation allowance due to the reduction in net indefinite-lived deferred tax liabilities in the three months ended June 30, 2026.
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Comparison of the Six Months Ended June 30, 2026 and 2025
The following table summarizes key components of our results of operations for the periods indicated (in thousands, except percentages):
Six Months Ended June 30,
2026 2025 $ Change % Change
Net revenues $ 61,454 $ 57,023 $ 4,431 8 %
Costs and expenses:
Cost of sales (17,940) (18,792) 852 (5) %
Selling and administrative expenses (42,990) (47,763) 4,773 (10) %
Impairments — (1,842) 1,842 (100) %
Other operating income (expense), net 810 (769) 1,579 over 150%
Total operating expense (60,120) (69,166) 9,046 (13) %
Operating income (loss) 1,334 (12,143) 13,477 111 %
Nonoperating (expense) income:
Interest expense, net (4,717) (3,795) (922) 24 %
Other income, net 1,527 1,202 325 27 %
Total nonoperating expense (3,190) (2,593) (597) 23 %
Loss before income taxes (1,856) (14,736) 12,880 (87) %
Expense from income taxes (1,909) (1,984) 75 (4) %
Net loss (3,765) (16,720) 12,955 77 %
The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated:
Six Months Ended June 30,
2026 2025
Net revenues 100 % 100 %
Costs and expenses:
Cost of sales (29) (33)
Selling and administrative expenses (70) (84)
Impairments — (3)
Other operating income (expense), net 1 (1)
Total operating expense (98) (121)
Operating income (loss) 2 (21)
Nonoperating (expense) income:
Interest expense, net (8) (7)
Other income, net 2 2
Total nonoperating expense (6) (5)
Loss before income taxes (4) (26)
Expense from income taxes (3) (3)
Net loss (7) (29)
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Net Revenues
The following table sets forth net revenues by reportable segment (in thousands):
Six Months Ended June 30,
2026 2025 $ Change % Change
Direct-to-consumer $ 38,334 $ 32,824 $ 5,510 17 %
Licensing 22,101 22,383 (282) (1) %
Corporate 445 382 63 16 %
All Other 574 1,434 (860) (60) %
Total $ 61,454 $ 57,023 $ 4,431 8 %
Direct-to-Consumer
The increase in direct-to-consumer net revenues, compared to the prior year comparative period, was primarily due to continued over-performance of full price Honey Birdette products.
Licensing
The decrease in licensing net revenues, compared to the prior year comparative period, was primarily due to the expiration of a small number of licensing agreements, some of which are expected to be replaced in subsequent quarters, partially offset by higher royalty overages revenue from existing licensees.
Corporate
Corporate revenues for the six months ended June 30, 2026 were substantially consistent with the prior year comparative period. The composition shifted toward magazine subscriptions, with the release of the spring 2026 issue of Playboy magazine in April 2026, and away from sponsorship events that occurred in the prior year comparative period, as a result of changes in brand strategy.
All Other
The decrease in all other revenue, compared to the prior year comparative period, was primarily due to lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
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Cost of Sales
The following table sets forth cost of sales and gross margin by reportable segment (in thousands):
Six Months Ended June 30,
2026 2025 $ Change % Change
Cost of sales:
Direct-to-consumer $ (14,861) $ (13,742) $ (1,119) 8 %
Licensing (1,966) (3,099) 1,133 (37) %
Corporate (1,113) — (1,113) 100 %
All Other — (1,951) 1,951 (100) %
Total $ (17,940) $ (18,792) $ 852 (5) %
Direct-to-consumer gross profit $ 23,473 $ 19,082 $ 4,391 23 %
Direct-to-consumer gross margin 61 % 58 %
Licensing gross profit $ 20,135 $ 19,284 $ 851 4 %
Licensing gross margin 91 % 86 %
Corporate gross profit $ (668) $ 382 $ (1,050) over 150%
Corporate gross margin (150) % 100 %
All Other gross profit $ 574 $ (517) $ 1,091 over 150%
All Other gross margin 100 % (36) %
Total gross profit $ 43,514 $ 38,231 $ 5,283 14 %
Total gross margin 71 % 67 %
Direct-to-Consumer
The increase in direct-to-consumer cost of sales, compared to the prior year comparative period, was primarily due to $1.0 million of higher Honey Birdette product, shipping and fulfillment costs associated with Honey Birdette’s revenue growth, partially offset by $1.1 million of tariff refunds, together with a $0.9 million increase in inventory reserves and related write-offs (of which approximately $0.7 million was recognized in the first quarter of 2026) as Honey Birdette increased its inventory balance in preparation for such growth. Gross margin improved to 61%, as higher full-price product sales outpaced the increase in inventory reserves.
Licensing
The decrease in licensing cost of sales and the corresponding increase in gross margin, compared to the prior year comparative period, was primarily due to $2.0 million of lower commissions in the second quarter of 2026, as a result of the prior year comparative period having included a one-time $2.4 million commission settlement, partially offset by a $0.9 million commission payment and a $0.3 million agency-termination payment to our former China licensing agent recognized in the first quarter of 2026.
Corporate
The increase in corporate cost of sales and the corresponding decrease in gross margin, compared to the prior year comparative period, primarily related to the 2026 spring issue of Playboy magazine and implementation of a revamped magazine subscription model in the second quarter of 2026. As the magazine is in an early relaunch phase, its production costs currently exceed its revenues, resulting in a negative gross margin. Corporate cost of sales for the six months ended June 30, 2026 was partially offset by $1.3 million of brand expense reimbursement applied against cost of sales during the second quarter of 2026, representing a portion of the $4.0 million advance received from UTG under the BSSA.
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All Other
The decrease in all other cost of sales and the corresponding increase in gross margin, compared to the prior year comparative period, was primarily related to the licensing of our digital subscriptions and content operations to Byborg pursuant to the LMA, effective as of January 1, 2025, and the inclusion of transition expenses incurred pursuant to the TSA during the six months ended June 30, 2025, which did not recur in 2026.
Selling and Administrative Expenses
The decrease in selling and administrative expenses for the six months ended June 30, 2026, compared to the prior year comparative period, was primarily due to lower payroll and payroll-related expenses, including severance cost of $5.7 million, mainly due to the transition of our digital operations into a licensing model during the prior year comparative period, lower professional and other outside services of $1.2 million, lower China operating costs of $0.7 million, lower legal expenses of $0.4 million, partially offset by $2.9 million of transaction expenses related to the formation of the New China JV and a $1.3 million increase in stock-based compensation expense due to new grant issuances in 2026.
Impairments
The decrease in impairments for the six months ended June 30, 2026, as compared to the prior year comparative period, was primarily due to the non-recurrence of prior-year impairment charges recognized on our artwork held for sale of $0.3 million and on right-of-use assets related to our corporate leases of $1.5 million.
Other Operating Income (Expense), Net
The change from other operating expense, net in prior year comparative period to other operating income, net was primarily due to a $0.9 million non-recurring release of an aged value-added tax (VAT) provision recognized in the first quarter of 2026 and $0.7 million lower net losses on the disposal and write-off of certain fixed assets.
Nonoperating (Expense) Income
Interest Expense, Net
The increase in interest expense, net for the six months ended June 30, 2026, as compared to the prior year comparative period, was primarily due to lower amortization of debt premium and discount, partially offset by lower interest expense on our borrowings, reflecting senior secured debt repaid with proceeds from the New China JV transaction.
Other Income, Net
The increase in other income, net for the six months ended June 30, 2026, as compared to the prior year comparative period, was primarily due to a $0.5 million fee to vacate a leased store space early in the first quarter of 2026, partially offset by lower net unrealized gains on foreign currency transactions.
Expense from Income Taxes
The decrease in expense from income taxes for the six months ended June 30, 2026, as compared to the prior year comparative period, was primarily driven by the change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities in the six months ended June 30, 2026.
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Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.
EBITDA and Adjusted EBITDA
“EBITDA” is defined as net income or loss before interest, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management. Adjusted EBITDA is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating EBITDA and Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate Adjusted EBITDA in the same fashion.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities, non-recurring non-cash impairments and asset write-downs, we typically adjust for non-operating expenses and income, such as nonrecurring special projects, including related consulting expenses, transition expenses, settlements, nonrecurring gain or loss on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. Investors should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Net income (loss) $ 198 $ (7,679) $ (3,765) $ (16,720)
Adjusted for:
Interest expense 2,218 1,907 4,717 3,795
Expense from income taxes 1,059 889 1,909 1,984
Depreciation and amortization 707 778 1,652 1,582
EBITDA 4,182 (4,105) 4,513 (9,359)
Adjusted for:
Stock-based compensation 2,499 1,666 3,668 2,353
Transaction expenses 155 — 3,364 —
Licensing commissions settlement — 2,400 — 2,400
Transition expenses — 1,170 — 5,000
Severance 4 322 71 2,593
Impairments — 1,541 — 1,842
Adjustments 127 477 367 1,019
Adjusted EBITDA $ 6,967 $ 3,471 $ 11,983 $ 5,848
•Transaction expenses for the three months ended June 30, 2026 primarily represent less than $0.1 million of expenses related to the seventh and eighth amendments of our senior secured credit agreement that were incurred in the second quarter of 2026 and less than $0.1 million of additional transaction expenses incurred in the second quarter of 2026 in relation to the formation of the New China JV.
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•Transaction expenses for the six months ended June 30, 2026 primarily represent $2.9 million related to the formation of the New China JV, termination expenses of $0.3 million related to our former China joint venture arrangements, and $0.4 million of expenses related to the seventh and eighth amendments of our senior secured credit agreement.
•Licensing commissions settlement for the three and six months ended June 30, 2025 represents a one-time settlement amount of $2.4 million to pay current and future commissions to a licensing agent, which were paid in the third quarter of 2025.
•Transition expenses for the three and six months ended June 30, 2025 represent costs associated with the digital operations licensed to Byborg pursuant to the TSA.
•Severance expenses for the three and six months ended June 30, 2025 were due to the reduction of headcount related to the transition of our digital subscriptions and content operations into a licensing model.
•Impairments for the three months ended June 30, 2025 related to impairment charges on our right-of-use assets related to our corporate leases and did not recur in the second quarter of 2026.
•Impairments for the six months ended June 30, 2025 related to impairment charges on our artwork held for sale and our right-of-use assets related to our corporate leases and did not recur in the first half of 2026.
•Adjustments for the three and six months ended June 30, 2026 are primarily related to losses on asset disposals and the non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for our 2021 acquisition of GlowUp Digital, Inc. that remained unsettled as of June 30, 2026, as well as other miscellaneous items.
•Adjustments for the three and six ended June 30, 2025 are primarily related to the non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable for our 2021 acquisition of GlowUp Digital, Inc. that remained unsettled as of June 30, 2025, loss on the sale of artwork, loss on disposal of assets, consulting, advisory and other costs relating to corporate transactions, as well as reorganization costs resulting from the elimination or rightsizing of specific business activities or operations.
Non-GAAP Segment Information
Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources. Total asset information is not included in the tables below as it is not provided to and reviewed by our CODM. The “All Other” columns relate to the previously identified operating and reportable segment, Digital Subscriptions and Content, which was eliminated upon its transition into a licensing model under the LMA. The “Corporate” column in the tables below includes certain operating revenues associated with Playboy magazine, events and sponsorships and expenses that are not allocated to the reportable segments presented to our CODM. Such expenses include legal, human resources, information technology and facilities, accounting/finance and brand marketing costs. Expenses associated with Playboy magazine, events and sponsorships are included in brand marketing costs. The accounting policies of the reportable segments are the same as those described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
“Adjusted Operating (Loss) Income” is defined as operating income or loss adjusted for stock-based compensation and other special items determined by management. Adjusted operating (loss) income is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of adjusted operating (loss) income provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating adjusted operating (loss) income, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Our computation of adjusted operating (loss) income may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate adjusted operating (loss) income in the same fashion.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities, nonrecurring non-cash impairments and asset write-downs, we typically adjust for nonrecurring special projects, including for related consultant expenses, nonrecurring gain on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.
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Because of the limitations described above, adjusted operating (loss) income should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using adjusted operating income (loss) on a supplemental basis. Investors should review the reconciliation of operating loss to adjusted operating (loss) income below and not rely on any single financial measure to evaluate our business.
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table reconciles Operating (Loss) Income to Adjusted Operating (Loss) Income by reportable segment (in thousands):
Three Months Ended June 30, 2026
Direct-to-Consumer Licensing Corporate All Other Total
Operating income (loss) $ 19 $ 9,555 $ (6,854) $ 255 $ 2,975
Adjusted for:
Depreciation and amortization 577 — 130 — 707
Transaction expenses — — 155 — 155
Severance 28 — (24) — 4
Stock-based compensation — — 2,499 — 2,499
Adjustments 101 51 (25) — 127
Adjusted operating income (loss) $ 725 $ 9,606 $ (4,119) $ 255 $ 6,467
Three Months Ended June 30, 2025
Direct-to-Consumer Licensing Corporate All Other Total
Operating (loss) income $ (750) $ 5,552 $ (9,925) $ (760) $ (5,883)
Adjusted for:
Depreciation and amortization 584 — 194 — 778
Licensing commissions settlement — 2,400 — — 2,400
Transition expenses — — — 1,170 1,170
Severance 25 — 117 180 322
Stock-based compensation — — 1,666 — 1,666
Impairments — — 1,541 — 1,541
Adjustments — — 477 — 477
Adjusted operating (loss) income $ (141) $ 7,952 $ (5,930) $ 590 $ 2,471
Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for descriptions of the adjustments to reconcile net loss to Adjusted EBITDA, certain of which adjustments are listed in the table above and the descriptions used for the reconciliation of net loss to Adjusted EBITDA are also applicable for the table above.
Direct-to-Consumer
Net Revenues and Gross Margin: Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of changes in net revenues and gross profit in our Direct-to-Consumer segment from 2025 to 2026.
Operating Income (Loss): The change from operating loss to operating income, compared to the prior year comparative period, was primarily due to a $3.0 million increase in gross profit related to significant sales growth and tariff refunds, partly offset by a one-time increase in transfer pricing costs.
Adjusted Operating Income (Loss): The change from adjusted operating loss to adjusted operating income, compared to the prior year comparative period, was primarily due to the change in operating income (loss) discussed above.
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Licensing
Net Revenues and Gross Margin: Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of changes in net revenues and gross profit in our Licensing segment from 2025 to 2026.
Operating Income: The increase in operating income, compared to the prior year comparative period, was primarily due to a $2.3 million increase in licensing gross profit, driven by lower China licensing agent commissions (the prior year comparative period included a one-time settlement amount of $2.4 million to pay current and future commissions to a licensing agent) and lower selling and administrative expenses of $1.7 million, primarily driven by $0.8 million of lower legal costs and $0.4 million of lower China licensing operating costs (staffing and general and administrative expenses).
Adjusted Operating Income: Adjustments to licensing operating income for the three months ended June 30, 2025 related to a one-time settlement amount of $2.4 million to pay current and future commissions to a licensing agent. There were no adjustments to licensing operating income for the three months ended June 30, 2026, and the change in adjusted operating income was the same as the change in operating income above.
Corporate
The decrease in corporate operating loss, compared to the prior year comparative period, was primarily due to the non-recurrence of $1.5 million of prior-year impairment charges and the non-recurrence of $0.4 million of prior-year asset-disposal losses, $1.5 million of higher transfer price cost allocations to other segments, which eliminate in consolidation, and lower selling and administrative expenses, including $0.3 million of lower professional and outside services and $0.3 million of lower severance. These improvements were partially offset by a $1.1 million increase in costs of sales, primarily related to the 2026 spring issue of Playboy magazine and implementation of a revamped magazine subscription model in the second quarter of 2026 (net of a $1.3 million UTG brand-expense reimbursement applied against cost of sales during the second quarter of 2026, representing a portion of the $4.0 million advance received from UTG under the BSSA) and a $0.9 million increase in stock-based compensation due to new grant issuances.
The decrease in adjusted corporate expenses, compared to the prior year comparative period, was primarily due to a $0.8 million favorable non-recurring release of a sales and use tax reserve, $1.5 million of higher intercompany cost allocations to other segments, which eliminate in consolidation, partially offset by a $1.3 million UTG brand-expense reimbursement applied against cost of sales under the BSSA .
All Other
Net Revenues and Gross Margin: Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of changes from 2025 to 2026 in net revenues and gross profit classified as All Other.
Operating Income (loss): The change from operating loss in the prior year comparative period to operating income, was due to the transition of our digital operations into a licensing model pursuant to the LMA and inclusion of $1.2 million of transition expenses pursuant to the TSA in the prior year comparative period, partly offset by lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
Adjusted Operating Income: The decrease in adjusted operating income, compared to the prior year comparative period, was primarily due to lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
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Comparison of the Six Months Ended June 30, 2026 and 2025
The following table reconciles Operating (Loss) Income to Adjusted Operating (Loss) Income by reportable segment (in thousands):
Six Months Ended June 30, 2026
Direct-to-Consumer Licensing Corporate All Other Total
Operating income (loss) $ 1,582 $ 17,474 $ (18,296) $ 574 $ 1,334
Adjusted for:
Depreciation and amortization 1,381 — 271 — 1,652
Transaction expenses — — 3,364 — 3,364
Severance 53 — 18 — 71
Stock-based compensation — — 3,668 — 3,668
Adjustments 101 380 (114) — 367
Adjusted operating income (loss) $ 3,117 $ 17,854 $ (11,089) $ 574 $ 10,456
Six Months Ended June 30, 2025
Direct-to-Consumer Licensing Corporate All Other Total
Operating (loss) income $ (1,280) $ 14,509 $ (20,286) $ (5,086) $ (12,143)
Adjusted for:
Depreciation and amortization 1,165 — 417 — 1,582
Licensing commissions settlement — 2,400 — — 2,400
Transition expenses — — — 5,000 5,000
Severance 52 — 1,353 1,188 2,593
Stock-based compensation — — 2,353 — 2,353
Impairments — — 1,842 — 1,842
Adjustments — — 1,019 — 1,019
Adjusted operating (loss) income $ (63) $ 16,909 $ (13,302) $ 1,102 $ 4,646
Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for descriptions of the adjustments to reconcile net loss to Adjusted EBITDA, certain of which adjustments are listed in the table above and the descriptions used for the reconciliation of net loss to Adjusted EBITDA are also applicable for the table above.
Direct-to-Consumer
Net Revenues and Gross Margin: Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of changes in net revenues and gross profit in our Direct-to-Consumer segment from 2025 to 2026.
Operating Income (loss): Direct-to-Consumer operating income improved by $2.9 million, from an operating loss of $1.3 million in the prior year comparative period, to operating income of $1.6 million for the six months ended June 30, 2026, primarily due to a $5.5 million increase in net revenues and a $4.4 million increase in gross profit, reflecting strong sales of full-price Honey Birdette products and improved gross margin, partially offset by an approximately $1.5 million increase in selling and administrative expenses related to the segment, primarily sales and marketing and store operating costs.
Adjusted Operating Income (loss): The change in adjusted operating income (loss), compared to the prior year comparative period, was primarily due to the change in operating income (loss) discussed above.
Licensing
Net Revenues and Gross Margin: Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of changes in net revenues and gross profit in our Licensing segment from 2025 to 2026.
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Operating Income: The increase in operating income, compared to the prior year comparative period, was primarily due to a $0.9 million increase in licensing gross profit, reflecting lower licensing commissions expense in cost of sales following the formation of the UTG China joint venture (the prior year comparative period included a one-time $2.4 million commission settlement) and a $2.1 million decrease in selling and administrative expenses allocated to the segment. The lower selling and administrative expenses were primarily attributable to $0.7 million of lower legal costs and $0.7 million of lower China licensing operating costs (staffing and general and administrative expenses) following the formation of the UTG China joint venture.
Adjusted Operating Income: Adjustments to licensing operating income for the six months ended June 30, 2026, related to termination expenses of $0.3 million attributable to our former China joint venture arrangements prior to the formation of the New China JV in the first quarter of 2026. Adjustments to licensing operating income for the six months ended June 30, 2025 related to a one-time settlement amount of $2.4 million to pay current and future commissions to a licensing agent in the second quarter of 2025, which was paid in the third quarter of 2025.
Corporate
The decrease in corporate expenses, compared to the prior year comparative period, was primarily due to the non-recurrence of $1.8 million of prior-year impairment charges and $0.8 million of prior-year asset-disposal losses, and lower selling and administrative expenses, including $2.9 million of lower severance, $1.6 million of lower payroll, $0.6 million of lower professional and outside services, and $0.6 million of lower rent, together with a $0.8 million non-recurring release of a sales and use tax reserve. These improvements were partially offset by $2.9 million of transaction expenses recognized in the six months ended June 30, 2026 related to the formation of the China joint venture with UTG, a $1.3 million increase in stock-based compensation from new grants, $0.5 million of higher legal costs, and a $1.1 million increase in cost of sales related to the Spring 2026 issue of Playboy magazine and a revamped magazine subscription model launched in the second quarter of 2026 (net of a $1.3 million brand-expense reimbursement from UTG applied against cost of sales under the BSSA).
The decrease in adjusted corporate expenses, compared to the prior year comparative period, was primarily due to $0.8 million favorable non-recurring release of a sales and use tax reserve, lower selling and administrative expenses, including $1.6 million of lower payroll and $0.6 million of lower rent, partly offset by a $1.1 million increase in cost of sales related to the Spring 2026 issue of Playboy magazine and a revamped magazine subscription model launched in the second quarter of 2026 (net of a $1.3 million brand-expense reimbursement from UTG applied against cost of sales under the BSSA).
All Other
Net Revenues and Gross Margin: Refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of changes from 2025 to 2026 in net revenues and gross profit classified as All Other.
Operating Income (Loss): The change from operating loss in the prior year comparative period to operating income, was due to the transition of our digital operations into a licensing model pursuant to the LMA and inclusion of $5 million of transition expenses pursuant to the TSA in the prior year comparative period, partly offset by lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
Adjusted Operating Income: The decrease in adjusted operating income, compared to the prior year comparative period, was primarily due to lower amortization of deferred revenue balances that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025) that pertain to our previously reported digital subscriptions and content operations.
Liquidity and Capital Resources
Sources of Liquidity
Our sources of liquidity are cash generated from operating activities, which primarily includes cash derived from revenue generating activities, from financing activities, including proceeds from our issuance of debt, and proceeds from stock offerings (as described further below), and from investing activities, which includes the sale of assets (as described further below). As of June 30, 2026, our principal source of liquidity was cash in the amount of $31.9 million, which is primarily held in operating and deposit accounts.
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During the three months ended June 30, 2026, we sold shares of our common stock pursuant to our previously registered and announced at-the-market offering (the “ATM”), selling a total of 2,051,498 shares for net proceeds of $2.8 million, out of which 56,255 shares were issued in July 2026. During the six months ended June 30, 2026, we sold 3,441,249 shares of our common stock under the ATM for net proceeds of $5.2 million. As of June 30, 2026, we had $194.4 million of remaining capacity under the ATM.
Pursuant to the LMA entered into in December 2024, Byborg agreed to operate our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses and to license the right to use certain Playboy trademarks and other intellectual property for related businesses and certain other categories. Pursuant to the LMA, Byborg was also granted exclusive rights to use Playboy trademarks for certain new adult content services and digital products to be developed. The LMA has an initial term of 15 years, with the operations and license rights pursuant to the LMA commencing as of January 1, 2025, and the possibility for up to nine renewal terms of 10 years each, subject to the terms and conditions set forth in the LMA. Pursuant to the LMA, starting in 2025, Playboy began receiving minimum guaranteed royalties of $20.0 million per year of the term, which royalties are paid in installments during each year of the LMA’s term. In addition, Byborg prepaid the minimum guaranteed amount for the second half of year 15 of the initial term of the LMA. Playboy is also entitled to receive Excess Royalties from the businesses licensed and operated by Byborg, on the terms and conditions set forth in the LMA.
In the fourth quarter of 2023, we began the sale of our art assets, and we continued the sale of our art assets in 2025. However, in the second quarter of 2026 we made a decision to cease sales of our artwork.
Since going public in 2021, we have incurred significant operating and net losses. However, during the three and six months ended June 30, 2026, our business performance continued to improve and we generated operating income of $3.0 million and $1.3 million, respectively. We continue to expect our capital expenditures and working capital requirements in 2026 to be largely consistent with 2025.
Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Quarterly Report on Form 10-Q. We may seek additional equity or debt financing in the future to satisfy capital requirements, respond to adverse changes in our circumstances or unforeseen events, or fund growth opportunities. However, in the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.
Debt
On August 11, 2025, we entered into Amendment No. 5 (the “A&R Fifth Amendment”) to our amended and restated senior secured credit agreement (the “A&R Credit Agreement”). The A&R Fifth Amendment revised the definition of Consolidated EBITDA in the A&R Credit Agreement to allow for $2.4 million of non-cash rent expense related to our Miami Beach office lease to be added back when calculating such Consolidated EBITDA for applicable periods.
On November 10, 2025, we entered into Amendment No. 6 to the A&R Credit Agreement (the “A&R Sixth Amendment”). The A&R Sixth Amendment, among other things, (i) extended the maturity of the A&R Credit Agreement to May 25, 2028, (ii) provided that the cash interest rate would be reduced by 0.15% or 0.50% in the event of certain prepayments of $25 million and $50 million, respectively (both of which did not occur), and (iii) provided that upon the first such prepayment made on the terms and conditions set forth in the A&R Sixth Amendment, the total net leverage ratio would be set at 9.00:1.00 for the quarter ending June 30, 2026, and step down over time until the ratio reached 7.25:1.00 for the quarter ending December 31, 2027 and any subsequent quarter. The other terms of the A&R Credit Agreement prior to the A&R Sixth Amendment remain substantively unchanged.
On February 9, 2026, we entered into Amendment No. 7 to the A&R Credit Agreement (“A&R Seventh Amendment”) to, substantially concurrently with the New China JV Initial Closing, amend the terms of the A&R Credit Agreement, to, among other things: (i) permit the New China JV transactions, (ii) permit the contribution of certain intellectual property from us to the New China JV at the second closing pursuant to the Purchase Agreement, and (iii) provide for additional representations, covenants, and mandatory prepayments related to the New China JV transaction (including the entire $45,000,000 Purchase Price and an additional $6.666 million directly from us).
We performed an assessment of the A&R Seventh Amendment, on a lender-by-lender basis, and accounted for the transaction as a debt modification. As a result of the A&R Seventh Amendment, fees of $0.3 million were expensed as incurred and recorded in Other income for the six months ended June 30, 2026, net and $0.2 million were capitalized in the first quarter of 2026 as a result of the A&R Seventh Amendment.
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Concurrently with the Repurchase Agreement, defined and described in Note 10, Stockholders’ Equity, we entered into Amendment No. 8 to the A&R Credit Agreement (the “A&R Eighth Amendment”) to obtain lender consent for the Repurchase Agreement and related backstop transactions. Refer to Note 17, Related Party Transactions, for additional details. The A&R Eighth Amendment did not modify the pricing, maturity, or financial covenants of the A&R Credit Agreement. Costs incurred in connection with the A&R Eighth Amendment of approximately $0.1 million were recognized as other expense in our condensed consolidated statements of operations for the three months ended June 30, 2026.
The stated interest rate of each of Tranche A and Tranche B of the term loans under the A&R Credit Agreement (the “A&R Term Loans”) as of June 30, 2026 was 10.09%. The stated interest rate of each of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2025 was 10.08%. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of June 30, 2026 was 2.93% and 5.74%, respectively. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2025 was 3.88% and 6.34%, respectively.
We were in compliance with applicable financial covenants under the terms of the A&R Credit Agreement and its amendments as of June 30, 2026 and December 31, 2025.
Leases
Our principal lease commitments are for office space and operations under several noncancelable operating leases with contractual terms expiring through 2033. Some of these leases contain renewal options and rent escalations. As of June 30, 2026 and December 31, 2025, our fixed leases were $21.4 million and $22.2 million, respectively, with $6.9 million and $7.4 million due in the next 12 months, respectively. We also have certain finance lease obligations; however, those are not material to our liquidity or capital resources.
On August 11, 2025, through our wholly owned subsidiary, Playboy Enterprises, Inc., we entered into an operating lease (the “Lease”) with RK Rivani LLC (the “Landlord”) for approximately 20,169 square feet of office space in Miami Beach, Florida.
In the second quarter of 2026, we amended the Lease to change the lease commencement date to January 1, 2027 and the expiration date to November 30, 2037. As we did not take possession of the office space as of June 30, 2026, it is not reflected in our condensed consolidated financial statements or in the tables below. The future undiscounted fixed non-cancelable payment obligation pertaining to the Lease is approximately $25.0 million.
On May 14, 2026, we entered into a new operating lease (the “Additional Lease”) with the Landlord for the remainder of the same floor as the Lease, comprising an additional approximately 5,696 square feet, which commenced on May 1, 2026 and expires on November 30, 2037, subject to two five-year renewal options. In addition to base rent under the Additional Lease, we are responsible for operating expenses and property taxes. During the six months ended June 30, 2026, we recognized right-of-use assets of approximately $1.6 million in exchange for the related operating lease liability. The future undiscounted lease payments under the Additional Lease are approximately $6.9 million.
During the second quarter of 2026, we terminated certain operating leases for Honey Birdette retail stores prior to their contractual expiration dates. Upon termination of such leases, we derecognized the related right-of-use assets and operating lease liabilities of $0.6 million in our condensed consolidated balance sheet as of June 30, 2026, and we recognized a net loss of $0.1 million in Other income, net in our condensed consolidated statements of operations for the three and six months ended June 30, 2026.
For further information on our lease obligations, refer to Note 13, Commitments and Contingencies, of the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Six Months Ended June 30,
2026 2025 $ Change % Change
Net cash (used in) provided by:
Operating activities $ (8,471) $ (11,507) $ 3,036 (26) %
Investing activities 14,214 (177) 14,391 over 150%
Financing activities (11,438) (114) (11,324) over 150%
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Cash Flows from Operating Activities
The decrease in net cash used in operating activities for the six months ended June 30, 2026, compared to the prior year comparative period, was primarily due to a $13.0 million improvement in net loss, partially offset by a $7.5 million net decrease in non-cash reconciling items and a $2.4 million unfavorable change in operating assets and liabilities. The unfavorable change in working capital was primarily driven by a $6.9 million increase in accounts receivable, mainly reflecting the timing of royalty collections from licensees, and a $2.5 million unfavorable change in accrued agency fees and commissions following the settlement of licensing commissions in the prior year comparative period. Inventory provided $1.5 million of cash in the six months ended June 30, 2026, compared with $2.6 million in the prior year comparative period, a $1.1 million unfavorable change. Honey Birdette drew down its inventory balance less in the six months ended June 30, 2026 as it built stock in preparation for revenue growth, and reserves for slow-moving and obsolete inventory increased to $3.6 million as of June 30, 2026 from $3.3 million as of December 31, 2025. These changes were partially offset by a $3.8 million favorable change in accounts payable, reflecting the timing of vendor payments, and a $3.6 million favorable change in deferred revenues. Deferred revenues used $3.8 million of cash in the six months ended June 30, 2026, compared with $7.4 million in the prior year comparative period, as the prior year comparative period included a larger drawdown of deferred revenue balances that existed as of December 31, 2024 relating to our previously reported digital subscriptions and content operations, which were licensed to Byborg pursuant to the LMA, effective as of January 1, 2025.
The net decrease in non-cash charges was primarily driven by the elimination of $5.5 million in capitalized paid-in-kind interest that was present in the prior year comparative period and did not recur in the six months ended June 30, 2026. The decrease of $2.8 million in deferred income taxes was primarily due to the release of a valuation allowance against indefinite-lived deferred tax liabilities recognized in the prior year comparative period, partly offset by an increase in stock-based compensation expense of $1.3 million and a $1.6 million reduction in the amortization of debt premium, net and issuance costs due to the A&R Seventh Amendment.
Cash Flows from Investing Activities
The increase in net cash provided by investing activities for the six months ended June 30, 2026, compared to the prior year comparative period, was primarily due to proceeds of $15.0 million received in connection with the initial closing of the New China JV transaction in the first quarter of 2026, partly offset by a $0.4 million increase in purchases of property and equipment, and $0.3 million in proceeds from the sale of our artwork in the prior year comparative period that did not recur in 2026.
Cash Flows from Financing Activities
The increase in net cash used in financing activities for the six months ended June 30, 2026, compared to the prior year comparative period, was primarily due to a $15.0 million repayment of long-term debt in connection with the initial closing of the New China JV transaction and payment of tax withholding in connection with vested restricted stock units of $1.8 million in the first quarter of 2026. The increase was further due to the $2.0 million repurchase of 1,904,762 shares of the Company’s common stock during the three months ended June 30, 2026, partially offset by $5.2 million of net proceeds from the issuance of shares of our common stock under the ATM and a noncontrolling interest capital contribution of $2.4 million received from UTG in April 2026.
Contractual Obligations
Other than the remaining $15.4 million contractual obligation under the Repurchase Agreement entered into on June 18, 2026 (see Note 10, Stockholders’ Equity, and Note 17, Related Party Transactions), there were no material changes to our contractual obligations for the six months ended June 30, 2026 from December 31, 2025, as disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K filed on March 16, 2026.
Critical Accounting Estimates
Our interim condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Estimates and judgments used in the preparation of our interim condensed consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, such as demand for our products, inflation, foreign currency exchange rates, economic conditions and other current and future events, such as the impact of public health crises and epidemics and global hostilities. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
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During the six months ended June 30, 2026, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March 16, 2026.
Recent Accounting Pronouncements
Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and results of operations.