Pattern Group Inc. - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Pattern Group Inc. operates as a global ecommerce accelerator, leveraging technology and data science to help brands grow sales on marketplaces. The company purchases inventory from brand partners to manage merchandising, pricing, and logistics. As of May 4, 2026, the company had 155,163,575 shares of Series A common stock and 21,702,510 shares of Series B common stock outstanding.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenues | $773.7 million | $540.4 million |
| Net Income | $29.2 million | $22.8 million |
| Operating Income | $39.6 million | $29.4 million |
| Operating Margin | 5.1% | 5.4% |
| Net Cash from Operating Activities | $72.6 million | $48.4 million |
| Cash and Cash Equivalents (End of Period) | $344.2 million | $218.8 million |
| Debt (Revolving Credit Facility) | $0 outstanding | N/A |
| Adjusted EBITDA | $53.7 million | $33.9 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 43.2% year-over-year, driven by a 127% Net Revenue Retention Rate (NRR). Amazon marketplace revenue grew 38%, while non-Amazon revenue surged 119%.
- Expense Increases: Cost of goods sold rose 42.3%, slightly outpacing revenue growth percentage-wise but improving gross margin slightly (COGS as % of revenue dropped from 56.4% to 56.0%). Operating expenses increased due to higher fulfillment costs ($35.6M increase) and stock-based compensation ($7.9M recognized in Q1 2026 vs. none in Q1 2025).
- Acquisitions: The company completed acquisitions of ROI Hunter and iDesign in late 2025, which contributed to expanded product offerings in advertising intelligence and digital media.
- Share Repurchases: The company initiated a $100 million share repurchase program in March 2026, repurchasing 311,731 shares for $3.6 million during the quarter.
Guidance, Outlook, and Risks
- Outlook: Management expects to continue investing in technology, warehouse automation, and global expansion. The company utilizes AI and machine learning to optimize the "ecommerce equation" for brand partners.
- Liquidity: The company holds $344.2 million in cash and has a $150 million revolving credit facility with no outstanding borrowings. Management believes this is sufficient for the next 12 months.
- Risks: Key risks include reliance on senior management, competition in the ecommerce space, macroeconomic factors (inflation, interest rates), and the potential impact of foreign currency fluctuations on international revenue. The filing notes that the share repurchase program does not guarantee enhanced long-term stockholder value and could increase stock volatility.
- Unusual Items: The effective tax rate increased to 29.7% in Q1 2026 (from 25.9% in Q1 2025), primarily due to limitations on stock-based compensation deductibility and valuation allowances on loss entities.
Investor Verification Checklist
- Verify the sustainability of the 127% Net Revenue Retention Rate and its impact on future growth projections.
- Monitor the execution of the $100 million share repurchase program and its effect on liquidity.
- Assess the integration progress and financial contribution of the ROI Hunter and iDesign acquisitions.
- Review the impact of rising stock-based compensation expenses on future operating margins.
- Confirm compliance with the financial covenants of the $150 million credit facility (fixed charge coverage and net leverage ratios).