Pattern Group (NASDAQ:PTRN) reported record second-quarter results, with revenue rising 47% year over year to $877 million and adjusted EBITDA increasing 54% to $54 million. Chief Executive Officer Dave Wright said the company’s adjusted EBITDA growth exceeded revenue growth for the fourth consecutive quarter.
The company also reported net revenue retention of 129%, up from 127% in the first quarter and 118% a year earlier. Pattern uses the metric to measure expansion among existing brand partners. Wright said the result exceeded the company’s long-term target of 115% and reflected brand partners expanding across marketplaces, geographies and product lines.
International and non-Amazon growth accelerate
Chief Financial Officer Jason Beesley said Pattern operates in 20 marketplaces across China, Hong Kong, Korea, Malaysia, Japan and Singapore. He noted that Pattern was the only non-China-based company named a Gold Star service provider for the health category by Tmall.
SaaS, logistics and other monetization revenue grew 123% to $17 million. Wright said the category remains a small portion of total revenue but provides additional ways to deepen relationships with brands and offers business optionality.
During the question-and-answer session, Beesley said non-Amazon revenue represented 9% of total business, up from 7% a year earlier. While the company did not provide a forecast for that mix, he said diversification should continue as Pattern follows consumers across global marketplaces.
Wright highlighted Walmart’s progress, saying Pattern’s business on the marketplace was 3.4 times its level of two years ago. He also said the company expects its channel mix to evolve as commerce expands to new marketplace and agentic-shopping surfaces.
Technology investments and brand tools
Wright said Pattern’s technology platform is built around an e-commerce ontology with a data layer, semantic layer and execution layer. The company said it has accumulated 91 trillion data points over 13 years and has 44 patents issued or pending across those layers.
Pattern launched its Pattern Intelligence, or Pi, platform in May. According to Wright, Pi uses a sensor-and-actor framework to take governed actions across marketplaces on behalf of brand partners, while allowing partners to review, approve and modify inputs.
The company also said it received a U.S. patent during the quarter for its True ROAS methodology, which seeks to measure advertising-generated sales after accounting for organic conditions, competition and long-term incrementality. The technology works alongside Destiny, Pattern’s advertising technology platform.
Pattern said it was named TikTok Shop’s Strategic Partner of the Year in April and now has more than 100 brand partners selling through TikTok Shop. Wright said social commerce has become a meaningful source of new brand acquisition, particularly in beauty and fashion. Through ROI Hunter, which Pattern acquired in December, brand partners can now advertise through ChatGPT in addition to Meta, Google, Snap and TikTok.
Management also discussed investments related to large language models and agentic commerce. Wright said Pattern is developing commerce infrastructure services involving real-time inventory, fulfillment, returns and customer interactions, while also building capabilities to help brands optimize their presence for LLM-driven shopping experiences.
Profitability, cash flow and outlook
Pattern generated $136 million in operating cash flow during the trailing 12 months ended June 30, up 76% year over year, and $106 million in free cash flow, up 92%. The company ended the quarter with $346 million in cash and cash equivalents, no outstanding debt and $150 million of borrowing capacity.
Beesley said adjusted EBITDA growth came despite expenses associated with Pattern’s annual Accelerate e-commerce summit, startup costs for an East Coast fulfillment facility and higher research and development spending. The East Coast facility is now operational, with early throughput in line with company targets.
R&D expense, excluding stock-based compensation and related taxes, rose 89% to $12 million. Pattern said it is investing ahead of revenue in data infrastructure, the expansion of Pi and AI capabilities, while seeking leverage in other operating areas.
Based on second-quarter results and momentum entering the second half, Pattern raised its full-year outlook. The company now expects:
- Revenue of $3.4 billion to $3.5 billion, representing approximately 37% to 38% year-over-year growth.
- Adjusted EBITDA of approximately $211 million to $213 million, representing approximately 38% to 40% growth.
- Ending net revenue retention for the year of approximately 123% to 124%.
For the third quarter, Pattern forecast revenue of $840 million to $860 million, or 31% to 34% growth, and adjusted EBITDA of $51 million to $53 million, or growth of 25% to 29%.
Beesley said third-quarter comparisons will be affected by the timing of promotional events. Amazon Prime Day, Walmart Deals and Target Circle events moved into the second quarter this year, creating an estimated four percentage-point growth shift from the third quarter to the second quarter and affecting both revenue and adjusted EBITDA.
Brand retention and acquisition questions
Asked about Procter & Gamble’s announced acquisition of Thorne, Beesley said Pattern learned of the transaction at the same time as the market and would not comment on transaction specifics. He said Pattern already works with other brands in P&G’s portfolio and that its agreement with Thorne does not contain a change-of-control provision.
Beesley said Pattern and Thorne management had discussed the transaction and reiterated the importance of their partnership, describing the current relationship as “business as usual.” Wright added that Pattern has worked with brands that were later acquired by larger consumer packaged goods companies, including some of its longest-running partnerships.
Management said it has not seen direct-to-consumer investment by brands materially cannibalize marketplace revenue. Wright said success in a brand’s direct channel can increase marketplace awareness, and Pattern’s focus remains on supporting brand outcomes across channels.
About Pattern Group (NASDAQ:PTRN)
At Pattern, we are on a mission to help brands accelerate profitable growth on global ecommerce marketplaces. Today, our proprietary technology and on-demand experts operate across more than 60 marketplaces to increase product sales to consumers in more than 100 countries. Utilizing more than 46 trillion data points and sophisticated machine learning and artificial intelligence (“AI”) models, we strive to optimize and automate key levers of ecommerce growth, including advertising, content creation and management, pricing, forecasting and customer service.
