Shares plunged 23.1% following a cautious outlook and signs of decelerating hardware revenue amid inventory challenges and a strategic exit from brick-and-mortar retail. Despite solid subscription and advertising growth, the market focused on margin pressures and the uncertain near-term trajectory for the hardware segment.
- Total revenue rose 38% year-over-year to $159 million, with subscription revenue growing 31% to $115.6 million.
- Paying Circles increased 27%, and average revenue per paying circle (ARPPC) was up 5%, driving strong core subscription growth.
- Advertising revenue contributed $22 million, reflecting progress in managed service offerings and programmatic advertising.
- Hardware revenue fell 20% to $9.8 million due to the strategic exit from brick-and-mortar retail for Tile and production line move constraints for Pet GPS.
- Gross margin was 80%, improving slightly, but investors appeared concerned about margin sustainability amid new revenue and cost dynamics linked to the AI transition and hardware challenges.
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