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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Annual Report on Form 10-K. This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in Item 1A. Risk Factors.

Unless otherwise indicated or the context otherwise requires, references to the “Company”, “PLBY”, “we”, “us”, “our” and other similar terms refer to PLBY Group, Inc. and its consolidated subsidiaries.

Business Overview

We are a global consumer lifestyle company marketing our brands through a wide range of direct-to-consumer products, licensing initiatives, digital subscriptions and content, and online and location-based entertainment businesses. We have three reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content. The Direct-to-Consumer segment derives revenue from sales of consumer products sold directly to consumers by Honey Birdette online or at its brick-and-mortar stores, with 54 stores in three countries as of December 31, 2024, and in the prior year comparative period included the playboy.com e-commerce business, which in the third quarter of 2023 fully transitioned from an owned-and-operated model to a licensing model. The Licensing segment derives revenue from trademark licenses for third-party consumer products, primarily for various apparel and accessories categories, hospitality, digital gaming and location-based entertainment businesses. The Digital Subscriptions and Content segment derives revenue from the subscription of Playboy programming that is distributed through various channels, including Playboy websites and domestic and international television, and sales of creator content offerings and memberships to consumers through the Playboy Club on playboy.com.

Disposition of Businesses

Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding our business dispositions.

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 in the section of this Annual Report on Form 10-K titled “Risk Factors.”

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. In the fourth quarter of 2024, we entered into a licensing agreement 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 as of January 1, 2025. We are focused on strategically expanding our 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. We will also continue to use our licensing business as a marketing tool and brand builder, including through high profile collaborations and our large-scale strategic partnerships. 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 that tend to spend more and are less price sensitive.

China Licensing Revenues

Our revenues from China (including Hong Kong) as a percentage of our total revenues from continuing operations were 10% and 20% for the years ended December 31, 2024 and 2023, respectively. At the end of the first quarter of 2023, we entered into the China JV with CT Licensing Limited, a brand management unit of Fung Group. The China JV owns and operates the Playboy consumer products business in mainland China, Hong Kong and Macau. In 2023, due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly, and we had to renegotiate terms of, or terminate, certain licenses, resulting in $152.2 million of unrecognized Licensing revenue under our long-term contracts as of the applicable termination dates. Revenue recognized in connection with such terminated contracts was $27.1 million during the year ended December 31, 2023, out of which $5.1 million was attributable to prepaid royalty guarantees recorded as revenue in the fourth quarter of 2023. Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets. Nonetheless, in 2024, our China JV stabilized our business in China, and we expect our licensing activity in China to increase slightly in 2025 and continue to represent a modest but meaningful part of our overall business in future periods.

Impairments

Our indefinite-lived intangible assets, including trademarks and goodwill, that are not amortized, and the carrying amounts of our long-lived assets, including property and equipment, stores, acquired intangible assets and right-of-use operating lease assets, may continue to be subject to impairment testing and impairments which reduce their value on our balance sheet. We periodically review for impairments whenever events or changes in our circumstances indicate that such assessment would be appropriate. We experienced further declines in revenue and profitability during the year ended December 31, 2024, which caused us to test the recoverability of our indefinite-lived and long-lived assets and resulted in the impairments set forth in our consolidated financial statements for the year ended December 31, 2024. However, if we continue to experience declines in revenue or profitability, which could occur upon further declines in consumer demand or additional discontinued operations, we may record further non-cash asset impairment charges as of the applicable impairment testing date.

Seasonality of Revenues

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 EBITDA and Adjusted EBITDA as non-GAAP financial measures. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure revenue and cost performance as a supplement to the GAAP consolidated financial statements. Refer to the “EBITDA andAdjusted EBITDA” section below for reconciliations of EBITDA and Adjusted EBITDA to net loss, the closestGAAP 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 sales of creator content offerings and memberships to consumers on our content creator platform on playboy.com, in addition to subscriptions to our programming, which is distributed through various channels, including websites and domestic and international television.

Consumer Products

Revenue from sales of online apparel and accessories, including sales through third-party sellers, 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.

Trademark Licensing

We license trademarks under multi-year arrangements to third-party consumer products and online and location-based entertainment businesses. Typically, the initial contract term ranges between one to ten 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.

Digital Subscriptions

Digital subscription revenue is derived from subscription sales of playboyplus.com and playboy.tv, which are online content platforms. We receive fixed consideration shortly before the start of the subscription periods from these contracts, which are primarily sold in monthly, annual, or lifetime subscriptions. Revenues from lifetime subscriptions are recognized ratably over a five-year period, representing the estimated period during which the customer accesses the platforms. Revenues from digital subscriptions are recognized ratably over the subscription period.

TV and Cable Programming

We license programming content to certain cable television operators and direct-to-home satellite television operators who pay royalties based on monthly subscriber counts and pay-per-view and video-on-demand buys for the right to distribute our programming under the terms of affiliation agreements. Royalties are generally collected monthly and recognized as revenue as earned.

Cost of Sales

Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency fees, website expenses, digital platform expenses, marketplace traffic acquisition costs, credit card processing fees, personnel and affiliate costs, including stock-based compensation and costs associated with branding events, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.

Selling and Administrative Expenses

Selling and administrative expenses primarily consist of corporate and retail store occupancy costs, personnel costs, including stock-based compensation and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities, and insurance, offset by a reversal of related selling and administrative expenses due to settlement at a discount of certain account payable balances in 2024.

Impairments

Impairments consist of the impairments of our artwork held for sale, internally developed software, certain licensing contracts, right-of-use assets, Playboy-branded trademarks, Honey Birdette’s trade names and goodwill.

Other Operating Expense, Net

Other operating expense, net consists primarily of losses on disposal of assets and other miscellaneous items, offset by gains recognized from the sale of crypto assets (2023 only).

Nonoperating (Expense) Income

Interest expense

Interest expense consists of interest on our long-term debt and the amortization of deferred financing costs and debt premium/discount.

Gain on Extinguishment of Debt, Net

In the first quarter of 2023, we recorded a loss on partial extinguishment of debt in the amount of $1.8 million related to the write-off of unamortized debt discount and deferred financing costs as a result of $45 million in prepayments of our debt pursuant to amendments of our senior secured credit agreement in December 2022 and February 2023.

In the second quarter of 2023, we recorded a gain on partial extinguishment of debt in the amount of $8.0 million upon the amendment and restatement of the Credit Agreement (as such term is defined in Note 10, Debt, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, refer to such Note 10, Debt and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for additional details).

Fair Value Remeasurement Gain

Fair value remeasurement gain consists of changes to the fair value of mandatorily redeemable preferred stock liability related to its remeasurement.

Other (Expense) Income, Net

Other (expense) income, net consists primarily of other miscellaneous nonoperating items, such as foreign exchange realized and unrealized transaction gains or losses, bank charges as well as nonrecurring transaction fees.

(Expense) Benefit from Income Taxes

(Expense) benefit 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 U.S. federal and state deferred tax assets, as well as Australia, U.K. and China deferred tax assets.

Results of Operations

Comparison of Fiscal Years Ended December 31, 2024 and 2023

The following table summarizes key components of our results of operations for the periods indicated (in thousands):

Year Ended December 31,

Costs and expenses:

Nonoperating (expense) income:

Gain on extinguishment of debt, net — 6,133 (6,133) (100)

Income from discontinued operations, net of tax — 6,030 (6,030) (100)

The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated:

Year Ended December 31,

Costs and expenses:

Selling and administrative expenses (85.0) (86.1)

Other operating expense, net (0.3) (0.4)

Nonoperating (expense) income:

Gain on extinguishment of debt, net — 4.3

Fair value remeasurement gain — 4.6

Other (expense) income, net (1.5) 0.6

Total nonoperating expense (21.9) (6.8)

Loss from continuing operations before income taxes (65.7) (139.9)

(Expense) benefit from income taxes (2.7) 9.6

Net loss from continuing operations (68.4) (130.3)

Income from discontinued operations, net of tax — 4.2

Net loss attributable to PLBY Group, Inc. (68.4) % (126.1) %

Net Revenues

The following table sets forth net revenues by reportable segment (in thousands):

Year Ended December 31,

Direct-to-Consumer

The decrease in direct-to-consumer net revenues, compared to the prior year comparative period, was primarily due to a $5.0 million decrease in revenue from playboy.com e-commerce related to our completion of the transition from an owned-and-operated model to a licensing model in the third quarter of 2023 and a $3.2 million decrease in Honey Birdette revenue as a result of a 30% reduction in days on sale and weaker consumer demand.

Licensing

The decrease in licensing net revenues, compared to the prior year comparative period, was primarily due to the termination of licensing agreements with certain Chinese licensees in the fourth quarter of 2023 due to material, uncured breaches resulting in collectability issues, $5.1 million of prepaid royalty guarantees recognized as revenue in the fourth quarter of 2023 in connection with the termination of one such licensing contract, the decline in contractual revenue and overages from our licensing partners due to weaker consumer demand, as well as lower licensee audit revenues.

Digital Subscriptions and Content

The increase in digital subscriptions and content net revenues, compared to the prior year comparative period, was primarily due to a $1.7 million increase in net revenues from our creator platform, partly offset by a $0.6 million decrease in other digital subscriptions and content revenue.

Cost of Sales and Gross Profit

The following table sets forth cost of sales and gross margin by reportable segment (in thousands):

Year Ended December 31,

Direct-to-consumer gross margin 56 % 41 %

Licensing gross margin 91 % 106 %

Digital subscriptions and content gross profit $ 12,729 $ 9,376 $ 3,353 36 %

Digital subscriptions and content gross margin 58 % 45 %

Other gross profit $ — $ (13) $ 13 (100) %

Other gross margin — % *

Total gross margin 64 % 62 %

_________________*Not meaningful

Direct-to-Consumer

The decrease in direct-to-consumer cost of sales and increase in gross margin, compared to the prior year comparative period, was primarily due to a $8.6 million reduction in cost of sales related to the transition of Playboy’s e-commerce site from an owned-and-operated model to a licensing model in the prior year comparative period, lower inventory reserve charges of $4.3 million for Honey Birdette, and a $2.6 million reduction in Honey Birdette’s product, shipping and fulfillment costs due to lower revenue.

Licensing

The increase in licensing cost of sales and decrease in gross margin, compared to the comparable prior year period, was primarily due to a $6.2 million increase in licensing commissions primarily due to a nonrecurring reversal of commission accrual in the prior year comparative period related to the termination of certain Chinese licensing agreements, partly offset by a $1.1 million reduction in licensing product costs due to the termination of Playboy’s e-commerce licensing agreement in the second quarter of 2024 and subsequent licensing agreement with a new licensing partner in the third quarter of 2024.

Digital Subscriptions and Content

The decrease in digital subscriptions and content cost of sales and increase in gross margin, compared to the comparable prior year period, was primarily due to $2.0 million in lower cost of sales related to our creator platform largely as a result of nonrecurring creator platform expenses in 2023 and lower payment processing fees.

Selling and Administrative Expenses

The decrease in selling and administrative expenses, compared to the prior year comparative period, was primarily due to $7.1 million of lower technology costs, primarily due to restructuring charges taken on direct-to-consumer cloud-based software attributable to continuing operations in 2023, lower audit, legal and consulting fees of $4.6 million as a result of business downsizing and cost rationalization, a $2.7 million reduction in severance expense, a $3.1 million decrease in China JV expense due to cost cuts and nonrecurring transaction expenses in 2023, lower stock-based compensation expense of $2.3 million and payroll expense of $0.8 million due to headcount reductions, and a $2.3 million decrease in insurance expense due to the renegotiation of our insurance policies.

Impairments

The decrease in impairments, compared to the prior year comparative period, was primarily due to impairment charges in the prior year comparative period of $143.9 million on Playboy-branded trademarks, Honey Birdette’s trade names and goodwill, $8.7 million in impairments of certain licensing contracts, and $2.3 million in impairments of certain Honey Birdette right-of-use assets and related leasehold improvements, partly offset by impairment charges of $2.4 million and $1.4 million on our artwork held for sale in the first and fourth quarters of 2024, respectively, $0.6 million on our corporate leases in the second quarter of 2024, $17.0 million on our goodwill for Digital Subscriptions and Content and $4.7 million of impairment charges related to our internally developed software in the third quarter of 2024.

Other Operating Expense, Net

The decrease in other operating expense, net, compared to the prior year comparative period, was primarily due to a $0.4 million loss on sale of assets, including our artwork held for sale, in 2024, and a $0.3 million gain on the sale of crypto assets during the year ended December 31, 2023, partly offset by a $0.7 million loss from settlement of a promissory note recognized in 2023 and other miscellaneous items.

Nonoperating (Expense) Income

Interest Expense

The increase in interest expense, compared to the prior year comparative period, was primarily due to higher interest rates on our senior secured debt in 2024 compared to the prior year comparative period.

Gain on Extinguishment of Debt

Gain on extinguishment of debt for the year ended December 31, 2023 represents a $6.1 million gain due to the partial extinguishment of debt upon the amendment and restatement of our senior secured debt credit agreement in 2023, net of a $1.8 million loss recorded in 2023 due to the partial extinguishment of debt related to $45 million of prepayments of such senior debt.

Fair Value Remeasurement Gain

Fair value remeasurement gain for the year ended December 31, 2023 represented the remeasurement of our mandatorily redeemable preferred stock liability to its fair value in 2023, which was exchanged (and thereby eliminated) in connection with our A&R Credit Agreement for our senior secured debt in the second quarter of 2023.

Other (Expense) Income, Net

The change in other income (expense), net from net income in 2023 to net expense in 2024 was primarily due to unrealized foreign exchange losses in relation to Honey Birdette’s foreign operations as well as certain of our Chinese licenses denominated in foreign currency.

(Expense) Benefit from Income Taxes

The change from benefit from income taxes to income tax expense as compared to the prior year comparative period was primarily driven by lower pretax book loss, a change in valuation allowance due to a reduction in net indefinite-lived deferred tax liabilities, and increased foreign Subpart F income in the year ended December 31, 2024.

Non-GAAP Financial Measures

In addition to our results being 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 and non-recurring non-cash impairments, asset write-downs and inventory reserve charges, we typically adjust for nonoperating expenses and income, such as 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.

Because of the limitations described above, 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 loss to EBITDA and Adjusted EBITDA (in thousands):

Year Ended December 31,

Adjusted for:

Income from discontinued operations, net of tax — (6,030)

Adjusted for:

Gain on extinguishment of debt — (6,133)

Expense (benefit) from income taxes 3,148 (13,770)

Depreciation and amortization 7,007 7,199

Adjusted for:

Mandatorily redeemable preferred stock fair value remeasurement — (6,505)

Recognition of prepaid royalty guarantees — (5,084)

Write-down of capitalized software — 5,051

Inventory reserve charges — 3,637

•Impairments for the year ended December 31, 2024 relate to impairment charges on our artwork held for sale, corporate leases and assets related to our Digital Subscriptions and Content business.

•Impairments for the year ended December 31, 2023 relate primarily to the impairments of intangible assets, including goodwill, and impairments on certain of our licensing contracts, and impairments of certain Honey Birdette right-of-use assets and related leasehold improvements.

•Mandatorily redeemable preferred stock fair value remeasurement for the year ended December 31, 2023 relates to the fair value remeasurement, non-cash fair value gain of the liability for such preferred stock.

•Recognition of prepaid royalty guarantees for the year ended December 31, 2023 relates to $5.1 million of prepaid royalty guarantees recognized as revenue in connection with termination of a licensing contract in the fourth quarter of 2023.

•Write-down of capitalized software for the year ended December 31, 2023 relates to restructuring charges taken on direct-to-consumer cloud-based software in the first and fourth quarters of 2023, excluding costs related to discontinued operations.

•Inventory reserve charges for the year ended December 31, 2023 relate to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the first quarter of 2023 to reflect the restructuring of the Playboy Direct-to-Consumer business.

•Adjustments for the year ended December 31, 2024 are primarily related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable with respect to a past acquisition that remained unsettled as of December 31, 2024, loss on the sale of artwork, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations.

•Adjustments for the year ended December 31, 2023 are related to non-cash fair value change related to contingent liabilities fair value remeasurement with respect to potential shares issuable with respect to a past acquisition that remained unsettled as of December 31, 2023, consulting, advisory and other costs relating to corporate transactions and other strategic opportunities, as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations.

Segments

During the year ended December 31, 2024 and as of December 31, 2024, we had three reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content. The Direct-to-Consumer segment derives revenue from sales of consumer products sold online direct-to-customer or at brick-and-mortar retail stores through our lingerie business, Honey Birdette, with 54 stores in three countries as of December 31, 2024. The TLA and Yandy direct-to-consumer businesses met the criteria for discontinued operations classification as of December 31, 2023 (refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional details). Therefore, they were excluded from the table below and classified as discontinued operations in our consolidated statements of operations for the year ended December 31, 2023. Our Licensing segment includes the licensing of one or more of our trademarks, our Playboy retail platform operations effective July 2023, and/or images for consumer products and online and location-based entertainment businesses. Our Digital Subscriptions and Content segment includes the production, marketing and sales of programming under the Playboy brand name, which is distributed through various channels, including domestic and international television, sales of creator content offerings and memberships to consumers through the Playboy Club on playboy.com, as well as events and sponsorships.

In the fourth quarter of 2024, the Company entered into a License & Management Agreement (the “LMA”) with Byborg to license intellectual property and certain 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. As a result, Licensing operations will include revenue from the LMA with Byborg as of January 1, 2025.

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” line items in the tables below are miscellaneous in nature and do not relate to the previously identified reportable segments disclosed herein. These segments do not meet the quantitative threshold for determining reportable segments. The “Corporate” line item in the tables below includes certain operating expenses that are not allocated to the reporting segments presented to our CODM. These expenses include legal, human resources, accounting/finance, information technology and facilities. 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 Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

“Adjusted Operating Income (Loss)” is defined as operating income or loss adjusted for stock-based compensation and other special items determined by management. Adjusted operating loss 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 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, 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 may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate adjusted operating loss 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 and nonrecurring non-cash impairments, asset write-downs and inventory reserve charges, 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.

Because of the limitations described above, adjusted operating loss 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 loss on a supplemental basis. Investors should review the reconciliation of operating loss to adjusted operating loss below and not rely on any single financial measure to evaluate our business.

The following table reconciles Operating (Loss) Income to Adjusted Operating (Loss) Income by reportable segment (in thousands):

Adjusted for:

Recognition of prepaid royalty guarantees — (5,084) — — — (5,084)

Write-down of capitalized software 5,051 — — — — 5,051

Inventory reserve charges 3,637 — — — — 3,637

Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for descriptions of the adjustments to reconcile net income to Adjusted EBITDA, certain of which adjustments are listed in the table above and the descriptions used for the reconciliation of net income to Adjusted EBITDA are also applicable for the table above.

Direct-to-Consumer

Net Revenues and Gross Margin: Refer to “Item 7. 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 2023 to 2024.

Operating Loss: The decrease in operating loss, compared to the prior year comparative period, was primarily due to non-cash impairment charges in the prior year comparative period of $72.6 million on certain of our intangible assets (including goodwill), a $2.3 million impairment on certain Honey Birdette right-of-use assets and related leasehold improvements, an increase of $7.7 million of gross profit, $7.1 million of lower technology costs, primarily due to restructuring charges taken on direct-to-consumer cloud-based software attributable to continuing operations in 2023, lower payroll expense of $4.0 million, of which $2.2 million was due to the transition of Playboy’s e-commerce site from our ownership and operation to a licensed business model in the third quarter of 2023, and $1.6 million in reduced marketing spend related to our discontinued e-commerce site.

Adjusted Operating Income (Loss): The change from adjusted operating loss in the prior year comparative period to adjusted operating income in 2024 was primarily due to an improvement in Honey Birdette’s gross margin, largely due to a reduction in inventory reserve charges, as well as reductions in selling and administrative expenses, reflecting cost optimization as we continue to pursue a capital-light business model.

Licensing

Operating Income: The change from operating loss in the prior year comparative period to operating income in 2024 was primarily due to $71.3 million of non-cash impairment charges on our trademarks and the $8.7 million impairment of certain licensing contracts in the prior year comparative period, a $3.1 million decrease in China JV expenses, out of which $1.5 million was due to organizational expenses incurred in the prior year comparative period, and a $3.0 million reduction in legal expenses, partly offset by a $24.8 million decrease in licensing gross profit, resulting from lower revenues and commission accrual reversals in the prior period.

Adjusted Operating Income: The decrease in adjusted operating income, compared to the prior year comparative period, was primarily due to a decrease in licensing gross profit, largely due to the termination of two China licensing agreements in the fourth quarter of 2023.

Digital Subscriptions and Content

Operating Loss: The increase in operating loss, compared to the prior year comparative period, was primarily attributable to impairment charges of $17.0 million on our goodwill in the third quarter of 2024, impairment charges of $4.7 million related to our internally developed software in the third quarter of 2024, a $3.0 million increase in stock-based compensation and a $2.3 million increase in payroll expenses as we recruited a new digital leadership team to revamp our digital business in the first half of 2024, and a $1.7 million increase in selling and administrative expenses related to our creator platform, partly offset by a $3.4 million increase in gross profit.

Adjusted Operating Income: The decrease in adjusted operating income, compared to the prior year comparative period, was primarily attributable to higher expenses related to our creator platform, as we recruited a new digital leadership team to revamp our digital business in the first half of 2024.

Corporate

The decrease in corporate expenses, compared to the prior year comparative period, was primarily due to a $5.3 million decrease in stock-based compensation expense, a decrease of $2.2 million in insurance expense, a decrease of $2.2 million in audit and consulting services as a result of business downsizing and cost rationalization, a $0.7 million decrease in payroll expenses due to headcount reductions, and a $1.0 million decrease in severance costs, partly offset by impairment charges of $2.4 million and $1.4 million on our artwork held for sale in the first and fourth quarters of 2024, respectively, and $0.6 million on our corporate leases in the second quarter of 2024.

The decrease in adjusted corporate expenses, compared to the prior year comparative period, was primarily due to lower insurance costs and a decrease in audit and consulting expenses, reflecting ongoing cost rationalization.

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 stock offerings (as described further below), and from investing activities, which included the sale of assets (as described further below). As of December 31, 2024, our principal source of liquidity was unrestricted cash in the amount of $30.9 million, which is primarily held in operating and deposit accounts.

On January 24, 2023, we issued 6,357,341 shares of our common stock in a registered direct offering to a limited number of investors. We received $15 million in gross proceeds from the registered direct offering, and net proceeds of $13.9 million, after the payment of offering fees and expenses.

We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock. We received net proceeds of approximately $47.6 million from the rights offering, after the payment of offering fees and expenses. We used $45 million of the net proceeds from the rights offering for repayment of debt under our senior secured credit agreement, with the remainder to be used for other general corporate purposes.

On April 4, 2023, we completed the sale of our wholly-owned subsidiary, Yandy Enterprises, LLC (the “Yandy Sale”) to an unaffiliated, third-party buyer. The consideration we received for the Yandy Sale consisted of $1.0 million in cash and a $2.0 million secured promissory note payable over three years (which note was then settled in the third quarter of 2023 for a cash payment to us of $1.3 million).

On November 3, 2023, we completed the sale of TLA Acquisition Corp. (“TLA”) to an unaffiliated, third-party buyer for approximately $13.5 million in cash (the “Purchase Price”). Approximately $2.1 million of the Purchase Price was placed into a short-term escrow account at the closing of the TLA sale in connection with a post-closing working capital adjustment, certain possible indemnification claims payable by us and for certain post-closing items to be completed by us. As of the date of this Annual Report on Form 10-K, such escrow funds had been released to us in full.

In November 2023, we also sold a small amount of our art assets, and we continued the sale of our art assets in 2024.

On November 5, 2024, we issued 14,900,000 unregistered shares of our common stock in a private placement to a third-party investor, at a price of $1.50 per share, for total proceeds to us of $22.4 million.

On November 11, 2024, we entered into Amendment No. 3 (“A&R Third Amendment”) to the A&R Credit Agreement (defined below), pursuant to which the terms of the A&R Credit Agreement were amended to, among other things, (a) amend the interest rate margin applicable to the Tranche A and Tranche B loans (each defined below), including that the interest rate margin for both Tranche A and Tranche B loans will be 6.25%, plus a 0.10% credit spread adjustment, above the Secured Overnight Financing Rate), (b) amend the definition of “Financial Covenant Sunset Date” to reduce the dollar threshold therein from $100,000,000 to $75,000,000 and to make certain other changes, (c) provide for quarterly amortization payments for the Tranche A and Tranche B loans, amounting on an annualized basis to 1% of the total outstanding principal balance of such loans as of closing of the A&R Third Amendment, commencing with the quarter ending December 31, 2025, and (d) provide for a reduction in the outstanding principal amount of Tranche A and Tranche B loans to approximately $153.1 million in the aggregate in exchange for 28,000.00001 shares of Series B Convertible Preferred Stock, as described below.

On December 14, 2024, we entered into a Securities Purchase Agreement (the “December SPA”) with The Million S.a.r.l. (the “Purchaser”), a wholly-owned subsidiary of Byborg, pursuant to which we agreed to sell to the Purchaser 16,956,842 shares of our common stock at a price of $1.50 per share, subject to the approval of such sale and issuance of such shares by our stockholders. The closing of the sale and issuance of shares pursuant to the December SPA is expected to occur by the end of the first quarter of 2025 and result in aggregate proceeds to us of approximately $25.4 million.

Pursuant to the LMA entered into in December 2024, Byborg agreed to operate our Playboy Plus, Playboy TV (digital and linear) and Playboy Club 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 will receive minimum guaranteed royalties of $20 million per year of the term, to be paid in installments during each year. In addition, Byborg will prepay 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.

Due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly in 2022 and 2023, leading us to renegotiate terms of, or terminate, certain licenses in October 2023. We have replaced certain terminated licensees with new licensees in China. Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets.

Since going public in 2021, we have yet to generate operating income from our core business operations and have incurred significant operating losses, including $50.8 million of operating losses for the year ended December 31, 2024. We expect our capital expenditures and working capital requirements in 2025 to be largely consistent with 2024.

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 Annual Report on Form 10-K. 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 February 17, 2023, we entered into Amendment No. 4 (the “Fourth Amendment”) to our senior secured Credit and Guaranty Agreement, dated as of May 25, 2021 (as previously amended on August 11, 2021, August 8, 2022, December 6, 2022, and as further amended by the Fourth Amendment, the “Credit Agreement”), which among other things: (i) required that the mandatory prepayment of 80% of our equity offering proceeds apply only to our $50 million rights offering completed in February 2023 (thereby reducing the applicable prepayment cap to $40 million), (ii) required an additional $5 million prepayment by us as a condition to completing the Fourth Amendment, and (iii) reduced the prepayment threshold for waiving our Total Net Leverage Ratio financial covenant through June 30, 2024 to $70 million (from the prior $75 million prepayment threshold). Such $70 million of prepayments were achieved by us through the combination of a $25 million prepayment in December 2022, a $40 million prepayment made in connection with our rights offering in February 2023, and an additional $5 million prepayment made at the completion of the Fourth Amendment.

As a result of the prepayments described above, we obtained a waiver of the Total Net Leverage Ratio covenant through the second quarter of 2024, eliminated the cash maintenance covenants, eliminated the lenders’ board observer rights and eliminated applicable additional margin which had previously been provided for under the Credit Agreement, as amended.

On April 4, 2023, we entered into Amendment No. 5 to the Credit Agreement (the “Fifth Amendment”) to permit, among other things, the Yandy Sale, and that the proceeds of such sale would not be required to prepay the loans under the Credit Agreement (as amended through the Fifth Amendment); provided that at least 30% of the consideration for the Yandy Sale was paid in cash.

On May 10, 2023 (the “Restatement Date”), we entered into an amendment and restatement of the Credit Agreement for our senior secured debt (the “A&R Credit Agreement”) to reduce the interest rate applicable to our senior secured debt and the implied interest rate on our then outstanding Series A Preferred Stock, exchange (and thereby eliminate) our then outstanding Series A Preferred Stock, and obtain additional covenant relief and funding.

In connection with the A&R Credit Agreement, Fortress Credit Corp. and its affiliates (together, “Fortress”) became our lender with respect to approximately 90% of the term loans under the A&R Credit Agreement (the “A&R Term Loans”). Fortress exchanged 50,000 shares of our Series A Preferred Stock (representing all of our issued and outstanding preferred stock) for approximately $53.6 million of the A&R Term Loans, and we obtained approximately $11.8 million of additional funding as part of the A&R Term Loans. As a result, our Series A Preferred Stock was eliminated, and the principal balance of the A&R Term Loans under the A&R Credit Agreement became approximately $210.0 million (whereas the original Credit Agreement had an outstanding balance of approximately $156.0 million as of March 31, 2023).

In connection with the A&R Credit Agreement, the original Credit Agreement’s term loans were apportioned into approximately $20.6 million of Tranche A term loans (“Tranche A”) and approximately $189.4 million of Tranche B term loans (“Tranche B”, and together with Tranche A comprising the A&R Term Loans). The prior amortization payments applicable to the total term loan under the original Credit Agreement were eliminated. The A&R Credit Agreement only requires the smaller Tranche A be subject to quarterly amortization payments of approximately $76,000 per quarter. The benchmark rate for the A&R Term Loans is the applicable term of SOFR as published by the U.S. Federal Reserve Bank of New York (rather than London Interbank Offer Rate, as under the original Credit Agreement). As of the Restatement Date, Tranche A accrues interest at SOFR plus 6.25% with a 0.10% SOFR adjustment, and has a SOFR floor of 0.50%. As of the Restatement Date, Tranche B accrues interest at SOFR plus 4.25% with a 0.10% SOFR adjustment, and has a SOFR floor of 0.50%.

We obtained additional leverage covenant relief through the first quarter of 2025, with testing of a total net leverage ratio covenant commencing following the quarter ending March 31, 2025, which covenant will be initially set at 7.25:1.00, reducing in 0.25 increments per quarter until the ratio reaches 5.25:1.00 for the quarter ending March 31, 2027.

As a result of the amendment and restatement of the Credit Agreement (the “Restatement”), in the second quarter of 2023, we recorded $8.0 million of gain for partial debt extinguishment and capitalized an additional $21.3 million of debt discount while deferring and continuing to amortize an existing discount of $2.6 million, which will be amortized over the remaining term of our senior secured debt and recorded in interest expense in our consolidated statements of operations. As a result of the Restatement, fees of $0.3 million were expensed as incurred and $0.4 million of debt issuance costs were capitalized in the second quarter of 2023.

In connection with the sale of TLA, on November 2, 2023, we entered into Amendment No. 1 to the A&R Credit Agreement (the “A&R First Amendment”), to permit, among other things: (a) the sale of TLA and the sale of certain other assets (and the proceeds of such sales will not be required to prepay the A&R Term Loans); and (b) the Company to elect, through August 31, 2025, to pay in cash accrued interest equal to the applicable SOFR plus 1.00%, with the remainder of any applicable accrued interest not paid in cash capitalized into the A&R Term Loans. The other terms of the A&R Credit Agreement will remain substantially unchanged from those prior to the A&R First Amendment.

On March 27, 2024, we entered into Amendment No. 2 to the A&R Credit Agreement (the “A&R Second Amendment”), which provided for, among other things:

(a) the amendment of the Total Net Leverage Ratio covenant to (i) suspend testing of such covenant until the quarter ending June 30, 2026, (ii) adjust the Total Net Leverage Ratio financial covenant levels once the covenant testing is resumed, and (iii) add a mechanism for the Total Net Leverage Ratio to be eliminated permanently upon the satisfaction of certain prepayment-related conditions (the date upon which such prepayment-related conditions are satisfied, the “Financial Covenant Sunset Date”);

(b) the addition of a covenant to maintain a $7.5 million minimum balance of unrestricted cash and cash equivalents (on a consolidated basis), subject to periodic testing and certification, as well as the ability to cure a below-minimum balance, and which covenant will be in effect (i) from March 27, 2024 until March 31, 2026 and (ii) from and after the Financial Covenant Sunset Date; and

(c) that assignments of commitments or loans under the A&R Credit Agreement from existing lenders to certain eligible assignees under the A&R Credit Agreement (i.e. a commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933) and which extends credit or buys loans in the ordinary course of business) shall not require consent from us while the minimum cash balance financial covenant is in effect.

The other terms of the A&R Credit Agreement prior to the A&R Second Amendment remained substantially unchanged.

On November 11, 2024, we entered into the A&R Third Amendment, which provides for, among other things:

•reducing the outstanding aggregate A&R Term Loan amounts under the A&R Credit Agreement from approximately $218.4 million to approximately $153.1 million in exchange for $28 million of Series B Convertible Preferred Stock, which was issued pursuant to the Exchange Agreement between the Company and the lenders party to the A&R Third Amendment;

•resetting the interest rate margin for both Tranche A and Tranche B term loans to the same rate of SOFR, plus a 0.10% credit spread adjustment, plus 6.25% (with corresponding changes necessary so that all but 1.00% of the interest rate margin can be paid in-kind); and

•applying amortization of 1% per year to all loans under the A&R Credit Agreement, which is to be paid quarterly starting in the fourth quarter of 2025.

The other terms of the A&R Credit Agreement prior to the A&R Third Amendment remain substantially unchanged, and the new terms were effective as of November 13, 2024 (the date 28,000.00001 shares were issued to the lenders in exchange for the debt reduction pursuant to the closing of the Exchange Agreement). The Series B Convertible Preferred Stock includes a 12% annual dividend rate, which will commence accruing as of May 13, 2025, and which dividends are payable in cash or in-kind, solely at our discretion. We have the right to redeem for cash (at any time) or convert the Series B Convertible Preferred Stock at any time, provided that the five-day volume-weighted average price of PLBY common stock is $1.50 or above, with a conversion price floor of $1.50 and a cap of $4.50.

We performed an assessment of the A&R Third Amendment, on a lender-by-lender basis, and determined that the transaction met the criteria for a troubled debt restructuring (“TDR”) under ASC 470-60, Troubled Debt Restructurings by Debtors (“ASC 470-60”), as we were experiencing financial constraints and the lenders granted a concession. However, the total future cash payments under the new terms exceeded the carrying amount of our senior secured debt at the date of transaction, therefore, no adjustment to the carrying amount of the debt was made. Instead, we calculated a new effective interest rate (“EIR”) based on the revised terms of the debt. The senior secured debt is then amortized over the remaining term of the debt using the new EIR, with interest expense recognized based on such rate in future periods. Third party fees of $0.5 million incurred in connection with the A&R Third Amendment were recorded in Other (expense) income, net in the consolidated statements of operations for the year ended December 31, 2024.

The stated interest rate of Tranche A and Tranche B term loans as of December 31, 2024 was 11.01%. The stated interest rate of Tranche A and Tranche B term loans as of December 31, 2023 was 11.41% and 9.41%, respectively. The effective interest rate of Tranche A and Tranche B A&R Term Loans as of December 31, 2024 was 1.05% and 4.93%, respectively. The effective interest rate of Tranche A and Tranche B A&R Term Loans as of December 31, 2023 was 12.03% and 13.27%, respectively.

We were in compliance with applicable financial covenants under the terms of the A&R Credit Agreement and its amendments as of December 31, 2024 and 2023.

On March 12, 2025, we entered into a fourth amendment of the A&R Credit Agreement. Refer to Note 22, Subsequent Events, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, for further details.

Leases

Our principal lease commitments are for office space and operations under several noncancellable operating leases with contractual terms expiring from 2025 to 2033. Some of these leases contain renewal options and rent escalations. As of December 31, 2024 and 2023, our fixed lease obligations were $25.5 million and $31.6 million, respectively, with $6.6 million and $7.0 million due in the next 12 months, respectively. For further information on our lease obligations, refer to Note 15, Commitments and Contingencies, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Cash Flows

The following table summarizes our cash flows from continuing operations for the periods indicated (in thousands):

Year Ended December 31,

Net cash provided by (used in):

Cash Flows from Operating Activities

The decrease in net cash used in operating activities from continuing operations for year ended December 31, 2024 over the prior year comparable period was due to a $107.1 million decrease in net loss from continuing operations, as well as changes in assets and liabilities that had a current period cash flow impact, such as $17.1 million of changes in working capital, partly offset by $100.5 million of changes in non-cash charges. The change in assets and liabilities as compared to the prior year comparable period was primarily driven by a $19.8 million change in deferred revenues due to the termination of certain Chinese licensing agreements in the prior year comparative period, a $6.7 million change in accrued agency fees and commissions primarily due to a nonrecurring reversal of commission accrual in the prior year comparative period related to the termination of certain Chinese licensing agreements, a $5.1 million decrease in inventories, net due to reduced purchasing, and a $2.1 million decrease in contract assets due to the timing of licensing payments, partly offset by a $5.6 million increase in accounts receivable due to the timing of royalty collections and modifications of certain trademark licensing contracts, an increase of $5.4 million in prepaid expenses and other assets, a $3.8 million decrease in accounts payable due to the timing of payments, and a $1.8 million decrease in operating lease liabilities. The change in non-cash charges compared to the change in the prior year comparable period was primarily driven by a $128.8 million decrease in non-cash impairment charges, a $8.0 million decrease in inventory reserve charges, and a $2.3 million decrease in stock-based compensation expense, partly offset by a $19.0 million increase in deferred income taxes, a $7.1 million change in fair value remeasurement charges, a $6.1 million change due to extinguishment of debt, $5.1 million of capitalized payment-in-kind interest in 2024, and a $1.4 million increase in the amortization of right of use assets.

Cash Flows from Investing Activities

The decrease in net cash provided by investing activities from continuing operations for the year ended December 31, 2024 over the prior year comparable period was due to $14.3 million of proceeds from the sale of TLA, $1.0 million of proceeds from the Yandy Sale and the $1.3 million repayment of a related promissory note in the prior year comparative period, partly offset by $1.9 million in proceeds from the sale of artwork, and a $1.3 million decrease in purchases of property and equipment.

Cash Flows from Financing Activities

The decrease in net cash provided by financing activities from continuing operations for the year ended December 31, 2024 over the prior year comparable period was due to reduced capital raising transactions in 2024, resulting in $22.2 million of net proceeds from the issuance of common stock in a private placement, while in 2023 we received net proceeds of $13.9 million from our registered direct offering in January of 2023, net proceeds of $47.6 million from our rights offering in February 2023, and gross proceeds of $11.8 million from the amendment and restatement of our senior secured credit agreement in the second quarter of 2023, which were partly offset by a $45.4 million repayment of long-term debt in early 2023 and the repurchase of $1.0 million of our outstanding common stock in the fourth quarter of 2023.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and could have a material impact on our financial condition or results of operations. Estimates and judgments used in the preparation of our 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, economic conditions and other current and future events, such as the impact of international armed conflicts and geopolitical tensions. 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.

We believe the following accounting estimates to be the most critical in understanding the judgments and estimates we use in preparing our consolidated financial statements.

Licensing Revenue Recognition

We license trademarks under multi-year arrangements with consumer products, online and location-based entertainment businesses. The performance obligation is a license of symbolic IP that provides the customer with a right to access the IP, which represents a stand-ready obligation that is satisfied over time. Under these arrangements, we generally receive an annual nonrefundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year. We recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned. Excess Royalties are payable quarterly. As the sales reports from licensees are typically not received until after the close of the reporting period, we follow the variable consideration framework and constraint guidance to estimate the underlying sales volume to recognize Excess Royalties based on historical experience and general economic trends. Historical adjustments to recorded estimates have not been material. We adjust how we account for revenue pursuant to licenses, if collectability on their related billings becomes improbable.

Goodwill and Other Intangible Assets, Net

Goodwill and certain other intangible assets deemed to have indefinite useful lives are not amortized. Rather, goodwill and indefinite-lived intangible assets are assessed for impairment at least annually. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their carrying values may not be fully recoverable.

We perform annual impairment test on goodwill in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value. We may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, an impairment test is unnecessary. If an impairment test is necessary, we will estimate the fair value of a related reporting unit.

Impairment of Long-Lived Assets

The carrying amounts of long-lived assets, including property and equipment, stores, acquired intangible assets and right-of-use operating lease assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate over its remaining life. If such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to the fair value.

Inventory

Inventories consist primarily of finished goods and are stated at the lower of cost or net realizable value. Inventory reserves are recorded for excess and slow-moving inventory. Our analysis includes a review of inventory quantities on hand at period-end in relation to year-to-date sales, existing orders from customers and projections for sales in the foreseeable future. The net realizable value is determined based on historical sales experience on a style-by-style basis. The valuation of inventory could be impacted by changes in public and consumer preferences, demand for product, changes in the buying patterns of both retailers and consumers and inventory management of customers.

Stock-Based Compensation

Our equity awards granted generally consist of stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”). We measure compensation expense for all stock-based payment awards, including stock options, RSUs and PSUs granted to employees, directors, and non-employees, based on the estimated fair value of the awards on the date of grant. The fair value of each stock option grant is estimated using a Black-Scholes option-pricing model, which requires the input of highly subjective assumptions, including (a) the expected volatility of our stock, (b) the expected term of the award, (c) the risk-free interest rate, and (d) expected dividends. The fair value of RSU grants is at a price equal to the fair market value of our common stock at the date of grant. Compensation expense associated with our stock options and RSUs is recognized ratably over the employee’s requisite service period.

Our PSUs vest upon achieving each of certain PLBY’s stock price milestones during the contractual vesting period. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations. The determination of the grant date fair value of PSUs issued is affected by a number of variables and subjective assumptions, including (i) the fair value of PLBY’s common stock, (ii) the expected common stock price volatility over the expected life of the award, (iii) the expected term of the award, (iv) risk-free interest rates, (v) the exercise price, and (vi) the expected dividend yield. For purposes of calculating stock-based compensation expense, forfeitures are accounted for as they occur.

Income Taxes

We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. The carrying amounts of deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses, the duration of statutory carryforward periods, and tax planning alternatives. We use a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals and litigation processes, if any. The second step is to measure the largest amount of tax benefit as the largest amount that is more likely than not to be realized upon settlement. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Recent Accounting Pronouncements

Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K 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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

PLBY Group, Inc.

Index to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Page

Audited Consolidated Financial Statements:

Financial Statements:

Consolidated Statements of Operations 63

Consolidated Statements of Comprehensive Loss 64

Consolidated Balance Sheets 65

Consolidated Statements of Cash Flows 68

Notes to the Consolidated Financial Statements 70

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

PLBY Group, Inc.

Los Angeles, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of PLBY Group, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, mezzanine equity and stockholders’ equity (deficit), and cash flows for each of the years then ended, and the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Assessment of Intangible Assets and Goodwill

As described in Notes 1, 2 and 8 to the Company’s consolidated financial statements, goodwill and, indefinite-lived trademarks totaled $36.0 million and $145.7 million as of December 31, 2024, respectively. In the second quarter of 2024, the Company had impairment indicators to its direct-to-consumer business causing the Company to test the recoverability of indefinite-lived trademarks and goodwill as of June 30, 2024. In the third quarter of 2024, the Company had impairment indicators with respect to its creator digital platform on playboy.com due to a decrease in its revenue projections causing the Company to test the recoverability of goodwill and indefinite-lived trademarks as of September 30, 2024. As a result, the Company recognized a write-down of goodwill of $17.0 million during the third quarter of 2024.

We identified the evaluation of goodwill and indefinite-lived trademarks for impairment as a critical audit matter. With respect to goodwill, the determination of the fair value of certain reporting units requires management to determine significant assumptions used in the discounted cash flow valuation model including revenue growth rates and discount rates. With respect to indefinite-lived trademarks, the determination of the fair value requires management to determine significant assumptions used in the discounted cash flow and relief from royalty valuation models including revenue growth rates, royalty rates, and discount rates. Auditing management’s significant assumptions used in the assessment of the recoverability of goodwill and indefinite-lived trademarks involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

•Assessing the reasonableness of projected revenue growth rates, through: (i) evaluating current and historical performance of the identifiable cash flows and (ii) assessing financial projections against external industry data.

•Assessing the reasonableness of royalty rates, through: (i) evaluating the current and historical financial results and (ii) for certain indefinite-lived trademarks, also testing a sample of the royalty rates within the Company’s license arrangements.

•Utilizing professionals with specialized skills and knowledge in valuation to assist in assessing the reasonableness of the royalty rates and discount rates used in the determination of fair values.

/s/ BDO USA, P.C.

We have served as the Company’s auditor since 2021.

Los Angeles, California

March 13, 2025

PLBY Group, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

Year Ended December 31,

Costs and expenses:

Other operating expense, net (399) (540)

Nonoperating (expense) income:

Gain on extinguishment of debt, net — 6,133

Fair value remeasurement gain — 6,505

Other (expense) income, net (1,722) 806

Loss from continuing operations before income taxes (76,249) (200,218)

(Expense) benefit from income taxes (3,148) 13,770

Income from discontinued operations, net of tax — 6,030

Net loss attributable to PLBY Group, Inc. $ (79,397) $ (180,418)

Net income per share from discontinued operations, basic and diluted — 0.07

Net loss per share, basic and diluted $ (1.04) $ (2.53)

The accompanying notes are an integral part of these consolidated financial statements.

PLBY Group, Inc.

Consolidated Statements of Comprehensive Loss

(in thousands)

Year Ended December 31,

Other comprehensive loss:

Foreign currency translation adjustment (2,545) (765)

Other comprehensive loss (2,545) (765)

The accompanying notes are an integral part of these consolidated financial statements.

PLBY Group, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

December 31,

Assets

Current assets:

Receivables, net of allowance for credit losses 7,271 7,496

Prepaid expenses and other current assets 5,472 7,802

Contract assets, net of current portion 7,848 8,716

Liabilities, Mezzanine Equity and Stockholders’ (Deficit) Equity

Current liabilities:

Deferred revenues, current portion 9,693 9,205

Long-term debt, current portion 381 304

Operating lease liabilities, current portion 6,624 6,955

Other current liabilities and accrued expenses 28,474 27,967

Deferred revenues, net of current portion 5,762 4,641

Operating lease liabilities, net of current portion 18,843 24,621

Other noncurrent liabilities 1,837 957

Commitments and contingencies (Note 15)

Mezzanine equity:

Redeemable noncontrolling interest (208) (208)

Stockholders’ equity:

Accumulated other comprehensive loss (27,455) (24,910)

Total stockholders’ (deficit) equity (7,731) 45,893

The accompanying notes are an integral part of these consolidated financial statements.

PLBY Group, Inc.

Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

Mezzanine Equity Stockholders’ Equity (Deficit)

Series B Convertible Preferred Stock Series A Preferred Stock Common stock

Preferred stock accretion — 817 — — — — — (817) — — (817)

Other — — — — — — — — — (426) (426)

Other comprehensive loss — — — — — — — — (2,545) — (2,545)

The accompanying notes are an integral part of these consolidated financial statements.

PLBY Group, Inc.

Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

Mezzanine Equity Stockholders’ Equity

Series B Convertible Preferred Stock Series A Preferred Stock Common stock

Exchange of mandatorily redeemable preferred shares — — (50,000) — — — — — — — —

Other comprehensive loss — — — — — — — — (765) — (765)

The accompanying notes are an integral part of these consolidated financial statements.

PLBY Group, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

Cash Flows From Operating Activities

Net loss from continuing operations $ (79,397) $ (186,448)

Income from discontinued operations, net of tax $ — $ 6,030

Depreciation and amortization 7,007 7,199

Fair value remeasurement of liabilities 114 (6,941)

Loss on extinguishment of debt — (6,133)

Amortization of right of use assets 7,037 5,642

Amortization of debt premium/discount and issuance costs 2,706 3,242

Capitalized paid-in-kind interest 6,971 1,848

Changes in operating assets and liabilities:

Prepaid expenses and other assets 2,124 7,518

Accrued agency fees and commissions (215) (6,884)

Other liabilities and accrued expenses 2,022 1,847

Operating lease liabilities (7,892) (6,102)

Net cash used in operating activities - continuing operations (19,139) (42,788)

Net cash used in operating activities - discontinued operations — (503)

Net cash used in operating activities (19,139) (43,291)

Cash Flows From Investing Activities

Purchases of property and equipment (2,262) (3,547)

Proceeds from sale of artwork 1,944 —

Proceeds from promissory note repayment — 1,290

Proceeds from sale of Yandy — 1,000

Proceeds from sale of TLA — 14,317

Net cash used in investing activities - discontinued operations — (109)

Net cash (used in) provided by investing activities (318) 12,951

Cash Flows From Financing Activities

Proceeds from issuance of common stock in private placement, net 22,249 —

Proceeds from issuance of common stock in rights offering, net — 47,602

Repayment of long-term debt (228) (45,628)

Proceeds from issuance of long-term debt — 11,828

Payment of financing costs — (508)

Purchase of treasury stock — (1,000)

Net cash provided by financing activities - continuing operations 21,595 26,184

Effect of exchange rate changes on cash and cash equivalents (492) 208

Net decrease in cash and cash equivalents and restricted cash 1,646 (3,948)

Cash and cash equivalents and restricted cash consist of:

PLBY Group, Inc.

Consolidated Statements of Cash Flows (continued)

(in thousands)

Year Ended December 31,

Supplemental Disclosures

Cash paid (refunded) paid for income taxes $ 2,046 $ (1,753)

Supplemental Disclosure of Non-cash Activities

Exchange of debt for Series B convertible preferred stock $ 23,044 $ —

Preferred stock accretion to redemption value $ 817 $ —

Accrued financing fees $ 250 $ —

Capitalized stock-based compensation expense $ — $ 1,735

Sale of artwork $ 751 $ —

Purchases of property and equipment $ 20 $ 596

PLBY Group, Inc.

Notes to Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

PLBY Group, Inc. (the “Company”, “PLBY”, “we”, “our” or “us”), together with its subsidiaries, through which it conducts business, is a global consumer and lifestyle company marketing the Playboy brand through a wide range of direct-to-consumer products, licensing initiatives, and digital subscriptions and content, in addition to the sale of direct-to-consumer products under its Honey Birdette brand.

We have three reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content. Refer to Note 21, Segments, for further details.

Basis of Presentation

The consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

As discussed in Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, the Yandy Enterprises LLC (“Yandy”) and TLA Acquisition Corp. (“TLA”, owner of the Lovers business) disposal groups, which were previously included in the Direct-to-Consumer segment in the prior year comparative period prior to them becoming assets held for sale, were classified as discontinued operations in the consolidated statements of operations for the prior year comparative period presented. The sale of Yandy was completed on April 4, 2023 (the “Yandy Sale”). The sale of TLA was completed on November 3, 2023 (the “TLA Sale”). As of December 31, 2024, we determined that our art assets continued to meet the held for sale criteria and were classified as held for sale in the consolidated balance sheet as of December 31, 2024.

Principles of Consolidation

The consolidated financial statements include our accounts and all majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

The Company follows a monthly reporting calendar, with its fiscal year ending on December 31.

Reclassifications

Certain prior period amounts in the consolidated statements of operations and consolidated balance sheets have been reclassified to conform with the current period presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management 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 financial statements and the reported amounts of revenues and expenses during the reporting period.

We regularly assess these estimates, including but not limited to, valuation of our trademarks and trade names; valuation of our contingent consideration liabilities; valuation of our income taxes; valuation of our only authorized and issued preferred stock; pay-per-view and video-on-demand buys, and monthly subscriptions to our television and digital content; the adequacy of reserves associated with accounts receivable and inventory; unredeemed gift cards and store credits; licensing commission accruals; and stock-based compensation expense. We base these estimates on historical experience and on various other market-specific and relevant assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates and such differences could be material to the financial position and results of operations.

Concentrations of Business and Credit Risk

We maintain certain cash balances in excess of Federal Deposit Insurance Corporation insured limits. We periodically evaluate the credit worthiness of the financial institutions with which we maintain cash deposits. We have not experienced any losses in such accounts and do not believe that there is any material credit risk to our cash. Concentration of credit risk with respect to accounts receivable is limited due to the wide variety of customers to whom our products are sold and/or licensed.

There were no receivables from any individual customers exceeding 10% of our total receivables as of December 31, 2024 and 2023.

The following table represents revenue from our customers exceeding 10% of our total revenue, excluding revenues from discontinued operations:

Year Ended December 31,

Customer A (1) * 16 %

Cash Equivalents

Cash equivalents are temporary cash investments with an original maturity of three months or less at the date of purchase and are stated at cost, which approximates fair value.

Restricted Cash

At December 31, 2024 and 2023, restricted cash was primarily related to cash collateralized letters of credit we maintained in connection with the lease of our Los Angeles headquarters and Honey Birdette’s term deposit in relation to its Sydney office lease. The December 31, 2023 restricted cash balance also included cash held in escrow related to the TLA Sale, which had been released to us in full in the second quarter of 2024.

Liquidity Assessment

Our revenues, results of operations and cash flows have been materially adversely impacted by negative macroeconomic factors beginning in the second quarter of 2022 and continuing through 2024. The persistently challenging macroeconomic and retail environments, including reduced consumer spending and increased price sensitivity in discretionary categories, has significantly impacted our licensees’ performance. Our net revenues from continuing operations for the year ended December 31, 2024 decreased by $26.8 million, compared to the year ended December 31, 2023, and this decline, coupled with investments into our digital operations, drove our impairment charge, operating loss and net loss. For the year ended December 31, 2024, we reported an operating loss from continuing operations of $50.8 million, and negative operating cash flows from continuing operations of $19.1 million. As of December 31, 2024, we had approximately $30.9 million in unrestricted cash and cash equivalents. We expect our capital expenditures and working capital requirements in 2025 to be largely consistent with 2024.

As of December 31, 2024, we were in compliance with the covenants under our senior secured credit agreement (including through there being no testing of our Total Net Leverage Ratio (as defined in the A&R Credit Agreement) until the quarter ending June 30, 2026). However, due to ongoing negative macroeconomic factors and their uncertain impacts on our business, results of operations and cash flows, we could experience further material decreases to net sales and operating cash flows and materially higher operating losses, and could experience difficulty remaining in compliance with such covenants. Refer to Note 10, Debt, for further details regarding the terms of our A&R Credit Agreement and the A&R Term Loans (as such terms are defined in such Note 10).

The accompanying consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. 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 Annual Report on Form 10-K. 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.

Accounts Receivable, Net

Trade receivables are reported at their outstanding unpaid balances, less allowances for expected credit losses. The allowances for expected credit losses are increased by the recognition of bad debt expense and decreased by charge-offs (net of recoveries) or by reversals to income. In determining expected credit losses, we consider our historical level of credit losses, current economic trends, and reasonable and supportable forecasts that affect the collectability of the future cash flows. A receivable balance is written off when we deem the balance to be uncollectible. The allowance for expected credit losses was immaterial at December 31, 2024 and 2023.

Inventories

Inventories consist primarily of finished goods and are stated at the lower of cost, using the first-in, first-out (“FIFO”) method, and net realizable value. Inventory reserves are recorded for excess and slow-moving inventory. Our analysis includes a review of inventory quantities on hand at period-end in relation to year-to-date sales, existing orders from customers and projections for sales in the foreseeable future. The net realizable value is determined based on historical sales experience on a style-by-style basis. The valuation of inventory could be impacted by changes in public and consumer preferences, demand for product, changes in the buying patterns of both retailers and consumers and inventory management.

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation, except for assets acquired in connection with our business combinations, which are reflected at fair value at the date of combination. Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities and are immediately expensed for preliminary project activities or post-implementation activities. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. The useful life for furniture and equipment ranges from three to seven years and software from two to three years. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the terms of the related leases. The amortization of leasehold improvements is included in depreciation expense. Repair and maintenance costs are expensed as incurred and major betterments are capitalized. Sales and retirements of property and equipment are recorded by removing the related cost and accumulated depreciation from the accounts, after which any related gains or losses are recognized.

Long-Lived Assets, Indefinite-lived Intangible Assets and Goodwill

The carrying amounts of long-lived assets, including property and equipment, stores, internally developed software, acquired definite-lived intangible assets and right-of-use operating lease assets are periodically reviewed for indicators of impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.

Definite-lived intangible assets include distribution agreements and trade names, which we recognized in connection with our business combinations. Because these assets were recognized as identifiable intangible assets in connection with our previous business combinations, we do not incur costs to renew or extend their terms. All of our definite-lived intangible assets are amortized using the straight-line method over their estimated useful lives.

In the third quarter of 2024, we had impairment indicators with respect to our creator digital platform on playboy.com due to a decrease in its revenue projections, and we determined that its carrying value was not recoverable as of September 30, 2024. As a result, we recognized $4.7 million of impairment charges related to the write-off of its internally developed software during the year ended December 31, 2024. Additionally, we recognized $0.6 million of impairment charges on right-of-use assets pertaining to our corporate leases in the third quarter of 2024. During the year ended 2023, we recorded $2.3 million of impairment charges related to certain Honey Birdette right-of-use assets and related leasehold improvements in the fourth quarter of 2023, and $5.1 million of impairment charges on Honey Birdette’s trade names at the impairment date in the third quarter of 2023

Indefinite-lived intangible assets that are not amortized but subject to annual impairment testing consist of Playboy-branded trademarks. Our indefinite-lived Playboy-branded trademarks are periodically reviewed for indicators of impairment whenever events or changes in circumstances indicate that the value of these assets may not be recoverable or that the useful life is shorter than originally estimated.

We evaluate the indefinite-lived Playboy-branded trademarks for impairment using the discounted cash flow and relief from royalty method. This valuation approach requires that we make a number of assumptions to estimate fair value, including projections of future revenues, market royalty rates, tax rates, discount rates and other relevant variables. The projections we use in the model are updated annually or more frequently if an impairment triggering event has been identified and will change over time based on the historical performance and changing business conditions. If the carrying value of the trademark exceeds its estimated fair value, an impairment charge is recognized for the excess amount.

In the third quarter of 2024, we had impairment indicators with respect to our indefinite-lived Playboy-branded trademarks, causing us to perform a quantitative impairment test on our indefinite-lived Playboy-branded trademarks as of September 30, 2024. The quantitative test indicated that their carrying value was less than their fair value, thus, no impairment charges to our Playboy-branded trademarks were recognized during the year ended December 31, 2024.

In the second quarter of 2024, we had impairment indicators to our direct-to-consumer business, causing us to perform a quantitative impairment test for our indefinite-lived and amortizable intangibles, including goodwill, as of June 30, 2024. The quantitative impairment test for indefinite-lived and amortizable intangibles, including goodwill, indicated that their carrying values were less than the fair values, therefore, there were no impairment charges to be recognized on our intangibles, including goodwill during the three and six months ended June 30, 2024.

In the second quarter of 2023, we experienced declines in revenue and profitability, causing us to test the recoverability of our indefinite-lived assets as of June 30, 2023. The resulting impairment charges on our indefinite-lived Playboy-branded trademarks were $65.5 million at the impairment date in the second quarter of 2023.

We perform annual impairment testing on goodwill in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value. We may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, an impairment test is unnecessary. If an impairment test is necessary, we will estimate the fair value of a related reporting unit. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is determined to be impaired, and we will proceed with recording an impairment charge equal to the excess of the carrying value over the related fair value. If we determine it is more likely than not that goodwill is not impaired, a quantitative test is not necessary.

In the third quarter of 2024, we had declines in our future projected cash flows for Digital Subscriptions and Content, causing us to test our goodwill for impairment as of September 30, 2024. Utilizing the income approach, we performed a quantitative impairment test on goodwill using a discounted cash flow analysis, which determined that the fair value of certain of our reporting units was less than their carrying value. As a result, we recorded $17.0 million of impairment charges to our goodwill at the impairment date in the third quarter of 2024.

In the fourth quarter of 2023, we experienced declines in revenue related to the termination of licensing agreements with certain Chinese licensees due to material, uncured breaches resulting in collectability issues, causing us to test the recoverability of our indefinite-lived assets, including goodwill, as of October 31, 2023. As a result, we recognized $5.8 million of impairment charges on our indefinite-lived Playboy-branded trademarks at the impairment date in the fourth quarter of 2023.

In the second quarter of 2023, we experienced declines in revenue and profitability, causing us to test our goodwill for impairment as of June 30, 2023. Utilizing the income approach, we performed a quantitative impairment test on goodwill using a discounted cash flow analysis, which determined that the carrying value of certain of our reporting units exceeded their fair value. As a result, we recognized $66.7 million of impairment charges on our goodwill at the impairment date in the second quarter of 2023.

Assets and Liabilities Held for Sale and Discontinued Operations

We classify assets and liabilities as held for sale, collectively referred to as the disposal group, when management commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, it is unlikely that significant changes will be made to the plan, the assets are available for immediate sale in their present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, and the sale of the assets is expected to be completed within one year. A disposal group that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until the date of sale. The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.

We account for discontinued operations when assets and liabilities of a disposal group are classified as held for sale, or have been sold, and only if the disposal represents a strategic shift that has or will have a meaningful effect on our operations and financial results. We aggregate the results of operations for discontinued operations into a single line item in the consolidated statements of operations for all periods presented. General corporate overhead is not allocated to discontinued operations. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.

Leases

We determine if an arrangement is a lease at inception. We determine the classification of the lease, whether operating or financing, at the lease commencement date, which is the date the leased assets are made available for use. We use the non-cancelable lease term when recognizing the right-of-use (“ROU”) assets and lease liabilities, unless it is reasonably certain that a renewal or termination option will be exercised. We account for lease components and non-lease components as a single lease component. Modifications are assessed to determine whether incremental differences result in new contract terms and should be accounted for as a new lease or whether the additional right of use should be included in the original lease and continue to be accounted for with the remaining ROU asset.

Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Lease payments consist of the fixed payments under the arrangement, less any lease incentives. Variable costs, such as common area maintenance costs and additional payments for percentage rent, are not included in the measurement of the ROU assets and lease liabilities, but are expensed as incurred. As the implicit rate of the leases is not determinable, we use an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments in determining the present value of the lease payments. Lease expenses are recognized on a straight-line basis over the lease term. We do not recognize ROU assets on lease arrangements with a term of 12 months or less.

Treasury Stock

Treasury stock is stated at cost.

Revenue Recognition

We recognize revenue when we transfer promised goods or services in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. This is determined by following a five-step process which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price and (5) recognizing revenue when or as we satisfy a performance obligation. We apply judgment to determine the nature of the promises within a revenue contract and whether those promises represent distinct performance obligations. In determining the transaction price, we do not include amounts subject to uncertainties unless it is probable that there will be no significant reversal of cumulative revenue when the uncertainty is resolved. We evaluate the nature of the license as to whether it provides a right to access or right to use the intellectual property (“IP”), which then determines whether the revenue is recognized over time or at a point in time. Sales or usage-based royalties received in exchange for licenses of IP are recognized at the later of when (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the sales or usage-based royalty has been allocated is satisfied.

Direct-To-Consumer Products

We generate revenue from the sale of intimates and other apparel and accessories, primarily through our direct-to-consumer channels (e-commerce sites and brick-and-mortar retail stores). We recognize e-commerce revenue upon delivery of the purchased goods to the buyer as our performance obligation, consisting of the sale of goods, is satisfied at this point in time when control is transferred, and the payment is due when an e-commerce order is made. We recognize retail store revenue at a point in time when a store satisfies a performance obligation and transfers control of the product to the customer, and the payment is due when a store order is made. Our revenue is recognized net of incentives and estimated returns. We periodically offer promotional incentives to customers, including basket promotional code discounts and other credits, that are treated as a reduction of revenue.

A portion of consumer product sales is generated through third-party sellers, who list the product on their websites. These sales are either fulfilled by us or through the third-party seller’s fulfillment services. We recognize the fees retained by the third-party sellers as expenses in cost of sales for inventory provided through drop-shipment arrangements.

We charge shipping fees to customers. Since control transfers to the customer after the shipping and handling activities, we account for these activities as fulfillment activities. All outbound shipping and handling costs are accounted for as fulfillment costs in cost of sales at the time revenue is recognized.

Licensing

We license trademarks under multi-year arrangements with consumer products, online and location-based entertainment businesses. Typically, the initial contract term ranges between one to ten years. Renewals are separately negotiated through amendments. Under these arrangements, we generally receive an annual nonrefundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year. Annual minimum guarantee amounts are billed quarterly, semi-annually, or annually in advance and these payments do not include a significant financing component. Earned royalties in excess of the minimum guarantee (“Excess Royalties”) are payable quarterly. The performance obligation is a license of symbolic IP that provides the customer with a right to access the IP, which represents a stand-ready obligation that is satisfied over time. 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 and the payment is usually due 30 days after the end of each reporting period. 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. As the sales reports from licensees are typically not received until after the close of the reporting period, we follow the variable consideration framework and constraint guidance using the expected value method to estimate the underlying sales volume to recognize Excess Royalties based on historical experience and general economic trends. Historical adjustments to recorded estimates have not been material.

Digital Subscriptions and Content

Digital subscription revenue is derived from subscription sales of playboyplus.com and playboy.tv primarily, which are online content platforms. Digital subscriptions represent a stand-ready obligation to provide continuous access to the platform, which is satisfied ratably over the term of the subscription. We receive fixed consideration shortly before the start of the subscription periods from these contracts, which are primarily sold in monthly, annual, or lifetime subscriptions. Revenues from lifetime subscriptions are recognized ratably over a five-year period, representing the estimated period during which the customer accesses the platforms. Revenues from digital subscriptions are recognized ratably over the subscription period.

Revenues generated from the sales of creator content offerings to consumers via our creator platform on playboy.com are recognized at the point in time when the sale is processed and the payment is due upon sale. Revenues generated from subscriptions to our creator platform and memberships to consumers are recognized ratably over the subscription/membership period. We receive fixed consideration shortly before the start of such subscription/membership periods, which are monthly, quarterly or annual. Revenues generated from events and sponsorships are recognized when the event occurs, and the payment terms vary on a contract by contract basis and usually are based on contract milestones.

We record revenue from sales of our tokenized digital art and collectibles at the point in time when the control is transferred on a gross basis and the payment is due upon sale. We are primarily responsible for fulfillment of the promise, have inventory risk, and have the latitude in establishing pricing and selecting suppliers, among other factors. As such, we determined that we are the principal in these transactions as we have custody and control of our digital assets prior to the sale to the customer, and discretion and latitude in establishing the price.

We also license our programming content to certain cable television operators and direct-to-home satellite television operators who pay royalties based on monthly subscriber counts and pay-per-view and video-on-demand buys for the right to distribute our programming under the terms of affiliation agreements. The distinct performance obligations under such affiliation agreements include (i) a continuous transmission service to deliver live linear feeds and (ii) licenses to our functional IP that are provided over the contract term that provide the operators the right to use our content library as it exists at a point in time. For both performance obligations, our IP is the predominant or sole item to which the royalties relate. Royalties are generally collected monthly and revenue is recognized as earned. The amount of royalties due to us is reported by operators based on actual subscriber and transaction levels. Such information is generally not received until after the close of the reporting period. In these cases, we follow the variable consideration framework and constraint guidance to estimate the number of subscribers and transactions to recognize royalty amounts based on historical experience. Historical adjustments to recorded estimates have not been material. We offer sales incentives through various programs, consisting primarily of co-op marketing. We record advertising with customers as a reduction to revenue unless we receive a distinct benefit in exchange for credits claimed by the customer and can reasonably estimate the fair value of the distinct benefit received, in which case we record it as a marketing expense.

Contract Assets and Contract Liabilities

The timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when we have an unconditional right to consideration which will become due solely due to the passage of time. We record a contract asset when revenue is recognized prior to invoicing or payment is contingent upon transfer of control of an unsatisfied performance obligation. We record a contract liability (deferred revenue) when revenue is recognized subsequent to cash collection. For long-term non-cancelable contracts whereby we have begun satisfying the performance obligation, we will record contract assets for the unbilled consideration which is contingent upon our future performance. Contract assets and contract liabilities are netted on a contract-by-contract basis.

Gift Card Liabilities

We account for gift cards sold to customers by recording a liability in other current liabilities and accrued expenses in our consolidated balance sheets at the time of sale, which is recognized as revenue when redeemed or when we have determined the likelihood of redemption to be remote, referred to as gift card breakage. Depending on the jurisdiction in which we operate, gift cards sold to customers have expiration dates from three to five years from the date of sale, or they do not expire and may be subject to escheatment rights. Our gift card liability totaled $1.7 million, $1.6 million and $1.6 million as of December 31, 2024, 2023 and 2022, respectively. Revenue recognized from unredeemed gift card beginning balances was $0.1 million for the years ended December 31, 2024 and 2023.

Cost of Sales

Selling and Administrative Expenses

Selling and administrative expenses primarily consist of corporate office and retail occupancy costs, personnel costs, including stock-based compensation, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.

Advertising Costs

We expense advertising costs as incurred. Advertising expenses were $4.9 million and $6.0 million for the years ended December 31, 2024 and 2023, respectively, excluding $2.9 million of advertising costs related to discontinued operations for the year ended December 31, 2023. We also have various arrangements with customers pursuant to which we reimburse them for a portion of their advertising costs in the form of co-op marketing which provide advertising benefits to us. The costs that we incur for such advertising costs are recorded as a reduction of revenue.

Stock-Based Compensation

We measure compensation expense for all stock-based payment awards, including stock options, restricted stock units and performance stock units granted to employees, directors, and non-employees, based on the estimated fair value of the awards on the date of grant. Compensation expense is recognized ratably in earnings, generally over the period during which the recipient is required to provide service. We adjust compensation expense based on actual forfeitures, as necessary. In the event of a modification to a previously granted award, the incremental cost of the modification is added to the unamortized cost as of the modification date and amortized over the remaining portion of the requisite service period of the modified award.

Our stock options vest ratably over the contractual vesting period, which is generally three to four years, and the fair value of the awards is estimated on the date of grant using a Black-Scholes option pricing model. The expected term of the stock options is estimated using the simplified method, as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The expected term represents an estimate of the time options are expected to remain outstanding. Our restricted stock units vest ratably over the contractual vesting period and the fair value of the awards is estimated on the date of grant as the underlying value of the award. Awards with graded vesting features are recognized over the requisite service period for the entire award. Our performance-based restricted stock units (“PSUs”) vest ratably over the derived requisite service period, which is generally two years, or upon achieving one of certain PLBY’s performance milestones during the contractual vesting period, with certain awards vesting fully upon change in control of the Company or upon sale of the majority of the assets of the Company. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations. The determination of the grant date fair value of PSUs issued is affected by a number of variables and subjective assumptions, including (i) the fair value of PLBY’s common stock, (ii) the expected common stock price volatility over the expected life of the award, (iii) the expected term of the award, (iv) risk-free interest rates, (v) the exercise price and (vi) the expected dividend yield. Forfeitures are recognized when they occur.

Troubled Debt Restructuring

As per ASC subtopic 470-60, “Troubled Debt Restructuring by Debtors” (“ASC 470-60”), a Troubled Debt Restructuring refers to a situation where the creditor grants concessions to a borrower experiencing financial difficulties. A lender is deemed to have granted a concession if the borrower’s effective interest rate on the restructured debt is less than the effective interest rate of the old debt immediately before the restructuring. Such restructuring is done with the intent to provide relief to the borrower and to maximize the potential for payable recovery by the lender.

In accordance with ASC 470-60, when the total future cash payments under the new terms are less than the carrying amount of the payable at the date of restructuring, the difference between the carrying amount and the total future cash payments is recognized as a gain on troubled debt restructuring in the consolidated financial statements. This gain is recorded immediately in the period the restructuring occurs. If the total future cash payments under the new terms exceed the carrying amount of the debt at the date of restructuring, no adjustment to the carrying amount of the debt is made. Instead, the Company calculates a new effective interest rate (“EIR”) based on the revised terms of the restructured debt. The debt is then amortized over the remaining term of the debt using the new EIR, with interest expense recognized based on such rate in future periods.

Income Taxes

We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. The carrying amounts of deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses, the duration of statutory carryforward periods, and tax planning alternatives. We use a two-step approach in recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals and litigation processes, if any. The second step is to measure the largest amount of tax benefit as the largest amount that is more likely than not to be realized upon settlement. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Significant management judgment is required in determining provision for income taxes, deferred tax assets and liabilities, tax contingencies, unrecognized tax benefits, and any required valuation allowance, including taking into consideration the probability of the tax contingencies being incurred. Management assesses this probability based upon information provided by its tax advisers, its legal advisers and similar tax cases. If at a later time the assessment of the probability of these tax contingencies changes, accrual for such tax uncertainties may increase or decrease.

The Company has a valuation allowance due to management’s overall assessment of risks and uncertainties related to its future ability in the U.S. to realize and, hence, utilize certain deferred tax assets, primarily consisting of net operating losses (“NOLs”), carry forward temporary differences and future tax deductions.

The effective tax rate for annual and interim reporting periods could be impacted if uncertain tax positions that are not recognized are settled at an amount which differs from the Company’s estimate. Finally, if the Company is impacted by a change in the valuation allowance resulting from a change in judgment regarding the realizability of deferred tax assets, such effect will be recognized in the interim period in which the change occurs.

Comprehensive Loss

Comprehensive loss consists of net loss and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net loss. Our other comprehensive loss represents foreign currency translation adjustment attributable to Honey Birdette operations. Refer to Consolidated Statements of Comprehensive Loss. Total foreign currency transaction gains and losses were immaterial for the years ended December 31, 2024 and 2023.

Mezzanine Equity

Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted to its redemptions value at each balance sheet date if the instrument is currently redeemable, or probable of becoming redeemable. Our Series B Convertible Preferred Stock, par value $0.0001 per share, issued in connection with the Exchange Agreement, as described in Note 10, Debt, and Note 13, Preferred Stock, is classified as mezzanine equity in our accompanying consolidated financial statements. We elected the accreted redemption value method under which the Series B Convertible Preferred Stock accretes changes in redemption value over the period from the date of issuance (November 13, 2024) to the potential redemption date (December 31, 2027) using the effective interest method. Such adjustments are included in preferred stock accretion on the Series B Convertible Preferred Stock in our Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit) and treated similarly to a dividend on preferred stock in accordance with U.S. GAAP.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to PLBY Group, Inc. stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period. In calculating basic and diluted earnings per share, the Company must allocate earnings to its participating securities with a corresponding reduction in the earnings attributable to common shares under the two-class method. Losses are only allocated to participating securities when the security holders have a contractual obligation to share in the losses of the Company with common stockholders. Because the holders of the Series B Convertible Preferred Stock do not have a contractual obligation to share in the Company’s losses with its common stockholders, the full amount of the Company’s losses for the year ended December 31, 2024 was attributed to the shares of common stock. Thus, the Series B Convertible Preferred Stock discussed in Note 13, Preferred Stock, has not been included in the diluted earnings per share for the year ended December 31, 2024. In calculating diluted earnings per share, the weighted-average number of shares outstanding for the period is increased to include all potentially dilutive securities. For periods in which we report net losses, diluted net loss per share is the same as basic net loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU’s amendments are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted this ASU on December 31, 2024, and applied the amendment retrospectively to all periods presented in our consolidated financial statements (refer to Note 21, Segments, for further details).

Accounting Pronouncements Issued but Not Yet Adopted

In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which addresses the accounting and disclosure requirements for certain crypto assets. This ASU requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. The ASU’s amendments are effective for all entities holding assets that meet certain scope criteria for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted for both interim and annual periods. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. We are currently evaluating the impact of this pronouncement, but we do not expect it to have a material impact on our disclosures and our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Under this ASU, public entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU’s amendments are effective for all entities that are subject to Topic 740, Income Taxes, for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of this pronouncement on our disclosures.

In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. An entity’s share of earnings or losses from investments accounted for under the equity method is not a relevant expense caption that requires disaggregation. Such ASU’s amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of this pronouncement on our disclosures and our consolidated financial statements.

2. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 inputs: Based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 inputs: Based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 inputs: Based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

For cash equivalents, receivables and certain other current assets and liabilities at December 31, 2024 and 2023, the amounts reported approximate fair value (Level 1) due to their short-term nature. For debt, based upon the refinancing of our senior secured debt in May 2021, its restatement in 2023 and subsequent amendments in 2023 and 2024, we believe that its carrying value as of December 31, 2024 and 2023 approximates fair value, as our debt is variable-rate debt that reprices to current market rates frequently. Refer to Note 10, Debt, for additional disclosures about our debt. Our debt is classified within Level 2 of the valuation hierarchy. The fair value of our artwork is based on Level 2 inputs, which include market prices obtained from recent auctions of similar works of art, or management’s judgment as to their salable value.

Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The following table summarizes the fair value of our financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Level 1 Level 2 Level 3 Total

Liabilities

Contingent consideration liability $ — $ — $ (513) $ (513)

Level 1 Level 2 Level 3 Total

Liabilities

Contingent consideration liability $ — $ — $ (399) $ (399)

There were no transfers of Level 3 financial instruments during the periods presented.

Contingent consideration liability relates to the contingent consideration recorded in connection with our 2021 acquisition of GlowUp Digital Inc. (“GlowUp”), which was acquired to build our creator platform, and represents the fair value for shares which may be still be issued and cash which may be paid to the GlowUp sellers, subject to certain indemnification obligations that remained unsettled as of December 31, 2024 and 2023.

We recorded the acquisition-date fair value of these contingent liabilities as part of the consideration transferred. The fair value option was elected for these contingent liabilities, as we believe fair value best reflects the expected future economic value. The fair value of contingent and deferred consideration was estimated using either (i) a Monte Carlo simulation analysis in an option pricing framework, using revenue projections, volatility and stock price as key inputs or (ii) a scenario-based valuation model using probability of payment, certain cost projections, and either discounting (in the case of cash-settled consideration) or stock price (for share-settled consideration) as key inputs. The analysis approach was chosen based on the terms of the purchase agreement and our assessment of appropriate methodology. The contingent payments and value of stock issuances are subsequently remeasured to fair value each reporting date using the same fair value estimation method originally applied with updated estimates and inputs as of December 31, 2024. Fair value change as a result of contingent liabilities fair value remeasurement in 2024 and 2023 was immaterial. We classified financial liabilities associated with the contingent consideration as Level 3 due to the lack of relevant observable inputs. Changes in key inputs described above could have an impact on the payout of contingent consideration.

Our Series A Preferred Stock liability, initially valued as of May 16, 2022 (the initial issuance date), and our subsequent Series A Preferred Stock liability, valued as of the August 8, 2022 (the final issuance date), were each calculated using a stochastic interest rate model implemented in a binomial lattice, in order to incorporate the various early redemption features. The fair value option was elected for Series A Preferred Stock liability, as we believe fair value best reflects the expected future economic value. Such liabilities are subsequently remeasured to fair value for each reporting date using the same valuation methodology as originally applied with updated input assumptions. In May 2023, in connection with the amendment and restatement of our senior secured credit agreement, the outstanding Series A Preferred Stock was exchanged for debt (and thereby ceased to be outstanding). Refer to Note 10, Debt, for further details. The fair value gain recorded in nonoperating income as a result of remeasurement of the fair value of our Series A Preferred Stock during the year ended December 31, 2023 was $6.5 million. We classified financial liabilities associated with our Series A Preferred Stock as Level 3 due to the lack of relevant observable inputs.

The following table provides information regarding significant unobservable inputs used in the valuation of our Series A Preferred Stock measured and recorded at fair value upon its exchange for debt in connection with the amendment and restatement of our senior secured credit agreement in May 2023 (amounts in thousands):

Total Fair Value Valuation Technique Unobservable Inputs Rate

$ 32,594 Binomial lattice model Preferred credit spread (annual) 18 %

Yield volatility 50 %

Dividend settlement Paid-in-kind (PIK)

The following table provides a roll-forward of the fair value of the liabilities categorized as Level 3 for the year ended December 31, 2024 (in thousands):

Contingent Consideration

Change in fair value and other 114

The decrease in the fair value of the contingent consideration for the year ended December 31, 2024 was primarily due to a decrease in a price per share of our common stock.

Assets and Liabilities Held for Sale

We initially measure an asset that is classified as held for sale at the lower of its carrying amount or fair value less costs to sell. We assess the fair value of an asset less costs to sell each reporting period that it remains classified as held for sale, and report any subsequent changes as an adjustment to the carrying amount of the asset. Assets are not depreciated or amortized while they are classified as held for sale.

In the fourth quarter of 2023, we began the sale of artwork assets, but they were not fully disposed of as of December 31, 2023 and 2024, and as such continued to be classified as current assets held for sale in our consolidated balance sheet as of December 31, 2024. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, for further details.

The assumptions used in measuring fair value of our artwork held for sale are considered Level 2 inputs, which include market prices obtained from recent auctions of similar works of art, or management’s judgment as to their salable value. During the year ended December 31, 2024, we recorded $3.8 million of impairment charges related to our artwork held for sale.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

In addition to liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis. Generally, the Company’s non-financial instruments, which primarily consist of goodwill, intangible assets, including digital assets, right-of-use assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions. Recognized losses related to the impairment of our digital assets during the year ended December 31, 2024 and 2023 were immaterial, and the fair value of our digital assets was immaterial as of December 31, 2024 and 2023. The fair value of digital assets held is predominantly based on Level 1 inputs.

We use an income approach, using discounted cash flow and relief from royalty valuation models with Level 3 inputs to measure the fair value of our non-financial assets, including goodwill, indefinite-lived trademarks and definite-lived trade names, and liabilities. With respect to goodwill, key assumptions applied in an income approach using the discounted cash flow valuation model include revenue growth rates and discount rates. With respect to indefinite-lived trademarks, key assumptions used in the income approach and the relief from royalty valuation model include revenue growth rates, royalty rates, and discount rates. With respect to the definite-lived trade names, key assumptions used in the relief from royalty valuation model include revenue growth rates, royalty rates and discount rates. Our cash flow projections represent management’s most recent planning assumptions, which are based on a combination of industry outlooks, views on general economic conditions, our expected pricing plans and expected future savings. Terminal values are determined using a common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant weighted-average cost of capital and long-term growth rates. Changes in key assumptions, namely discount rates, royalty rates and growth rates, could have an impact on the fair value of our non-financial assets and liabilities. At the impairment date in the third quarter of 2024, we recorded non-cash asset impairment charges related to the write-down of goodwill of $17.0 million. At the impairment date in the fourth quarter of 2023, we recorded impairment charges on our indefinite-lived Playboy-branded trademarks of $5.8 million. At the impairment date in the second quarter of 2023, we recorded non-cash asset impairment charges of $65.5 million related to the write-down of indefinite-lived trademarks and impairment charges of $66.7 million related to the write-down of goodwill and $5.1 million related to trade names and other assets.

The following table provides information regarding significant unobservable inputs used in the valuation of our intangible assets measured and recorded at fair value at the impairment date (dollar amounts in thousands):

Fair Value Valuation Technique Unobservable Inputs Range

Goodwill $ 16,084 Discounted cash flow Revenue growth rate 3.0% - 25.4%

Discount rate 19.0%

Discount rate 17.0%

Relief from royalty Revenue growth rate (9.9)% - 233.0%

Royalty rate 7.0%

Discount rate 16.0%

Relief from royalty Revenue growth rate (34.5)% - 200.0%

Royalty rate 7.0%

Trade names 12,550 Relief from royalty Revenue growth rate 3.0% - 10.0%

Royalty rate 3.0%

Discount rate 17.0%

Goodwill 21,176 Discounted cash flow Revenue growth rate 3.0% - 10.0%

Discount rate 14.0%

Series B Convertible Preferred Stock

On November 13, 2024, pursuant to the Exchange Agreement (as defined in Note 10 below), we issued an aggregate of 28,000.00001 shares of a newly created series of our preferred stock, par value $0.0001 per share, designated as “Series B Convertible Preferred Stock” (the “Series B Convertible Preferred Stock”), as consideration in exchange for approximately $6.4 million of Tranche A loans and approximately $58.9 million of Tranche B loans under the A&R Credit Agreement (as such terms are defined in Note, 10, Debt, refer to such Note 10, Debt, for additional details).

The fair value of the Series B Convertible Preferred Stock, initially measured as of November 13, 2024 (the initial issuance date), was estimated using a binomial lattice model in a risk-neutral framework (a special case of the income approach). Considering the conversion feature was out-of-the-money as of the issuance date and the Series B Convertible Preferred Stock is redeemable by us without penalty, we valued the Series B Convertible Preferred Stock as a non-convertible callable note. Specifically, our future yield is modeled using the Black-Derman-Toy interest rate model in a risk-neutral framework. For each modeled future yield, the value of the Series B Convertible Preferred Stock was calculated incorporating any optimal early prepayment/redemption. The value of the Series B Convertible Preferred Stock was then calculated as the probability-weighted present value over all future modeled payoffs.

The Series B Convertible Preferred Stock was classified as mezzanine equity in the consolidated balance sheet as of December 31, 2024. No subsequent fair value remeasurement is required.

We classified our Series B Convertible Preferred Stock as Level 3 due to the lack of relevant observable inputs. The following table provides information regarding significant unobservable inputs used in the valuation of our Series B Convertible Preferred Stock measured and recorded at fair value at the measurement date:

Fair Value per Share Unobservable Inputs Value

Risk-free rate 4.30%

Credit spread 11.0%

PLBY US Equity

PLBY · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

PLBY US Equity☆

PLBY · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

PLBY US Equity