PTRN 10-K & 10-Q changes, risk factors and insider trading

Net Revenue Retention Rate (“NRR”) is an important metric to measure the long-term performance of our brand partner relationships. In any given period, we calculate NRR by comparing total revenue attributable to all existing brand partners in the current trailing 12-month period to that of the previous trailing 12-month period. This metric, expressed as a percentage, provides valuable insight into the accelerated growth delivered through our platform, the effectiveness of our brand expansion strategies and our ability to deepen relationships with existing brand partners. “Existing brand partners” are defined as brand partners that, as of the measurement date, have been with Pattern for more than twelve months since we first generated over $1,000 in revenue attributable to such brand partner. “New brand partners” are defined as all other brand partners that are not existing brand partners. For purposes of our NRR calculation, for those existing brand partners that, as of the measurement date, have been with Pattern for more than twelve full months but less than 24 full months since we first generated over $1,000 in revenue attributable to such brand partner, we only include current period revenue for the corresponding months in the current period for which the brand partner had attributable revenue in the previous period. For example, when calculating NRR as of MarchJune 31,30, 2026 for a brand partner that Pattern first generated over $1,000 of attributable revenue in SeptemberDecember 2024, we would only include that brand partner’s attributable revenue from SeptemberDecember 2025 through MarchJune 2026 in the numerator and that brand partner’s attributable revenue from SeptemberDecember 2024 through MarchJune 2025 in the denominator. Current period revenue includes the impact of any expansion, contraction and attrition. NRR excludes revenue attributable to new brand partners during the current period. All revenue attributable to services relating to consulting and design are excluded.

In addition to our results determined in accordance with accounting principles generally accepted in the United States (“GAAP”), we believe that Adjusted EBITDA, a non-GAAP financial measure, is useful in evaluating our operational performance. We calculate Adjusted EBITDA, as net income excluding depreciation and amortization; interest income, net; provision for income taxes; share-based compensation expense and related taxes; indirect initial public offering and secondary offering costs; and other items that we do not consider representative of our underlying operations. We believe it is useful to exclude charges, such as depreciation and amortization and share-based compensation expense from our Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude interest income, net; provision for income taxes; and other items that are not components of our core business operations. Non-GAAP financial measures such as Adjusted EBITDA should not be considered in isolation or as an alternative to net income or any other measure of financial performance calculated and prescribed in accordance with GAAP. In addition, Adjusted EBITDA may not be comparable to similarly titled measures in other organizations because other organizations may not calculate Adjusted EBITDA in the same manner as we do, thus limiting its usefulness as a comparative measure.

Comparison of the three months ended MarchJune 31,30, 2025 and 2026

The increase in revenue was primarily driven by the growth of consumer product sales attributable to existing brand partners, as evidenced by our NRR of 127%129% for the period ended MarchJune 31,30, 2026. Revenue from Amazon marketplaces increased $194.6$239.0 million, or 38%,43%, year-over-year and revenue not attributable to Amazon increased $38.8$39.6 million, or 119%,93%, year-over-year. Collectively, international revenue increased $45.3$51.2 million, or 101%,87%, year-over-year.

The increase in operations, general and administrative expenses was primarily driven by an increase of $35.6$44.5 million in fulfillment costs associated with the increase in consumer product sales and the recognition of $4.1$6.6 million of stock-based compensation expense. The remaining $10.2 million increase was primarily driven by an increase in corporate headcountheadcount, depreciation, amortization, and rent expense.

The increase in sales and marketing expenses was primarily driven by an increase in marketplace commissions of $31.8$39.2 million, which generally grew in line with revenue on a percentage basis, and the recognition of $2.8$3.5 million of stock-based compensation expense. Partner marketing and advertising expenses increased $3.1$3.2 million year-over-year. The remaining $8.4 million increase was primarily driven by an increase in brand management, sales and marketing, advertising and creative headcount.

Our principal sources of liquidity are cash and cash equivalents. At MarchJune 31,30, 2026, we had cash and cash equivalents of $344.2$345.8 million. We also have access to external sources of liquidity through our revolving credit facility as further described within “Credit Facility” below.

Net cash provided by operating activities was $72.6$87.3 million for the threesix months ended MarchJune 31,30, 2026, which primarily consisted of $29.2$56.7 million of net income, $13.3$36.9 million of non-cash adjustments, such as stock-based compensation andcompensation, depreciation and amortization expense, and deferred income taxes, and a cash increasedecrease of $30.1$6.3 million from the management of the remaining working capital accounts.capital.

Net cash provided by operating activities was $48.4$50.4 million for the threesix months ended MarchJune 31,30, 2025, which primarily consisted of $22.8$46.6 million of net income, $4.0$9.7 million of non-cash adjustments, such as depreciation and amortization expense, and a cash increasedecrease of $21.6$5.8 million from the management of working capital.

Net cash used in investing activities was $9.3$20.2 million for the threesix months ended MarchJune 31,30, 2026, primarily related to capital expenditures for our internally developed software and investments in machinery, warehouse automation and leasehold improvements related to our warehouses and facilities.

Net cash used in investing activities was $5.2$10.6 million for the threesix months ended MarchJune 31,30, 2025, primarily related to capital expenditures for our internally developed software and investments in machinery and leasehold improvements related to our North Las Vegas warehouse and other warehouse automation.

Net cash used in financing activities was $8.3$10.5 million for the threesix months ended MarchJune 31,30, 2026, primarily related to the payment of $4.6$8.1 million for taxes withheld upon the vesting of restricted stock awardsRSUs and $3.6$3.7 million of Series A common stock repurchases. Additionally, we received $1.3 million in proceeds from our employee stock purchase plan.

Net cash used in financing activities was zero for the threesix months ended MarchJune 31,30, 2025.

As of MarchJune 31,30, 2026, we were party to a revolving credit facility with JPMorgan Chase Bank, N.A. and other lenders pursuant to the Credit Agreement dated September 4, 2025 (the “Credit Facility”). The Credit Facility provides for non-amortizing revolving loans in the aggregate principal amount of up to $150 million, with the option to increase the aggregate principal amount up to $250 million under certain conditions subject to lender approval. The Credit Facility matures in September 2030. The revolving line of credit bears interest at a variable base rate plus an applicable margin ranging from 0.50% to 2.00%. We are required to pay commitment fees on the unused portion that range from 0.20% to 0.25% per annum. Our obligations under the Credit Facility are guaranteed by certain of our subsidiaries and are secured by a first priority lien on substantially all of our tangible and intangible property.

As of MarchJune 31,30, 2026, we had no outstanding borrowings under the Credit Facility and we had a $150 million borrowing capacity under the Credit Facility. As of MarchJune 31,30, 2026, we were in compliance with the related financial covenants under the Credit Facility. For additional information, see Note 6—Credit Facilities, in the section titled “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report on Form 10-Q.

As of MarchJune 31,30, 2026, there have been no material changes to the contractual obligations or commitments from those described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report on Form 10-K.