Pattern Group Q3 Revenue Rises 38% as Net Income Turns Positive

Pattern Group Inc. (NASDAQ: PTRN) reported a sharp increase in third-quarter 2026 revenue and swung to a GAAP profit, while net revenue retention strengthened and trailing-12-month cash generation expanded. The company also projected full-year revenue of $3.50 billion to $3.52 billion, representing growth of 40% to 41%.

Revenue rose 38% year over year to $886 million from $640 million in the third quarter of 2025. Net revenue retention increased to 127% from 122%, indicating higher trailing-12-month revenue from existing brand partners after accounting for expansion, contraction and attrition. The measure excludes new brand partners and revenue from consulting and design services.

Pattern recorded net income of $32 million, or 3.6% of revenue, compared with a net loss of $59 million, or 9.2% of revenue, a year earlier. The year-over-year comparison included a substantial reduction in stock-based compensation and related taxes, which fell to $13 million from $92 million.

Adjusted EBITDA, a non-GAAP measure, increased 40% to $57 million from $41 million. Adjusted EBITDA margin edged up to 6.5% from 6.4%, showing that underlying profitability remained broadly stable as revenue expanded.

Expense and cash-flow trends

Cost of goods sold increased slightly as a proportion of revenue, to 56.3% from 55.7%. Fulfillment expense represented 15.0% of revenue, compared with 14.8% a year earlier, while marketplace commissions declined to 14.0% from 14.3%. Sales and general and administrative expenses fell to 7.1% of revenue from 9.0%, and technology expenses rose to 1.8% from 1.3%.

Cash generation also improved. For the trailing 12 months ended in the third quarter, operating cash flow rose 54% to $142 million from $92 million. Free cash flow increased 50% to $106 million from $71 million, even as purchases of property and equipment rose to $36 million from $21 million.

Pattern ended the quarter with $352 million in cash, up from $313 million at the comparable prior-year point. Total available liquidity was $502 million, including $150 million available under its revolving credit facility.

2026 outlook

For the fourth quarter, management expects revenue of $965 million to $985 million, implying year-over-year growth of 34% to 36%. Adjusted EBITDA is projected at $54 million to $55 million, with a midpoint margin of 5.6%.

For full-year 2026, Pattern forecasts revenue between $3.502 billion and $3.521 billion, corresponding to growth of 40% to 41%. Adjusted EBITDA is expected to be $219 million to $220 million, with a midpoint margin of 6.3%. The guidance, dated Nov. 4, 2026, assumes an effective tax rate of about 26% for the year.

The company did not provide a reconciliation of its forward-looking adjusted EBITDA guidance to the corresponding GAAP measures, citing uncertainty and potential variability in the reconciling items.

Pattern identified several uncertainties that could affect its results, including the development of demand for its offerings, relationships with brand partners and marketplaces, access to marketplace data, consumer spending, tariffs and trade policies, supply-chain disruptions, foreign-exchange movements and competition. The company also cited technology-related risks, including unauthorized agentic activity, cyberattacks and data breaches, as well as potential difficulties forecasting demand, maintaining infrastructure and sustaining profitable growth.