GrabAGun Digital Holdings Inc. (PEW) Earnings

Management highlights

• Core Business Performance - Outpaced industry growth, achieved meaningful gross margin expansion, and maintained operating discipline and a strong balance sheet - 9% revenue growth was paired with only a 6% increase in cost of goods sold, resulting in a 39% increase in gross profit and 290 basis points of margin expansion - AI-driven pricing optimization, favorable mix shift to higher-priced, higher-margin products, and strong sourcing capabilities drove margin improvements - Sales and marketing expense remained approximately 1% of net revenue, reflecting a lean, efficient customer acquisition model built on long-term technology and trust investments - Mobile engagement grew to 71% of traffic (from 67% in Q1 2026) and 67.5% of revenue (from 64% in Q1 2026), aligning with shifting consumer digital preferences • Pew Logistics Strategic Initiative - A natural extension of the company's existing technology, compliance, fulfillment, and industry relationship capabilities to serve manufacturing customers - Onboarded its third manufacturing partner, Backwoods Suppressors, expanding into the growing suppressor product category - Operates with a capital-light, capital-efficient model and an attractive long-term margin profile, with strong potential to diversify revenue • Infrastructure and Leadership - Construction/outfitting of the new headquarters, fulfillment, and distribution facility remains on track to be fully operational in Q4 2026; this long-term investment expands capacity to support core business and Pew Logistics growth - Co-founder and current CFO Justin Hilty will retire, transitioning to an advisory role for a smooth handover; Jonathan Terry, a former senior finance leader at Yeti with public company and outdoor consumer product experience, will be appointed as the new CFO • Capital Allocation - Maintains a strong balance sheet with $97.5 million in cash and minimal debt at quarter end - Repurchased $2.4 million of common stock in the first half of 2026 under a $20 million share repurchase authorization; will continue opportunistic repurchases while maintaining balance sheet flexibility - Maintains a disciplined approach to M&A, actively evaluating opportunities that align with long-term strategy and will only act when deals deliver compelling long-term value without overpaying • Regulatory Positioning - The firearms industry is undergoing modernization driven by technology and changing consumer expectations, and the company is well-positioned to succeed regardless of regulatory changes from ongoing rulemaking - The company has 15 years of investment in digital infrastructure, compliance capabilities, and regulatory expertise to operate in the highly regulated firearms space

Guidance

• No formal numeric revenue or profit guidance was provided in the call, but management confirmed that the new fulfillment facility is on track to launch in Q4 2026 as previously planned - Starting from Q3 2026, year-over-year operating expense comparisons will become consistent on a like-for-like basis, as the final year of comparisons against the 2025 pre-public operating cost base concludes; general and administrative and public company incremental costs are expected to normalize after the upfront investment period - The Q2 2026 quarter-end cash balance was impacted by timing of accounts payable payments, and cash balances are expected to rebound in the second half of 2026 with no change to the underlying efficient working capital profile of the business - Management expects the Pew Logistics manufacturer onboarding pipeline to accelerate as early proof of concept with existing partners builds industry confidence, leading to snowballing adoption over time

Segment performance

For Q2 2026, total net revenue was $23.2 million, a 9.4% year-over-year increase from $21.2 million in Q2 2025. The firearms product segment generated $19.3 million in revenue, an 8.5% year-over-year increase, contributing 83.2% of total revenue. The non-firearms product segment generated $3.6 million in revenue, a 7% year-over-year increase, contributing 15.5% of total revenue. The new Pew Logistics third-party logistics platform segment processed over $1.9 million in gross merchandise value through the end of Q2 2026. Overall gross profit for the quarter was $3.1 million (13.5% margin), up from $2.2 million (10.6% margin) year-over-year.

Risks & headwinds

• Forward-looking statements (including Pew Logistics growth projections, regulatory outcomes, and future operational performance) are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from projections, including general macroeconomic and market uncertainty - The firearms industry operates in a highly regulated market, with ongoing regulatory rulemaking that has an uncertain final outcome that could impact business operations - Industry-specific softness in ammunition demand continues to impact non-firearms product sales performance - Seasonality impacts sales and new customer acquisition: the summer months typically see degradation in new customer acquisition and transaction volumes compared to the stronger fourth and first quarters

Analyst Q&A

• Q: The analyst asks to disentangle the drivers of 8.5% year-over-year firearm sales growth, clarifying whether average order value (AOV) growth comes from higher unit pricing, larger product baskets with more accessories, or a shift to higher-priced firearms. /

  A: Management confirms the AOV growth comes from a combination of all three factors: higher-priced, higher-quality firearms, and larger baskets that include more add-on accessories. They note they are pleased with the quality of this growth, which aligns with their strategic targets.

• Q: The analyst asks for details on the Pew Logistics pipeline of potential manufacturing partners, including whether there is hesitation among targets and the expected timeline for new signings. /

  A: Management confirms a sizable pipeline that includes all manufacturers the company already works with for its core retail business, but notes that direct-to-consumer platforms for manufacturers are new to the firearms industry, leading to some initial hesitation. They expect adoption to accelerate after more early proof of success from existing onboarding partners, leading to snowballing growth.

• Q: The analyst asks how working capital needs and cash balances will trend for the rest of 2026, following the Q2 drop driven by earlier accounts payable payments. /

  A: Management confirms the Q2 cash drop was purely driven by payment timing, not a change in the underlying working capital profile, and expects cash balances to rebound in the second half of the year. They also confirm general and administrative costs from public company conversion will also normalize going forward.

• Q: The analyst asks for an update on M&A strategy, including near-term appetite for deals, valuation trends for potential targets, and any changes to the company's approach. /

  A: Management confirms M&A remains a core part of long-term growth strategy, and the pipeline is still being actively evaluated. They will maintain their disciplined approach, will not overpay for deals or do deals just for the sake of growth, and will only move forward when an opportunity aligns with the company's long-term vision.