Q2 2026 GrabAGun Digital Holdings Inc Earnings Call

August 13, 2026

Speaker #1: This call. On today's call are Marc Nemati, Chief Executive Officer, and Justin Hilty, Chief Financial Officer. A recording of this conference call will be available on the GrabAGun Investor Relations website shortly after this call has ended.

Speaker #1: After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #1: I'd like to take this opportunity to remind you that during the call we will be making certain forward-looking statements. This includes statements relating to the operating performance of our business, future financial results, and guidance, strategy, long-term growth, and overall future prospects.

Speaker #1: We may also make statements regarding regulatory or compliance matters. These statements are subject to known and unknown risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call.

Speaker #1: In particular, those described in our risk factors included in the form 10(k) for the fiscal year ended December 31, 2025, filed by the company with the SEC on March 12, 2026, as well as the current uncertainty and unpredictability in our business, the markets, and the global economy generally.

Speaker #1: You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on management's assumptions and beliefs as of the date hereof and GrabAGun disclaims any obligation to update any forward-looking statements except as required by law.

Speaker #1: Our discussion today will include non-GAAP financial measures, including adjusted EBITDA. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.

Speaker #1: Information regarding our non-GAAP financial measures including a reconciliation of our non-GAAP financial measures to our most comparable historical GAAP financial measures may be found in our earnings release, which we filed with the SEC earlier today.

Speaker #1: And is available on the company's investor relations site. I'll now turn the call over to Marc Nemati. Marc, please go ahead.

Speaker #2: Good afternoon, and thank you for joining us. The second quarter reflected continued execution along the long-term strategy we've been building over the past several years.

Speaker #2: We grew ahead of the industry, expanded margins meaningfully, and continued extending the capabilities we've built into the new opportunities like Pew Logistics. Which we believe will define the next era of firearms commerce.

Speaker #2: All while maintaining the operating discipline and balance sheet strength that sets us apart. Looking at the second quarter, net revenue increased 9% year over year to $23 million.

Speaker #2: With firearm sales of 8%, while gross margin expanded to approximately 13.5%. Firearm sales growth was primarily driven by an increase in average order value and a continued shift in mix towards higher price-point products, reflecting the strength of our customer value proposition.

Speaker #2: We're especially pleased with our disciplined approach to driving profitability. While revenue increased 9%, costs of goods sold increased by only 6%, resulting in a 39% increase in gross profit and gross margin expansion.

Speaker #1: Extending the capabilities we've built into the new opportunities like P Logistics, which we believe will define the next era of firearms commerce, all while maintaining the operating discipline and balance sheet strength that sets us apart.

Speaker #2: I mentioned a moment ago to approximately 13.5%, compared to 10.6% a year ago. Those results reflect the benefits of our AI-driven pricing optimization: a favorable product mix, our sourcing capabilities, and the initial contribution of Pew Logistics as we continue to scale the platform.

Speaker #1: Looking at the second quarter, net revenue increased 9% year over year to $23 million, with firearm sales of 8% while gross margin expanded to approximately $13.5%.

Speaker #2: Just as important is how efficiently we acquire and serve customers. Sales and marketing expense remained approximately 1% of net revenue, reflecting a very lean customer acquisition profile.

Speaker #1: Firearm sales growth was primarily driven by an increase in average order value and a continued shift in mix toward higher price-point products, reflecting the strength of our customer value proposition.

Speaker #2: That efficiency reflects years of investment in technology, supplier relationships, and customer trust, creating a competitive advantage that we believe is difficult to replicate. Pew Logistics continues to make meaningful progress as we extend the capabilities we've built over many years.

Speaker #1: We're especially pleased with our disciplined approach to driving profitability. While revenue increased 9%, cost of goods sold increased by only 6%, resulting in a 39% increase in gross profit and gross margin expansion, as I mentioned a moment ago, to approximately 13.5% compared to 10.6% a year ago.

Speaker #2: It is a natural extension of our technology, compliance expertise, fulfillment capabilities, and industry relationships, allowing us to serve manufacturing customers while creating another avenue for long-term growth.

Speaker #1: Those results reflect the benefits of our AI-driven pricing optimization, a favorable product mix, our sourcing capabilities, and the initial contribution of P Logistics as we continue to scale the platform.

Speaker #2: Pew Logistics has now processed more than $1.9 million in gross merchandise value through the end of the second quarter. We recently welcomed our third manufacturer, Backwoods Suppressors.

Speaker #1: Just as important is how efficiently we acquire and serve customers. Sales and marketing expense remained approximately 1% of net revenue, reflecting a very lean customer acquisition profile.

Speaker #2: Further expanding our reach into a growing product category. Combined with our nationwide FFL network, which places a licensed dealer within 15 miles of approximately 97% of the U.S.

Speaker #1: That efficiency reflects years of investment in technology, supplier relationships, and customer trust, creating a competitive advantage that we believe is difficult to replicate. P Logistics continues to make meaningful progress as we extend the capabilities we've built over many years.

Speaker #2: population, we continue to provide a fast, compliant customer experience with average checkout-to-delivery times of just under 3 business days. While the Pew Logistics business remains in its early stages, the progress we've made reinforces our confidence in the opportunity ahead.

Speaker #1: It is a natural extension of our technology, compliance expertise, fulfillment capabilities, and industry relationships, allowing us to serve manufacturing customers while creating another avenue for long-term growth.

Speaker #2: As we onboard new manufacturers and scale operations, we believe Pew Logistics has the potential to become an increasingly meaningful contributor to revenue diversification while benefiting from a capital-efficient operating model and an attractive long-term margin profile.

Speaker #1: P Logistics has now processed more than $1.9 million in gross merchandise value through the end of the second quarter. We recently welcomed our third manufacturer, Backwoods Suppressors.

Speaker #2: The combination of discipline execution, and the differentiated digital model, continue to create meaningful operating advantages for our business. Mobile engagement remains strong in the quarter, increasing to 71% of traffic from 67% in the first quarter, and accounting for 67.5% of revenue up from 64% in the first quarter.

Speaker #1: Further expanding our reach into a growing product category. Combined with our nationwide FFL network, which places a licensed dealer within 15 miles of approximately 97% of the U.S.

Speaker #1: For our population, we continue to provide a fast, compliant customer checkout-to-delivery time of just under three business days. While the P Logistics business remains in its early stages, the progress we've made reinforces our confidence in the opportunity ahead.

Speaker #2: As consumer behavior continues to shift towards digital channels, our technology platform enables a seamless customer experience while providing a structurally lower cost-per-transaction or cost-to-serve advantage, compared to traditional retail.

Speaker #1: As we onboard new manufacturers and scale operations, we believe P Logistics has the potential to become an increasingly meaningful contributor to revenue diversification, while benefiting from a capital-efficient operating model and an attractive long-term margin profile.

Speaker #2: During the quarter, we continued outfitting our new headquarters and fulfillment and distribution facility which remains on track to become fully operational in the fourth quarter of 2026.

Speaker #2: This investment, which we made, in Q4 2025, expands our operational capacity and positions us to support the continued growth of both the core business and Pew Logistics.

Speaker #1: The combination of discipline execution, and the differentiated digital model, continue to create meaningful operating advantages for our business. Mobile engagement remains strong in the quarter, increasing to 71% of first quarter, and accounting for 67.5% of revenue up from 64% in the first quarter.

Speaker #2: This is a long-term infrastructure investment that reflects our conviction in where the business is headed. Our approach to mergers and acquisitions remains disciplined. We are closely monitoring the landscape and actively evaluating opportunities that could accelerate our long-term vision.

Speaker #1: As consumer behavior continues to shift toward digital channels, our technology platform enables a seamless customer experience while providing a structurally lower cost-per-transaction, or cost-to-serve advantage, compared to traditional retail.

Speaker #2: Our strong balance sheet and liquidity position provides us with the flexibility to continue investing in our business while remaining disciplined in our approach to capital allocation.

Speaker #2: We will remain patient and act only when the right opportunity aligns with our strategy and creates compelling long-term value. Stepping back, the second quarter reflects the continued evolution of our business.

Speaker #1: During the quarter, we continued outfitting our new headquarters and fulfillment and distribution facility, which remains on track to become fully operational in the fourth quarter of 2026.

Speaker #1: This investment, which we made in Q4 2025, expands our operational capacity and positions us to support the continued growth of both the core business and P Logistics.

Speaker #2: Our core e-commerce platform continues to grow and increase gross margin year over year. While the capabilities we've built over the past 15 years are beginning to create new opportunities through Pew Logistics, firearms consumers increasingly expect a frictionless, digitally native experience, and we believe our capabilities, technology, compliance expertise, and a scalable operating model position us to compete effectively today while creating additional avenues for growth over time.

Speaker #1: This is a long-term infrastructure investment that reflects our conviction in where the business is headed. Our approach to mergers and acquisitions remains disciplined, we are closely monitoring the landscape and actively evaluating opportunities that could accelerate our long-term vision.

Speaker #1: Our strong balance sheet and liquidity position provides us with the flexibility to continue investing in our business while remaining disciplined in our approach to capital allocation.

Speaker #2: The firearms industry is entering an important period of modernization, driven by evolving technology and changing consumer expectations. As the industry evolves, we believe technology can enable more efficient, lawful purchasing experience while preserving features that matter most: background checks and core compliance safety guards that remain fundamental to the category.

Speaker #1: We will remain patient and act only when the right opportunity aligns with our strategy and creates compelling long-term value. Stepping back, the second quarter reflects the continued evolution of our business.

Speaker #1: Our core e-commerce platform continues to grow and increase gross margin year over year. While the capabilities we've built over the past 15 years are beginning to create new opportunities through P Logistics, firearms consumers increasingly expect a frictionless, digitally native experience, and we believe our capabilities, technology, compliance expertise, and scalable operating model position us to compete effectively today, while creating additional avenues for growth over time.

Speaker #2: I want to be measured here. Any potential changes remain subject to the rulemaking process, and we won't speculate on where those regulations ultimately land.

Speaker #2: Instead, we'll continue focusing on what we can control: investing in technology, compliance capabilities, and customer relationships required to operate successfully in one of the nation's most highly regulated industries.

Speaker #2: Regardless of how the rulemaking process ultimately unfolds, GrabAGun is well-positioned. For more than 15 years, we've invested in the digital infrastructure, compliance capabilities, and regulatory expertise required to operate as the intersection of e-commerce and a highly regulated market.

Speaker #1: The firearms industry is entering an important period of modernization, driven by evolving technology and changing consumer expectations. As the industry evolves, we believe technology can enable more efficient, lawful purchasing experience while preserving features that matter most: background checks and core compliance safety cards that remain fundamental to the category.

Speaker #2: If the industry continues to modernize, we believe few companies are better prepared to serve customers within a compliant framework. And our readiness is the result of our investments in technology, compliance, and customer relationships.

Speaker #1: I want to be measured here. Any potential changes remain subject to the rulemaking process, and we won't speculate on where those regulations ultimately land.

Speaker #2: With that, I'll turn the call over to Justin to walk through the financials in more detail. Justin?

Speaker #3: Thank you, Marc. I'll now provide additional details on our second quarter financial performance. Second quarter total revenues were $23.2 million, an increase of 9.4% compared to 21.2 million in the second quarter of fiscal 2025.

Speaker #1: Instead, we'll continue focusing on what we can control: investing in technology, compliance capabilities, and customer relationships required to operate successfully in one of the nation's most highly regulated industries.

Speaker #1: Regardless of how the rulemaking process ultimately unfolds, GrabAGun is well-positioned. For more than 15 years, we've invested in the digital infrastructure, compliance capabilities, and regulatory expertise required to operate at the intersection of e-commerce and a highly regulated market.

Speaker #3: Firearms product sales increased 8.5% year over year to 19.3 million, reflecting the continued benefits of our AI-powered pricing and demand forecasting capabilities which enable us to better serve customers while optimizing our business performance.

Speaker #1: If the industry continues to modernize, we believe few companies are better prepared to serve customers within a compliant framework. And our readiness is the result of our investments in technology, compliance, and customer relationships.

Speaker #3: Non-firearms product sales were $3.6 million, an increase of 7% year over year, despite continued softness in ammunition demand across the broader 2A industry. We remain focused on leveraging our differentiated capabilities, including our data-driven approach to pricing, demand planning, and customer engagement, allowing us to navigate market conditions and effectively drive sustainable long-term growth.

Speaker #1: With that, I'll turn the call over to Justin to walk through the financials in more detail. Justin?

Speaker #2: Thank you, Mark. I will now provide additional details on our second quarter financial performance. Second quarter total revenues were $23.2 million, an increase of 9.4% compared to 21.2 million in the second quarter of fiscal 2025.

Speaker #3: Gross profit in the second quarter was $3.1 million, representing 13.5% of net sales, compared to $2.2 million, or 10.6% of net sales, in the prior year period.

Speaker #2: Firearms product sales increased 8.5% year over year to 19.3 million, reflecting the continued benefits of our AI-powered pricing and demand forecasting capabilities which enable us to better serve customers while optimizing our business performance.

Speaker #3: Gross margin improved by approximately $290 basis points, driven by a more favorable sales mix towards higher margin firearms categories and the continued execution of our pricing optimization initiatives.

Speaker #2: Non-firearms product sales were 3.6 million, an increase of 7% year over year, despite continued softness in ammunition demand across the broader 2A industry. We remain focused on leveraging our differentiated capabilities, including our data-driven approach to pricing, demand planning, and customer engagement, allowing us to navigate market conditions and effectively drive sustainable long-term growth.

Speaker #3: We remain focused on identifying opportunities to improve gross margin over time through continued mix optimization, pricing discipline, and the expansion of higher margin opportunities such as Pew Logistics, while maintaining our competitive positioning and delivering value to our customers.

Speaker #3: Operating expenses in the second quarter were $5.7 million compared to $1.5 million in the prior year period. The year-over-year increase reflects investments to support the long-term growth of the business, including incremental resources and infrastructure required to operate as a public company, continued investments in the expansion of Pew Logistics, and headcount aligned with our growth initiatives.

Speaker #2: Gross profit in the second quarter was $3.1 million, representing 13.5% of net sales, compared to $2.2 million, or 10.6% of net sales, in the prior year period.

Speaker #2: Gross margin improved by approximately 290 basis points, driven by a more favorable sales mix toward higher margin firearms categories and the continued execution of our pricing optimization initiatives.

Speaker #3: As a reminder, the second quarter of fiscal 2025 represented a pre-public period, and the current year, comparison reflects the incremental costs associated with building the capabilities to support the business as we scale.

Speaker #2: We remain focused on identifying opportunities to improve gross margin over time through continued mix optimization, pricing discipline, and the expansion of higher-margin opportunities, such as P Logistics, while maintaining our competitive positioning and delivering value to our customers.

Speaker #3: We have now reached the final quarter of year-over-year comparisons reflecting these incremental costs. Beginning next quarter, our expense comparisons will be on a more consistent, like-for-like basis, providing greater visibility into the underlying performance and cost structure of the business while allowing us to continue leveraging the investments we have made to support our long-term growth.

Speaker #2: Operating expenses in the second quarter were $5.7 million compared to $1.5 million in the prior year period. The year-over-year increase reflects investments to support the long-term growth of the business, including incremental resources and infrastructure required to operate as a public company, continued investments in the expansion of P Logistics, and headcount aligned with our growth initiatives.

Speaker #3: Net loss for the second quarter was $1.8 million, compared to net income of $0.8 million in the prior year period. The year-over-year change was primarily driven by the increase in operating expenses discussed above, including higher G&A expenses I just discussed associated with operating as a public company and supporting our growth initiatives.

Speaker #2: As a reminder, the second quarter of fiscal 2025 represented a pre-public period, and the current-year comparison reflects the incremental costs associated with building the capabilities to support the business as we scale.

Speaker #3: Adjusted EBITDA for the second quarter was a loss of $1.7 million, compared to adjusted EBITDA of $0.9 million in the prior year period. The year-over-year change reflects the planned investments we are making to support the long-term growth of the business, including Pew Logistics and the incremental resources to support our growth initiatives.

Speaker #2: We have now reached the final quarter of year-over-year comparisons reflecting these incremental costs. Beginning next quarter, our expense comparisons will be on a more consistent, like-for-like basis, providing greater visibility into the underlying performance and cost structure of the business, while allowing us to continue leveraging the investments we have made to support our long-term growth.

Speaker #3: These investments were partially offset by higher gross profit from revenue growth and gross margin expansion. Turning to the balance sheet, we ended the quarter with $97.5 million in cash and minimal debt.

Speaker #2: Net loss for the second quarter was $1.8 million, compared to net income of $0.8 million in the prior year period. The year-over-year change was primarily driven by the increase in operating expenses discussed above, including higher G&A expenses I just discussed associated with operating as a public company and supporting our growth initiatives.

Speaker #3: The decrease in cash during the quarter was primarily driven by the timing of working capital as we reduced accounts payable towards the end of June.

Speaker #3: Our business model benefits from an efficient working capital profile as we collect cash from customers before paying our suppliers. However, the timing of these payments can impact quarter-end cash balances.

Speaker #2: Adjusted EBITDA for the second quarter was a loss of $1.7 million, compared to adjusted EBITDA of $0.9 million in the prior year period. The year-over-year change reflects the planned investments we are making to support the long-term growth of the business, including P Logistics and incremental resources to support our growth initiatives.

Speaker #3: As a result, we ended the quarter with $9.3 million in inventory and $7.8 million in accounts payable. For comparison, we ended Q1 with $13 million in accounts payable and relatively the same inventory balance in Q2.

Speaker #3: We view the second quarter-end impact as timing-related and do not expect it to represent a change in the underlying working capital profile of the business.

Speaker #2: These investments were partially offset by higher gross profit from revenue growth and gross margin sheet, we ended the quarter with $97.5 million in cash and minimal debt.

Speaker #3: While our current performance continues to be anchored by our core e-commerce business, we see Pew Logistics as an important opportunity to further diversify our revenue base and enhance our margin profile over time.

Speaker #2: The decrease in cash during the quarter was primarily driven by the timing of working capital, as we reduced accounts payable toward the end of June.

Speaker #3: The business benefits from an attractive higher margin profile and asset light operating model and the ability to leverage our existing infrastructure and capabilities. As the platform scales, we believe Pew Logistics has the potential to become a meaningful contributor to growth and margin expansion while creating additional long-term value for the company.

Speaker #2: Our business model benefits from an efficient working capital profile, as we collect cash from customers before paying our suppliers. However, the timing of these payments can impact quarter-end cash balances.

Speaker #2: As a result, we ended the quarter with $9.3 million in inventory and $7.8 million in accounts payable. For comparison, we ended Q1 with $13 million in accounts payable and a relatively similar inventory balance in Q2.

Speaker #3: For the first six months of the year, we repurchased approximately $2.4 million of our common stock under our $20 million share repurchase authorization. We will continue to evaluate opportunistic share repurchases while maintaining a disciplined approach to capital allocation and preserving balance sheet flexibility to support our long-term growth initiatives.

Speaker #2: We view the second quarter-end impact as timing-related and do not expect it to represent a change in the underlying working capital profile of the business.

Speaker #2: While our current performance continues to be anchored by our core e-commerce business, we see P Logistics as an important opportunity to further diversify our revenue base and enhance our margin profile over time.

Speaker #3: As we look ahead, our priorities remain centered on investing in the initiatives that support long-term growth. These include continuing to expand Pew Logistics through the addition of new manufacturers while building market share and strengthening the position of our core e-commerce business.

Speaker #2: The business benefits from an attractive higher margin profile, an asset-light operating model, and the ability to leverage our existing infrastructure and capabilities. As the platform scales, we believe P Logistics has the potential to become a meaningful contributor to growth and margin expansion while creating additional long-term value for the company.

Speaker #3: At the same time, we remain committed to disciplined expense management and thoughtful capital allocation as we invest in opportunities that we believe will create long-term shareholder value.

Speaker #3: Our strong balance sheet and prudent financial approach position us well to execute on these strategic priorities while maintaining flexibility to pursue future opportunities. With that, I'll turn the call back over to Marc before we move on to the Q&A.

Speaker #2: For the first six months of the year, we repurchased approximately $2.4 million of our common stock under our $20 million share repurchase authorization. We will continue to evaluate opportunistic share repurchases while maintaining a disciplined approach to capital allocation and preserving balance sheet flexibility to support our long-term growth initiatives.

Speaker #3: Marc?

Speaker #2: Thank you, Justin. I would like to briefly reinforce a few of the key themes from today's discussion before we move to Q&A. We are pleased with the progress we continue to make across the business.

Speaker #2: As we look ahead, our priorities remain centered on investing in the initiatives that support long-term growth. These include continuing to expand P Logistics through the addition of new manufacturers while building market share and strengthening the position of our core e-commerce business.

Speaker #2: Our second quarter results demonstrate the strength of our platform, including the continued growth in our core e-commerce business and the benefits of technology investments we have made over the past 15 years.

Speaker #2: We remain excited about the continued expansion of Pew Logistics as we add new manufacturers and leverage our existing infrastructure technology and relationships to create an additional avenue for long-term growth and value creation.

Speaker #2: At the same time, we remain committed to disciplined expense management and thoughtful capital allocation as we invest in opportunities that we believe will create long-term shareholder value.

Speaker #2: Our strong balance sheet and prudent financial approach position us well to execute on these strategic priorities while maintaining flexibility to pursue future opportunities. With that, I'll turn the call back over to Mark before we move on to the Q&A.

Speaker #2: Finally, before we move to the Q&A portion of today's call, I would like to take a moment to recognize an important leadership transition for the company.

Speaker #2: After more than 15 years of dedicated service, Justin has decided to retire. As our co-founder and CFO, he has played an important role in our growth and evolution over the years, and we are incredibly grateful for his leadership, commitment, and many contributions to GrabAGun.

Speaker #2: Mark?

Speaker #3: Thank you, Justin. I would like to briefly reinforce a few of the key themes from today's discussion before we move to Q&A. We are pleased with the progress we continue to make across the business.

Speaker #3: Our second-quarter results demonstrate the strength of our platform, including the continued growth in our core e-commerce business and the benefits of technology investments we have made over the past 15 years.

Speaker #2: Justin will remain with us in an advisory capacity to support a smooth transition and knowledge transfer. We believe that the continuity will be valuable as we welcome our new CFO and begin the next chapter of financial leadership.

Speaker #3: We remain excited about the continued expansion of P Logistics as we add new manufacturers and leverage our existing infrastructure, technology, and relationships to create an additional avenue for long-term growth and value creation.

Speaker #2: I'm also pleased to announce that Jonathan Terry has been named as our next Chief Financial Officer. He brings valuable public company experience, and a strong background in consumer products within the outdoor space.

Speaker #3: Finally, before we move to the Q&A portion of today's call, I would like to take a moment to recognize an important leadership transition for the company.

Speaker #2: Most recently serving in a senior finance role at Yeti. We are confident that his experience will be a strong fit for our business, and we look forward to welcoming him to our leadership team and to having him build on the strong foundation Justin has helped establish.

Speaker #3: After more than 15 years of dedicated service, Justin has decided to retire. As our co-founder and CFO, he has played an important role in our growth and evolution over the years, and we are incredibly grateful for his leadership, commitment, and many contributions to GrabAGun.

Speaker #2: On behalf of the entire company and our board, I want to thank Justin for the many years he has devoted to GrabAGun and for the important role he has played in building the company we are today.

Speaker #3: Justin will remain with us in an advisory capacity to support a smooth transition and knowledge transfer. We believe that this continuity will be valuable as we welcome our new CFO and begin the next chapter of financial leadership.

Speaker #2: We wish him all the very best in his retirement. With that, Operator, please open the line for questions.

Speaker #1: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand.

Speaker #3: I'm also pleased to announce that Jonathan Terry has been named as our next Chief Financial Officer. He brings valuable public company experience and a strong background in consumer products within the outdoor space.

Speaker #1: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Matt Koranda with Roth Capital.

Speaker #3: Most recently serving in a senior finance role at Yeti. We are confident that his experience will be a strong fit for our business, and we look forward to welcoming him to our leadership team and to having him build on the strong foundation Justin has helped establish.

Speaker #1: Matt, your line is now open. Please go ahead.

Speaker #3: On behalf of the entire company and our board, I want to thank Justin for the many years he has devoted to GrabAGun, and for the important role he has played in building the company we are today.

Speaker #4: Hey, guys. Good afternoon and congrats to Justin. I guess just on the firearm sales commentary that you gave up eight and a half percent, I think, year over year, you mentioned AOV growth was a driver there, but maybe just could you maybe disentangle AOV growth from transaction or unit count?

Speaker #3: We wish him all the very best in his retirement. With that, operator, please open the line for questions.

Speaker #1: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #1: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #5: Hey, Matt. Yeah, thanks. Thanks for joining. Yeah, definitely AOV growth on the firearm unit sales kind of drove that growth in revenue. We have higher AOVs in addition to better gross margins by purchasing capabilities of buying more of the stuff.

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Matt Kuranda with Roth Capital.

Speaker #5: So a lot of our initiative is to also grow the rest of the basket as well. So AOV is also growing as a combination of firearms as well as all the additive accessories.

Speaker #1: Matt, your line is now open. Please go ahead.

Speaker #4: Hi, guys. Good afternoon, and congrats to Justin. I guess just on the firearm sales commentary that you gave—up eight and a half percent, I think, year over year—you mentioned AOV growth was a driver there. But maybe, could you disentangle AOV growth from transaction or unit count?

Speaker #5: So really, we're happy with the quality of the growth, and it's really the outcome that we're targeting.

Speaker #4: Okay. So the AOV growth commentary was more around the bigger basket and accessories attached versus I guess AUR or unit pricing growth within firearms?

Speaker #5: Hey, Matt. Yeah, thanks. Thanks for joining. Yeah, definitely, AOV growth on the firearm unit sales kind of drove that growth in revenue. We have higher AOVs, in addition to better gross margins, by purchasing capabilities of buying more of the stuff.

Speaker #5: It's kind of a combination of the two. So yes, AOV is growing, but also we're selling higher-quality, higher-priced firearms as well.

Speaker #4: Okay. All right. Gotcha. All right. Cool. And then I guess, Justin Nix has been a little spiky as of late. Just curious, to hear from you sort of how you think your share and relative performance versus adjusted Nix has been over the last couple of months, maybe in June and July.

Speaker #5: So, a lot of our initiative is to also grow the rest of the basket as well. So, AOV is also growing as a combination of firearms as well as all the additive accessories.

Speaker #5: So really, we're happy with the quality of the growth, and it's really the outcome that we're targeting.

Speaker #4: It'd be helpful to hear.

Speaker #5: Yeah. I mean, July is definitely interesting. A lot of stuff here, obviously, is Q2 numbers. So seasonality definitely has a big role to play.

Speaker #4: Okay, so the AOV growth commentary is more around the bigger basket and accessories attached, versus, I guess, AUR or unit pricing growth within firearms?

Speaker #5: For us in our industry, so summertime typically we see that degradation of Nix. And total transactions throughout the year, just because summertime people are outside and it's typically not the best buying time for firearms, and we see Q4 and Q1 are typically higher in that regard.

Speaker #5: It's kind of a combination of the two. So yes, AOV is growing, but also we're selling higher-quality, higher-priced firearms as well.

Speaker #4: Okay. All right. Gotcha. All right. Cool. And then I guess Justin Nix has been a little spiky as of late. Just curious to hear from you, sort of how you think your share and relative performance versus adjusted Nix has been over the last couple of months, maybe in June and July.

Speaker #4: Okay. Gotcha. On the Pew Logistics service, did it see it ramping? I think you guys said three manufacturers are now signed up. Is there any way to quantify the pipeline of opportunity ahead, I guess, just in terms of manufacturers that might be in the funnel or dollars of potential GMV that you're targeting?

Speaker #4: It'd be helpful to hear.

Speaker #5: Yeah, I mean, July is definitely interesting. A lot of stuff here, obviously, is Q2 numbers, so seasonality definitely has a big role to play.

Speaker #5: Yeah. So yeah, you're correct. We have three now added to the platform. And we're really onboarding new partners and optimizing for near-term granularity. So we have a pretty sizable pipeline, and the mix of those manufacturers is pretty wide.

Speaker #5: For us in our industry, summertime typically brings that degradation of NICS and total transactions throughout the year, just because summertime people are outside and it's typically not the best buying time for firearms, but we see Q4 and Q1 are typically higher in that regard.

Speaker #5: As you noticed, the most recent one is a suppressor company. So we just want to make sure that we're applying all the features and functions to the platform across the breadth of products that our manufacturers carry.

Speaker #4: Okay. Gotcha. On the Pew Logistics service, good to see it ramping. I think you guys said three manufacturers are now signed up. Is there any way to quantify the pipeline of opportunity ahead, I guess, just in terms of manufacturers that might be in the funnel or dollars of potential GMV that you're targeting?

Speaker #5: In terms of quantifying the total pipeline, I mean, it's obviously with all the manufacturers that we carry on the GrabAGun side, those are more or less all of our targets.

Speaker #5: Which is a high number of manufacturers. And we're going to continue to target those and we should see more sign on as time progresses.

Speaker #5: Yeah, so yeah, you're correct. We have three now added to the platform, and we're really onboarding new partners and optimizing for near-term granularity. So, we have a pretty sizable pipeline, and the mix of those manufacturers is pretty wide.

Speaker #4: Okay. And in terms of sort of the progress, in terms of sign-ups, I assume maybe you need a bit of time to kind of prove out the offering to some of the more hesitant customers that are in the funnel.

Speaker #5: As you noticed, the most recent one is a suppressor company. So, we just want to make sure that we're applying all the features and functions to the platform across the breadth of products that our manufacturers carry.

Speaker #4: Roughly, how long do you think some folks need to evaluate the service before they sort of make a decision, go no-go on it?

Speaker #5: In terms of quantifying the total pipeline, I mean, obviously, with all the manufacturers that we carry on the GrabAGun side, those are more or less all of our targets.

Speaker #5: Yeah, it's a very kind of new offering. It's very disruptive to the industry. It's obviously not a new offering to retail in general, but to the firearm space, having a manufacturer have a direct-to-consumer e-commerce platform is new.

Speaker #5: Which is a high number of manufacturers. We’re going to continue to target those, and we should see more sign on as time progresses.

Speaker #5: So I think there is some hesitation to understanding the how consumers will react to this. Obviously, having Caltech and Daria now backwards on there is proof to the industry and these other manufacturers how customers are appreciating the service and how it's beneficial for manufacturers.

Speaker #5: I think as we sign on a few more manufacturers, the snowball will start to take hold. And more and more manufacturers will increasingly become members of the platform.

Speaker #4: Roughly, how long do you think some folks need to evaluate the service before they sort of make a decision, go no-go on it?

Speaker #4: Okay. Gotcha. And maybe just on the cash flow front, I guess, how should we think about working capital needs for the rest of the year?

Speaker #4: It seems like we could normalize payables for the remainder of the year, just given your timing commentary. So then maybe suggest we get a little bit of cash out of working capital in the second half of the year here, just wanted to kind of get your thought process on cash and cash levels for the remainder of the year.

Speaker #5: So I think there is some hesitation to understanding the how consumers will react to this. Obviously, having Caltech and Daria now backwards on there is proof to the industry and to other manufacturers how customers are appreciating the service and how it's beneficial for manufacturers.

Speaker #5: Yeah, definitely. Yeah, as Justin commented earlier, a lot of that was AP timing is kind of what adjusted the cash number for Q2. So we should see that rebound.

Speaker #5: I think as we sign on a few more manufacturers, the snowball will start to take hold, and more and more manufacturers will increasingly become members of the platform.

Speaker #5: It's all kind of timing-dependent upon when the quarter closes is when those payables are due. So yeah, we should, as you said, we should see it rebound here.

Speaker #4: Okay. Gotcha. And maybe just on the cash flow front, I guess, how should we think about working capital needs for the rest of the year?

Speaker #5: And then on G&A also, you should see that start to normalize as we've kind of gotten through the public initial upfront public company costs and those start to normalize over time as well.

Speaker #4: Yeah. Okay. You kind of preempted one of the questions I had on G&A, which was just last year, I think there were some maybe some one-timer in the G&A line in the third quarter from your kind of new public company costs.

Speaker #5: Yeah, definitely. As Justin commented earlier, a lot of that was AP timing—it's kind of what adjusted the cash number for Q2. So we should see that rebound.

Speaker #4: So just kind of plotting that against the run rate that you're on in the second quarter, maybe just if you could give us a little bit of color on sort of how we should be thinking about quarterly run rate on G&A on a go-forward basis, that'd be very helpful.

Speaker #5: It's all kind of timing-dependent upon when the quarter closes and when those payables are due. So, yeah, as you said, we should see it rebound here.

Speaker #5: Yeah, especially as compared to last year, it's definitely going to stabilize. Like I said, because of public company costs. There are also additive expenses in there that are part of the ramp-up for there that may phase out over the duration of the year and into next year.

Speaker #5: And then on G&A also, you should see that start to normalize as we've kind of gotten through the initial upfront public company costs, and those start to normalize over time as well.

Speaker #4: Yeah, okay. You kind of preempted one of the questions I had on G&A, which was — just last year, I think there were maybe some one-timers in the G&A line in the third quarter from your kind of new public company costs.

Speaker #5: So you should see a moderate flattening out of G&A expenses.

Speaker #4: Okay. Gotcha. And then just lastly, I'll turn it over to anyone else who wants to ask questions. Just on the M&A front, I know I asked you this probably every quarter, but just latest thinking around sort of the pipeline there, I'd imagine sort of the potential sort of buckets of targets that you have haven't changed, but maybe just any increasing appetite to give something done in the near term, what do multiples look like, and sort of expectations from sellers look like in the current environment?

Speaker #4: So, just kind of plotting that against the run rate that you're on in the second quarter—maybe, if you could give us a little bit of color on how we should be thinking about the quarterly run rate on G&A on a go-forward basis, that would be very helpful.

Speaker #5: Yeah, especially as compared to last year's definitely going to stabilize. Like I said, because of public company costs. There are also additive expenses in there that are part of the ramp-up for there that may phase out over the duration of the year and into next year.

Speaker #5: Yeah. No, I appreciate you asking this question every time because it is definitely one of the exciting parts of our long-term growth plan is that M&A process.

Speaker #5: So, you should see a moderate flattening out of G&A expenses.

Speaker #5: So but it's kind of the same as I've mentioned before, where we're going to be very disciplined with how we deploy that investor capital.

Speaker #5: M&A is still part of the thesis. We're constantly evaluating targets and we will move when we see opportunity has aligned itself with our long-term vision.

Speaker #5: Multiples of private companies are kind of all over the map, as I'm sure you're probably aware, but again, with our discipline structure, we're going to make sure that we're not going to overpay or again, not just make a deal for the sake of making a deal.

Speaker #5: And we're going to continue along that on that course.

Speaker #5: Yeah. No, I appreciate you asking this question every time because it is definitely one of the exciting parts of our long-term growth plan is that M&A process.

Speaker #3: Okay.

Speaker #4: Very clear. I'll leave it there. Thanks, guys.

Speaker #5: Thanks, Matt.

Speaker #5: So, but it's kind of the same as I've mentioned before, where we're going to be very disciplined with how we deploy that investor capital.

Speaker #1: We have reached the end of the Q&A session. I will now turn the call back to Marc Nematy for closing remarks.

Speaker #5: Before we sign off, I want to thank again, Justin, for the many years of service. He has given to the company. I'd also like to thank, as always, our employees whose dedication and hard work makes everything we do possible.

Speaker #5: M&A is still part of the thesis. We're constantly evaluating targets, and we will move when we see an opportunity has aligned itself with our long-term vision.

Speaker #5: And I also want to thank our shareholders for your continued support and confidence in grabbing them. Thanks, everybody, for your time today, and we look forward to speaking with you on our next call.

Speaker #5: And we're going to continue along that on that course.

Speaker #3: Okay.

Speaker #4: Very clear. I'll leave it there. Thanks, guys.

Speaker #5: Thanks a lot.

Speaker #1: We have reached the end of the Q&A session. I will now turn the call back to Mark Namati for closing remarks.

Speaker #5: Before we sign off, I want to thank, again, Justin for the many years of service he has given to the company. I'd also like to thank, as always, our employees, whose dedication and hard work make everything we do possible.