AXIL Brands Stock Price Decreases 2.2% as Earnings Decline Y/Y in Q3

Core View - AXIL Brands, Inc. has experienced a significant decline in stock performance, with a 2.2% drop since the third quarter results, contrasting with a 7.8% increase in the S&P 500 index during the same period [1] Financial Performance - In Q3 of fiscal 2025, AXIL reported revenues of $6.92 million, a 7% increase from $6.47 million in the same quarter last year [2] - Net income decreased by 26.1% to $0.6 million from $0.8 million a year earlier, with diluted EPS at 7 cents, down from 4 cents [2] - Adjusted EBITDA improved to $0.9 million, a significant turnaround from a negative $11,052 in the prior year, indicating enhanced operational efficiency [2] Operating Metrics & Business Segments - The hearing enhancement and protection segment was the primary revenue driver, contributing $6.45 million, or approximately 93% of total revenues, up from $5.99 million last year [3] - The hair and skin care segment reported flat revenues of $0.5 million, with a gross profit of $0.3 million [3] - Total assets increased to $12.95 million from $10.97 million as of May 31, 2024 [3] Profitability and Costs - Gross profit rose to $4.97 million from $4.62 million, with a margin expansion to 71.7% from 71.5% [4] - Operating expenses decreased by 7.3% to $4.38 million, attributed to lower advertising costs and a shift to targeted marketing [5] - Stock-based compensation increased significantly to $0.3 million from $59,099 a year earlier [5] Cash Flow and Financial Position - Cash position improved to $4.74 million from $3.25 million at the end of the previous fiscal year [6] - Operating cash flow for the nine months ended February 28, 2025, rose sharply to $1.73 million from $339,323 in the prior-year period [6] Management Insights - Management noted that reduced advertising spending in earlier quarters impacted direct-to-consumer sales but highlighted stronger performance in Q3 due to post-Thanksgiving sales and expanded distribution [7] - CEO Jeff Toghraie expressed confidence in navigating market challenges and emphasized initiatives for geographic expansion and cost efficiency [7] Strategic Developments - AXIL Brands incurred approximately $195,000 in consulting fees related to geographic expansion and new product lines [8] - The company completed a reverse stock split at a ratio of 1-for-20 and converted 3.36 million shares of Series A Preferred Stock into 168,000 shares of common stock, streamlining its capital structure [13] Supply Chain Strategy - AXIL accelerated its supply-chain transition strategy in response to elevated tariffs and geopolitical risks, relocating manufacturing leadership to the U.S. and establishing domestic facilities [14]