Core Insights - The company reported a strong fiscal Q3 2026, highlighting a return to profitability with significant improvements in key financial metrics [5][7][8] Financial Performance - Adjusted EBITDA increased by 54% to $6.5 million from $4.3 million year-over-year, representing 49% of net sales [1][7] - Net income before discontinued operations was $1.465 million, a significant recovery from a loss of $21.177 million in the prior-year quarter [2][7] - Net sales rose to $13.4 million, up 7% from the previous year, with gross margin remaining high at 87% [4][7] Revenue and Market Metrics - Gross merchandise value (GMV) reached nearly $216 million, with a modest increase in take rate to 6.2% from 6.17% a year earlier [3][7] - The company generated over $4 million in operating cash and ended the quarter with $69.9 million in cash [7][8] Cost Management - Operating expenses fell by approximately $22 million year-over-year, driven by lower litigation costs and a streamlined corporate structure [6][9] - Recurring corporate operating expenses declined by roughly $1.4 million, indicating effective cost management strategies [9] Marketplace Trends - Firearm unit sales increased over 8% from the previous quarter, contributing to a stronger market position despite a decline in non-firearm categories [13][14] - The company attributed its outperformance to enhanced buyer experience and streamlined fulfillment processes [14] Strategic Initiatives - The company announced a partnership with Master FFL to improve the transfer process for regulated products, requiring an investment of approximately $60,000 to $120,000 per month [16][17] - Management is exploring "universal payments" to reduce transaction friction, with about 30% of transactions currently not paid by credit card [17] Future Outlook - The near-term objective is to achieve a $25 million Adjusted EBITDA run rate within the next 12 months while continuing cost optimization and targeted investments [18]

Financial Data and Key Metrics Changes - Net sales for the quarter were just under $12 million, essentially flat year over year, outperforming broader trends in the firearm market and overall consumer spending [5][10] - Gross margin increased by 22 basis points to 87.1% [5][10] - Net income from continuing operations was $1,405,000 compared to a loss of $5,868,000 in the same period last year, translating to earnings per share of one penny versus a loss of five cents [7][10] - Adjusted EBITDA improved by 24% to $4.9 million from $3.9 million in the prior year [8][11] - Cash generated from operations was $2.3 million during the quarter, with cash on hand at approximately $65.7 million [8][11] Business Line Data and Key Metrics Changes - Firearm sales on gunbroker.com increased by over 3%, while adjusted NIX were down over 5% [9][18] - Gross merchandise value (GMV) for firearms increased by 1.2%, driven by a 7.8% increase in used firearms [9][10] - Total GMV decreased by 1.2% to $189 million, but total revenue for the quarter was slightly up at $11,984,000 [9][10] Market Data and Key Metrics Changes - The company’s adjusted share of NIX increased by 50 basis points to 6% [9] - The overall firearm market saw a decline, but the company managed to gain market share [18] Company Strategy and Development Direction - The company aims to be a streamlined e-commerce marketplace operator, focusing on cost efficiencies and improving user experience on gunbroker.com [5][12] - There is a commitment to exploring methods to increase shareholder value through cost reduction and enhancing the user experience [15] - The relocation of corporate headquarters back to Atlanta is expected to result in a modest reduction in headcount and eliminate the Arizona footprint [13][14] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the current trends and the benefits of a more efficient operating model [12] - The company anticipates that financial performance will remain uneven until ongoing litigation is resolved [14] - There is a focus on improving the buyer experience and seller support on the gunbroker.com platform [19][20] Other Important Information - The company qualified as a smaller reporting company, which will affect the scope of financial reporting disclosures [11][12] - The company intends to use part of its cash balance for share repurchases [11] Q&A Session Summary Question: Market share performance relative to peers - Management indicated that while adjusted NIX were down 5%, firearm sales increased 3%, suggesting market share gains [18] Question: Changes in strategy and improvements to the gun broker site - Management emphasized ongoing improvements to the buyer experience and seller support, with a focus on using AI to streamline processes [19][20] Question: Sustainability of operating expenses - Management believes there is still significant room for further cost reductions, indicating that current improvements are just the beginning [22] Question: Consumer trends in firearms demand - Management noted that used firearms have a high sell-through rate, and the challenge lies in getting more used items listed [26][27] Question: Potential for profitability and EBITDA targets - Management expressed confidence in exceeding the previously set EBITDA target of $25 million over time, driven by revenue growth and continued cost-saving measures [33]

Financial Data and Key Metrics Changes - Net revenue for Q2 2025 was $28.5 million, a 41% increase from $20.3 million in Q2 2024, driven by the launch of the compact launcher and increased sales [5][6] - Gross profit for Q2 2025 was $17.6 million, maintaining a gross margin of 62%, compared to $12.6 million and 62% in Q2 2024 [6] - Net income for Q2 2025 was $2.4 million, up from $2.1 million in Q2 2024, attributed to increased product sales [7][8] - Adjusted EBITDA for Q2 2025 totaled $4.3 million, compared to $2.8 million in Q2 2024 [8] - Cash and cash equivalents decreased to $13 million from $25.7 million at the end of Q4 2024, reflecting planned inventory increases [9] Business Line Data and Key Metrics Changes - Direct-to-consumer revenues increased by $2.2 million through verna.com and amazon.com compared to the prior year [6] - Sales to dealers increased by $3.9 million or 106%, largely due to initial stocking orders for Sportsman's Warehouse [6][12] Market Data and Key Metrics Changes - International sales reached $2.6 million, an 86% increase from the prior year, including a one-time bump in royalties from partners [19] - The company is expanding its presence in new markets, including farming and ranching, with new chains testing Berna products [16] Company Strategy and Development Direction - The company plans to introduce Burnet Care, a recurring revenue model for replacing lost or damaged launchers [23] - The strategy includes expanding the number of stores carrying Berna products and increasing the range of products offered [17][30] - The company is focusing on enhancing its marketing efforts, including partnerships with celebrity influencers [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted a slowdown in consumer spending but expects continued growth due to increased distribution channels and product normalization [10][30] - The company anticipates a growth rate of 25% to 40% for the year, despite some market softness [36][37] Other Important Information - The compact launcher has better margins and is expected to drive sales growth, with production adjusted to meet demand [28][29] - The company is shifting to a more efficient assembly pod-based manufacturing system to improve quality and reduce labor requirements [29][30] Q&A Session Summary Question: June trends and growth expectations - Management observed a 40% sales increase during civil unrest in June but noted it was a transitory trend, with a sustained growth expectation of 25% to 40% for the year [34][36] Question: Softness in the market - Management indicated signs of softness, including higher abandoned cart rates and sticker shock at checkout, but expects significant growth despite seasonal slowdowns [40][41] Question: Expansion with Sportsman's Warehouse - Management clarified that there are currently 22 store-within-a-store locations, with plans to increase to 33, and noted that some point-of-sale locations are outperforming shooting pods [42][45] Question: Channel mix evolution - Management expects brick-and-mortar sales to grow faster than online sales, with Amazon continuing to outpace Berna's direct sales [51][54] Question: Recurring revenue model - The upcoming Burnet Care will function like an insurance policy, allowing customers to pay a monthly fee for coverage on their launchers [65][66] Question: Performance of Scottsdale store - The Scottsdale store's success is attributed to its prime location, high traffic, and effective sales personnel, indicating a strong market fit [74][76]