Financial Data and Key Metrics Changes - Same-store sales increased by 2.1% year-over-year, marking the second consecutive quarter of comp store sales growth [4][12] - Net sales for Q2 were $393.9 million, a 1.8% increase compared to the prior year [12] - Gross margin improved to 32%, an 80 basis point increase from Q2 last year, driven by healthier inventory and higher sales penetration from the fishing department [13][14] - Net loss for Q2 was $7.1 million, compared to a net loss of $5.9 million in the same quarter last year [15] - Adjusted EBITDA improved to $8.3 million, up from $7.4 million in the same quarter last year [15] Business Line Data and Key Metrics Changes - The hunting and shooting sports department grew by 4%, while fishing sales increased by nearly 11% year-over-year [6][12] - Ammunition sales grew by 10%, with average unit retail up in low single digits [6] - Camping sales were down 10% compared to last year, prompting a strategic shift to eliminate slow-moving categories [7] Market Data and Key Metrics Changes - Sales in Alaska grew by high single digits, indicating successful localization of merchandise assortments [5] - The firearms business outperformed the industry despite a 4.9% decline in adjusted NICs checks [5] Company Strategy and Development Direction - The company is focused on four key priorities: inventory precision, local relevance, personal protection, and brand awareness [9][10] - A strategic shift to an everyday low-price model for core ammunition has resonated well with customers [6] - The company aims to improve inventory efficiency and reduce working capital investment [17] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the strategic plan despite ongoing consumer microeconomic challenges [10] - The company anticipates ending the year with lower total inventory than last year and generating positive free cash flow [11][19] - Full-year guidance for net sales has been raised to reflect flat growth, with adjusted EBITDA expected between $33 million and $45 million [18] Other Important Information - Total inventory at the end of Q2 was $443.5 million, compared to $363.4 million in the same period last year, reflecting a strategic decision to prepare for key hunting seasons [16] - The company exercised a $20 million deferred draw feature on its term loan to strengthen the balance sheet [17] Q&A Session Summary Question: Can you talk about the drivers of comp performance and its durability into 2026? - Management highlighted the alignment of strategy around hunting, shooting, fishing, and personal protection as key drivers of performance, with continued investment in inventory to maintain momentum [22][23] Question: Can you discuss margin drivers in the back half of the year? - Management noted that hunting has lower margins due to firearms and ammunition, which will impact overall margins, while fishing has been a beneficiary of margin improvements [26][27] Question: How did demand trend through August and the setup into the back half in terms of comps? - Management expressed satisfaction with August performance, noting acceleration in NICs and a positive outlook for Q3 [32] Question: Can you break down the AOV trend and its potential for improvement? - Management indicated that there is significant room for improvement in attachment rates, particularly in firearms and ammunition, with AOV and UPT both at all-time highs [34][36] Question: How is the company managing potential tariff-related margin pressure? - Management is working with vendors to anticipate cost increases and has flexibility to offset some tariffs through MAP pricing [51][53] Question: Can you provide insight into consumer behavior within the hunt category? - Management noted that average unit retail is down about 4%, but unit sales are up 4.2%, indicating a mixed impact on margins [61][63] Question: Is there an opportunity to increase sales or inventory in suppressors and short barrel rifles? - Management sees significant opportunity in these categories and plans to lean into them in the back half of the year [65]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 reached a record $16 billion, up 22% year-on-year, driven by strong demand in AI semiconductors and VMware growth [4][10] - Consolidated adjusted EBITDA was a record $10.7 billion, reflecting a 30% year-on-year increase [4] - Gross margin was 78.4% of revenue, exceeding initial guidance due to higher software revenues and favorable product mix [10] - Operating income was a record $10.5 billion, up 32% year-on-year, with operating margin increasing to 65.5% [10][12] Business Line Data and Key Metrics Changes - Semiconductor revenue was $9.2 billion, growing 26% year-on-year, with AI semiconductor revenue at $5.2 billion, up 63% year-on-year [4][11] - Infrastructure software revenue was $6.8 billion, up 17% year-on-year, driven by strong bookings [8][11] - Non-AI semiconductor revenue was flat sequentially at $4 billion, with expectations for low double-digit growth in Q4 [8][12] Market Data and Key Metrics Changes - AI semiconductor revenue is forecasted to reach approximately $6.2 billion in Q4 2025, up 66% year-on-year [8][14] - Non-AI semiconductor revenue is expected to grow low double digits sequentially in Q4, driven by seasonality [8][14] - The current consolidated backlog for the company hit a record of $110 billion, with a significant portion attributed to AI [4][35] Company Strategy and Development Direction - The company is focusing on expanding its AI semiconductor business, with a strong emphasis on custom AI accelerators and networking solutions [5][6] - The launch of new products like Tomahawk 6 and Jericho 4 is aimed at addressing the growing demands of AI networking and compute clusters [6][7] - The company plans to continue investing in R&D to maintain its competitive edge in the semiconductor and software markets [11][86] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the AI market, indicating that demand is expected to remain strong and that the outlook for fiscal 2026 AI revenue has improved significantly [5][8] - The non-AI semiconductor segment is characterized as slow to recover, with expectations for a U-shaped recovery by mid to late 2026 [21][25] - Management highlighted the importance of networking solutions in scaling AI infrastructure, noting that challenges in deploying larger clusters will drive demand for their products [7][55] Other Important Information - Free cash flow for Q3 was $7 billion, representing 44% of revenue, with a focus on disciplined inventory management [12] - The company plans to continue paying dividends, with $2.8 billion distributed in Q3 [13] - Management confirmed that the CEO will continue in the role through at least 2030, indicating stability in leadership during a critical growth phase [15] Q&A Session Summary Question: AI business and XPU growth - Management indicated that growth expectations for AI revenue have improved due to the addition of a fourth customer and strong demand from existing customers [17][18] Question: Non-AI semiconductor business recovery - Management noted that while the non-AI segment is slowly recovering, broadband is showing strong growth, and they expect low single-digit growth year-on-year in Q4 [21][24] Question: Fiscal 2026 AI guidance - Management stated that growth rates for fiscal 2026 are expected to accelerate beyond the previously indicated 50-60% range, driven by increased demand from existing and new customers [27][29] Question: Backlog composition - Management confirmed that the $110 billion backlog is largely driven by AI growth, with at least 50% attributed to semiconductors [35][36] Question: Competition in ASIC and networking - Management emphasized the strength of Ethernet as a proven technology and expressed confidence in their ability to compete effectively in both ASIC and networking markets [82][86]

Financial Data and Key Metrics Changes - Total revenue for Q4 was $23.2 million, up 11% sequentially and up 3% year over year, marking the first year-over-year increase in revenue in eight quarters [17] - Non-GAAP gross margin for Q4 was 73%, up from 71% a year ago, while sales gross margin was 80%, up from 76% [17] - For the full year, total revenue was $88.4 million, down 5% year over year, primarily due to churn in the messaging business [19] - Non-GAAP net income for the full year was $5.7 million or $0.20 per share, compared to $4.3 million or $0.40 per share in the prior year [20] Business Line Data and Key Metrics Changes - AI knowledge ARR grew by 25% year over year, with expectations of 20% growth in fiscal 2026 [11] - Sales ARR for knowledge customers increased 25% year over year, while sales ARR for all customers increased 11% [22] - Non-GAAP operating costs for the full fiscal year were $56 million, flat compared to the prior year [19] Market Data and Key Metrics Changes - The company signed significant clients, including the largest nonprofit healthcare network in New Jersey and a major credit union, indicating strong market demand for AI knowledge solutions [5][6] - The partnership with JPMorgan Chase is expected to enhance customer experience and drive AI efficiencies across their business [9][10] Company Strategy and Development Direction - The company plans to focus on AI knowledge solutions, defocusing from less strategic products, such as messaging, which will be sunset in fiscal 2026 [12] - R&D spending is expected to increase by 6% year over year to extend product leadership in the AI knowledge infrastructure market [11][27] - The company aims to achieve gross margin expansion to between 74% and 75% for the year, up from 71% in fiscal 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management noted that AI investments are not showing significant ROI due to a lack of trusted knowledge, which is critical for delivering value [10] - The company expressed optimism about the growing demand for trusted knowledge to support AI initiatives, which is reflected in their bookings for fiscal 2025 [11] - Guidance for fiscal 2026 indicates total revenue is expected to return to growth, with projections between $90.5 million and $92 million [25] Other Important Information - The company repurchased 2.6 million shares at an average price of $6.03 per share during fiscal 2025, with a total of $15.8 million spent [21] - An investor and analyst day event is scheduled for October 14th and 15th in Chicago, providing opportunities for engagement with customers and insights into the business [27] Q&A Session Summary Question: Timing on the sunsetting of the messaging products - Management indicated that the decision was driven by the need to focus on AI knowledge, which is expected to yield better ROI [29] Question: Expected impact of messaging product sunsetting on numbers - The impact is expected to begin in Q2, with a run rate reduction of roughly 50% by the end of fiscal 2026 [31] Question: Details on the partnership with JPMorgan Chase - The partnership is seen as a strategic opportunity to strengthen the relationship and gain insights into customer needs [33] Question: Trends in AI pilot to conversion rates - The conversion rate for AI solutions is currently stable at about two out of three [35] Question: Sustainability of cost reductions in OpEx and COGS - Management noted improvements in COGS due to migration to a new cloud platform and automation processes [37][38] Question: Breakdown of SaaS ARR components - Approximately 60% of total ARR is now from AI knowledge, with the remainder from eGain Analytics Hub and eGain Conversation Hub [44] Question: Competitive position on the Conversation Hub - Management expressed optimism about the Conversation Hub's growth potential as the AI Knowledge Hub expands [48] Question: Pipeline status for mega deals - Currently, there are no deals of JPMorgan Chase's size in the pipeline, but there are several attractive seven-figure opportunities [49] Question: Services gross margins outlook - The goal is to bring services margins closer to break even as efficiencies improve [50]

Financial Data and Key Metrics Changes - Revenue for Q2 was $801 million, up 9% year-over-year, and billings were $818 million, up 13% year-over-year, marking one of the strongest growth quarters in the past two years [5][14] - Non-GAAP operating margins were 30%, with free cash flow margins improving to 27%, supporting $200 million in share repurchases this quarter [5][21] - Non-GAAP diluted EPS for Q2 was $0.92 compared to $0.97 last year, while GAAP diluted EPS was $0.30 versus $4.26 last year [22] Business Line Data and Key Metrics Changes - The e-signature and CLM segments showed improved fundamentals, with strong performance in commercial and enterprise customer segments [5][14] - Dollar net retention increased to 102%, reflecting higher gross retention rates [6][16] - The CLM business grew well into double digits year-over-year in Q2, with significant deals closed, including T-Mobile [9][15] Market Data and Key Metrics Changes - International revenue represented 29% of total revenue and grew 13% year-over-year, with the Asia-Pacific region being the fastest-growing international market [17][18] - Total customers grew 9% year-over-year, ending the quarter above 1.7 million, with large customers spending over $300,000 annually increasing by 7% year-over-year [18] Company Strategy and Development Direction - The company is focused on three strategic pillars: strengthening routes to market, accelerating innovation, and improving operational efficiency [6][14] - The IAM platform is positioned to transform business operations with deeper insights and actionability from agreements, with plans to launch AI agents to expand market opportunities [10][12] - The partnership with the U.S. Federal Government's General Services Administration aims to expand e-signature sales to federal agencies [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for e-signature and IAM, with no significant evidence of macroeconomic weakness impacting contract volumes [30][32] - The company expects total revenue for Q3 to be between $804 to $808 million, reflecting a 7% year-over-year increase at the midpoint [22][23] - Management highlighted the importance of operational execution in improving gross retention rates and the potential for further growth through IAM [52][53] Other Important Information - The company ended Q2 with approximately $1.1 billion in cash and no debt on the balance sheet, indicating a healthy financial position [21] - The cloud migration continues to impact margins, but the company expects to see a gradual easing of these impacts in fiscal 2027 and beyond [25][26] Q&A Session Summary Question: What is driving the improved fundamentals in e-signature? - Management noted strong growth in verticals like financial services and healthcare, with no significant macro weakness observed [29][30] Question: Can you discuss the pipeline for CLM? - Management indicated a positive overall trend but cautioned against overinterpreting Q2 as a breakout quarter [35][36] Question: How is the rollout in new markets progressing? - Management reported encouraging signs of larger deals with enterprise customers and noted that IAM is gaining traction internationally [38][39] Question: What are the economics of adopting IAM? - Management stated that IAM is critical for year-on-year growth and is expected to represent a low double-digit percentage of overall bookings [44][47] Question: What are the drivers behind improved gross retention? - Management highlighted operational execution and proactive engagement with customers as key factors in improving retention rates [52][53] Question: What does the partnership with the U.S. Federal Government mean for the business? - Management expressed optimism about the growth opportunity in the federal sector, although it remains a modest contributor currently [58][59] Question: How have sales reps adapted to the changes made at the beginning of the year? - Management reported positive adaptation among sales reps, with no significant changes planned for the foreseeable future [62][63] Question: How is customer acceptance for AI features progressing? - Management indicated strong customer engagement with AI features, with nearly 100 million agreements ingested for processing [68][70] Question: When will the cloud transition be less of a headwind? - Management expects the peak impact from cloud migration costs to occur this year, with improvements anticipated in FY2027 [75][77]

Financial Data and Key Metrics Changes - Net sales in Q1 were $29.7 million, a decrease of 28.7% compared to $41.6 million in Q1 last year [14] - On a six-month basis, net sales for Q4 and Q1 combined increased by 4.2% compared to the same period last year [14] - Gross margin for Q1 was 46.7%, up 130 basis points compared to Q1 last year [17] - GAAP EPS for Q1 was a loss of $0.54 compared to a loss of $0.18 last year, while non-GAAP EPS was negative $0.26 compared to $0.06 in Q1 last year [18] Business Line Data and Key Metrics Changes - Traditional channel net sales decreased by 24.4% in Q1, while e-commerce net sales decreased by 35.2% compared to last year [14] - Net sales in shooting sports decreased by 25.1%, and outdoor lifestyle net sales decreased by 31.6% over Q1 last year [16] - Domestic net sales decreased by roughly 25%, while international net sales decreased by 58.2% or $2.6 million compared to Q1 last year [16] Market Data and Key Metrics Changes - Purchasing activity from retailers in Q1 reflected replenishment cycles that were turned on and off on a retailer-by-retailer basis [9] - E-commerce channel underperformed in Q1 due to lower order flow from a large e-commerce retailer adjusting its purchasing patterns [10] Company Strategy and Development Direction - The company emphasizes consumer-driven innovation and adapting to a shifting environment to strengthen brand equity and long-term growth [5][6] - An expanded partnership with Major League Fishing aims to enhance recurring subscription revenue and product introductions [11] - The company plans to introduce new products at the upcoming Shot Show in January, focusing on innovation to fuel growth [12] Management's Comments on Operating Environment and Future Outlook - The current environment is characterized by evolving tariff impacts and macroeconomic uncertainty, similar to FY2023 [6][22] - Management expects a year-over-year decline in net sales for Q2 of approximately 15% but remains optimistic about the overall year due to strong POS performance and new product launches [23][24] - The company is focused on maintaining gross margins and controlling costs while supporting long-term growth initiatives [24] Other Important Information - The company ended the quarter with $17.8 million in cash and no debt, maintaining a strong balance sheet [19] - Inventory increased by $21.1 million in the quarter, primarily for seasonal inventory build and tariff-related adjustments [20] Q&A Session Summary Question: Is there still excess tariff-related inventory at retail partners? - Management indicated that while some inventory was accelerated into the prior quarter, it would not be classified as excess [26] Question: How much pricing have you taken so far regarding tariffs? - Management discussed a multi-faceted approach to offset price increases, including supplier concessions and product redesigns, with ongoing adjustments expected throughout the year [27][28] Question: When do you expect order choppiness to settle down? - Management noted that retailers are ordering cautiously, and as inventory normalizes, they expect improved visibility moving forward [36][38] Question: Which brands are seeing the strongest POS? - Brands like Caldwell and BUBBA are performing well, with strong POS data indicating consumer demand [41] Question: What is the status of the M&A pipeline? - The company remains active in looking for acquisition targets but is finding fewer opportunities and is being patient in its approach [44][45] Question: Are consumers trading down to more value-oriented products? - Management observed that while some consumers may be trading down, the company's products continue to attract affluent consumers and enthusiasts [50][51]

Financial Data and Key Metrics Changes - Second quarter revenue increased to $362 million, representing a 14% year-over-year growth, with a normalized growth of 12% after accounting for foreign exchange impacts [23][26] - Annual Recurring Revenue (ARR) grew 11% to $1.723 billion, driven by $31 million in net new ARR, with a normalized growth of 11% after foreign exchange adjustments [5][23] - Non-GAAP operating income rose to $62 million, reflecting a 17% margin and an improvement of over 1,500 basis points year-over-year [6][26] - Dollar-based net retention rate remained at 108%, indicating strong customer retention and expansion [25] Business Line Data and Key Metrics Changes - The launch of agentic automation solutions has led to increased deal sizes and customer engagement, with 450 customers actively developing agents [5][33] - The company reported that over 95% of new logos included core automation capabilities, indicating strong demand for foundational automation solutions [8] - The cloud ARR exceeded $1.08 billion, marking a growth of over 25% [23] Market Data and Key Metrics Changes - The financial and healthcare sectors showed strong demand, while the public sector is stabilizing with recent wins from agencies like the U.S. Navy and IRS [80][43] - The company ended the quarter with approximately 10,820 customers, with a focus on long-term enterprise clients [24] Company Strategy and Development Direction - The company is focused on combining automation and AI to enhance enterprise transformation, emphasizing the importance of orchestration through its Maestro platform [4][10] - The strategy includes deepening partnerships with major GSIs and technology platforms, such as Microsoft and Deloitte, to enhance agentic automation capabilities [17][66] - The company aims to continue investing in innovation while driving operational efficiencies to capture the growing automation market [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the public sector's return to normalized buying behavior and the overall macroeconomic environment stabilizing [27][84] - The company anticipates continued growth in ARR and revenue, with guidance for the third fiscal quarter set between $390 million to $395 million [28][29] - Management acknowledged that while agentic capabilities are still in early adoption phases, they expect to contribute more significantly in the future [27][74] Other Important Information - The company repurchased 8.3 million shares of Class A common stock at an average price of $12.10, reflecting confidence in long-term opportunities [26] - The company launched initiatives to support customer adoption of agentic automation, including a no-sign-up testing environment called UiPath Playground [11] Q&A Session Summary Question: Client demand progression on agentic solutions - Management noted encouraging progress with 450 customers actively working on agentic solutions, leading to increased deal sizes and uncovering more automation opportunities [33][34] Question: Stability of dollar-based net retention rate - Management indicated that the dollar-based net retention rate is stabilizing and reflected a prudent outlook on the macroeconomic environment [35][36] Question: Key pitch for Maestro orchestration - The key pitch emphasizes an agnostic approach to orchestration, allowing customers to integrate across multiple business systems without being locked into a single platform [38][39] Question: Performance of U.S. federal business - Management reported strong momentum in the public sector, with recent wins and positive feedback from major customers [42][43] Question: Incremental contributions from U.S. public sector - Management expects incremental contributions from the U.S. public sector in the second half of the year due to a more stabilized environment [84][86]

Financial Data and Key Metrics Changes - Annual Recurring Revenue (ARR) grew 19% year-over-year, reaching $1.032 billion, with fully ramped ARR increasing by 22% on a constant currency basis [5][17] - Total revenue for the year was $1.2 billion, exceeding expectations, with subscription revenue at $667 million, up 40% year-over-year [18] - Operating income was $208 million, up 109% year-over-year, with cash flow from operations at $301 million [20][24] Business Line Data and Key Metrics Changes - The company signed 19 core cloud deals in Q4, totaling 57 for the year, indicating healthy annual growth in deal count [10] - Subscription and support revenue increased by 33% year-over-year, while services revenue grew by 21% [19] - Total cloud ARR grew 36% year-over-year, comprising 74% of total ARR [18] Market Data and Key Metrics Changes - North America showed strong performance with a stable win rate, while Europe closed 11 deals for the year, and Latin America saw a sharp increase with three deals in Q4 [11][12] - The Asia-Pacific region benefited from successes in Australia, New Zealand, and Japan, positioning the company well for long-term growth [12] Company Strategy and Development Direction - The company is focused on enhancing its cloud platform and expanding its data-driven analytics and AI applications to modernize the insurance industry [7][8] - The acquisition of Quanti aims to modernize pricing operations and product management across the industry [7] - The company is optimistic about leveraging generative AI to improve operational efficiencies and customer outcomes [8][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for the Guidewire Cloud Platform and the healthy pipeline entering fiscal 2026 [6][21] - The company anticipates ARR growth of 17% for fiscal 2026, with total revenue expected between $1.385 and $1.405 billion [21][22] - Management highlighted the importance of customer success and project implementation quality in driving low ARR attrition rates [28][29] Other Important Information - The company ended the year with $1.5 billion in cash, cash equivalents, and investments [20] - The professional services team is focused on improving the pace and predictability of cloud program implementations [62] Q&A Session Summary Question: What are the drivers behind the record low ARR attrition? - Management attributed the low attrition to a durable customer base, focus on project success, and proactive customer engagement [28][29] Question: How should investors think about platform expansion post-cloud transition? - Management indicated that the next phase involves focusing on data and analytics, with significant potential in pricing, underwriting, and claims [33][34] Question: How does premium growth impact the business model? - Management clarified that while premium growth generally benefits the company, the complexity of contract structures means it does not directly translate to revenue [39][41] Question: What is the competitive landscape like? - Management noted that the demand for modernization remains strong, and minimizing the risk of project failure is key to driving growth [47][48] Question: Can you discuss the Liberty Mutual deal and its implications? - Management described the deal as significant but noted it is not yet a pattern for all Tier 1 conversations [54] Question: How is the Guidewire Marketplace performing? - Management highlighted the importance of third-party development and the potential for innovation through the marketplace [58][59] Question: How is AI being integrated into service operations? - Management confirmed that AI is a primary focus for improving deployment efficiency and minimizing modernization risks [61][62]

Financial Data and Key Metrics Changes - In Q2 FY2026, total revenue reached $242.1 million, reflecting a 25% year-over-year growth [18] - Subscription revenue grew by 27% year-over-year to $174.8 million, driven by faster growth from new customers [19] - Gross transaction volume (GTV) was $22.9 billion, representing a 19% year-over-year increase [18] - Platform gross margin improved to 80.7%, an increase of 280 basis points year-over-year [19] - Operating income was $29.2 million, resulting in a record operating margin of 12.1%, an improvement of 510 basis points year-over-year [20] - Free cash flow for Q2 was $34.3 million, up from $18.7 million in the prior year [20] Business Line Data and Key Metrics Changes - The company reported strong performance across its pro products, which are the fastest-growing area of the business [13] - Professional services revenue for Q2 was $9.4 million, contributing to overall revenue growth [19] - The introduction of AI capabilities has allowed customers to automate workflows, leading to increased efficiency and revenue growth [10][14] Market Data and Key Metrics Changes - Commercial customers and non-HVAC residential trades led the overperformance in GTV growth [18] - Residential HVAC growth was slower compared to previous periods due to challenging year-over-year comparisons [19][75] - The partnership with Roto-Rooter is expected to enhance the company's presence in both residential and commercial markets [12][13] Company Strategy and Development Direction - The company aims to become the operating system for the trades, focusing on delivering automation and AI solutions to enhance customer operations [11][12] - There is a strong emphasis on expanding capabilities in the commercial sector, particularly in construction project management [15][39] - The company is committed to improving product offerings and customer service to maintain competitive advantages [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong ROI to customers, which in turn drives growth [4][5] - The management team highlighted the importance of automation and AI in transforming the trades industry [10][14] - Future growth is expected to be driven by continued investment in R&D and capital deployment towards high ROI opportunities [22][48] Other Important Information - The company has posted an updated investor presentation and earnings release on its website [3] - The management team is focused on executing their strategy with a long-term view of sustainable growth and margin improvement [22] Q&A Session Summary Question: What was the business objective for Roto-Rooter in choosing ServiceTitan? - Management highlighted that Roto-Rooter seeks revenue growth through lead generation, lower customer acquisition costs, and back-office automation [25][26] Question: What percentage of the customer base is hybrid, spanning across residential and commercial? - Management noted that most customers have both residential and commercial operations, which provides a competitive advantage [32][33] Question: Is there anything underperforming that the company is working on? - Management acknowledged the desire for continuous improvement across all areas, including product delivery and service levels [35] Question: How long has the company been investing in the commercial side? - The company has been investing in the commercial side for about three years, focusing on construction capabilities [39] Question: How is the company leveraging AI for efficiency? - Management indicated that AI is being used to improve customer experience and operational efficiency, with ongoing developments in this area [79] Question: What is the expected impact of Pro products on gross margins? - The impact on gross margins will depend on the specific Pro products, with some expected to contribute positively [80]

Financial Data and Key Metrics Changes - Revenue for the third quarter was $103.7 million, down from $109.6 million in the prior year quarter, primarily due to a volume decline in the U.S. concrete pumping segment [7][8] - Net income available to common shareholders decreased to $3.3 million, or $0.07 per diluted share, compared to $7.1 million, or $0.13 per diluted share in the prior year quarter [9] - Consolidated adjusted EBITDA was $26.8 million, down from $31.6 million in the same year-ago quarter, with an adjusted EBITDA margin of 25.8% compared to 28.8% [10] Business Line Data and Key Metrics Changes - Revenue in the U.S. concrete pumping segment was $69.3 million, down from $75.2 million in the prior year quarter, impacted by adverse weather [7][8] - U.S. concrete waste management services revenue increased 4% to $19.3 million, driven by robust can pickup volumes and sustained pricing improvement [8] - U.K. operations revenue was $15.1 million, down from $15.9 million in the same year-ago quarter due to lower volumes from a slowdown in commercial construction [8] Market Data and Key Metrics Changes - The U.S. concrete pumping business faced construction softness, particularly in interest rate-sensitive light commercial projects, while larger commercial projects remained durable but slower [4][5] - The U.K. market experienced heavier impacts from interest rates and economic uncertainty, although infrastructure projects like HS2 construction remained resilient [6] - The residential end market in the U.S. remained resilient, accounting for 32% of total revenue, supported by a structural supply-demand imbalance in housing [5] Company Strategy and Development Direction - The company remains committed to generating healthy free cash flow and maintaining flexibility for capital deployment to position for stronger performance as market conditions improve [4][12] - The focus is on disciplined growth strategy, maintaining commercial leadership, and driving efficiencies through operational excellence [13] - The company plans to continue investing in its fleet to strengthen service offerings in anticipation of a market recovery in fiscal 2026 and beyond [12] Management Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic headwinds and localized weather disruptions but expressed confidence in the business model's resilience [4] - There is cautious optimism regarding bidding activity and infrastructure projects, with expectations for continued strength in the residential market [18][19] - The company does not anticipate meaningful near-term impacts from tariffs but noted heightened uncertainty affecting customer decision-making [14] Other Important Information - The company repurchased approximately 593,000 shares for $3.8 million during the third quarter, demonstrating commitment to enhancing shareholder value [11] - Full-year guidance remains unchanged, with expected revenue between $380 million and $390 million and adjusted EBITDA between $95 million and $100 million [12] Q&A Session Summary Question: Outlook for the fourth quarter and margin expectations - Management indicated that while revenues may be down, they expect margins to trend positively due to an extra day in the fourth quarter and improved volume [15][16] Question: Insights on recovery timing and backlog - Management noted increased bidding activity and resilience in residential markets, but emphasized uncertainty regarding the timing of recovery [17][18] Question: Pricing pressure in the U.S. business - Pricing pressure persists due to competitors targeting more complex projects, with expectations for this to continue for another six months [23] Question: Factors affecting U.S. pumping margins - Lower margins are attributed to volume changes and operating leverage, with expectations for recovery as volumes improve [24][25] Question: Weather-related impacts on revenue - Management clarified that the weather-related headwind for the current quarter was $2 million compared to a worse situation last year [31] Question: Geographic footprint and market exposure - The company feels confident about its current geographic footprint but is open to expanding into new areas for sizable projects [33]

Financial Data and Key Metrics Changes - First quarter sales were $85.1 million, reflecting a year-over-year decrease of $3.3 million or 3.7% [14] - EBITDA for the quarter was $8 million, indicating robust demand despite a seasonal slowdown [5] - Gross margin was 25.9%, down 1.5% from the prior year due to lower production absorption and tariffs [15] - The company reported a net loss of $3.4 million, translating to a loss of $0.08 per share [15] Business Line Data and Key Metrics Changes - Handgun shipments increased over 35% year-on-year, while long gun shipments decreased by 28.1% [5][6] - Average selling prices (ASPs) for handguns declined by 4%, and long guns saw a 13% decrease due to market conditions [6] - New products accounted for 37.3% of sales in the first quarter, highlighting the importance of innovation [9] Market Data and Key Metrics Changes - The market is viewed as relatively "normal" with cyclical trends and traditional seasonality [7] - Distributor inventory levels were down more than 13,000 units compared to the end of fiscal 2025, indicating strong retail demand [9] - The company expects a significant sales increase in the second quarter, projecting sales to be 3% to 5% below Q2 fiscal 2025 [17] Company Strategy and Development Direction - Innovation is a cornerstone of the company's strategy, with a strong pipeline of new products planned [9] - The company is investing in its facilities and enhancing brand support initiatives [10] - The reopening of the Smith & Wesson Academy aims to provide training for law enforcement and consumers, enhancing brand loyalty [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about maintaining or expanding market share despite macroeconomic challenges [17] - The company anticipates a normal seasonal environment for the second quarter, with no significant inventory impact expected [17] - Gross margin for Q2 is expected to align with Q1 levels, with operating expenses projected to increase by 20% [18] Other Important Information - Cash used in operations was $8.1 million, significantly lower than the prior year due to a net working capital decrease [16] - The board authorized a quarterly dividend of $0.13, with payment scheduled for October 2 [17] Q&A Session Summary Question: ASPs in handgun and long gun markets - Management is pleased with ASPs and expects to maintain or increase them as the busy season approaches [20] Question: Opportunities in long gun business - The company is expanding its lever-action product line and exploring new market segments [22] Question: Impact of regulatory changes on NFA items - There is pent-up demand in the suppressor market, which is expected to grow with upcoming regulatory changes [23] Question: Performance of legacy products - Legacy products performed well, with the company gaining market share and focusing on inventory management [26][27] Question: Promotional activity in the back half of the year - Management does not foresee a need for increased promotional activity, expecting ASPs to hold steady [28][29]