PEW

Good afternoon, welcome to the GrabAGun Digital Holdings Q1 2026 earnings conference 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. 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. 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.

In particular, those described in our risk factors included in the form 10-K for the fiscal year ended December 31st, 2025, filed by the company with the SEC on March 12th, 2026, as well as the current uncertainty and unpredictability in our business, the markets, and the global economy generally. 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 the date hereof, and GrabAGun disclaims any obligation to update any forward-looking statements except as required by law. 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.

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 and is available on the company's investor relations site. I will now turn the call over to Marc Nemati. Marc, please go ahead.

Good afternoon, and thank you for joining us. We started fiscal year 2026 with momentum. Our Q1 results shows a business model that's working, and they reflect our commitment to supporting Americans' Second Amendment rights. Our Q1 results reflect disciplined execution across our operation and our continued commitment to serving a growing customer base that values constitutional freedoms and lawful access to a wide selection of premium firearms and accessories. First, the headline numbers. Q1 revenue increased 11.1% year-over-year to $25.9 million, driven by a 10.5% increase in firearm sales. Our growth continued to outpace the broader industry as adjusted NICS background checks were up by 1.6% during that same period. We're continuing to take share in a challenging environment. We believe we are just scratching the surface of what this platform can do.

Our growth is impressive against that backdrop. The strength of the business model shows up most clearly in our customer metrics. Customer lifetime value continued to grow of 4.2% year-over-year, reflecting deep relationships with our expanding base of loyal customers. Repeat purchase momentum remains strong, with our repeat rate holding steady as customers continue to return to GrabAGun for their firearms and accessory needs. Mobile engagements continue to be a significant driver of our business as well, accounting for approximately 67% of traffic and 64% of revenue in the Q1. Mobile drives higher conversion rates, and our digital model runs at a structurally lower cost per transaction than traditional retail. These conversion rates, this customer lifetime value, this repeat purchase behavior, none of it is accidental.

It's a result of over 15 years of compounding investment in technology, supplier relationships, and customer trust. As I mentioned on our Q4 call, 2025 was an inflection point for GrabAGun. We completed our public listing, expanded our strategic capabilities, and laid the foundation for the next phase of growth. We entered 2026 with momentum, and this quarter we continued to execute against our strategic priorities. We had a significant milestone this quarter, the launch and continued development of PEW Logistics, our white-labeled direct-to-consumer fulfillment solution purpose-built for firearm manufacturers. For those who may be newer to this part of our story, let me provide some context on why this is important. The firearm industry has a friction gap that has persisted for decades.

Manufacturers have historically been locked out of direct consumer commerce, not because they lack the products or brand equity, but because the regulatory complexity, FFL processing requirements, and a fragmented fulfillment infrastructure that creates barriers most cannot overcome on their own. The result is referral leakage. Manufacturers drive demand through marketing and brand building, only to watch that demand be captured by third-party retailers who own the customer relationship and the data. PEW Logistics solves this problem. We engineered a platform that allows manufacturers to launch branded direct-to-consumer storefronts with full ATF-compliant FFL workflows, end-to-end fulfillment, and first-party customer data. All of it is powered by over 15 years of infrastructure investment at GrabAGun. Manufacturers can launch in weeks, not months, with no major capital outlay and no need to build out compliance, IT, customer service, or logistics teams. We launched PEW Logistics in January with KelTec Weapons as our first implementation.

KelTec is a 35-year American firearms manufacturer with a loyal customer base. Their collaboration validated the platform's value proposition from day one. In March, we added Derya Arms as our second manufacturer client. Derya is a global manufacturer with over 200,000 firearms produced and products trusted by professionals in more than 50 countries. The addition of Derya demonstrates growing industry momentum for the platform and validates its appeal across both domestic and international manufacturer profiles. We are also making progress on our new headquarters and fulfillment facility, which we acquired in the Q4. At approximately 2.5x our current footprint, this purpose-built facility provides operational capacity to support our growth well beyond 2026, including the anticipated needs as we aggressively scale PEW Logistics.

We are currently outfitting the space and remain on track to be fully operational in the Q4 of 2026. This is a long-term infrastructure investment that reflects our conviction in where the business is headed. Since launch, PEW Logistics has processed $1.3 million in gross merchandise value. Our network of FFL holders that puts a licensed dealer within 15 miles of 97% of the U.S. population ensures fast, compliant delivery nationwide, resulting in an average checkout to delivery time of just under three business days. PEW Logistics continues to outpace traditional online firearms retail benchmarks. The early results are encouraging and we see significant runway ahead as we onboard additional manufacturers throughout the year. Beyond PEW Logistics, we continue to strengthen our core D2C e-commerce business. Our Shoot and Subscribe ammunition subscription service, which we launched in the Q4, continues to build momentum.

The service introduced something the firearms e-commerce category had not historically had, a predictable recurring revenue model built upon a loyal contracted customer relationship instead of relying upon a series of one-time transactions with the same customer. Early adoption has continued to build, now contributing 15% of our ammo revenue line, and the model is architected to expand across additional product categories over time. Looking ahead, we remain focused on scaling PEW Logistics with additional manufacturers, driving continued market share gains in our core D2C business, and deploying capital towards accretive opportunities that strengthen our platform. Regarding capital deployment specifically, outside of directly growing PEW Logistics and our D2C channel, we remain focused on finding accretive opportunities and are taking a disciplined approach focused on long-term shareholder value. We continue to evaluate both potential M&A and internal build possibilities.

Our M&A pipeline remains active, but our priority remains disciplined and our approach to M&A is straightforward. We're not in the business of overpaying to hit arbitrary growth targets. The strength of our balance sheet gives the luxury of patience. We can wait for the right assets at the right price rather than chasing deals that don't make strategic or financial sense. Our framework is built on acquisitions in the tens of millions, where they enhance our platform capabilities and meet our return thresholds, focusing on long-term shareholder value. When we find those targets, we will move quickly. Until then, we're comfortable staying disciplined and letting our organic growth engines, both D2C and PEW Logistics, compound. Overall, our Q1 results demonstrate that the strategy is working.

We continue to outperform the broader firearms industry, and we are building a promising new growth vector through PEW Logistics, and we are doing so while maintaining a fortress balance sheet and returning capital to shareholders. The next generation of firearm consumers is already here. They transact on mobile, they transact with Bitcoin, they expect frictionless experiences, and they hold GrabAGun to the same standard as the best retail platforms on the internet. We are built for this customer. We are winning today. We're taking more market share every quarter. Before I turn it over to Justin, one regulatory item worth flagging that could reshape this industry. The ATF has proposed new regulations that would allow certain firearm transfers to occur remotely, with federal background check requirements still met through secure identity verification. If finalized, lawful consumers could complete the full compliance process remotely.

That includes direct-to-home firearm delivery within an approved framework. This could be the most significant change to firearms retail distribution in decades. Importantly, infrastructure required to operate in this environment is complex. As currently proposed, the new regulations require remote identity verification, meeting federal standards, seamless NICS integration, advanced compliance systems, secure record keeping, and the operational ability to execute all of it accurately at scale. GrabAGun is uniquely positioned for this opportunity. For more than 15 years, we have built the digital infrastructure and compliance foundation required to support highly regulated online firearm transactions. Few companies are positioned to adapt this quickly if the rules change. Regardless of regulatory outcome, the long-term strategy that we have been building on for years positions us to continue to drive the evolution of firearms commerce. With that, I'll pass it over to Justin.

Thank you, Marc. I will now dive into our financials in more detail. Q1 net sales were $25.9 million, an increase of 11.1% compared to $23.3 million in the Q1 of fiscal 2025. Firearms product sales increased 10.5% year-over- year to $21.7 million, significantly outperforming adjusted NICS background checks during the quarter. The strength in firearms was driven by continued market share gains, favorable product mix, and the ongoing effectiveness of our AI-powered pricing and demand forecasting capabilities. Non-firearms product sales were $4.1 million, an increase of 10.4% year over year, despite widespread softness in ammunition demand that has been consistent across the 2A industry.

Gross profit for the Q1 was $2.8 million or 10.7% of net sales compared to $2.2 million or 9.6% of net sales in the prior year period. Favorable mix towards higher margin firearms categories plus continued benefit from our pricing optimization drove the 107 basis point improvement in gross margin. We remain focused on driving sustainable margin improvement while maintaining our competitive price positioning. Total operating expenses for the Q1 were $5.4 million compared to $2.2 million in the prior year period. The increase reflects planned investments in public company infrastructure, the launch and scaling of PEW Logistics, and incremental headcount to support our growth initiatives. As a reminder, the Q1 of fiscal 2025 was a pre-public company period.

The year-over-year comparison reflects the full impact of incremental costs associated with operating as a public company. Net loss for the Q1 was $1.8 million. The $3.2 million increase in year-over-year SG&A expenses were primarily attributable to approximately $1.5 million in incremental headcount to support our growth initiatives, about $500,000 in stock-based compensation, and approximately $800,000 in insurance costs and professional fees associated with operating as a public company. Adjusted EBITDA for the Q1 was a $2 million loss compared to half a million dollars in the prior year period. The decrease reflects the increased operating expenses I just mentioned, partially offset by higher gross profit from our revenue growth and margin expansion.

Turning to the balance sheet, we ended the quarter with $106.4 million in cash and minimal debt. Our business model is built so that we can collect from our customers before we pay our suppliers. With $9.2 million in inventory against $13 million in accounts payable, our suppliers are effectively co-funding our growth. As a reminder, while our results today primarily reflect our core direct-to-consumer business, over time, we expect PEW Logistics to begin contributing to our diversified revenue model in an even more meaningful way. This business carries a structurally higher margin profile than our core direct-to-consumer business, driven by its software-like revenue share model and highly scalable economics that leverage our existing infrastructure with minimal incremental fulfillment costs. As PEW Logistics scales and contributes more significantly to our revenue mix, we expect it to be accretive to overall margins over time.

During the Q1, we repurchased approximately $2.4 million of our common stock under our $20 million share repurchase authorization. We have just under $9 million remaining under the current authorization and 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. Looking ahead, we expect to continue investing in our strategic growth initiatives, including expanding PEW Logistics through additional manufacturers and driving continued market share gains within our core direct-to-consumer business. We remain focused on disciplined expense management while making the investments necessary to capture these significant opportunities ahead of us. With that, I'll turn the call back to Marc before we move into Q&A. Marc?

Thank you, Justin. I would like to quickly reiterate the key themes from today's discussion. We delivered a solid Q1 with 11% revenue growth and continued market share gains in a flat industry environment. We made meaningful progress scaling PEW Logistics with two manufacturers now on the platform. We maintained our fortress balance sheet with over $106 million in cash and minimal debt, providing us with significant flexibility to pursue our growth initiatives and return capital to shareholders. We at GrabAGun continue to lead the generational shift towards digitally native commerce in the firearms industry. With the potentially large regulatory changes by the ATF, we believe we are uniquely positioned to capitalize on the next industry evolution. Our 15 years of compounding investment in technology, supplier relationships, and customer trust have built competitive advantages that widen as the market evolves.

We are confident in our strategy, we're executing against our priorities, and we are excited about the opportunities ahead. With that, operator, please open the line for questions.

We will now begin the question and answer session. Your line will remain open for follow-ups. If you would like to ask a question, please press star one to raise your hand. 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. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matt Koranda with Roth Capital. Matt, your line is open. Please go ahead.

Hey, thanks, guys. Nice work on the outperformance versus NICS again. Just wanted to hear a little bit more on the outgrowth as it pertains to units versus average order value on firearms this quarter. Anything you can share on just cadence of the quarter. Obviously, we had some geopolitical disruption in March. Just wanted to hear how that might have impacted results interquarter and what you've seen in terms of demand trends since then, if you're willing to share sort of April or May trend that you've seen in terms of firearms demand.

Hey, thanks, Matt, for joining. Yeah. I think most of the growth that we can attribute to this is the consistency of our platform. Obviously, we spend a lot of time making sure that there's as much reduced friction as possible. A lot of it also attributable to our product mix. You know, we're continuing to purchase the right items at these right prices to help consumers purchase what they want. As well as you've probably seen our expanded marketing capabilities. Now we're driving, I think, a lot more traffic, a lot more consumer demand into our platform through all the change we've done in marketing, whether that's social media or other marketing channels. In terms of like interquarter stuff, I mean, the quarter month by month, you know, is pretty stable across the line.

You know, that growth is a upward trend. That trend is continuing through the Q1 and beyond. It's been pretty stable. I don't see that many like peaks and spikes because of geopolitical events. There may be some, but they're not massive in any duration. The platform and the revenue that is generating has all been fairly stable and linear growing linearly.

Okay. All right. Appreciate that, Marc. Then just maybe on the PEW Logistics solution, good to see the second customer added there. How should we think about the funnel of opportunity, I guess, as it pertains to maybe manufacturing partners that could sign up, how you're attacking the market, overall and how growth should unfold as that kind of ramps from a standing start?

Yeah. I think we'll get more manufacturers on a much quicker cadence after they start seeing some of these metrics and revenue that's being driven by some of the partners we have on there already. As you know, we just launched this in mid-January with our first customer, KelTec, and then Derya came on board, and that website launched, I think about a week or two ago. It's all still very new.

The more time we have under our belt with that and the more results that we show, these manufacturers, I believe, will start to see kind of the option that they have to leverage a platform like this to grow their gross margin and again, to kind of work on that funnel of customer information that they're losing out on because of the way that they don't have a direct purchasing capability currently.

Okay. On the margins front, on PEW Logistics, I mean, I guess it's fair to say, given this is service revenue and maybe there's a little bit of logistics cost associated with it should come at a significantly higher gross margin than the core e-commerce platform. Is that a fair assumption?

Yeah. The platform is significantly higher. Yeah. As like you said, it's a rev share model. In addition to those pick, pack, ship fees, gross margin profile there is upwards of 70%, which is much higher compared to that of the hard goods e-commerce platform.

Okay. All right. Got it. On the M&A funnel, I guess I didn't particularly detect like a different tone from you guys. It seems like you're just remaining patient there, and we'll look for opportunistic M&A as it becomes available. Just any update on the funnel and maybe level of urgency as we kind of think about deploying capital on the M&A front?

Yeah, I would say the funnel is still full. We are actively reviewing and looking through several potential deals. As I mentioned also, we are very, very disciplined in our approach. We're not gonna overpay for an asset just for the sake of making a deal. We have a pretty rigid framework, and if a acquisition is accretive in revenue and income, then, you know, we'll act on that quickly. We wanna make sure that we have all that cash to deploy whenever that, you know, target comes up. As well, we wanna leverage that cash to for organic growth as well, growing out GrabAGun and PEW Logistics, so we're not just gonna throw money away just for the sake of closing a deal.

Yeah, okay. In the meantime, in terms of cash deployment, organically, I guess, are there any chunkier expenses or capital expenses that we should be thinking about as you ramp the distribution center and move in there fully through the end of the year? With PEW Logistics and getting that up and running, how should we think about, I guess, the capital outlay organically from a cash perspective through the rest of the year for those items?

Obviously we're building out that new facility. Once we're into that facility, we'll have a lot more space for inventory, our own inventory, as well as the PEW Logistics inventory. There likely will be some capital deployment by increasing our overall inventory capabilities, which again helps us drive better pricing, better margins. Still the lion's share of the capital deployment is around M&A, we're gonna still focus on that throughout the duration of the year and beyond.

Okay. Got it. I'll leave it there, guys. Thanks so much.

There are no further questions at this time. I will now turn the call back to Marc Nemati for closing remarks. Marc, please go ahead.

Thank you, operator. Thank you to everyone who joined us today. Before we sign off, I would like to thank our employees, whose dedication and hard work continues to drive our success every day. I also wanna thank our shareholders for your continued support and confidence in GrabAGun as we execute our long-term vision. We look forward to speaking with you on our next earnings call.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, and welcome to GrabAGun Digital Holdings fourth quarter and full year 2025 earnings conference 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. 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, strategy, long-term growth, and overall future prospects. 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.

In particular, those described in our risk factors included in our annual report on Form 10-K for the fiscal year ending December 31, 2025, filed with the Securities and Exchange Commission earlier today, as well as the current uncertainty and unpredictability in our business, the markets and global economy generally. 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. 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 for our GAAP results.

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 and is available on the company's investor relations site. I'll now turn the call over to Marc Nemati, Chief Executive Officer of GrabAGun. Marc, please go ahead.

Good afternoon, and thank you for joining us. I'm pleased to share that we delivered an exceptional fourth quarter, closing out an extraordinary year for GrabAGun. Our Q4 and full year results highlight the strength of our business model and our steadfast dedication to supporting Americans' Second Amendment rights. These achievements reflect disciplined execution across our operations and our continued commitment to serving a growing customer base that values constitutional freedoms and lawful access to a wide selection of premium firearms and accessories. Fourth quarter revenue increased 14.1% to $29.6 million, driven by a 19.1% increase in firearm sales, reflecting 11.5% volume growth. Our growth continued to significantly outpace the broader industry as adjusted NICS background checks were down 4.1% during the same period.

We are taking share in a challenging environment, and we believe that we are just scratching the surface of what this platform can do. The strength of our business model is most evident in our customer metrics. Customer lifetime value grew 8% year-over-year, reflecting deep relationships with our growing base of loyal customers. Mobile sessions drove a majority of both transactions and revenue in 2025, a direct result of the platform investments we've been making for years. Mobile engagement accounted for 72% of traffic and 64% of revenue in 2025, up 19% and 11% respectively year-over-year. Mobile drives higher conversion rates, and our digital model runs at a structurally lower cost per transaction than traditional retail.

The conversion rates, the customer lifetime value growth, the mobile trajectory, these are the outputs of years of deliberate investment in building GrabAGun into a technology-enabled commerce platform. The past year marked an inflection point for GrabAGun, one that validated both the breadth of our platform and the execution capability of our team. The most significant milestone was the commercial launch of PEW Logistics, our wholly owned white label direct consumer fulfillment platform, purpose-built for the firearms and outdoor industry. PEW Logistics is a product of 15 years of infrastructure investment. It runs on the same battle-tested technology backbone that has powered GrabAGun's e-commerce operations since day one. That means our incremental cost to launch was minimal, and the margin profile reflects it.

PEW Logistics operates on a software-style pricing model with revenue share, delivering economics that look far more like a scalable software business than a traditional logistics operation. We launched with KelTec as our first implementation, a 35-year American manufacturer that chose PEW Logistics to power their direct consumer channel. Beginning with the launch of their all-new P-3AT, KelTec's Director of Business Development said it directly. The platform gives them real-time visibility into KelTec end user buying behavior across the portfolio, enabling smarter inventory planning, better product development alignment, and the ability to reach customers that they haven't been able to reach before. In the first 30 days of transaction volume, PEW Logistics delivered results that exceeded our own internal projections. Over 500 orders, approximately $400,000 in gross merchandise value, and an average delivery time of just over three business days from the checkout to doorstep.

Our 1% e-commerce conversion rate is already outpacing the traditional online firearms retail benchmark on a brand-new storefront in just month one. Historically, firearm manufacturers faced a structural friction gap in direct consumer sales, compliance complexity, FFL processing requirements, and a fragmented fulfillment infrastructure made direct sales prohibitively expensive to stand up internally. Resulting in what we call referral leakage, where high intent traffic on manufacturer websites bleeds out to third-party marketplaces with inaccurate inventory and competing brands. PEW Logistics closes that gap entirely, and the reach behind our platform is real. We believe our FFL dealer network puts a license transfer dealer within 15 miles of 97% of the U.S. population. You don't build that overnight. That network is what makes nationwide compliant direct-to-consumer fulfillment something we can deliver today, not something we are working toward.

Our platform delivers the full operational stack, brand-owned storefronts, automated ATF compliance, FFL workflows, end-to-end fulfillment, and critically, first-party data and market intelligence layer that manufacturers have long been looking for but never had access to. For the first time, these brands gain direct access to real-time visibility into consumer behavior, purchase patterns, and demographic insights across their entire portfolio. The data doesn't just inform marketing, it shapes product development, inventory strategy, and channel growth. Manufacturers can now meet their customers anywhere, from first click to final checkout under their own brand on their own storefront with a single card experience that eliminates the referral leakage and converts high-intent traffic into high-margin owned revenue. The result is defensible. High switching cost platform that allows manufacturers to launch direct consumer channels in weeks, not months, without hiring compliance, IT, or logistics teams.

Layered on top of our capital-light build cost to launch a platform for a manufacturer, software style margin structure, and a proprietary first data advantage that compounds with every manufacturer we add. PEW Logistics is a durable growth vector, and it's one we intend to scale aggressively. We are putting capital to work organically as well. In Q4, we acquired our new headquarters and fulfillment facility for $8 and a quarter million. A purpose-built investment in the physical infrastructure required to scale both GrabAGun and PEW Logistics. At approximately two and a half times our current footprint, the facility provides operational capacity to support our growth well beyond 2026, including providing the anticipated needs as we aggressively scale PEW Logistics. We are currently outfitting the space and expect to be fully operational in Q4 2026.

This is a long-term infrastructure investment and one that reflects our conviction in where the business is headed. In December, GrabAGun became the first major firearms retailer to accept cryptocurrency payments, adding Bitcoin, USDC, and USDT across our full catalog. This was not a novelty move. The crypto native consumer skews younger, digitally fluent, and represents one of the fastest-growing segments of the firearms market. Reaching that customer where they already transact is a deliberate part of our strategy to capture next-generation market share. Importantly, our existing compliance infrastructure absorbs capability without adding regulatory complexity or capital outlay. A consistent theme you will see across our 2025 initiatives, a platform built over 15 years that designed to extend, not rebuild, when we identify new growth vectors.

We also launched Shoot to Subscribe, our ammunition subscription service, and in doing so, introduced something the firearms e-commerce category has not had, a predictable recurring revenue model. Frequent shooters have a consistent high-frequency consumption need, and Shoot to Subscribe converts that demand into a loyal contracted customer relationship rather than a series of one-time transactions. Early adoption has been encouraging, and the model is architected to expand across additional product categories over time. Building a recurring revenue layer that compounds alongside our transaction and platform businesses. Our 290 basis points expansion in Q4 gross profit margin reflects a quarter where the right opportunities presented themselves, and we were positioned to act on them. Favorable supplier dynamics, disciplined inventory management, and the continued maturation of our platform all contributed.

We enter 2026 well-positioned with strong inventory across high-velocity SKUs and the operational flexibility to move quickly when opportunities arise. We repurchased $8.9 million of our own stock in 2025, a direct expression of management's conviction in GrabAGun's intrinsic value and long-term trajectory. We entered 2026 with $11.1 million remaining under our current authorization, giving us continued flexibility to pursue opportunistic repurchases while preserving balance sheet strength to fund our growth initiatives. On the M&A front, our pipeline remains active, and our priority remains focused on disciplined, accretive opportunities that strengthen and complement our platform. We are seeing a disconnect between seller price expectations and fundamental value. Private market valuations in our space continue to reflect aspirational more than reality. We have no interest in bridging that gap at our shareholders' expense.

Every potential acquisition is evaluated against a straightforward standard. Does it bring accretive revenue and income, and does it strengthen the ecosystem that we are trying to build? If the answer is not clearly yes, we walk away. The discipline is not a sign of inactivity, it's our job. Our war chest is intact, our criteria are well-defined, and when valuation and value align, we will move. In the meantime, build versus buy remains a live consideration on every opportunity, and we will continue to evaluate both with the same discipline. GrabAGun enters 2026 with a clear structural advantage in what is an accelerating shift toward digitally native commerce in the firearms industry. The next generation of firearm consumers is already here. They transact on mobile, they transact with crypto, they expect frictionless experiences, and they hold GrabAGun to the same standard as the best retail platforms on the internet.

15 years of compounding investment in technology, supplier relationships, and customer trust have built competitive advantages that widen as the market evolves, not erode. Our Q4 results confirm the strategy is working across every customer segment, and we enter the new year with the platform, the relationships, and the momentum to extend that lead. I will now turn the call over to Justin C. Hilty, our Chief Financial Officer, for a detailed review of our financial performance. Justin?

Thank you, Marc. Our fourth quarter results demonstrate continued momentum across key financial metrics, building on the operational improvements we've implemented throughout 2025. Fourth quarter net revenue was $29.6 million, our strongest quarter of the year, and a 14.1% increase over the prior year period. Firearm sales contributed $25.7 million, reflecting a 19.1% increase, driven by 11.5% volume growth and favorable pricing dynamics. Non-firearm sales of $3.9 million reflected strategic inventory management decisions as we focused resources on higher margin opportunities. Q4 gross profit margin expanded 290 basis points to 15.9%, driven primarily by select one-time purchasing opportunities, favorable product mix, strategic buying during the quarter, and continued progress in strengthening supplier relationships.

Operating expenses increased primarily due to stock-based compensation and public company costs, resulting in a loss from operations of $0.4 million compared to income of $1.8 million in the prior year. However, net income remained positive at $0.4 million, demonstrating the strength of our underlying business. Adjusted EBITDA of $231 thousand for the quarter reflects disciplined cost management as we continue to invest in growth initiatives and absorb incremental costs associated with operating as a public company. For the full year 2025, revenues of $96.4 million represented 3.6% growth, with gross profit margin improving to 11.7% from 10.4% in the prior year.

While we reported a net loss of $2.5 million for the full year, this was driven by stock-based compensation expense and higher public company expenses following the business combination, including certain transaction-related expenses. Adjusted EBITDA of $753,000 for the full year demonstrates our ability to maintain positive operating cash flow while making necessary investments for long-term growth. We ended 2025 with $110.4 million in cash and cash equivalents and minimal debt, providing substantial financial flexibility for capital deployment, including organic growth investments, share repurchases, and strategic acquisitions. We maintained strategic inventory levels throughout Q4, positioning ourselves to capture seasonal demand while avoiding excess carrying costs. Our supplier relationships have strengthened significantly, giving us better access to high-demand products and improved pricing terms.

I also want to emphasize that our cash position increased during Q4, demonstrating our ability to generate positive operating cash flow. Looking ahead, we expect our operations to be approximately cash flow neutral in 2026, with any cash deployment directed towards strategic share repurchases and high return opportunities, including technology investments that enhance our competitive position and potential strategic investments or acquisitions that align with our growth strategy. Our strong balance sheet gives us the flexibility to be opportunistic while maintaining financial discipline. As Marc mentioned, we recently launched our PEW Logistics platform, which is already contributing to our diversified revenue model. While still in early stages, we're seeing strong interest from manufacturers across multiple categories. The platform generates revenue through setup fees for storefront customization, monthly platform fees, per transaction fulfillment fees, and optional marketing services.

Because these services leverage our existing technology and logistics infrastructure, we believe this will result in a structurally higher margin profile than our core businesses as the platform scales. Over time, we believe platform revenue streams like PEW Logistics can become a meaningful contributor to both growth and margin expansion. We repurchased approximately 1.56 million shares of our common stock during 2025 for $8.9 million. As of the beginning of 2026, we had 11.1 million remaining on our current repurchase authorization. Looking ahead, we expect continued revenue growth driven by market share gains, customer acquisition, and platform expansion. Our focus remains on maintaining gross margin improvements while scaling our operations efficiently. The investments we've made in technology, supplier relationships, and customer experience position us well for sustained growth as the firearms industry continues its digital transformation.

I'll now turn the call back to Marc for closing remarks.

GrabAGun's mission is singular: to build the definitive digital platform for America's firearms community. We are building an ecosystem that serves manufacturers, dealers, and consumers through technology-driven innovation and uncompromising service, backed by 15 years of compliance expertise and a platform built to operate in one of the most regulated industries in the country. PEW Logistics exemplifies our strategic evolution from pure-play retailer to industry infrastructure provider, and the economics of that shift are worth emphasizing. The operational excellence and compliance expertise we have built over 15 years serving consumers is now a monetizable infrastructure layer available to every manufacturer who wants to own their customer relationship. This B to B to C model materially expands our total addressable market while strengthening our position as an essential platform across the entire firearms value chain. Early traction validates our thesis.

Manufacturers need a trusted partner who can unlock the complexity of compliant direct-to-consumer operations. We believe GrabAGun is the only platform in the industry built to deliver it at scale. Our Q4 results are not an accident. Against a backdrop of declining industry-wide NICS background check data, we delivered double-digit growth, proof that superior customer experience and operational excellence are durable competitive advantages and not cyclical tailwinds. The demographic trends are continuing to move in our direction. Younger customers, increased mobile usage, crypto payments, and a preference for digital-first experiences. Every repeat purchase, every mobile session, every subscription deepens the customer relationship and improves the economics. We are not a participant in the industry's digital transformation. We are driving it. Thank you for your continued confidence in GrabAGun. We look forward to updating you on our progress as we execute on our growth strategy throughout 2026.

Operator, you may now open the line for questions.

At this time, I would like to remind everyone, in order to ask a question, please press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Matt Koranda with ROTH Capital Partners. Your line is open.

You guys, congrats on the nice, fourth quarter growth. I guess I just wanted to hear a little bit more about where you think the key drivers of site traffic are coming from that are enabling the outperformance on firearms versus mix. Maybe also just talk a little bit about pricing or mix that's helping you out there. It seems like, it's a nice tailwind in the fourth quarter. I wanted to hear a little bit more about what's driving that growth as well.

Hey, Matt. Thanks for joining. Yeah, I mean, I think our outperformance is really driven by a lot of the fact that our digital model is working. You know, we're continuing to take market share as we scale up the marketing side of our business, and that customer acquisition funnel is continuing to grow. Really that plus our digital platform makes the experience better for customers, and so they're gonna continue to return to the platform. A lot of that is really driving you know, repeat buyers as well as we grab a lot more market share, additional revenue growth throughout the year.

Okay. Trend on AOV, Marc, or just anything in terms of what's helping you out on price there. Is it a mix thing or anything to call out in terms of the growth?

Yeah. We definitely have a product mix there that's definitely helping us as well as I think Justin mentioned, you know, opportunistic buying. You know, us having the ability to have a lot of that cash allows us to make a lot of opportunistic buying for various products, whether that's firearms or accessories at better deals and we can leverage that for a larger gross margin or even larger AOV's.

Okay. All right. Got it. Wondering if you guys could talk a little bit about any demand trends since the end of the fourth quarter. I mean, there's just been a lot of different geopolitical events that have happened in the last couple of months. Just wanted to see if the demand trend has changed in any way for you guys, how to think about either industry broader brush or for you guys specifically, anything you're willing to share, kinda year to date.

Yeah. I mean, obviously, we're very excited about Q1 and what's happened thus far. What's attributable to obviously what's going on globally versus what is driven by our increased market share grab. Again, back to your first question there, as we scale up marketing where we're grabbing more customers. I think there's kind of a mix of everything that's going on that's driving some positively for us, potentially for the industry as well. You know, I can only speak for us and we continue to grow and be successful.

I noticed the marketing line ramping just a touch. It's still relatively low in terms of overall scale. Wondering if you were willing to share any channels or just avenues where you've had success in deploying incremental sales and marketing dollars in the fourth quarter and what's your spend for 2026.

Yeah. I mean, we've grown our marketing team internally a lot over the last quarter plus. We believe that's driving a lot of kind of new eyeballs on the brand. A lot of that is driven by a lot of in-house content that we're creating, social media content. We're working also with brands that we carry. It's kind of, I mean, instead of spending ad dollars, we're actually buying more product from manufacturers and leveraging those manufacturer relationships to grow our brand. It's a little bit different than your traditional digital ad spend, but it's returning kinda similar returns that you would see if we could spend dollars on, you know, Facebook and Instagram, which, as you know, we cannot.

We are leveraging a lot of our own content creation, so more or less becoming an influencer in the industry, but at a much lower cost than it would be if we were paying for digital ads.

Okay. Yeah, that makes total sense. I guess this last one from me, I wanted to hear a bit more on PEW Logistics. Maybe just how long has it been in place? And you mentioned you rattle off a bunch of stats on sort of transactions that you've seen in the first 30 days. Just wondering how we should be thinking about the ramp up there, for you know the year ahead and how you think about going out and acquiring customers for PEW Logistics. Then maybe for Justin, the $8 million of investments in PEW Logistics, is that largely for the building and the expansion that you did and the capital that was deployed in the fourth quarter, or is there other buckets to spend in that $8 million?

Yeah. I mean, we are definitely very excited about PEW Logistics. It's definitely transformational, not only for GrabAGun, but we believe this industry. It's kind of first of a kind to have an offering of this such. In the case of GrabAGun, the transformation is driven by the fact that the pricing model is much different than, you know, e-commerce retail. It's more of a software rev share model. The gross margin profile for PEW Logistics is definitely gonna be a lot more attractive than that of the GrabAGun commerce side. It actually adds a lot of value for manufacturers. We've seen a lot of interest because it grows their gross margin as well as they, you know, kinda skip around a few different hops there in terms of margin leakage.

Kinda what I mentioned before, there's manufacturers have the ability, really, they all do to have a lot of high intent traffic to their websites, as people are looking for their products. This actually gives them an avenue to convert that high intent traffic into actual sales and revenue without having to, you know, invest in a fulfillment network, a compliance person, customer service, e-commerce. I mean, the 15 years of what GrabAGun has built and our understanding of e-commerce in the firearm space, they get on day one. It you know, once they're contracted, it only takes a couple of weeks, really for them to get off the ground. It's definitely transformative for all those manufacturers in the industry. I think it's something that we're definitely gonna push on hard for 2026.

Again, the margin profile here is much more different than that of GrabAGun. As far as the investment, $8 million, yeah, it's in the building, which can be shared and expensed across both PEW and GrabAGun. As both businesses continue to grow and scale in terms of personnel as well as top-line revenue, we just need more space and more facility to handle all that. That investment is for both of the businesses.

All right. Makes sense. I'll take the rest of mine offline. Thanks, guys.

I will turn the call back over to Marc Nemati for closing remarks.

Before we conclude today's call, I want to express my appreciation to our entire GrabAGun team for their dedication and expertise. The results we've shared today reflect the hard work of talented individuals who are passionate about serving our customers and advancing our mission. We're building something special at GrabAGun, a platform that respects the traditions and values of American firearms community while embracing the technologies and innovation that will shape our industry's future. Our strong financial position, growing customer base, and expanding platform capabilities give us confidence in our ability to deliver sustained growth and value creation over the long term. With that, thank you again for joining us today, and we look forward to sharing our continued progress with you in the quarters ahead.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.