AXIL Brands, Inc. Reports Third Quarter Fiscal Year 2026 Financial Results

Key Highlights and Investor-Relevant Details

AXIL Brands, Inc. (NYSE American: AXIL), a global consumer products company specializing in hearing protection and enhancement products (AXIL®), hair and skin care products (Reviv3®), and third-party marketing services, announced its financial and operational results for the third fiscal quarter ended February 28, 2026.

Financial Performance

• Net Sales: Net sales rose 5.4% year-over-year to \$7.3 million in Q3 2026, from \$6.9 million in Q3 2025. Growth was primarily driven by increased demand for hearing enhancement and protective equipment, partially offset by lower hair and skin care segment sales due to the absence of a significant distributor order fulfilled in the prior year.
• Gross Profit: Gross profit was largely unchanged at \$5.0 million, representing a gross margin of 69.1% (down from 71.7% last year). The decrease in gross margin is attributed to higher tariffs and customs duties.
• Operating Expenses: Operating expenses increased 10.1% to \$4.8 million (66.2% of net sales) from \$4.4 million (63.3% of net sales) in the prior year. This was mainly due to an approximately \$400,000 rise in sales and marketing expenses, reflecting expanded retail promotional initiatives and brand awareness investments.
• Net Income: Net income dropped to \$0.2 million (\$0.02 per diluted share) from \$0.6 million (\$0.07 per diluted share) last year, highlighting margin compression from increased spending.
• Adjusted EBITDA: Adjusted EBITDA fell 47.1% to \$0.5 million from \$0.9 million in Q3 2025, primarily due to increased retail sales and marketing expenses.
• Operating Cash Flow: Net cash provided by operating activities for the nine months ended February 28, 2026 was \$0.8 million, compared to \$1.7 million in the prior year.
• Cash Position: Cash on hand as of February 28, 2026 stood at \$5.5 million, up \$700,000 from May 31, 2025.

Operational Updates

• Retail Distribution Expansion:
  • AXIL announced a new order with Home Depot to distribute three high-performance products through its online platform.
  • Sportsman’s Warehouse will distribute two AXIL products (GSX 3 and XCor Pro) across 70 national stores and online.
  • AXIL will initiate a 3,700-store rollout with Walmart in the first half of calendar 2026, significantly increasing retail presence.
  • Expansion of licensing agreement with Monster Jam, indicating strategic branding and partnership efforts.
• Store Count: AXIL estimates its products are now available in approximately 6,000 stores, up from less than 1,800 stores at the end of last year—a more than threefold increase. Management sees further growth potential in retail store count.

Management Commentary

CEO Mr. Toghraie stated that increased marketing and retail distribution expenses temporarily compressed margins and bottom line in Q3 2026. AXIL remains profitable, maintains a strong balance sheet, and is executing a strategy to scale into a multi-channel, high-growth consumer platform. The hearing protection business continues to be the main growth driver, with expanding national retail partnerships and increasing demand across both professional and consumer markets.

Outlook

• Q4 2026 Guidance: AXIL expects revenue in the range of \$8 million to \$10 million for Q4 2026, representing 39% to 74% year-over-year growth. Gross margins are expected to be between 67% and 71%.
• Full Fiscal Year 2026 Guidance: Revenue is projected to be \$30.2 million to \$32.2 million, implying 15% to 23% growth versus FY2025.

The company stressed that store count is a key growth indicator. While management is optimistic, there is no guarantee that anticipated store count or revenue growth will be achieved.

Balance Sheet and Liquidity

• Total Assets: \$15.2 million as of February 28, 2026 (up from \$12.9 million at May 31, 2025).
• Total Liabilities: \$3.7 million, with current liabilities at \$3.2 million and long-term liabilities at \$0.5 million.
• Total Stockholders’ Equity: \$11.5 million, up from \$9.7 million.
• Cash Flow: Operating cash flow for the nine months was \$0.8 million, with cash and cash equivalents ending at \$5.5 million.

Risks and Shareholder Considerations

• Margin Compression: Increased sales and marketing expenses, along with higher tariffs/customs duties, negatively impacted margins and net income. This could be price-sensitive, especially if such trends persist or escalate.
• Retail Expansion: The rollout with Walmart, Home Depot, and Sportsman’s Warehouse significantly increases retail exposure—a potential share price catalyst if execution is successful.
• Store Count Growth: Rapid expansion in store count may signal higher future revenues, but execution risks and competitive pressures remain.
• Guidance: The aggressive Q4 and FY2026 revenue guidance (up to 74% and 23% growth, respectively) is price-sensitive, as missing these targets could negatively impact shares.
• Tariff and Supply Chain Risks: Management cites tariffs and customs duties as increasing product costs—a risk to future margins if not mitigated.
• Strategic Alternatives: The company is reviewing strategic alternatives for its hair and skin care business, which could lead to divestment or restructuring, potentially impacting share value.
• Economic and Geopolitical Uncertainties: Risks include inflation, trade policy changes, supply chain disruptions, and macroeconomic instability, all of which could affect performance and thus share price.

Non-GAAP Financial Measures

AXIL uses EBITDA and Adjusted EBITDA (excludes stock-based compensation) as key performance indicators. Adjusted EBITDA for Q3 2026 was \$470,794 (6.5% of sales, down from 12.9% last year). These measures may differ from those used by other companies, so investors should not rely solely on them for evaluating performance.

Conclusion

AXIL Brands, Inc. is experiencing significant retail expansion and revenue growth, especially in its hearing protection segment. However, margin compression, increased operating expenses, and tariff-related cost increases are risks that shareholders should monitor closely. The aggressive revenue guidance for Q4 and FY2026, along with the strategic review of the hair and skin care business, are potentially price-sensitive and could materially impact share values depending on execution and market conditions.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Investors should review all company filings and consult their financial advisor before making investment decisions.

View Axil Brands, Inc. Historical chart here