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Oct 6, 2026, 4:20 PM ETTechnology

AXIL Brands, Inc. — First Quarter Fiscal 2027 Earnings Summary

AXILAXIL BRANDS INC
Source

Financial Performance

  • Net revenues were $6.1 million for the quarter ended August 31, 2026, a decrease of 11.2% compared to $6.9 million in the prior-year period.
  • Gross profit was $5.0 million (82.6% of sales), compared to $4.6 million (67.6% of sales) in the prior year; excluding a non-recurring $0.55 million IEEPA customs duty refund benefit, gross margin was approximately 73.6%.
  • Income from operations was $437,000, an increase from $412,000 in the prior-year period.
  • Net income was $0.4 million ($0.05 per diluted share), compared to $0.3 million ($0.04 per diluted share) in the prior year.
  • Adjusted EBITDA was $0.8 million, compared to $0.7 million in the prior year.
  • Net cash provided by operating activities was $3.8 million, a significant improvement from $739,000 used in the prior-year period.
  • Cash on hand was $7.9 million as of August 31, 2026, compared to $4.5 million as of May 31, 2026, with no outstanding borrowings.
  • Total assets were $18.6 million as of August 31, 2026, compared to $18.0 million as of May 31, 2026.
  • Total liabilities were $4.7 million as of August 31, 2026, compared to $4.8 million as of May 31, 2026.

Guidance and Future Outlook

  • The Company anticipates that first-quarter advertising costs and inventory staging related to the XCOR II launch will convert to revenue in the second quarter.
  • Management expressed optimism for fiscal 2027, focusing on building long-term shareholder value.
  • The Company expects the XCOR II launch orders and investment to be reflected in second-quarter revenue and beyond.

Business Segments and Product Lines

  • The Company announced XCOR II, the next-generation successor to its flagship AXIL wireless earbud line, with availability beginning September 15, 2026.
  • Initial XCOR II orders exceeded $2.8 million as of August 26, 2026, and $3.6 million as of September 30, 2026; shipments are underway in the second quarter of fiscal 2027.
  • Direct-to-consumer revenue in the hearing segment was down less than 1%.
  • The Company brought three strategic partners into Reviv3 ProCare Company to lead the global relaunch of the Reviv3 hair and skin care brand; partners received an approximately 25% ownership interest in exchange for services, while AXIL retains approximately 75%.
  • The $137,511 value of the Reviv3 partner shares was recorded as a non-cash expense in the first quarter.
  • First-quarter results included approximately $360,000 in advertising costs and inventory staging for the XCOR II launch.

Market and Competitive Landscape

  • The quarter reflected a planned transition from XCOR to XCOR II and the absence of a material prior-year big-box order that did not repeat.
  • The Company noted the slowing of first-generation XCOR sales.
  • The Company operates in the United States, Canada, the European Union, and throughout Asia.

Risks and Challenges

  • The press release notes risks related to the ability to grow net revenues, perform according to guidance, and generate sufficient revenue to support operations.
  • Potential risks include difficulties in implementing cost savings, competition, customer concentration, changes in laws or regulations regarding taxes and tariffs, and supply chain disruptions.
  • Risks also include the success of new product initiatives like XCOR II and the Reviv3 relaunch, including the potential for order cancellations and returns.

Management Commentary and Tone

  • Jeff Toghraie, Chairman and CEO, stated that XCOR II generated the strongest early demand seen for an AXIL product, with orders exceeding $3.6 million through September 30.
  • Management noted that reported gross margin included a non-recurring customs duty refund, but underlying margin was 73.6%, in line with history.
  • Management highlighted that the Reviv3 partnership was executed without deploying AXIL cash.
  • The tone was optimistic regarding fiscal 2027 and the conversion of XCOR II orders into revenue.

Other Key Points

  • The Company received $0.9 million in IEEPA customs duty refunds from U.S. Customs and Border Protection, including interest; no claims remain outstanding.
  • Of the refunds, $0.55 million was recognized as a reduction of cost of revenues, $0.32 million as a reduction of inventory, and $0.04 million as interest income.
  • Stock-based compensation expense was $322,393 for the quarter, compared to $199,212 in the prior year.
  • The Company will host a conference call on October 6, 2026, at 5:00 PM ET to discuss results.
  • Noncontrolling interests in Reviv3 were recorded as $149,670 on the balance sheet as of August 31, 2026.