Hour Loop — Three and Nine Months Ended September 30, 2026 Earnings Summary

Financial Performance:

• Net revenues for the third quarter of 2026 decreased 4% to $32.1 million from $33.4 million in the year-ago period.
• Net income for the third quarter of 2026 decreased to $0.4 million from $0.5 million in the prior year period.
• Net income per diluted share for the third quarter was $0.01, compared to $0.02 in the prior year.
• For the nine months ended September 30, 2026, net revenues increased 11% to $95.9 million from $86.4 million in the prior year.
• Net income for the nine months ended September 30, 2026, decreased to $2.3 million from $2.4 million in the prior year.
• Gross profit margin for the third quarter decreased to 50.6% from 51.4% in the prior year.
• Operating expenses as a percentage of net revenues decreased to 49.1% in the third quarter from 49.2% in the prior year.
• Cash used in operating activities for the nine months ended September 30, 2026, was $4.1 million, compared to $0.4 million in the prior year.
• Cash and cash equivalents were $1.1 million as of September 30, 2026, down from $3.8 million as of December 31, 2025.
• Inventory increased to $26.3 million as of September 30, 2026, from $18.3 million as of December 31, 2025.
• Accounts payable increased to $13.1 million as of September 30, 2026, from $6.2 million as of December 31, 2025.
• Total liabilities were $22.4 million as of September 30, 2026, compared to $16.8 million as of December 31, 2025.
• Total stockholders' equity was $9.3 million as of September 30, 2026, compared to $7.0 million as of December 31, 2025.

Guidance and Future Outlook:

• Full-year 2026 net revenue guidance was narrowed to a range of $147.0 million to $152.0 million, representing 3% to 6% year-over-year growth.
• Full-year 2026 net income guidance remains in the range of $0.75 million to $1.5 million.
• Management anticipates the holiday season to be the most important time of the year.

Business Segments and Product Lines:

• Hour Loop operates as an online retailer primarily selling as a third-party seller on Amazon.com, with negligible revenue from its own website and other marketplaces like Walmart, eBay, and Etsy.
• The company manages more than 100,000 stock-keeping units (SKUs) across categories including home/garden décor, toys, kitchenware, apparel, and electronics.
• AI agents are now utilized for purchasing, replenishment, advertising, pricing, inbound shipments, inventory reconciliation, customer service, and compliance.
• Management plans to expand the business rapidly in upcoming years by increasing the number of business managers, vendors, and SKUs.

Market and Competitive Landscape:

• The third-quarter revenue decrease was primarily attributed to lower order volume resulting from lower inventory levels.
• The decrease in gross profit margin was driven by lower inventory reimbursements from platforms, partially offset by tariff-related refunds from vendors.
• Operating expenses decreased in line with lower revenues, specifically selling and marketing expenses.

Risks and Challenges:

• Forward-looking statements are subject to risks and uncertainties, including those detailed in the company's SEC filings, which could cause actual results to differ materially.
• The company faces a challenging economic environment, as noted in the press release title.

Management Commentary and Tone:

• Sam Lai, Chief Executive Officer and Interim Chief Financial Officer, stated the company made a deliberate choice to protect margins rather than chase low-quality sales.
• Management expressed confidence in the long-term opportunity, citing a disciplined operating model powered by AI to drive efficiency.
• Management believes AI adoption will allow the business to scale without growing headcount at the same pace as routine work shifts to AI agents.

Other Key Points:

• The company has been operating since 2013.
• No dividends, stock buybacks, or M&A deals were mentioned in the release.
• The press release includes unaudited consolidated balance sheets, statements of operations, and statements of cash flows for the periods ended September 30, 2026, and 2025.