Once Upon a Farm — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales increased 42.3% year-over-year to $85.4 million for the quarter ended June 30, 2026, compared to $60.0 million in the prior year period.
• Gross margin decreased to 35.9% from 40.7% in the prior year period, driven by trade spend (including a national club channel program), product mix, and partially offset by pricing and lower slotting fees.
• Net loss narrowed to $5.0 million from a net loss of $9.0 million in the prior year period, primarily due to the elimination of the non-cash change in fair value of a derivative liability, higher gross profit, and higher interest income.
• Adjusted EBITDA loss was $1.7 million, compared to an Adjusted EBITDA profit of $2.0 million in the prior year period, driven by higher SG&A expenses.
• SG&A expenses increased to $36.3 million from $24.4 million in the prior year period, representing 42.5% of net sales compared to 40.7%, driven by stock-based compensation, IPO-related performance payments, higher marketing, labor, and employee costs.
• Cash and cash equivalents increased to $93.5 million as of June 30, 2026, from $10.9 million as of December 31, 2025.
• Total debt was eliminated, decreasing from $60.2 million as of December 31, 2025, to zero as of June 30, 2026.
• Inventory increased to $51.9 million from $47.0 million as of December 31, 2025.

Guidance and Future Outlook

• Raised full-year 2026 net sales outlook to $327 million to $335 million, representing 36% to 39% growth versus 2025.
• Raised full-year 2026 Adjusted EBITDA outlook to $3 million to $4.5 million.
• Outlook is based on information as of August 6, 2026, and may be impacted by factors outside the Company's control.

Business Segments and Product Lines

• Net sales growth was driven by a 40.3% increase in volume, reflecting incremental distribution of existing products and new product introductions.
• Kid category net sales were $43.9 million for the quarter, up from $36.1 million in the prior year period.
• Baby category net sales were $41.5 million for the quarter, up from $23.9 million in the prior year period.
• Management noted that cooler productivity is increasing as awareness grows, assortments broaden, and newer cooler cohorts mature.

Market and Competitive Landscape

• Distribution continues to expand, and velocities remain strong across the portfolio.
• The company reports strong consumption trends, continued gains in household penetration, repeat rates, and buy rates.
• The company operates in a highly competitive market and notes the risk of inability to compete successfully.

Risks and Challenges

• Gross margin compression due to trade spend, mix, and pricing dynamics.
• Rising SG&A expenses as a percentage of sales due to stock-based compensation, IPO-related payments, and higher labor and marketing costs.
• Potential risks include adverse public relations, product recalls, supply chain disruptions, availability of organic ingredients, failure to increase cooler count or productivity, and changes in consumer preferences.
• Risks related to global trade policy, tariffs, and economic disruptions are noted in forward-looking statements.

Management Commentary and Tone

• CEO John Foraker described the quarter as "high-quality, volume-led growth" with strong underlying consumer trends.
• Management expressed confidence in the company's ability to execute, citing expanding household reach, strengthening consumer loyalty, and increasing productivity as drivers for durable growth and long-term profitability.
• Innovation is described as highly incremental, bringing new consumers into the brand and increasing engagement among existing households.

Other Key Points

• The Company's IPO in February 2026 resulted in the application of proceeds to pay down total debt and increase cash reserves.
• SG&A expenses included approximately $3.5 million in stock-based compensation and performance payments related to the IPO.
• The Company is unable to provide a reconciliation for forward-looking Adjusted EBITDA to net income without unreasonable effort due to the inability to estimate depreciation, amortization, interest, and tax provisions.
• The Company reported a net loss per share of $0.12 for the quarter, compared to $1.36 in the prior year period.
• Financing activities for the six months ended June 30, 2026, included $155.4 million in proceeds from the issuance of common stock and $103.0 million in net cash provided by financing activities.