Reformation — Second Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Net revenue increased 24.1% year-over-year to $155.2 million.
• Net income grew 79.4% to $12.4 million, or $0.23 per diluted share, compared to $6.9 million, or $0.13 per diluted share, in the prior-year period.
• Adjusted EBITDA increased 53.9% to $25.4 million, with Adjusted EBITDA margin expanding 320 basis points to 16.4%.
• Gross margin expanded 230 basis points to 66.7%, driven by lower average tariff rates and higher average unit retail (AUR).
• Total operating expenses increased 24.2% to $84.4 million, representing 54.4% of net revenue.
• SG&A expenses increased 23.3% to $70.0 million (45.1% of net revenue), while marketing expenses rose 28.8% to $14.5 million (9.3% of net revenue).
• Cash and cash equivalents totaled $76.6 million at the end of the quarter.
• Inventory increased to $81.8 million from $65.0 million in the prior-year period.
• Total debt outstanding was $246.7 million, with net debt at $170.1 million.

Guidance and Future Outlook

• Full-year fiscal 2026 net revenue is expected to range from $602 million to $606 million, representing 18.6% to 19.5% growth.
• Full-year fiscal 2026 Adjusted EBITDA margin is projected between 14% and 14.2%.
• Capital expenditures for the full year are anticipated to be approximately $23 million to $27 million.
• The company plans to open 15 to 16 new stores for the full year.

Business Segments and Product Lines

• Direct-to-consumer (DTC) net revenue grew 21.2% to $135.3 million, driven by a 22.9% increase in Active Customers, partially offset by a 1.4% decline in DTC Net Revenue per Customer.
• Wholesale and Other net revenue surged 48.7% to $19.9 million, driven by increased demand from existing partners.
• International revenue increased 36.8% to $31.2 million, supported by growth in focus markets and retail expansion in France.
• U.S. revenue increased 21.3% to $124.0 million.
• The company opened four new stores during the quarter, bringing the global total to 70 stores.

Market and Competitive Landscape

• Reformation reported its 21st consecutive quarter of double-digit revenue growth.
• The company serves more than 150 countries through its e-commerce platform.
• Management highlighted the strength of the brand, agile merchandising model, and disciplined execution as key drivers of performance.

Risks and Challenges

• Forward-looking statements note risks including the ability to attract and retain customers, maintaining brand value, and responding to changing consumer preferences.
• Potential impacts from tariffs, global trade wars, and foreign currency fluctuations are cited as uncertainties.
• Risks include reliance on key suppliers, ability to accurately forecast demand, and costs associated with intellectual property protection.

Management Commentary and Tone

• CEO Hali Borenstein stated the company is beginning its public company journey from a position of strength, delivering strong profitability alongside growth.
• Management expressed confidence in the long-term growth algorithm and the ability to create meaningful long-term value for shareholders.
• The tone emphasized the consistency of results and significant runway ahead.

Other Key Points

• On June 17, 2026, the Company amended its Credit Agreement to obtain an additional $92.0 million in term loans, extending maturity to June 2031.
• Proceeds from the credit agreement amendment were used to fund an approximately $90.0 million dividend to shareholders, equating to $1.63 per share.
• A recapitalization dividend of $29.056 million was accrued but not paid as of the end of the quarter.
• Stock-based compensation expense was $24.378 million for the 26 weeks ended June 27, 2026, compared to $568,000 in the prior-year period.
• The company operates 70 retail stores across the US, UK, Canada, and France.