It isn't limited to California either. Across all of our facilities, we continue to make tangible progress on the cost side of the business. For example, more efficient seeding practices have lowered our seed costs by approximately 20% year over year, and we expect to continue garnering cost savings across procurement, maintenance, labor efficiency, and freight management across the network. With that, I'll turn it over to Tony for the financial review.
Thank you, Kathy, and good morning, everyone. Turning to our results, second quarter revenue grew 14% to $13.9 million compared to $12.1 million in the second quarter of last year and grew approximately 4% sequentially from $13.3 million in the first quarter. The increase was driven by increased production and growth in sales from our Texas, Georgia, and Washington facilities. Adjusted gross margin for the second quarter was 27%, excluding depreciation, stock-based compensation, and other non-core items, compared to 30% in the prior year period and approximately 29% in the first quarter. The sequential and year-over-year decline is a function of our strategy to diversify our channel mix at our Georgia facility and resulted in temporary packing inefficiencies, which have since been refined and implemented. As we look longer term, we expect that our increased penetration of the retail channel, in combination with our broader efforts to lower input costs, will support enhanced margins over time. adjusted gna expense for the second quarter was 4.1 million down from 5 million in the second quarter of last year a reduction of approximately 17 percent year over year and essentially in line with the 4.1 million we reported in the first quarter gap net loss for the second quarter was 19.8 million compared to 21.6 million in the second quarter of last year and 12.7 million in the first quarter of 2026. The year-over-year improvement was primarily driven by a 1.5 million improvement in loss from operations, reflecting lower operating expenses, along with a modest reduction in net interest expense. The sequential increase in gap net loss for the first quarter was almost entirely explained by non-cash items. The change in fair value of our warrant liabilities swung from a $5.2 million gain in the first quarter to a $1.4 million loss in the second quarter, driven by changes in our stock price during the period. Adjusted EBITDA loss for the second quarter was $5.8 million compared to a loss of $7.1 million in the second quarter of last year, a 17% year-over-year improvement relative to the first quarter. the loss was stable, and we still expect the pattern of continued improvement to hold in the second half as our network continues to mature and scale alongside our retail customers. Looking at our trending for the first half of the year, revenue is up 15% to $27.2 million, and adjusted EBITDA loss has improved approximately 24% to $11.5 million, compared to $15.3 million in the first half of last year. These results reinforce that we are on the right path. With respect to the balance sheet, we ended the quarter with cash, cash equivalents, and restricted cash of $10.1 million down from $18.8 million at the end of the first quarter, reflecting cash used in operations during the quarter. Subsequent to quarter end, and prior to today's call, we received an additional $12.5 million investment from an existing strategic investor, which is not reflected in that $10.1 million balance. Combined with the $15 million investment we received in March and the transactions we executed in 2025, these commitments continue to give us the financial flexibility to be strategic about growth and partnership decisions as we advance towards profitability. In terms of our outlook, we expect the trajectory of improvement we've demonstrated over the past several quarters to continue. Revenue growth and continued cost discipline remain the two biggest levers we have towards our goal of positive adjusted EBITDA. With that, I'll turn it back to Kathy for closing remarks.
Thank you, Tony. To close, I'd say this was a quarter that moved us forward on every front that matters, the commercial pipeline turning into real placements, our operational discipline continuing to compound, and our strategic investor who knows the business well choosing to back it with more capital, and all of it against a backdrop where the case for how we grow food has genuinely never been more relevant. There's more work ahead of us before we get to positive adjusted EBITDA, but every quarter like this one narrows that gap. I'm grateful to the entire Local Bounty team for the execution and to our investors and partners for their continued confidence.
