SharkNinja's 2Q26 Earnings Call

Hello, everyone. Thank you for joining us and welcome to the Shark Ninja second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to James Lamb, Senior Vice President of Investor Relations and Treasury. James, please go ahead.

Good morning and welcome to Shark Ninja's second quarter 2026 earnings conference call. Earlier today, we issued our Q2 earnings release, which is available on the company's website at ir.sharkninja.com. A replay of today's webcast will also be available on the site shortly after the call. Before we begin, let me remind you that today's discussion will include forward-looking statements based on our current perspective of the business environment. These statements involve risks and uncertainties, and actual results may differ materially. For more details, please refer to our earnings release and the company's most recent SEC filings, which outlined factors that could impact these statements. The company assumes no obligation to update or revise forward-looking statements in the future. Additionally, during the call, we will reference non-GAAP financial measures, which we believe provide valuable insight into the underlying growth trends of our business. You can find a full reconciliation of these measures to their most directly comparable GAAP measures in the earnings release. Joining me today are our Chief Executive Officer, Mark Barokas, and Chief Financial Officer, Adam Quigley. Mark will start by providing a business update, followed by Adam, who will review our Q2 financial results and share our outlook for 2026. Mark will then offer some closing remarks before we open the call to questions. During the Q&A session, please limit yourself to one question and one follow-up. I would now like to turn the call over to Mark.

Thank you, James. Good morning, everyone, and thank you for joining us today. Let me get right to it. Q2 was a blowout quarter for Shark Ninja. We delivered our 13th consecutive quarter of double-digit net sales growth. And we didn't just sustain our pace, we accelerated to over 22% growth year over year. This is our fastest growth rate since Q4 2024. And here's the key takeaway. Shark Ninja's products are resonating globally, not in one category, not in one region, across consumer demographics, across geographies, and across channels. Everywhere we compete, we are winning by engaging and delighting consumers. We believe this quarter demonstrates the global power of our diversified business model in action. Domestic net sales grew more than 15% in Q2, a meaningful step up from last quarter, with first half 2026 net sales up greater than 12%. International grew nearly 37%, fueled by the UK, Europe, and Latin America. Every cylinder in our engine is firing, powered by our diversified three-pillar growth strategy. Just as important, our profitability performance was exceptional. Gross margin beat our expectations, even as tariffs remained a real headwind. Adjusted EBITDA increased nearly 19% year over year, driven by another quarter of leverage on adjusted operating expenses. And adjusted earnings per share increased nearly 30% year over year. Clear proof that we're compounding earnings, not just growing sales. I want to be direct. When some investors ask me about Shark Ninja's growth, I can sense some skepticism. It's hard to believe that double-digit growth in a business our size, in a market that isn't growing much, can be durable. Today, I will explain why we believe it is, and why it comes down to the most misunderstood part of our business, the size and strength of our core. When people think about Shark Ninja's growth story, they often think about new innovations we bring to market, like Slushy, CryoGlow, Chill Pill, the products that go viral. There is a misperception that these subcategories are an outsized part of the business that requires enormous growth to drive total sales, and that their success comes from Shark Ninja effectively pioneering these markets in a way that isn't repeatable. Category expansion is a real and important part of our story, but it overlooks what really powers our success. The base business franchises like vacuums, blenders, and air fryers, the products consumers already know us for, are very large categories. They're diversified, and they're growing, not flat, not managed for decline, growing. Here's a simple way to think about our growth. On average, over the last three years, our existing categories typically grow mid to high single digits. Layer on international expansion, layer on new category launches, add those three together, and you can get a double-digit growth profile. That's not a fragile formula built on one or two hit products. That's a durable, compounding growth engine with multiple sources of fuel. The three-pillar growth strategy that has been in place for years and one we intend to keep running for years to come. Success within the core is the centerpiece of this strategy, and it comes from relentless innovation in the areas we already dominate. Cleaning is a great proof point this quarter, with multiple product launches. The Shark Luxe Home Collection brings elevated new finishes to our flagship power detect robot and cordless vacuums. The Shark Carpet Force lineup debuted to give consumers powerful deep cleaning in a lightweight, ultra-compact design. And the Shark Power Detect Transformer is a true game-changer that brings together three cleaning tools in one. An upright for deep cleaning, a stick vacuum for maneuverability, and a handheld for above floor and tight spaces like the car. That's three meaningful innovations in a single quarter. Inside a category we've sold for decades. This is emblematic of Shark Ninja, driving continuous innovation within the largest categories we compete in. And it's a big reason our core isn't just holding steady, it's thriving. Motorized kitchen appliances are another great example. This quarter, our blending franchise drove excellent growth within the food preparation category. The Ninja Blend Boss, a complete reinvention of our Tumblr blender, has reinvigorated our business in this subcategory. Consumers are responding to the product's unique combination of power and function, not to mention personal style in a big way. Colors have also been a huge win for the Blend Boss, another element that keeps this part of our blending franchise thriving. There's a second idea I want to leave you with today because I believe it's just as important as the strength of our core. Shark Ninja is not a cleaning company or a kitchen appliances company. We're a consumer problem solving company. That is the lens through which we approach every aspect of our business. And the number of consumer problems left to solve is for all practical purposes, endless. every category we've ever entered started the same way not with a product we wanted to create but with a problem we noticed a soggy sandwich in a cooler a hot styling tool that damages hair a stain a traditional cleaner couldn't lift that mindset doesn't run out it compounds the bigger and more diversified we get the more problems we're positioned to see and solve first that's why I don't think about our core and our new categories as two separate stories. They're the same story told at different stages. Cleaning is new every single quarter because we keep finding fresh problems inside of it. And our newest categories will eventually mature into core the same way things like Creamy have, which I'll come back to later. Our focus on the core shows up in how we drive innovation, not just how we talk about it. Roughly 20 of the 25 new products we launch each year go into existing categories. That's deliberate. A vibrant, healthy-based business is what powers everything else we do at Shark Ninja. And that cord doesn't sit still. It gets larger and more diversified every year as we layer on new categories, channels, and geographies. That's the strength of our core today. Now I want to spend a minute on two things I believe will extend that advantage for years to come. First, channel expansion, specifically social commerce. Platforms like TikTok Shop aren't just a place to sell our newest, most viral products. They're becoming a front door for entirely new customers to discover our core products for the first time. One of my favorite examples is cutlery, a category we've been in for almost five years. Our Ninja Never Dull Knife system have become a smash hit on TikTok shop in the U.S., with this channel now in the top three for sales in the category. Even better, we're appealing to a mostly younger demographic than we typically see purchasing these products. Social commerce represents a new promising acquisition channel for many of our oldest, largest categories, and it's one that we're scaling globally. At the end of the quarter, we were live with TikTok shop in seven countries compared to zero in the year ago period. But we're not stopping there with a goal of more than double that number by this holiday season. Second, artificial intelligence. Last quarter, we described Jailbreak Shark Ninja, our initiative that encourages and rewards employees for developing AI tools. One of the most tangible places we're seeing it pay off is product development. AI is compressing the fuzzy front end of innovation. That phase where we conceptualize a product's form factor and style. That used to take months. It's getting shorter. And faster iteration should enable a stronger overall pipeline, not just for splashy new categories, but mainly for the core. AI is also meaningfully enhancing our consumer insights team. Increasingly, we can see the full conversation, not just our own channels. The best marketing we have is our consumers. They're sharing recipes, building fan communities, and turning our products into a cultural moment. Previously, we could only fully analyze content where people used our hashtags, but less than 20% of user content actually uses hashtags. AI has meaningfully improved our ability to process social media content and find our products. today ai has lifted our capture rate to 60 plus accuracy across the full ecosystem of users influencers and creators engaging with our brand organically this gives us a more complete real-time view of what's driving demand and it's increasingly shaping both our marketing and product development strategy at the company level we continue to rapidly progress on our most important AI initiatives. Coming out of our jailbreak live, our all-company hack week, we're laser-focused on eight big bet projects and 20 quick win projects. Two examples of big bet projects are POS attribution and media analytics and optimization. In both cases, we're partnering with major tech companies and other thought leaders in the AI space. Across all these initiatives, we've created a very unique approach, similar to how we operate in product development. Every project has a two-week cycle. The leadership team meets every two weeks with the project leads for updates and plans the next two weeks. The concept of a six- to nine-month project no longer exists at Shark Ninja. If we don't see tangible progress on an initiative every two weeks, resources are reallocated elsewhere. Decisive action has always been part of our DNA, and AI is helping us move even faster. Both of these, social commerce as a discovery channel and AI-accelerated innovation, enhance our confidence that the core business isn't simply healthy today, it's built to keep winning. With that context on the core, let me walk through our three-pillar growth strategy, beginning with our first pillar, expansion into new and adjacent categories. A common question we hear at Shark Ninja is, when do we run out of the categories we can go into? In our minds, we've been answering these for 18 years and counting. With a relentless focus on solving consumer problems, independent of whether we already possess a core technology or expertise, we feel like the white space ahead of us is enormous. Let's take an age-old consumer problem, settling for soggy leftovers and on evenly heated meals using traditional microwaves. Building on the success of the Ninja Crispy platform, Ninja just reimagined the microwave experience with the revolutionary Ninja Crispy microwave. The breakthrough is Fusion Crisp technology. It starts with microwave cooking, then automatically finishes with Ninja's legendary air frying, using superheated cyclonic air up to 450 degrees to take food from frozen to crispy in 10 minutes. Early consumer reaction has been outstanding. In just the first week alone, we've had over 8 million impressions across our social media landscape. This is an incredible adjacency for us in an established multi-billion dollar market, adding a TAM that is brand new to Shark Ninja and taking our total subcategory count to 40. The Ninja Crispy Microwave is another example of us finding a category that hasn't seen real innovation in years and asking what Shark Ninja can do differently. And you will recognize the same thing again in a few weeks when we launch a new category that addresses yet another problem in a space with minimal innovation for years. Let's turn to our second growth pillar, growing share in existing categories. I spent time earlier discussing the size and strength of our core business using cleaning and blending as examples. Now let's focus on frozen treats, where the Ninja Creamy has become a scaled global business with revenue coming from over 30 different countries. The first Creamy launched in 2021, and we've transformed it from a single product into a family of products, each with different features and price points, with even more innovation coming as part of our roadmap. This is exactly the pattern we want. A new category doesn't stay new forever. It matures into an existing franchise, and then we keep innovating inside it to become one part of a massive diversified core business that continues to evolve and compound. Fans were also a standout in the quarter, both domestically and particularly in EMEA. Hot temperatures this summer, coupled with our innovative lineup, drove exceptional demand for products like the Shark Flex Breeze and Shark Turbo Blade. In fact, we sold out and couldn't capture all the demand we saw. This presents a major opportunity for us to scale next year, especially as we expand to more European countries. Fans are a great example of a subcategory that started domestic and is now scaling into international, another proof point of how our playbook travels. This leads us nicely to our third pillar, international expansion, where we demonstrated a sensational quarter. Net sales growth of nearly 37% was powered by broad-based strength across regions, led by UK, Europe, and Latin America. The UK grew nearly 19% year over year as the power of our diversified category and channel strategy continues to shine. Latin America remains incredibly robust for Shark Ninja with contributions across the region. In EMEA, we saw strong performance from France and Germany and a successful transition in Italy and Spain, two markets we recently converted from distributor led to direct markets. Importantly, we're now done for the foreseeable future with these distributor conversions, laying the groundwork for future growth. We've also finished the rollout of our new direct-to-consumer platform across our major international markets. Social commerce initiatives like TikTok shop launches are going exceptionally well across the geographies where we've turned them on. These efforts represent a multi-year heavily complex transition and we've now crossed the finish line. This unlocks real focus for our international teams going forward and a major opportunity for Shark Ninja. We've demonstrated that operating directly enables us to really scale countries under our leadership. In fact, a few weeks ago we brought together leaders from across the company to our quarterly business review in London. We focus the multi-day meeting on EMEA, with the key takeaway being boundless opportunities for growth. The biggest component of this is driving core business expansion market by market. France and Germany are the clearest examples. A year ago, Shark Ninja participated in a low double-digit number of categories in each market. Today, that number is up over 50%, with the incremental launches largely coming from our established core. Even with the expansion, we estimate that we're still less than 10% penetrated on an overall category basis across EMEA today. I see so much potential ahead of us for years to come, as we keep introducing successful legacy categories while taking share within existing ones what excites me the most about our international expansion is how our social demand generation model is scaling as we built out our teams scaled up local language content and learn what works in different countries we're creating consumer demand across the globe just as important is how many more ways we have to reach the end consumer than we did a year ago. Our omni-channel strategy is flourishing. Retailers are making bigger commitments to Shark Ninja as partnerships deepen, and we are grateful. We're building momentum across countries with major partners like Amazon globally and Mercado Libre in Latin America, and we're complementing all of it with our meaningfully enhanced DTC and social commerce presence shark ninja moves fast in the past the natural pace of expansion in brick and mortar could limit this speed at times there were more products we wanted to launch than we could today we can move even faster thanks to our expanded retailer relationships globally in combination with the flexibility of our dtc and social commerce capabilities Let's take TikTok Shop as a prime example. We launched in multiple new countries in Q2, and the early success has been phenomenal. In the case of Germany, within weeks, our sales volume in this channel started to reach levels that took us months to achieve in the U.S. and U.K. We think this speaks to how much we've learned over the last nine months on the platform, particularly how to maximize social media marketing. To wrap up, Shark Ninja has a battle-tested strategy driving our massive success. Our core is large, diversified, and growing. Our new categories keep finding white space. Our domestic business is humming across the board, including with our largest retailers. Our international business, go-to-market transformation, is complete and ready to scale. put these pieces together and we believe we have a balanced powerful growth engine capable of delivering excellent results into the future all these factors drive huge excitement and confidence for 2026. we meaningfully raised our guidance today well beyond the benefit we expect from tariff refunds a reflection of the continued strength we see for the remainder of We were active with our share repurchase program in the second quarter, and we head into the back half with real momentum in the places that matter most. Products that excite consumers, a marketing strategy that works globally, and more channels to drive sales than ever before. The Shark Ninja consumer is proving to be remarkably resilient. We intend to keep pressing that advantage. With that, I'll turn it over to Adam, who will walk you through our financial results and share our updated outlook for 2026.

Thank you, Mark, and good morning, everyone. Q2 was an outstanding quarter for Shark Ninja across the board, and I'm excited to walk through the details. Net sales in the second quarter increased 22.2% year over year to $1.77 billion. dollars by geography domestic net sales increased 15.5 percent to 1.14 billion dollars international net sales were 624 million dollars up 36.6 percent our uk business continued its great start to the year with net sales up 18.7 percent year over year to 255 million dollars we saw particular strength within our beauty and home environment business in the uk along with heated cooking in multiple other categories. The rest of the international business also performed quite well in the quarter. Our EMEA region grew robustly, with multiple countries contributing to our success. Mexico performance remains very strong, along with the rest of the Latin America region. Turning to performance by category, net sales in the cleaning category increased 4.1% year-over-year to $522 million. One of our largest subcategories, cordless vacuums, drove our success, and carpet extraction had another strong quarter. Net sales in the cooking and beverage category increased 36.5% year-over-year to $499 million. Two of our flagship Ninja franchises, the Ninja Luxe Cafe and the Ninja Crispy, continue to see very strong momentum globally. Net sales in the food preparation category increased 13.3 percent year-over-year to 459 million dollars. Blending was the standout in Q2, as Mark mentioned, and our frozen treats business grew nicely as well. Finally, our beauty and home environment category increased 65.3 percent year-over-year to 286 million dollars. The Shark Beauty technology portfolio performed very well in the quarter, along with sizable contribution from our home environment subcategories. Now let's move to gross profit where the results in the quarter exceeded our internal expectations. Tariffs remain the primary headwind due mostly to the annualization impact from 2025. We partially offset this pressure through continued cost optimization and favorable mix coming from product and channels. Adjusted gross margins in the second quarter decreased approximately 70 basis points year over year to 48.7 percent of net sales and GAAP gross margins decreased roughly 30 basis points to 48.7% of net sales. Moving down the P&L, our adjusted operating expenses this quarter totaled $629 million, or 35.6% of net sales. This compares to 36% of net sales in the year-ago quarter for roughly 40 basis points of favorability year-over-year. SharkNinja has now driven leverage on adjusted operating expense as a percentage of net sales for five quarters in a row we remain confident in our ability to balance robust reinvestment in the business while also finding opportunities to optimize spending this discipline enables shark ninja to remain flexible regardless of the macro environment around us i will now break down our operating expense line items on a gap and non-gap basis gap research and development expenses increased 22.3 year over year to 109 million, compared to $89 million in the prior year period. Non-GAAP research and development expenses increased 16.4% year-over-year to $101 million, compared to $87 million in the prior year period, leveraging almost 30 basis points year-over-year. We believe R&D is one of the most important competitive advantages for Shark Ninja. As a result, we will continue to invest in this area as a key component of our innovation engine. Gap sales and marketing expenses increased 23.4% year-over-year to $442 million, compared to $358 million in the prior year period. Non-gap sales and marketing expenses increased 22.3% year-over-year to $425 million, compared to $347 million in the prior year period, essentially flat year-over-year as a percentage of net sales as we had previewed last quarter there was more media spending in june 2026 compared to the prior year based on the timing of prime day gap general and administrative expenses increased 40.8 percent year over year to 130 million dollars compared to 92 million dollars in the prior year period the majority of this increase was due to an increase in share-based compensation non-gap general and administrative expenses increased 18.8 percent year over year to $103 million compared to $87 million in the prior year period, leveraging about 20 basis points year over year. Investments in SharkNinja personnel, along with professional and consulting fees, drove the increase. SharkNinja's profitability goal centers on delivering full-year adjusted EBITDA growth that outpaces net sales growth. Due to the annualization of 2025 tariffs, our adjusted EBITDA growth slightly trailed our sales growth in Q2, increasing 18.6% year-over-year to $265 million. This represents a 15% adjusted EBITDA margin down approximately 50 basis points compared to the prior year period. As you can see from our guidance, we continue to anticipate adjusted EBITDA growing ahead of net sales for the full year of 2026. To wrap up the income statement our gap effective tax rate in q2 was 20.7 percent while our non-gap effective tax rate was 19.7 percent adjusted net income in the period was 178 million dollars or one dollar and 26 cents per diluted share compared to 138 million dollars or 97 cents per diluted share in the year ago period our adjusted net income per share in q2 grew roughly 30 percent year over year marking growth in excess of 23 percent for 11 of the last 12 quarters turning to the balance sheet and cash flow at the end of the second quarter cash and cash equivalents totaled almost 780 million dollars up more than 300 percent year over year total debt outstanding at quarter end was 719 million dollars and we continue to have nearly 490 million dollars of capacity available to us on our 500 million revolving credit facility. Total inventories were $1.14 billion exiting the quarter, up 8.6% year over year. Recall that we are still lapping the large tariff pre-built inventory levels from late 2024 and early 2025. We view our inventory position as healthy and capable of continuing to support our growth plans. Cash flow performance year-to-date is worth highlighting with cash flow from operations of nearly 275 million dollars through the first six months of 2026. this includes meaningful buyback activity in q2 we repurchased roughly 100 million dollars worth of stock as part of our authorization we are pleased with our buyback activity year to date and will continue to utilize the program opportunistically let's move to our outlook as 2026 has unfolded we are seeing tremendous global momentum in our business alongside greater visibility to certain cost items consistent with prior quarters our updated 2026 outlook assumes current tariff levels persist for the remainder of the year including minimum rates of 10 for indonesia malaysia and cambodia and a recent increase from 10% to 12.5% for China, Vietnam, and Thailand. We now anticipate receiving a tariff refund benefit in 2026, the details of which are available in our Form 10-Q. In July 2026, Sharpton just submitted refund claims of approximately $247.1 million through the U.S. Customs and Border Protection, or CBP, refund process, and the CBP accepted those claims. as a result we expect to recognize a benefit of approximately 247.1 million dollars as a reduction of cost of sales with a corresponding receivable in the third quarter of 2026. the underlying duties subject to refund are expected to be split approximately evenly between amounts previously expensed in fiscal 2025 and in the first half of 2026. we are treating the refunds consistently with the period in which the underlying tariff costs were recognized. Refunds associated with tariffs expensed in 2025 will benefit our gap results in cash flow, but will be excluded from adjusted net income, adjusted EBITDA, and adjusted net income per diluted share in our fiscal 2026 outlook. Refunds associated with tariffs incurred in 2026 will be reflected in these same adjusted metrics as part of our revised full-year outlook. consistent with the treatment of the original expense. Our updated outlook reflects stronger underlying operating performance, complemented by the expected net benefit from the tariff refund. We are opportunistically choosing to reinvest a portion of that benefit in targeted areas that support long-term growth, including retail activation, media, technology and AI capabilities, and mitigation of the ongoing updated tariff and input cost pressures. For transparency and clarity, we have separated the net tariff impact where applicable in our outlook. For the full year 2026, we now expect net sales to increase between 16% and 17% compared to our prior guidance of an 11.5% to 12.5% increase. Adjusted net income per diluted share is now expected to be in the range of $6.45 to $6.55 compared to $6.10 to $6.10 previously. Of the $0.45 increase, approximately $0.15 is associated with the expected net tariff refund benefit. Adjusted EBITDA is now expected to be in the range of $1.36 billion to $1.37 billion, representing growth of 19.5% to 20.5% year-over-year compared to the prior expectation of $1.29 billion to $1.3 billion representing growth of 13.5% to 14.5% year-over-year. Of the $67 to $69 million increase, approximately $30 million is associated with the expected net tariff refund benefit. Net interest expense is now expected to be down relative to 2025. our gap effective tax rate expectation remains approximately 22 to 23 percent and capital expenditures are still expected to be between 190 million and 210 million dollars for the year where we are tracking toward the high end to close we are proud of our q2 performance as evidence of continued steady execution in a macro environment that remains uncertain the strength of our net sales is perhaps the most encouraging data point because we see it coming from so many different places and it reinforces our belief that consumers continue to recognize the value of our innovation and choose our products across categories channels and geographies as mark discussed it all starts

with a healthy based business a core that is larger more diversified and more powerful than many realize we enter the second half of 2026 with great enthusiasm about how shark ninja can continue to positively impact consumers lives globally and we're already underway with planning for 2027 and beyond thank you with that i will now turn it back to mark thanks adam our exceptional q2 results and outlook for the remainder of the year underscore the global strength we see in our business while execution behind the scenes is extraordinarily complex the goal is simple grow domestic and grow international with domestic our goal is to be a double digit grower in 26 and we feel confident about that beacon. Just look at what we're doing with one of our biggest retail partners, Walmart. We recently rolled out large, exceptionally curated end caps at a large number of stores. These displays showcase the best of Shark and Ninja products and the response so far has been incredible. We're also deploying some of our social media tactics with retail partners, influencers and other social media personalities are creating content about amazing shark ninja finds they're discovering in stores. And our D2C business is just scratching the surface of the opportunity we see ahead. Internationally, the breadth of our reach is significantly better than even when we began 2026. The balance of paths we now have to the consumer, retailers, large e-commerce platforms, DTC and social commerce is enormously powerful. Add in how quickly we're learning how to drive demand generation with social media, and you have an incredibly exciting opportunity for years to come. Success like this doesn't happen by chance. It's the output of the Shark Ninja playbook consistently applied across all aspects of our business. While this strategy isn't changing, we're hopeful that the way people understand SharkNinja can. To that end, we have added two new slides to our investor presentation published today. These additional resources are intended to bring incremental clarity to our three-pillar growth strategy, particularly on the size and strength of our core. Thank you. This concludes our prepared remarks, and I'll turn it over to the operator to kick off Q&A. Operator?

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Randy Koenig with Jeffries. Please go ahead.

Yeah, thanks a lot and good morning. Mark, you laid out a lot of good nuggets on how we should be thinking about the durability of growth through new product generation or innovation, and continuing to innovate the core and geographic expansion. So one thing that would be probably helpful is to kind of dimensionalize the size of TAM and SAM. I remember three years ago when we took the coverage, you kind of talked about a TAM size of, well, about $100, I think, $12 billion and a SAM of about $40 billion, which is a massive opportunity or massive category. Maybe kind of give us your thoughts on how you think about that size, that true size and global opportunity and how you layer that in with all this product innovation and continue to kind of refresh the core.

Yeah, Randy, absolutely. Thanks for the question. Look, when we started the second quarter, I think we viewed the available TAM at roughly about $120 billion. dollars. So if you think about, you know, what our current guide is, you know, there's an enormous amount of runway. Now, that TAM continues to keep growing. You know, as you heard in the remarks, you know, we just launched the Ninja Crispy microwave. That now enters us into a category that we never participated in that is a multi-billion dollar TAM, you know, over a three billion TAM. So it opens up a whole new set of categories for us. In Q3, as we get toward the end of Q3, we'll be entering into our 41st subcategory that is also a multi-billion dollar subcategory. So I think by coming out of the year, Randy, you know, we'll be participating in, $125 to $130 billion available TAM against the overall revenue that we have. So lots and lots of white space. And I would also just like to point out that there's been so much talk about the market. What Shark Ninja did in the U.S. this quarter, I think, is astounding. I mean, our business, our shipments grew 18% in the United States. Our POS was even higher than that in the U.S. It bodes well as we head into the second half of the year. So it really points to the fact that kind of Shark Ninja is able to create the market by getting consumers excited about our products and driving the viral marketing that we're driving.

That's great. And I guess following up, you know, one thing that kind of strikes me is, you know, you're talking about the best in TikTok and you merge the websites and you have this one website you kind of came out with last fall. So I'm just curious in thinking about how you just kind of think about long-term penetration potential, you know, for direct selling versus wholesale. And maybe Adam can give us some perspective on, you know, the margin differential there. And then on top of that, the other area that seems interesting is from a margin opportunity while you still invest is marketing, where you did say marketing, I think, was flat as percent of sales year over year. But, you know, I think as history lessons go, as you get more of brand awareness or more penetration in a country or geographic area, it seems like you could get, you know, marketing leverage while just becoming more efficient in that area as well. So net net seems like either with direct and marketing, there's continued potential for margin expansion opportunity long term. Just want to get your thoughts on how you think about that as well.

Yeah, so let me answer the first part, and then Adam can answer the second piece. First is, you know, in the second quarter is when we just completed the Salesforce DTC launches in the rest of Europe. So, you know, the results that you're seeing in the second quarter, with the exception of the United States and Canada, really do not have any impact. In fact, they may even have a little bit of hurt as a result of the DTC transition and just going through those transitions and then scaling back up. You know, we're going to continue to maintain our omni-channel strategy. I mean, we think that that's what is so compelling about us. I mean, you heard me talk in the prepared remarks about what we're doing with Walmart, which is exciting and, you know, continuing to grow other retailers. We're excited about the partnership we're developing with Mercado Libre in Latin America. We're launching Allegro in Poland that's going to continue to expand, you know, our pure player presence. But there's no doubt that TikTok affiliates DTC in 27 is going to grow as a faster percentage of our sales than the rest of the business. And I think as you get into the third and fourth quarter and particularly into 27, I think you're going to see a lot of acceleration from the investments that we've made in the DTC platform and some of the new Salesforce tools that will be launching and optimizing and the CRM benefits that will be coming. But let me, Adam, turn it over to you on the other piece.

Sure. Yeah, Randy, I'll hit on the margin makeup overall. So obviously, DTC, TikTok shop, overall social commerce does come at a higher structural gross margin. That's sort of the initial benefit. And so, as Mark noted, those are the channels that we have seen and will continue to see growing faster than retail. The more exciting piece there is then how much control we have within those channels in terms of what assortment we're putting out there, what colors we're putting out there, collectibles, the ability to be changing price, changing promotions, reacting quickly. So there's a lot more that then stands in our control as we go forward in terms of how we can impact that margin, but certainly higher gross margin opportunity overall. And then as we scale that business, we start to see overall benefits across our distribution network, across customer service, et cetera. So for us, it's looking forward to what is then the ability to leverage the scale of these channels while also recognizing that structurally they come at a higher gross margin overall.

Thanks, guys.

Your next question comes from Brooke Roach with Goldman Sachs. Please go ahead.

Good morning, and thank you for taking our question. Mark, I was hoping you could unpack the growth that you're seeing in the domestic business, which is really strong. How large is your DTC business domestically today, and how are are you thinking about the pace of contribution from DTC and TikTok shop to domestic growth this year and into 2027? Similarly, on the other hand of your business, you spoke to stronger POS versus shipments. Where do inventory levels sit in the channel, and how are you thinking about the opportunity for sell-in versus sell-through to more closely align? Maybe bottom line, do you think that you can grow the domestic business at a double-digit rate in the back half? Thanks.

Yeah, so thanks for the question, Brooke. Look, I have been excited since the beginning of the year, saying that I believe our domestic business is a double-digit growth business. We came out of the first half of the year, it is a double-digit growth business, and I believe it will grow double digits in the back half of the year as well. So I'm confident if we look at the second quarter results, the U.S. business grew 18%. The Canada business was down 17% as we flow through all of the remaining changes in Canada. Canada is going to grow in the second half of the year. The U.S. is going to grow. So I feel very, very good about a double-digit second-half number for the domestic business. We don't break out the percentage of our D2C business. What I can tell you is that I do expect D2C and affiliates to grow at a faster rate than the rest of the business through the end of 27. You know, I would also tell you that, you know, we've had some startups, you know, with Salesforce. We transitioned the UK that had a couple of week blip in the second quarter. We transitioned Germany and France and the rest of Europe. By the fourth quarter, we'll be live in Europe in 14 different countries with Salesforce. So I don't think you're seeing in the numbers the benefits today of what is going to come from Salesforce and from our D2C site. I think you'll start to see that in Q4 of this year, and you'll really see it accelerate as we get into 2027. But as I said in the last question, I still, you know, stay firm to our omni-channel strategy. I mean, retailers are making big bets with Shark Ninja. You know, our brands are the most searched brands on the pure player sites. And I think, you know, we want to be relevant wherever the consumer chooses to shop for our products.

And then as far as the POS shifts piece, Brooke, we do see that normalizing as you get into the back half of the year. The Q2 difference is largely driven by the timing of Prime Day. So POS certainly outpaces ships at that point. Overall, the retailer inventory is extremely healthy. You know, we're not seeing any pullback on that front. Our inventory levels remain extremely healthy as well. And so I think we're really well positioned for the back half of the year and feel good about where POS ships is in relation to that.

And look, I would say if anything, you know, I think retailers could take a bit more inventory, you know, not that they're consciously working down their inventory, but, you know, I think there's a lot of demand to capture. And I think that, you know, we could see inventory levels, you know, we will at least push for inventory levels to grow as we head into Q4.

Great. Thanks so much. I'll pass it on.

Your next question comes from Stephen Forbes with Guggenheim. Please go ahead.

Good morning, Mark, Adam. Mark, I appreciate the comments around Shark Ninja's partnership with Walmart and new end caps. But I was curious if you can maybe broaden those comments out to other sort of retail partners in, you know, as we think about sort of planogram changes or opportunities ahead of holiday 2026. How do you sort of summarize what the real change is on a year-over-year basis, given what happened last year with missing some of those planogram dates? And then maybe equally as important, just given the growth and the opportunity, are you starting to have even earlier conversations with some of those new international partners about planogram opportunities even in the first half of next year? Or how do you sort of think about, or how should we think about, you know, sort of just the performance of the business impacting the ability to change, you know, planograms maybe earlier than anticipated in those new markets?

Yes, Steve, let me start with your international question first, because I, you know, I said something in the prepared remarks, and I want to make sure that it's clear to folks. If we were sitting here last year at this time, Shark Ninja did not have a lot of ways to get to the end consumer in some of these European markets that it does today. You know, we didn't have D2C sites set up. You know, TikTok shop was not set up in these countries a year ago at this time. We were not set up and scaling the pure players. So I don't want to minimize. You know, we've done a great job expanding our planogram placement with, you know, all of the European retailers heading into holiday of this year. But we've got a lot more ways to get to the end consumer in Europe than we did a year ago. We'll be up on TikTok shop platforms in 13 countries. You know, as I said, we'll be in places like Allegro and Amazon and other pure players. Our D2C business has stood up heading into Q4. So we have a lot of ways now to get to the end consumer in Europe that we didn't have a year ago. Now, that being said, you know, yes, we are having lots of conversations with the European retailers. You know, some are willing to move off of their annual planogram changes. Some are simply not. But I feel very confident in our ability to be able to launch more products into Europe and get to more consumers as a result of social commerce, pure players in our D2C site. So that's on the Europe side. On the U.S. side, I think there's a really interesting dynamic. You know, I mentioned Walmart and the end caps that we've done. We've got some great promotions that are coming up with Target. you know they're a retailer that has really recognized the colors that we're doing and how we're bringing excitement to a lot of these products they are you know going all in with us on that in both you know their dot-com sites as well as you know in store on end caps we've got some great things that we're working on with people like Costco and Sam so you know overall all i i think that you know retailers are are seeing us in lots of different ways than they did a year ago um i think our products have very much become part of culture i mean i'll give you one example you know we never sold any products other than hair care and skin care to alta and we showed them our shark chill pill and they said this would be an amazing product uh you know for them to add to their assortment they launched the chill pill they've done great with it In fact, Vogue and Elle have written up Chill Pill as the it product of the summer in Europe. We're seeing people writing that up in the United States as well. So it's really helping us get incremental placement at retailers that were not selling these types of products a year or two years ago.

Maybe just a quick follow-up on sort of the AI-related acceleration agenda. agenda. You gave us some color there on innovation jailbreak. I know we've talked in the past about sort of efficiency capture around promotion and media spending. So maybe if you could update us on sort of that initiative as it pertains to driving better ROAS or promotional optimization, where are we today and how would you sort of summarize the opportunity that you're chasing?

Look, we went live a couple of weeks ago with a phase one initiative on promotions and optimization management with Palantir. The first couple of weeks, the results of that showed a lot of promise to the point where we actually have now moved ahead with a phase two initiative with Palantir that will take about four months to implement. I think you'll see the benefits of the Palantir work come through in Q4 promotions and Q4 media planning, primarily in the United States, UK, Germany, and France. It'll expand to the rest of the markets as we get closer towards the end of the year. So I'm very, very optimistic about the work that we've done on promotions management, on marketing, on pricing. I think we are going live at the end of September on a system that we've worked on with Amazon, with AWS around media optimization. And I think you'll see a little bit of the benefit of that come through in Q4, but really for the most part, that won't scale until 27. But Steve, we're seeing a tremendous amount of optimization in lots of the quick wins work that we're doing and lots of the AI sharks work that we're doing. I mean, yes, we're investing and we're seeing benefit, But I think what you're going to see is that as we turn the page on 26 and we go into 27, I think you're going to see us be able to really leverage compensation in a big way in 27. You know, not to the extent of seeing any type of large reductions, but I think we're going to continue to be able to keep growing the business on roughly flat headcount as we get into 27. And I think that's going to be a big benefit for us in terms of leveraging operating expense and then being able to choose, you know, where do we invest that operating expense, you know, maybe into other areas that will drive a higher return on investment for us.

Thank you.

Your next question comes from Peter Keith with Piper Sandler. Please go ahead.

Thank you. Nice results. I wanted to dig into the strength in the core categories. I guess the one that really stood out to us was the cooking and beverage appliance category was the strongest, I think, in at least two years. Could you just unpack a little bit of what you're seeing in that category that's driving such strong growth?

Yeah, Peter, look, I would say a few things. One is, you know, our espresso and coffee business has seen very significant growth globally. During the quarter, we launched a fully automatic coffee maker, the Ninja Auto Barista, that launched at $949 and was off to a great start. We've continued to scale our espresso business in more and more countries around the world into places like Spain and Italy that we just launched. We expanded it more into Latin America. Our Ninja Crispy business has done great in the quarter. you know we've really built that into a whole franchise of products you know we launched our original crispy then we expanded into the ninja crispy pro and in the quarter we launched in the united states the ninja dual zone crispy um and so you'll see that start to scale out to the rest of the world as we get through this year and into the early part of q1 of next year So I think expansion, you know, in our crispy business, expansion in our espresso business, solid results in items like our oven business, you know, our multi cooker business. You kind of put all of those things together and you just look at kind of further penetration of our heated cooking products into more new countries. And that's what drove, you know, really nice growth in the quarter. I mean, look, you know, cooking did great. I would also point to the fact that home and beauty, you know, had a standout quarter growing over 60 percent. You know, our cleaning business in the first half of the year had very strong growth relative to the market and our food prep business, you know, grew double digits. So, you know, it's great to see that all four of our major product categories grew in the quarter.

Yep, agreed. The other thing I just picked up in the call is it sounds like you're going to now launch three subcategories this year. I want to confirm that's right. And then I guess if so, it sounds like an accelerated pace of innovation.

It might be early, but is this anything related to the jailbreak initiative? not really so peter we we are you know we launched the blast boss earlier in the year we launched the crispy microwave a couple of weeks ago we have a new subcategory that's going to launch in q uh three i think we've publicly said that we would launch in a minimum of two subcategories a year you know i'm really excited about what we have coming in 2027 i mean we have to obviously get through 26, but we have a great pipeline of new categories for 27. And I think that's where you're really going to see the impact of AI and the jailbreak work on our product development. I mean, you'll see some new products that are coming out in Q3 and Q4 of this year that are using kind of enhanced software capability in them. But I think the innovation changes that we've made, particularly using AI and consumer insights through AI, you'll start to see really come through in 27.

All right. Sounds great. Thank you very much.

This concludes the question and answer session. This concludes the call. Thank you for attending. You may now disconnect.