All right, let's get started. Thank you, everyone, for attending our 46th annual growth conference. My name is Brian McNamara. I'm one of Canaccord's analysts in the consumer space. We are delighted to have Shark Ninja with us today to host CFO Adam Quigley and James Land, who heads up IR. So thank you very much for joining us, guys. So the company reported another strong beat and raise quarter last week. We actually pulled the buy side ahead of time because the bar felt like it was higher than sell side estimates, and you cleared it with ease. How do you do it, and what's the secret sauce?

It doesn't feel easy, that's for sure. But honestly, I think you look at Q2. Q2, I think, is very emblematic of what we set out to do every year, right? And it's broad-based growth. It's not any one category. It's not any one country. It's not any one thing that we're going after. And so I think at any given quarter, we're going up to 10, 12 different things, right? I think Q2 is a good example. When things go right, that's a 22% growth quarter for us. But we're setting out to do that. So it's hitting on new categories. It's hitting on existing categories. It's hitting on innovations in the base. It's hitting on international. But look at the U.S. business, right? I think we're most excited, if I were to choose one thing, don't tell the international team. But the U.S. growth of 18%, I think, is something that's really, you know, a proof point in the strength of the business right now. So, you know, for us, I think Q2 was great in many regards. We knew we had some tough comps coming into it from Q2 last year. where we pulled a lot of levers in order to start offsetting tariffs. But, yeah, the team did an incredible job in feeling great about those results.

So fair or not, this stock has always been associated with tariffs at some level. You guys have done a ton of work moving supply chains, diversifying suppliers, a whole host of other things, you know, that the company triggered last April after Liberation Day. Now you're in receipt of roughly $250 million in tariff refunds. Tell us about the work involved that went into tariff mitigation, and what you learned and how you'll deploy those refunds.

Yeah, I mean, going back to the first week of April, right, when Liberation Day hit, we mobilized the entire organization. And we've kind of talked a lot about this of, you know, that whole week was, you know, orienting around finding 1,500 different initiatives to help offset tariffs, from pricing to costing, operating expense. The entire P&L was looked at. And we took a lot of actions right out of the gate. And, again, I think that's part of what made Q2 a tough cop in some regard. But by putting everything on the table early and then also acting on price, acting on cost, acting on OpEx early, we were able to give ourselves flexibility as those rates inevitably change throughout the year. That moment was also very representative of how Shark Ninja operates. You look at some of the AI work we've done and some of the jailbreak posts that Mark has shared on LinkedIn and other forums. When there's an opportunity, when there's a problem, we mobilize, right? We don't sit around and wait and evaluate it. We just start moving because inevitably it's easier to change direction when you're already moving. That's always been sort of our idea. So when you think about now getting the refund, and to recap, $247 million is what's been accepted by the CBP. It has not been paid yet, but that's what we've filed for and has been accepted. So we do expect to book that in Q3. We will treat about half of that related to 2025 as an ad back in the year. So we'll adjust that out of 2026. We've been working with EY to determine what is related to 25 versus what's related to 26. Based on inventory turns, it's about half and half. And so the other half that we keep within 2026, that's an opportunity, right? There's kind of four buckets that I think about of where those dollars go. The first bucket is we did disproportionately raise our guidance. So operationally, we raised sales a good amount. You saw a good amount of flow through from EBITDA. On top of that operational performance, we're then, you know, flowing through another roughly $30 million of EBITDA related to the tariffs. That's kind of the first bucket. The second bucket is the macro headwinds have persisted. Tariffs are now 12.5%. They were 10%, kind of 0%, but now they're 12.5%. So that 2.5% delta is a new hit to the back half of the year. Part of it's going to offset that. Not a huge number, but it's a number. The other piece is commodities. Commodities have stayed elevated. It's not just resins, you know, with the Middle East crisis. It is, you know, aluminum, it's silver, it's copper. It's some of the materials that, of course, you know, are still in high demand with everything going on with AI. So commodities tariffs is kind of the second bucket, equal weighting. The next two buckets are the exciting part. One of them is reinvestment. So we're reinvesting in the business across media. That's new categories, new geographies, brand-building type media. Media not to maximize revenue in 26, but media to drive momentum into 27. Investment across AI, you know, we continue to do that. Not a huge, you know, splash that's going to make a headline, but more prudent projects that have time-bound deliverables. And so accelerating some of that. And there's some other parallel path ideas that we're working on across R&D. So pulling forward some initiatives that maybe would have otherwise waited until 27 to do, trying to do those now in Q4 and pull that ahead. So big opportunity to reinvest in the momentum of the business and invest in the things that we're already doing today. And the fourth bucket, I'm going to call it flexibility, right? Let's see what the rest of the year brings. Can I reinvest more of that? Do we need to adjust prices? Do we need to, you know, look at commodities? Do we need to drop more to the bottom line? That's sort of where we're reserving the right to be flexible.

So the company launches roughly 25 new products a year.

How do you avoid the boom-bust nature of new product launches? so those 25 products 20 of them on average maybe more 21 22 are in existing categories right so existing categories is not boom bust existing categories is strengthening the core just this morning i delighted the family with the unboxing of a brand new luxe edition um cordless stick vacuum right the other one was fine it was two years old but that employee discount was appealing and, you know, my son particularly was excited. But, like, I look at the two products right next to each other, you'd think they were from different companies. One was two years ago, one is today. And the one today is amazing. I mean, check it out. There's some great colors out there. They fit with the, you know, beautiful modern design. And, you know, the quality is different. The functionality is different. There's just, there's a big difference. Now, look, you know, I get, I work at Shark Ninja, so, you know, new vacuums every day is kind of a standard occurrence. But I think that's a great example of just how you reinvent the core, how you bring newness to the market, how you help people retire their products early, right, and solve a new consumer problem. So the 25 new products, so many of that is in the existing business across, you know, existing categories. The other pieces are within new categories. We've launched two new categories this year. We've got another one coming. But I think the dependency on new categories, that's not the story of this business, right? The story of this business is developing and maintaining a strong core, continue to invest in that. And then as the new categories come about, they eventually end up back in the core, right? Creamy was a big product. Slushy, big product. Those are all in the core business now. You know, we were checking in this morning, and, you know, we were stopped by the folks at the front desk talking about the new slushy that they bought. And, you know, they were going to be making a vodka water drink this weekend. And I'm like, you've got to add allulos syrup to that to make sure it slushes properly. But, you know, we asked, did you buy the new one? No, we didn't buy the new one. But that to us, that brand new one that we just came out with, that's now innovation in the core, right? And that's giving people another reason. And now there's a dual zone. Maybe someone that said, hey, I don't need that slushy machine. I got kids. I got adults. I can't do two slushies at once. Now they can. And so there's a reason for people maybe to revisit that product that they wouldn't have otherwise.

Brian, just one thing to add. We get all the time what we think is a misperception that the growth of Shark Ninja is driven only by new categories. So we introduced very intentionally some new IR materials this quarter that we just reported to combat that notion. And it turns out only about 20% of our growth contribution over the last three years comes from new products that have been released two years or less. So the majority of the growth, what's really doing the work, to Adam's point, is the existing base business, and that only compounds and gets bigger and more diversified as we enter new channels, geos, and as new categories evolve into existing.

So understanding the company plans for singles and doubles when you launch new things, or a Gen 2 of an existing category, What products or innovation have surprised you the most to the upside this year?

Honestly, I think it is the broad-based nature of the growth. Because, again, we go into the year planning a lot of singles and doubles. And I think the quantity of singles and doubles that we saw this year is perhaps what's most surprising, right? Because you plan all of those knowing that there's going to be some strikeouts. There's going to be some that just don't work out. I think the new products have kind of been maybe icing on the cake, if you will. I think microwave, you know, no revenue really hit Q2 for microwave, but I think the reception on microwave has been more than I expected. I don't personally think much of, you know, countertop microwaves in my day-to-day, but that product has really resonated. I mean, some of the impressions are some of the best amount of impressions we've seen on new products. We've got retailers and consumers that are, you know, extremely excited about this, and it exists within a multibillion-dollar TAM that we previously did not participate in. And so for me, that's one that is extremely exciting because that's a whole other arena for us to participate in. I think some of the other new products, I mean, Chill Pill, I think, has been a really exciting one, not because of the individual revenue that generates, but in the way of how it's become part of culture, right? I mean, like the company gets really excited sending around pictures of Rihanna carrying one around and Sabalenka at the French Open, you know, using it, the camera catching her using it. And obviously those are intentional, you know, outreaches, but them using it in their personal life certainly is nothing we're forcing them to do. So that is kind of an exciting one as well because it's really cementing Shark as part of that culture. And then you look at, you know, some of the heat waves that we've had this summer, particularly across Europe, Shark has really cemented its name as the great brand and fans. And we have a great fan portfolio. They've done extremely well. But, you know, new product innovations across, you know, the upright vacuum category, continue to invest in a category that the market is down without us and, you know, with us, It's up a bit, but we're still driving share in a mature market like that. So, again, I think what excites me most is the broad-based nature. Look, we're all finance folks for the most part. We love a good diversified portfolio. That's Shark Ninja. And so when I think about what's exciting, it's that we have this diversification that even as we've had these ups and downs and different turmoils, we're able to kind of keep persisting through because we're appealing to the 16-year-old on TikTok. We're appealing to the retiree, and we're appealing to everybody in between at various cycles of their life. So that, to me, is what's most exciting because that's durable growth, in my opinion.

So I think the company's in 40 subcategories today. Correct me if I'm wrong, and you enter maybe one to two new ones each year. Most companies have a few core competencies, and you guys are generally good at really anything you enter, at least historically. How is that? How is that possible?

So far, so good. We've got one more category coming out this year, so that'll be 41. But look, our core competency is not blending, it's not vacuums, it's consumer problem solving. And I think, you know, over the last three years, that's really been our message. I've been with the company for 12 years. I've seen it from how we solve a consumer problem with a steam mop to today when we solve a consumer problem with a propane grill. I'm not sure I would have ever imagined such a leap because if you look at the products individually, it's really hard to see how they connect to one another, right? You've got a cryo-glow LED skincare mask, and then you have a fire pit. In what world are those coming from the same company? But at the end of the day, if you think about what our competency is, it's solving the consumer problem. Each of those categories, each of those products, we went to market because we saw a consumer problem. We recognized it. We were able to solve it with engineering, and we were able to then communicate it with our marketing and then reach the consumer in a way that perhaps they weren't reached before if the product was similar in the market or that they didn't understand what it did. But through this ability to spot the issue, solve the issue, and then communicate the solve that we've created for the issue, that's our core competency.

The other thing I would add, Brian, is the extensibility of the brands I think has been really important. Shark, as recently as 2021, was really a cleaning brand and then moved into beauty with hair tools and is now a skin care player. And we have aspirations to continue to go deeper in beauty, wellness, things of that nature. Ninja historically was inside your kitchen, permeated to more of your home, and now we're going outside the home. So we really think that both the Shark and the Ninja brands have given us license to continue to pursue all these new categories. That's something you have to earn, right? You have to do it with intention incrementally, but we've had a lot of success making the brand stand for more categories.

Got it. So the company invests a lot in marketing and R&D, much more than your peers. I remember before you guys listed three years, I think you had like roughly 750 R&D engineers. Today you have, what, 11, 1200. Are your engineers assigned to certain categories, or does everybody kind of do everything? Tell us about your R&D organization.

So when you look at the R&D organization, it's really split into three buckets. There's product development, and so call this the strategy arm of the group, right? They're the ones that are acting on the consumer insights. They're finding the consumer insights. They're working with the consumer they're testing they're talking with the consumer they're kind of shaping what does the product need to be what problem are we trying to solve how might we solve that problem that is then handed to the engineering organization to then do it right to then develop the product to then you know bring it to fruition to then meet the needs of the issue that we're trying to solve and then also to try to make the next generation of that better right to find efficiencies in that So that's kind of the engineering side of that puzzle overall. The third one is then product excellence. So product excellence is the quality arm, if you will, but going much further than that to after the product launches, we're looking at every single consumer review. We're reacting to every single consumer review. We're communicating with the consumers at that point. We're ensuring that, you know, our product in the marketplace is upholding the value that we sold the consumer on to begin with. So, you know, when we think about R&D in that regard, not every organization will say that quality is part of R&D, but it absolutely is to us because that quality organization, product excellence organization, they're feeding information back in engineering, they're feeding it back into product development, and they're helping even influence the roadmap because, again, all cycles at the beginning and at the end, we're communicating with the consumer. And so keeping the consumer at the forefront, engineering, I've seen them do it, and it's great, right? Their minds think very different than mine does. But they can create an amazing technology, an amazing product. But if the consumer doesn't want it, you don't need it, right? And they can make the best, you know, motor possible. But if it doesn't solve a consumer problem, it's not going to ultimately, you know, drive the turnover that we're looking for. So I think those three together in terms of just keeping the consumer at the forefront and then ensuring that we're continuing to drive new innovation, create new ideas, you know, that to me is what keeps that flywheel spinning within the overall R&D organization. And, yeah, absolutely. I mean, we invest more than our peers. You know, our gross margin, I think, is greater than the majority of our peers as well. That's the lifeblood.

That's what we fuel that with, and that's an area that we've said before, maybe there's some years that we leverage R&D as a percentage of sales, but ideally in the long run, you know, we probably pace it with sales because, again, there's there's so many opportunities out there out there for us to get into um so yeah so let's shift gears to international i think the uk is your largest international market um you started out as a distributor market there you transitioned to a direct model in 2014 mexico and several other markets have i've seen similar shifts over the last year or two so walk us through kind of you know your strategy when you enter a new market and then kind of when you feel comfortable to transition into a direct model.

Yeah, UK is the largest international market. And overall, so our strategy, even with UK going back 10 years ago, has been distributor first, right? It's a low capital means of expanding internationally. It's a way of getting in, learning the consumer, learning the retail landscape. And I think over the last decade, that has been the traditional way, right? You've got to get in with the retailers to learn the consumer, learn the market, and sort of play by their rules, I would say, in a way. I think what we've learned over the last year is that we have a way to get to the consumer directly faster through D2C, through peer players like MercadoLibre and Amazon and others like that, as well as through TikTok Shop. And so getting to the consumer quicker, it also is a little bit of a duty because social media is global in many regards, right? And so there's a lot of countries over the last couple of years that the demand is pent up, right? You see the comments, when are you coming to my country? When are you coming to this country? And, you know, for us, the quickest way to do that is DTC. It's, you know, the peer players out there, and it's through TikTok shop. And so I think our path to market has accelerated in terms of how we've transitioned our distributors now to a direct model. One of the most exciting things about perhaps Q2 and even reflecting on the last year is Mexico. We got a lot of questions, Q1 2025 on Mexico. You might have asked a couple yourself, right? Because it was messy, right? We had a buyback inventory. You know, it wasn't really clean. I think, you know, we were still, you know, only a year and a half into our public company life. And so it looked a little odd to us. We knew it was the right thing to do because we just wanted to move quickly. But look choppy. Fast forward to today, that's one of our most exciting markets, right? They're hitting on all cylinders. That transition, you know, couldn't have gone better in hindsight sitting where we're sitting today. the team has the shark ninja mindset the MD of Mexico is actually someone that you know I mentor on a monthly basis and I come out of that conversation so amped up I don't know if he does I hope he does but I am more energized talking to him because of what they're building there you don't get that with a distributor right you don't get that level of excitement because he's cascading it to his team he's cascading to the retailers I think maybe more importantly he's cascading it back to headquarters right he's bringing to the product teams he bring it to the marketing teams engineering teams to help them, help him, ultimately drive that business. So why I talk about Mexico is that that's the playbook that we've now proven out. We knew it was a good playbook. We thought it was going to work. Now it's really proof point to where, as we've transitioned now officially, Spain, Italy, Poland, other countries, we now know that that playbook is working and we're seeing But I think what's changed in the last year is this kind of direct-to-consumer model that allows us to get in quicker and not necessarily, we still need the retailers, absolutely, But we're able to, you know, not just bide our time and slowly build the relationships. We can do it much faster.

So you might have already answered the front part of this next question, but what international markets are you most excited about? And secondarily, what international markets are you not in currently that you should be in?

All right, so next to Mexico. Germany and France, honestly. I mean, we want to talk about the new distributor markets, and absolutely, that's super exciting. But I look at Germany and France as countries that now are starting to get to the level of category diversification, early innings still. But the category diversification that the U.K. has started to build, you know, we saw the period of a year ago, two years ago, where the U.K. was having some tough comps with air fryers. They were too dependent on the air fryer category. Inevitably, the air fryer category just grew super fast. But now you look at Germany and France, there's so much white space there. You know, the new categories that we've entered into recently, it's low market share, right? So there's low penetration for us. So I think there's a ton of white space. I think we've got the right foundation framework in those countries. And it's the same story, really, on some of the new direct markets. We've got, you know, a handful of categories that are driving the business today. But I think the white space is probably the most compelling, you know, thing. As far as what countries we're not in today, you know, Africa, I think, will be a big piece for us, That's a big focus for us as we look at 27 and beyond. We've started to plant some seeds in South Africa this year. And I think there's more to come in that regard. There's more across Latin America. We still have a number of distributors operating for us in Latin America. You know, they're not yet direct. So look, our model is plant a lot of seeds, allow those to grow, develop, and also for us to learn and pivot our model if we need to. But right now, the markets that we're in today as a direct company, there's still so much white space to capture there.

So tell us how your marketing strategy has evolved. I remember being at your investor day three years ago. I was shocked at like how important infomercials were not too long ago in QVC. Like today you're doing TikTok shop, influencer, social media, all like to kind of discuss that evolution.

Yeah, it's interesting. You know, we've always talked about an omni-channel presence. I remember back, you know, when private equity came into the business in 2017, I think, and we talked about the omni-channel. And I think at the time it was the first time we were kind of, you know, using that terminology. That still is the focus today, right? It's be where the consumer wants to shop, right? We're not going to force the consumer to our website. We're not going to force the consumer to Amazon. We're not going to do all these retail exclusives. That's not our model. Our model is to be where the consumer wants to shop. That's why we sell across perhaps the broadest spectrum of retailers, if I put anybody in our space. And so being where the consumer wants to shop, that's where the consumer trend has changed, right? The consumer wants to buy on social commerce. That's new as of the last year. We didn't sell a dollar on TikTok shop a year ago. Now it's becoming a decent chunk of the business. Direct-to-consumer, we didn't give the consumer a reason to shop on our website a year ago. It was not a great website. I think our CEO called it a terrible website at one point. But today, it's a desirable landing spot. It also brings the two brands together. I think that's super exciting. But I think to your point on what hasn't changed, what hasn't changed is the product. So when I think about the infomercial business, that was the largest spend of media when I joined long form. The 20-minute commercial was the biggest chunk of media that we spent. And what we talked about at the time was, is the product infomercialable, which is a real word, I'm sure. And what it meant was, can you talk about it for 20 minutes and still be interesting? Can you talk about the product for 20 minutes and still be interesting? And if that was the case, that had a lot of consumer value, right? The eight-in-one product, the three-in-one product. You were able to capitalize on all the different things that product brought to the consumer so that the consumer had no reason but to convert and say, yeah, I can't live without this. That's what's happening today on forums like TikTok Shop and, you know, Meta and even our own D2C site, some of the influencer work that we're doing, is that you've got people in the world that are now showcasing our products in many different ways, much more than we could do in 20 minutes, right? You look at all the different product demos you could do in a 20-minute infomercial. Think about putting 200 products in 200 influencers' hands, affiliates' hands. That's 200 different demonstrations. That's 200 different people that maybe look and feel different to their consumer base than what an infomercial was. So I think what's happened now is our products were built for this new world, and I think that's what we're seeing come to fruition. That's why we've had such a great head start on the social commerce as that started the shift.

So your company has grown a CAGR north of 20% since 2008. That's really tough to do in consumer. Your CEO, Mark Barocas, spent a lot of time on last week's earnings calls kind of, you know, defending why he thinks you're a double-digit growth company. As the revenue base gets larger, though, right, those incremental sales get a lot more meaningful. So, like, how do you do it?

Just to say, since he couldn't be here today, he's been defending why we're a double-digit growth company for the last 18 years as well. And he's ready to keep doing that. You know, honestly, Brian, it is kind of a sum. I assume it's the last question because it's a nice, you know, period, an exclamation point. because it is a culmination of everything that we just talked about, right? It is broad-based. It's no one thing. It's no one hit product. If we were a one-hit product company, a viral product company, it's boom and bust. If we were a one-category company, it's boom and bust. If we were focused on one consumer, one demographic, one geography, like we wouldn't be able to do what we're doing today. So to be able to grow, you know, that amount and to be able to comp 2026 and 2027, it's going to come from 50 different things. And I think, again, that's the beauty of the business, because over the last 18 years, it's come from an exponentially larger amount of things every single year.

Keep in mind, it's that existing base that fuels everything, right? If 20 of the 25 new products that you release every year are intentionally designed to keep the core fresh, you're going to compel people to come back and upgrade and maybe prematurely before the end of the useful life, buy a new unit, that's almost like a same-store sale type of number. That's what really is the bedrock of everything else.

I'm going to squeeze one last one, and we're asking all of our consumer companies. that's on consumer health. How healthy is your consumer today versus a year ago, and how do you see consumer spending shaping up overall as we head into the back half and into 27?

Yeah, you know, look, I think that that is a tough one, because I think the consumer overall, in our opinion, they have money to spend, but they're discerning. And I think the shark ninja consumer, you can't overgeneralize the entirety of consumer. But I do believe we have a discerning consumer. I do believe that it's a consumer that, you know, is well-educated, reads the reviews, and I think I think it's on us to earn those dollars. We talk about competing with Olive Garden, we talk about competing with Vacations, certainly competing with the competition, but for us it's a matter of how do we earn that dollar, and how we earn the dollar is through innovation and the consumer value that we're bringing. Great, we'll leave it there.

Thank you so much, guys.

Great, thanks Brian.

Thanks all.