REVENUEBeat +0.5%
EPSBeat +83.9%
Actuals vs. estimates
| Metric | Actual | Consensus | Surprise |
|---|---|---|---|
| RevenueNet sales (headline) | $1.50B | $1.49B | ▲ Beat +0.5% |
| EPS(GAAP diluted) | $0.13 | $0.07 | ▲ Beat +83.9% |
Revenue — API Ninjas actual does not reconcile with a unique Quartr consolidated revenue
EPS — API Ninjas actual does not reconcile with a unique Quartr EPS basis
Verdict
- Net sales of $1.5bn beat the $1.493bn estimate by 0.5%, and diluted EPS of $0.13 beat the $0.07 estimate -- but sales were effectively flat at $1,489.2m against $1,488.5m, with comparable sales up 0.6%.
- Profitability came in ahead of the company's own outlook: operating income rose 11.1% to $47.8m and adjusted EBITDA reached $122.2m from $113.9m.
- A $6.8m net IEEPA tariff refund sits inside every one of those figures; excluding it, adjusted EBITDA was $115.4m and the release states gross margin was about flat with the prior year.
- Full-year net sales and adjusted EBITDA guidance were reaffirmed at flat to up 1.5% and $415m-$430m, with Q3 adjusted EBITDA guided to $100m-$103m.
- The one thing that matters: the profit beat is real but small once the tariff refund and a $15.7m tax benefit are set aside, and the top line has still not started growing.
Key metrics
| Metric | Reported | Prior year | Change |
|---|---|---|---|
| Comparable sales | +0.6% | — | — |
| Gross margin rate | 39.7% | 39.3% | +37 bps |
| Operating income | $47.8 million | $43.0 million | +11.1% |
| Adjusted EBITDA | $122.2 million | $113.9 million | — |
| Normalized Adjusted EBITDA (ex tariff refund) | $115.4 million | — | — |
| Free cash flow, year-to-date | $60.8 million | $9.9 million | — |
Guidance changes
| Item | New guidance | Prior guidance |
|---|---|---|
| FY2026 net sales | Flat to up 1.5% year over year | — |
| FY2026 Adjusted EBITDA | $415 million to $430 million | — |
| Q3 2026 net sales | 0.4% to 1.0% growth | — |
| Q3 2026 Adjusted EBITDA | $100 million to $103 million | — |
Quality of earnings
- The net income jump is mostly tax. Net income rose to $38.7m from $14.0m while operating income rose only 11.1% to $47.8m; a $15.7m income tax benefit against a $0.7m expense a year ago accounts for most of the difference.
- The gross margin gain is the refund. Gross margin rate improved 37 bps to 39.7%, and the release says that without the net tariff refund benefit normalized gross margin was about flat with the prior year.
- Cash generation is the genuinely improved line. Year-to-date operating cash flow of $130.6m against $70.4m lifted free cash flow to $60.8m from $9.9m, and total debt fell to $1.48bn from $1.59bn.
Gotchas & watch items
- Net sales grew 0.05% -- $1,489.2m versus $1,488.5m -- and the company attributes the shortfall to points redemption from its membership relaunch without quantifying it.
- Reaffirmed FY26 adjusted EBITDA of $415m-$430m includes the $6.8m refund and assumes no further refunds, against $219.6m delivered in the first 26 weeks.
- Q3 adjusted EBITDA is guided to $100m-$103m after $122.2m in Q2, so the reaffirmed full year leans on the fourth quarter.
- The $75m debt prepayment came after quarter-end, so the $1.48bn total debt shown here does not yet reflect it.