AXIL Shares Jump 15.6% as Q2 Revenues and Profitability Improve

Shares of AXIL Brands, Inc. AXIL have gained 15.6% since the company reported its earnings for the second quarter of fiscal 2026, outperforming the S&P 500 index’s 0.1% growth over the same period. Over the past month, AXIL stock has surged 42% compared with the S&P 500’s 0.5% rise, reflecting a notably stronger short-term momentum than the broader market.Earnings & Sale PerformanceFor the quarter ended Nov. 30, 2025, AXIL posted net sales of $8.1 million, up 5.2% from $7.7 million a year earlier, driven primarily by a “material order from a leading national membership-based retail chain,” partially offset by the timing of Thanksgiving sales events.Net income rose to $704,883 from $633,706 in the year-ago quarter. On a per-share basis, basic EPS was 10 cents, unchanged year over year, while diluted EPS increased to 9 cents from 8 cents. Gross profit was $5.5 million, though gross margin declined to 68.1% from 71.1% due to a tighter-margin retail mix.AXIL Brands, Inc. Price, Consensus and EPS Surprise AXIL Brands, Inc. price-consensus-eps-surprise-chart | AXIL Brands, Inc. QuoteOther Key Business MetricsProfitability improved despite margin pressure. Cost of sales increased 16.3% year over year to $2.6 million, and cost of sales as a percentage of revenue rose to 31.9% from 28.9%, reflecting lower-margin wholesale and retail volumes. Still, AXIL expanded operating income by 34.2% to $903,071, aided by operating leverage and lower operating costs.Operating expenses declined to $4.6 million from $4.8 million, and fell to 57% of net sales from 62.4%, driven by reduced marketing spending tied to a shift toward retail distribution, lower professional and consulting costs, and lower stock-based compensation.On a non-GAAP basis, Adjusted EBITDA increased 13.9% to $1.16 million, and Adjusted EBITDA margin improved to 14.2% from 13.1%. Management also highlighted that the prior-year quarter benefited from a roughly $0.2 million non-recurring forgiveness of accounts payable, suggesting underlying improvement was stronger than the headline comparison.Balance sheet metrics showed higher working capital investment. Cash stood at $5 million at quarter-end, up from $4.8 million as of May 31, 2025. Accounts receivable rose to $2.4 million from $1 million, and inventory increased to $4.7 million from $2.5 million, indicating a heavier build tied to growth initiatives and channel expansion. For the first six months of fiscal 2026, operating cash flow was $0.2 million, down from $1.9 million a year earlier, reflecting sizable increases in receivables and inventory.Management CommentaryChief executive officer Jeff Toghraie described fiscal 2026 as “shaping up to be a strong year,” citing progress in retail-channel expansion alongside continued e-commerce execution. He emphasized that expense discipline is improving profitability and that the company is generating operating leverage as revenue grows. Management also pointed to accelerating retail momentum supported by stronger sell-through and broader product visibility with major retail partners.Factors Influencing the Headline NumbersAXIL’s quarter reflected the trade-offs of channel expansion. Revenue growth was supported by a large wholesale/retail order, but that business carried “tighter margins” than direct-to-consumer sales, pressuring gross margin.At the same time, the shift toward retail appears to be improving operating efficiency, as marketing and selling costs declined and operating expenses fell as a share of revenue. The company also discussed ongoing supply-chain transition efforts aimed at reducing tariff exposure and geopolitical risk. Management noted that while tariff-related pressures affected fiscal 2025, it does not expect a material ongoing effect in fiscal 2026 at current tariff levels, though policy changes could alter that outlook.ViewManagement stated it believes it can sustain profitable growth through cash generated from operations, and that all current strategic initiatives can be funded through our existing cash flow at this time.The company also highlighted that several strategic supply agreements with national retail chains have produced purchase orders, with fulfillment expected in the first half of calendar 2026, which it expects to support revenue expansion.Other DevelopmentsThe quarter included several commercial and product initiatives rather than acquisitions or divestitures. AXIL announced national distribution of the new X30i LT with Walmart, with an initial rollout expected across approximately 3,700 U.S. locations beginning in early calendar 2026. The company also launched GS Extreme 3.0, an updated tactical earbud product featuring proprietary sound-filter technology, improved water resistance, and more than double the battery life of the prior generation. In addition, the Reviv3 brand expanded its professional reach through a rollout with Chatters, Canada’s largest salon retailer with more than 115 locations. The company also noted it had recently incorporated a wholly owned subsidiary intended to offer marketing services, though it did not have material activity during the reporting period.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. 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