Newton Golf Company, Inc.

Good afternoon, and welcome to Newton Golf Company's third quarter 2025 earnings conference call. Today's call will include prepared remarks from Greg Campbell, Chairman and CEO, and Jeff Claiborne, our Chief Financial Officer. Following their remarks, we'll open the call for a Q&A session. As a reminder, today's discussion may include forward-looking statements. Actual results may differ materially from those expressed or implied due to risks and uncertainties described in the company's filings with the SEC. With that, I'll now turn the call over to Greg Campbell. Greg?

Thank you, Colin, and good afternoon, everyone. Q3 marked a record quarter for Newton Golf, defined by continued growth, operational scale, and expanding brand recognition across the golf industry. We delivered 113% year-over-year revenue growth, reaching $2.5 million in net revenue, driven by robust product demand and continued market penetration. The company maintained a gross margin of 67%, reflecting effective pricing strategies, production efficiency, and the strength of its premium brand positioning. Year-to-date revenue has now reached $5.86 million, 147% increase over the same period last year. Our gross profit of roughly $4 million represents 166% improvement year-over-year, underscoring both product demand and disciplined cost control. We're seeing broad-braced strength across all channels. Tour adoption continues to accelerate with now more than 60 professionals gaming Newton shafts across the PGA Tour champions, LPGA, and Korn Ferry Tours. This validation from elite players continues to validate Newton's credibility and visibility, translating into increased consumer interest as well as the larger potential market of professional club fitter demand. The fast motion shaft, launched earlier this year, remains a breakout success, with cumulative unit sales increasing more than 300% quarter over quarter, quickly surpassing our early motion adoption curve. This rapid uptake demonstrates both strong market receptivity and our ability to scale manufacturing efficiently as demand grows. International expansion is progressing well with new distribution partnerships now active in Japan and discussions underway in South Korea and Europe. These channels are critical to establishing Newton as a global performance brand and diversifying revenue beyond the U.S. market. On the direct-to-consumer side, we continue to see repeat purchase strength through our Shopify store, supported by data-driven marketing and brand recognition. Our growing TTC base provides valuable consumer insights, higher margins and brand loyalty that supports sustainable long-term growth. The growing visibility of Newton shafts on tour and in retail has begun to establish us as a premium performance brand built on measurable science. Media response has been strong and we've seen rising engagement from professional club fitters and OEMs who recognize the measurable difference in performance and consistency. The Newton technology is rooted in science, the brand is growing in visibility, and sales tour pros are using our shafts. And why? Because Newton products work. On the operational front, we've made meaningful progress in scaling production capacity at our St. Joe, Missouri facility. Process refinements have improved throughput and quality control, positioning us well to meet anticipated demand into Q4 and 2026. Looking ahead, our focus remains clear. Deepened engagement with OEM partners as we work to integrate Newton shaft technology into major club manufacturers offerings. These relationships have the potential to expand our distribution reach, strengthen brand visibility and create recurring volume opportunities at scale. Continue expanding our professional club fitter and retail network to increase accessibility and hands-on testing opportunities for golfers at every level. Leverage our growing tour presence to drive consumer adoption and highlight the measurable performance advantage Newton shafts provide. Advance our 2026 innovation pipeline, including next generation Newton shaft technologies and additional product categories designed to broaden our portfolio and serve a wider range of golfers. We're proud of what the team has accomplished and confident that Newton's foundation is only getting stronger. Beyond our own results, the broader golf market remains incredibly healthy and supportive of Newton's game-improving golf products and its long-term growth strategy. Today, there are more than 47 million active golfers in the U.S. and over 64 million worldwide, figures that continue to grow each year. Participation among players over age 40 represents a large share of that base and remains the highest spending segment in golf equipment. Globally, the golf equipment market is valued at roughly $7 to $9 billion and is projected to grow at around a 5% annually through 2030. The U.S. alone accounts for nearly half of that spend, driven by strong replacement and upgrade cycles. In addition, the upcoming USGA and RNA golf ball rule changes which take effect for professionals in 2028 and recreational players in 2030, are expected to spark a new wave of equipment innovation and purchases. We view this as an opportunity for Newton to showcase its physics-based shaft technology, giving golfers measurable performance benefits that align with how the game itself is evolving. These trends reinforce that Newton is operating in a large expanding market with both demographic strength and industry catalysts supporting continued long-term growth. Taken together, our expanding product roadmap, growing engagement from retailers, professional club fitters, and OEMs, and supportive industry trends all point to a long runway for growth. We're confident in the foundation we've built and our ability to execute against these opportunities. With that, I'll hand it over to Jeff to walk through the financials in more detail. Jeff?

Thanks, Greg. Q3 represents another quarter of strong execution and continued momentum for Newton Golf. For the three months ended September 30th, 2025, we reported revenue of $2.6 million, a 113% increase from the $1.2 million in Q3 2024. We reported gross profit of $1.7 million, up 115% year over year, with gross margin steady at 67%. We reported operating expenses of 3.2 million compared to the 1.9 million in Q3, 2024, reflecting targeted investments in marketing, product development, and staffing to support scale. The quarter also included elevated professional service costs related to consulting and system integration work to modernize our back office environment, enhance data accuracy, and implement improved policies, procedures, and internal controls. These initiatives are designed to strengthen our control framework, improve operational efficiency, and provide a scalable foundation for future growth. We reported a net loss of $1.6 million, or a loss of $0.34 per share, compared to a loss of $1.1 million, or a loss of $21.79 per share in Q3 2024. When the nine months ended September 30th, 2025, we reported revenue of $5.9 million, up 147% year over year. Our gross profit reached $4 million, up 166% year over year, with a 68% gross margin. Net loss for the period was $3.6 million, or a loss of $1.07 per share, compared to $3.4 million, or a loss of $70.05 per share, for the same period last year. We ended the quarter with 2.6 million in cash and equivalents. In October, 2025, the company established an ATM equity offering program permitting the sale of up to 10 million of common stock pursuant to our effective shelf registration statement on Forum S3. The ATM provides a flexible and efficient mechanism to access capital as needed to support growth initiatives, strengthen liquidity, and enhance balance sheet flexibility. Importantly, even as we've scaled, we've maintained a strong gross margin profile and are beginning to see early operating leverage as production and sales volumes increase. Based on a strong year-to-date performance and order visibility into Q4, we are reaffirming full year 2025 revenue guidance in the range of $7 to $7.5 million. We believe Newton Etcher's 2026 was solid momentum, a deep product pipeline, and clear pathways for continued revenue growth and improved operating efficiency. With that, I'll turn back to Colin to begin the Q&A portion of today's call.

Thank you, Jeff. That concludes the presentation portion of today's call. We'll now open the floor for questions. We'll begin with questions submitted in advance via email, and then open the line for live questions from attendees. To submit a question, please click the Q&A button at the bottom of your Zoom window and type your question into the box. You may also choose to submit anonymously if you prefer.

Okay, well, this is Greg Campbell. Thank you everybody for joining our call. We think it was a really terrific quarter. We're very excited and that momentum is continuing into Q4, which is already proving to be pretty strong. I'm going to start by reading some of the questions that we got by email ahead of the call. And then as questions come in here online, I'll address those as well. So one of the first questions we got was, how close are you to expanding into more mainstream retail channels such as Golf Galaxy, PGA Superstore, Dick's Sporting Goods? Is this still a strategic goal? The answer to that is yes, it's a strategic goal and a very important one. Let me highlight our channels. So currently, we're mainly focused on direct-to-consumer. And so we run ads on Google and Meta. We have a large email database that we use for marketing purposes, and we're also on Amazon. That drives traffic to our Shopify store, where we take orders directly. We fulfill those orders at our manufacturing facility in St. Joe, and we ship them directly to the consumer. So that's the direct-to-consumer channel. that if you read our 10Q, it's 90% of our revenue in the quarter. Retail channel is primarily Club Champion currently, which is about 135 stores. They have our motion shafts, our motion fairway shafts, and our fast motion shafts, as well as our putters. So that's a very important retail channel for us. We're currently talking to all of the above that were mentioned, Golf Galaxy, PGA Superstore, and Dick's. In addition, we're talking to a number of smaller stores that most people probably wouldn't have heard of. But the retail component is very important to us. The margins will be lower, the gross margins will be lower, but the net margins will be comparable because we won't have the same paid media spend advertising costs that we do for direct-to-consumer. Two other channels that are also very important to us are what we call the OEM channel. So the OEMs are the golf equipment manufacturers like Callaway, Titleist, TaylorMade, Ping, Srixon, et cetera. And we are engaged with more than one of those. And we are expecting that to hopefully be rolling out in 26 sometime. And what would happen there is that we would plug into their network of professional fitters and salespeople, and we would be a recommended upgrade shaft on one of their drivers or fairway woods. So the margin would be better than retail, but not as good as direct to consumer, but the volume would be very significant in that channel. And that's the one that we're very interested in. And then the last, but also important channel is international. We mentioned in my remarks, but also in the press release, that we've launched pretty heavily into Japan. We're in 50 of the largest retail stores. We just launched an e-commerce site in Japan. We're in discussions with a big distributor in South Korea, and we've begun some early discussions with a distributor in Europe. So, again, the four channels, direct-to-consumer, retail, OEM, retail, and international, all of which are important. And as we move forward, we'll start to balance out those other three channels and the direct consumer as a percentage of sales will come down. So that's that question. There's a related question and I think I've already answered it, but it's called OEM. Is there any line of sight on OEM integration? Obviously this would be a major milestone. What can you share about timing? I think I alluded to the time is probably in the 2026 first and second quarter. So I think we answered that. I'm now seeing a whole bunch of questions coming in online. Question timeline on the OEM market and how will that affect gross margins? Have tariffs impacted the business at all? We are 100% made in the USA. So there are no tariffs for us. But tariffs do impact our competitors. Biggest competitor is Fujikura, which is a Japanese company, but they manufacture in China and in Vietnam. So tariffs will impact them, but not us. Anonymous attendees, is there a path to profitability? I think that was part of the reason for the stock decline today. Yes, there is a path to profitability. Let me just comment about the spend in second quarter and third quarter. Second quarter and third quarter are the heart of the golf season. As we move into the fourth quarter, particularly now, November and December, you're starting to get colder weather in the northeastern parts of the United States. And so golf is kind of slowing down a little bit. But in the third quarter, you've got two big sales weekends. You've got July 4th and you've got Labor Day. So we upped our spend in order to be able to boost and take advantage of those sales. Our tour expenses are also a little higher in those periods because the tour is playing every week. In fact, today is the very end of the Champions Tour. They're playing the Schwab Cup Final. In fact, I just noticed that two of our guys are tied for fifth, Steve Flesch and Doug Barron, which is great. And then as Jeff mentioned in his remarks, we are investing in, we have a NetSuite ERP system. that we're really adding capability to in order to improve our operational efficiencies, particularly in manufacturing and some of the back office. So as revenue continues to grow, our gross margins will improve. I'm pretty happy with the 67%, but we'll be happier when we get into the 70s. And as revenue grows, your cost per unit goes down, and so your gross margin will improve. And we won't be spending as big a percentage of revenue on the marketing spend as we currently are. So, yes, that's the path to profitability. Let me see. Let's scroll down here. You mentioned that your shafts provide measurable performance improvement. What specific measurements is this claim based on? Have you tested your shafts on robotic arms? against top competition like Fujikura? Oh, really good question. Yes, we did. When we were developing our shafts, we engaged Gene Parente down in San Diego and we did robot testing against Fujikura, also against Graphite Design and some hazardous shafts, hazardous at the higher dot or the stiffer shaft level. Robot testing is interesting because essentially you have to set the club head speed to be equal So you're not going to see huge differences center of the face on carry distance, because that's pretty much determined by the speed of the club head. What you do notice is a tighter dispersion on toe and heels, just slightly off face mishits. And the Newton shafts showed much better dispersion. And in fact, that's what we find out on the tour. So on the tour, all the club pros use launch monitors when they're practicing on the range. And we're there. We have two guys at every tour event. And so we're looking at the spin, which is a big characteristic. And that's where a lot of our advantages come is we tend to have lower spin on the high launch angles than the competitive shafts. And what they're also noticing is a much tighter dispersion. and they are getting more distance. In fact, Ken Duke claimed that we kind of saved his career because we enabled him to be able to reach the par fives and two, which you have to be able to do on the tour to be competitive. So great question. And I love, I love talking about the technology of the shafts. How much production capacity was added? Can you quantify that in terms of dollar capacity? Great question. So I can say that we're now producing about 20,000 shafts per quarter. And if you go back to first quarter, we were probably producing a little less than 10. And in second quarter, we were producing a little more than 10. So we've ramped up capacity. By the way, we did need to throw some extra dollars at that in terms of labor because we also introduced the new fast motion shafts. And as you heard in my remarks, that thing is exploding. So we're getting sort of three out of four driver shafts are now fast. And I think people just love the fast motion is 10 grams lighter in every flex. And people are just liking the feel of the lighter shaft in their hands. And we're seeing that across all flexes. So even guys that swing really, really fast still prefer it to be a little lighter. And so, yeah, we had to introduce that, which is a whole new SKU. It's different fiber. It's different method of rolling, etc. And we were able to keep up with that dramatic increase in demand. So we're pretty pleased about that. uh what do you assess the probability to be that your shafts will be offered as an option by one or more oems before july of 26 zeroing in on the timing um i say the probability is good just the way our discussions are going but there's no guarantees we have to go through the process of getting fully evaluated um and then Customers have to love it and customers have to want to order it through the OEMs. So hopefully we'll be seeing some sales by July of 2026. Oh, gosh, Scott, you're not going to like this one. I called IBM six times asking to speak to the person in charge of IR for Newton Golf. I've yet to get a call back. What does it take to get Scott McGowan to respond to my inquiry? Scott's actually on this call right now, so he's hearing this. The best way to reach Scott is by sending an email to our IR email through our IR site, newtongolfir.com. And he's very good at getting back to people, has been my experience. How much of the ATM do you plan to use? I'm going to let Jeff answer that one so that you can hear him talking.

Great. It's a very good question. I wish sometimes the filings weren't just black and white. If you go back in time, we filed the shell financing for $25 million. We filed the $10 million to be opportunistic. It's an efficient use of capital, the cheapest way to raise money. We have no intention. We're really cognizant of dilution, I think, is a simple answer. $10 million is over at our current run rate, that's over two years of operating capital. There is no need to dilute our existing investors and go raise $10 million at this level. However, at the same time, when you hear what just Greg went through, we've set the foundation. Two years ago, no one even knew who Newton was. We just went public. We were less than a half a million dollars of revenue. We built the foundation. Pro players are using it. Competitive golfers are using our product. We've got new products coming. If we land an OEM, we expect the stock to react accordingly. And we want to be in a position that if things really go our way, we're in position to take care of our balance sheet, provide for future growth while mitigating dilutions. But at these levels, no, we're not interested in raising significant amounts of capital because we're not burning a tremendous amount of money. And with the growth on the horizon, there's a certain amount of cost to just be in business as a publicly traded company, a certain amount of overhead, CEO, CFO. So as we were growing this business, the operating expenses as a percentage of revenue is really, really high. As we start to move into other channels, the revenue goes up. You know, we expect to, you know, find that path to profitability, be in position to get better equity terms. So I think that the short answer is I don't think you guys have to be fearful of us raising money that will be incredibly dilutive to the investor. We will take what we need to buy us time to continue to operate and execute the plan, which this company has been doing.

Great. There's another question here. It says, given the multi-trillion dollar wealth transfer now underway from boomers to affluent millennials and Gen Z, who are largely online, golf obsessed and highly influenced by authentic creators, does Newton have plans to accelerate penetration of this next generation high net worth segment through targeted influencer sponsorships, e.g. Kai Trump? whose rapidly growing platform already reaches millions of young premium golf consumers. Great question. I love this. Yes, we in fact have just recently engaged and launched, I think it was, Jeff might be able to correct me, in November one or so, a company called Out of the Box Capital, who focuses on basically getting influencers to promote our products. and our stock. So that's underway. We looked at it about a year ago. Frankly, the agency we were using was targeting sort of super expensive influencers and we just couldn't quite afford it. But what we're now targeting is a lot more reasonable.

Greg, on that note, I think what I would share with the investors is You know, when we engage people like out of the box, they have relationships with these influencers. We don't take them over the wall. You know, as a new company, it is incredibly important that we treat our ticker symbol as a product just like the product itself. So it is about getting our story out there, letting people hear who Newton is, how incredible the new shaft technology is, the disruptions that are coming with rule changes in the PGA. to bring awareness for investors to make their own decision. There's no promotion of our stock. It's really driving awareness and using these new modern channels and where the investors are getting their news now. We need to do a better job and we've started that transition now. Great.

Oh, here's one. Looks like Greg has been making some open market purchases. Would love to see more of this, especially with the business accelerating the way it is. You'll be seeing more of this next week. I plan to be buying again. I can only buy in certain windows, as you know. But look, it's ridiculous how undervalued we are right now. Our market cap is below our nine-month revenue. So there's not going to be an opportunity like this again, and I plan on taking advantage of it. Um, next question is what is the actual USGA and RNA ball modification? Yeah, this is a good question. Um, in fact, I was speaking to a real golf ball expert, uh, the guy who actually developed the very first pro V1 and when he was at Titleist. So what they're, you know, as you know, guys like Bryson and Rory are just knocking the drives ridiculous distances and it's kind of making the golf courses, you know, considerably easier, uh, So what they're doing is there's now a ball modification in competition. It's going to start in 2028 for the pros on the tour, and then it'll fan out recreationally by 2030. So what they're basically doing is they're modifying the ball. There's a couple of ways they can do it. Inside of the ball, you have a core and then a couple of mantles, and then you have a polyurethane coating with dimples. So the dimples are what basically give the ball lift and when it's spinning, it gives it a sort of aerodynamic lift. So they can either modify the dimple pattern to create more drag and slow the ball down so it goes less far. Or you can keep the dimple pattern the same and modify the core and the mantles to get it to go less far. And the reason it's tricky is because really what they're trying to do is shorten the driving distance But when pros get, you know, within 100, 150 yards of the green, they want to put a lot of spin on the ball to get it to stick on the green and get close to the hole. So if you start messing around with the spin in order to shorten the distance, you're going to kind of mess up the pitching and chipping part of the game. So kind of the jury is out on how the different ball companies are going to go about it. But either way, you're going to have less distance. So you're going to have to turn to your clubs in order to pick up that distance, which there's only so much more you could do with the driver head or the fairway wood head. What's really left is getting better performance out of your shafts. And that's where we come in. Hopefully that answers that. I got one last question here. It's actually the very first question. I missed it. Any comments on the putter market? Did you increase ad spend? No. In fact, we did not spend really any money on advertising putters. And the reason is what we've experienced is we can advertise putters. We get great response to our ads. We drive tons of traffic to the Shopify store. but we're just not getting conversion. And we've tried a number of different things to try to learn what's happening. I think what's happening is people go there for educational purposes to learn what's out there, what the price is, et cetera, but they really want to get it in their hands and put balls with it before they purchase. So this is why really the best place to sell them is retail, like at Club Champion. So we're slowly converting over from the old Saks Perenne putters to the new Gravity putters. We're in about 30 club champion stores, but we're going to ramp that up as we stock up more and more stores. And then once we start seeing some lift as we go into PGA show and the next golf season kicking up, we'll make another run at driving advertising for putters. But that's been our experience to date. And counter to that, we're getting just phenomenal conversion and return on ad spend with the shafts. I mean, we're averaging four to one, meaning for every dollar we spend on advertising, we get $4 of revenue on our shafts and our conversion rates are really, really good. So we pushed all our ad spend towards the shafts. So Colin, I'm not seeing any more questions. Um, let me check our email questions. Are there marketing plans in Japan to highlight the use of Japan Tori carbon fiber and Newton? So that's interesting. Um, Yes, we have marketing plans in Japan. We have a sales rep company over there. As I mentioned earlier, we're in the retail stores. We just launched the e-commerce. Good idea. We hadn't really thought to promote the fact that we're using Toray, which is Japanese carbon fiber in the Newton shafts. I think we tell people that, but I don't think we're advertising it or intentionally marketing. I think that's a pretty good idea. Just so people know, even though Toray is a Japanese carbon fiber company, they do manufacture in the US because their largest customer is Boeing. And so we buy our fiber from the US manufactured, the fiber manufactured here in the US through US distributors. Okay. I think, I think that's it, Colin.