PSQ Holdings Inc

Ladies and gentlemen, thank you for joining us and welcome to PSQ Holdings second quarter 2026 financial results conference 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 William Kent, head of corporate affairs. William, please go ahead.

Good morning and thank you, Holly. Welcome to the PSQ Holdings second quarter 2026 earnings call. Joining me today are Dustin Wunderlich, our chairman and chief executive. Also joining us are Mike Pena, our chief financial officer, and Crystal Wenzel, our chief accounting officer. Before we begin, please note that information that we discussed today, including our outlook, is current as of today and includes forward-looking statements that involve risks and uncertainties. We are not required to update these statements if new information arises. For details on factors that could cause actual results to differ, please see today's earnings release and our SEC filings, including our 2025 Form 10-K. We may also present non-GAAP measures alongside financial measures calculated according to GAAP. Before I hand the call over to Dusty, if you'd like to submit a question for management to answer during the Q&A portion of today's call, please email investment at publicsq.com. Once again, that's investment at publicsq.com. I will now hand the call over to Dusty.

Thanks, Will, and good morning. I took over this company six months ago. I'm going to share with you exactly what has happened since, exactly what we're telling you we believe happens next, and then I'm going to let you draw your own conclusions. First, let's start with the six months in the rearview mirror because numbers are not subtle. We more than doubled revenue, up 108% year-over-year in the second quarter, up 136% for the first half. And we did it while taking costs out, not adding them. Normalizing for a one-time stock comp reduction in last year's quarter, operating expenses were down about 12%. Headcount is down by roughly half. Operating cash burn in the quarter was cut 52%. Revenue per employee went from about 48,000 to about 198,000, up more than 300%. Non-GAAP operating income went from a $2.7 million loss a year ago to positive $400,000. I want to be blunt about what that combination means because it's rare. Most companies grow by spending more. We grew while spending less. We took a business built on addition. Too many brands, too much scope, too much headcount, too much story. And we cut it down to the parts that actually move money and make margin. Growing your top line over 100% while you take costs out is not a normal result. It's a result we sought with focus and intentionality. Yesterday, We announced that we entered into a definitive agreement to sell Every Life to Freehold Brands for $5.5 million in cash, with the transaction expected to close by the end of September. Three things about the sale. First, we told you we would divest what wasn't core, and we did it on a timeline we laid out. That's the pattern I want you to get used to. We do what we say. Second, this wasn't a reaction to anything. We moved Every Life into Discontinued Operations three quarters ago. This is the planned execution of a strategy we started back then, not a decision made under pressure. Third, we ran a deliberate process. In our view, we maximized the value of this asset. The proceeds come in as cash and go straight to a stronger balance sheet, and every piece of this sharpens the team's focus on the core even further. Here's where I'll be disciplined, and I want you to notice that I am. We're a company growing at 100%, cutting costs, and bringing in cash. I'm well aware of where the stock trades against that. I told you in February I'm not a market commentator, and I'm not going to become one today. I'll give you the facts. Pricing them is your job. My job is to say what we'll do, do what we say, and ensure our results keep getting better. And they are. On the balance sheet, we ended the quarter with $11.8 million of restricted cash and Cash Equivalence. But the number I want you to actually look at is operating cash burn. 2.3 million in the quarter, down 52% from a year ago. We're spending about half of what we used to to run a bigger business. Every life cash, our lower burn and the revenue trajectory I just walked you through are how we fund ourselves from here. Before I move on to guidance, I want to share a few KPIs that further demonstrate the direction the business is headed and the real results of the efforts our team has put in over the last six months. These numbers are critical because they show whether this is real. Payments. We moved 172.5 million of volume through the platform this quarter, against 68.2 million a year ago. That's up 153%. For the first half, $374.3 million against $104.2 million, up 259%. Payments revenue was $3 million in the quarter against $1 million last year, and $6.6 million for the half against $1.6 million. Credit. Credotova did $14.1 million of GMV in the quarter against $10.7 million, up 32%. Same 32% for the first half, $29.2 million against $22.1 million. Credit revenue was $4.1 million in the quarter against $2.4 million and $8.7 million for the first half against $4.9 million. And I want to be clear about the backdrop. The firearms market has begun to stabilize and show signs of improvement. That 32% is conversion, approval rates, attracting new borrowers, and reengaging borrowers we already have. It's not a market tailwind. Credit quality remains strong. Losses and delinquencies are inside our expectations. Now, the numbers some of you are going to circle. Both TMV lines are down modestly for the first quarter. Payments was $186.2 million in Q1. Credit was $15.1 million. So let me get in front of it rather than wait for the question. Two reasons, and we told you both of them in May. First, credit is seasonal. Demand moderates after the first quarter every year. Mike said that on his call three months ago. Second, on payments, Q1 carried the full period step up from agreements we signed in the back half of last year. We're now lapping that from a much higher base. Neither of those is a change in the business. What I point you to instead is the year over year comparison because that's the honest one, 153% and 32%. On the revolver, the facility that funds Cordova's consumer originations, we had 7.3 million drawn on the 10 million line as of June 30th. We draw on funds to finance loans and leases and we pay them back as those receivables are collected or sold. That's the mechanic and it hasn't changed. Now, guidance. and I'm going to be pointed because this is the part that matters. Companies in our position usually go quiet, they hedge, they hand you a range wide enough to drive a truck through so they never have to be wrong. We're doing the opposite. We are affirming full year 2026 revenue of about 32 million. We expect positive non-GAAP operating income for the full year and we're driving towards positive operating cash flow in 2027. I'm not giving you these numbers because I have to. Nobody makes a company at our stage put specific targets in public. I'm giving them to you because I'm confident enough in what we've built to say them out loud with my name attached. To write them down, hold me to them. That's the entire point of being on this call. I know none of this earns your trust by itself. Trust doesn't get earned in one call, one quarter, or one good print. It gets earned by doing this again and again and again until the pattern is impossible to argue with. I'm not asking you to believe me. I'm asking you to watch what we do against what I just told you we do. That's the deal. It's the only deal I'm interested in. We have nothing back until it earns its way in. We protect what's real, we move money, and we compound. Thank you. I'll now turn the call over for questions.

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 the line of Thomas Forte with Maxim Group. Thomas, your line is now open. Please go ahead.

Sure. So first off, Dusty and Will, congrats on the quarter and on the every life divestiture. So I am going to, Dusty, ask multiple questions. If you want to stop me at two and have me get back in the queue, I'm happy to do that. But I'll go one at a time. Can you high level Your long term financial goals. For example, do you believe you can sustain double digit top line growth for an extended period of time?

Hey, Tom, thanks for being on. Happy to answer a number of questions. Yeah, look, I think the growth, the first half, we're definitely seeing good triple digit growth. The back half of last year, we made the pivot in Q3. Q4 of last year was our, I would say our real first focus of FinTech growth there. So I think we will see some softening of the growth, but based on our pipeline, how we're executing, how I'm seeing the team perform, I would say we're definitely going to see continued growth. It might come under the triple digit mark, but I continue to see it at and much aggressive levels above 50%, I would say, Tom, for the foreseeable future as we continue to scale the FinTech divisions.

Excellent. And then, Dusty, for the next question, can you talk about your target customers, both inside and outside the firearms industry?

Yeah, absolutely. You know, I would say the firearm industry probably is The most targeted industry from a debanking perspective or just a lack of financial services that the industry is afforded. So this has always been our core target. It's the most complex. It's the most disenfranchised by the financial system. So that will continue to be. We continue to see, you know, even in the era where executive orders are coming out against such behavior from banks, and Fintechs, we're still seeing it. And that just broadly goes out beyond that, Tom. We've seen similar treatment to certain types of nonprofits. It can be ancillary businesses that are ancillary to an industry like firearms. And it could just be industries or people that are generally Aligned with what we believe in and how we're running our business that might have no from an industry perspective, might have no real cancellation or debanking risk. But they might have a CEO that's outspoken about things that might lead to that. The banking system has used this just very insidious concept of reputational risk to really pick and choose who they want to do business with. There's really no company out there that is not open to that type of exposure. So there's the obvious industries, Tom, and then there's those that I'd say are ancillary and then those that are just values aligned or targeted because of their views.

Excellent. All right. So then, Dusty, for my next question, can you clarify what positive cash flow in 27 means? Are you suggesting that you're going to exit 27 with positive cash flow? positive cash flow on a full year basis. And then it's your definition of positive cash flow, operating cash flow, less capex.

Great question. Yeah, so because we do run a balance sheet for our loans and leases, we point specifically to operating cash flow, Tom, because to us, that shows the unit economics are turning positive and That doesn't mean that free cash flow can also be positive depending on how we're leveraging our balance sheet and whether we're putting loans and leases on the balance sheet or we're selling those loans and leases off. But for us, the step that we want to prove to the market is that, hey, here is operating cash flow. We have solid positive unit economics that are driving positive cash flow. So We expect to see that turn positive sometime next year. I wouldn't say the full year will be positive, but we'll start to make that turn probably mid-next year. And from that foundation, I think we're going to keep pushing forward to really drive to not only a full year cash flow positive on the operating side, but also into a free cash flow as well. So We ran Cordova as a private company with positive free cash flow, and I know it's possible, and we are going to get there, and this is our first step to getting there.

Excellent. All right, so two more from me, and then I'll step aside. So you successfully divested every life for your, you know, finishing the process of doing so. But long term, how should we think about your strategic M&A strategy? So rather than focus on assets that you decided to part with, how should we think about assets you might add in the future?

Yeah, it's a great question. Right now, we're in the phase of earning the broader strategy of adding, as you see in my language. We're in that phase very much of subtracting to get to the core to drive good business fundamentals. Now with that said, you know, we're always exploring the market. We're looking at the market. We definitely see interesting pathways of where fintech is going. You know, you've heard me talk a lot about, you know, stablecoins being a big part of the payments future. That's an area we're looking at. We also think that, you know, potential, you know, niche software called SaaS software and the e-commerce space of industries that we serve could also be very interesting as well from an acquisition perspective as we start to potentially look at a Shopify type of model in certain industries where we think we have a strong moat. Payments and SaaS software can be very compelling. So it's something we're always thinking about, Tom, but we also are in the the stage where we've got to earn it. And right now we still believe that subtracting down to the core to give good business fundamentals is the path right now.

Excellent. All right. And then last one, Dusty. So I can't let you off the hook without talking about AI. Can you give your current thoughts on AI and agented commerce? I feel like as we're gathering more information, as companies report the June quarter, we're seeing kind of, you know, continued heightened investment, but would appreciate your thoughts on AI. And maybe if you want to add in how you're using it to run the business so efficiently.

Yeah, no, much appreciated. I'd say that I'll start with the operational efficiency and As you know, Tom, we stated we were very early adopters. It is a big reason why we've been able to grow revenue to our employees 300%. I still think there's a lot of room there. My personal thesis is that businesses like ours are benefiting the most from the AA revolution because I believe that compute is heavily subsidized right now. And so this is a great time to leverage it into your business to really spur growth. I do not think compute is going to stay as cheap as it is long-term and companies are going to have to reconcile with that. I think there might even be a point in time in the future where companies start thinking about adding employees back because the compute is too expensive. So I think we're in a really great period to leverage it and we're going to continue to do so. And I'm still very optimistic about that. But I also think that there's going to be limitations in the future. With agentic commerce, we're keeping a very close eye on it. I think it's very interesting. Where we're really looking at it is from a consumer behavior perspective. And I think agentic commerce is going to work really well in some commodity type of categories. I think it's going to take a long time for adoption in areas that I would say are not commodity areas. For example, firearms. It's almost an entertainment to people to go and explore firearms, go build them on a website, think about them. There's a social component to that that I don't think will do as well with agentic commerce. So there's going to be some interesting consumer behavior. I think the technology is fantastic. I definitely see us playing a part of it in the future. But I think we're still very, very early and have a lot to learn about how consumers at the end of the day that are the ones that drive our market are going to leverage and interact agent at commerce.

Thank you for taking my questions, Dusty. I appreciate it. Yeah.

Thanks, Tom. Appreciate you, man.

We will move on to our pre-submitted questions. I will now hand the call back to William Kent.

Thank you, Holly. We have a couple of pre-submitted questions and some submitted actually during the call as well. One item I just want to clarify before we move to the pre-submitted questions is restating, make sure that the cash number stated for the quarter is $8.3 million, including restricted cash, as of June 30th. First question for Dusty, Mike, and Krista, on payments and credit growth. Thank you for the question.

We actually have a very high throughput on customers that are using both payments and credits. And it's only in a few rare cases that we don't see a merchant using both payments and credits. So we've been extremely happy with this bundling concept of the adoption, and it really ties to our thesis on bundling these together allows us to be extremely competitive on pricing. It allows us to make it a lot easy just from a integration perspective. So that we've been very pleased with the results on there. And yes, our pipeline, both from a payments and credit perspective, are extremely strong and continue to be. They're very different in how we're growing them, so I'll take a quick moment in the differences. On the credit side, which is a much more mature business than the payment side, we continue to add merchants to the credit platform, but something we have taken a concerted effort on is really growing the pie that we have, and we're doing that through re-engagement with consumers, We've started to do very aggressive marketing campaigns with our merchant partners that we've seen extraordinary results from. And this really comes down to storytelling about a lot of our merchant partners and brands that we work with. The younger generation loves authentic stories of the brands they're buying from. And we've started to invest in that and see a really good result and just Storytelling to our consumers about the merchants they're buying from or the manufacturers they're buying from that are building their products. And so that is an area we've continued to really grow from a base that we have. And we see that that will definitely be a continued path on the credit side. Payments being a new business, this has been more about building a pipeline, which in the early stages, we built a great pipeline. and we're now working through that pipeline to get merchants live and integrated. A big part of our pipeline I would call is enterprise grade which is unusual for a new product and we've been able to convert pretty large enterprise customers. Now that takes a little bit more time so I think in the past there was very large numbers shared on our pipeline and some of those have taken time to get through but we're starting to see those numbers come through now with the 100% year-over-year growth we're seeing. So that's how we're thinking about the pipeline from the two different product lines. Will, do you have another question?

Yes. 2026 Roadmap to Profitability. During the September 2025 Investor Day, the plan highlighted Treasury Services private label credit cards and MTLs. Could you provide an update on where each of these initiatives currently stands or does not stand? And then talk a little bit more about your timeline for reaching Free Cash Flow Positive, and any more information on medium and long-term plans.

Yeah, so part of me getting in this seat was taking a fresh look at where the company needs to go. And you'll continue to hear from me this language of addition versus subtraction. And I think it's just an elegant way to explain the differences of where we were versus where we're going. The former leadership team was really all about addition, big ideas, big stories, and some of what was labeled here is part of that. Again, I think you've got to earn thinking big. And when I got in, I knew that we had a very good core business that we let lapse because of adding too much and chasing too many things. We started subtracting away what wasn't working to get to the core, which I think we're there now. And I think the results are proving that. So all of these are still interesting ideas. And like I said to Tom, they need to be earned, though. We're not quite to the place, in my opinion, where we've earned the ability to start adding. I think we're getting close. And that kind of ties into that cash flow positivity, which I talked to Tom about. We have to show and prove that we have good positive unit economics, and I believe that operating cash flow positivity is a sign of that. And I think that will start to change our philosophy and thinking in strategy going forward, where we can actually start thinking about addition again through either product lines or acquisitions. As I said to Tom, that operating cash flow is the metric we think is the most important. We expect to turn operating cash flow sometime next year, probably in the second or third quarter is where we're looking at right now. And that to us will start the foundation to then work from a full free cashflow positivity from there.

Thank you, Dusty. We're gonna take one more question before closing out. Can you talk more about seasonality in the business, how that factors into your guidance and any other information you can give around that?

Yeah, so at the core of the industries we serve, I would say follow discretionary retail spending very closely, which means the far majority of our revenue, GMV, is going to come in the fourth quarter. That's been seasonal with Cordova since our inception. Our slow quarters tend to be the second and third quarter. Our largest quarters typically are the fourth and the first quarter with the fourth being pretty outsized to the rest of the quarters. So that's something that's always going to be in the business, you know, especially on the credit side, which is a bit of a more mature business. Payments is the one exception because we're very early in the curve, but eventually we Payments will follow that same seasonality as well. So discretionary retail spending is a good marker for how our business is going to interact from a GMV and revenue perspective.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.