SharkNinja, Inc.

Good morning and thank you all for attending the Shark Ninjas Second Quarter 2025 Earnings Call. My name is Breaker and I will be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. To remove your request, please press star followed by the number two. And for operator assistance at any point during the call, please press star then the number zero. Thank you. I would now like to pass the conference over to your host James Lamb, Senior Vice President of Investor Relations and Treasury. Thank you. You may proceed James.

Good morning and welcome to Shark Ninjas Second Quarter 2025 Earnings Conference Call. Earlier today, we issued our Q2 earnings release, which is available on the company's website at .sharkninja.com. A replay of today's webcast will also be available on the site shortly after the call. Before we begin, let me remind you that today's discussion will include forward-looking statements based on our current perspective of the business environment. These statements involve risks and uncertainties and actual results may differ materially. For more details, please refer to our earnings release and the company's most recent SEC filings, which outline factors that could impact these statements. The company assumes no obligation to update or revise forward-looking statements in the future. Additionally, during the call, we will reference non-GAAP financial measures, which we believe provide valuable insight into the underlying growth trends of our business. You can find a full reconciliation of these measures to their most directly comparable GAAP measures in the earnings release. Joining me today are our Chief Executive Officer Mark Barokas and Chief Financial Officer Patrick Reagan. Mark will start by providing a business update, followed by Patrick, who will review our Q2 financial results and share our outlook for 2025. Mark will then offer some closing remarks before we open the call to questions. During the Q&A session, please limit yourself to one question and one follow-up. I would now like to turn the call over to Mark.

Thank you, James. Good morning, everyone, and thank you for joining us today. Our second quarter results exemplify Shark Ninja at its best, executing on our differentiated growth strategy, even amid unprecedented global challenges. We believe we've built a durable business model that can deliver demonstrable success in all operating environments. This quarter reinforces the power of creating disruptive and innovative products, supporting them with world-class marketing and demand generation, leveraging our diversified global supply chain, and executing our omni-channel strategy to benefit our consumers, retail partners, employees, and shareholders. We did what we said we would do, and our efforts produced another outstanding quarter of results, net sales growth of nearly 16% -over-year, higher gross margins compared to the year-ago period, and adjusted EBITDA growth of approximately 33% -over-year. Importantly, we also followed through on the expense discipline we committed to, with operating expenses as a percentage of net sales decreasing by more than 200 basis points compared to the prior year quarter. How did we achieve these results in such a challenging environment? Let's take a look at the underlying drivers of our strength, starting with the consumer. Put simply, we're seeing strong demand for Shark Ninja products globally. Our steadfast focus on solving consumer problems with innovative five-star products is resonating worldwide. -over-year net sales growth was up nearly 14% domestically, and our international segment accelerated to over 20% growth -over-year, compared to roughly 14% -over-year in the first quarter. This momentum reflects broad strength across our diversified portfolio of categories and geographies. Consumers are demonstrating a healthy appetite for spending on products, offering differentiated performance and value that's synonymous with Shark Ninja. We have a trusted relationship with consumers, one that we hold sacred. This trust grows as we drive towards an extraordinary value proposition, no matter what is changing around us. In the second quarter, we hit the challenges of global tariffs head-on in multiple ways. Supplier concessions, limited discounting activity, and strategic pricing actions are all tools we utilized in a balanced way. Our targeted price changes to date have resulted in minimal, if any, demand degradation. We don't take price increases lightly, and we're constantly trying creative approaches and testing to measure their impact. Shark Ninja is deeply committed to ensuring the trust we've earned is durable. We do this by solving consumer problems, both known and undiscovered. We do this by innovating and relentlessly delivering value. These core principles allow us to continue to grow and take market share, even when the markets we serve are under pressure. In the first half of 2025, our data indicates the end markets we participate in globally declined in the low single-digit range -over-year when excluding Shark Ninja's performance. Our relative strength is significant and positions us to play offense. This is a theme I will return to later. Our reputation with consumers is the result of how we differentiate ourselves as a company. At Shark Ninja, problem solving is in our DNA. The second quarter introduced unprecedented global supply challenges, but we did what Shark Ninja does with any problem. We attacked it from all angles, mobilized a strategy, and navigated our way to success. We view this capability as a foundational competitive advantage, particularly given the significant scale and complexity of our global operations. While there are tariff dynamics at play everywhere we source products, we believe it's becoming clear that China will be subject to a higher rate than most other manufacturing centers in Southeast Asia. That's why it's so important to be diversified in other countries, another area where we feel we have an industry-leading optionality. I'm pleased to confirm that we have now achieved our goal of enabling approximately 90% of our US volume to be produced outside of China. And we remain on track to get to nearly 100% by the end of the year. This is a major milestone for Shark Ninja and a significant competitive advantage. The depth of investment in our supplier network is another edge. We spent multiple years and considerable resources developing independent subsupplier and component vendors to support the expansion of our Tier 1 partners across Southeast Asia. I will now turn to our three-pillar growth strategy, starting with our first pillar, expanding into new and adjacent categories. Before I get into some of the exciting highlights from the second quarter, I want to remind everyone of three important elements that differentiate Shark Ninja in new product development. The first is the scope of our ambition. Our mission statement is to positively impact people's lives every day in every home around the world. This means we're always on the hunt for problems to solve and ways to delight the consumer. In turn, this mindset empowers Shark Ninja to enter two new categories every year, while simultaneously introducing 25 ground-up new products over the same period. The second factor is the rigor of our process. We recognize the broad strength of our innovation engine that allows us to enter new categories, but it's not easy to do. We're constantly planting seeds, some of which will propel us into a new category quickly and some that might take time. The process to enter a new category is challenging and not linear. There is lots of criteria, decisions, and multiple stage gates at every step. We spent years developing this approach as a key enabler of consistently driving innovation. Like everything else at Shark Ninja, there's always room for improvement. We'll continue to refine and reinvent our process as we evolve. The third key differentiator is the size of our pipeline. We intentionally sequence new product introductions to maximize impact and success. For example, we're in 37 different categories in the US, but in fast-growing countries like France and Germany, that number is only roughly 10 today. As a result, our global geographies have multiple years of structural growth, simply by continuing to introduce our already successful products in new categories within these markets. As we continue to add to our innovation pipeline, where we're already deep into developing 2026 launches, we constantly build for the long term. Back to Q2 specifically, we saw tremendous strength across newer categories. Our Ninja Slushie remains a viral sensation. We earned 1.3 billion impressions globally, up from over a billion impressions last quarter, and saw robust performance across geographies. Our Ninja Lux Cafe business continues its sizable contribution to growth as we establish ourselves as a disruptive player within the espresso category. We launched our Lux Cafe Pro Series in the second quarter, with enhanced automation and versatility features to easily create even more beverage options. Taking a step back, Slushie and Lux Cafe are great examples of how we're transforming products into franchises. When we have a viral hit, we don't rest on our laurels because we realize that we need to continue to deliver an even better product the following year. Over time, we've proven that Shark Ninja's success comes from building large, durable franchises. To do this, we have to create an assortment of products across price points, feature sets, sizes, and do it globally. If we're successful, we'll capture additional new customers while keeping existing customers satisfied. This is important to keep in mind when we discuss new categories that eventually transition into existing categories. Our fan business performed incredibly well during the quarter, across key products like the Flex Breeze Go, an indoor-outdoor misting fan, and the recently introduced Turbo Blade that's gone viral on social media. Fans offer a great example of how Shark Ninja completely rethink categories that are, in this case, more than a century old. We want you to take fans with you outdoors. We want you to sleep better with fans. We want fans to convert from pedestal to portable with ease. And we show consumers how to benefit from all these use cases using social media with tremendous success. Other companies may look at fans and decide it's a break-fix, no-growth category. At Shark Ninja, leaning into our novel approach has turned into big growth and another proof point on building sustainable franchises. We introduced the Shark Flex Breeze last year and followed that up with multiple new products in 2025, all with stronger marketing support and broader channel reach. Turning to beauty, momentum continues to build globally for Shark Trial Glow. The product is launched in the U.S., U.K., and the TAM markets with availability in continental Europe starting this month. Trial Glow enables at-home access to high-quality skincare treatments, a market that we think can be huge. This is a prime example of the differentiated thinking we pursue at Shark Ninja, and it's only the beginning. We aspire to establish Shark Beauty as the runaway leader in beauty technology, an enormous white space opportunity we're seizing at full speed. We plan to introduce several significant and disruptive new products in hair and skincare before year-end with an exciting pipeline for 2026 and beyond. Beauty is an incredibly attractive market that naturally aligns with our recipe for success. Huge demand for innovation and prestige products, visual storytelling and social media interest, the potential for high margins, and more. Let's turn to our second growth pillar, growing share in existing categories. The foundation of Shark Ninja success is a healthy base business that delivers strong average selling prices, healthy gross margins, and marketing efficiencies. In Q2, the story is about breadth and consistency. Across all four of our category groupings, cleaning, cooking, food prep, and beauty and home environment, we drove market share gains. A great example is cleaning, where multiple existing product lines contributed to sizable outperformance relative to the industry at large, including our cordless vacuums, robotics, and carpet extraction products. The ability to scale and reinvent existing categories is vital to how Shark Ninja builds and maintains big businesses. The success of Ninja Crispy reflects the power of this concept within the air fryer category. Our leading position in this market presents a new challenge to solve, figuring out how to grow even bigger. This is where Shark Ninja shines. The portable glass system Crispy revolutionizes air fryer cooking. With this innovation, we're capturing new consumers into the market and even seeing existing consumers retiring their legacy air fryers to upgrade. Excitement for this product is a global phenomenon. Crispy first launched in the US with great success, and we've just introduced it into the UK, with France and Germany next in line. By design, we don't expect to achieve full reach until year end, and then we've got a big roadmap of innovation lined up to follow. Along the way, we're building a strong intellectual property mode around Crispy while we collect invaluable consumer feedback to power the next wave of new products. Market share gains within existing categories do not happen by accident. Our ability to gain share comes from disruptive products like Crispy, but also the halo effect from our unstoppable innovation and marketing engines throughout the business. Across our -to-consumer sites, we see more repeat buying behavior and more cross-brand shopping than ever before. The strength of our core product categories is a fundamental cornerstone of how we pursue durable success. Nearly 20 of the 25 new products per year come within existing categories to support the core business and will never stop driving innovation as this space grows larger. Our third pillar is international, where we're seeing significant white space for years to come. We experience growth across all our international geographies in Q2, with continued strong trends in Europe, including France, Benelux, and Central Europe. Importantly, our UK business also returned to form more quickly than expected, with traction across a wide range of products. Flushy, creamy, luxe café, blenders, robots, fans, cryoglow, and more. In fact, sales momentum in the UK strengthened throughout the quarter. This result shows the power of our diversified business model. Despite an approximately 25% -over-year decline in air fryers, the largest category in the UK, our net sales in this geography still grew in the second quarter. The more we expand our portfolio of products and geographies, the more the power of diversification drives success. This is evident in places like France and Germany, where we're running the same playbook. We're further penetrating the market in these countries with a broader selection of products. We anticipate a big holiday selling season in 2025 in both France and Germany that can drive additional momentum heading into next year. As our other international geographies keep scaling rapidly, we'll continue evolving from distributor-led to direct models. The next geographies we have targeted include Benelux, Poland, and the Nordics, with conversions happening over the coming quarters. Our goal is to execute more transitions in 2026 as another lever to drive strong international growth. There's a lot of growth potential ahead of us in continental Europe. We're equally excited about our opportunity in Latin America. Our Mexico business successfully transitioned to a direct model in Q1, with shipments accelerating throughout Q2. We expect to see further strength in the second half of 2025, and we're building our teams to support growth. In fact, even as we continue using distributors in other Latin America countries, we're adding our own boots on the ground in areas like marketing and social media. These investments help Shark Ninja build connections with local consumers directly as we learn about their insights and needs. Our three-pillar growth strategy is the cornerstone of how we intend to deliver sustainable top-line success, and it all stems from our outrageously extraordinary mindset. At Shark Ninja, we're obsessed with winning. It's what drives our relentless innovation engine, breakthrough social media campaigns, agile and differentiated supply chain, and deep relationships with retailers. We play to win big and cannot be more excited to be fully on offense in the second half of 2025 to drive momentum heading into 2026 and beyond. This enthusiasm is reflected in our updated outlook, where we're once again raising our net sales and adjusted EBITDA growth ranges for FY 2025. Patrick will provide more details, but allow me to underscore how excited we are to attack growth opportunities by leveraging every advantage we have. Momentum across both brands, a robust new product pipeline, healthy inventory availability, and increasing interest from retail partners globally. We will also take advantage of the lessons we're learning related to pricing actions and promotional activity as we continue to experiment thoughtfully with both in the second half of the year. Taken individually, these attributes are meaningful. Taken together, we feel as strongly about the degree of our competitive edge as we ever have. When it comes to our brand aspirations, Shark Ninja is dreaming bigger and acting bolder. In Q2, we broke new ground as a key sponsor featured in the Apple Original Films F1, the movie, from Warner Brothers Pictures. With a focus on precision engineering and elite performance, the F1 audience is a perfect fit for Shark Ninja. We saw tremendous consumer activation throughout multiple marketing events associated with the movie. F1 the movie also marks an important evolution in our branding strategy as we build consumer awareness of the combined Shark and Ninja brands. We intend to take an even bigger step in this direction with the upcoming relaunch of our direct to consumer site at sharkninja.com powered by the Salesforce e-commerce platform. We're on track to go live in North America in Q4 and expect to follow suit with international DTC sites in Q1 of 2026. The more we demonstrate how our unique culture and innovation strategy drives success, the more outside recognition we receive. In the second quarter, we were deeply honored to be named to Time Magazine's list of Time 100 most influential companies for 2025. It's a true privilege to be part of this elite list of disruptive companies and a major validation of how our relentless focus on solving consumer problems is resonating. To wrap up, this quarter demonstrates the power of our proven operating model and competitive mode. Even with all the distractions and challenges around us, Shark Ninja is winning because we're a problem solvers at our core. This skill set extends from our products and consumer focus to our business strategy and execution. Going forward, we believe we're poised to outperform our competitors from a position of strength. Even as we focus on delivering 2025, we're building a strong foundation for the future. Shark Ninja is making a concerted investment into our world-class team to enhance our ability to scale and globalize the business. The level of talent we're adding to the organization is profound and deliberate. I would like to thank all Shark Ninja team members for their unwavering dedication to our success. And now, Patrick will walk you through our second quarter financial and updated 2025 outlook. Thank you, Mark, and