Kits Eyecare Ltd.

Good morning, everyone, and thank you for joining Kids Eyecare's second quarter 2026 earnings call. With me on today's call are Roger Hardy, Chief Executive Officer, Joseph Thompson, Chief Operating Officer, and Ibrahim Kamar, Chief Financial Officer. Before we begin, I am required to provide the following statement, respecting forelooking information. which is made on behalf of KITS and all of its representatives on this call. Certain statements made on this call will contain forelooking information. These forelooking statements generally can be identified by the use of words such as intend, believes, could, expect, estimate, forecast, may, would, and other words of similar meaning. This forward-looking information is based on management's opinions, estimates, and assumptions in light of their experience and perception of historical trends, current conditions, and expected future developments, as well as factors that are currently believed are appropriate and reasonable in the circumstances. Actual results go different from a conclusion, forecast, expectation, Belief or projection in the forelooking information. And certain material factors and assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forelooking information. Management cautions, investors not to rely on forelooking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion For forecasts or projections in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in KIPP's filings with Canadian provincial security regulators. During today's call, all figures on Canadian dollars, unless otherwise stated,

and with that, I will turn the call over to Roger.

Thanks, operator, and thank you to everyone for joining us today. When we set out to build kits, the mission was simple. Make eyecare easy, easy to buy, easy to afford, and easy to get glasses and contacts fast. Everything we've built since, our own vertically integrated lab, our own beautiful frames, Optician AI, our auto-ship program, exist in service of that mission. And the second quarter is what it looks like when more than a million customers respond to it. Revenue for the quarter was $58.4 million, up 17.8% year over year, and 17.9% in constant currency, bringing our first half revenue to $115.9 million, or up 20.5%. Glasses reached $11.1 million, up 54%, and now represent almost 19% of our business, up from just 14.5% a year ago. Net income in the quarter was $1.5 million compared to a loss of $0.7 million in the prior year period. Operating cash flow was a standout and was a record $7.8 million, and we ended the quarter with $27.4 million in cash and no debt. Our 15th consecutive quarter of positive adjusted EBITDA with the strongest balance sheet in our history. Coming into 2026, we made a deliberate decision to point the company's acquisition and merchandising effort at building out the glasses business. The reason is simple. We designed the frames, we cut the lenses in our factory, and we ship made-to-order products off in the same day. When you own every step, each incremental pair carries more margin and gets the customers faster. This quarter validated those decisions. 148,300 pairs of glasses were delivered, up 32.4%. Premium lens upgrades were 45.2% of glasses revenue. And new glasses customers spent 50% more on their first order than the same cohort a year ago on identical entry-level pricing. Not one thing did that, but customers are taking more pairs. They're upgrading their lenses. They're buying into categories we've added like progressive readers and anti-fatigue lenses, and they're finding all of it faster because of tools like Optician AI. They help customers make the right choice, the easy choice. It has nothing to do with price increases. It's just been good product and guidance compounding. In fact, Glasses customers acquired this year are generating first-order revenue that exceeds the multi-year cumulative revenue of Glasses customers we acquired in earlier years. The newest cohorts are our best cohorts, and the gap is widening. Making Eyecare easy shows up in the P&L as bigger baskets. The trade-off stated plainly, total revenue growth decelerated from Q1's pace. That was the cost of the Glasses-focused and we knew it going in. Glasses is a higher consideration purchase. You acquire fewer customers per marketing dollar, but each one is worth substantially more, as we talked about at the end of Q1. We acquired 90,800 new customers in the quarter and their first order economics are the strongest in any cohort of our history. In the back half, we plan to rebalance. We will keep the Glasses momentum, which is increasingly organic, Thank you for watching. The durable part of the business is what happens after the first order. Repeat customers contributed 65.5% of revenue up from 60.6% a year ago. $38.3 million of repeat revenue, an increase of $8.2 million. Put another way, our installed base on its own grew 27% year over year, faster than the business as a whole. And new customer revenue grew as well. So the mixed shift reflects repeat growing faster, not new shrinking. Our two-year active customer base is $1.1 million, up 15.2%. Our auto ship is now a $24.6 million annuity that costs almost nothing to maintain. Our average order value was $213, up 15.8%. Customers come to us for contacts, then buy glasses, then buy their second and third pair. 78,500 pairs went to repeat customers this quarter, up 51%. They do this because the model works for them. Quality, value, and speed in a combination nobody else in the category delivers because nobody else owns the full stack from design to lab to doorstep. We earn the first order and our model earns the rest. How big is the opportunity? Eyecare is an enormous category, still early in its shift online, and we're one of the only vertically integrated direct-to-consumer platforms operating at scale in North America. Every new customer lands on infrastructure we already own and enters a cohort that historically spends more each year they stay with us. It's growth that funds itself on a fixed asset base in a market this size. That presents asymmetric upside. This is the model working as designed, a vertically integrated platform where growth funds itself. Consider the combination in these results. First half constant currency growth of 22%, positive and growing net income, and operating cash flow equal to 13% of revenue in the quarter. Very few companies grow at this rate, and even fewer do it while generating cash. We're fortunate to be one of them. The business is now paying for its own acceleration and continues to compound. Looking ahead to Q3, we expect continued momentum with revenue projections in the range of $62 million to $64 million and an adjusted EBITDA margin between 4% and 6%. With that, I'll turn the call over to Joe to share more on the operational highlights. Joe? Thanks, Roger.