Grabagun Digital (NYSE:PEW) reported higher first-quarter fiscal 2026 sales and said it continued to gain market share in a firearms industry environment that management described as challenging and broadly flat.
Chief Executive Officer Marc Nemati said revenue rose 11.1% year over year to $25.9 million, driven by a 10.5% increase in firearm sales. He said the company’s growth outpaced adjusted NICS background checks, which were up 1.6% over the same period.
The company said firearm product sales reached $21.7 million, while non-firearm product sales rose 10.4% to $4.1 million despite softness in ammunition demand across the industry. Gross profit was $2.8 million, or 10.7% of net sales, compared with $2.2 million, or 9.6% of net sales, in the prior-year period.
Higher Expenses Weigh on Profitability
Chief Financial Officer Justin Hilty said the gross margin improvement reflected a more favorable product mix in higher-margin firearms categories and benefits from pricing optimization. However, operating expenses increased to $5.4 million from $2.2 million a year earlier.
Hilty attributed the increase to planned investments in public company infrastructure, the launch and scaling of PEW Logistics, and additional headcount tied to growth initiatives. He noted that the year-earlier quarter occurred before the company was public.
The company reported a net loss of $1.8 million in the quarter. Adjusted EBITDA was a loss of $2 million, compared with a loss of $500,000 in the prior-year period.
Hilty said the year-over-year increase in selling, general and administrative expenses included about $1.5 million in incremental headcount, approximately $500,000 in stock-based compensation and about $800,000 in insurance costs and professional fees associated with operating as a public company.
PEW Logistics Becomes a Key Growth Focus
A major theme of the call was the early development of PEW Logistics, the company’s white-labeled direct-to-consumer fulfillment platform for firearm manufacturers. Nemati said the service is designed to let manufacturers launch branded online storefronts with ATF-compliant FFL workflows, fulfillment capabilities and access to first-party customer data.
The company launched PEW Logistics in January with KelTec Weapons as its first customer and added Derya Arms in March. Nemati said the platform has processed $1.3 million in gross merchandise value since launch.
Nemati said the company’s network of FFL holders places a licensed dealer within 15 miles of 97% of the U.S. population, supporting an average checkout-to-delivery time of just under three business days.
During the question-and-answer session, Roth Capital analyst Matthew Koranda asked about the opportunity to add more manufacturers to the platform. Nemati said the company expects manufacturer interest to grow as early partners demonstrate results.
“The more time we have under our belt with that and the more results that we show, these manufacturers, I believe, will start to see kind of the option that they have to leverage a platform like this,” Nemati said.
Asked about the margin profile of PEW Logistics, Nemati said the platform has significantly higher gross margins than the company’s hard-goods e-commerce business, citing a revenue-share model and pick, pack and ship fees. He said the gross margin profile is “upwards of 70%.”
Mobile Traffic and Subscriptions Support Core Business
Management also highlighted the company’s core direct-to-consumer e-commerce business. Nemati said mobile engagement remained a major driver, accounting for approximately 67% of traffic and 64% of revenue in the quarter.
He said customer lifetime value increased 4.2% year over year and repeat purchasing remained strong. In response to a question from Koranda about demand trends and the cadence of the quarter, Nemati said results were relatively stable month to month and did not show major spikes tied to geopolitical events.
Nemati also pointed to the company’s Shoot and Subscribe ammunition subscription service, which launched in the fourth quarter. He said the service now contributes 15% of the company’s ammunition revenue line and is designed to create a recurring revenue model in a category historically driven by one-time transactions.
Balance Sheet and Capital Allocation
Hilty said the company ended the quarter with $106.4 million in cash and minimal debt. He said GrabAGun’s business model allows it to collect from customers before paying suppliers, with $9.2 million in inventory and $13 million in accounts payable at quarter end.
The company repurchased about $2.4 million of common stock during the quarter under its $20 million share repurchase authorization. Hilty said just under $9 million remained available under the current authorization.
Nemati said the company continues to evaluate merger-and-acquisition opportunities but remains disciplined. He said the M&A pipeline is active, but management is not willing to overpay to meet arbitrary growth targets.
“The strength of our balance sheet gives the luxury of patience,” Nemati said. “We can wait for the right assets at the right price rather than chasing deals that don’t make strategic or financial sense.”
Nemati said the company is also investing in a new headquarters and fulfillment facility acquired in the fourth quarter. The facility is approximately 2.5 times the size of the company’s current footprint and is expected to be fully operational in the fourth quarter of 2026.
Company Flags Potential ATF Rule Change
Nemati also discussed proposed ATF regulations that he said could allow certain firearm transfers to occur remotely while still meeting federal background check requirements through secure identity verification. If finalized, he said the rules could allow lawful consumers to complete the compliance process remotely, including direct-to-home firearm delivery under an approved framework.
Nemati said the proposed framework would require remote identity verification, NICS integration, compliance systems, secure record keeping and the ability to operate accurately at scale. He said GrabAGun’s technology and compliance infrastructure position it to respond if the rules change.
“Regardless of regulatory outcome, the long-term strategy that we have been building on for years positions us to continue to drive the evolution of firearms commerce,” Nemati said.
About Grabagun Digital (NYSE:PEW)
GrabAGun.com is an online retailer of firearms, ammunition and related accessories. GrabAGun.com, formerly known as Colombier Acquisition Corp. II, is based in COPPELL, Texas.
