SharkNinja Stock

Good morning, and welcome to this next session of the Goldman Sachs Global Consumer and Retail Conference. My name is Brooke Roach, and I cover the apparel, softlines and brand sector here at GS, and I'm thrilled to introduce our next session with SharkNinja. Here with me on stage today is Mark Barrocas, CEO and Director, and Adam Quigley, CFO. Welcome, Mark. Welcome, Adam.

Thanks, Brooke.

Thank you.

Mark, let's kick it off with a discussion about the strength of the business. You've now delivered 13 quarters of double-digit growth. And last quarter, you materially increased your fiscal '26 outlook. As you look across each of these drivers of the business, what gives you the most confidence that SharkNinja can continue this momentum?

Yes. Well, Brooke, in the second quarter earnings release, I made a point to really focus on the core and base business because I think it's something that is really misunderstood by investors. They look at our new products and they look at our international expansion. And I think they miss the fact that underlying all of this is a really healthy core base business growing at mid- to high-single digits.

And then you layer on top of that, the new products and you layer on top of that, the international growth, and it translates into a really strong growth algorithm in mid- to high teens. Last quarter, we were low 22% growth. But it's that base business strength that I'm most excited about. I mean, if you think about this year, I mean, take a category like upright vacuum is probably our most mature category. We launched a product called the Shark Transformer. It raised average sell price. It improved gross margins in a market that is declining 1%, our business is growing 5%.

So there's lots of pieces. I mean, across 41 product categories, it's funny, you come into a conference like this and everyone wants to talk about the new water purification, the Ninja HydraSense that we just launched or big TAM that we're entering into or the Crispi Microwave in the microwave category that we're launching into or international expansion. But as you look under the hood of the business, like it's the strength of the core base business. We don't have a leaky bucket. We do have a very healthy core base business. And then again, you layer on top of these other growth drivers, and that gives you the really strong growth that you're seeing from us.

Great to hear. I know there is a lot of discussion around some of the incremental new category expansion of SharkNinja given that you open 1 to 2 new categories per year. Your current TAM is $125 billion to $130 billion. And every year, you grow these new categories. What categories do you see as most attractive that you're not in today? And what makes these categories desirable? Are new categories coming at a smaller TAM than current products as you continue to build?

Look, again, you come to these investor conferences and the answer is like, have you -- are there any more categories to go into? Is there any more places for SharkNinja to expand to? And I think if we were sitting here last year at this time, we entered 3 new categories this year. The first was water purification, I mean, a $6 billion TAM, okay? So is the TAM big? I mean, the TAM is enormous, okay? Even if we get 10% of that market, the $600 million business. We entered into microwaves, a $4 billion TAM.

So we got a $10 billion of TAM in those 2 categories, and we've developed really disruptive products. I mean, who on social media was talking about water purification before the last 4 weeks? Who is talking about microwaves on social media? I mean, we've got an incredible campaign that's going to be coming out in advance of Thanksgiving with lots and lots of creators talking about making their Thanksgiving turkeys in microwave. I mean, there's so much excitement around some of these categories that have been dead categories for years.

And then the third category we launched into was the Shark BlastBoss, which was an indoor/outdoor blower. And that is going to give us a big road map of products into '27 and '28. So you have a category with virtually no TAM where we're the only product in the category. You've got products like water and microwave. But what it points to is that there's just so many more places for SharkNinja to expand into. I mean, what I'm so excited about is we just launched our next -- in the U.K., we launched our next-generation Shark CryoGlow. It's called the CryoGlow Clinic. It has 2x the power. It has a chest plate together with it. So you can do your neck and your chest area. It's designed so you can also do your hands. We found that the hands are kind of the third most important spot on the person's body that they want to get wrinkle reduction or, kind of, age reduction. In fact, it's the first place on your body that shows aging.

I think with the success that we've had in skin, you're going to see us expand into places like wellness. I think wellness is an incredible growth opportunity for us as we move forward. Physical wellness, environmental wellness in your home, I think that's some place that Shark absolutely has the right to play in. And I think, Brooke, you've heard me talk about the fact that it starts with, can we come up with something where we can honestly say what gives us the right to be in the business.

I think when you look at what we've done in something like water purification, where we're bringing performance of a multi-thousand dollar product to your countertop and making it so easy for you to be able to get clean water is something that is really not just exciting the category, but is disrupting the category. And then the last thing I would just say on the question that you brought up is every time we enter into these new categories, it's expanding the demographics of the consumers.

I mean, I can't tell you how many kids went off to summer camp this year with Shark ChillPill. I can't -- there's kids that are asking for our products for Christmas. We're outfitting dorm rooms. I mean, if you go to college campuses, I mean, look at the number of SharkNinja boxes during move-in day. We're outfitting your first apartment, when you move into your first apartment or you have a family, you have more kids or you move into a house. So we're taking you through the whole life cycle of the consumer.

And again, we're doing it across socioeconomic groups. We're not talking about going after the same consumer. I mean, we're selling $59, $79, $99 products to the Walmart consumer, and we're selling $1,000 grills at Home Depot or Sephora, more expensive products. So I think when you look at the categories we can enter into, when you look at the demographic groups we're targeting and engaging with, when you look at the socioeconomic groups, the TAM is going to continue to keep growing.

Very clear. You mentioned social media and some of the ad campaigns that you have for some of these new product launches. But one really exciting area of growth for SharkNinja is TikTok Shop, affiliates and social commerce. What percent of the business do these channels represent in 2026 by geography? How quickly do you see this business growing? And what's differentiated about SharkNinja's approach here that can sustain this momentum even as competitors might start to catch on a little bit?

Yes. Well, look, we're the largest brand on TikTok Shop in the U.S. We're the largest brand in the U.K. We're the largest brand in Germany. We -- up until May, we were only in the U.S. and U.K. In May, we launched in Germany, France, Spain, Italy and Mexico. By the holiday selling season, we'll have shops up in 12 or 13 countries around the world. So as it relates to like how large is the percentage of business, I mean, that's not something we're going to talk about until we get, kind of, a full year under our belt.

I mean, let's keep in mind that, like, the first product that we sold on TikTok Shop was August of '25. I mean, it's not like this is a channel that is usually mature. I mean, we haven't even gone through a full year -- full fiscal year selling on TikTok Shop. Now the other thing I would say is I think it's a misnomer to think about this as just TikTok Shop. We're growing with Meta affiliates. We had the Meta team in our office last week with a big hack. They're making a big, big push into this. While TikTok has a first-mover advantage, TikTok is -- Meta is reacting, YouTube affiliates, we're doing a lot more with.

So I think you have to look at this as a whole in terms of the view of social commerce. And what role is social commerce going to play in our business moving forward? I think that some of the retailers are going to get involved in this. MercadoLibre has come out and said that they're going to develop their own affiliate program. I think ultimately, people are recognizing that this is a really interesting channel of distribution. I mean, the consumer today opens up their phone and they have 1,000 QVC channels just by opening TikTok or Instagram. So it's an incredible way.

And the other thing I would say about it is, and I ask investors at almost every meeting that I have, have you ever shopped on TikTok Shop? And like 99.9% of you say no, which I find amazing because you're investors in the category, this is the biggest change, I think, in consumer retail since Amazon. It's totally frictionless. I mean, I go on TikTok Shop and I buy 3 things, and I don't even know that I bought the 3 things. Stuff just shows up at your house. And so it's a very, very easy interface and user experience.

Now in terms of SharkNinja's advantage in the space, look, I mean, you could say the same thing about Amazon. I mean, SharkNinja has a great advantage on Amazon. I mean, we -- our search and our algorithms, consumers are hitting on our products constantly. Consumers are searching for us by name. I think we have a great moat that we're creating from an analytics standpoint. Social commerce doesn't stand on its own. There's also a spillover effect. So some amount of that revenue is staying on the platform, but some amount of that revenue is spilling over into other channels, Amazon, Walmart.com, our Direct-to-Consumer site, Target.com, Best Buy, I mean, all of these people are also beneficiaries of marketing and advertising and selling that's being done on these social commerce sites.

Very clear. Let's shift to some topical trends. And one area that's been in focus is the domestic growth rate. You've indicated confidence in the Domestic business growing double digits in the back half and into 2027 despite some toughening comparisons. Can you unpack this? What underpins your confidence even as many of your key retail partners have started to show some recent volatility?

Yes. Well, look, we came out of the first quarter, and we reaffirmed that we felt like the Domestic business was a double-digit growth business for us. First half of the year, we delivered double digits. I mean we believe we'll deliver double digits in the back half of the year as well. I think, Brooke, it points to the strength of the core. We obviously track POS on a daily basis at all of our major retailers. Of course, our direct-to-consumer site, our TikTok Shop and our social commerce business.

And we're seeing good strength in the core base business. Again, you layer on top of that the new categories and the new products that we're launching. And that's what gives us a lot of confidence and the support that we're getting from the retailers. I talked about the fact that Walmart was our one major retailer in '25 that didn't grow in Q4. We had the Walmart team in our office last week. We're set up for a great second half of the year with Walmart. I'd encourage you to go and look at these vignettes that we've created in Walmart with Ninja products with all different colors.

There's influencers that are going into Walmart stores and are doing content in front of these vignettes. The stores that have them are growing at a very significant clip. I mean, we're talking to them about doing all types of things in-store that we would never have discussed a year ago at this time, 2 years ago at this time, colors, drop-ins, special collabs, things like that. And it doesn't just go to Walmart. I mean, we're having that with Target and Best Buy. We're doing great with Costco and Sam's.

So I think what you're seeing in the Domestic business is our omnichannel model really on display, a strong brick-and-mortar retail business, a strong dot-com business, a strong direct-to-consumer business, a social commerce business. There's just so many ways for the consumer to be able to engage with us. But again, it all starts with do we have products that consumers love? And are we getting them excited by the marketing that we're putting out and generating? And I think the answer is yes.

I mean, if you just look at the last couple of days, I mean, 2 days ago, we launched a new product in the cookware space. Today, actually this morning, we just launched a product called the Ninja MultiPot. Two weeks ago, 3 weeks ago, we just launched a product called the Shark AquaReach in kind of the 2-in-1 floor cleaning space. So there's just a lot of new innovation that is coming and kind of driving excitement within the Domestic business.

And the last thing I would say is, look, we're going to grow our Canada business. I mean I've never spoken so much about Canada in the 18 years of running the business as I have in the last 2 quarters just because we've evolved and changed our model in Canada from being a very heavy direct import business to being a buyout of the warehouse business. And so that now has flushed through at the end of Q2. We're going to grow our business in Q3. We're going to see strong growth in Q4. And I think that will position us well as we head into '27.

One question that we commonly get about your Domestic business on wholesale, in particular, is that of inventory levels and how to think about sell-in versus sell-through as well as shelf space. Do you think that there's more opportunity for more shelf space? And are you seeing anything odd when it comes to inventory levels at retail?

Well, look, the first thing I could say to you is that I think this year in '26, for a number of reasons, we missed sales due to not having enough supply in our Domestic business. I think our Domestic business grew faster than what we expected. I think we had some supply and demand forecasting challenges. So if anything, I think that we left some business on the table in '26 due to low in-stocks and low replenishment rates that we'll see hopefully as a benefit as we move into 2027.

Our POS has, if anything, been tracking with shipments or even a little bit ahead of shipments. So I think -- me personally, I think inventory levels are light at retail. But I don't think that's as a result of the retailers. I think that's as much of our doing as it is the retailers' doing. So that is not something that I think is a big concern for us moving forward.

Very clear. One question we're asking all companies at our conference today is one on the health of the consumer. What are your expectations for the environment in the second half of '26 by geography? And do you expect things to be the same, better or worse? And then a follow-up on that. Do you expect the health of the consumer to be better, the same or worse in '27 versus '26?

Yes. Look, this is such an interesting question, right? Because I mean, I think everyone comes to these conferences thinking the consumer is down. And then a few months go by and like, oh, the numbers were better than what we expected from a consumer perspective. I will say that like, listen, since 2008, our industry has grown at a compounded growth rate of 1.5% a year. This is not kind of a frothy industry. I mean, other than the 18 months, 15 months during COVID, we've never experienced a high-growth, double-digit type industry growth.

Listen, I think the consumer obviously continues to be under pressure. I mean, as long as gas prices are sitting at $6, as long as sentiment is what it is. That being said, there is a certain amount of dollars that the consumer has to spend, will spend, is excited to spend. And I think they're going to be very discerning about where they spend those dollars. And I've said this over and over again, like I don't believe that we're competing against what this group would consider our core competition. I don't think that we're competing against other home appliance companies. I think we're competing against Olive Garden.

And I think we're competing against Royal Caribbean. I think the question is, does the consumer go out to dinner 2 more times? Or do they buy a Ninja Crispi Pro that they can use at home to cook all the time? Is the consumer going to go on vacation? Or are they going to pull back on that cruise and invest it more in holiday purchases?

So what our job is, is we have to continue to develop exciting disruptive products. We have to continue to keep telling our story that drives viral excitement from the consumer, and we need to keep driving our omnichannel strategy. And I think over the last 18 years, what that has shown us is there is a certain amount of consumer discretionary spend that we've got to give the consumer a reason to invest it with SharkNinja versus investing it somewhere else.

Another big debate in the industry is on pricing. How much of your growth is being driven by units versus price? And within that price, is it mix? Or is it like-for-like? And do you expect your prices to be higher, lower or the same in the second half of the year versus the rate that you delivered in the first half?

Yes. So in '26, we haven't raised prices, okay? So let's start with the fact that -- I mean, our growth is coming predominantly from unit growth. We've got a little bit of ASP growth that's happening from a mix perspective in the business as we start to continue to grow our espresso business at $600, $700. We continue to grow our outdoor cooking business, things like that. So you've got a little bit of benefit due to ASP mix improvement. But for the most part, it's unit growth.

Now what do I expect as we move forward? I expect us -- as we head towards the end of the year and into '27, I expect us to look at taking a little bit of price. When you think about commodity costs, when you think about plastic prices, we're going to be in a position as we head towards '27 to have to start taking small amounts in price. And the playbook is basically the tariff playbook that we put in place back in '25 that I think we did a great job of executing.

And so I think what you'll see from us is some small price increases as we get towards the end of the year, maybe as we get to the beginning of '27. But like everything, we'll do it. We'll watch it very closely. We'll react accordingly. We'll see what sticks. We'll decide where there are products we want to take price and maybe promote a bit more. But I think we've got a really good playbook as to how to manage that.

Very clear. Before we turn to some of the margin implications of what's happening in the business, let's round out the discussion on strategy with a discussion about your international outlook. Can you speak to the growth that you expect out of your most mature international markets relative to your emerging markets into 2026 and '27? And how are you thinking about U.K., France and Germany versus the other emerging opportunities and some of the business model distribution transitions?

Yes. So let's talk -- I mean, first half of the year, I think you saw the U.K. business was very strong. Listen, what's so great about that is if I go back to the beginning of '25, we experienced tremendous growth in the U.K. in '24. One of our biggest categories, air fryers, kind of peaked at the beginning of '25. People said to us, oh, is the business now in the U.K. is going to be down? We diversified. We got into a lot more product categories. We expanded distribution, and you're seeing the U.K. business just do great.

And that points to the power of diversification of the business that maybe a quarter or 2 quarters, you could see a blip from a category. Now in the case of air fryers, it was kind of an outsized situation. But we rebounded. We've grown now the last 4 quarters in the U.K. We've got really nice growth. And I think over time, you're going to see the U.K. business look a lot like the U.S. business. It's well distributed across a lot of channels. It's well distributed across a lot of product categories.

I think if you think about Germany and France, I think there's still a lot of growth in both of those markets. France, in particular. Germany is a little bit bigger business than France. I think there's tremendous growth that we have in France moving forward. There's still really nice growth in Germany. Over time, I believe Germany will be a bigger business than the U.K., and the U.K. this year will be a little bit over $1 billion in revenue. So we've got a lot of growth opportunity for us in Germany. We spent the last 7 quarters buying back a lot of distributor markets. We basically completed that at the end of Q2.

I'm super excited about what our direct platform looks like. I mean, if Mexico is any indication, we're in for some really nice international growth in 2027. Mexico, we put the staff in place in Mexico City. We built the demand generation flywheel. We expanded channels. We -- I think our Mercado Libre business this holiday season is going to approach our Amazon business in terms of size. And this will be our first holiday season that we're in with Mercado Libre in Mexico.

And I think we're seeing the same playbook now in some of the other European markets. I mean, Poland as an example, that we just took over at the end of the first quarter. We just launched 2 weeks ago on Allegro. Allegro accounts for almost 35%, 40% of the retail business in Poland. We weren't on Allegro at all. When I think about Spain, last holiday season, we had a distributor in Spain. We were selling to a few retail stores, very low SKU count. This holiday season in Spain, we're going to have a direct-to-consumer site up and running.

We're going to have TikTok Shop. We're going to have Amazon as a 1P seller in Spain. We're now -- retailers in Spain are actually coming to us and saying, hey, are there any products we could still get for this holiday season? That was not at all a conversation we were having with any of the European retailers. But as we have more ways of getting to the end consumer and the retailer is not the gatekeeper or the blocker of getting to the end consumer, the retailers are looking at the data and they're saying, hey, they're going to get left behind here if they wait until June or July when their planograms change to get more SharkNinja products into the store.

So listen, I think you saw really nice growth in Q2. I think the back half of this year, we'll continue to see strong international growth. And I'm really excited. I mean, South Africa is now expanding. The Middle East is starting to scale. That was a slow market for us with the war and everything in the first half of the year. We're expanding into markets like Kenya and Nigeria and North Africa. Now you think why? Well, why? Because there's consumer demand. It's not because SharkNinja is trying to just sell its products into the market. I mean, go on to social media and look at comments, when is this product coming to Ghana? When is this product coming to Kenya?

I mean, there's no borders to the social media that we invest in and run. And so there's demand that's being created in all these markets as we're running -- we now have social media content creators in Dubai and Saudi Arabia. That's translating over into Egypt and Morocco. Content that's being generated in London is being consumed in North Africa and the Middle East markets. So there's this tremendous kind of spillover ecosystem that's being created that's driving a lot of the international growth for us.

Adam, let's turn to you for a moment and to margins. There's been a lot of discussion about what's happening with fuel, freight and product costs. As you're thinking about that, how should we be thinking about that into 2027? What are the most meaningful opportunities or risks? And what are the offsets or mitigants?

Yes, sure. I mean, I think I sat up here last year and said, Brooke, there's a lot of moving pieces as we head into 2026. And I think I'm here to say the same thing about 2027. And that's the fact of the matter, right? Mark mentioned the tariff playbook that we put in place. That's the playbook that's alive and well right now in a lot of ways. That's our SharkNinja problem-solving playbook. As I think about what's underway, we kicked off a 30 hacks in 30 days initiative on gross margin. We like to have fun names just like our marketing team.

And that's the work that has to happen today so that by January 1, those things are already in motion. We are looking at price. We haven't had to do that to date. The refund helped to offset some of the commodities that have already come into 2026. And so we feel good about the margin that we're delivering this year. But certainly, as you go to '27, there's a lot of factors at play. Amongst them, we are operating in categories that do have higher margins. And so there's a mix benefit. Some of the channels that we're in has a mix benefit. But certainly, commodities, certainly freight, certainly tariffs and the movement that happens there.

There's enough at play where what we're doing right now is putting it all on the table, price, value engineering and then even OpEx, right? Our goal, as we've said for a long time, is to grow EBITDA margin at a faster rate than sales. That remains the goal this year. That remains the goal next year. That might mean that operating expenses, we lean on more next year. Those initiatives as well are underway. There's a lot of great opportunities that we've talked a little bit about thus far with AI and other areas where we can optimize the P&L and ensure that whatever comes our way for gross margin, we've got plenty of levers at our disposal.

That's very clear. Can you continue to work towards that goal if tariff rates move back to closer to 20% if Section 301s come back as you continue to cycle the tariff tailwinds from this year?

Yes. Certainly, I think when you go to Liberation Day, April 2, right, the numbers that were disclosed that day were big, insurmountable. Some might have said we digested it over the course of a couple of hours, maybe overnight, and then we did start moving to that big number. That big number came down. We reacted, we adjusted and we pivoted. We're doing the same thing now. We're assuming it goes to 20%, right? That's the information that's in front of us. Let's say it goes to 20% in '27. We need to be prepared for that. If it doesn't happen, great. It does give us more flexibility in terms of what we do within the business.

Even as you think about '26, we were given an unexpected benefit with the refund. We were opportunistic in both raising our guidance to a disproportionate level of EBITDA outside of the sales increase. We did offset commodities with that as well. But we also reinvested in the business. We also pulled some things that would have maybe otherwise came in '27, maybe some projects would have happened in '27 and pulled those forward.

So we'll remain opportunistic as we have that ability. And I think the work that we're doing today, it's not just about the commodities of '27 and the tariff of '27. It is structural foundational changes that are going to make SharkNinja a healthier business, right? We're not just focused on solving '27. We are focused on growing at this rate for the long term.

Part of the tariff refund reinvestment was also in reserve for potential competitive pressures. Are you seeing something like that and a need to use that? And if that's not needed, will you reinvest it in additional growth-driving initiatives into next year?

Yes, absolutely. I mean, we have a very diligent weekly process where we're looking at point of sales data. We're looking at retail inventory. We're looking at the promotional environment, looking at how the consumer is reacting to our prices. With 25 new products launching every year, you have a lot of new opportunities to recalibrate what the pricing is going to be. And I think some of those levers we're looking at even as we go into the holiday. Black Friday, you've got a lot of levers in terms of how deep is the promotion, how many units are you promoting? So we're still evaluating those. We're still looking at other opportunities to invest in the business. But to answer your question directly, have you seen any new or unexpected competitive pressure, I would say no.

Very clear. One more thing that could potentially help your margin, but also help some of your growth is AI. And SharkNinja has been very keen and has really leaned in there. And Mark, I know you've spearheaded a lot of AI hack initiatives. One question we're asking all companies at our conference is, do you expect a significant increase in efficiency as a result of AI in '27 versus 2026? And what part of the business is going to change the most as a result of AI over the next year?

So in answer to your first question, absolutely in '27 versus '26. I think you're going to see a lot of investments in '26 that are going to pay off in '27. The most tangible one right now that I can point to is the commercial side of our business, pricing, promotions, media analytics. The business spends over $800 million a year on marketing and advertising. We spend a significant amount on pricing and promotions. I publicly said we brought in Palantir to help us, and they've really focused on the commercial side of our business. And the results that we're seeing are extraordinary.

It's early days. We're kind of 5 weeks into launching kind of the first phase with them and leveraging it in the business. But it's totally changed the way that we're operating as a company. I mean, we -- it took us days and days to analyze POS data on a weekly basis. It's getting spit out in 2 hours by agents. So I think the commercial side, first and foremost, is the biggest tangible area of opportunity. Adam now is talking to Palantir in areas like finance. We're talking to them about supply chain. How do we manage our supply chain more efficiently on both the demand side as well as the supply planning side? So that is our biggest kind of macro project.

I mean, we're working with Salesforce on a number of things to improve our D2C experience and drive more e-commerce business and particularly on the service side of the business now that we've implemented Agentforce, you're going to see a lot more of our calls being answered by agents and being done better by agents. I mean, not just -- it's a cost savings. I think with all of our products, an agent -- a live agent just can't read off of so many manuals, whereas an AI agent can do that a lot more effectively.

And then we have a project that we've called AI/Sharks. We went out, we hired 100 master's and PhD students to come in as co-ops and work on what we call kind of quick-hit AI projects across the business, how do we just drive greater efficiency, areas like order management, distribution, logistics, but it's also become a great talent pipeline for us. So they're in the company. We're leveraging this incredible talent pool that exists in Boston and London in our offices. And then we're working to convert some of those people into full-time associates into the business. And we expect moving forward that we'll have this as an ongoing initiative where we'll always have 100 AI/Sharks in the company.

It just brings a whole different energy and creativity element of people that haven't been in business, they're usually AI proficient coming out of data science and computer science backgrounds. But now we're partnering them with experts in the functional areas. And when you put those 2 together, it becomes really impactful because I will say there's a lot of functional experts in our business that are not AI literate, that are not understanding how to leverage AI in the right way.

And so if you can put them together with somebody that's able to do that, where they can verbalize what I'm looking to do and then have somebody actually sit there with them and develop the tools from an AI perspective, we found that to be a really, really great benefit. And we call it these kind of quick-hit initiatives, and we've already completed about 65 of them across the company. And you'll see none of those are going to be the be-all end-all, but when you do 65 or 100 of them, you're going to start to see a lot of efficiency impact as we move into '27.

It's really great to hear. With that, Mark and Adam, I think we are about out of time. Thank you very much for joining us today, and thanks for all of the audience for tuning in.

Thank you.

Thank you.

All right. Let's get started. Thank you, everyone, for attending our 46th Annual Growth Conference. My name is Brian McNamara. I'm one of Canaccord's analyst in the consumer space. We are delighted to have SharkNinja with us today to host CFO, Adam Quigley; and James Lamb, who heads up IR. So thank you very much for joining us, guys.

Absolutely.

So the company reported another strong beat and raise quarter last week. We actually polled the buy side ahead of time because the bar was -- felt like it was higher than sell-side estimates and you cleared it with ease. How do you do it? And what's the secret sauce?

It doesn't feel easy. That's for sure. But honestly, I think you look at Q2. Q2, I think, is very emblematic of what we set out to do every year, right? And it's broad-based growth. It's not any one category. It's not any one country. It's not any one thing that we're going after. And so I think on any given quarter, we're going after 10, 12 different things, right? I think Q2 is a good example. When things go right, that's the 22% growth quarter for us, but we're setting out to do that.

So it's hitting on new categories. It's hitting on existing categories. It's hitting on the innovations in the base. It's hitting on international. But look at the U.S. business, right? I think we're most excited if I were to choose one thing, don't tell the international team. But the U.S. growth of 18%, I think, is something that's really a proof point in the strength of the business right now. So for us, I think Q2 was great in many regards. We knew we had some tough comps coming into it from Q2 last year where we pulled a lot of levers in order to start offsetting tariffs. But yes, the team did an incredible job and feeling great about those results.

So fair or not, this stock has always been associated with tariffs at some level. You guys have done a ton of work, moving supply chains, diversifying suppliers, a whole host of other things that the company triggered last April after Liberation Day. Now you're in receipt of roughly $250 million in tariff refunds. Tell us about the work involved that went into tariff mitigation, what you learned and how you'll deploy those refunds?

Yes. I mean going back to first week of April, right, when Liberation Day hit, we mobilized the entire organization, and we've kind of talked a lot about this of that whole week was orienting around finding 1,500 different initiatives to help offset tariffs from pricing to costing, operating expense, the entire P&L was looked at. And we took a lot of actions right out of the gate.

And again, I think that's part of what made Q2 a tough comp in some regard, but by putting everything on the table early and then also acting on price, acting on costs, acting on OpEx early, we were able to give ourselves flexibility as those rates inevitably change throughout the year. That moment was also very representative of how SharkNinja operates. You look at some of the AI work we've done and some of the Jailbreak posts that Mark has shared on LinkedIn and other forums.

When there's an opportunity, when there's a problem, we mobilize, right? We don't sit around and wait and evaluate it. We just start moving because inevitably, it's easier to change direction when you're already moving. That's always been sort of our idea. So when you think about now getting the refund, and to recap, $247 million is what's been accepted by the CBP. It has not been paid yet, but that's what we filed for and has been accepted. So we do expect to book that in Q3. We will treat about half of that related to 2025 as an add-back in the year. So we'll adjust that out of 2026.

We've been working with EY to determine what is related to '25 versus what's related to '26. Based on inventory turns, it's about half and half. And so the other half that we keep within 2026, that's an opportunity, right? There's kind of 4 buckets that I think about of where those dollars go. The first bucket is we did disproportionately raise our guidance. So operationally, we raised sales a good amount. You saw a good amount of flow-through from EBITDA. On top of that operational performance, we're then flowing through another roughly $30 million of EBITDA related to the tariffs. That's kind of the first bucket.

The second bucket is the macro headwinds have persisted. Tariffs are now 12.5%. They were 10%, kind of 0%, but now they're 12.5%. So that 2.5% delta is a new hit to the back half of the year. Part of it is going to offset that. Not a huge number, but it's a number. The other piece is commodities. Commodities have stayed elevated. It's not just resins with the Middle East crisis. It is aluminum, it's silver, it's copper. It's some of the materials that, of course, are still in high demand with everything going on with AI. So commodities, tariffs is kind of the second bucket, equal weighting.

The next 2 buckets are the exciting part. One of them is reinvestment. So we're reinvesting in the business across media. That's new categories, new geographies, brand building type media, media not to maximize revenue in '26, but media to drive momentum into '27. Investment across AI, we continue to do that, not a huge splash that's going to make a headline, but more prudent projects that have time-bound deliverables and so accelerating some of that. And there's some other parallel path ideas that we're working on across R&D. So pulling forward some initiatives that maybe would have otherwise waited until '27 to do, trying to do those now in Q4 and pull that ahead. So big opportunity to reinvest in the momentum of the business and invest in the things that we're already doing today.

And the fourth bucket, I'm going to call it flexibility, right? Let's see what the rest of the year brings. Can I reinvest more of that? Do we need to adjust prices? Do we need to look at commodities? Do we need to drop more to the bottom line? That's sort of where we're reserving the right to be flexible.

So the company launches roughly 25 new products a year. How do you avoid the boom-bust nature of new product launches?

So those 25 products, 20 of them on average, maybe more, 21, 22 are in existing categories, right? So existing categories is not boom-bust. Existing categories is strengthening the core. Just this morning, I delighted the family with the unboxing of a brand-new Luxe Edition Cordless Stick Vacuum, right? The other one was fine. It was 2 years old, but that employee discount was appealing and my son particularly was excited.

But like I look at the 2 products right next to each other, you think they were from different companies. One was 2 years ago, one is today. And the one today is amazing. I mean check it out. There's some great colors out there. They fit with the beautiful modern design. And the quality is different. The functionality is different. There's just -- there's a big difference.

Now look, I get -- I work at SharkNinja, so new vacuums every day is kind of a standard occurrence. But I think that's a great example of just how you reinvent the core, how you bring newness to the market, how you help people retire their products early, right, and solve a new consumer problem. So the 25 new products, so many of that is in the existing business across existing categories.

The other pieces are within new categories. We've launched 2 new categories this year. We've got another one coming. But I think the dependency on new categories, that's not the story of this business. The story of this business is developing and maintaining a strong core, continuing to invest in that. And then as the new categories come about, they eventually end up back in the core, right? CREAMi. CREAMi is a big product. SLUSHi, big product. Those are all in the core business now.

We were checking in this morning, and we were stopped by the folks at the front desk talking about the new SLUSHi that they bought, and they were going to be making a vodka water drink this week. And I'm like, you've got to add allulose syrup to that to make sure it slushes properly. But we asked, "Did you buy the new one? No, we didn't buy the new one." But that, to us, that brand-new one that we just came out with, that's now innovation in the core, right? And that's giving people another reason. Now there's dual zone. Maybe someone that said, "Hey I don't need that SLUSHi machine. I got kids, I got adults. I can't do 2 slushes at once." Now they can. And so there's a reason for people maybe to revisit that product that they wouldn't have otherwise.

Brian, just one thing to add. We get all the time this -- what we think is a misperception that the growth of SharkNinja is driven only by new categories. So we introduced very intentionally some new IR materials this quarter that we just reported to combat that notion. And it turns out only about 20% of our growth contribution over the last 3 years comes from new products that have been released 2 years or less. So the majority of the growth, what's really doing the work to Adam's point is the existing base business, and that only compounds and gets bigger and more diversified as we enter new channels, geos and as new categories evolve into existing.

So understanding the company plans for singles and doubles when you launch new things or Gen 2 of an existing category, what products or innovation have surprised you the most to the upside this year?

Honestly, I think it is the broad-based nature of the growth because, again, we go into the year planning a lot of singles and doubles. And I think the quantity of singles and doubles that we saw this year is perhaps what's most surprising, right? Because you plan all those knowing that there's going to be some strikeouts. There's going to be some that just don't work out.

I think the new products have kind of been maybe icing on the cake, if you will. I think microwave, no revenue really hit Q2 for microwave. But I think the reception on microwave has been more than I expected. I don't personally think much of countertop microwaves in my day-to-day, but that product has really resonated. I mean some of the impressions are some of the best amount of impressions we've seen on new products. We've got retailers and consumers that are extremely excited about this, and it exists within a multibillion-dollar TAM that we previously did not participate in. So for me, that's one that is extremely exciting because that's a whole another arena for us to participate in.

I think some of the other new products, I mean, ChillPill, I think, has been a really exciting one, not because of the individual revenue that generates, but in the way of how it's become part of culture, right? I mean like the company gets really excited sitting around pictures of Rihanna carrying one around and Sabalenka at the French Open using and the camera catching her using it. And obviously, those are intentional outreaches, but them using it in their personal life certainly is nothing we're forcing them to do. So that is kind of an exciting one as well because it's really cementing Shark as part of that culture.

And then you look at some of the heat waves that we've had this summer, particularly across Europe, Shark has really cemented its name as the great brand in fans. And we have a great fan portfolio. They've done extremely well. But new product innovations across the upright vacuum category, continue to invest in a category that the market is down without us. And with us, it's up a bit, but we're still driving share in a mature market like that. So again, I think what excites me most is the broad-based nature.

Look, we're all finance folks for the most part. We love a good diversified portfolio. That's SharkNinja. And so when I think about what's exciting, it's that we have this diversification that even as we've had these ups and downs and different turmoils, we're able to kind of keep persisting through because we're appealing to the 16-year-old on TikTok. We're appealing to the retiree and we're appealing to everybody in between at various cycles of their life. So that to me is what's most exciting because that's durable growth, in my opinion.

So I think the company is in 40 subcategories today, correct me if I'm wrong, and you enter maybe 1 to 2 new ones each year. Most companies have a few core competencies and you guys are generally good at really anything you enter, like at least historically, like how is that possible?

So far, so good. We've got one more category coming out this year, so that'll be 41. But look, our core competency is not blending. It's not vacuums. It's consumer problem solving. And I think over the last 3 years, that's really been our message. I've been with the company for 12 years. I've seen it from how we solve a consumer problem with a steam mop to today when we solve a consumer problem with a propane grill. I'm not sure I would have ever imagined such a leap because if you look at the products individually, it's really hard to see how they connect to one another, right?

You've got a CryoGlow LED skin care mask and then you have a Fire Pit. In what world are those coming from the same company? But at the end of the day, if you think about what our competency is, it's solving the consumer problem, right? Each of those categories, each of those products, we went to market because we saw a consumer problem. We recognized it. We were able to solve it with engineering, and we were able to then communicate it with our marketing, right, and then reach the consumer in a way that perhaps they weren't reached before if the product was similar in the market or that they didn't understand what it did. But through this ability to spot the issue, solve the issue and then communicate the solve that we've created for the issue, like, that's our core competency.

The other thing I would add, Brian, is the extensibility of the brands, I think, has been really important. Shark, as recently as 2021, was really a cleaning brand and then moved into beauty with hair tools and is now a skin care player, and we have aspirations to continue to go deeper in beauty, wellness, things of that nature. Ninja historically was inside your kitchen, permeated to more of your home, and now we're going outside the home.

So we really think that both the Shark and the Ninja brands have given us license to continue to pursue all these new categories. That's something you have to earn, right? You have to do it with intention incrementally, but we've had a lot of success making the brand stand for more categories.

Got it. So the company invests a lot in marketing and R&D much more than your peers. I remember before you guys listed 3 years ago, I think you had, like, roughly 750 R&D engineers. Today, you have, what, 1,100, 1,200. Are your engineers assigned to certain categories? Or does everybody kind of do everything? Tell us about your R&D organization.

So when you look at the R&D organization, it's really split into 3 buckets. There's product development, and so call this the strategy arm of the group, right? They're the ones that are acting on the consumer insights. They're finding the consumer insights. They're working with the consumer. They're testing, they're talking with the consumer. They're kind of shaping what does the product need to be, what problem are we trying to solve? How might we solve that problem? That is then handed to the engineering organization to then do it, right, to then develop the product to then bring it to fruition, to then meet the needs of the issue that we're trying to solve and then also to try to make the next generation of that better, right, and to find efficiencies in that. So that's kind of the engineering side of that puzzle overall.

The third one is then product excellence. So product excellence is the quality arm, if you will, but going much further than that to -- after the product launches, we're looking at every single consumer review, right? We're reacting to every single consumer review. We're communicating with the consumers at that point. We're ensuring that our product in the marketplace is upholding the value that we sold the consumer on to begin with.

So when we think about R&D in that regard, not every organization will say that quality is part of R&D, but it absolutely is to us because that quality organization, product excellence organization, they're feeding information back in engineering. They're feeding it back into product development, and they're helping even influence the road map because, again, all cycles at the beginning and at the end, we're communicating with the consumer.

And so keeping the consumer at the forefront, engineering, I've seen them do it, and it's great, right? Their minds are -- think very different than mine does, but they can create an amazing technology, an amazing product. But if the consumer doesn't want it, you don't need it, right? And they can make the best motor possible. But if it doesn't solve a consumer problem, it's not going to ultimately drive the turnover that we're looking for.

So I think those 3 together in terms of just keeping the consumer at the forefront and then ensuring that we're continuing to drive new innovation, create new ideas, that to me is what keeps that flywheel spinning within the overall R&D organization. And yes, absolutely. I mean, we invest more than our peers. Our gross margin, I think, is greater than the majority of our peers as well. That's the lifeblood. That's what we fuel that with. And that's an area that we've said before, maybe there are some years that we leverage R&D as a percentage of sales. But ideally, in the long run, we probably pace it with sales because, again, there's so many opportunities out there for us to get into. So yes.

So let's shift gears to international. I think the U.K. is your largest international market. You started out as a distributor market there. You transitioned to a direct model in 2014. Mexico and several other markets have seen similar shifts over the last year or 2. So walk us through, kind of, your strategy when you enter a new market and then, kind of, when you feel comfortable to transition into a direct model?

Yes. Yes, U.K. is the largest international market. And overall, so our strategy even with U.K. going back 10 years ago has been distributor first, right? It's a low capital means of expanding internationally. It's a way of getting in, learning the consumer, learning the retail landscape. And I think over the last decade, that has been the traditional way, right? You've got to get in with the retailers to learn the consumer, learn the market and sort of play by their rules, I would say, in a way.

I think what we've learned over the last year is that we have a way to get to the consumer directly faster through D2C, through pure players like Mercado Libre and Amazon and others like that as well as through TikTok Shop. And so getting to the consumer quicker, it also is a little bit of a duty because social media is global in many regards, right? And so there's a lot of countries over the last couple of years that the demand is pent up, right? You see the comments, "When you come into my country?" When you come into this country? And for us, the quickest way to do that is DTC. It's the pure players out there, and it's through TikTok Shop.

And so I think our path to market has accelerated in terms of how we've transitioned our distributors now to a direct model. One of the most exciting things about perhaps Q2 and even reflecting on the last year is Mexico. We got a lot of questions, Q1 2025 on Mexico. You might have asked a couple of yourself, Brian, because it was messy, right? We had to buy back inventory. It wasn't really clean. I think we're still only 1.5 years into our public company life. And so it looked a little odd. To us, we knew it was the right thing to do because we just wanted to move quickly. But looked choppy.

Fast forward to today, that's one of our most exciting markets, right? They're hitting on all cylinders. That transition couldn't have gone better in hindsight, sitting where we're sitting today. The team has the SharkNinja mindset. The MD of Mexico is actually someone that I mentor on a monthly basis. And I come out of that conversation so amped up. I don't know if he does. I hope he does, but I am more energized talking to him because of what they're building there.

You don't get that with a distributor, right? You don't get that level of excitement because he's cascading it to his team. He's cascading to the retailers. I think maybe more importantly, he's cascading it back to headquarters, right? He's bringing to the product teams, bringing to the marketing teams, engineering teams to help them help him ultimately drive that business. So why I talk about Mexico is that, that's the playbook that we've now proven out. We knew it was a good playbook. We thought it was going to work. Now it's really proof point to where, as we've transitioned now officially Spain, Italy, Poland, other countries, we now know that, that playbook is working, and we're seeing it work.

But I think it's -- what's changed in the last year is this kind of direct-to-consumer model that allows us to get in quicker and not necessarily -- we still need the retailers, absolutely. But we're able to not just bide our time and slowly build the relationships. We can do it much faster.

So you might have already answered the front part of this next question, but what international markets are you most excited about? And secondarily, what international markets are you not in currently that you should be in?

It's next to Mexico. Germany and France, honestly, I mean, we want to talk about the new distributor markets. And absolutely, that's super exciting. But I look at Germany and France as countries that now are starting to get to the level of category diversification, early innings still, but the category diversification that the U.K. has started to build. We saw the period of a year ago, 2 years ago where U.K. was having some tough comps with air fryers. They were too dependent on the air fryer category. Inevitably, the air fryer category just grew super-fast.

But now you look at Germany and France, there's so much white space there. The new categories that we've entered into recently, it's low market share, right? So there's low penetration for us. So I think there's a ton of white space. I think we've got the right foundation framework in those countries. And it's the same story really on some of the new direct markets. We've got a handful of categories that are driving the business today, but I think the white space is probably the most compelling thing.

As far as what countries we're not in today, Africa, I think, will be a big piece for us, a big focus for us as we look at '27 and beyond. We've started to plant some seeds in South Africa this year. And I think there's more to come in that regard. There's more across Latin America. We still have a number of distributors operating for us in Latin America. They're not yet direct. So look, our model is plant a lot of seeds, allow those to grow, develop and also for us to learn and pivot our model if we need to. But right now, the markets that we're in today as a direct company, there's still so much white space to capture there.

So tell us how your marketing strategy has evolved. I remember being at your Investor Day 3 years ago, I was shocked at like how important infomercials were not too long ago in QVC. Like today, you're doing TikTok Shop, influencers, social media, all, like, kind of, discuss that evolution.

Yes. It's interesting. We've always talked about an omnichannel presence. I remember back when private equity came into the business in 2017, I think, -- and we talked about the omnichannel. I think at the time, it was the first time we're, kind of, using that terminology. That still is the focus today, right? It's "be where the consumer wants to shop," right? We're not going to force the consumer to our website. We're not going to force the consumer to Amazon. We're not going to do all these retail exclusives. That's not our model. Our model is to be where the consumer wants to shop. That's why we sell across perhaps the broadest spectrum of retailers of anybody in our space.

And so being where the consumer wants to shop, that's where the consumer trend has changed, right? The consumer wants to buy on social commerce. That's new as of the last year. We didn't sell $1 on TikTok Shop a year ago. Now it's becoming a decent chunk of the business. Direct-to-consumer, we didn't give the consumer a reason to shop on our website a year ago, right? It was not a great website. I think our CEO called it a terrible website at one point. But today, it's a desirable landing spot. It also brings the 2 brands together. And I think that's super exciting.

But I think to your point on what hasn't changed, what hasn't changed is the product. So when I think about the infomercial business, that was the largest spend of media when I joined long-form, right? The 20-minute commercial was the biggest chunk of media that we spent. And what we talked about at the time was, is the product infomerciable? Which is a real word, I'm sure. And what it meant was, can you talk about it for 20 minutes and still be interesting, right? Can you talk about the product for 20 minutes and still be interesting?

And if that was the case, that had a lot of consumer value, right? The 8-in-1 product, the 3-in-1 product, you were able to capitalize on all the different things that product brought to the consumer so that the consumer had no reason but to convert and say, "I can't live without this." That's what's happening today on forums like TikTok Shop and Meta and even our own D2C site, some of the influencer work that we're doing is that you've got people in the world that are now showcasing our products in many different ways, much more than we could do in 20 minutes, right?

You look at all the different product demos you could do in a 20-minute infomercial. Think about putting 200 products in 200 influencers' hands or affiliates' hands, that's 200 different demonstrations. That's 200 different people that maybe look and feel different to their consumer base than what an infomercial was. So I think what's happened now is our products were built for this new world. And I think that's what we're seeing come to fruition. That's why we've had such a great head start on the social commerce as that started to shift.

So your company has grown at a CAGR north of 20% since 2008. That's, like, really tough to do in consumer. Your CEO, Mark Barrocas, spent a lot of time on last week's earnings call. He was kind of defending why he thinks you're a double-digit growth company. As the revenue base gets larger, though, right, those incremental sales get a lot more meaningful. So, like, how do you do it?

Just to say, since he couldn't be here today, he's been defending why we're a double-digit growth company for the last 18 years as well. He's ready to keep doing that. Honestly, Brian, it is, kind, of a -- I assume it's the last question because it's a nice period and exclamation point, because it is a culmination of everything that we just talked about, right? It is broad-based. It's no one thing. It's no one hit product.

If we were a one-hit product company, a viral product company, it's boom and bust. If we're a one category company, it's boom and bust. We were focused on one consumer, one demographic, one geography, like we wouldn't be able to do what we're doing today. So to be able to grow that amount and to be able to comp 2026 and 2027, it's going to come from 50 different things. And I think, again, that's the beauty of the business because over the last 18 years, it's come from an exponentially larger amount of things every single year.

But keep in mind, it's that existing base that fuels everything, right? If you can -- if 20 of the 25 new products that you release every year are intentionally designed to keep the core fresh, you're going to compel people to come back and upgrade and maybe prematurely before the end of the useful life, buy a new unit. That's almost like a same-store sale type of number. That's what really is the bedrock of everything else.

I'm going to squeeze one last one and we're asking all of our consumer companies. That's on consumer health. How healthy is your consumer today versus a year ago? And how do you see consumer spending shaping up overall as we head into the back half and into '27?

Yes. Look, I think that is a tough one because I think the consumer overall, in our opinion, they have money to spend, but they're discerning. And I think the SharkNinja consumer, you can't overgeneralize the entirety of consumer. But I do believe we have a discerning consumer. I do believe that this is a consumer that is well educated, reads the reviews, and I think it's on us to earn those dollars. We talk about competing with Olive Garden. We talk about competing with vacations, certainly competing with the competition. But for us, it's a matter of how do we earn that dollar and how we earn the dollar is through innovation and the consumer value that we're bringing.

Great. We'll leave it there. Thank you so much, guys.

Hello, everyone. Thank you for joining us, and welcome to the SharkNinja Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to James Lamb, Senior Vice President of Investor Relations and Treasury. James, please go ahead.

Good morning, and welcome to SharkNinja's Second Quarter 2026 Earnings Conference Call. Earlier today, we issued our Q2 earnings release, which is available on the company's website at ir.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 Barrocas, and Chief Financial Officer, Adam Quigley. Mark will start by providing a business update, followed by Adam, who will review our Q2 financial results and share our outlook for 2026. 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. Let me get right to it. Q2 was a blowout quarter for SharkNinja. We delivered our 13th consecutive quarter of double-digit net sales growth. And we didn't just sustain our pace, we accelerated to over 22% growth year-over-year. This is our fastest growth rate since Q4 2024.

And here is the key takeaway. SharkNinja's products are resonating globally, not in one category, not in one region, across consumer demographics, across geographies and across channels. Everywhere we compete, we are winning by engaging and delighting consumers. We believe this quarter demonstrates the global power of our diversified business model in action. Domestic net sales grew more than 15% in Q2, a meaningful step up from last quarter, with first half 2026 net sales up greater than 12%. International grew nearly 37%, fueled by the U.K., Europe and Latin America. Every cylinder in our engine is firing, powered by our diversified 3-pillar growth strategy.

Just as important, our profitability performance was exceptional. Gross margin beat our expectations even as tariffs remains a real headwind. Adjusted EBITDA increased nearly 19% year-over-year, driven by another quarter of leverage on adjusted operating expenses. And adjusted earnings per share increased nearly 30% year-over-year, clear proof that we're compounding earnings, not just growing sales.

I want to be direct when some investors ask me about SharkNinja's growth, I can sense some skepticism. It's hard to believe that double-digit growth in a business our size in a market that isn't growing much can be durable. Today, I will explain why we believe it is and why it comes down to the most misunderstood part of our business, the size and strength of our core. When people think about SharkNinja's growth story, they often think about new innovations we bring to market, like Slushy, CryoGlow, ChillPill, the products that go viral. There is a misperception that these subcategories are an outsized part of the business that requires enormous growth to drive total sales and that their success comes from SharkNinja effectively pioneering these markets in a way that isn't repeatable.

Category expansion is a real and important part of our story, but it overlooks what really powers our success. The base business franchises like vacuums, blenders and air fryers, the products consumers already know us for are very large categories. They're diversified, and they are growing. Not flat, not managed for decline, growing. Here's a simple way to think about our growth. On average, over the last 3 years, our existing categories typically grow mid- to high single digits, layer on international expansion, layer on new category launches. Add those 3 together, and you can get a double-digit growth profile. That's not a fragile formula built on 1 or 2 hit products. That's a durable compounding growth engine with multiple sources of fuel. The 3-pillar growth strategy that has been in place for years and one we intend to keep running for years to come.

Success to win the core is the centerpiece of the strategy, and it comes from relentless innovation in the areas we already dominate. Cleaning is a great proof point this quarter with multiple product launches. The Shark Luxe Home Collection brings elevated new finishes to our flagship Power Detect Robot and Cordless Vacuums. The Sharp CarpetForce lineup debuted to give consumers powerful deep cleaning in a lightweight ultra-compact design. And the Sharp PowerDetect Transformer is a true game changer that brings together 3 cleaning tools in one: an upright for deep cleaning, a stick vacuum from [indiscernible] and a handheld for above floor and tight spaces like the car. That's 3 meaningful innovations in a single quarter inside a category we've sold for decades.

This is emblematic of SharkNinja, drive continuous innovation within the largest categories we compete in. And it's a big reason our core isn't just holding steady, it's thriving. Motorized Kitchen Appliances are another great example. This quarter, our blending franchise drove excellent growth within the food preparation category. The Ninja BlendBOSS, a complete reinvention of our tumbler blender, has reinvigorated our business in the subcategory. Consumers are responding to the product's unique combination of power and function, not to mention, personal style in a big way. Colors have also been a huge win for the BlendBOSS, another element that keeps this part of our blending franchise thriving.

There's a second idea I want to leave you with today because I believe it's just as important as the strength of our core. SharkNinja is not a cleaning company or a kitchen appliances company. We're a consumer problem-solving company. That is the lens through which we approach every aspect of our business. And the number of consumer problems left to solve is for all practical purposes endless. Every category we've ever entered started the same way, not with a product we wanted to create, but with a problem we noticed, a soggy sandwich in a cooler, a hot styling tool that damages hair, a stain a traditional cleaner couldn't lift. That mindset doesn't run out, it compounds. The bigger and more diversified we get, the more problems we're positioned to see and solve first. That's why I don't think about our core and our new categories as 2 separate stories. They're the same story told at different ages.

Cleaning is new every single quarter because we keep finding fresh problems inside of it. And our newest categories will eventually mature into core the same way things like CREAMi have, which I'll come back to later. Our focus on the core shows up in how we drive innovation, not just how we talk about it. Roughly 20 of the 25 new products we launched each year go into existing categories. That's deliberate. A vibrant, healthy base business is what powers everything else we do at SharkNinja. And that core doesn't sit still. It gets larger and more diversified every year as we layer on new categories, channels and geographies. That's the strength of our core today.

Now I want to spend a minute on 2 things, I believe, will extend that advantage for years to come. First, channel expansion, specifically social commerce, platforms like TikTok Shop aren't just a place to sell our newest most viral products, they're becoming a front door for entirely new customers to discover our core products for the first time. One of my favorite examples is cutlery, a category we've been in for almost 5 years. Our Ninja NeverDull Knife System have become a smash hit on TikTok Shop in the U.S. with this channel now in the top 3 for sales in the category. Even better, we're appealing to a mostly younger demographic than we typically see purchasing these products.

Social commerce represents a new promising acquisition channel for many of our oldest largest categories, and it's one that we're scaling globally. At the end of the quarter, we were live with TikTok Shop in 7 countries compared to 0 in the year ago period. But we're not stopping there with a goal of more than double that number by this holiday season. Second, artificial intelligence. Last quarter, we described JailBreak SharkNinja, our initiative that encourages and rewards employees for developing AI tools. One of the most tangible places we're seeing it pay off is product development. AI is compressing the fuzzy front-end of innovation. That phase where we conceptualize a product's form factor and style. That used to take months. It's getting shorter and faster iteration should enable a strong overall pipeline, not just for splashy new categories, but mainly for the core.

AI is also meaningfully enhancing our consumer insights team. Increasingly, we can see the full conversation, not just our own channels, the best marketing we have is our consumers. They're sharing recipes, building fan communities and turning our products into a cultural moment. Previously, we could only fully analyze content where people use our hashtags, but less than 20% of user content actually uses hashtags. AI has meaningfully improved our ability to process social media content and find our products. Today, AI has lifted our capture rate to 60% plus accuracy across the full ecosystem of users, influencers and creators engaging with our brand organically. This gives us a more complete real-time view of what's driving demand, and it's increasingly shaping both our marketing and product development strategy.

At the company level, we continue to rapidly progress on our most important AI initiatives. Coming out of our JailBreak Live, our all-company Hack Week, we're laser-focused on 8 big bed projects and 20 quick win projects. Two examples of big bed projects are POS attribution and media analytics and optimization. In both cases, we're partnering with major tech companies and other thought leaders in the AI space. Across all these initiatives, we have created a very unique approach, similar to how we operate in product development. Every project has a 2-week cycle. The leadership team meets every 2 weeks with the project leads for updates and plans the next 2 weeks.

The concept of a 6- to 9-month project no longer exists at SharkNinja. If we don't see tangible progress on an initiative every 2 weeks, resources are reallocated elsewhere. Decisive action has always been part of our DNA, and Aon is helping us move even faster. Both of these social commerce as a discovery channel and AI accelerated innovation, enhance our confidence that the core business isn't simply healthy today, it's built to keep winning.

With that context on the core, let me walk through our 3-pillar growth strategy beginning with our first pillar, expansion into new and adjacent categories. Common question we hear at SharkNinja is, "When do we run out of the categories we can go into?" In our minds, we've been answering these for 18 years and counting. With relentless focus on solving consumer problems, impendent of whether we already possess a core technology or expertise, we feel like the white space ahead of us is enormous. Let's take an age old consumer problem: settling for soggy leftovers and unevenly heated meals using traditional microwaves. Building on the success of the Ninja Crispi platform, Ninja reimagine the microwave experience with the revolutionary Ninja Crispi Microwave.

The breakthroughs FusionCrisp Technology, it starts with microwave cooking that automatically finishes with Ninja's legendary air frying, using super-heated psychotic up to 450 degrees to take food from frozen to crispy in 10 minutes. Early consumer reaction has been outstanding. In just the first week alone, we've had over 8 million impressions across our social media landscape. This is an incredible adjacency for us in an established multibillion-dollar market, adding a TAM that is brand new to SharkNinja and taking our total subcategory count 40. The Ninja Crispi Microwave is another example of us finding a category that hasn't seen real innovation in years and asking what SharkNinja can do differently. And you will recognize the same thing again in a few weeks when we launch a new category that addresses yet another problem in a space with minimal innovation for years.

Let's turn to our second growth pillar, growing share in existing categories. I spent time earlier discussing the size and strength of our core business, using cleaning and blending as examples. Now let's focus on Frozen Treat, where the Ninja CREAMi has become a scaled global business with revenue coming from over 30 different countries. The first CREAMi launched in 2021, and we've transformed it from a single product into a family of products, each with different features and price points, with even more innovation coming as part of our road map. This is exactly the pattern we want. A new category doesn't stay new forever. It matures into an existing franchise, and then we keep innovating inside it to become one part of a massive diversified core business that continues to evolve in compounds.

Fans were also a standout in the quarter, both domestically and particularly in EMEA. Hot temperatures this summer, coupled with our innovative lineup, drove exceptional demand for products like the Shark FlexBreeze and SharkNinja TurboBlade. In fact, we sold out and couldn't capture all the demand we saw. This presents a major opportunity for us to scale next year, especially as we expand to more European countries. Fans are a great example of a subcategory that started domestic and is now scaling into international, another proof point of how our playbook travels.

This leads us nicely to our third pillar, international expansion, where we demonstrated a sensational quarter. Net sales growth of nearly 37% was powered by broad-based strength across regions, led by U.K., Europe and Latin America. The U.K. grew nearly 19% year-over-year as the power of diversified category and channel strategy continues to shine. Latin America remains incredibly robust for SharkNinja, with contributions across the region. In EMEA, we saw a strong performance from fans in Germany and a successful transition in Italy and Spain, 2 markets we recently converted from distributor led to direct markets. Importantly, we're now done for the foreseeable future with these distributor conversions, laying the groundwork for future growth.

We've also finished the rollout of our new direct-to-consumer platform across our major international markets. Social commerce initiatives, like TikTok Shop launches, are going exceptionally well across the geographies where we've turned them on. These efforts represent a multiyear, heavily complex transition, and we've now crossed the finish line. This unlocks real focus for our international teams going forward and a major opportunity for SharkNinja. We've demonstrated that operating directly enables us to really scale countries under our leadership. In fact, a few weeks ago, we brought together leaders from across the company to our quarterly business review in London. We focused the multi-day meeting on EMEA with the key takeaway being boundless opportunities for growth.

The biggest component of this is driving core business expansion market by market. France and Germany are the clearest examples A year ago, SharkNinja participated in a low double-digit number of categories in each market. Today, that number is up over 50%, with the incremental launches largely coming from our established core. Even with the expansion, we estimate there is still less than 10% penetrated on an overall category basis across EMEA today. I see some potential ahead of us for years to come as we keep introducing successful legacy categories while taking share within existing ones.

What excites me the most about our international expansion is how our social demand generation model is scaling. As we built out our teams, scaled up local language content and learn what works in different countries, we're creating consumer demand across the globe. Just as important is how many more ways we have to reach the end consumer than we did a year ago. Our omnichannel strategy is flourishing. Retailers are making bigger commitments to SharkNinja as partnerships deepen, and we are grateful. We're building momentum across countries with major partners like Amazon Globally and Mercado Libre in Latin America. And we're complementing all of it with our meaningfully enhanced DTC and social commerce presence.

SharkNinja moves fast. In past, the natural pace expansion in brick-and-mortar could limit this speed. At times, there were more products we wanted to launch than we could. Today, we can move even faster thanks to our expanded retailer relationships globally in combination with the flexibility of our DTC and social commerce capabilities. Let's take TikTok Shop as a prime example. We launched in multiple new countries in Q2, and the early success has been phenomenal. In the case of Germany, within weeks, our sales volume in this channel started to reach levels that took us months to achieve in the U.S. and U.K. We think this speaks to how much we've learned over the last 9 months on the platform, particularly how to maximize social media marketing.

To wrap up, SharkNinja Sharpeninga has a battle-tested strategy, driving our massive success. Our core is large, diversified and growing. Our new categories keep finding right space. Our domestic business is humming across the board, including with our largest retailers. Our international business go-to-market transformation is complete and ready to scale. Put these pieces together, and we believe we have a balanced powerful growth engine capable of delivering excellent results into the future. All these factors drive huge excitement and confidence for 2026.

We meaningfully raised our guidance today well beyond the benefit we expect from tariff free funds, a reflection of the continued strength we see for the remainder of the year. We were active with our share repurchase program in the second quarter, and we head into the back half with real momentum in the places that matter most, products that excite consumers, a marketing strategy that works globally and more channels to drive sales than ever before. The SharkNinja consumer is proving to be remarkably resilient. We intend to keep pressing that advantage.

With that, I'll turn it over to Adam, who will walk you through our financial results and share our updated outlook for 2026.

Thank you, Mark, and good morning, everyone. Q2 was an outstanding quarter for SharkNinja across the board, and I'm excited to walk through the details. Net sales in the second quarter increased 22.2% year-over-year to $1.77 billion. By geography, domestic net sales increased 15.5% to $1.14 billion. International net sales were $624 million, up 36.6%. Our U.K. business continued its great start to the year with net sales up 18.7% year-over-year to $255 million. We saw particular strength within our Beauty and Home environment business in the U.K., along with heated cooking in multiple other categories. The rest of the international business also performed quite well in the quarter. Our EMEA region grew robustly with multiple countries contributed to our success. Mexico performance remains very strong, along with the rest of the Latin America region.

Turning to performance by category. Net sales in the cleaning category increased 4.1% year-over-year to $522 million. One of our largest categories, Cordless Vacuums drove our success and carpet extraction had another strong quarter. Net sales in the cooking and beverage category increased 36.5% year-over-year to $499 million. Two of our flagship Ninja franchises, the Ninja Lux Cafe and the Ninja CRISPI continue to see very strong momentum globally. Net sales in the food preparation category increased 13.3% year-over-year to $459 million. Blending was the standout of Q2, as Mark mentioned, and our FrozenTreats business grew nicely as well. Finally, our Beauty and Home environment category increased 65.3% year-over-year to $286 million. The SharkNinja Beauty Technology portfolio performed very well in the quarter, along with sizable contribution from our home environment subcategories.

Now let's move to gross profit, where the results in the quarter exceeded our internal expectations. Tariffs remain the primary headwind due mostly to the annualization impact from 2025. We partially offset this pressure through continued cost optimization and favorable mix coming from product and channels. Adjusted gross margins in the second quarter decreased approximately 70 basis points year-over-year to 48.7% of net sales, and GAAP gross margins decreased roughly 30 basis points to 48.7% of net sales.

Moving down the P&L. Our adjusted operating expenses this quarter totaled $629 million, or 35.6% of net sales. This compares to 36% of net sales in the year-ago quarter, or roughly 40 basis points of favorability year-over-year. SharkNinja has now driven leverage on adjusted operating expense as a percentage of net sales for 5 quarters in a row. We remain confident in our ability to balance robust reinvestment in the business while also finding opportunities to optimize spending. This discipline enables SharkNinja to remain flexible regardless of the macro environment around us.

I will now break down our operating expense line items on a GAAP and non-GAAP basis. GAAP research and development expenses increased 22.3% year-over-year to $109 million compared to $89 million in the prior year period. Non-GAAP research and development expenses increased 16.4% year-over-year to $101 million compared to $87 million in the prior year period, leveraging almost 30 basis points year-over-year. We believe R&D is one of the most important competitive advantages for SharkNinja, as a result, we will continue to invest in this area as a key component innovation engine.

GAAP sales and marketing expenses increased 23.4% year-over-year to $442 million compared to $358 million in the prior year period. Non-GAAP sales and marketing expenses increased 22.3% year-over-year to $425 million compared to $347 million in the prior year period, essentially flat year-over-year as a percentage of net sales. As we had previewed last quarter, there was more media spending in June 2026 compared to the prior year based on the timing of Prime Day.

GAAP general and administrative expenses increased 40.8% year-over-year to $130 million compared to $92 million in the prior year period. The majority of this increase was due to an increase in share-based compensation. Non-GAAP general and administrative expenses increased 18.8% year-over-year to $103 million compared to $87 million in the prior year period, leveraging about 20 basis points year-over-year. Investments in SharkNinja personnel, along with professional and consulting fees drove the increase.

SharkNinja's profitability goal centers on delivering full year adjusted EBITDA growth that outpaces net sales growth. Due to the annualization of 2025 tariffs, our adjusted EBITDA growth slightly trailed our sales growth in Q2, increasing 18.6% year-over-year to $265 million. This represents a 15% adjusted EBITDA margin, down approximately 50 basis points compared to the prior year period. As you can see from our guidance, we continue to anticipate adjusted EBIT growing ahead of net sales for the full year 2026. To wrap up the income statement, our GAAP effective tax rate in Q2 was 20.7%, while our non-GAAP effective tax rate was 19.7%.

Adjusted net income in the period was $178 million or $1.26 per diluted share compared to $138 million or $0.97 per diluted share in the year ago period. Our adjusted net income per share in Q2 grew roughly 30% year-over-year, marking growth in excess of 23% for 11 of the last 12 quarters.

Turning to the balance sheet and cash flow. At the end of the second quarter, cash and cash equivalents totaled almost $780 million, up more than 300% year-over-year. Total debt outstanding at quarter end was $719 million, and we continued to have nearly $490 million of capacity available to us on our $500 million revolving credit facility. Total inventories were $1.14 billion the quarter, up 8.6% year-over-year. Recall that we are still lapping the large tariff prebuild inventory levels from late 2024 and early 2025. We view our inventory position as healthy and capable of continuing to support our growth plans.

Cash flow performance year-to-date is worth highlighting with cash flow from operations of nearly $275 million through the first 6 months of 2026. This includes meaningful buyback activity. In Q2, we repurchased roughly $100 million worth of stock as part of our authorization. We are pleased with our buyback activity year-to-date and continue to utilize the program opportunistically.

Let's move to our outlook. As 2026 has unfolded, we are seeing tremendous global momentum in our business alongside greater visibility to certain cost items. Consistent with prior quarters, our updated 2026 outlook assumes current tariff levels persist for the remainder of the year, including minimum rates of 10% in Indonesia, Malaysia and Cambodia and the recent increase from 10% to 12.5% for China, Vietnam and Thailand. We now anticipate receiving a tariff refund benefit in 2026, the details of which are available in our Form 10-Q.

In July 2026, SharkNinja submitted refund claims of approximately $247.1 million through the U.S. Customs and Border Protection, or CBP, refund process. And the CBP accepted those claims. As a result, we expect to recognize a benefit of approximately $247.1 million as a reduction of cost of sales, with a corresponding receivable in the third quarter of 2026. The underlying duties subject to refund are expected to be split approximately evenly between amounts previously expensed in fiscal 2025 and in the first half of 2026. We are treating the refunds consistently with the period in which the underlying tariff costs were recognized. Refund associated with tariff expense in 2025 will benefit our GAAP results and cash flow but will be excluded from adjusted net income, adjusted EBITDA and adjusted net income per diluted share in our fiscal 2026 outlook.

Refunds associated with tariffs incurred in 2026 will be reflected in these same adjusted metrics as part of our revised full year outlook, consistent with the treatment of the original expense. Our updated outlook reflects stronger underlying operating performance, complemented by the expected net benefit from the tariff refund. We are opportunistically choosing to reinvest a portion of that benefit in targeted areas that support long-term growth, including retail activation, media, technology and AI capabilities and mitigation of the ongoing updated tariff and input cost pressures.

For transparency and clarity, we have separated the net tariff impact where applicable in our outlook. For the full year 2026, we now expect net sales to increase between 16% and 17% compared to our prior guidance of 11.5% to 12.5% increase. Adjusted net income per diluted share is now expected to be in the range of $6.45 to $6.55 compared to $6 to $6.10 previously. Of the $0.45 increase approximately $0.15 is associated with the expected net tariff refund benefit. Adjusted EBITDA is now expected to be in the range of $1.36 billion to $1.37 billion, representing growth of 19.5% to 20.5% year-over-year compared to the prior expectation of $1.29 billion to $1.3 billion, representing growth of 13.5% to 14.5% year-over-year. Of the $67 million to $69 million increase, approximately $30 million is associated with the expected net tariff refund benefit. Net interest expense is now expected to be down relative to 2025. Our GAAP effective tax rate expectation remains approximately 22% to 23%, and capital expenditures are still expected to be between $190 million and $210 million for the year, where we are tracking toward the high end.

To close, we are proud of our Q2 performance as evidence of continued steady execution in a macro environment that remains uncertain. The strength of our net sales is perhaps the most encouraging data point because we see it coming from so many different places. And it reinforces our belief that consumers continue to recognize the value of our innovation and choose our products across categories, channels and geographies. As Mark discussed, it all starts with a healthy base business, a core that is larger, more diversified and more powerful than many realize. We entered the second half of 2026 with great enthusiasm about how SharkNinja can continue to positively impact consumers' lives globally, and we're already underway with planning for 2027 and beyond.

Thank you. With that, I will now turn it back to Mark.

Thanks, Adam. Our exceptional Q2 results and outlook for the remainder of the year underscore the global strength we see in our business. While execution behind the scenes is extraordinarily complex, the goal is simple, grow domestic and grow international. With domestic, our goal is to be a double-digit grower in '26, and we feel confident about that beacon. Just look at what we're doing with one of our biggest retail partners, Walmart. We recently rolled out large, exceptionally curated end caps at a large number of stores. These displays showcased the best of SharkNinja products. And the response so far has been incredible.

We're also deploying some of our social media tactics with retail partners. Influencers and other social media personalities are creating content about amazing SharkNinja finds, they're discovering in stores. And our D2C business is just scratching the surface of the opportunity we see ahead. Internationally, the breadth of our reach is significantly better than even when we began 2026. The balance of path we now have to the consumer, retailers, large e-commerce platforms, DTC and social commerce is enormously powerful. Add in how quickly we're learning how to drive demand generation with social media, and you have an incredibly exciting opportunity for years to come.

Success like this doesn't happen by chance. It's the output of the SharkNinja playbook consistently applied across all aspects of our business. While this strategy isn't changing, we're hopeful that the way people understand SharkNinja can. To that end, we have added 2 new slides to our investor presentation published today. These additional resources are intended to bring incremental clarity to our 3-pillar growth strategy particularly on the size and strength of our core.

Thank you. This concludes our prepared remarks, and I'll turn it over to the operator to kick off Q&A. Operator?

[Operator Instructions] Your first question comes from Randy Konik with Jefferies.

Yes. Mark, you laid out a lot of good notes on how we should think durability of growth through new product generation or innovation, continuing to innovate the core and geographic expansion. The one thing that would be probably helpful is to kind of dimensionalize the size of TAM and SAM. I remember 3 years ago when we took the coverage, you kind of talked about a TAM size of well -- about, I think, $112 billion and a SAM of about $40 billion, which is a massive opportunity or a massive category. Maybe kind of give us your thoughts on how you think about that size, the true size and the global opportunity? And how you layer that in with all this product innovation and continuing to kind of refresh the core?

Yes, Randy, absolutely. Thanks for the question. Look, when we started the second quarter, I think we viewed the available TAM at roughly about $120 billion. So if you think about where our current guide is, there's an enormous amount of runway. Now that TAM continues to keep growing. As you heard in the remarks, we just launched the Ninja Crispi Microwave. That now enters us into a category that we never participated in, and that is a multibillion dollar TAM, over a $3 billion TAM. So it opens up a whole new set of categories for us.

In Q3 -- as we get toward the end of Q3, we'll be entering into our first subcategory that is also a multibillion-dollar subcategory. So I think by coming out of the year, Randy, we'll be participating in $125 billion to $130 billion available TAM against the overall revenue that we have. So lots and lots of white space. And I would also just like to point out that there's been so much talk about the market. What SharkNinja did in the U.S. this quarter, I think, is astounding. I mean our business, our shipments grew 18% in the United States. Our POS was even higher than that in the U.S. It bodes well as we head into the second half of the year. So it really points to the fact that kind of SharkNinja is able to create the market by getting consumers excited about our products and driving the viral marketing that we're driving.

That's great. And I guess following up, kind of strikes me is you're talking about best in TikTok and you merged the websites, and we have this one website, you kind of came out with last fall. So I'm just curious in thinking about how you just kind of think about long-term penetration potential for direct selling versus wholesale. And maybe Adam can give us some perspective on the margin differential there. And then on top of that, the other area that seems interesting is from a margin opportunity while you still invest is marketing where you did say marketing, I think, was flat as a percent of sales year-over-year. But I think as history lessons go, as you get more of brand awareness or more penetration in a country or geographic area, it seems like you could get marketing leverage just becoming more efficient in that area as well. So net-net, it seems like either with direct and marketing, there's continued potential for margin expansion opportunity long term. Just want to get your thoughts on how you think about that as well.

Yes. So let me answer the first part, and then Adam can answer the second piece. First is in the second quarter is when we just completed the sales force, DTC launches in the rest of Europe. So the results that you're seeing in the second quarter, with the exception of the United States and Canada really do not have any impact. In fact, they may even have a little bit of hurt as a result of the DTC transition and just going through those transitions and then scaling back up.

We're going to continue to maintain our omnichannel strategy. I mean we think that that's what is so compelling about us. I mean you heard me talk in the prepared remarks about what we're doing with Walmart, which is exciting, and continuing to grow other retailers, we're excited about partnership we're developing with Mercado Libre in Latin America, we're launching Allegro in Poland that's going to continue to expand our pure player presence. But there's no doubt that TikTok affiliates, DTC in '27 is going to grow as a faster percentage of our sales than the rest of the business. And I think as you get into the third and fourth quarter and particularly into '27, I think you're going to see a lot of acceleration from the investments that we've made in the DTC platform and some of the new sales force tools that we'll be launching and optimizing and the CRM benefits that will be coming.

But let me, Adam, turn it over to you on the other piece.

Sure. Yes, Randy, I'll hit on the margin makeup overall. So obviously, DTC, TikTok Shop, overall social commerce, does come at a higher structural gross margin. That's sort of the initial benefit. And so as Mark noted, those are the channels that we have seen and we'll continue to see growing faster than retail the more exciting piece there is then how much control we have within those channels in terms of what assortment we're putting out there, what colors we're putting out there, collectibles, the ability to be changing price, changing promotions, reacting quickly. So there's a lot more that then stands in our control as we go forward in terms of how we can impact that margin. But certainly higher gross margin opportunity overall.

And then as we scale that business, we start to see overall benefits across our distribution network, across customer service, et cetera. So for us, it's looking forward to what is then the ability to leverage the scale of these channels while also recognizing that structurally, they come at a higher gross margin overall.

Your next question comes from Brooke Roach with Goldman Sachs.

Mark, I was hoping you could unpack the growth that you're seeing in the domestic business, which is really strong. How large is your DTC business domestically today? And how are you thinking about the pace of contribution from DTC and TikTok Shop to domestic growth this year and into 2027?

Similarly, on the other hand of your business, you spoke to a stronger POS versus shipments. Where do inventory levels sit in the channel? And how are you thinking about the opportunity for sell-in versus sell-through to more closely align? Maybe bottom line, do you think that you can grow the domestic business at a double-digit rate in the back half?

Yes. So thanks for the question, Brooke. Look, I have been excited since the beginning of the year saying that I believe our domestic business is a double-digit growth business. We came out of the first half of the year. It is a double-digit growth business, and I believe it will grow double digits in the back half of the year as well. So I'm confident. If we look at the second quarter results, the U.S. business grew 18%, the Canada business was down 17% as we flow through all of the remaining changes in Canada. Canada is going to grow the second half of the year. The U.S. is going to grow. So I feel very, very good about a double-digit second half number for the domestic business.

We don't break out the percentage of our D2C business. What I can tell you is that I do expect D2C and affiliates to grow at a faster rate than the rest of the business through the end of '27. I would also tell you that we've had some startups with Salesforce. We transitioned the U.K. that had a couple of week blip in the second quarter. We transitioned Germany and France and the rest of Europe. By the fourth quarter, we'll be live in Europe in 14 different countries with Salesforce. So I don't think you're seeing in the numbers that the benefits today of what is going to come from Salesforce and from our D2C side. I think you'll start to see that in Q4 of this year, and you'll really see it accelerate as we get into 2027.

But as I said in the last question, I still stay firm to our omnichannel strategy. I mean retailers are making big bets with SharkNinja. Our brands are the most search brands on the pure player sites. And I think we want to be relevant wherever the consumer chooses to shop for our products.

And then as far as the POS ships piece, Brooke, we do see that normalizing as you get into the back half of the year. The Q2 difference is largely driven by the timing of [indiscernible]. So POS certainly outpaced ships at that point. Overall, either the retailer inventory is extremely healthy. We're not seeing any pullback on that front. Our inventory levels remain extremely healthy as well. And I think we're really well positioned for the back half of the year and feel good about where POS shifts is in relation to that.

And look, I would say if anything, I think retailers could take a bit more inventory, not that they're consciously working down their inventory, but I think there's a lot of demand to capture. And I think that we could see inventory levels -- we will at least push for inventory levels to grow as we head into Q4.

Your next question comes from Steven Forbes with Guggenheim.

Mark, I appreciate the comments around SharkNinja's partnership with Walmart and new end caps. But I was curious if you could maybe broaden those comments out to other sort of retail partners in -- as we think about sort of planogram changes or opportunities ahead of holiday 2026, like how do you sort of summarize what the real changes on a year-over-year basis given what happened last year, with missing some of those planogram dates?

And then, and maybe equally as important, just given the growth and the opportunity, like are you starting to have even earlier conversations with some of those new international partners about planogram opportunities even in the first half of next year? Or how do you sort of think about -- or how should we think about sort of just the performance of the business impacting the ability to change planograms maybe earlier than anticipated in those new markets?

Yes, Steve, let me start with your international question first because I said something in the prepared remarks, and I want to make sure that it's clear to folks. If we were sitting here last year at this time, SharkNinja did not have a lot of ways to get to the end consumer in some of these European markets that it does today. We didn't have D2C sites setup. TikTok Shop was not set up in these countries a year ago at this time. We were not set up and scaling the pure players. So I don't want to minimize. We've done a great job expanding our planogram placement with all of the European retailers heading into holiday of this year. But we've got a lot more ways to get to the end consumer in Europe than we did a year ago.

We'll be up on TikTok Shop platforms in 13 countries. As I said, will be in places like [ Allegro ] and Amazon and other pure players. Our D2C business has stood up heading into Q4. So we have a lot of ways now to get to the end consumer in Europe that we didn't have a year ago. Now that being said, yes, we are having lots of conversations with the European retailers. Some are willing to move over their annual planogram changes, some are simply not. But I feel very confident in our ability to be able to launch more products into Europe and get to more consumers as a result of social commerce, pure players and our D2C site. So that's on the Europe side.

On the U.S. side, I think there's a really interesting dynamic. I mentioned Walmart and the end caps that we've done. We've got some great promotions that are coming up with target they're a retailer that has really recognized the colors that we're doing and how we're bringing excitement to a lot of these products. they are going all in with us on that in both their dot-com sites as well as in-store on end caps. We've got some great things that we're working on with people like Costco and SAM. So overall, I think that retailers are seeing us in lots of different ways than they did a year ago. I think our products have very much become part of culture.

I mean I'll give you one example. We never sold any products other than hair care and skin care to Alta, and we showed them our Shark ChillPill, and they said this would be an amazing product for them to add to their assortment. They launched the ChillPill. They've done great with it. In fact, Vogue, [indiscernible] and have written up ChillPill as the product of the summer, in Europe. We're seeing people writing that up in the United States as well. So it's really helping us get incremental placement at retailers that were not selling these types of products a year or 2 years ago.

Helpful. And then maybe just a quick follow-up on sort of the AI-related acceleration agenda. You gave us some color there on innovation JailBreak. We've talked in the past about sort of efficiency capture around promotion and media spending. So maybe if you can update us on sort of that initiative as it pertains to driving better ROAs or promotional optimization. Where are we today? And how would you sort of summarize the opportunity that you're chasing?

Look, we went live a couple of weeks ago with a Phase 1 initiative on promotions and optimization management with Palantir. The first couple of weeks, the results of that showed a lot of promise, to the point where we actually have now moved ahead with a Phase II initiative with Palantir. That will take about 4 months to implement. I think you'll see the benefits of the Palantir work come through in Q4 promotions and Q4 media planning, primarily in the United States, U.K., Germany and France. It will expand to the rest of the markets as we get closer towards the end of the year. So I'm very, very optimistic about the work that we've done on promotions management, on marketing, on pricing.

I think we are going live at the end of September on a system that we've worked on with Amazon, with AWS around media optimization. And I think you'll see a little bit of the benefit of that come through in Q4. But really, for the most part, that won't scale until. But Steve, we're seeing a tremendous amount of optimization and lots of the quick wins work that we're doing and lots of the AI Sharks work that we're doing. I mean, yes, we're investing and we're seeing benefit, but I think what you're going to see is that as we turn the page on '26 and we go into '27, I think you're going to see us being able to really leverage compensation in a big way in '27. Not to the extent of seeing any type of large reductions, but I think we're going to continue to be able to keep growing the business on roughly flat head count as we get into '27.

And I think that's going to be a big benefit for us in terms of leveraging operating expense and then being able to choose where do we invest that operating expense maybe into other areas that will drive a higher return on investment for us.

Your next question comes from [ Peter Keith ] with Piper Sandler.

Nice results. I wanted to just dig into the strength in the core categories. I guess the one that really stood out to us was the cooking and beverage appliance category was the strongest, I think, in at least 2 years. Could you just unpack a little bit of what you're seeing in that category that's driving such strong growth?

Yes, Peter. Look, I would say a few things. One is our espresso and coffee business has seen very significant growth globally. During the quarter, we launched a fully automatic coffeemaker, the Ninja AutoBarista that launched at $949 and was off to a great start. We've continued to scale our espresso business in more and more countries around the world into places like Spain and Italy that we just launched. We expanded it more into Latin America. Our Ninja CRISPI business has done in the quarter. We've really built that into a whole franchise of products. We launched our original CRISPI, then we expanded into the Ninja Crispi Pro. And in the quarter, we launched in the United States, the Ninja DualZone CRISPI. And so you'll see that start to scale out to the rest of the world as we get through this year and into the early part of Q1 of next year.

So I think expansion in our CRISPI business expansion in our Espresso business, solid results in items like our oven business our MoldCooker business, you kind of put all of those things together, and you just look at kind of further penetration of our heated cooking products into more new countries, and that's what drove really nice growth in the quarter. I mean, look, cooking did great. I would also point to the fact that Home and Beauty had a standout quarter, growing over 60%. Our cleaning business in the first half of the year had very strong growth relative to the market. And our food prep business grew double digits. So it's great to see that all 4 of our major product categories grew in the quarter.

Yes, agreed. The other thing I just picked up in the call is, it sounds like you're going to now launch 3 subcategories this year. I wanted to confirm if that's right. And then I guess, if so, it sounds like an accelerated pace of innovation, it might be early, but is this meaning related to the JailBreak initiative?

Not really. So Peter, we launched the BlastBoss earlier in the year. We launched the CRISPI Microwave a couple of weeks ago. We have a new subcategory that's going to launch in Q3. I think we've publicly said that we would launch in a minimum of 2 subcategories a year. I'm really excited about we have coming in 2027. And we have to obviously get through '26, but we have a great pipeline of new categories for '27. And I think that's where you're really going to see the impact of AI and the JailBreak work on our product development. I mean you'll see some new products that are coming out, Q3 and Q4 of this year that are using kind of enhanced software capability in them. But I think the innovation changes that we've made, particularly using AI and consumer insights through AI, you'll start to see really come through in '27.

This concludes the question-and-answer session. This concludes the call. Thank you for attending. You may now disconnect.

All right. Good afternoon, everyone. Thanks for joining us today. My name is Philip Blee. I'm the consumer analyst here at William Blair. Before we get started, I want to remind everyone that a full list of disclosures are available at williamblair.com.

With that out of the way, I'm excited to have SharkNinja's CEO, Mark Barrocas, and CFO, Adam Quigley, here with us today. SharkNinja has been one of my favorite names. One of my favorite stories to follow over the past few years. They've defied what's [ otherwise ] been a choppy consumer environment and have consistently driven strong top line growth. And selfishly, I enjoy covering you guys for all the great products.

So you recently put up another great quarter. You're doing it while a lot of the categories you play in, maybe aren't operating on full cylinders across the broader industry. Mark, you've been with the company now since 2008. When you take a step back and look at the business today, what do you think are some of the big drivers that has allowed SharkNinja to keep compounding growth. How do you keep that sort of scrappy, small company flexibility that's allowed you to adapt and be so dynamic with consumer changing demand. And then now that you've scaled over $6 billion, how do you keep that going?

Yes. Well, look, I mean, we -- you and I have talked a lot about the company's culture. And if you go to our website, you'll see three culture documents, one is called Success Drivers, the other one is called Leadership Principles, and the third is called Outrageously Extraordinary. And look, I think we built a -- this is not working?

Okay. We built what I think is a really fast-paced, innovative culture that has not gotten bogged down as we've grown in size and scale and growing globally. And I think one of the things that I attribute that to is this hack approach that the business takes to problem solving. We've started as a great product innovation problem solver, but I think that's translated into every part of what the company does. And I think it's highly demonstrated by what we did during the tariff situation a year ago and kind of running towards that problem and doing it in a very innovative way.

I think it's translated into how we're approaching AI. We've recently run a program called Jailbreak SharkNinja, and we've routinely take this approach of not finding time for innovation, but making time for innovation. And I think as companies get larger and larger, calendars don't match or we'll run it around a planning cycle. Innovation at SharkNinja is every week. Okay, you have a challenge, you have a problem, get a whole bunch of people in a room, call in sick for a couple of days and just solve the problem. And I think so much so that it's gotten to a point where you say, where is so and so, and they say they're sick, and you're like, are they really sick, or are they hacking?

Like that's a common thing at SharkNinja. I think our approach to product innovation, I mean, we shut down the whole product development teams every 8 weeks, and we just run hack weeks. And we try to accelerate the pace of innovation in the business to come up with ideas. And so that culture kind of permeates into everything that we do. I would say the last part answer to your question is we meet the consumer where they are. I think there's a lot of companies that kind of say, well, the consumer is going to meet us where we are. We sell everyone. We sell everyone from Walmart to Sephora and everyone in between. We were the #1 brand on TikTok Shop last holiday season.

We don't sit here and say that there's like a protected strategy in the business. Our strategy is around positively impacting people's lives every day and every home around the world. And we do that through disruptive product innovation. We do that through viral marketing, and we do that through an omnichannel strategy that meets the consumer where they are. And I think when you run a business that is so led by meeting the consumer where they are, we're not constantly going against the tide. I mean, we're meeting them where the tide is going.

That makes sense. And I want to dive a little bit deeper into that because I think your growth has been so strong. The market share gains have been so significant. One of the most common concerns from investors then is kind of waiting for the other shoe to drop, so to speak. In their defense, there's a lot of consumer product companies out there that maybe have hit a trend, then comping the comp becomes this kind of looming boogeyman out there. There were some concerns of the virality of CREAMi and SLUSHi were going to be that boogeyman, didn't happen. But you've spoken to this desire to grow double digits here in the U.S. this year. How do you get comfort that you can continue to comp that comp and avoid some of the choppiness that maybe has plagued some of your peers?

Listen, in the consumer space, the question is kind of what is your moat, okay, and how compelling is the moat that you have. If I go back in the business in 2008, I mean, 60% of our business came from one product, the Shark Steam mop. We've spent the last 18 years, okay, not the last 3 years as a U.S. public company. I spent the last 18 years leading this company and the overwhelming focus has been around the idea of diversification. We're in 39 different product categories. We sell in 30 different countries around the world. We've built two multibillion-dollar brands from scratch. We sell in 150 retailers around the world.

We have a robust direct-to-consumer business. We're the #1 most searched brands on Amazon. We have 8,000 patents. I mean people -- there were investor meetings this morning and people said to us like, "Hey, would you get into the cup business?" Like, I don't think there's a durable place to have a 15-year cup business. I think that the business has to have some IP around it. It has to have some supply chain efficiency strategy around it. It has to have something that makes the business durable and lasting. I mean we became the #1 vacuum brand in 2014. We built that business off of a great patent portfolio. We built that business off of great innovation and technology and kind of having one great consumer experience at a time.

And I think when people look at our business, and they talk about like the slushy, it minimizes who we are, and what we do. And quite frankly, it shows kind of a real lack of effort and work that's being put into like understanding our business. I mean go around -- we have the second-most pallets in Costco behind P&G. We're the most searched brands on Amazon in our space. I've met with the CEO of Mercado Libre a couple of weeks ago. And I said to him, "How are you so confident that there is demand for SharkNinja products in Latin America and on your platform?" And he says, "Why? Because in Brazil, there are as many searches for SharkNinja products, and we don't sell your products on our platform as there are products we sell on the platform."

So there is a real incredible demand -- global demand generation model that is not easy to replicate. I mean we're going to do this year $100 million in business in the Nordics; in Finland, Sweden and Norway. We have no marketing team right now in that market. All of that is being generated by spillover content that's coming from other markets around the world. So this idea of like can we develop the next hit product. We have 1,300 engineers around the world. We spent 7% of sales on R&D. We have an incredible pipeline of product innovation. People say, "Well, have you gone into all the product categories that you could go into?" We're launching three new product categories this year.

There is a tremendous pipeline of new categories for us to enter into. But this is a business that not only creates a category from zero, like we did with skincare, or like what we've done with ice cream -- at-home ice cream making, but it's also a business that you could say before we got into the espresso business, what we heard from people is, "Well, you don't have any coffee legacy." What does coffee legacy mean? Like do we need to be from Italy and be in the coffee business for 50 years? If you develop a disruptive product, if you really understand what the consumer is looking for, if you give the consumer a great value, I mean, here's what's so interesting about the coffee space. We became the #1 espresso brand in the United States -- #1 espresso product in the United States and the U.K. after only 18 months, and we grew the size of the overall business.

So the espresso business in the U.S. and the U.K. was flat to down before SharkNinja comes into it. SharkNinja launches the Ninja Luxe Cafe, it grows the business double digits. The rest of the market declines, but the business overall grows because of how much SharkNinja has grown. And when you look at it, that market and everything that brands were advertising was a guy in a suit drinking a shot of espresso. And all of a sudden, SharkNinja comes out, and they start showing a 23-year-old girl making Dubai coffee in the morning, okay?

Like using the products as consumers want to use the products, like when you're speaking to somebody and George Clooney is in a suit, and his pinky is out, drinking a shot of espresso, like that's not the way Americans are drinking espresso in the morning, okay? They're doing it the way SharkNinja shows them and the way SharkNinja excites them to be able to do that. And that is something that is really special and compelling. And I find it like minimizing the entire business when it devolves down into what was the slushy selling in last year.

I completely agree. And I think that, that's a great representation of that. And I want to talk a little bit more about the product innovation piece because one of the most consistent takeaways that we always have is that you're always working multiple product cycles ahead, right, not just the next launch, but the next iteration, the next franchise. So can you, I guess, frame what the next 12 to 18 months look like from an innovation standpoint? Where you're maybe most excited because you think innovation can either expand or kind of reshape the category rather than just compete within it. And then any common themes, I guess, for what next-gen products could look like?

Listen, the common theme through every category, people look at our business and they say, like, you sell robots, and you sell outdoor heaters, and you sell coolers, and you sell air fryers, you sell espresso machines and skincare masks and at-home facial devices and hair care products. Well, the common theme through all of it is we identified some consumer problem, and we figured out a way to solve that problem for the consumer, okay? So there is some consumer problem-solving strategy within that. I think as you look at the balance of the year, I think what is so exciting for me is that there is so much work that we're doing to innovate the base business.

I mean this business could not be growing at a double-digit pace that it is if we didn't have a really healthy, strong base business, and I think that's something else that investors don't fully understand about our business. I mean, believe it or not, I keep saying this to people, the single largest category in the entire company is upright corded vacuums. I've been asked -- Adam has been asked maybe one time by an investor about the upright corded vacuum cleaner category, okay? Like, we are this year developing a total redesign to the upright vacuum cleaner, okay?

We're not talking here about any other -- we're talking about a category whose market is flat to down, but we've got an incredibly innovative idea so much so that we're developing our first new infomercial in 3 years. Yes, we're going to go back on TV, and we're going to do an infomercial. Well, why? Because that category responds really well to that type of advertising, engaging with the consumer. So there's a whole strategy over the course of the next couple of months, which is around innovating our base business.

How do we bring innovation -- disruptive innovation into core categories like blenders, like kitchen systems, like upright vacuum cleaners, like corded stick vacs, so that's kind of one whole group of kind of base business strengthening. Now why am I so excited about it? Because last year, we launched a product called the BlendBOSS. And the BlendBOSS was a category called single-serve blenders. Single-serve blenders in 2016 was the second largest category in the entire business. And it got stale, and it ran its course, and it settled in to kind of a nice business, but kind of a low ASP business.

We were selling the products mainly for $69, $79. And you add a bit of innovation into the category, you come up with a new type of motor technology that allows the product to be form factored in a very different way. You add color and excitement into it. And we have a category now that's up 30%, and our average sale price on that product is $129. So for very little more product cost, we're getting $40 and $50 more for these products, and we reinvented that category. We're going to do that in blending. We're going to do that in core vacuum cleaners. We've got a lot of great innovation in our cordless vacuum business.

But then we're going to launch into two new product categories in the second half of the year. One of them is in the cooking space, a big definable category in the cooking space, the other one is a brand-new category that we've never been in before, that I think is super exciting, our beauty business, we have some great innovation in beauty. We have some great innovation and cleaning that we're coming out with. But look, the product cycles don't always match up. I mean in -- as an example, our cleaning business was a high single-digit growth business last year. In the first quarter of this year, it grew over 20%. So again, it's -- we're playing the portfolio. We're playing this diversified product assortment.

And I -- look, I'm -- we're on right now to our 2027 road map, and you're going to see us get into categories next year in '27 that you're going to say, wow, like that was not a category at all that I thought SharkNinja could play in. But it's both categories that we think we can grow the business in and build the business ourselves from scratch and also businesses that have a big definable market presence, and we can go out and get our fair share of that category.

Makes sense. And as the owner of a BlendBOSS, I highly recommend everyone as well. But I want to switch gears to international a little bit because international has been very strong over the past few years. You've been explicit that you see a path to 50-50 mix between the U.S. and non-U.S. markets over time versus 65, 35 currently. There's been some noise as you guys have transitioned from distributor to direct models in major markets. Most of that, I believe, should be in the rearview mirror. Can you just break down how you think about maybe more of a steady growth profile for the international markets going forward?

Yes. Look, 2017, our business -- 2016, our business is primarily North America. And what people said to us was, "Look, Mark, your business is mainly in North America, like is the product really going to translate into other markets in the world?" I mean, German consumers are so different. Japanese consumers are so different. I think the starting point in trying to understand our international business is, do consumers love our products in all of these markets? And as an investor, I would go, and I would look at the online reviews, and I would look at the social media in all these markets.

And so as a starting point, consumers love our products, whether they're in Hungary, or whether they're in the Middle East or whether they're in Poland or whether they're in Argentina. So it's like first is, are consumers excited about the products and the answer is yes. The second is, does the marketing demand generation model apply globally? Or does it happen to be something that only applies into certain markets? And the answer is absolutely. I mean, our social media model applies into every one of these markets.

I mean we're seeing phenomenal growth right now in Latin America, okay? Big market with heavy social media engagement. We're driving a lot of demand, a lot of excitement, for example, in Latin America. And then the third is, does the omnichannel strategy that you have apply globally. This idea that you're going to sell direct to consumer, you're going to sell Amazon, you're going to sell social commerce, you're going to sell brick-and-mortar. And so it absolutely does. And then lastly, just the supply chain model apply to all these markets.

So the fundamental operating model applies and is working in all these markets by virtue of the fact that we're growing at rates that you talk about. Now the challenge that we've had over the course of the last year is that when we launched internationally, in many cases, we launched with distributors. And that was the fastest, easiest way for us to get to a market, but it doesn't allow us to be able to scale the market up and kind of control our own destiny in that market. And so over the last 18 months, we've been moving all of these distributors to direct models.

Now in doing that, in some cases, we've had to buy back inventory. We've had to stand up new teams in those markets, do all these different things. So it's created some noise, but we've done that all within the existing P&L, okay? Like, we haven't taken any onetime charges. We haven't done anything related to saying, hey, our growth is going to be muted for the next couple of quarters. We've done that, and we've absorbed everything into our P&L and still delivered growth, and that will be complete by the end of Q2. So by the end of this quarter, we will have kind of a right-sized global model.

Now that doesn't mean that we've decided that, for example, we're still going to have distributors in Saudi Arabia and in Kuwait and in Dubai, that we grow that business over the next few years, and we ultimately decide at some point, we want to flip that from a distributor model to a direct model. But for the most part, the key Latin American markets and the key European markets by the end of this quarter, will be selling on a direct basis, direct-to-consumer, pure players, social commerce and brick-and-mortar retailers.

And we think that sets us up right now to really start scaling towards this 50% of our business coming from outside of the U.S., which, look, if you do the math on that alone, that is another couple of billion dollars of revenue for the business. And if you believe that the North America business continues to grow at low double digits, which makes that number even harder and harder to get to 50%, that there could be $2.5 billion, $3 billion more revenue just coming from those international markets.

Excellent. And then just building off that a little bit. So you recently replatformed your international direct business. You're just over 6 months then from replatforming your U.S. business. So you can -- just talk a little bit about what the changes in kind of KPIs that you've seen, how that's played into what seems to be maybe a bigger growth opportunity in TikTok Shop as well. And then just maybe some other key unlocks that this begins to offer, whether it's marketing effectiveness or subscription options, loyalty programs, just any of those?

Okay. So there's two pieces that I think are really important in the question that you're asking there. So there was an investor. I was in a meeting with earlier and he said, "I wrote down notes from you last year at this conference, where you said that your DTC site was crappy." And I said, "Yes, that probably sounds like something that I said." And so last October, we replatformed our site with Salesforce in the United States. We've done that now in Europe, and we'll have the entire world up on Salesforce by the end of this quarter. So everything will be on one platform. And why is that important? Because prior to this, in order to buy Shark and Ninja products, you had to go to three different websites.

There was Ninja Kitchen, where you bought Ninja product. There was Shark Beauty, where you bought our beauty products and then was Shark Clean, where you bought our home products. This is now replatformed where everything is on the same website, so that's number one. What we've seen in the U.S. is since February, all of our metrics have moved in a really positive direction. Site visits are up, time on the site is up, conversion is up and revenue is up every month since February. We learned a lot from the U.S. transition back the end of last year. By the second month in the U.K., all of our metrics were positive. We're just replatforming Europe. We just went live about two weeks ago.

So as we get to the second half of this year, it's now an opportunity for us to optimize that. You talk about not just loyalty programs, but the whole concept of CRM. We couldn't -- if you bought from us previously, we couldn't cross-sell you on the same site. We couldn't chase you. And so there's a whole CRM initiative, and we believe the D2C is going to grow faster than the rest of our business for at least the medium term going forward. I mean, we think it will grow faster than the rest of our business through the balance of this year and into the full year of next year. So we're really excited about that.

Now that's not us putting our fingers on the scale and moving consumers to D2C. That's us just simply saying we've gone from what has been a subpar experience for consumers to what we think is now a good experience for consumers, and this is now a great destination to kind of understand our business and our products in a much better way. Now the second part that you're talking about is social commerce. And I think what most people here refer to that as TikTok Shop, but TikTok Shop is an element of social commerce, it's not social commerce. There is social commerce on Meta. There's social commerce on YouTube. There's social commerce on Snapchat. And I believe this is going to be the most disruptive thing in consumer retail over the next 24 months that we've seen in a very, very long time.

And people have said, "Wow, I don't know, is social commerce even working in the United States." The numbers and the scaling of it month-over-month is massive. Now you have to keep in mind that it's starting from zero, okay, 15 months ago, but every month sequentially is growing tremendously. This is where consumers are shopping. I mean that might not be where 60-year-old people are shopping, but it is where under 30-year-old people are shopping on a regular basis. I think it's amazing. We had 30 affiliates -- of our top affiliates in our office last week, I met with them.

We have people making $600,000, $700,000 this year selling Shark and Ninja products out of their house, out of their house. I mean, we have -- we will have hundreds of affiliates globally that will be selling Shark and Ninja products exclusively, exclusively. Their entire jobs will be selling Shark and Ninja products. I mean they've got lots and lots of products to be able to sell. And the experience now of consumers being on social media and then seeing these affiliates and then being able to shop instantly on it is a completely frictionless way for consumers to buy products.

So look, I'm excited about our direct-to-consumer business, but I really think the affiliate piece and the social commerce piece is something that is going to be transformational. And I think that we are right out there on the forefront of driving that channel of distribution.

Great. And those numbers let us know how we can become a SharkNinja affiliate. But -- so I want to dive into everyone's kind of favorite topic gross margin. There's a lot of moving pieces this year. You guys were best-in-class in diversifying your supply chain and really mitigating tariffs much earlier than everybody else. Now there's a lot of concern about rising freight, transportation cost, resin costs. So can you just maybe talk about your exposure there, puts and takes more broadly, how you're thinking about gross margin evolving? And then are you guys targeting maybe a gross margin rate, a specific rate longer term here?

Yes. No, I'm glad you asked. As we look at gross margin, I mean, it's core of everything we do. From the time of product ideas presented in the company, we're looking at gross margins. So it's happening from the very onset of the product to even while it's on the shelf years down the road. As we think about the levers that we have, and I think if you've been following along, we've kind of put this on full display since the tariff impact of April last year, and how we've been able to offset that in a really meaningful way. But there's really three buckets of gross margin for us. There's the sell side, there's the piece of what are we selling it at with the retailers, what are the terms, what are the pricing? What's the promotions? How do we optimize that?

As we go from distributor to direct, we have the opportunity to renegotiate with some of our retail partners. We have the opportunity to partner with them in a deeper way that we hadn't been able to do on the distributor front. So there's a lot of sell-side initiatives on that front. There's the buy side initiatives. There's -- as you mentioned, our geographic diversified footprint of supplier base across Southeast Asia. And everything we've done across that platform over the last several years has really put us in the position today to have dual sourcing on all of our SKUs to be able to move inventory, move POs across these factories, be able to negotiate while we're facing tariff challenges, freight challenges, partnering with factories versus just taking a cost increase, right?

These are negotiations that are happening live. So that's kind of the buy side, if you will, what we're buying the product at. The third bucket is mix, right? We were talking about affiliates, talking about social commerce, talking about our D2C site, all of those gross margin accretive, all of those higher gross margin channels that we're seeing a more favorable channel mix from where we're selling. The other piece is there's category benefits there. There's category mix benefit that we're capturing today across the beauty channel, in particular, because you do see that one growing at a greater rate than the rest of the business.

So it's really those three buckets of gross margin that I think we've been employing over the last several years. It's not necessarily new, but it's a lot of the investments now that we've made from replatforming from geographic expansion in terms of the supply base that we can now reap the benefits of and face the challenges of today.

Excellent. And just quickly because I know we're at time, but I think it's important just touching on capital allocation because of strong free cash flow, very little debt. You recently announced a buyback program this year and started executing against it. Can you maybe just talk us through how you think about capital allocation here, I understand there's also some float dynamics to think about.

Number one, invest in the business. We're our best investment. We've proven that across R&D, sales and marketing. So number one is investing in the organic growth that we're driving. I think what you're seeing from us now is being opportunistic, having flexibility in the balance sheet. 1.5 years ago, we leaned in with inventory. We leveraged the balance sheet to pull inventory in, avoid offset some tariffs on that front. And then I think the share repurchase authorization that we started acting upon in Q1, we're going to continue to act on that as we go through this year, ramping that up as we move along. So again, I think we're looking at all avenues of ensuring that we're returning value to shareholders. But number one is going to be investing in the opportunities in front of us today.

Excellent. Well, Mark, Adam, thank you guys very much. And then we will be doing a breakout in Adler on the second floor right after this. Thank you, guys.

Thank you.

Thank you for standing by, and welcome to the SharkNinja First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I'd now like to turn the call over to James Lamb, Senior Vice President of Investor Relations and Treasury. You may begin.

Good morning, and welcome to SharkNinja's First Quarter 2026 Earnings Conference Call. Earlier today, we issued our Q1 earnings release which is available on the company's website at ir.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 Barrocas, and Chief Financial Officer, Adam Quigley. Mark will start by providing a business update, followed by Adam, who will review our Q1 financial results and share our outlook for 2026. Mark will then offer some closing remarks before we open the call to the 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. SharkNinja is firing on all cylinders as we kick off 2026. Our Q1 results are a powerful testament of what we believe this company is built to do: Win with consumers execute with precision and grow from a position of real strength. Consumers are actively seeking out SharkNinja products, talking about them and making them part of their daily lives from product innovation to marketing to our expanded omnichannel presence, we see exciting momentum across the business.

Global sales trends are strong and broad-based. Social engagement is surgeon. We're not just winning with consumers, we're becoming part of culture. And what makes this even more exciting is how we're growing. The diversification of our business across categories, geographies and channels is powering our trajectory in a way we feel is difficult to replicate.

While the macro environment has remained unpredictable, our operational discipline never wavered. We stayed focused on what matters most, delivering breakthrough accessible innovation to consumers around the world. That focus is our foundation. And today, it has never felt more solid. Our Q1 financial results reflect these themes in action.

Net sales increased nearly 16% year-over-year driven by contributions from all 3 growth pillars. Domestic grew 8.4%, while point-of-sale growth even higher in the double digits. Our international growth accelerated to almost 32% with broad-based strength across geographies. Adjusted EBITDA increased roughly 18%, with higher adjusted EBITDA margins compared to the prior period. This performance was driven by our fourth consecutive quarter of leverage in adjusted operating expense as a percentage of net sales. Finally, adjusted EPS increased more than 25% year-over-year, consistent with our goal of driving strong profitability and earnings growth.

Across the board, Q1 was another outstanding quarter for SharkNinja. Our recently released 2025 shareholder letter highlights last year's accomplishments and our ambitions for 2026 and beyond. I encourage everyone to read it. Today, I want to expand on one of its most critical concepts, culture as SharkNinja's superpower and how will harness our unique culture to drive continued success into the future.

SharkNinja is a company of world-class problem solvers. Problem-solving is at the core of how we think of who we are. That mindset, what we call outrageously extraordinary, or OE, comes to life through rapid iteration, continuous improvement and an entrepreneurial fearlessness to test, learn and pivot. We believe our unique culture is a powerful competitive advantage, enabling us to move faster, adapt quicker and consistently deliver disruptive innovation at breakneck speed.

Importantly, this cultural edge goes way beyond product innovation into all areas of the business, marketing, finance, operations, technology and everywhere else. The OE mentality thrives on adapting quickly to challenges. The macro environment has unfolded in surprising and difficult ways so far in 2026. When excluding SharkNinja's performance, the U.S. market declined in the low single-digit to mid-single-digit range across all 4 of our major categories in Q1 according to [ Sercana ]. In contrast, SharkNinja just delivered our 12th consecutive quarter of double-digit organic net sales growth. While many factors drive this outperformance we believe the key differentiator is the culture that powers our mission, to positively impact people's lives in every home around the world and the existential need to be the best of what we do and to win.

Our second mantra, the intrinsic drive to win, requires constant evolution as we grow, new categories, new geographies, new ways to reach and serve consumers. These will always be motivating forces behind how we scale SharkNinja. But there's another force at play here, one that will profoundly reshaped everything going forward, artificial intelligence. In a short time, SharkNinja has rapidly and comprehensively embrace AI across the board. We expect AI will touch every part of our business: consumer insights, product development, marketing and demand generation, supply chain and our omnichannel strategy. SharkNinja stands to benefit from all of it.

To unleash this vision, we've launched a company-wide initiative called JailBreak SharkNinja. JailBreak means hacking through limitations to enable full access to a technology. It's the perfect description of how we're leveraging our unique culture to maximize our opportunity with AI. Some companies are hiring AI consultants and taking months to develop a top-down solution. We see other companies reluctant to get started at AI. We're only granting access to very few. We don't think either of approach is right for sharpening. Instead, our program incentivizes broad-based experimentation by proliferating AI tools and trainings company-wide. It's purpose-built for everyone to participate at all levels, an opportunity for early talent to contribute meaningfully and gain senior leadership visibility.

We believe that putting technology in the hands of our people the ones who live in the details of our business every day can maximize the insights we capture. What started off in a small way is now growing exponentially and early signs are that it can have a transformational impact on the business.

JailBreak SharkNinja aims to drive real business impact and reward employees who deliver breakthrough solutions. This impact is showing up in multiple ways. Our product innovation engine is benefiting from deeper consumer insights all the way through the development process. We're getting smarter at creating consumer demand with tools to improve our content and the efficiency of our media dollars. Operationally, we're discovering meaningful productivity gains. And across the business, we're unlocking intelligent insights we couldn't access before. Most importantly, we're freeing up time spent on mundane tasks to focus on strategic thinking to deliver real insights.

JailBreak is spreading across SharkNinja like wildfire. Over 150 employee submissions and counting. Each one a signal of the ingenuity and ambition alive inside the company. A few weeks ago, a 20-year-old intern from Clark University walked up to me at lunch and asked if I had 5 minutes. He had been up until 4:00 a.m. for multiple nights, building an AI solution from scratch. I called over two members of my leadership team and had him presented on the spot. The idea was that good. This is exactly the kind of boldness JailBreak is designed to find fuel and reward. And the world is taking [indiscernible]. When I shared the story on LinkedIn, it went viral, over 500,000 impressions, at a top 1% post across all of SharkNinja's content on the platform.

[ Fast Company ] and others have since covered the program and the $1 million price fund we've committed to back it up. We could not be more inspired by the momentum of JailBreak shortenings so far, but we're already thinking bigger and bolder. 10 years ago, we shut down the company for a week and held our first company-wide weeklong hack. That event became a defining moment for SharkNinja. It captured exactly how we operate. moving fast, focusing intently as a team and solving the hard problems. It also made us rethink who we are and what we're capable of.

As an example, the very first conversations about moving into outdoor products happened during this hack inspiring years of innovation since. Last week, we did it again. Team members across the globe completely cleared their calendars for JailBreak Live and all company HackWeek devoted to tackling some of our most important and complex problems as we embrace the biggest technological shift of our lifetime. We identified 20 cross-functional projects, spanning product development and quality, to commercial and revenue and supply chain and operations and so much more. We also hacked on over 400 departmental projects that engage thousands of people across the world. truly in all hands on deck moment for SharkNinja.

The JailBreak live HackWeek is testament to our desire to find problems and then concentrate our resources to solve them. It's also a direct expression of how we can utilize AI to once again reshape who we are and how we operate. And just like a decade ago, we came away with even more excitement about where we can go from here.

SharkNinja is also thinking about the AI long game by building institutional capabilities through 2 parallel initiatives. First, we're investing in training and other resources to scale company-wide AI adoption from beginners to super users. We believe everyone at SharkNinja should consider themselves part of our AI expertise. Second, we're actively recruiting the next generation of AI talent, who we call AI Sharks. These are ambitious forward-thinking builders who are already experimenting with emerging technologies and delivering solutions. This approach ensures we both capture immediate grassroots innovation and build sustainable long-term AI competency.

SharkNinja's culture is our superpower. And our most durable competitive advantage, our people don't wait to be asked, they just go. This inpatients for action is defining character trade in people who are successful at SharkNinja. We empower, nurture and reward this OE behavior that we feel distinguishes SharkNinja and drive results. We view the dawn of AI as an opportunity to take this differentiation to the next level. And our JailBreak culture is the powerful force behind how we strive to be the very best and to win.

With that, let me turn to our 3-pillar growth strategy beginning with our first pillar: Expansion into new and adjacent categories. At the end of Q1, we launched the [ SharpBlack ], the only indoor outdoor air blasting system that converts into a powerful blast broom to clear loosen, lift and sweep with ease. This innovative multifunctional solution represents a new subcategory for SharkNinja, taking our total to 39. We remain on track to enter another new subcategory in 2026 in line with our goal of adding 2 per year.

SharkNinja's product development philosophy centers on listening to consumer problems and innovating in perfect built solutions, often establishing product lines that don't exist elsewhere. The SharkBlastBoss exemplifies this a novel portable device with multiple use cases. Our solution helps solve a problem that we identified through social media comments and other consumer insights. Initial feedback has been exciting. And we think the BlastBoss unlocks a road map for future product development to help us expand outdoors even further.

SharkShowHill is a similar story, a revolutionary personal cooling system that offers 3 ways to chill, a blade-less fan, a dry touch mister and our cryoinspired [indiscernible] direct contact cooling play. This technology can lower skin temperature by up to 16 degrees Fahrenheit in seconds, to offer customizable cooling and instant relief. The SharkShowHill has been a smash hit among consumers, generating tens of millions of social media impressions in its first month. We believe such a passionate and growing level of engagement showcase how SharkNinja is increasingly becoming a part of popular culture.

Justin Bieber, headlined [indiscernible] a few weeks ago with an exclusive chilled zone featuring a SharkShowHill. We also partnered with Bieber and his lifestyle brands, Skylark on a limited edition ShowHill in a custom heat color wage, extensive press coverage from variety, [indiscernible] and Rolling Stone highlighted this collaboration. As we continue to introduce exciting new products that consumers love, we're confident we can expand the ways the cultural conversation revolves around SharkNinja.

To put this in perspective, no one is saying Shark made a new fan, based on our consumer insights feedback. Instead, we're being recognized as creating a new personal cooling system that didn't exist before. In doing so, we've created desire and demand at a premium price point that ShowHill's benefits and lifestyle appeal are resonating with consumers in a remarkable way showcases just how influential the Shark and Ninja brands have become.

We derive [indiscernible] cooling plate technology from the expertise we developed with our sharp cryoglo-LED face mask. Within our overall Shark beauty skin care business, the strong holiday momentum has continued into Q1. Consumer demand in POS remained incredibly robust for our disruptive skin care products globally. Our new product road map features exciting new skin care launches in the next 12 to 18 months, further leveraging our beauty technology platform.

Let's turn to our second growth pillar: growing share in existing categories. A healthy core business is SharkNinja's cornerstone of success. Our goal is to find new ways to drive growth and productivity within legacy categories through relentless innovation. The new [indiscernible] is a great example of how we keep existing franchises vibrant. The [indiscernible] cleverly combines drying, straightening and combing hair with our heat damage in one convenient device. Importantly, it is designed for every hair type, including [indiscernible] hair, that other products don't address well based on our consumer insights.

The [indiscernible] prostrate strengthens an already robust lineup of hair care solutions designed to address a wide array of consumer needs. The Ninja Luxe Cafe is another area in which we continue to push the envelope on innovation and differentiation. Global momentum for Luxe Cafe remains incredibly exciting with consumers eager to see what's next. Last week, we launched limited-edition Lux Cafe Color Collection including our first-ever collaboration with SharkNinja in global ambassador, David Beckham. Our design leaders worked with Beckham to create a one-of-a-kind version of Lux Cafe, featuring a matt black stainless steel body, black chestnut wood grain and gold accents to channel his signature aesthetic. Color and Collections present opportunities across many of our product lines with many more exciting developments in the pipeline.

Finally, our large cleaning franchise delivered an exceptional Q1 with [indiscernible] leading the way, highlighted by a standout performance from the recently introduced Shark Stainforce cordless spot and stain cleaner. Strong results in our largest category are an important proof point.

Our base business isn't just healthy, it's thriving, and that matters because healthy, profitable core businesses are the engine of everything SharkNinja does. They established the foundation of our growth and fund our expansion into new categories, new geographies and new channels. Later in 2026, we plan to have a meaningful innovation to subcategories like upright vacuums and cordless sticks driving further momentum and reinforcing the strength of the core.

Our steadfast focus on refreshing and renewing legacy categories is essential to the success of SharkNinja. But broad-based market share gains we observed this quarter validate this approach. They also underscore the power of diversification as another vital element of our strategy. Our food preparation category declined slightly year-over-year. driven largely by lapping a very large sell-in period for Slushy in Q1 '25. Our strong overall net sales growth underscores the power of category diversification SharkNinja, which we also expect will drive improved trends in our food preparation category going forward.

Our third pillar: international expansion, saw robust results across multiple geographies. I spoke last quarter about how our model can scale globally, particularly as we become a direct operator in more countries. Q1 showcased strong international performance even as we work through business model transitions in certain EMEA countries, like Italy and Spain. Net sales growth in the U.K. business accelerated this quarter to over 18% year-over-year after a very strong second half of 2025. We're winning in multiple ways with category and channel diversification, both driving success. We see a lot of excitement for SharkNinja products in the U.K. and expect continued strength for the remainder of the year.

Our France and Germany business are a similar story, both continue to grow well with increasing diversification across categories, and we're eager to see what's to come with additional shelf placement in 2026. Since our last update, SharkNinja has successfully earned larger commitments from retailers throughout EMEA for the holiday season. These outcomes reflect deeper relationships with our retail partners and continued exciting demand signals for global consumers.

Latin America experienced another exceptionally strong quarter. Last year, we transitioned our Mexico business from a distributor led to a direct business model. Since that time, our results have been outstanding. The benefits of directly operating in Mexico are multiplying. We have strong and growing relationships with retailers. Our consumer engagement continues to expand with local language social media content and we believe our opportunity with partners like Mercado Libre is enormous. Across our international business, we're seeing a strengthening of our omnichannel strategy. Additional placement from retailers reflect the trust and success we're driving together, and we deeply appreciate the partnership. We're also excited about how our direct-to-consumer business is developing.

Last fall, we meaningfully improved our capabilities by rolling out new DTC sites in the U.S. and Canada. In the first half of '26, we're bringing this enhanced experience to all our major international markets, including the U.K., France, Germany and more. In parallel, we're activating our presence on TikTok Shop in several countries within EMEA. Our success within TikTok Shop in the U.S. and the U.K. allows us to launch confidently in Germany, France, Spain and beyond. The combination of these elements a healthy and growing retail presence our new DTC platform and further TikTok Shop penetration fortifies our international omnichannel strategy with additional opportunities to come in the back half.

To wrap up, the year is off to a fantastic start. We're executing on the complex multidimensional task of growing across categories, geographies and channels. all while navigating a constantly shifting environment. Yet underneath it all, it's business as usual at SharkNinja. Our unique, ambitious culture is as dependable as ever. and it continues to be the driving force behind our strategy and our confidence in where this company is headed. That confidence shows up in our guidance rates for 2026. Even against the backdrop of changing cost dynamics, our momentum is undeniable, and signs what we're seeing give us every reason to lean in. Consumers are responding to our innovation with real enthusiasm. SharkNinja products are becoming an increasingly embedded part of culture and the partnership and support we're seeing from retailers continues to strengthen. The macro environment will likely stay dynamic, but we believe we built this company to handle uncertainty better than anyone.

Most of all, we're genuinely energized about everything ahead. With the momentum and fresh creativity coming out of our global HackWeek propelling SharkNinja [indiscernible] into the future.

With that, I'll turn it over to Adam, who will walk you through our financial results and share our updated outlook for 2026.

Thank you, Mark, and good morning, everyone. I'd like to echo the enthusiasm that Mark just shared coming out JailBreak and HackWeek. The [indiscernible] in the entire organization reflects how SharkNinja responds to any major call to action, similar to the [indiscernible] about a year ago.

Through intense focus and cross-functional collaboration, we've generated an exciting number of high-impact work streams that we are eager to pursue. When this company drops everything and collaborates to solve problems, we can be unstoppable.

Now let's dive into our excellent results for Q1. Net sales in the first quarter increased 15.6% year-over-year to $1.41 billion. By geography, domestic net sales increased 8.4% to $916 million. International net sales were $497 million, up 31.6%. Our U.K. business grew robustly in Q1 with net sales up 18% year-over-year to $220 million. This strong result underscores the power of the category diversification strategy that we intend to utilize across our global markets.

The rest of our international business also performed quite well in the quarter. Our EMEA region grew nicely across multiple geographies with encouraging trends in some of the markets we recently converted to a direct business model. Latin America continues to see exciting momentum in Mexico and across the region.

Turning to performance by category. Net sales in the cleaning category increased 17% year-over-year to $517 million. [indiscernible] uprights the largest subcategory and the company performed well as did our carpet extraction business. Net sales in the cooking and beverage category increased 19.8% year-over-year to $415 million. Consumer demand for the [indiscernible] cafe espresso machine continues to be strong worldwide. [indiscernible] is also seeing great momentum across multiple markets.

Net sales in the food preparation category decreased 3.3% year-over-year to $288 million. Strong growth in our blending franchise was offset by lapping a particularly large quarter of selling for our frozen treats business in Q1 of '25. This is another great example of the importance of healthy core franchises, like lending. Our frozen treatment remains an exciting growth area for us with more innovation coming in the second half of the year.

Finally, our beauty and home environment category increased [ 40.8% ] year-over-year to $194 million. Our Shark beauty technology portfolio to stand out in the quarter, particularly our skin care business, led by Shark [indiscernible].

Now let's move to gross profit, where our results came in at the high end of our expectations. Tax presents a sizable headwind for the full quarter of impact in Q1 of 2026 compared to a baseline of minimal tariffs in the prior year period. On the positive side, our [indiscernible] strategies continue to benefit gross margin. Cost optimization efforts remain robust, while favorable trends within pricing and mix also positively impacted margins in the quarter.

Adjusted gross margin in the first quarter decreased approximately 100 basis points year-over-year to 49.2% of net sales, and GAAP gross margins decreased roughly 10 basis points to 49.3% of net sales. The difference between our adjusted and GAAP gross profit remains negligible.

Moving down to P&L. Our adjusted operating expenses this quarter totaled $495 million or 35% of net sales. This compares to 36% of net sales in the year ago quarter or roughly 100 basis points of favorability year-over-year. SharkNinja has now driven leverage on adjusted operating expense as a percentage of net sales for 4 quarters in a row. We feel that this consistency speaks to how we prioritize investments to fuel growth while remaining disciplined on spending.

I will now bring down our operating expense line items on a GAAP basis. Research and development expenses increased 12.9% year-over-year to $99 million compared to $88 million in the prior year period, leveraging almost 20 basis points year-over-year. We believe our robust investment in R&D remains a critical differentiator to SharkNinja's disruptive innovation engine. Sales and marketing expenses increased 14.4% year-over-year to $315 million compared to $276 million in the prior year period, leveraging just over 20 basis points year-over-year. We continue to deploy resources to expand our social media prowess from advertising dollars to additional personnel around the globe.

General and administrative expenses increased 22.4% year-over-year to $116 million compared to $95 million in the prior year period, deleveraging about 50 basis points year-over-year. The bulk of this increase came from tax related to share-based compensation. On an adjusted basis, general and administrative expenses grew 11%, roughly 30 basis points of leverage year-over-year.

SharkNinja's top priority is to deliver full year adjusted EBITDA growth that outpaces net sales growth. In Q1, we achieved this goal with adjusted EBITDA growing 17.5% year-over-year to $235 million. This represents a 16.7% adjusted EBITDA margin, up approximately 30 basis points compared to the prior year period. Even with all the moving parts on the COGS line, we remain confident in our ability to stay flexible and opportunistic with operating expenses where needed.

To wrap up the income statement, our GAAP effective tax rate in Q1 was 17.7%, while our non-GAAP effective tax rate was 20.7%. Adjusted net income in the period was $155 million or $1.09 per diluted share compared to $124 million or $0.87 per diluted share in the year ago period. Our adjusted net income per share in Q1 grew 25% year-over-year, our fourth consecutive quarter of growth in excess of 23%.

Turning to the balance sheet and cash flow. At the end of the first quarter, cash and cash equivalents totaled almost $512 million, up more than 100% year-over-year. Total debt outstanding at quarter end was $729 million, and we continue to have nearly $489 million of capacity available to us on our $500 million revolving credit facility. Total inventories were $1.03 billion exiting the quarter, up 6.3% year-over-year. It's important to keep in mind that we are now lapping the large tariff prebuild inventory levels from late 2024 and early 2025. We feel confident that our healthy inventory positions us well to support our growth ambitions.

Last quarter, we announced that our Board of Directors had approve SharkNinja's inaugural $750 million share repurchase authorization. Through the end of March, we have repurchased roughly $20 million worth of stock, the details of which will be available in our 10-Q filing. We will continue to utilize the authorization opportunistically when we feel it is appropriate while steadfastly reinvesting into the business as our priority.

Let's move to our outlook. As Mark mentioned, we see encouraging trends across the business, including all 3 of our growth pillars. We believe we are executing against what we committed to, which gives us incremental confidence. Consistent with prior quarters, our updated 2026 outlook assumes current tariff levels persist for the remainder of the year, including minimum rates that have shifted from 20% and to 10% for China, Vietnam, Indonesia, Thailand, Malaysia and Cambodia. As of today, our guidance does not incorporate any potential tariff refund benefit.

On the raw material side, we continue to actively assess the situation while already taking action on both cost mitigation and supply procurement. The duration of the Middle East conflict is unknown and therefore, [indiscernible] prices may change for resins and other commodities. But we view the potential impact as manageable and have incorporated this into our guidance. For the full year 2026, we now expect net sales to increase between 11.5% and 12.5% compared to our prior guidance of a 10% to 11% increase. Adjusted net income per diluted share is now expected to be in the range of $6 to $6.10 compared to $5.90 to $6 previously.

Adjusted EBITDA is now expected to be in the range of $1.29 billion to $1.30 billion, representing growth of 13.5% to 14.5% year-over-year compared to the prior expectation of $1.27 billion to $1.28 billion, representing growth of 11.8% to 12.7% year-over-year. Net interest expense is still expected to be flat relative to 2025. Our GAAP effective tax rate expectation remains approximately 22% to 23%, and capital expenditures are still expected to be between $190 million and $210 million for the year.

To close, our Q1 performance demonstrates the best of SharkNinja. Strong net sales growth with contributions across all 3 of our growth pillars, an adaptable P&L that can absorb challenges on the gross margin line while driving material OpEx leverage to deliver on our adjusted EBITDA goals and a robust balance sheet that enables us to retain flexibility while also returning capital to shareholders, these factors, along with continued momentum of the Shark and Ninja brands with consumers worldwide give us the confidence to increase our outlook for FY 2026. None of this is possible without the diligent efforts of the entire team. We exit our JaiLbreak Live HackWeek squarely focused on execution for the remainder of the year while also building for the next chapter at SharkNinja.

Thank you. With that, I will now turn it back to Mark.

Thanks, Adam. Simply put, SharkNinja is strong today. and we're built to get even stronger. That confidence isn't just about the numbers. It's about how we keep winning, growing fast, tackling problems and pushing our differentiated strategy further than ever before. And at the center of all of it is our cultural DNA. The outrageously extraordinary mindset is not commonplace. It demands bonus, decisiveness and adaptability, and it ignites our people to set their sites on something truly great, not just good enough.

That's exactly why we're all in on AI and the JailBreak SharkNinja initiative. We genuinely can't think of a more perfect fit between our unique OE mentality and the most revolutionary technological advancement of our lifetimes. Our culture wasn't built for the old world. It was made for this one. We went deep on cultural differentiation today because we believe it is the single most important driver of our outperformance past, present and future.

Since our NYSE listing in July of 2023, the outside world has watched us delivered 12 straight quarters of double-digit organic net sales growth. But inside SharkNinja, we've been living and building this culture for 18 straight years. Long before the spotlight, long before the listings, the results you see today are in a hot street. They are the compounding output of nearly 2 decades of relentless outrageously extraordinary execution, a track record that we believe speaks for itself, and we're just getting started.

Thank you. This concludes our prepared remarks, and I'll turn it over to the operator to kick off Q&A. Operator?

[Operator Instructions] Your first question comes from the line of Randy Konik from Jefferies.

Mark, to start off, you gave a perspective on the industry trends for the United States in the quarter. Can you give us some perspective of how you think about how those trends play out for the balance of the year from an industry perspective? And then the second kind of part of the story globally, when you think about you're talking about your bullishness on international, you talked about great order growth for holiday in international markets. When you think about what you said in the past, I think you said, you think international can be about 50% of the business. I don't know about when you think you get there. But when you think about what you said in the past and then combine that with -- your brand awareness is growing internationally but still low. I don't think you started TikTok Shop yet. You're about to. Not all the countries have -- international countries have all your products. The U.K. just showed a big acceleration. You're going to add some more countries on top of that in terms of new organic growth opportunities. Have you changed or become even more bullish on where international can go and how fast you can get there? That would be really helpful in sizing that up for the audience.

Yes. Thanks for the question, Randy. Let's start on the North America side. I mean, the industry was down low to mid-single digits. Our U.S. business was up 10%. On shipments, it was up more than that in POS that sets us up really well as we move into the second quarter. Our Canada business had some structural changes and kind of moves from direct import to domestic, that had the Canada business down year-on-year. That will change as we move into the back half of this year.

So I think as you look inside the numbers, yes, our international business grew quite a bit, but we're really excited about the domestic business. I mean, we're excited about the fact that our cleaning business is strong. Our cooking business is strong. Our base business is really healthy. Our POS is double-digit increase. And so that bodes really well for us as we move through the year.

As it relates to the international business, we actually just went live with our new DTC platform in the U.K. 2 weeks ago. In Germany and France, this week. Spain and Italy are right behind it. We'll have TikTok Shop up and running in France and Germany. We have it up and running right now. It just started. Spain, Italy, Mexico is coming in the next 2 weeks. So when we come out of Q2, Randy, I mean, we're now going to have the entire world on our new sales force platform. We're going to have TikTok Shop operating in 7 countries. It sets us up really well on the D2C business and the TikTok Shop business as we get into the second half of the year.

There's also some noise within the international business because we're in the midst right now of transitioning Italy and Spain from a distributor market to a direct market. So we took a bit of a hit in that in Q1. That will get rectified as we close out Q2. And then again, as we move into the back half of the year, we've now transitioned all the major markets that we want to transition to direct. We'll have increased ad spending as we get into the second half of the year in a lot of those markets. And we're expecting a strong holiday season. As I mentioned in the prepared remarks that we received really great signals from the European retailers in terms of commitments as we head into the holiday season into Q4. So that played out as we expected and as we wanted it to.

Great. And then, can we follow up on the beauty category. I think 4 years ago, it was essentially 0% of sales, and now it's almost, I think, around 15% of sales. The buckets I see that you're kind of focused on today are skin care and hair care. Can you kind of frame up how you think about that category in terms of adding more potential areas of that business and frame out how big you think that business can be or how all-encompassing you think that category can be for you guys?

Yes. Look, Randy, I've been historically bad at answering how big a business could be because whatever number I give you, I think we're going to undershoot and surpass that number. Look, I think here is a great example. There's still lots of categories in hair that we've yet to enter into. I mean our [indiscernible] our first air straightener product. It puts us in a really attractive price point. That product won't launch into Europe until the second half of the year. So we're expecting a strong holiday season.

We've got a back half, second half really strong road map in skin care with new products coming out in skin care. We see other categories on the road map within beauty that we think are exciting. I mean, I'm personally very excited about the wellness category. I think that our beauty business is going to help us ultimately expand into wellness in 2027. So I see it -- I see there's a lot of doors that are open for us. I mean as the consumer accepts us in hair and accepts us in skin and understands us for our LED light therapy, and our cryotherapy. And Randy, I think what's so interesting is look at what we've done with the CryoGlow [indiscernible], we put them on to our Shark ChillPill that just launched. And that product has gone viral here in the last couple of weeks. I mean, we've got tens of millions of social media impressions.

So it's not just what we're doing in beauty, it's how is what we're doing from one category, helping us translate to product innovation in another category.

Your next question comes from the line of Brooke Roach from Goldman Sachs.

Mark, what are the implications of the Iran war and higher oil prices to SharkNinja this year and into 2027? How are you thinking about potential demand implications by geography? Have you seen any change in demand quarter-to-date in any of the consumer bases in any of your geographies? How are you thinking about fuel and freight costs and then raw materials?

Yes. Thanks, Brooke. I'll start and then hand it over to Adam. On the demand side, look, we're looking at daily POS around the world, and we have not seen any impacts right now in the second quarter as it relates to demand from the war.

Look, Brooke, I mean, this is another one of those challenges that SharkNinja is good at addressing and figuring out. I mean, I think there's a lot of movement in our gross margin line. I think that tariffs have come down since our last call. that present the benefit to us. I think there will be some impact on resin prices that are going to partially offset some of those tariff benefits. I think there's a lot of mix movement going on in our business. Our international business is growing faster than our domestic business. Our D2C business and TikTok Shop business is growing faster than our retail business. So I think there's a lot of different things at play here within gross margin, but it's just another problem that SharkNinja, I think, is so good at managing through. We've demonstrated that year after year.

And maybe to add to what Mark just said there, I mean, you go back a year ago in the way that we responded to the tariff situation, something that our competitive peer set was also faced with. And our goal at that time was to win in that situation, right, to come out of it better than our competition to come out of it and play the game, play the hand that we dealt better than others. It's the same thing here. The raw materials are going to be an impact to everybody in our industry. Our goal is how do we face that challenge better than others.

Mark hit on this, but there's a lot of movement within that gross margin line. And it also gives us a lot of different levers to be able to pull. We are seeing some favorable impact on the tariff front as those rates have softened as we've gone throughout the year. We planned that very much straight up in terms of what the rate is at that moment in time. And so I think there's some conservatism on that front. But also as we go through the rest of the year and look at where we're at, you see it in our guidance, I mean, we're very much feeling very good about where the gross margin trajectory is heading and what we have in front of us in terms of the levers to pull in this macro environment.

Great. As a follow-up, can you unpack how you're thinking about pricing, both for new innovation and for your existing categories as you look throughout the rest of the year?

Yes. Brooke, there's nothing at this point, planned from a price increase standpoint in our guide through the end of the year. As it relates to new product pricing, look, I think we've started that process going back 1.5 years ago and as I've mentioned on other calls, we're doing a lot of price testing. We're probably erring on the side of going a little bit higher as we launch and then seeing how it plays out in the numbers, and we can always adjust accordingly. We launched our Shark ChillPill at $149. We think that's kind of the upper range of what we tested at, but we think it's a fair price, and we think that consumers are responding with strong demand.

So we'll continue to evaluate and assess as we see how consumer demand plays out. But from a pricing standpoint, we feel good about where we are.

Your next question comes from the line of Rupesh Parikh from Oppenheimer.

So just going back to the International segment, a very strong momentum in Q1. Just curious how you're thinking about the growth rates for the balance of the year.

Yes. Listen, Rupesh, Adam can speak to the specific numbers, but I guess, just qualitatively, I want to point out that what we've done starting last year with kind of rightsizing the international business and moving it from the countries that we want to be selling direct from distributor to direct I can underscore how much of a big challenge that has been and also how successfully we've done it. And I think it's something that kind of goes unnoticed from an investor standpoint. I mean, by the end of Q2, I mean we will completely have rightsized our international sales model in 1.5 years. And I think it sets us up really well as we get into the second half of this year and into next year.

We're really understanding more and more the impact of how media and content travels around the world. We call this concept spillover. We just launched, as an example, in South Africa, this week. There's already incredible amount of demand that's been created in South Africa. Our Head of Sales was over in South Africa a couple of weeks ago. The response that he got from retailers was incredible. They all know Shark and Ninja products, consumers know Shark and Ninja products, all of that media, English language media that's generated in the U.S. and the U.K., spills over into places like South Africa. We're seeing our Spanish language content spill over from Spain into Latin America and Latin America into Spain and even into the U.S. Latin market. So I think it's not just about the fact that our products are resonating. Our media is traveling. Our content is traveling and then our omnichannel strategy is getting set up. With expanded brick-and-mortar penetration, our D2C platform getting set up in these markets and TikTok Shops standing up.

Yes. And maybe just to add a little bit more to that. I mean, I think we feel very strong that international growth will remain in the low 20s range, right, not official guidance, but certainly where we think that business is heading. Some of the things that you can look at in terms of the international business is take a market like the U.K., which is our most domestic -- most developed market overall, and you saw very strong growth from it in Q1. You're seeing a very healthy diversified business, no dependence on any one category and firing on all cylinders and especially porting over the TikTok Shop playbook and seeing that take off really well. You've got a really strong base in international with a market such as that.

Mexico being kind of the next one that's really taken hold extremely strong performance coming out of Q1. We've got really high hopes as we look through the rest of the year. And that market is one that's paving the way for other expansion within Latin America, developing some of the playbooks that we're able to deploy across those regions. Mark spoke to the Spanish-speaking media and the impact of that. And so that's one that's taken hold, and we continue to see accelerate.

And then there's the seeds, right? The more entry we just got into South Africa as an example, those are the seeds, that are going to continue to grow throughout this year so that we continue to have this maturity cycle across the international business. It's not reaching a matter of development too rapidly. It's a matter of continuing to expand and develop these seeds across the regions.

Our next question comes from the line of Jonna Kim from TD Cowen.

Just would love to get more color on how much TikTok and DTC contributed to your domestic sales this quarter. Any further color there? And if you're hearing any sort of pullback in inventory from domestic retailers? And just going forward, what are key building blocks for domestic growth going forward?

Yes. Listen, I mean the key building blocks for domestic growth are a strong base business and layering on new innovation on top of that. I think it's a very clear formula. We're not seeing any significant change in terms of inventory levels from retailers. I mean, there's obviously some timing shifts or kind of quarter-to-quarter movements or things like that but kind of structure. We're not hearing from any of our retailers that they're pulling back on weeks of supply or that they have a conscious inventory decision.

Listen, on the domestic side, it's we've got a very large base business. We're innovating into the base. I mean, we have new products coming out and upright vacuums and cordless vacuums. We're reinventing our whole blender category in the second half of this year that's going to be launching. We're launching a new category. We're expanding products in existing categories. So I feel really good about the domestic business as we go into the second half of the year as it relates to DTC and TikTok Shop.

Adam?

Jonna, we don't break out specifically D2C and TikTok Shop overall. But what I can say is those channels are growing at a faster rate than the overall domestic business and doing so to a strong capacity. I mean we're starting to annualize TikTok Shops. So certainly, there's an inherent benefit there. But I think what we're also seeing is just the maturity of that channel in terms of our ability to operate and operate well within it.

So feeling great on that front. Salesforce, again, another platform that we're annualizing as we go into the first half of this year. So DTC and TikTok Shop are certainly firing on all cylinders and growing very strongly.

Your next question comes from the line of Steve Forbes from Guggenheim Securities.

Given all the supply chain complexity and the color you provided, I was curious maybe if you can update us on the progress of the one SharkNinja voice initiative. How many of your vendor partners has the team met with thus far? What areas of optimization has the team identified and sort of what are your vendor partners asking of Shark on the back of that?

Do you mean our factory partners, Steve?

Yes, yes, yes.

Yes. Listen, the question is framed in a way like supply chain challenges are a new thing. Supply chain challenges have been a thing now for years. And when you say kind of one SharkNinja approach, I mean, tariffs or parity in China right now and outside of China, in about 66% of our business, it allows us now the flexibility of moving production back and forth very easily. There may be a factory that is pushing us more on price and we've had to move some of that production to another factory that is willing to not push on price, but wants more volume.

So I think there's a lot of levers at our disposal. I think the work that we've done to diversify our supply chain, all of our top SKUs resourced at more than 1 factory, most of our SKUs are sourced inside of China and outside of China. I think the changes to the tariff that happened in November and then again in -- after the Supreme Court ruling, have played in our benefit of giving us lots more optionality than we had a year ago at this time, and we're leveraging that optionality. I mean we believe that there's lots of opportunity for us to have capacity in different areas of the world. And then assess where is the best place for us to place those orders. And literally, Steve, we're doing it at an individual order-by-order basis.

That's helpful. And then maybe just a quick follow-up. You mentioned social engagement is surging. And I know we spent a lot of time last year talking about your sort of brand affiliate plans for the future. And I think this was the first quarter, you delivered advertising leverage. So I don't know if you can maybe just update us on the brand affiliate plans, sort of refining the partners and really seeing leverage opportunities while also stimulating demand.

Look, I think the work that we're doing with AI and technology on our media and marketing space is going to be transformational to the business, I mean, particularly as we get into Q4. Understanding how TikTok Shop also drives demand off platform. Understanding how median one market drives demand in another market. There is so much what we're putting out into the world, I think we're now getting the tools to kind of understand how one piece of content kind of impacts our business in lots of different ways. I think it's going to help us drive media efficiency. But also I don't think, Steve, that we should think of it is that we're going to get media leverage on a long-term basis. I think there's a lot of countries for us to continue to keep investing into.

I think there's a tremendous opportunity in Europe that we've got to just keep spending and investing and building brand awareness and building our product knowledge and who SharkNinja is. I think, Latin America is, again just at its infancy. I was with the CEO of Mercado Libre on Sunday. They're super excited. I mean, we're excited about our partnership with them and developing them as kind of a great pathway to reach Latin American consumers.

So I wouldn't expect lots of leverage moving forward, but I would expect that we're going to drive efficiency in our media through all the tools that we're implementing.

And we have reached the allotted time for questions. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Hello, everybody, and welcome to the SharkNinja's Fourth Quarter '25 and FY '25 Earnings Call. My name is Elliot, and I will be coordinating your call today. [Operator Instructions]

I would now like to hand over to James Lamb, Senior Vice President of Investor Relations and Treasury.

Good morning, and welcome to SharkNinja's Fourth Quarter 2025 Earnings Conference Call. Earlier today, we issued our Q4 earnings release which is available on the company's website at ir.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 Barrocas, and Chief Financial Officer, Adam Quigley. Mark will start by providing a business update followed by Adam, who will review our Q4 and full year 2025 financial results, and share our outlook for 2026. Mark will then offer some closing remarks before we open the call up to questions. [Operator Instructions]

I would now like to turn the call over to Mark.

Thank you, James. Good morning, everyone, and thank you for joining us today. 2025 concluded on a high note for SharkNinja. It was an outstanding holiday season driven by broad-based strength across product categories, geographies and channels. Our remarkable fourth quarter and full year performance reflect many factors, but the simplest are the most crucial.

Consumers want Shark and Ninja products, and they're discovering them in more places than ever before. We believe we are meeting consumers where they are by delivering accessible innovation and exceptional value. We're incredibly proud of what SharkNinja accomplished this year. Record financial results, swift and decisive execution and an ever-growing array of groundbreaking products that consumers love.

Our most important objective this year and every year is building trust with consumers. We win when consumers around the world get excited to buy our products and feel delighted when using them. To this day, nothing makes me happier than reading a 5-star review online, and nothing gets to be more motivated than feedback telling us where we can improve. Obsession with the consumer is in our DNA. It powers everything we do. We believe that when we successfully captivated consumers, we earn permission to expand further into their lives. With a never-ending spectrum of consumer problems to solve we feel the opportunity ahead of us is enormous.

Our Q4 results were excellent across the board with net sales increasing nearly 18% year-over-year, the fastest growth rate of 2025. Domestic growth accelerated to almost 16%, implemented by international growth of over 21%. Adjusted gross margin expanded by nearly 40 basis points and adjusted EBITDA increased 36% year-over-year. This performance reflects our third consecutive quarter of leverage in adjusted operating expenses as a percentage of net sales. A pattern we believe demonstrates the scalability of our model.

Importantly, this performance came against a challenging macro backdrop. While our markets remained under pressure throughout 2025, on top of declines in both '24 and '23, we continue to rapidly gain share. According to [ Sircana ], the total U.S. market that we participate in declined in the low single digits year-over-year for the full year 2025, excluding SharkNinja's performance. Q4 was even more challenging for the industry with mid-single-digit declines year-over-year, again, excluding SharkNinja. The magnitude of our outperformance is noteworthy. With market share gains across each of our 4 category groupings in '25, Cleaning, Cooking and Beverage, Food Preparation and Beauty and Home Environment.

Despite macro headwinds SharkNinja delivered its 11th consecutive quarter of double-digit top line growth, and we did it while staying true to our core strategy, continuing to invest to drive innovation and maintaining our marketing momentum. We kept executing the same tried and true playbook even with every challenge presented in 2025. In the face of uncertainty, our goal is consistent execution and durable performance, not just for 1 quarter but for every quarter. We're confident in our ability to operate effectively in tough consumer environment and diversification is a central reason why.

Diversification is a foundational driver of success across our business. The most obvious benefit is revenue growth. We have more products, more channels and more geographies, giving us multiple paths to expand. I'll return to this when I discuss our 3-pillar growth strategy. But first, let's look at the several ways, diversification differentiate SharkNinja, starting with the consumer.

Consumer diversification allows us to reach a broader demographic than ever before. Years ago, our core customer was typically a 35- to 55-year-old women. Today, we have high school students asking for Shark and Ninja products for the holidays. 60-year-old [indiscernible] sharing product reviews on social media and everything in between. As we enter new categories, especially in beauty and outdoor, we expect this reach to expand further. Most importantly, a more diverse consumer base generates deeper insights that fuel our disruptive innovation engine.

Supply chain diversification is another major differentiator. Our work here began more than 5 years ago, driven by significant investment in people, infrastructure and time. Today, we have the ability to manufacture nearly a 100% of our U.S. volume outside of China. We think our multi-country sourcing footprint across Southeast Asia gives us meaningful advantages in supply predictability, cost efficiency and risk management. With this supply chain transformation largely complete, 2026 represents our first full year of optimization, unlocking even greater potential benefits ahead.

Marketing diversification continues to expand our reach and engagement. From Tom [ Brady ] [indiscernible] major football events on connected platforms, to our engineers engaging directly with consumers on forms like Reddit. SharkNinja's marketing ecosystem is both expensive and distinctive. Our social-first ecosystem has been deliberately built to foster affinity and loyalty amongst consumers. One analyst recently highlighted our social media momentum SharkNinja reached 3.9 million followers across Instagram and TikTok in 2025, reflecting a 119% year-on-year growth, far outpacing peers who averaged just 8% growth on these platforms on a much smaller base of followers.

[indiscernible] consumers broadly requires an equally diversified go-to-market strategy. In 2025, we deepened partnerships with key retailers, gaining increased flexibility in pricing and promotions. At the same time, we significantly enhanced our direct-to-consumer capabilities. Our newly redesigned sharkninja.com is already delivering strong early results with higher engagement, improved conversion and increased average order value.

Finally, investment diversification, particularly in technology, is strengthening our foundation for long-term growth. In 2025, we completed the final stages of our global Oracle implementation. We launched Salesforce in the U.S. and Canada to power our new D2C platform, and we rolled out advanced ROI dashboards for social media spending. We also leaned in materially with artificial intelligence, from product innovation to consumer experience.

Our goal is to embed a greater level of AI capabilities in all of our products going forward. Some of which will debut as early as the second half of 2026 in categories like coffee, air purification and robotics. We're on track to hire a 100 new software engineers to help drive this AI ambition. From more intelligent user interfaces, to greater automation, to app-based companion features. We believe consumer experience is another rich area of AI-powered potential.

As an example, we've moved from sampling under 5% of contact center calls to AI score, and nearly 100% of interactions for quality, empathy and listening. Additionally, we feel the massive amount of consumer insight data that SharkNinja processes can benefit from AI applications. Our objective is faster, more precise product innovation and improved messaging and content to resonate in a stronger way with consumers.

This is the SharkNinja flywheel. Consumer insights, our resilient global supply chain, always on marketing and omnichannel distribution. We believe it's a competitive advantage that exceedingly difficult to replicate at our scale. The diversification shows up very clearly in our financial results. Sustained double-digit growth, expanding margins and strong free cash flow. I'd like to spotlight our balance sheet where years of compounding success have put us in a net cash position as we exit 2025, an achievement that opens meaningful new options for SharkNinja.

Today, the leadership team and I are thrilled to announce that our Board of Directors has authorized an inaugural $750 million share repurchase program. We're excited about the potential that our record levels of cash and equivalents, and our anticipated future cash flow could have to drive shareholder value for years. We intend to utilize this authorization to repurchase shares opportunistically while also planning to offset the natural dilution from stock-based compensation. We believe this is a significant milestone for SharkNinja, and a testament to our operational discipline and cash management execution.

With that, let me turn to our 3-pillar growth strategy. Beginning with our first pillar, expansion into new and adjacent categories. In 2025, we met our goal of entering 2 additional subcategories. Finishing the year at 38, with the addition to [ Propane Grill ] and [ Outdoor Fire Pit ]. We plan to add two more categories to our portfolio in 2026 with significant excitement around both launches. Category expansion is one of our most foundational differentiators. It grows our addressable market and reshapes how consumers perceive the Shark and Ninja brands.

A standout example is Shark Beauty, which we feel is rapidly emerging as a leader in beauty technology. View this opportunity as a massive global white space. In 2025, we established Shark Beauty as a disruptive innovator in skincare with the global launch of Shark CryoGlow, and the recent debut of Shark facial [indiscernible], a revolutionary at-home hydro-powered facial device with contrast therapy. These products were runaway holiday successes, complementing our strong [ hair ] care performance and helping to cement Shark Beauty as the #1 skin care facial device brand in the U.S.

We see clear runway ahead not only in hair and skin but across the broader health and wellness ecosystem. The Ninja Fireside 360, our combo smokeless fire pit and propane power and outdoor space heater exemplifies how new categories bring new consumers into our brands. For many buyers, this innovative product was their first Ninja purchase, opening the door to a lifetime relationship with SharkNinja. It also demonstrates how we build new technical competencies. By investing in propane expertise, we successfully paved the way to launch the Ninja FlexFlame and Ninja [ FireSide 360 ], creating a foundation for future innovation. This model, engaging experts, learning deeply and innovating boldly is core to SharkNinja. It underpins our expansion across heated cooking, frozen treats, food prep and beyond. We believe our 2026 fixed pipeline also reflects years of capability building and we're exceptionally excited about what lies ahead.

Our second growth pillar is growing share in existing categories. Maintaining leadership in large mature categories requires relentless innovation, execution and focus. Two standout examples from 2025 are the Ninja Crispi and the Ninja Luxe Cafe. Ninja Crispi represents the next generation of air frying, promoting healthier cooking with the benefits of glass. Our larger format Crispi Pro delivered a strong holiday performance, setting the stage for broader global expansion in 2026.

Ninja Luxe Cafe is one of the most exciting success stories. By reimagining the at-home espresso experience we've cleaned the best-selling espresso SKU in the United States in under 1 year. In 2026, we will extend this platform with two major renovations, positioning Lux Cafe as a powerful growth engine across a wider spectrum of consumers.

Our Shark [ cleaning ] franchise also delivered outstanding results with continued market share gains across corded and cordless [indiscernible]. In 2026, we plan to introduce breakthrough innovations across several legacy categories, including corded uprights and traditional blending, reinforcing our leadership position.

Our third pillar, international expansion delivered another year of strong performance. The most important takeaway is that our model can scale globally. We believe the most critical parts of our strategy are applicable worldwide, not just to a few countries, driving widespread consumer demand with 5-star reviews, expanding retail partnerships, and producing viral local language marketing, are all key elements to our international playbook.

These attributes can be scaled even more as we evolve from a distributor-led to a direct model in more countries. In Q4, we successfully transitioned to direct operating businesses in the Nordics, Poland and Benelux, while preparing to convert Italy and Spain in the first half of 2026. In each case, we've established a hybrid model, distributor partnerships to serve fragmented customers and a direct relationship with the larger retailers. At the same time, we're upgrading our DTC platforms across major international markets, creating a powerful growth combination.

The U.K. delivered another strong quarter with over 9% year-over-year growth, while EMEA saw robust results across multiple geographies and channels. Our Latin America business also performed exceptionally well. In Mexico, we believe triple-digit growth underscores the strength of our momentum and the exciting opportunities ahead. The success that we're seeing across Latin America is fueling consumer interest for our products in places we don't currently sell, like Ecuador and Peru. In 2026, we're focusing more attention on expanding our reach by ramping a new partnership with the dominant e-commerce player in the region.

Stepping back, diversification remains a central theme. While it introduces complexity, it is powered by constants. Experienced leadership, an innovation-driven culture, unwavering consumer focus and disciplined execution. This approach has enabled us to build two multibillion-dollar brands, and we believe we're only at the beginning. This momentum carries directly into our outlook for 2026 with yet another year of double-digit growth reflected in our net sales guidance. We also remain committed to expanding profitability on the adjusted EBITDA line with an even faster rate of expected growth versus top line. As our track record demonstrates, SharkNinja is focused on delivering consistent quarter-after-quarter performance.

With that, I'll turn it over to Adam, who will walk you through our financial results and share our outlook for 2026.

Thank you, Mark, and good morning, everyone. I'm excited to review our results for the fourth quarter and full year 2025.

Starting with a summary of 2025, SharkNinja achieved $6.4 billion in net sales up nearly 16% year-over-year. Our domestic net sales grew 13.5%, and international net sales increased 20.8%. Adjusted EBITDA increased more than 19% year-over-year to $1.14 billion for the full year, with an adjusted EBITDA margin expanding approximately 50 basis points. Finally, adjusted earnings per share reached a new record for SharkNinja at $5.28, up nearly 21% year-over-year.

A moment ago, Mark highlighted the consistency SharkNinja strives to achieve in our results. We think our sales growth this year is a powerful proof point of this model in action. On a rounded basis, our year-over-year total net sales increased 15%, 16%, 14% and 18% through the fourth quarter of 2025. Now let's dive into more detail about our performance in Q4, specifically, starting with sales.

Net sales in the fourth quarter increased 17.6% year-over-year to $2.1 billion. By geography, domestic net sales increased 15.7% to just over $1.37 billion. International net sales were $729 million, up 21.4%. Our U.K. business grew nicely in Q4 with net sales up 9.2% year-over-year to $326 million. For the full year, our U.K. business grew 7.3% year-over-year. Even while air [indiscernible], our single largest category in the U.K. declined throughout 2025, the rest of our portfolio of categories more than offset the headwind, a testament to the power of our diversification.

Our global category performance further reinforces how SharkNinja can win through diversification. Our overall [indiscernible] sales increased in 2025 despite the tough comparables in the U.K. Across the rest of our international business, we experienced a robust holiday selling season with high retailer enthusiasm to partner with SharkNinja. The EMEA region performed well with strength across multiple countries. Latin America continues to grow rapidly, led by Mexico. Overall, we expected our international net sales growth to accelerate exiting 2025, and we accomplished just that. Year-over-year net sales grew 23.2% in the second half of 2025, compared with 17.3% in the first half. We see enormous future growth opportunity within International for 2026 in the years to come.

Turning to performance by category. Net sales in the Cleaning category increased 3.4% year-over-year to $670 million. [ Carpet ] attraction was a particular standout, partially driven by disruptive innovations like the Shark [indiscernible] cordless spot and stain cleaner. Net sales in the Cooking and Beverage category increased 11.7% year-over-year to $667 million. As we've seen in prior quarters, the Ninja Luxe Cafe espresso machine has continued to be a growing hit worldwide. Net sales in the Food Preparation category increased 28.1% year-over-year to $438 million. Our Frozen Treats business saw further global momentum in the quarter [indiscernible] help propel this category. As we progress throughout 2026, we are excited to introduce new innovations in Frozen Treats and beyond.

Finally, our Beauty and Home Environment category increased 63.2% year-over-year to $326 million, our highest growth rate of the year. Importantly, this strength came from multiple subcategories, including fans, air purifiers and our portfolio of Shark Beauty tech products. Now let's move to gross profit, where our results in the quarter exceeded our internal expectations, driven by two primary factors.

First, our international gross margins expanded nicely based on a number of elements, including cost optimization and channel mix. Secondly, our overall sales mix was more favorable than anticipated, driving margin upside. We did start to see the increased impact of tariffs on our domestic gross margins in Q4, partially offset by this mix benefit on top of the robust an evolving set of mitigation strategies that we have spoken about previously.

Adjusted gross margin in the fourth quarter increased nearly 40 basis points year-over-year to 48.2% of net sales, and GAAP gross margins increased roughly 90 basis points to 47.9% of net sales. Similar to last quarter, the difference between our adjusted and GAAP gross profit results is negligible and should diminish further as 2026 progresses. For the full year, our adjusted gross margin improved approximately 30 basis points year-over-year to 49.4% of net sales. This outcome exemplifies SharkNinja's core competency on gross margin and our diversified approach to driving upside even in a challenging environment.

Moving down the P&L. Our adjusted operating expenses this quarter totaled $645 million, or 30.7% of net sales. This compares to 33.5% of net sales in the year ago quarter, or nearly 280 basis points of favorability year-over-year. We have now produced adjusted operating expense leverage for 3 consecutive quarters, a clear demonstration of our continued cost discipline, balanced with considerable reinvestment in the business to fuel growth.

Research and development expenses increased 13.1% year-over-year to $98 million, compared to $87 million in the prior year period, leveraging 20 basis points year-over-year. We believe investing [ behind ] R&D resources such as personnel and prototypes, remains critical to power our innovation engine. Sales and marketing expenses increased 8% year-over-year to $459 million, compared to $425 million in the prior year period, leveraging almost 200 basis points year-over-year. Our performance this quarter is a great example of the balance I mentioned a moment ago between cost control and investment for growth. Relative to last year, we have internally developed more sophisticated social media optimization tools. These help us more efficiently spend advertising dollars in social channels to drive strong ROI.

At the same time, we have added meaningful global talent to our SharkNinja team of content creators in cities across the world. We believe our sales and marketing capabilities provide a key competitive differentiator for SharkNinja, one that we will work to enhance globally into the future.

General and administrative expenses decreased 13% year-over-year to $107 million, compared to $123 million in the prior year period, leveraging about 180 basis points year-over-year. The bulk of the decrease this quarter relates to lower expenses on personnel, including stock-based compensation favorability year-over-year.

At SharkNinja, our ultimate goal is to profitability growth in excess of net sales growth, with the adjusted EBITDA as our key metric. We emphatically succeeded on this dimension in Q4 with adjusted EBITDA growing 36% year-over-year to $395 million, roughly double the rate of top line growth. This represents an 18.8% adjusted EBITDA margin, up approximately 250 basis points compared to the prior year period. For the full year 2025, our adjusted EBITDA margin reached 17.7% of net sales, up roughly 50 basis points year-over-year. As we enter 2026, we will continue to utilize our diversified set of gross margin levers and operating expense discipline to keep laser focused on adjusted EBITDA margin improvement potential.

To wrap up the income statement. Our GAAP effective tax rate in Q4 was 22.6%, while our non-GAAP effective tax rate was 21.9%. Adjusted net income in the period was $275 million, or $1.93 per diluted share, compared to $198 million or $1.40 per diluted share in the year ago period. Our adjusted earnings per share in Q4 grew 38% year-over-year while GAAP earnings per share nearly doubled from $0.91 per diluted share to $1.80 per diluted share.

Turning to the balance sheet and cash flow. Total inventories were $1 billion exiting the quarter, up 11.4% year-over-year. With all tariff [ prebilled ] stock now sold through our inventory levels exiting the year reflect a healthy position to support our future growth plans. Our strong fourth quarter results across net sales and profitability delivered record cash flow performance for SharkNinja. In 2025, we achieved $634 million of cash from operating activities, and ended the year with over $777 million of cash and cash equivalents, up more than 100% year-over-year.

Total debt outstanding at the quarter end was $739 million, and we continue to have nearly $490 million of capacity available to us on our $500 million revolving credit facility. We feel this level of cash generation and balance sheet strength gives us a durable financial foundation to invest in growth, thoughtfully deploy capital and maintain optionality as the environment evolves.

As Mark touched on, we have deliberately strengthened SharkNinja's financial profile for years of disciplined execution. We have long viewed our balance sheet as a key advantage relative to peers. In 2024 and '25, we prioritize flexibility around elements like inventory and working capital. In 2026 and beyond, we feel we are in a prime position to remain nimble while also prioritizing capital allocation in a more meaningful way. This is why we were so excited about the $750 million share repurchase authorization. We view it as another means by which we can drive long-term value for our shareholders.

Let's move to our outlook. We entered the year excited about the multiple growth opportunities ahead in cognizant of the tariff-related headwinds that are now fully manifesting in the P&L. Consistent with prior quarters, our initial 2026 outlook assumes current tariff levels persist, including minimum rates of 20% for China, 20% for Vietnam and 19% for Indonesia, Thailand, Malaysia and Cambodia. For the full year 2026, we expect our net sales to increase between 10% and 11%. Adjusted net income per diluted share to be in the range of $5.90 to $6, an increase of 12% to 14% year-over-year. Adjusted EBITDA to be in the range of $1.27 billion to $1.28 billion, representing growth of 12% to 13% year-over-year. Net interest expense to be flat relative to 2025. Our GAAP effective tax rate to be approximately 22% to 23%, and capital expenditures to be between $190 million to $210 million for the year.

To close, our performance in Q4 capped off a truly remarkable year for SharkNinja. In the face of extraordinary challenges, we relentlessly executed to drive value for our consumers, retail partners, employees and shareholders. 2025 will likely be remembered as an exceptional unique period, but in many ways, it has been business as usual for SharkNinja. We remain squarely focused on delivering our goals quarter after quarter, year after year.

With that, I will now turn it back to Mark.

Thanks, Adam. During our Q1 conference call back in May, I reflected on some of the major macroeconomic challenges during my 17-year tenure. The great financial crises, the COVID-19 pandemic, component shortages and now the tariff-related upheaval of 2025. Our tremendous results this year reinforce our perspective that these are not roadblocks. There are opportunities. We believe SharkNinja has emerged from this period stronger, smarter, more agile and unwaveringly committed to winning, all powered by our diversification strategy across the business. This is why I'm so excited for 2026 as a fresh chapter in SharkNinja's evolution as a company.

On the business side, we're now a direct operator in more markets than ever before. There is a huge opportunity ahead to scale our international business, supported by the success in Mexico and early indications in EMEA. We also entered the year with a meaningfully stronger omnichannel presence, more [indiscernible] retailers and momentum with many of our largest partners. This was complemented by our revamped direct-to-consumer presence rolling out across the globe in early 2026.

On the financial side, we've achieved our goal of becoming a domestic filer. This is an exciting milestone for SharkNinja and the final step needed to earn consideration for broader index inclusion. Keep an eye out for our annual report on Form 10-K in the next few weeks and our proxy later in the spring. Across all facets of our business, we believe SharkNinja is set up incredibly well for success for years to come.

I'm often asked by investors how and why we continue our pattern of strong net sales growth and profitability improvements going forward? We think the answer is simple. We focus on two foundational cornerstones. Disruptive consumer-focused product innovation and viral marketing capabilities that create consumer demand. We feel the combination of these driving forces is powerful and differentiated, especially when considering how much white space we see. New categories to pursue, existing categories where we can go deeper and new countries to enter. With so much opportunity ahead, we think our culture is a key enabler of success. As long as we stay grounded in what matters the most, positively impacting people's lives every day and every home around the world, and the existential need to be the very best.

These mantras permeate everything we do. Our focus on the consumer, our multilayered flywheel, our growth pillars, our ability to execute and our guiding principles. To the over 4,000 team members committed to the outrageously extraordinary mindset, I thank you for a truly incredible 2025. We feel like we're still at the beginning of an exciting journey and a bright future for SharkNinja.

Thank you. This concludes our prepared remarks, and I'll now turn it over to the operator to kick off Q&A. Operator?

[Operator Instructions] The first question comes from Brooke Roach with Goldman Sachs.

Mark, given the momentum in the business, I was hoping you could outline what you believe is an appropriate medium-term growth algorithm for the U.S. business. What does that mean for U.S. growth in 2026? And what contribution do you expect from the [indiscernible]

I'm sorry, the ending. What contribution do you expect from units versus price?

Correct. Yes. Thank you, Mark.

Okay. Yes. Yes. So Brooke, look, we came out of Q4 and delivered great growth in the U.S. Our D2C business is growing nicely. Our retailer partners gave us tremendous support in the holiday season and they're continuing do that into 2026. New channels are emerging like TikTok Shop as we've talked about. So we think the U.S. business is a [indiscernible]

[Technical Difficulty]

Sorry, ladies and gentlemen, following the Technical Difficulties. We now turn to Steve Forbes from Guggenheim.

I'll try to get through this -- we're having a little trouble hearing you guys on the call here. But my question really is about International segment growth. So you mentioned triple-digit growth in Mexico, a lot of excitement around LatAm. But you also commented on the recent transitions to a direct model right in a variety of countries.

As we think about the first quarter in particular, right, the quarter we're in, given that we're cycling the [indiscernible] from Mexico last year. Any way to help us just think through how you guys are planning for the international segment growth profile to evolve as we work through 2026?

Can you hear us now?

Yes, that is much better.

Okay. We'll try this. I think I got most of your question, Steve. This is Adam. So as we look at the international growth profile, we do continue to see international growing at a faster rate than the domestic business. We're seeing incredible momentum out of the LatAm business, specifically in Mexico, continuing to accelerate as we entered and exited the second half of this year. We do expect that to continue into the first half of 2026, and we've really laid some really great framework and foundations in that market to continue to build upon.

Over on EMEA, I think what you've seen is an acceleration overall from the first half into the second half of 2025 as well. Obviously, we've talked a lot about lapping pretty strong air [indiscernible] comps overall. We're pleased with the diversification that we're seeing, particularly on the U.K. U.K. is a really good growth position now, having lapped, and continuing to lap pretty strong air [indiscernible] comps there. Similar trends on Germany and France, where, again, our focus is on diversification in those markets, continuing to bring the wealth of category expansions that we have across our developed markets into some of those new and expansion markets.

Look, Steve, I mean, we grew in the fourth quarter, 21% international. We said that there was going to be some noise in the numbers due to the transition of Benelux, Poland, the Nordics. In Q1, there's some disruption as it relates to the movement of Spain and Italy. So yes, we are comping the Mexico transition. There will be some kind of transition impacts that are going to happen in Q1. By the end of Q2, we're still on track to kind of have a normalized business moving forward. And so we think this was the right thing to do. We're up and running now on a direct basis in the Nordics, Benelux and Poland. By the second quarter, we'll be up on a direct basis in Spain and Italy. And we think this kind of distributor direct major transitions will be gone as we come out of the second quarter.

But overall, the U.K. growth was very nice. Our European business continues to be very strong. Latin America, we pointed out. And I'm very excited as we go into the second half of this year to the Middle East. I mean I think we're seeing some really good signs out of some products that we launched in Q4 in the Middle East that our distributor will start getting back into inventory toward the end of Q1. So I think there's a lot of pathways for growth for us in the international business.

Maybe I'll just stick, Mark, with the international commentary because it's sort of where I was getting with the question, you think about the success in Mexico post the transition, post the disruption that you experienced. I don't know if you can maybe frame up for us here on the call. Like how much visibility do you have into those countries that you've transitioned as you look out to the second half of '26 into 2027, planning for 2028.

I mean you're on record talking about the mix of the business eventually getting to 50-50. Obviously, that's some pretty exciting international growth implications. So maybe I'll just leave the question there, and have you comment on just the visibility behind the growth profile as we get past the disruptions?

Look, Steve, I think the biggest thing is, let's start off with do consumers love the products. Okay. Like first and foremost, like, are they resonating with the products? And I think we've got really good visibility as it relates to that. I mean, I think if you -- whether you go online and you look at online reviews in Norway, or you look at online reviews in Mexico, I mean the products are really resonating with consumers. And not just across 1 or 2 categories but across lots of categories.

The second is, is our demand generation model resonating and working? And while Adam pointed out the great Q4 that we had in Mexico, all of that Spanish language media is spilling over into the rest of Latin America as well. I mean our [ PriceSmart ] business was very strong in Q4. We talked about expanding quite a bit with [ Mercado Libre ] in 2026. That's all coming because demand is being generated in -- throughout Latin America by the social media and the demand generation that's happening in Mexico that's spilling over into these other markets.

So I think we have great visibility on the consumers love the products. I think we have really good visibility on is our demand generation model working. I think we're -- it's always slower to get into brick-and-mortar retailer placements. But our pure player business is growing quite a bit. Our D2C business is growing quite a bit. And look, the brick-and-mortars will come online as their planogram set and things like that. But at the end of the day, it's a matter of how are we resonating with the consumer? How -- what kind of relationship are we building with the consumer?

And I think whether it's Norway, or Poland, or Belgium, or Mexico, or Colombia, the consumer is resonating with our model and with our products. And so we're excited as we go into '26.

We now turn to Jonna Kim with TD Cowen.

Just wanted to double click a little bit on the Beauty segment. Could you talk about the customers you're acquiring to Shark brands through Beauty? Any notable characteristics of these customers versus your other brands and products? And then also just related to that, how do you see the distribution opportunity within Beauty? What are some life space, both domestically and internationally?

Okay. Look, what is the difference? I mean, like we're obviously attracting a younger demographic. I mean, we're attracting a young female demographic in particular. You'd be surprised actually in our skin care business, we're also attracting a young male demographic in that. I think that we're creating lots of social media excitement, whether it's CryoGlow or whether it's [indiscernible]. But I'll give you an interesting -- a couple of interesting points about the Beauty business.

I mean let's think about Christmas 2024. If you wanted to buy an [ LED mask ], it was a fringe product that was sold online and it was mainly sold with some no-name brands. I mean, in 2025 -- I mean, we democratize the category. I mean, you could buy a sharp CryoGlow at Costco in Bloomington, Indiana. And I think what bodes so well for this is that we're enlarging the size of the market. I mean the total [ LED mask ] market in the United States was $35 million in 2024. We did more than 2x that, just in '25 ourselves.

So what we're doing in skin care is a lot like what we did in -- with the [indiscernible]. We are a lot like what we did in other categories where we're developing the category. I mean we're the #1 skin care facial device in the U.S. coming out of the holiday season. But more than that, I mean, our goal is we want to be the #1 beauty tech company in the world. And we think it starts with hair, and we think it extends into skin. And we think there's a lot of other places for us to go within the beauty space. I mean, scalp, I think, is an interesting place. I think nails is an interesting place. I think wellness is quite interesting, and we're looking into.

So I think it bodes really well for a big expansive global category for us to develop, but it also opens up the next doors for us as to where to SharkNinja go next.

We now turn to Andrew Didora with Bank of America.

So Mark, I guess, in 2025, you launched several new celebrity campaigns for the likes of [indiscernible]. I guess how would you define the success of these campaigns? And maybe what new initiatives do you have to continue to engage your customers this year?

Okay. I think in '25, we absolutely became more part of culture. Our social media followers grew over 100%. Our engagement with consumers grew over 100%. Everything from how consumers viewed us in the F1 movie, which was a tremendous success for us. I think Tom and Kevin and David and what we're doing with those celebrity partnerships are kind of the tip of the pyramid. But I think it's all part of kind of a campaign that starts at the celebrity level and looks at macro influencers like people like Alex Earl. We go -- we work with tons of micro influencers that have very high engagement and followership in specific categories. I mean that could be in something like outdoor cooking, or that could be in something like clean talk, or food prep, or other areas.

But I think it's all part of how do we meet the consumer where they're engaging in content? That is ask me anything on Reddit, whether that is TikTok shop, whether that is Instagram, whether that's outdoor billboards. It's all part of kind of a total demand generation approach. And I'll tell you something that I think is really exciting as we look at our business right now heading into '26, it's the spillover effect of all the media.

This social media has no borders to it. And so when you run social media content in the U.S. or the U.K., it's being viewed in places all around the world. I mean we're now tracking influencer content based on what countries view their content and engage with their content. We're getting much more sophisticated and it does an influencer only have followership in the United States, or if we hire them, is the influencer also have followership in Mexico, and France and Germany and in other places. So I think the whole approach to our demand generation strategy is getting much, much more sophisticated. The analytics behind it are getting much more sophisticated. That's going to allow us to make sure that we're targeting the right content with the right influencers to the right consumers to drive POS.

That's great. Very helpful. Just a follow-up for Adam, and sorry if I missed this, I think things were cutting in and out a little bit. But can you speak to any gross margins kind of headwinds and tailwinds that you see for this year? And how would you characterize your ability to grow gross margins in 2026?

Yes, certainly. Thanks, Andrew. And a good piece to hit on. So as we look at the first half of 2026, we will be normalizing tariffs as we go into the year and paying -- having them come through the P&L in a way that we didn't have last year in the first half. We, of course, really start to see those flow into our P&L until Q3 a bit and then into Q4. And so the first half, we expect a decent gross margin headwind driven by tariffs, with slight offsets driven by all the cost optimization efforts that we have talked about before, and we've continued to ramp up.

The other piece is that you will start -- you will continue to see the operating expense leverage from us in the first half and into the second half as well, as we continue to not only optimize across various initiatives and spend areas, but also continue to execute against some of the initiatives that we've been doing for years now. So our goal overall remains and you see it obviously in the guidance is that our goal is to expand EBITDA rate as a percentage of sales, and we're certainly intent on doing just that, and you'll see that in the first half right of the gate.

We now turn to Philip Blee with William Blair.

So fourth quarter was very strong. Domestic growth of almost 16% is very impressive. So how do you think about that momentum flowing through into the first quarter, first half of this year? And then how do you think about lapping any retailer stockpiling ahead of tariffs, or potentially some sales left on the table from inventory constraints last year?

And then just want to confirm since we had some sound issues earlier. You mentioned the U.S. growth should be sustainable in the double-digit range, correct?

Yes. I mentioned, Phillip, that I think the U.S. should continue to grow at double digits. We saw strong momentum coming out of '25. We feel good about our placement in '26 with retailers. We feel good about the momentum that our D2C site is going to continue to get as we get through the year and we stand that up with additional functionality.

Look, I mean, there's always inventory issues that you're lapping, or constraints, or one-offs, or one-times. I mean that's part of the diversification across the business that we're managing. I mean it's hard for us to comment on like any one specific thing at a quarterly level. I think the more important thing is that our business has multiple pathways of growth. I mean, we're going to enter into two new product categories this year in '26. We've got a really great pipeline of innovation in '26 that we're going to be bringing to market with 25 new products. We're building our base business. We're continuing to take share in the base business, not just in North America but in Europe and Latin America as well. And we think there's a lot of continued pathways for international growth.

So it's hard to comment on any individual onetime blip quarter-to-quarter. I think at a macro level, how do we feel about our 3-pillar growth strategy? I mean, we feel like it's strong. And we feel like we've got good momentum as we head into '26.

Okay. Great. Very helpful. And then you've spoken a bit about how you're getting smarter about social spend, how you're paying affiliates. We saw quite a bit of leverage that in sales and marketing line this quarter. So how should we think about the impact of those efforts both from, maybe, a marketing effectiveness standpoint, but then also a financial perspective? Should we expect that line to remain more flattish as a percentage of sales for the time being? Or how should we think about that?

Yes. Thanks, Phillip. So as we look at sales and marketing, again, you'll see -- you saw significant leverage in Q4 across that line item. And that's really driven by a number of different factors. It's the media optimization type efforts that Mark talked about earlier. It's allocations between media spend and price and promo, depending on the category, depending on the region. And so that bucket has a lot of different moving pieces within it.

But also as we look ahead and move forward, there's a lot of great optimization efforts that will allow us to continue to leverage that line item. We're at a point of scale now that we can leverage some of these global campaigns Mark touched on earlier. F1 movie as an example. Some of the global brand ambassadors that are on board, those are all assets that appeal across many different markets. So Sales and Marketing is certainly aligned that while it is a competitive advantage and will remain one that we continue to lean in on via investment from new geographies, new categories.

It's also a massive area of leverage. So it's not about harvesting any sort of forced leverage there. It's really about optimizing what is a very large and healthy base of investment.

And our final question today comes from Rupesh Parikh with Oppenheimer.

So just curious, as you guys think about this upcoming fiscal year, how you think about the consumer category backdrop? Do you expect it to be same or better than the prior year? And then just any thoughts on whether your categories could benefit from stimulus in the U.S. market?

Yes. Look, Rupesh, I mean -- I think -- I think other than -- I think I've mentioned this other than the 18 months during COVID, I don't remember kind of a frothy consumer time for us. So I would say the consumer is going to be kind of expected to be flat to where we were last year in general.

Listen, when there is stimulus in the United States, it does seem like that stimulus does flow through the economy quite fast and consumers use that money to spend on things that they want. I can't comment until we understand what that exactly looks like. But I would expect the consumer to be flat. And I think it's our job to earn the consumers hard earned dollar by making great products, and delivering them at a great value, and letting them choose as to whether they go out to dinner 2x more. They buy a Shark or Ninja product.

I mean, I don't think we're competing against our industry per se. I mean, I think we're competing against the pool of consumer discretionary dollars and how do we make sure that we put our best foot forward in making the case as to why they should invest in SharkNinja.

Ladies and gentlemen, that's all the time we have for questions. This concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.

All right. Well, good morning, everyone. My name is Stephen Forbes, consumer discretionary Hardlines analyst at Guggenheim Securities. And we have the pleasure of hosting SharkNinja's CEO, Mark Barrocas; and CFO, Adam Quigley, for a fireside chat this morning.

Mark, it's sort of hard not to go back to early December when you guys sort of first gave us indication that holiday was performing relatively strong. So maybe just start, if there's any sort of update you can provide, on how those trends continue through December? And maybe more importantly, how it sort of changed the conversation or influence the conversations with your core U.S. retailers for the start of '26?

Yes. Great. Well, look, I mean let's start with, we had a relatively strong guidance heading into Q4. We anticipated double-digit growth that was going to come in the quarter. And what we said in early December was that we felt good against the guide that we had put out there. And so sitting here today, we feel really good against the guide that we put out there. Our holiday season was very strong. Our products were high up on people's wish list for the holiday season. The growth was really broad-based across retailers, across product categories.

Our domestic business was strong. Our international business was strong. We really accelerated in some new markets. Our Mexico business did great during the holiday season. Some of the new markets in Europe really started to click and take off. And our core domestic North America business was very healthy. We won with many of the key retailers that won. I mean our direct-to-consumer business was strong during the holiday season, our Amazon business was great. If you walked up and down the aisles of Costco, you would see lots and lots of SharkNinja products.

We won where the consumer was shopping at during the holiday season. So all in all, we always measure our success based on how excited are we on December 31 for the next holiday season. And I'm more excited about next holiday season as I was about this holiday season, but SharkNinja did really, really well with consumers this holiday season.

And then maybe expanding on the thesis of excitement, right? 2025, obviously, somewhat of a challenging year to get product into the distribution channels. It sort of sets '26 to be maybe an above-average year as it pertains to just distribution port expansion and innovation sort of driven sales growth. So I don't know if you can maybe frame for the group here, what it really means for the business as you sort of lean back on some of the new product launches in '25. And then any sort of highlights as you think about 2026 innovation?

Yes. Look, it's hard to put into perspective for investors kind of the amount of mindshare focus, tariffs and mitigating tariffs in the supply chain went into from April of '25 all the way through the end of the year. I mean it wasn't just about moving manufacturing. It was about planning new products and kind of where products we're going to launch and how they were going to launch. Did it go exactly as we wanted it to? No. I mean, to the point of what you're bringing up, Steve, is that there's a lot of products that didn't launch either at the scale that we wanted them to launch or the markets that we wanted.

We've got a lot of pent-up new products from '25 that are going to launch in the first half of '26 that will either scale out to more and more retailers in North America or they'll launch for the first time in international markets. And then on top of that, we've got a really robust '26 new product road map of 25 new products that are going to launch in '26.

So I think that '26 has a lot of innovation behind it. It adds a lot of new products that are going to launch into the market over the course of the next -- let's call it, the next 6 months. But I think for us also, what was exciting for us to see coming out of '25 was a really strong healthy base business. You can look at the products like the Luxe Cafe and what we've done to disrupt the espresso market or you can look at the CryoGlow and what we've done in skin care. But our core vacuum business is performing really nicely. I mean our core heated cooking business is performing nicely. I mean we're reinventing our whole air fryer business with the Ninja Crispi and the Ninja Crispi Pro that we just launched.

So within the portfolio of 38 categories, you've got categories that are really on the upswing. You've got categories that we're kind of really reinventing like the air fryer business. And then you've got new categories that we're entering into when we did that last year. I mean one of the standout products last year that we sold out during the holiday season was the Ninja FireSide, our outdoor heater fire pit.

You look at that business and you say, well, I mean, how big could that really be? I mean I think this year, which will be the full year for FireSide, I think that will be a $75 million to $100 million business that just comes from 0.

Maybe expanding on sort of new product introductions and how you guys manage product life cycle at the SKU level, right? I think there's always sort of a concern that a product life cycle might be shorter than you hope, right, and/or competitive pressures come into the marketplace and cannibalize the opportunity. So I don't know if you can maybe frame out the tail, right? Like how do you guys plan for product life cycle management, maybe use the FrostVault or the Crispi as an example of like what is in the pipeline for newness. And how far out is the business sort of preparing for?

Look, I think the best case study for it would be the air fryer business. I mean, we launched our first air fryer in 2017. And I've taken investors through the case study of -- we launched the 4 Quart air fryer that kind of set that market in motion. And then we went and we developed a larger XL capacity air fryer. And then we recognize that there was this batch cooking, and we created DualZone air fryers. And then we saw that the consumer didn't have enough counter space, but they love that concept. And so then we did a stackable air fryer. And then we recognize that, wow, there could be a whole different way of thinking about this, and we developed the Ninja Crispi.

And we started looking at glass vessels and as people became more conscious of PTFE and kind of healthy cooking and the idea of portable cooking and then we launched a product called the Crispi Pro, which was kind of a family size version of that in the holiday season. I mean I think, look, we still sell lots of original 4 Quart air fryers from back in 2017.

I mean, it's not like that business has completely gone away. I mean a consumer getting into the category at $99 might still be looking at that product as the entry point into the category. But it's obviously a much smaller part of our business. And we've now diversified it into lots and lots of different products. I mean, people say there's an air fryer category in the air fryer category is kind of made up of like 12, 14 different products. So highly diversified across lots of different price point categories. I mean, coffee and espresso is a great example of that as well. I mean we became in the third quarter the #1 selling espresso maker in the United States, I mean after being on the market for less than a year.

We went in, we really disrupted that market. We looked at how do we solve the problem of espresso in the United States and what were the unmet needs of consumers in Europe and Latin America. And we said, let's create this kind of all-in-one product that does espresso in drip coffee and iced coffee and cold brew. Well, now the question is like, where do we go with that category and kind of the SharkNinja model is we want to innovate above that in price point and we also want to innovate below that in price point.

We want to block the knockoffs that are coming in, all the other competitors that are trying to figure out how to disrupt the Luxe Cafe. So in 2026, what you'll see is a lower-price Luxe Cafe that we'll launch with certain features that come out of the core product. And then you'll see a step up new technology that we have, and that will become our kind of halo product that we drive most of our media behind. But that's kind of a model of how we think about category management.

On pricing architecture, right? You think about all the input cost challenges that SharkNinja faced last year. And I don't know if we can think about potential relief, right, on the go forward here, but how does SharkNinja stay true to the pricing architecture and your ability to serve such a broad consumer, right? Maybe talk about like the ability to sort of have product that spans all price points to the example of blocking people out, but also continuing to innovate and push price points higher?

Yes. Well, look, let's start with -- I mean, the SharkNinja business is built on this idea of affordable, accessible innovation. And I think that, at times, consumer companies can kind of drink their own Kool-Aid and kind of think that let's keep pushing price points up, let's keep pushing price points up. I mean I have people that joined the company that the first month they're there. I mean all they want to do is premiumize the product line. And that is just not something that is exciting to us. I mean we want to hold true to we want to service what we call almost everyone. I mean, take the vacuum cleaner market, okay? There's a big business at $79 for vacuums.

We don't participate in that because we think there's a certain level of quality and performance that needs to go into being a Shark vacuum, but our opening price point is $129 in our vacuum space. We want to keep innovating into that $129 space. I mean, we think it's really important for the Ninja consumer to get into the Ninja brand at $59. I mean you could buy a Ninja product for $59, buy a Ninja product for $999.

I mean I want to be able to have the product on your Christmas wish list, I want to be able to outfit your dorm room when you go to college. I want to be able to outfit your first apartment when you get out of college, you move into your first home, you have your first kid. I mean, going through the consumer life cycle is what the business is all about. And I think when you lose focus of who your consumer is, you start to think that your consumer is only the consumer that's shopping at Best Buy or only the consumer that -- I mean I think what's so exciting about the fourth quarter for us is look at the TikTok Shop business.

I mean we want to service the Walmart consumer. We want to service the TikTok Shop consumer. I mean we want to service consumers across all different price point levels. And I think that it's easy for a brand to lose focus around that. It's easy for a brand to keep premiumizing and premiumizing, but then you walk away from a huge swath of consumers, which is not what's exciting to us.

You mentioned TikTok Shop. We had the pleasure of visiting the new Creative Design Hub right in New York City back in December. I don't know if maybe you can frame up to the group here, what that sort of initiative we're building -- means for the business? And how does it sort of have the potential to really drive the creative side and continue to grow those more profitable channels and newer channels?

Yes. Well, look, I mean, to talk first, just about TikTok shop. I mean I personally did my first TikTok Live in December. I mean I think it's really important to go out and sell. I mean, like sell to consumers. And I think what was so exciting is the feedback that you get instantly. I mean, like my TikTok Live generated 1 million likes. I'm not sure if that's good or it's not good, but like there's like instant feedback that was coming in. We were selling product, we were getting feedback from consumers instantly on that.

We did, as a company, we were on TikTok Lives in the month of December for over 250 hours of content. I mean, I envision over the course of the next year that SharkNinja will be running 24-hour TikTok Lives. So you talk about kind of where is that New York office or what we're doing in our studio in Irvine, California, what we're doing in Boston. I mean we've set up kind of Live studios in each one of those offices where employees of the company can go on and do TikTok Lives. The engineers or the product developers that are working on those products could do Ask Me Anythings with consumers. But it's just more and more ways for consumers to get a behind the scenes view of kind of what goes on at SharkNinja, how do these products get developed.

And I think what's so exciting is the interest level that consumers have of kind of wanting to know the story behind the products. I mean wanting to know kind of how this was developed, or asking questions or things like that. So it doesn't mean that we're not going to continue to sell our products to every major retail channel. We want to be relevant wherever the consumer chooses to shop for our products. But I think it is so exciting that there's this platform now that allows you to get this instant feedback.

I mean it's really the modern day QVC where the consumer is just engaging with you constantly and our goal is we don't want a middleman. I mean we don't want a middleman between us and the consumer. I mean we want the relationship to be SharkNinja and the consumer and ultimately, let the consumer decide where they want to shop or buy our products.

I guess on that point, you think about leaning on certain affiliates or brand ambassadors. I think there's -- I think you mentioned before, I don't know, 25,000 branded affiliates that you work with. How does that change that initiative? Or has it improved the sort of profit generation stream behind the affiliate program?

Look, I mean it's still the Wild West. I mean this is still kind of a very immature platform and business model. But it will mature. I mean if I go back 5 years ago, I mean influencers kind of set the price of what they wanted to charge for a piece of content. I mean, today, our analytics kind of tell the influencer, here's where your content is worth. I mean based on how much engagement you have based on how good your content is, based on where the consumer is going after they see your content. Here's what we think the value of your content is as opposed to someone saying, "this is the price for what I want to charge for a particular post." I think the same maturity is going to wind up happening in TikTok Shop.

I mean as -- I don't envision holiday of '26 that 20,000 affiliates are going to sell our products. I mean I think there's going to be kind of certified SharkNinja affiliates that work with us that are base -- that set certain criteria and a certain threshold and a certain understanding of the product, they're brand accretive instead of being brand destructive in some way. But I think that business is going to mature over the next year to the point where it will be a really understandable sales channel from a revenue standpoint, a margin standpoint, what the margin profile looks like, how much it's worth paying these affiliates based on the content.

And let's not forget that these affiliates that are out there that are marketing these products, all of that demand is not staying on the platform. I mean you might see content on the platform and you might go out and buy that product on Amazon, and you might go out and buy that product in Walmart or Target or somewhere else out in the market. So that's another big question of what percentage of the demand is still captured on the platform relative to what percentage of that demand is actually created and serviced way out in the marketplace.

Maybe switching topics. Software engineers, I think you stated sort of a goal of hiring 100 software engineers. I don't know if you can update us on where you are today on that sort of initiative and then when can we sort of expect the product to be influenced by those group of software engineers? And I don't know if there's anything you can sort of tease out for us a little bit what does it mean for the product.

In terms of when you'll see it translate into the product, the second half of '26. I mean the second half of '26, I think you'll start to see the first products that are much more hardware, software, integrated products that are designed in the beginning with software in mind as opposed to a predominantly hardware mechanical product where we say, "hey, we need a PCBA to kind of run certain aspects of the product." What do I think that's going to unlock? I think it's going to unlock a lot more functionality for the consumer in the product. I think take even a product like I mentioned the Luxe Cafe, you know, our espresso product. I mean, right now, there's a static menu that's on the user interface. I think what you'll see coming out as we go to holiday of '26 is kind of an infinite menu that the consumer will be able to create.

And so the products have a lot more functionality right now than what they're -- what we're able to deliver to the consumer. I think with what we're doing on the software side, we're going to be able to unlock that. I mean you're going to see user interfaces that are much more interactive in the product that unlock much more functionality for the consumer. You're going to see more app connected products from us where it makes sense, sometimes where the app controls the product, like in the case of our robots, but in other cases where the app enhances the product, where you, as the consumer, is still controlling the product, but the app is kind of bringing some enhancement to the product with enhancement to the experience.

We've hired to date about half of the goal of what we wanted to. We'll continue to keep hiring. But I think it's the end of '26 and then full year where you're going to start to see SharkNinja products that are bringing much, much more intelligence, much, much more sophistication into the consumer, but not moving away from ease of use. I mean, the goal here is, I mean, we still stand by the consumer should open up the product and not have to go through the instruction manual to be able to figure out how to use the product.

I mean that's our goal in every product. And so as we kind of elevate the sophistication of it with software, the idea is not to muck up the product to make it more and more complex.

Switching to the direct-to-consumer replatforming work. I don't know, Adam, if you can jump in here as well. Maybe just provide an update on where you are in those efforts, country-wise, timeline behind global change and then briefly sort of maybe express the core benefits that you guys see on the horizon from such work.

Sure. Yes. Canada and U.S. are live right now, right? Those went live right before the holiday season. And I think as we led up to that, that was a huge undertaking on the team, right, doing that before the biggest selling period of the year, and I think it went incredibly well, right? Really happy with how that came out. And it wasn't without its bumps. But I think the team that we had behind it, the lean-in from sales force to help us troubleshoot things on a daily basis. And then the optimizations and the daily back and forth that we saw going into December even and kind of deals and the optimizations that we're able to make live time and the insights that we could get, I think, is really exciting.

Now fast forward in 2026. We've got U.K. and the rest of EMEA going live first half. And so feeling really good about that timeline and feeling really good about what that's going to bring. We do have a greater portion of our business on direct-to-consumer in Europe than in the U.S. So this is a more meaningful piece to us. And then once we're global, there's other things that we can start to look at. We talk about a loyalty program. We talk about the subscription. So there's a lot more to even unlock even as we move forward from there.

Listen, I mean conversion rate was up, time on the site was up, our revenue grew, we plan this very conservatively. I mean any time you replatform, you lose all of your kind of search optimization, you got to build that back up. The consumer experience is much, much better. I mean you as investors can just go on the site and kind of look at the consumer experience has improved and it's translated into disproportionate growth in our direct-to-consumer business. So we're excited to get that scaled across the world globally that will -- the entire world will be on sales force by the end of Q2 of this year. And then to Adam's point, we'll be able to start adding on in the second half of the year, kind of lots of the bells and whistles that we want to kind of keep accelerating the direct-to-consumer business.

We think about the global business, right? Obviously, exciting time in terms of transitioning from third-party to self-distribution in a bunch of markets. Maybe update the group here sort of where we are on those efforts. And then, I guess, secondarily, just your conviction and confidence that it will be smoother, right or easier than the Mexico was less disruptive? And then how much visibility you actually have into sort of sell-in as you think about the relationships, right, with the top 5, top 10 retailers within those respective markets.

Yes. So during the fourth quarter, we successfully transitioned Poland, Benelux and the Nordics. January 2, we were shipping all of those people on a direct basis. So you'll see that just kind of wash through our numbers in Q4, and we're off and running. In Q1 and Q2, we'll transition Spain and Italy. I mean those are 2 very big definable markets for us. I think we have a much better formula on how to do this and how to do it kind of in a less disruptive way than what you said maybe a year ago. Now all that being said, in Mexico, I think our business -- I mean, our business in Q4 was on fire in Mexico. I mean we'll grow our business triple digits in Mexico. I mean our Latin America business is growing.

I think what's exciting about it, Steve, I mean we're entering into, for example, South Africa in the second quarter of this year. And you look at a market like South Africa and what's amazing to us is that 80% of the social media that's consumed in South Africa originates in either the U.S., the U.K. or Australia. And so already, there's massive demand in South Africa for our products by name before we've even gotten there. So you asked the question about will the retailers. I mean it's not about the retailers, it's -- the consumers know us, okay? If the consumers know us getting to the retailers is the easiest part, okay? It's about, you know, are there consumers in South Africa that are searching for Ninja CREAMi that are searching for Shark CryoGlow or Shark Flex Style or Shark Vacuums or things like that.

And you already see in Google searches in those markets that people are searching for those products. And so our ability to be able to walk into those retailers in South Africa and that's a market that we're going to launch through a distributor, but we're meeting with a lot of the retailers directly. Those retailers know who SharkNinja is. They know that the consumers are already searching for those products. That has made the conversation kind of much, much easier with a lot of these retailers in these markets. The bellwether in any new market is, is there a successful direct-to-consumer and Amazon business, pure player business, okay? Once that is successful, you know you've got the consumer okay? And then retail will come on board and will follow from that. It's not a push model where we got to line up the retailers and then go get the consumers. We got to go get the consumers first and then let the consumers line up the retailers.

I think it's an exciting topic to leave us on. We're actually out of time. So thank you all for your time today. And I think SharkNinja has a breakout at 10:00 a.m. today and hope to see you there. Thank you.

Thanks.

Thank you.

Good afternoon, everyone. Just a quick disclaimer. For important disclosures, please see the Morgan Stanley Research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep.

So thanks, everyone, for joining. I'm Megan Clapp. I'm one of the U.S. consumer analysts here at Morgan Stanley. Really pleased to be here today with SharkNinja. The company's CEO, Mark Barrocas; and new CFO, Adam Quigley.

SharkNinja probably needs no introduction. I'm sure everyone has one of their products in their homes. But global product design and technology company specializing in household appliances and consumer lifestyle products. Operates under 2 flagship brands: Shark and Ninja.

So Mark and Adam, thanks so much for joining.

Thanks for having us.

Thank you.

Mark, maybe we can start, just zoom out. SharkNinja on track for mid-teens growth this year on the top line, low-teens in the U.S., high-teens internationally. Really impressive in a backdrop that clearly has not been easy for the category or the consumer. Maybe you could just start with what's meaningfully exceeded your expectations this year that's allowed you to deliver another year of record growth? And then maybe on the flip side, what are some of the challenges where you maybe had to navigate a bit more friction than anticipated?

Sure. Well, challenges are easy. I mean, listen, going to your first part of your question, it all starts with product. I mean the business is maniacally focused on solving consumer problems and developing products that solve consumer problems. And we do that across 38 different product categories. We do that globally.

In the third quarter, as an example, I mean, we came out with an outdoor heater fire pit. We came out with a cordless stain cleaner. We came out with a facial product that extracts, depuffs and moisturizes your skin. And that's just 1 quarter of innovation that we brought to the market. And so for us, kind of everything starts with, what's the problem for us to solve? What's the consumer problem for us to solve?

The second is, look, it's not good enough to just create a great product. I mean you've got to create consumer demands for the product. And for us, that is a sizable investment in media and marketing assets. And that could be everything from our partnerships with David Beckham and Kevin Hart and Tom Brady, to macro influencers and micro influencers and experiential events and TV and out-of-home, the whole surround sound of how do we get the consumer excited about the products that we sell.

The third is a dominant omnichannel strategy. I mean we've got a great direct-to-consumer business. We're the most search brands on Amazon in our space. And we're in every major brick-and-mortar retailers. So I mean we're relevant wherever the consumer chooses to shop for our products.

And then it's supply chain. And supply chain, I would put in kind of the opportunity and the challenging bucket this year, which is, as challenging as it's been to move all of our U.S. production outside of China, I think it's made us a much more healthier business, a much more diversified business. It's allowed us to be able to be now in 6 countries sourcing product instead of 1, which we weren't 4 years ago.

And look, we run towards problems; we don't run away from them. And I think it's a business of problem solvers.

As you think about some of those challenges, again of which there were many, tariffs, supply chain shifts, some uneven category trends in some of your markets, is there anything you learned about the organization that surprised you, or any big strategic shifts you made that were long term?

Look, I mean, I tell the story that kind of the day of April 2, of Liberation Day, where we got this news and said, okay, well, what do we do about it? And it really took us kind of an hour to kind of shake it off and say, okay, we've got to run towards this and we've got to figure out how to turn lemons into lemonade. And within 8 days, the organization had come up with 1,500 initiatives to mitigate the tariffs.

And I think it's emblematic of a business that looks at a problem and sees it as an opportunity. And whether that is COVID, and we came out of COVID stronger than when we went into it. And whether that's the 2008, 2009 financial crisis, we came out of it stronger than we went into it. And so it's a business that continues to keep reinventing itself.

I mean if I go back 17 years ago, 50% of our business was 1 product. And today we're in 36 different categories and we're in 26 different countries. And we continue to just keep disrupting ourselves and reinventing ourselves and recognizing that the only thing constant at SharkNinja is that things are going to change.

That's helpful. Maybe the question on everyone's mind, you talked about POS momentum exiting the third quarter. We're now through Black Friday, Cyber Monday. Can you share with us how demand has trended through the holiday season thus far?

So we went into the fourth quarter with a strong guidance number. I mean we guided with top line up 16%. And Q4 for us kind of starts with like Prime Day 2. We came out, we had a very strong Prime Day 2. From their Black Friday Deal started as early as the end of October. I mean they've been running now for the last couple of weeks. Coming out of the Black Friday week, we feel really good about our guidance. Growth in the domestic business, growth in the international business.

The growth is pretty broad-based by product category. I think there's clearly pockets of the market that performed better than others over the course of the last 2 weeks. We re-platformed our direct-to-consumer site in the U.S. and Canada a couple of months ago, and we experienced great D2C growth. We're excited about TikTok Shop. We were the second largest brand on TikTok Shop in the month of October.

So I think there's real pockets of strength in the business. But again, it's being driven by our innovation, our demand creation. And so overall, we feel good about the guidance number.

Great. Maybe just sticking with the U.S. You had a great year in the U.S. SLUSHi had a breakout year; Beauty, you continue to expand. But you also deprioritized some innovation when tariffs hit. So what does the innovation pipeline look -- what does that look like into 2026 compared to 2025 to the extent you can share? And how do you think about maintaining the momentum you've seen in the U.S. this year?

Well, look, I mean, while the supply chain got disrupted, we developed the 25 products that we expected to develop in the year. I mean if you just look at the last, let's call it, 8 weeks, I mean we came out with a product in Ninja BlendBoss, and we came out with the FacialPro Glow, we came out with the Shark StainForce, and we came out with new products in hair care and skin care. And so we developed all the products. We just, as a challenge from a supply chain standpoint, we weren't able to get them to market in the scale that we wanted to.

So what that means is that there's a good pipeline of innovation that's ready to go for the beginning of 2026. We'll get pipeline fills from retailers in January. It's not like we're going to be waiting for new products to launch in this quarter or third quarter. We've got a great pipeline of new products in the first quarter for us to go to market with.

On top of that, our '26 road map, we'll launch 25 new products in 2026 into the market. And so I think '26 is going to present an interesting opportunity for us globally where there's a lot of innovation that we've got across a lot of different categories.

Now investors have asked me, well, like, is there too much? Like when is enough -- when is it too much? And I think what's exciting about it is that, look, we have to be careful, for example, not to launch multiple Ninja products at the same time. But we're hitting different demographics of consumers. We're hitting different price points of consumers. I mean for us to launch a hair care product and a cooking product and a robot product, like those can come roughly in similar time frames. But '26 has got a really robust pipeline of new innovation.

Got it. And obviously, that will help international as well. But international has had some unique dynamics that have impacted various markets this year. Maybe you can break those out, talk about some of those things and, just broadly, whether you see a path for international growth to actually reaccelerate as you maybe move past some of the headwinds you saw in the U.K. with the air fryer market and these distributor transitions, et cetera.

Look, I mean, in the third quarter, our international business grew 25%. I mean, I think in most companies, you would say like that's pretty good. I think we expect our business to do roughly similar or a little bit better in the fourth quarter. So I mean, the numbers that we're talking about here are relative to SharkNinja, not relative to the overall market.

Our U.K. business coming out of '26 -- '25 is going to be a much healthier business than it was coming out of the end of '24. I mean it's more diversified, it looks a lot like the North America business. It's diversified from a channel standpoint, from a consumer standpoint, strong gross margins. Our average sale price is improving in the U.K. Our business in Germany is performing great. Germany is looking very diversified. But there's also some structural changes that we're making with the international business to move from distributor markets to direct markets.

And I think we learned a lot with our transition of Mexico earlier on in the year where we probably shouldn't have done a big-bang approach as we did. There is a role for distributors in all of these markets. We want to kind of sell directly to larger retailers and the direct-to -- and we want to control the direct-to-consumer business.

So the decision we've made is that we're going to go and convert markets like the Nordics and Poland and Benelux in Q3 and Q4 of this year; Spain and Italy in the first and second quarter of next year. And we're going to just flow those numbers through our international business. There'll be some blips, but by the end of Q2 of next year, we'll have a right-sized portfolio of where do we want to be direct versus where do we still want to maintain distributorships.

And can you just talk a little bit about the strategic decision to move direct in certain markets versus not others perhaps? And maybe, Adam, you can talk about -- help us understand the margin implications of some of the transitions?

Yes, listen, there's a role and there has historically been a role for us with using distributors to kind of learn the market and understand the market. But we've come to realize in Europe that, look, the retailers are cross-border retailers. Like us being an American company that comes in and says, MediaMarkt, we're going to sell you in Germany. Well, MediaMarkt says, "Well, what about our stores in Italy and Spain, Turkey and all these other markets?" And our answer historically has been, well, you have to go speak to our distributors in all these other markets. Well, that's not a good answer. And so there's logical reasons why we want to control the larger retailers and the direct-to-consumer market.

And we also want to control the marketing. I mean we've put local content creators into places like the Middle East. We've put local content creators into Paris and Frankfurt, and we have them in Madrid and we're expanding them into Milan.

And so we want to control the marketing. We want to control the demand creation. We want to control the larger retailers. We want to control the direct-to-consumer business. And the only way to do that is for us to take back these distributorships and have a direct model.

Yes. And then on the gross margin front, certainly, there's structural benefit from going -- excuse me -- going from distributor to direct, right, just from fundamentally different structure there. As we look at the benefit of that, we can now get in with the retailer and start to negotiate some of the terms, start to leverage some of our scale.

We've done a lot of that in the U.K. this year. We did a lot of that in the U.S. prior to that. And it's a matter of looking across our entire category set and understanding where do we want to partner with the retailer to better drive product, to better drive the promotions and have a lot more efficiencies there. And so over time, we can then improve that gross margin now that we've become direct in that market.

As a result, we do have outsized OpEx expense that we'd be investing in. We'd be bringing on the media ourself, which we're controlling, as Mark mentioned. Also building out the local teams. And so, OpEx, you're going to have an increase; gross margin, you're going to have an expansion. Net-net, you're going to have an EBITDA rate expansion, which is what our goal is at the end of the day.

The other benefit is, you look at this past Black Friday, our teams, something that we do really well is making changes on the fly, toggling between media, between prices, between promotions. You can't do that if you're operating in a distributor type structure. You can do that when you're direct. And that allows us just to react to what we're seeing very quickly in the moment, rather than having to wait until the end of the season and then maybe get it right the next year.

Makes sense. And maybe, Adam, sticking with you, just bigger picture on gross margin. You've managed it quite well this year despite all of the tariff headwinds and supply chain challenges thrown at you. What's been -- simple question, but like what's been the primary driver of the impressive gross margin performance?

I think the primary driver of the gross margin performance is everything. And it's honestly, Mark's comment on April 2 when we kind of put everything on the table, that was one moment in time. But really the work against it began years prior when we won -- started the diversification effort outside of China. And that wasn't just for tariffs, right? That was for a better geographic diversification for our supply base, which, as we sit here today, gives us a lot of pricing power, a lot of negotiation power with our retailers, with our factories, to be able to make sure that our dual sourcing is giving us the best possible price.

And so as I look across the gross margin spectrum, a lot of that is coming through on the buy side, so what we're buying the actual cost set -- actual product set. On the sell side, to what I mentioned earlier, it's the retailer partnerships. It's renegotiating legacy terms. It's optimizing the prices, the promotions.

We did take price. We took price early on in this year. That wasn't just the result of tariff. That was taking price on innovation. That was looking at price where the consumer was willing to pay for the innovation. SLUSHi is a great example of that, that launched a year ago at $280. Within 48 hours, it was at about $300, and we took another price increase in Q1. That was unrelated to tariffs. That was just a matter of what's the innovation worth to that consumer. Same thing was seen in a couple of other categories across beauty and others.

The other component is mix. We've seen a lot of great mix benefit as we've entered some of these new categories, like beauty, espresso, that, structurally, that's not going away. And so we're going to annualize the tariff impact going into next year as we have a full year of tariffs. This year, we only had about half of that. But some of these structural changes that we started to make midyear this year, we'll also annualize into next year.

Right. So it's fair to say there's some tailwinds, some headwinds as we think about gross margin in 2026. Any other way you'd frame the puts and takes, without giving guidance, of course?

That's right. There's lots of puts and takes. We're in the middle of our plan. I think we feel really good about where the puts and takes are landing, but certainly still a lot to work through.

But the other thing I'll mention is it's not just a gross margin story. You've seen from us the last few quarters our ability to leverage OpEx. We said we were going to leverage OpEx. We did leverage OpEx. And so that remains a primary lever of ours as well, to make sure that, again, it's the EBITDA rate expansion that we're achieving at the end of the day.

Mark, back to you. Investors, this is a question you've probably answered a million times, but I think it's an important one because I think investors often view small appliances as the category is competitive, promotional, price driven. I think you've proved you have a competitive moat. But there's been certain instances in the U.K., for instance, where competition has come in. And you've moved through that and you've perhaps proved that the diversification -- you've definitely proved that diversification matters from that perspective.

But sitting here today, how do you -- how should investors think about kind of handicapping that risk in broader categories and you maintaining that competitive moat broadly?

Look, I mean, let's start off with like, while we've been a U.S. public company for 10 quarters, I mean I've been doing this for 17 years. I mean over the last 17 years, the business has grown at a compounded growth rate of 21% a year, in the last 17 years. So I mean, this story didn't just start. I mean we didn't -- I was asked the same question when the business was $300 million or $500 million. How are you going to keep growing it?

We're at a point now where as you look at next year, if we were to grow double digits next year, I mean we'd have to grow our business $700 million. And where is that growth going to come from? And we've never acquired $1 of revenue in the company's history. And I don't think we need to acquire $1 of revenue. I mean I think there's still a lot of organic pathways for growth for the business. I think there's still lots of share in existing categories that we're in, there's lots of categories that we're single-digit market share in.

We've got a really unique ability to not just enter a category and find the white space in a big definable category and get our fair share in the market. But we also have the ability to go and to create the market. I mean take a category like LED, infrared face masks. Last year, in 2024, total market size in the U.S. was $35 million. This year, I mean, the Shark CryoGlow alone in the U.S. will do $70 million. So we've enlarged the size of these markets.

There's lots of new categories to expand into. I mean if you would have asked me 5 years ago, "Where else can we go in the home?" today it's like, where can we go outside the home? I mean outside the home, there are so many places for us to expand into. How do we look at products that can be used inside or outside of home? And then when it comes to international expansion, I think in the short to medium term, 50% of our business coming from outside of the U.S. is a realistic number for us to think about.

So I think that when people look at our business, they look at some of the hit media products that we have. The fact is that we have a very strong, healthy base business that drives a lot of gross margin. There's a lot of embedded losses in our business. We're funding every new category that we enter into. We lose money for a period of time. Every new market we go into, we lose money for a period of time. That's all being funded within the existing business. There's lots of seeds that have been planted that will come to fruition and grow over the coming years. But I think you put all of those pieces together and our track record has shown us that we can keep inventing ourselves and continue to keep driving growth.

That's helpful. You said, if we grow double digits next year, I'm not asking for guidance, but maybe you can just -- your planning, you talked about gross margin. Innovation seems to potentially be a tailwind to next year, just your comments from earlier. Mexico was perhaps a challenge that you'll lap through; the U.K., you'll lap through that in the first half of this year. So seems to be like you could lap through some challenges and you'll have some nice tailwinds on the innovation side. So just any comments on puts and takes that I'm missing as we kind of think about the growth algo in '26.

I mean I think there's a lot of puts and takes. I think what you've mentioned are some of the tailwinds that we certainly have. I think as we look at 2026, certainly not giving guidance now, but as we look across growth in existing categories, growth in new categories, growth in international, I think we have an incredible, balanced portfolio going forward. And kind of looking at where we're at right now in our '26 planning process, there's a lot to be excited about in each of those different pillars.

And I think that's when we're at our best, is when we've got that diversified portfolio to choose from. Because who knows what the macro issues will be next year? But that's something that we've never blamed any business results on. And so for us, it's a matter of controlling what we can control. So so long as we have a diversified portfolio in front of us, I think we're really excited about what '26 is going to bring.

Got it. That's helpful. Mark, you made an interesting comment in a meeting earlier about beauty tech and how, when you went into hair care, there was a clear premium player and competitor. With beauty tech, that hasn't really been the case. So with the CryoGlow, some of these new categories you've gone into, how have you approached the category from a pricing perspective, from a marketing perspective that's maybe been different than what you did with hair care? And yes.

Yes. Look, I mean we entered hair care a couple of years ago. And as you said, I mean, I think the world market today is a 2-horse race when it comes to premium hair care. But I think our aspirations were kind of well more than hair care, because, I mean, we're not taking a technology and applying it into a product; we're trying to find the next consumer problem to solve.

And so as we started getting into the beauty space, we said, okay, well, where else -- where is the next problem for us to solve? And for us, kind of inspiration is either finding something the consumer has a problem with or finding something the consumer is doing outside their home that they're not able to do inside the home.

So we went ahead, and as you said, we went into the Shark CryoGlow. It was not just our first skin care product; it was our first medical device. I mean it's an FDA-approved device. It's approved by the European Board as a medical device. And so it put us into a whole new category in technology of products.

We followed that up with the FacialPro Glow. And what I pointed out was like our desire wasn't to be the best hair care company; it was our desire is to be the best beauty tech company. And I think as a result of that, there's lots of other places for us to explore from a beauty tech perspective.

I mean we have LED technology competency. We have medical device development competency now. We have Peltier technology, having heating and cooling technology. There are so many other places to go. Could we go into the scalp? Could we go into nails? Could we go into other places within beauty? And that's really what you'll see kind of roll out over the next couple of years from us of how do we kind of think of Shark Beauty as not a single category, but as a beauty tech provider for consumers.

Got it. Good segue because I see these products all over TikTok with social media influencers. So not just that, but David Beckham, Kevin Hart, Tom Brady. Your marketing strategy and engine is something that really stands out. What are you doing differently? Maybe I just mentioned it. But what are you doing differently in demand generation that makes it hard for others to copy or where others just aren't going?

Okay. Well, let's start with this is not about just spending money. Like you have to have a product that has a story to tell. I mean if I go back 16 years ago, my partner and I made infomercials because that was telling the story about our product. Like how do we develop it? And what do we develop? And how do we demonstrate it? How do we show it to consumers? So you need a product that you can -- that has a story to tell, I mean, that has a reason for being.

I mean I think what's so exciting about what we do is our products are in over 1,000 consumer homes before we even launch the product. I mean we're getting so much insights and feedback from consumers. And so now we've got this story to tell. So the question is how do you tell the story?

We tell the story through kind of a pyramid approach. Like at the top of the pyramid is what you talked about, which is celebrity partners. I mean David Beckham and Kevin Hart and Tom Brady, because our products really have become part of culture. If you see what Kevin and David did in these neighborhood skits, and I mean, it really is kind of bringing our products to life in terms of how they're used in the home.

Underneath that, there's macro influencers. And those macro influencers could be local influencers that have anywhere from 500,000 to multiple millions. And then underneath that, there's micro influencers. And those micro influencers could have really niche followership, but very high engagement. So when we go into developing a product, we look at that product and say, like, what's the right mix? Who are the people we want to partner with to go and develop and promote the product?

And then that gets coupled with still a lot of traditional advertising. I mean TV commercials and out-of-home and billboards and experiential events and things like that. But it's all meant to kind of authentically communicate to the consumer, how is this product going to change your home, your life? How are you going to engage with it? How do you learn more about it?

I mean I go back to like years ago, when I was a kid, there was a store in New York called SYMS, and they would say the educated consumer is our best customer. I want educated consumers buying Shark and Ninja products. That's why I'm so excited about TikTok Shop, okay? I think TikTok Shop is like the reinvention of QVC and HSN. I think the more consumers can be educated about what they're buying and what they're investing in, I think the more satisfied consumers we're going to have, the more evangelists for our products.

And by the way, they're going to start the organic flywheel. I mean, yes, while the fire might get lit by a Tom Brady or by a macro influencer, the fire keeps going by just the everyday person that buys our products and then goes and tells 10 million of their closest friends with a TikTok or an Instagram video why they like this Shark or Ninja product.

How do you think about the role of agentic AI evolving in terms of driving demand and commerce broadly?

I think it's going to massively change our approach. I think consumers are going to search on whether it's ChatGPT or any of the other platforms. I think, ultimately, the consumer is going to transact on those platforms. I mean they're already starting to transact on those platforms.

Look, you have to follow where the consumer is going. Like it's not our job to pick which retailers are going to win and lose. It's our job to watch where the consumer is going. I mean I think what TikTok did was so interesting because they had all these people on the platform and they said, "Well, how do we keep them on the platform and how do we get them to transact?"

There's hundreds of millions of people every day that are on ChatGPT. Ultimately, they're going to come up with a way of how do we keep them on the platform, how do we get them to transact on the platform. It's our job to make sure that when they're on there, they get the information that they need and we're the brands of choice for them to choose from.

Helpful. Adam, if maybe we can go back to you. Newly stepped into the CFO role officially, but you've been deeply involved in the finance organization for more than a decade. As stepping into the role, how are you thinking about your priorities looking ahead? And maybe you can touch on capital allocation within that.

Yes. No, absolutely. Yes, I've been here almost 11 years now. And so I think I feel like I've gone through a lot of different events in the company's history and seeing a lot of the incredible growth, a lot of incredible category expansion. I think what is most exciting is looking at kind of what's ahead of us in terms of the 3 pillars that I talked about earlier, but also it's how much white space still exists out there.

So I think in terms of my priorities, it's a matter of making sure that my finance team continues to be that strategic partner to the business to then unlock those opportunities, to light up those opportunities. We're a business that moves fast. And so where finance has the best role to play is by moving at that same speed of the organization, but helping those in the organization move faster, helping those in the organization make better decisions. So that's something I'm keenly focused on.

Within the team itself, I'm really excited about the team that we have on board. I think we've got a great group to kind of continue to face the challenges that we have ahead.

Working capital optimization and capital allocation, that's an area that I feel like we haven't even tapped into the opportunity there. I think one of the first opportunities that maybe we did lean into was last year with our balance sheet in terms of bringing on more inventory ahead of tariffs and be able to bring on an incredible amount of tariff prebuild, that really we're just now seeing the end of in Q4.

Looking ahead, our #1 priority for capital allocation is internal. It is investing in the new geographies. It's investing in R&D. That's definitely the #1 priority that we'll continue to look at. Mark said it earlier, we've never acquired a $1 of growth; it's all been organic. And so I don't see that changing.

That said, we'd be opportunistic, right? We are well positioned if something did come along that made sense. But at this point, it's not getting distracted by the shiny object. There's so much opportunity for us to capitalize on in front of us.

But other things across the balance sheet. I mean share repurchase, that's always an opportunity that could be out there for us and is one that I think we look at going into 2026 as a great way to return value to the shareholders. There's a lot of other working capital initiatives that are already under flight. I talked about earlier moving from distributor to direct and the opportunities that that unlocks. Same thing on payment terms, same thing on the accounts receivable. There's a lot of other working capital optimizations that we're going to be after going into next year.

And so again, I think starting from a position of strength with the balance sheet is a great position to be in, but then also respecting that we've got a lot of opportunity that we could still go from here.

As the rise of TikTok Shop and your DTC business grows, is there -- do you foresee any distribution strategic changes or needs arising as those, not alternative, but those channels continue to grow and maybe have a bit of a different distribution model?

I think it will accelerate our continued improvement across our distribution. Our distribution network has been a constantly evolving organism over the last 11 years that I've been in there. One of the first projects I worked on was setting up -- helping set up an East Coast distribution center to be able to get product to consumers quicker. That's not to put Amazon out, right? That's to be able to ensure that we're delivering great service to our consumers. That's within the U.S.

Within Europe, you already have the ability to get product to consumers rather quickly. So it's really more a matter of making sure that we've set up the distribution network there to then capitalize on the new markets that we're going into and be able to set up for the growth that's to come in those markets.

The other thing is looking at distribution centers that traditionally were shipping truckloads, and now having distribution centers that can do both truckload and individual parcels. Having the TikTok business on top of our D2C business is just a greater amount of volume for us to put through those warehouses, which just gives us more opportunities to continue to optimize and again leverage that scale.

Right. So we have a little over 5 minutes left. I just wanted to open it to the room, to see if there are questions. Any brave souls? No one? Okay. Well, feel free to raise your hand if you have any questions.

Maybe if we can go back, just stick with the DTC business. You've talked about at the beginning, Mark, you relaunched the unified platform. How are you thinking about the role of DTC broadly going forward? Is it still mostly insights? Is it -- what does the role broadly for that segment look like?

Look, I mean, a credible destination for the consumer. I mean up until 8 weeks ago, I mean you had to go to 3 platforms if you wanted to transact with us. There was Ninja Kitchen, there was Shark Beauty, there was Shark Clean. I mean this holiday season now is the first time you could actually put in your cart a Ninja product and a Shark product together.

So I think -- it's not to say that we're tipping the scales towards direct-to-consumer. I mean we want to be relevant wherever the consumer chooses to shop for our products. But the experience we've been providing on our site has not been great. I think we've upgraded it tremendously.

I think that EMEA will be up and running by the beginning of the second quarter of next year. And I think that the consumer should be going to one destination to get all the information they want about our products, content about our products. And if they so choose to want to buy on the site, great, but it's totally up to them.

That's helpful. I'll open it again. Anyone? Okay.

Adam, maybe a bit of a housekeeping item. But you've been discussing the -- becoming a domestic filer, that's been the goal, by the beginning of next year. Can you give us any update on just how that's going? Anything investors should keep in mind around the transition?

Yes. No, I would say it's going well. And I would also say that, look, this has been the intent since the spin back in July of '23. And so it's a work stream that we've been preparing for, we've resourced against. We've got our weekly meetings against it.

And so I think we're on track, January 1, domestic filer, you'll see a 10-K from us. And so I think you're going to see the same level of disclosures that you'd get from any other domestic filer.

Great. Maybe we can -- you both mentioned it briefly, but just pricing. You've taken -- you can tell me how many times you've taken it in SLUSHi, prices up. I think it's been a lot. Tariffs, obviously, that was a lever you chose to pull this year. What's been the reaction from retailers as you've done some of those things? What's been the reaction from consumers? And what have you learned about your pricing power broadly this year?

Look, I mean we started focusing on pricing before the election. I mean, like I have said publicly, I was listening to a founder's podcast on LVMH and was inspired by our Arnault's approach to pricing. And I came back and kind of said to my team, like, do we really know what consumers are willing to pay for our products? And that started November of last year. And so we were kind of well down the path on this.

We have taken price, but we've made sure that we maintain what we call extraordinary value for our products. I mean we think we need market-leading performance, high-quality products at a great value. And of the 80 or 90 price increases that we've taken across different products, look, some have stuck and have not had any demand impact. Some we've decided that we'll pulse more promotions, but we'll keep the price points up. And some we've had to roll back or kind of change out the products and put products in that we can afford.

I mean there are certain price points -- for example, I mean, if you have a $99 blender at Walmart, that consumer is not looking for the $114 blender. I mean they're looking for the $99 blender. And so our ability to kind of say, hey, we can't sell you that same product at $99. We could sell you another product to fill that slot at $99.

So I think to the point both Adam and I brought up of the 1,500 initiatives, I think SharkNinja goes through exhaustive detail that many other companies would just find exhausting, okay? I mean we have an initiative that takes place every week that we spend 5 hours on, which is a meeting called Obsessed With Winning. I mean we go through every single subcategory in every market, and all of our executives kind of sit through that meeting. I think you might look at other companies, you might say, like, "Do you do that once?" No, we do that every single week. Like, every week, we do that.

And I think that kind of maniacal focus on the details is what's needed. That if I think about kind of last week with Black Friday, I mean, there's people that are hands on keys all day long, like updating Amazon and D2C and our media strategy. And we're making changes today for media that we're going to run this weekend based upon ROI that's coming in. But it's that level of detail that I think differentiates us.

Yes. Getting in under the wire. Is there a microphone somewhere? Up in the front.

Your largest shareholder has been selling shares on a kind of consistent basis. Is this something -- I mean, you obviously don't have any control over this, but is this something that we should be concerned about?

He still has a lot of shares. Yes. But I mean, that's up to him. But I mean, still a very strong believer in the business and still has a sizable share position, and has done it in a very orderly, organized way and provided a lot of transparency to it.

So look, I think it's a good thing. I think he has sold down his shares, I think it's enabled other people to come into it. But it's totally up to him as to how that will transpire as we move forward.

Okay. I think we've got to wrap there. Mark, Adam, thank you so much for being here. Thanks, everyone, for joining.

Great.

Thank you.

Thank you.

Good morning, and thank you all for attending the SharkNinja's Third Quarter 2025 Earnings Call. My name is Brika, and I will be your moderator for today. [Operator Instructions]

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 SharkNinja's Third Quarter 2025 Earnings Conference Call. Earlier today, we issued our Q3 earnings release, which is available on the company's website at ir.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 Barrocas; and Chief Financial Officer, Adam Quigley. Mark will start by providing a business update, followed by Adam, who will review our Q3 financial results and share our outlook for 2025. Mark will then offer some closing remarks before we open the call to questions. [Operator Instructions]

I would now like to turn the call over to Mark.

Thank you, James. Good morning, everyone, and thank you for joining us today.

During a year of massive upheaval across our ecosystem, supply chain disruptions, consumer uncertainty, industry headwinds and other challenges, SharkNinja has continued to triumph. At our core, we're a company of problem solvers. We thrive on tackling problems head on to deliver innovative and groundbreaking solutions time and time again. As 2025 has unfolded, the monumental series of challenges has gotten the better of many companies.

I believe SharkNinja, on the other hand, is a true outlier. We've steadily and meaningfully taken market share across categories and geographies. We've continued delivering disruptive innovation at breakneck speed. And we've done it all with best-in-class profitability and impressive execution. In short, SharkNinja has been exemplary.

The third quarter is a testament to all these factors with outstanding results across the board. Net sales grew over 14% year-over-year, our tenth quarter in a row of double-digit top line growth, all of which is organic. Adjusted gross margins expanded more than 90 basis points year-over-year to surpass 50%, and adjusted EBITDA grew nearly 21% year-over-year. We also delivered our second quarter in a row of [ leverage ] of adjusted operating expense as a percentage of net sales.

These are truly outstanding numbers, and one might ask just how we're able to deliver them. I think they are the byproduct of 2 essential aspects of our culture, 2 things that drive everything we do: our mission of positively impacting people's lives every day and every home around the world; and the existential need to be the absolute best at whatever we do, not just like everyone else, but the best. Our performance this quarter and for the last 17 years proves that this is a winning formula.

Let's deep-dive into sales where SharkNinja continues to materially outpace the competition. Our point-of-sale trends in Q3 demonstrate enviable momentum over a broad base of products and categories. While our data indicates the total U.S. market that we participate in declined slightly year-over-year excluding SharkNinja's performance, our own POS grew in the low double digits. The outperformance expanded in the last 4 weeks exiting the quarter with our POS reaching mid-teens growth as the market weakened further, again, excluding SharkNinja.

We're also seeing tremendous success internationally where net sales growth in Q3 accelerated to almost 26% year-over-year, compared to just over 20% year-over-year in the second quarter. Our top line strength reflects expanding relationships with consumers and retailers. Recent innovative product launches are generating exceptional consumer engagement across reviews, social media and elsewhere.

The trusted relationship that SharkNinja has earned with consumers remains our priority. I believe it's why we've maintained our pace of innovation despite a difficult environment. It's why we keep a maniacal focus on consumer satisfaction. And it's why we continue to expand the places consumers can shop for our products. These elements help ensure SharkNinja is driving extraordinary value to the consumer. I believe as we earn more trust, we build lifetime value and brand loyalty. This advantage means that as we enter new categories, consumers are all ears about what's new with SharkNinja.

On the retailer side, our global relationship status continues to strengthen. The commercial team and I spent time during Q3 with the top leaders at our largest and most important partners across the globe. The feedback was incredibly encouraging and remarkably consistent. SharkNinja is a brand unlike anyone else in our marketplace: fast-moving, uniquely innovative and steadfastly committed to marketing and demand generation. I think this is a rare combination of attributes for any company, but exceptionally so given the extreme difficulties so many have faced in 2025.

Our differentiation has earned us an important seat at the table. You're seeing this already in the lead-up to holiday 2025 with meaningful traction in orders. Even with some shipments moving out of Q3 into Q4 as we anticipated, September was a record month for SharkNinja. As we head through the remainder of the year and into 2026, we could not be more excited about SharkNinja's position with our wholesale partners.

This enthusiasm extends to our direct-to-consumer business as well. In October, we launched a completely redesigned sharkninja.com, consolidating 3 outdated domains into 1 streamlined destination. Our new platform is a massive upgrade. It should enable us to engage the consumer in powerful new ways and provide a more seamless e-commerce experience. Now we can instantly showcase the value of SharkNinja as the innovation powerhouse behind 2 multibillion dollar brands. Over time, we believe this can be an important driver of traffic, conversion and cross-selling activity.

We're also partnering with major retailers to enhance the SharkNinja experience on their online properties through new creative, enhanced imagery and by leveraging some of our celebrity ambassador content. We will continue to roll out modernized DTC sites across Latin America and EMEA in the first half of 2026 with the goal of learning and optimizing as we get into the second half.

Making great products is one thing, but creating widespread viral demand for them is another. SharkNinja employs a very sophisticated approach of doing this in multiple ways, leveraging global brand ambassadors, micro ambassadors, influencers and experiential events.

At the top of the pyramid, our roster of global brand ambassadors continues to expand with 2 tremendous new additions to highlight. We are thrilled to welcome comic sensation, Kevin Hart; and NFL icon, Tom Brady, to the SharkNinja family. Kevin and Tom each bring their own unique and authentic connection to fans and audiences worldwide. I encourage you to watch the first installment of Kevin and David Beckham, a long-time global brand ambassador, as neighbors in a new digital series we're creating. And be sure to check out the new Tom Brady Roast featuring him using our new Ninja Crispi Pro Air Fryer. We have a lot more exciting content to debut in the coming months from our celebrity partners, so stay tuned.

We're also rapidly expanding our influencer network globally, driving more localized contents across key markets in Latin America, Europe and the Middle East. We now have SharkNinja content creators in these markets developing content every single day.

The considerable scope of expertise that we're building should be durable and not easily replicable by others. We believe our investments into effective localized content can strengthen our social media marketing advantage worldwide. The same playbook that we've developed successfully in North America is now coming to the rest of the world. This evolution is another proof point of SharkNinja continuing to evolve into a true global business.

I will now turn to our 3-pillar growth strategies, starting with our first growth pillar: expanding into new and adjacent categories. We're now officially in 38 subcategories with the Q3 launch of Ninja Fireside 360, our revolutionary outdoor heater and fire pit combination. This product exemplifies how we utilize consumer insights to solve problems with innovation. Fireside 360 combines the benefits of traditional heaters and fire pits while eliminating common drawbacks like poor heat distribution and cleanup hassles. The initial consumer response has been excellent, and we're excited to expand further into the outdoor lifestyle space.

Turning to beauty. We've delivered significant new product momentum during the second half of 2025. Shark Glam epitomizes our engineering first approach to solving real consumer problems. It's the first multi-styler that combines ceramic heat and powerful airflow to deliver salon-quality results for even the most challenging hair types.

The Shark [ Glossy ] leverages the same breakthrough technology in a versatile brush product, appealing to a broader consumer base at a more accessible price point. Together, these launches showcase our ability to evolve individual products into comprehensive franchises with hair care as the latest example. We now offer a vast ecosystem of products across multiple use cases and price points, reinforcing our position as an innovation leader transforming the beauty space.

Earlier this year, in the U.S., we entered the skin care market with the Sharp CryoGlow. In under 12 months, Shark CryoGlow is the #1 skin care facial device in the U.S., and Shark Beauty is the #1 skin care facial devices brand in the U.S., both according to Circana.

Acting quickly on the heels of this runaway success we've just launched our next revolutionary innovation in skin care, the Shark Facial Pro Glow with DePuffi. We anticipate this hydrofuel device will redefine the at-home facial experience to deliver spa level results in 10 minutes, combining cleansing, moisturizing and de-puffing technology. Facial Pro Glow has been an enormous success so far with 25,000 people on the wait list and a complete sellout of Amazon in 3 hours.

Our ambition is to be the runaway leader in beauty technology, and we believe cutting-edge products like the Shark CryoGlow and Shark Facial Pro Glow pave the way for that success.

Taking a step back, what other company launches products as wide-ranging as an outdoor heater fire pit combo and a facial extracting and sculpting device in a single quarter? This is the magic of SharkNinja. We relentlessly pursue the next great breakthroughs across an infinite number of consumer problems to solve.

We remain fully committed to delivering on our 2025 innovation road map with 25 new products as promised. This is a tall task considering all the supply disruptions earlier this year, but we believe we enter next year with meaningful momentum as new products ramp and our exciting 2026 launches rollout.

Now let's turn to our second growth pillar: growing share in existing categories. I mentioned earlier how profoundly we outperformed the market we serve in Q3, and the same pattern has been evident all year. Year-to-date, our internal data supports clear market share gains across all 4 of our category groupings: cleaning, cooking, food preparation and beauty and home environment.

The cleaning business was a particular standout in Q3 with growth across all subcategories. Our robotics division continues to gain traction, while our extraction products also performed well. Extraction represents a great example of one of the hallmarks of SharkNinja, the drive to deliver demonstrably superior product than what we believe the market is currently offering. As Shark grew into a powerhouse within the vacuum and floor care markets, retailers asked us for years to enter extraction. We resisted it first because, initially, it wasn't clear how we could solve the consumers' problems in a better, more innovative way. We kept at it and introduced our Shark Stain Striker platform to great success. In just a few years, we've gone from 0% share to a meaningful position in the extraction market.

In Q3, we took another leap forward with the introduction of the Shark Stain Force. This revolutionary cordless stain elimination system addresses what we call stainxiety, the stress consumers feel when faced with tough stains or spill emergencies. The product became a viral sensation on social media with plenty of user-generated content. Best of all, authentic consumer enthusiasm is translating directly into strong sales performance, reinforcing the power of our consumer-centric product development approach.

Another social media standout is the Ninja Blend Boss, our first-ever tumbler blender that's redefining portable wellness with an ultra powerful motor and 100% leakproof design. The innovative on-the-go solution demonstrates the potency of our integrated marketing approach. And the launch post went viral. We've seen millions of impressions across TikTok, Instagram, YouTube and Facebook, driving exceptionally strong sales in the first few weeks. I think Ninja Blend Boss is breathing new life into a category that's been dormant, similar to what we spoke about last quarter with fans, and it represents another step in our expansion beyond traditional kitchen appliances to meet consumers' active lifestyles. This kind of organic consumer engagement reflects the genuine excitement our innovations generate in the marketplace.

Lastly, I want to highlight the Ninja Crispi Pro launch, that further extends our leadership in the glass system air fryer category. Ninja Crispi Pro represents the latest building block in our next-generation air-frying franchise, with expanded excel capacity and enhanced functionality. We have additional breakthrough Crispi products coming in 2026 that I believe will keep one of our largest categories refreshed and vibrant for consumers.

A common thread unites all 3 of the products I just highlighted. They represent disruptive innovation within some of our core existing businesses. The Shark Stain Force delivers the best stain fighting in the category with no cords and no setup. The Ninja Blend Boss completely rethinks the way the consumer can utilize a single-serve blending platform as a fashionable, unique and on-the-go product. The Ninja Crispi meaningfully expands the kinds of meals our revolutionary glass system air fryer can handle. In each case, we believe we're delivering compelling newness to help accelerate the replacement cycle across these core franchises.

I think innovating within the base is the key to a healthy and thriving set of existing categories. It's a vital component of our growth algorithm, and we focus on it constantly.

Our third growth pillar, international expansion, delivers exceptional results in Q3. I'm particularly excited about our U.K. business, which saw a dramatic reacceleration to 27% year-over-year net sales growth, compared to roughly 6% in the prior quarter. Our diversified portfolio of products in the U.K. is resonating with consumers in both new and existing categories. The air fryer headwind we've observed throughout 2025 in the U.K. has started to diminish, offset by strength across espresso, beauty, [ stands ], floor care, robotics, frozen treats and more.

Mexico continues to perform exceptionally well, and we believe we're building significant momentum heading into 2026. Our business is firing on all cylinders. Consumer demand is outstanding, with extraordinary point-of-sale metrics since the transition to a direct model. Retailers are responding in kind by expanding the number of categories they buy from SharkNinja. This flywheel is supported by the dedicated resources we have deployed across sales, marketing and operations.

Our success in Mexico is creating a halo effect across other Latin America markets. Our investments in Spanish language media are paying off in multiple countries, driving strong consumer engagement and stellar POS trends. In Q3, we experienced broad-based triple-digit growth in Latin America overall. These trends drive confidence in our expectations for a robust holiday forecast across the region.

Moving to EMEA, we continue to strengthen and build out our business in Germany and France. These are large definable markets where SharkNinja still has significant market share opportunity. Recent meetings with our key retail partners reinforce their excitement to expand shelf placements across more categories throughout Europe.

I believe the power of our 3-pillar growth strategy cannot be overstated. This balanced approach across new categories, existing category share gains and international expansion has enabled us to deliver 10 consecutive quarters of double-digit growth. Our diversification across products, distribution channels and geographies should only fortify our position as we move forward. While many view SharkNinja as a product and marketing company, we're fundamentally a company intently focused on execution and delivering results consistently across all areas of our business.

Given our strong performance and expectations for Q4, we're excited to raise our full year guidance ranges once again, while narrowing them as we enter the final quarter. We're particularly enthusiastic about the holiday season, where our innovative product portfolio and strong retailer relationships have historically positioned us well.

To wrap up, I'm incredibly proud about how we've navigated 2025, during a prolonged period of turbulence around us. We have performed admirably across the dimensions we prioritize, extraordinary sales growth with contributions across geographies, gross margin expansion despite significant tariff headwinds and leverage on operating expense without sacrificing on innovation, marketing or reinvestment in the business.

I think this performance in such a challenging environment demonstrates how resilient and unique SharkNinja is. It's also a testament to the talented group of leaders who have relentlessly worked to drive such strong performance. Results like these don't just happen with our coordinated excellence, across supply chain, operations, commercial, product development, customer service and more. The breadth of our execution is a critical factor in the success of SharkNinja, from new joiners up to our most tenured executives.

And I'd like to formally welcome the newest member of this executive leadership team, Adam Quigley. Adam and I have worked together for more than a decade and I've witnessed firsthand his exceptional financial acumen and strategic thinking ability. He succeeded throughout his SharkNinja tenure from a manager role when we were under $1.5 billion in revenue, to our SVP of Global Planning and Analysis. His responsibilities span some of the most complex challenges: the sale of the business in 2017, listing on the Hong Kong Exchange in 2019, navigating through the COVID-19 pandemic and architecting our tariff mitigation strategy, among others. I believe Adam's deep understanding of our business model and proven track record make him the ideal leader for our finance organization during this exciting growth phase. I'm thrilled to announce our Board of Directors has officially confirmed him to be SharkNinja's new Chief Financial Officer.

And now Adam will walk you through our third quarter financial updated and 2025 outlook.

Thank you, Mark, for the kind introduction, and good morning, everyone. I'm honored to step in the CFO role and join you on the earnings call. I approach this opportunity the same way I have every step of my journey at SharkNinja over the last 11 years: relentlessly focused on enabling the business to thrive while working side by side with Mark and the rest of the executive team. My vision is to continue building our finance function as a strategic partner that helps propel SharkNinja's continued growth and success.

With that, let's review the quarter that yielded record earnings per share for our investors. Net sales in Q3 increased 14.3% year-over-year to $1.63 billion. Looking at our performance by geography, domestic net sales increased 9.5% year-over-year to just over $1.1 billion.

International net sales were $530 million, up 25.8% year-over-year as reported and 21.6% in constant currency. As Mark mentioned earlier, our U.K. net sales were incredibly strong in the third quarter, up 26.7% year-over-year to $237 million. Mexico was also a standout performer in the quarter, while growth in our EMEA business outside of the U.K. moderated slightly. Overall, these excellent results drive confidence in our expectation that international net sales growth will accelerate in the second half of 2025 compared to the first half.

Looking at performance by category. Net sales in the cleaning category increased 12.4% year-over-year to $593 million. Robotics, extraction and corded [ uprights ] all contributed to the success, and we gained considerable market share in the category. Net sales in the cooking and beverage category returned to growth, increasing 6.3% year-over-year to $437 million. Trends here are similar to last quarter with the Ninja Luxe Cafe espresso strength offsetting difficult compares in other subcategories such as air fryers outside the U.S.

Net sales in the food preparation category increased 11.9% year-over-year to $411 million. The Ninja SLUSHi continued to be a global sensation with availability now across our largest global markets. Finally, our beauty and home environment category increased 56.7% year-over-year to $189 million. We experienced broad-based growth across fans, air purifiers, hair care and skin care in the quarter.

Now let's move to gross profit, where we were able to offset higher tariff costs with our relentless focus on profitability. It's worth noting that the 2-year sourcing services agreement with JS Global ended as planned on July 31 of this year. In the third quarter, GAAP gross profit increased 17.6% year-over-year to $818 million or 50.1% of net sales. This represents a record high for GAAP gross margin since our U.S. listing and a significant milestone for SharkNinja above the 50% threshold this quarter.

Adjusted gross profit increased 16.4% year-over-year to $820 million or 50.3% of net sales. Adjusted gross margin increased approximately 90 basis points year-over-year, with multiple elements of our mitigation strategy offsetting a notable headwind from tariffs. The biggest positive contributor to adjusted gross margin this quarter came from multiple initiatives across our product cost optimization. We continually assess gross margin levels to drive improvement in value engineering to reduce build material costs and by introducing replacement versions of existing products that carry higher underlying gross margins, without impacting consumer value. We also made further progress this quarter by diversifying production across our supply chain to drive further savings and flexibility with our dual source model.

While we are pleased with adjusted gross margin performance in the quarter, it's important to note that roughly 1/3 of the year-over-year expansion came from true outperformance, while 2/3 was the result of favorability related to the timing of tariffs flowing through the financials.

Moving down to P&L. Our adjusted operating expenses this quarter totaled $531 million or 32.6% of net sales. This compares to 32.7% of net sales in the year-ago quarter or 16 basis points of leverage year-over-year. As we've committed before, SharkNinja remains laser-focused on balancing cost discipline with the necessary reinvestment levels to fuel our exceptional growth, and we're delivering on that pledge.

I will now review the components of our operating expenses on an adjusted basis. Research and development expenses decreased 3.2% year-over-year to $89 million, compared to $92 million in the prior year period, leveraging 99 basis points year-over-year. I believe this quarter exemplifies how our personnel strategy drives both innovation and efficiency. A year ago, we hired external subject matter experts across new technologies and areas of expertise as we work to develop new solutions to consumer problems. Consistent with our R&D operating model, we strategically brought a portion of that talent in-house, allowing us to retain and develop our knowledge base while optimizing overall operating costs.

Sales and marketing expenses increased 20.7% year-over-year to $355 million, compared to $294 million in the prior year period, deleveraging 116 basis points year-over-year. We continue to invest confidently in our differentiated marketing and demand generation efforts, particularly in new and growing geographies.

General and administrative expenses increased 7.6% year-over-year to $87 million, compared to $81 million in the prior year period, leveraging 33 basis points year-over-year. The bulk of that increase relates to higher merchant fees in our direct-to-consumer business driven by channel growth in EMEA.

Profitability improvement is the cornerstone of our financial philosophy at SharkNinja with a focus on adjusted EBITDA. We are very pleased to deliver outstanding performance with adjusted EBITDA growing 20.7% year-over-year to $317 million. This represents a 19.4% adjusted EBITDA margin, up 100 basis points compared to the prior year period. A really incredible effort by the team here. We will continue to prioritize adjusted EBITDA margin improvement by pursuing opportunities on both the gross margin and operating expense lines.

To wrap up the income statement, our GAAP effective tax rate in Q3 was 22.6%, while our non-GAAP effective tax rate was 22.3%. Adjusted net income for the period was $213 million or $1.50 per diluted share, compared to $170 million or $1.21 per diluted share in the year-ago period. This represents an incredible 24% increase year-over-year, with SharkNinja achieving record results for both GAAP and non-GAAP earnings per share in the third quarter.

Turning to the balance sheet and cash flow. We continue to prioritize flexibility given the substantial advantages our balance sheet provides relative to what we observed across the peer group. At the end of the third quarter, cash and cash equivalents totaled $264 million, up more than 100% year-over-year, with total debt outstanding of $746 million. We continue to have nearly $490 million of capacity available to us on our $500 million revolving credit facility.

Total inventories were $1.16 billion exiting the quarter, up 7.6% year-over-year. We've worked through the majority of the tariff [ rebuild ] inventory that we strategically added in late 2024 and early 2025. Our healthy inventory levels position us well heading into the holiday season.

Let's move to the updated outlook. Entering Q4, we remain confident in our ability to outperform the market. While tariffs remain a dynamic challenge, our revised outlook assumes current tariff levels persist, including minimum rates of 20% for China, 20% Vietnam, 19% for Indonesia, Thailand, Malaysia and Cambodia.

For the fourth quarter of 2025, we expect our net sales growth to be around 16% year-over-year. We anticipate the timing impacts I mentioned earlier related to tariffs will put pressure on our adjusted gross margin by roughly 50 basis points compared to the prior year period. We also anticipate nearly 250 basis points of year-over-year leverage on adjusted operating expense as a percentage of net sales. This sizable improvement comes from seasonally strong fourth quarter sales combined with our continued cost discipline.

Finally, we expect adjusted EBITDA margin in Q4 to increase approximately 200 basis points compared to the prior year period. This expansion, of course, is also impacted by timing shifts related to tariffs. When combined with our Q3 adjusted EBITDA performance, we anticipate second half 2025 adjusted EBITDA margin to demonstrate notable improvement compared to the second half of 2024.

For the full year 2025, we now expect net sales to increase between 15% and 15.5%, compared to our prior year guidance of a 13% to 15% increase. Adjusted net income per diluted share is now expected to be in the range of $5.05 to $5.15, compared to $5 to $5.10 previously. Adjusted EBITDA is now expected to be in the range of $1.115 billion to $1.125 billion, representing growth of 17.2% to 18.3% year-over-year, compared to the prior expectation of $1.1 billion to $1.12 billion, representing growth of 16% to 18% year-over-year.

Net interest expense is now expected to be down $5 million to $10 million relative to 2024, compared to our previous outlook of flat. Our GAAP effective tax rate expectation is now in a range of approximately 23% and to 24%, compared to a range of approximately 24% to 25% previously.

Our capital expenditures guidance remains $180 million to $200 million for the year. We are tracking toward the lower end of that range due to more efficient deployment of capital.

To close, our performance in Q3 exceeded expectations across the board. Reflecting on my tenure, I marvel at how we've evolved and what we've accomplished. While we continue delivering strong growth and profitability, the drivers are now much more expansive. We believe our diversification across products, retailers and geographies should enable us to navigate challenges more effectively than ever before.

I've also witnessed tremendous development across our finance organization during my decade-plus at SharkNinja. It is my distinct honor to lead this amazingly talented group as we work to continue driving value for consumers, employees and shareholders.

I'll now turn it back to Mark.

Thanks, Adam. 2025 has been a year of unprecedented challenges for businesses around the world. While many companies struggle in this environment, SharkNinja is thriving in uncertain times. Where others may lack the willingness or capability to innovate and seize the moment, we're forging ahead full throttle.

Why do we operate like this? It's our existential drive to be the absolute best at what we do. This is the cornerstone of the outrageously extraordinary mindset that fuels everything, from consumer insights and product development, to supply chain and marketing. But mindset means nothing without execution, which is core to our DNA. our success is inextricably linked to the why and the how of SharkNinja, which I believe distinguishes us from everyone else.

I'm proud of what we've accomplished this year and even more excited about what's to come in 2026 and beyond. My sincere gratitude to everyone at SharkNinja who has gone above and beyond to drive our great results. Thank you.

And this concludes our prepared remarks. And I'll now turn it over to the operator to kick off Q&A. Operator?

[Operator Instructions] The first question comes from Brooke Roach with Goldman Sachs.

Mark, can you speak to your outlook for category growth for holiday and into 2026? How confident are you in your ability to continue to outperform the category to the same degree into next year? And is your portfolio of new innovation robust enough to cycle your own tough comparisons and continue to deliver a double-digit level of U.S. growth into 2026?

Yes. Thanks so much, Brooke, for the question. I guess I'll start with your second question first on new innovation. The pipeline of new innovation that we have coming out I think, is great. You could just see what we've done over the last couple of weeks now. I mean our consumer problem-solving machine was on full display. I mean we reinvented outdoor heating and fire pit. We solved the problem of stainxiety with our cordless Stain Force. We brought an at-home facial solution that extracts, moisturizes and de-puffs your skin. I'm not sure that there's another company solving all of these different types of problems.

So I think we've got a great road map of innovation. What I think I'm also really excited about, Brooke, is things that we're doing like, for example, with the Blend Boss, we're reinventing existing categories. I think what we've done with Crispi Pro, look at how we're not resting on our laurels with the air fryer category, but we're trying to completely actually reinvent the air fryer category with Crispi and now Crispi Pro. So the innovation is coming not just from new categories and kind of homerun new ideas, but it's coming from reinventing the base. And I think as we go into '26 I think we're going to see an increasingly larger amount of new products coming from reinventing the base.

On your first question in terms of category growth, I mean, look, I think we've consistently outperformed the market now for the 10 quarters that we've been a U.S. public company. I believe the innovation cycle is there. I think we're getting better and better at our content creation that we're developing. We're engaging with consumers more. So I'm excited about where things are headed.

Your next question comes from Randy Konik with Jefferies.

I just wanted to kind of go through -- Adam, first and foremost, congratulations on your new role. In terms of -- if I think about the new design center opening up in the last week or so, Mark, can you talk about what are your hopes in terms of utilizing that design center to kind of continue to build more muscle into the organization, build more innovation? Where do you see that kind of fitting into the rest of the infrastructure you've built around the world? Kind of let's start there.

Yes, Randy, I think I would start with going back to 2014 when we opened up our engineering office in Central London and recognized that there was a talent base in London for design engineering that we just couldn't attract in Boston to the degree that we wanted to at the time. And fast forward today, we have over 200 engineers in the Battersea Power Station that has really helped build this kind of chasing-the-sun innovation approach that SharkNinja has developed.

I think there's a lot of parallels and similarities with that here in New York, and I'm actually in New York now. I think from a creative standpoint, there is just a level of creative talent that's exceptional in New York. I think from a design perspective, I think PR, media buying, social media. We'll have a content creator studio that will be here right in Midtown. I think it's exciting that we're actually going to be designing and developing products here in Midtown Manhattan. I actually had the Dean of Columbia Engineering School here last week that was excited to send down students and interns here at the facility.

So all in all, I think it's just going to be a great magnet for talent for us. And I think it's going to blend together really well with our teams in Boston and London and around the world to just bring together the best and brightest people.

Super helpful. I guess my last follow-up would be, when you think about the next few years and driving continued international growth, maybe remind us kind of just the way you think about international, how big it should be a portion of the total business within a few years? And where you see the biggest opportunities? You keep talking about massive continued growth in the U.K. and beyond.

And then, Adam, just a follow-up on gross margin. I think you've talked about there's still ability to kind of bring that further higher in the years ahead. Maybe talk to some of the puts and takes you think about high level from a gross margin standpoint as you think about the next couple of years.

Yes. Look, on the international side, I think what's most exciting is that our model is replicating globally. I mean let's start with that. I mean if I go back a couple of years ago, people would say, well, Europe is so different, it's so fragmented. Latin America, how do you even get to that market? Is it even accessible to you? And I think we've kind of proven out that the model of disruptive consumer-focused product innovation and viral marketing that creates consumer demand is a global translatable strategy, and we're seeing that in countries around the world.

I'm very excited about Europe, very excited about Latin America. But I'm also excited that we're building -- we're continuing to build a strong business in the U.K. I mean there's strong nice growth in the U.K. I'll continue to reinforce that I think over time our business in Germany, just because of the market size, will ultimately be bigger than the U.K., and France, maybe a little bit smaller. But for right now, Randy, we're very focused on the path to getting to 50% of our business outside of the U.S., and that's kind of the short to midterm, immediate target for us.

Yes. And on the gross margin front, I mean, you continue to see from us, we've expanded gross margin considerably every quarter thus far. And what we're seeing as we move forward is the changes that we're making, the structural changes, right, we're improving our product costs through value engineering efforts. We're improving the product cost through where we source the product, through the supply chain that we've talked a lot about. And also, we're entering into new categories that are commanding higher price points that have more structural higher gross margins. And so the durability of our ability to expand gross margin, I think we feel very good about going into the future because it's, really, it's no one thing. It's coming from multiple avenues.

We now have Rupesh Parikh with Oppenheimer.

So just going back to your commentary on the inventory side, it appears to be in really good shape, I think you had a high single-digit growth this quarter. Do you believe you have the inventory right now to meet underlying demand or even stronger demand out there? I know at times you guys have been inventory-constrained in recent quarters.

Yes. Thanks for the question, Rupesh. I think where we're at with inventory right now is, you saw last year, we really leaned into our balance sheet strength and brought in prebuilt inventory ahead of some of the tariffs coming into place, and that served us quite well throughout this year. What you saw in Q3 of growing about 7%, 8% year-over-year is we've got healthy inventory stock. We're not in an overstock position by any means. The stock that we have on hand, we feel good about going into the holiday season.

We've talked about some NPDs shifting in terms of timing and potentially picking that up in 2026. But overall heading into the holiday season, I think we feel really good, and also reflecting on some of the actions that were taken a year ago, feeling really good about that and being able to help us on the gross margin front.

Great. And then maybe just a quick follow-up question, just on the elasticity front. We've heard some players out there just some of the challenges they've had in actually taking price while you guys have done quite well. So just curious what you're seeing from an elasticity perspective and overall how you feel about your price gaps.

Yes. Rupesh, we've taken price, but we've done it very, very cautiously. I mean we understand the consumer is challenged, I mean, we're particularly watching the impact of the government shutdown. And what we've seen to date is that we're still delivering extraordinary value to the consumer. I mean we're not the highest-priced products in the market, we're not the lowest-priced products. You could still buy a SharkNinja product for $59 or for $999. So I think we're in all of the key price points that you can -- that consumers are looking for.

And as long as we continue to maintain market-leading performance and high-quality products and still deliver them to consumers at a great value, I think that'll work out fine for us.

We now have Brian McNamara with Canaccord Genuity.

So there was a lot of concern from investors for the last several weeks heading into this print, pretty much all of which was kind of proven unfounded with these results and guidance. A number of your competitors have reported much weaker results, and one common headwind has been kind of retailer inventory levels. So you had a European competitor [indiscernible] last month and called out U.S. retailers' "wait and see" attitude, while a U.S. competitor last week called out a retailer inventory adjustment in Q3 as kind of higher inventory value due to tariffs were absorbed by the market. So I'm just curious how your business was impacted by these market dynamics.

Yes. Brian, I mean, I guess, on your first point, we've delivered 10 consecutive quarters of double-digit top and bottom line growth since we've been a U.S. public company. So I can't speak to what investor concerns were specifically.

As it relates to retailer inventory, yes, I mean, we're experiencing good retailer support. I mean I think the retailers are leaning in with SharkNinja. I think they believe in our innovation. I think they believe in the demand generation that we're going to bring to them. I mean there are, of course, situations where maybe there isn't the inventory levels that we'd like them to be.

I think we distribute through lots of different channels, I mean, from dot-com to brick-and-mortar to D2C. Our job is just to make sure that our innovation is able to be purchased by consumers when we create the demand for it. And we love full retailer participation. In some cases, we get it; in some cases, we don't get it. But we still have to drive demand and fulfill orders for consumers.

And Brian, I was just going to mention too, I think one of the things that we can point to is our Q4 guidance is sort of the confidence that we have in the retail orders that are ahead. And so I think you're seeing that reflected also in what we've put out today.

Great. And then secondly, obviously, I don't want to [ frontload ] your '26 guidance, but you've consistently said you're a double-digit growth company. Is that a reasonable expectation for the top line next year?

Yes. I mean I think as we go forward, we're continuing to be very proud of where we're going to land in 2025. We're not in a position right now to give any guidance on 2026. But I think we've got a really incredible Q3 that we've just put out today, and I think we're really excited about Q4.

Your next question comes from Steven Forbes with Guggenheim Securities.

Mark, Adam, maybe just a follow-up on international -- maybe just a follow-up on international expansion. As we look out sort of over the next couple of quarters here, I was hoping maybe for a formal update on the transitions of the international markets from third-party distribution to self-distribution. I don't know if you can give us maybe a road map to think through, and then maybe broader comments on how has the risk parameters of that transition period changed. I mean we're coming off, right, the Mexico transition that you've talked about some optimism on a smoother transition ahead. So maybe just would love to hear your most updated thoughts as we look ahead to those transitions.

Yes. Steve, I mean, I think the biggest -- as we talked about on previous calls, I mean, I think the biggest learning was not to approach these things from a big bang perspective, that in each market, likely there is a role for a distributor, particularly in countries that do have a sizable amount of small retailers that maybe it's just not in our best interest to be working with on a direct basis. I mean you take a country like Spain, there's 4 major retailers that we're going to work with, but there's a whole lot of other retailers that we might be better off just being serviced by a distributor.

And so I think that's more of the model that we're moving towards. You're going to see that in the Nordics, you're going to see that in Poland. You're going to see that in Spain and Italy, likely see that in some countries in South America. So I think that it shouldn't be kind of an event situation. I think you should see it as more of a kind of just an ongoing smoother transition as we take over some of the larger retailer relationships and continue to partner with distributors to meet the secondary and tertiary retailers in the market.

And then just a quick follow-up. I don't know if you can provide a formal update on the path to becoming a domestic filer. It seems to be a point of interest from your -- from investors. So I don't know if there's a formal statement that you guys can provide.

As we look ahead to 2026, we have officially failed the foreign private issuer test. And so certainly making our way for as a domestic filer, and that will occur in 2026. So yes, on track on that front, what we've said before.

We have Phillip Blee with William Blair.

Adam, congrats on the new role. I wanted to focus on the beauty space a bit more. Can you maybe provide a bit of color around the consumer response to all the newness you've released in hair and skin over the past few months? What kind of lift that could have during this holiday season as a more giftable option? And then what's the opportunity to expand the availability of your skin assortment to retail partners beyond just the specialty beauty space?

Yes. Thanks. Phillip. Look, we're really excited about what we're doing in beauty, both in hair and in skin and what that potentially opens up for us to other categories in beauty. This will be the first holiday selling season for CryoGlow in the United States and most of Europe. So we're excited about that. We're seeing great momentum. It's the #1 selling skincare beauty device in the U.S. in just a very short period of time.

We just launched a product called the Shark Facial Pro Glow. We think it's off to a great start. Won't have broad distribution in Q4, but we think it will as we start to roll it out into Q1 and Q2 and beyond. I think what's exciting about that product is the replenishment topical that is sold with it. I mean we developed that with this Korean formulation company. So I'm excited that we're not just selling a product, but we're selling a system that the consumer will kind of ongoing engage with us.

In the hair care space, we've got a lot of new innovation and technology happening, not just with what we launched today, but the pipeline of what's to come moving forward. I don't view it as that we're only looking at the beauty business to sell that in the prestige retailers. I think you're going to see broadened retail distribution from us. I mean we want to be able to positively impact everyone. We think everyone should feel beautiful with our hair care products and our skin care products.

So I think you'll continue to see broader distribution as we get into '26, but we're in very much our early stages in the expansion of our overall beauty business.

Okay. Great. That's super helpful. And then just now that a lot of this accelerated supply chain diversification efforts are behind you and inventory levels seem to be in good shape, how do you think about the potential to accelerate the category availability in international markets more in line with what's available here in the U.S.? And then what kind of lift could that have on the segment?

Yes. Phillip, I think inventory and our global sourcing model obviously has impacted our ability to roll out as fast as we want or fulfill as much demand as we wanted to globally. But I think there's another constraint also that we've talked about, which is marketing and just being able to invest a sufficient amount of marketing on each category to be able to get a foothold in these new markets.

I mean let's not forget, like 3 years ago, a German consumer didn't know who Shark or Ninja was. And there was no German consumer that had our products in their homes. And so there's still a lot of brand building that's needed. I mean there's still a lot of education that we need to do in a lot of these markets.

So supply chain is a component of it, but I almost see marketing as an equal or bigger component of it. And it's just going to take us some time as we move forward. And really, I don't want to make the mistake of pushing too far too fast and not being able to support it properly from a marketing standpoint.

We have Andrea Teixeira with JPMorgan now.

Congrats, Adam on the promotion. I wanted to go back, Mark, with the commentary, because you did say in the beginning of September, a competitor conference, that some of the inventory may have slipped through into the fourth quarter. And you also mentioned some of the innovation also that had been planned for 2025 could come to fruition in 2026.

So I was just hoping to see if, one, that concern that some of these shipments would shift into the fourth quarter actually did not materialize at the end of the quarter. In other words, you don't have that benefit potentially in the fourth quarter. Obviously, we can do the math, but we just want to figure how consumption and shipment dynamics are unfolding, and inventory levels.

And then if you think on the innovation, obviously, you have announced a very strong pipeline now, but just wondering how that pipeline compares when you started the year or as it unfolded and how it sets you for 2026.

Andrea, let me take the question around Q3 and Q4 and some of the retailer shipment timing. I think every year at this time, we're actively watching and monitoring daily what inventory patterns are and what the retailer shipments are. And so as the retailers ramp up for the holiday season and we also ramp up our inventory for the holiday season, that Q3, Q4 timing is often quite tricky.

I will say our sales and operations team did an incredible job to really get as much out as we could with the retail orders that we had. And I think one of the items that Mark mentioned earlier in the call was retailers really view us quite favorably right now. And we know we're operating in an uncertain consumer environment and that retailers, we can't speak for them, but they're going to make their own choices and they're going to make their own bets across who they're buying inventory from and when. And I think we've positioned ourselves really well for them to prioritize us because they know that we're going to stand behind the products. They know that we were investing behind the brand and the products that we're launching. And I think they're looking to win in Q4 with us.

Yes. In terms of the innovation, listen, I think we feel very good about the pipeline of what we've developed across lots of different categories. And as I said earlier, I think we're doing a really good job of innovating in the base. And that's something that I really want to reinforce to investors because we have a great, healthy base business, which is the foundation of the overall business that we've created. So things like Blend Boss and things like Crispi Pro and things like improvements to our core vacuum business, those are all, I think, really, really exciting, that maybe do not get some of the fan fare out there that they should.

Thank you. I can confirm that does conclude the question-and-answer session here. And that does conclude today's call. Thank you all for your participation. You may now disconnect, and please enjoy the rest of your day.