SharkNinja Aktie

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.

All right. Good morning, and welcome to another session of the Goldman Sachs 32nd Annual Global Retailing Conference. My name is Brooke Roach and I cover the softlines and brand sector here at GS Research. And I'm thrilled to introduce our next session with SharkNinja. Here on stage with me is Mark Barrocas, CEO; and Adam Quigley, Interim CFO. Welcome, Mark, and welcome Adam.

Thanks for having us.

Thank you.

Mark, maybe we can kick it off with a question about the business. You've delivered incredibly strong growth since your public listing a few years ago. As you look across each of those core growth pillars, what gives you confidence in this strategy continuing to deliver sustainables ahead?

Yes. Look, I mean we haven't just delivered great growth since our public offering, but really over the last 17 years, I mean we've delivered great growth. I mean we have a compounded annual growth rate of 21% a year during that period of time over the last 17 years. When you think about kind of the 3 pillars of growth plus that we talk about, which is gaining share in the existing categories that we're in, expanding into new and adjacent categories and international expansion. I'll start with international growth. Let's start with our products are resonating with consumers globally. I think that was always the big question as I went back 6, 7 years ago when we started expanding outside of North America. How do our products translate to a German consumer, a Mexican consumer, a consumer in the Middle East. And consumers are really engaging with Shark and Ninja products globally.

I mean it's the same products that we make, 90% of the products that we make every year are sold globally, are sold in 25 different countries around the world. I mean the only difference is the plug. And so we've started this approach of taking countries direct, like the U.K. and Germany and France and now we started pulling back some of the distributor markets that we've had and moving those to direct markets like Poland and the Nordics and Benelux. We'll accelerate that further as we get into the end of this year and into the beginning of next year with places like Spain and Italy. So I think on the international side, this is a business that, in the reasonable short term, is going to generate close to 50% of our revenue from outside of the U.S. And I think there's a very clear growth trajectory for us to be able to achieve that number.

The second is expanding into new categories, and we get asked the question all the time, have you gone into all the categories that are out there. And I think our business and our innovation is based on finding the next consumer problem to solve. And I think there's an unlimited amount of consumer problems to solve both in the home and outside of the home. And I think a great example of that, Brooke, is the Ninja Fireside that we just came out with. I mean people would say, if we were sitting here, I don't think you would expect that Ninja would be reinventing outdoor heating and fire pits, and we developed a product called the Ninja Fireside. It takes these kind of big patio heaters that you would normally see, where the heat is kind of coming down just on your head and it puts it into this where the heat should be around your body and it also has this ambiance approach with a fire pit and we launched that product basically 10 days ago, and the product already has 90 million impressions on social media.

So again, it's like when you hit on this kind of problem solution, it really resonates with the consumer. And we had great success in the spring with the expansion of our outdoor fans, now we're hoping we're able to translate that into success as we go into the fall and winter months with outdoor heating. So lots and lots of more categories for us to be able to expand into and then I think what is probably most misunderstood by investors because they look at a lot of our hit new products is that we've got a really strong base business. Like we can't grow double digits at the scale that we're growing at, if it wasn't underpinned with just a very healthy base vacuum business and base lending business and kind of the core categories that are very healthy.

I mean if you look at the second quarter, the industry in the second quarter in North America, if you exclude SharkNinja, was down 8%, and our business domestically grew double digits. So in spite of, I think, what has been kind of a challenged market, there's still a lot more white space within the existing categories that we're in to take share and to make sure that, that core business is as healthy as possible.

There's a lot to dig in on that. Maybe we'll start with that key debate, which is this question and focus that some investors have on some of the key product hits. How are you approaching portfolio management? And how do you make sure that not a single product becomes too important to the business and thus, you have a tough time comping the comp?

Yes. Well, look, diversification is, I think, probably 1 of the biggest strengths of SharkNinja. No 1 product category is any meaningful share of our overall business, no 1 customer, no 1 market, so there's lots of diversification. I mean, there's brand diversification. We built $2, $3 billion-plus brands in Shark and Ninja. There's product category diversification. We're in 37 different product categories. There's country diversification. We're selling in 25 different countries. There's channel diversification. Our direct-to-consumer business is growing, but we're also the most search brands on Amazon in our space, and we're in 150 different retail outlets around the world.

So I think a great case study on that, Brooke, is take our air fryer business, okay? Our air fryer business this year is going to grow globally, but it's comping huge growth numbers in 2024 in the U.K. We came into the first quarter of this year, we didn't have the innovation in '24 because we left a lot of that innovation in North America, and we didn't launch it in the U.K. Our business was down slightly in the U.K. in the first quarter. We bounced back and we grew the business in the second quarter. We came out of the second quarter, trending double-digit growth in the U.K. So it just points to that in spite of very strong growth in 1 category, our business in the U.K. continued to diversify. I mean, we expanded into beauty and we expanded into our fan business grew and our vacuum business continued to grow. And so many other businesses grew to kind of make up for what was the largest category in the U.K. business, air fryers being down 25%.

You touched on the international business, and that is one of the areas where you expect it to be 50% of your business in a quite quick time. What are the most important countries in achieving that goal? And how should we be thinking about the contribution from some of these international market distribution switches versus the growth in your core geographies that you're already in?

Look, I mean, I don't know that any of our countries want to be called not important. So I'll say they're all important. I would say there's maybe a hierarchy of size or opportunity. And at the top of that is really Germany and France. Our business this year in the U.K. is going to approach $1 billion in revenue. The market in Germany is bigger than the U.K. The market in France is just a little bit smaller than the U.K. So kind of collectively, we think there's kind of an over $2 billion opportunity just between Germany and France and there's still lots and lots of growth for us in those 2 markets. So at least from a size and scale standpoint, those are the biggest opportunities. Now -- but there's others, lots of our retailers, as all of you may know, in Europe, the retailers don't stay in 1 country.

So retailers like MediaMarkt, they've got a huge presence in Spain. Fnac Darty just made a big acquisition in Italy. Companies like Euronics were all through the continent and so those relationships are kind of driving us into lots of other countries. I mean we think that places like the Nordics could be a $150 million business for us. I mean we think Poland could be a $100 million business for us. And these are all starting from kind of very, very small bases that we have today I think we're really excited about Latin America and the expansion into Latin America, we took back our distributorship.

I think there was a huge learning for us of how to now do these distributorship changes moving forward. I think we kind of took too much of a big bang approach by moving from distributor to direct. But our business in Q3 in Mexico is going to be up triple digits, and our business is expanding. I'll give you an interesting fact that I think is really relevant. We did a whole bunch of research around how consumers consume social media globally. And you would be surprised to see that in the Nordics as an example, 40% of all social media is consumed in English. And so they're getting that social media content from the U.K., from the United States and so before we even launch a product into places like Norway and Sweden and Finland, they've already been exposed to lots of this innovation through the English social media content that they're listening to on their feeds.

I mean, same thing when it comes to Spain, I mean our Latin American Spanish-speaking social media is all translating over into Spain. So the Middle East is a great example. I mean the Middle East consumes 30% to 40% of their social media in the Middle East is coming from the U.K. And so our ability to kind of drive this content, it's not being contained by kind of geographic borders. The content is going out. And that's why in a place like Norway, when we launched our Ninja SLUSHi back a couple of months ago, and it got wind on social media that the product was for sale at a retailer called Power, there were 400 people waiting outside of a Power store in negative degree weather to buy a Ninja SLUSHi machine.

Wow. That's incredible. And you talked a lot about social media as a driver of some of your ability to launch new products, launch them quickly and scale very quickly. It seems like a big competitive advantage for you from a marketing perspective relative to peers, especially in the categories that you play in. How should we be thinking about the investments that you're making in social media marketing looking ahead? How should we be thinking about what's changing in your strategy such that you can make sure that you maintain that lead that you have versus peers in social media marketing?

Okay. So I think 1 of the things that's misunderstood is you could say, well, like can't other people just spend the amount of money that you spend. Now first off, we spend $700 million a year on advertising as a company. I mean, we spend over 11% of sales on advertising. And so if you think about companies that have margins in the low 30s, it would be very hard for them to spend that kind of money. So I think there's a competitive moat just in terms of our gross margin level and the amount of money that we're able to invest in advertising and creating consumer demand. Number 2 is it's not just on social media about investing. I mean, take something like Fireside. We go, we launch the product and the product has to be something that resonates intently with the consumer. I mean this is not just about advertising some kind of off-the-shelf cheap product. I mean when the consumer sees what we did with Fireside and I'd invite all of you to go on to TikTok or Instagram and kind of look at that product and see, I mean, we have posts that have generated 6 million, 7 million, 8 million impressions, enormous amount of engagement because the consumer is looking at the product and the consumer is saying, that's my problem.

You see -- we came out with a product called the Shark TurboBlade. It's a bladeless fan that starts in the vertical position, allows you to be able to tilt it, allows you to be able to kind of move it back and forth. When we went into consumer homes, what consumers started doing is they put the fan at the end of their bed. And we said, "Why are you putting it at the end of your beds" and he said "Well, we're a hot sweeper." And they might have been a hot sleeper, but their partner is cold. So we adjusted the product so that 1 side could shoot straight air at you and the other side could tilt up, so the air went up. So this whole idea of like we created an air blanket. We go on social media and influencers start posting about this idea of "I'm finally not sweeping hot." And when the consumer goes and looks at that post, the consumer is not saying Shark's developed an amazing fan. The consumer is saying, that's my problem. I'm a hot sleeper, like that's the solution to my problem.

So now the conversation is not just do I need a fan. The conversation is, I need to be cool when I sleep, Shark or Ninja has developed the solution to that. And so it's this problem solution thing that resonates so well on social media. Now how is that evolving? We're putting content creators, we're hiring them ourselves. We're generating massive amounts of content globally. We're getting much better at localizing content. We're not just taking English content and then dubbing it in French. We have SharkNinja content creators in France, in Germany, in Spain, in Mexico that are developing content.

So if I think back kind of 3 years ago, we were using a lot of outside agencies to develop content for us. Then it went to kind of we're paying influencers. Right now, the 2 biggest pieces and we're still using some agencies, we're still using influencers but we now have a team of internal content creators that are just all day long developing content on our products and I think it's that localized content. It's being able to say that like, wow, in the U.S., they might like protein ice cream coming out of their Creami. But in France, they're not booking with protein all day long. And they're focused on more decadent desserts. And so making sure that kind of localized content is really resonating with those consumers around the world. So I don't think there's anyone doing it at a global scale to the degree that SharkNinja is doing that.

Adam, 1 question for you on international as we wrap part of the international discussion. Given the heavier investments that Shark has been making in international for the last few years, including marketing, can you provide an update on where international margins currently stand? And where you think that opportunity lies ahead?

Sure. Yes. So I mean, as you've heard before, as we enter a new market, we're going to overinvest in media, right? We have that ability to overinvest in media in new markets because we have a core market where we're starting to leverage that same median. So when Mark talks about 11% of sales is spent on advertising, that varies a lot across our different geographies. So as we enter into a new market, we're over investing to build brand awareness, to launch the product themselves and then over time, 2- to 3-year horizon, we expect that maturity curve to develop and grow and then to start leveraging within those countries again.

That then allows us to overinvest in the next country. And so we're not taking a scattershot approach and investing that degree of media across every country. We're doing it in kind of a thoughtful, well-measured plan where we can roll off 1 mature market, bring on another one. You're seeing that as we develop Germany, France, as we take on a country like Poland, all of that enabled by continuing the scale at our core markets, developed markets, U.S., U.K., getting media efficiencies from what Mark just talked about on social media is a huge lever for us. And so overall, that 11% of media, it looks very different per country. But that 2- to 3-year trajectory is what we kind of look at as we enter the new market.

Listen, I think, Brooke, also to what Adam is pointing out is we're also getting product development scale. So there really is not any incremental costs from a product development standpoint to take that product and then launch it into the next country and the next country. So yes, there's initial start-up investment when it comes to things like media, in a new market, we might spend upwards of 25% of sales on media for a period of time. But that number then kind of cascades down. And when you think about a market, a more mature market like the U.S. we're investing 6.5%, 7% of sales on media. So that media is kind of a big variable. But again, SharkNinja hasn't historically bought businesses. We kind of greenfield them, we enter a new market, we enter a new product category ourselves and the investment in those is really how do we create demand for that, and that's marketing and advertising.

That's really helpful. Let's shift to North America. You've seen some really nice expansion in that business through a couple of different drivers, new products, new categories, but also new distribution. What do you see as the sustainable run rate of your U.S. business going forward? And how should we be thinking about the contribution from new distribution and new shelf space?

Okay. So in terms of the way we think about distribution and shelf space is we want to be relevant wherever the consumer chooses to shop for our products. So it's not for us to say that like if you want to buy a cooler from SharkNinja, you have to buy it here, you have to buy it. We want to -- there's people that are buying coolers everywhere. I mean there's people that are going into Wegmans and buying coolers in the supermarket. I mean we want to be relevant wherever the consumer chooses to shop for these products. Our job is to create this demand out in the marketplace and then to make sure that we show up in those places at the consumer. So as an example, if you take the cooler category, I mean there's demand that's being fulfilled in sporting goods. We want to be in sporting good shops. There's demand that's being filled in places like Bass Pro and Cabela's. We want to be -- these might not have been traditional retailers that were carrying -- that we had sold to in the past, but as we enter into a new category like that, we now want to find our way into that shelf space.

As we think about the domestic business, I mean I remember kind of years ago, people would say, well, the North America business is a slow growth business. And even if you can grow kind of low-single digits in North America and then you can kind of grow a couple of times faster than that internationally. I mean, I think we've demonstrated that we're growing double digits in the domestic business in the North America business. Yes, it's coming from entering new categories. Yes, it's coming from expanding into new distribution partners. But I'll be honest with you, I mean, it's also coming from a really healthy base business. I mean, take a business like our upright vacuum cleaner business. I mean, it's growing. It's throwing off very healthy margins. It's maintaining strong average sell prices. And that -- and a category like that has been funding kind of the next investment categories that we have through the portfolio.

So I'll keep going back and pointing to like the understandable thing for investors is sure this company can keep growing internationally and there's white space internationally or sure, maybe they can come up with a whole bunch of different new categories to be able to enter into. But I want to keep putting a button on the fact that the core base business, the health of the core base business provides this really strong, stable foundation for us to build off of, and there's no way that we could grow the domestic business double digits by coming from just distribution expansion. I mean it's coming because there's this really healthy, high margin, high ASP base business.

Let's turn to a couple of questions that we're asking every company at our conference today. The first one is the health of the consumer. What are your expectations for the environment in the back half of 2025 by geography? Do you expect things to be better, the same or worse?

Yes. Look, I mean, I've been leading this company now for 17 years. And I -- other than for a year during COVID, I've never experienced kind of a frothy consumer environment. I mean you have to work hard to earn the consumers' hard-earned dollar. And I don't think of it as we're competing against other appliance companies for that dollar. I think we're competing against Olive Garden in going out to dinner a couple of extra times or apparel or something like that. I mean there's this whole universe of consumer discretionary spending. And I think when the consumer sees one of our products, I mean, the average sell price of a Shark or Ninja product is $199 to $229. I mean you could buy a Ninja product for $49. You could buy a Ninja product for $999. I mean there's such a wide swath of consumers in socioeconomic groups and demographic groups that are buying into our brands.

We need the consumer to look at our products and say, "Hey, you know what, for $199 I think having a Ninja Creami in my house would be great for my family. And yes, I might go out to dinner two times less versus having that at home." So I think as long as we continue to keep developing disruptive, innovative products, I think if we keep the quotient of market-leading performance, high-quality products at an extraordinary value and I think if we continue to keep creating consumer demand through our viral marketing, I think in whatever consumer environment, there's some discretionary dollars for us to get our fair share.

That's great to hear. One of the topics of the year has been tariffs. And I was wondering if we could quickly touch on that. You've reached your target of sourcing 90% outside of China in the second quarter. But we've also seen tariff rates in other Southeast Asia countries increase. Can you help parse apart the magnitude of the impact that you expect from tariffs this fiscal year and also on an annualized basis?

Yes. I mean, look, I will say that I think we're getting to kind of a more understandable playing field as it relates to tariffs. I mean I think there was a period of time through April and May and June that the new cycle is coming out every day, and you really couldn't make kind of strategic plans around tariffs. I think that we started down a path 4.5 years ago, to diversify outside of China. And at the end of the second quarter, we were able to make 90% of our production outside of China. And I think that's proved to be a wise choice. I mean I think that the tariff landscape is that China is going to be at elevated tariff levels, which today for our products is anywhere from 30% to 55%. I think the other countries that we're in, which are primarily Vietnam, Thailand, Malaysia, Indonesia and Cambodia, are roughly 19%, 20% tariff.

I think that's a world that we -- that's the new world that we are living in. And I think that we've been able to navigate that quite well through opportunities to drive buy-side savings, opportunities on the sell side and then tightening our belt on the operating expense side. I mean our gross margin rate grew in the second quarter. Look, I think that we're not out of the woods as it relates to tariffs, but I think we have tried through a series of 1,500 initiatives in the company to try to minimize the impact on consumers, but also to make sure that we're able to mitigate that. And that's everything from lowering discounting rates on our products. We've passed on some price increases. We have another round of price increases that we're going to be passing on come October 1 in advance of the holiday selling season.

I think we've changed out a lot of product. We've removed certain products and put in kind of higher-margin product in its place. So I think there's -- this is a period of time that plays to SharkNinja's strengths. I mean we're nimble and we're agile and we move quickly and we reacted. And when April 4 came out, a week later, we shut down our entire business roughly. I mean the top 250 executives of the company did a hack week and we came up with 1,500 ideas and within a week we mitigated 80% of the tariffs. And Adam was one of the key leaders and architects in that. And I think we're in a world right now where if we just have to continue to stay agile and react to the deck of cards that are dealt us.

You have some additional price increases coming in the back half. How should we be thinking about your forward pricing strategy? And have you seen any signs of price elasticity of demand as a result of recent price increases?

Yes. So we started price increases actually before tariffs went into effect. I think -- you have to take inspiration from things. I was listening to an acquired podcast on LVMH, and I was inspired by our nose point of view on companies don't know what they're able to actually sell their products for. And I remember listening to that on the weekend, and I pulled my team together on Monday, and I said, look, I mean, we're making some really disruptive viral products. I mean, are we truly getting paid the right amount for those products. I mean we don't want to move away from an extraordinary value to the consumer, but we also feel like maybe there's some price that we've left on the table, and we took prices up on a few products at that point. I mean, that was in February at the time. We've been very careful to do it. I mean I think that on our viral marketing products, yes, we've taken price, and we haven't seen an impact in demand. I mean we've taken things like our Luxe Café espresso coffee maker from $499 to $599, new products that were coming out. We were going to launch our Shark CryoGlow at $299. We launched it at $349.

So I think we're finding opportunities to raise price. I think we looked at certain categories where we might have had a product -- a vacuum cleaner that we were selling at $139, and we said, "Hey, let's move it to $149, and let's kind of watch demand." We might -- there might have been price promotions that we've done 25% off. And we said, "let's not go that deep. Let's do 10% off in those price promotions." So I think it's a lot of trial and error. Not everything has worked. I think we've had to retrench on certain things. But I think on the whole, we've been able to do it, that I think if you went out and you asked 100 consumers, "did SharkNinja raise price?" I think they would say to you "no, SharkNinja's prices are roughly the same." I mean, I think we've tried to do this with kind of very, very minimal consumer disruption.

That's really helpful. As you think about that backdrop, what are you seeing in the competitive backdrop today? Do you think that the competitive environment will be tougher, the same or less competitive into next year?

Look, I think the competitive environment is always tough. I mean, like you got to -- you have to earn the right to stay in business. I mean just because we had a great year, great brands. I mean like when the circus comes to town, every Christmas, I mean, you've got to have the next great innovative products. I mean we're launching 25 new products a year. I mean we're not letting up on our innovation. In spite of all the tariff upheaval this year, we'll still launch 25 new products. We have a great pipeline of innovation in '26. We're working now on our 2027 innovation. So I think -- look, we're worried about everyone from a competitive standpoint. But more so than that, it's are we giving the consumer a compelling reason to invest in a Shark or Ninja product. I mean, I think that over the last 17 years, that's what we've learned is the key to our success.

One question that we're getting regularly is about the mixed commentary that we've heard from brands about wholesale order books into the back half and into 2026. Given the success of some of your new products, how are your conversations going with wholesale partners as you contemplate that forward demand?

Look, I think we're really fortunate. I think just recently in the last couple of weeks, I mean, you might have heard the earnings calls of Target that mentioned SharkNinja, the earnings calls of Ulta that mentioned us, the earnings call of Best Buy that mentioned us. So I mean, I think that's great that they recognize kind of SharkNinja is a company that is driving growth for them and driving consumers into their stores or online. Look, I think it's always tricky between Q3 and Q4. I think just where the holidays fall this year, I think that you may have shipments that wind up going out in October versus September from a timing standpoint. I think you'll continue to see that level of uncertainty happening today where a retailer might decide, "Hey, I thought I would take this product on September 20, but I'm going to take it on October 10." Underlying demand is strong from the consumer, retailers are kind of leaning in to support SharkNinja and our innovation. I guess what I'm most excited about is the international expansion of SKUs. I mean it's the retailers like Fnac Darty in France and Euronics in Germany and Currys in the U.K. and Elkjøp in the Nordics that are really expanding the number of SKUs that they carry from SharkNinja Christmas '25 versus Christmas '24.

That's great to hear. Adam, let's bring you into the conversation a little bit more. If you put tariffs and some of the transitory impacts aside, how should we be thinking about the long-term structural drivers of gross margin within SharkNinja? What do you view as the sustainable gross margin rate of the business? And what's the path to getting there?

Sure. I mean I've been at SharkNinja almost 11 years now, and gross margin focus has been a cornerstone of everything that I've done. It's a cornerstone of everything we do within the company. It is the lifeblood and that enables us to launch in the new categories, launch in new geographies, fund the media, fund the R&D. And so gross margin is the core of everything we do, right? Mark spent a lot of time talking about the gross margin impacts and how we offset tariffs, but gross margin starts at the very beginning of a product inception. We're in product reviews looking at gross margin. We've got product developers presenting gross margin path without caveats of with and without tariffs, it's with that, right? And so we have every goal of every new product is to launch that at the company average or better as well as better than a SKU that it potentially would replace.

And so with gross margins so entrenched in what the company does in the lifeblood of what we do, it's our core KPI. It's something that everybody the company is focused on, and it's our path to continue to grow. And so we know there's always going to be headwinds, whether it's commodities, whether it's freight, whether it's labor, whatever it might be, we continue to plan every year as if it's going to be bad, right? We prepare as if it's going to be bad because we prepare to make sure that we have the flexibility so that when something does come up, tariffs is 1 example. We were already moving. We weren't caught flat-footed there. And so margin trajectory for us. We're going to keep doing what we've been doing, which is expanding gross margin rate, which allows us to continue to invest in other areas of business.

And what does that mean for EBITDA path opportunity from a reinvestment perspective versus non-margin drivers?

Our path long term is to continue to expand EBITDA rate, right? And so I think over the years, last year, you saw an incredible amount of investment in OpEx, you saw an incredible expansion in gross margin. And so we're looking at those 2 things together as 2 of the major levers within the P&L. And so at the end of the day, those 2 levers are going to equal EBITDA expansion, and that's where our target is.

That's really helpful. Mark, I think we're about out of time. Any final comments or closing thoughts that you want to leave with the audience?

Look, I guess to understand our business, go through -- shop the retail stores, see the number of pallets, for example, that are at Costco that are positioned. Go on social media, I mean, look at the comments section in the social media posts in terms of what consumers are saying about Shark or Ninja products. And I think at the end of the day, it's like this is all about engaging with the consumer and I think to really understand our business, like, yes, you could read a P&L or balance sheet, but like go and look at what consumers say about the brands and the product, I think you'll get a much better sense of who we are.

Great. Thank you, Mark. Thank you, Adam, and thanks for all of the audience for tuning in.

All right. Good afternoon, everyone. Thank you for attending CG's 45th Annual Growth Conference. I'm Brian McNamara, one of the analysts in the consumer space at CG. We are delighted to have SharkNinja here and to host, CFO, Patraic Reagan; and James Lam, who heads IR. So thank you very much for joining us.

So Patraic, the company just reported another strong beat and raise quarter. How do you guys do it? What's the secret sauce? And maybe kind of provide a quick overview of the company and your growth pillars?

Yes, sure. So first of all, great to be with everyone today. For those of you that are maybe less familiar with SharkNinja, really kind of our approach is in terms of growing the business is putting the consumer at the center of everything that we do. And so I think we aim to really out-innovate both our competition as well as creating compelling reasons for our consumers to spend his or her share of wallet with us. And so what does that look like in reality?

So from our business standpoint, we compete in 37 categories, and that can range from anything as more traditional in our business. You can think of like vacuum cleaners and blenders to areas that we're getting into for more of an innovation standpoint and that could be ice cream makers, our SLUShi frozen drink makers, our Ninja Luxe Café espresso maker. And so for us, what we're always focused on is innovating on behalf of the consumer.

And so Brian, to answer your question, it's like, well, how do we do it? We do it because we put a high priority on innovation. As our P&L is constructed, really where we're able to generate that is, it starts with us from an investment standpoint, prioritizing our product design and development, our research and development.

So product design is creating it. R&D is building it, then investing in the supply chain to deliver it. And then finally, we invest in an outsized way in our media and marketing organizations to communicate the value of our products to our customer. And so a little bit of the secret sauce in terms of how we grow and how we drive the growth. And I think now we've been in the public space for about 2 years and each year that we've been in the public space, we've had double-digit top line growth.

So tariffs have taken up a lot of investor focus, probably a lot of sleepless nights for you guys. But we have not seen huge broad-based price increases on the shelf yet. In your view, do you expect tariffs to be a net positive or a net negative on your business longer term?

Yes. I mean, putting the words net positive and tariff into the same sentence is not something I can get myself to actually say. But maybe what I could do is I'll give you a little bit more of our approach to it. And certainly, we were anticipating kind of a heightened amount of tariffs as the new administration came in. And -- but what we weren't expecting necessarily was what happened in early April. However, we had been preparing for the moment in terms of how we were going to react and in some ways, how we were already reacting in advance of that.

And so for us, what we've really been doing is, we've been attacking it from 3 points. Number one, as we look at our sourcing and manufacturing, we have deep long-term relationships with our sourcing and manufacturing partners. We started moving out of China for our U.S.-based manufacturing about 4 years ago, 4.5, 5 years ago. And as we started to see that there was a likelihood of Trump 2 administration, we accelerated that. And we started accelerating that in kind of the Q2 time frame of 2024.

And so for those of you that have followed us from that point in time, you will have heard us a year ago talking about heightened investment, heightened OpEx investments as it related to how we were investing our money to kind of help us move U.S. production outside of China at a faster clip. And so that is kind of number one. Staying in the sourcing and manufacturing space, other actions that we've taken is, number one, we have kind of, what I would say, a 24/7 365 initiative that is called gross margin high-impact initiative.

And really what that is, is we're constantly looking at how we make and produce product and where we have opportunities to do so more efficiently. And so what does that look like? Really 2 main -- a lot of subcategories within that, but 2 main that I'd like to communicate with you guys. And the first one is really in our -- what we call our VAVE space, so value-added value engineering. And what that is, is that we have teams across the globe that are constantly looking at our product and where can we be more efficient in terms of how we produce and manufacture that product?

How can we take cost out of the products that we produce. So that's number one. And that was obviously a heightened focus in terms of what was happening from a tariff standpoint. And the second one is -- and this kind of comes in through more of consumer insights. And so you might ask yourself, well, what consumer insights have to do with manufacturing. What we get in terms of feedback from our consumer groups is what do our consumers value in the product that they -- that we produce. And so as I said earlier, we compete on innovation. And so not all innovation though is created equally.

And so we're constantly in a feedback loop with our consumers to understand the features that we put into our products, are they actually valued by our consumers. And we go through the process of like if they -- if it is valued, then obviously, we keep it. If it's kind of like, oh, it's nice to have, but it's not really something that drives value in the price value equation, then we'll look at taking that out, and we call that defeaturing. So it's taking a feature out of a product that the consumer doesn't really value. And so those 2 components were really critical for us.

Brian, as you kind of hit on from a pricing standpoint, we want to be very careful and respectful of our relationship with the consumer and the sensitivity around price. And so let me start with like what we didn't do in terms of approaching pricing as it relates to potentially mitigating or partially mitigating or offsetting tariffs. What we didn't do is sit around in a room and say we're going to take a 5% price increase or an 8% price increase across the board.

What we did do is we looked at the products where we truly compete from an innovation standpoint and looked at it on a case-by-case basis, asking ourselves, again, based on consumer data and insight, where do we have potential to take more price or, said a different way, where did we maybe leave some pricing on the table. And so internally, what does that look like? Or how do we talk about it? We talk about it in the sense of getting paid for our work. And it's really important for us as an innovation company to get paid for our work.

We get paid -- we want to get paid for our work because we invest more in product design and development, more in R&D, more in media and marketing than any of our competitors. And so in areas where we're truly, truly competing from an innovation standpoint, we have the opportunity to take surgical price, and that's part of what we did. And then the third pillar is just a continued efficiency of our operating spend, our investment spend and how we spend from an OpEx side. So when you take those 3 pillars together, that's really when -- how we've been approaching the challenge of tariffs.

So you guys have -- you reached your goal of being 90% out of China by the end of Q2. You're on pace to kind of be nearly completely out by the end of this year. How has that shift been? I'm assuming it's not that easy and you've probably run into some unexpected things along the way.

So just a great question. To be really clear, we're not -- we are out of China at the 90% rate by the end of Q2 and nearly 100% by the end of the year for our U.S. production. China is still and will remain an important area of the world for us from a sourcing and manufacturing standpoint. But from a U.S. standpoint, we're hitting that, which is what we committed to late last year. So in terms of how that's gone, I mean, it hasn't been easy. It definitely hasn't been easy.

But where I think that we have hit the mark in terms of what we said we were going to do is we leaned into our sourcing and manufacturing partners that we've had. And in nearly all cases, they've been with us for a decade, decade plus. And so what we did is we partnered with them starting back 4, 5 years ago in terms of laying that kind of groundwork to move U.S. production outside of China. And so where are we?

From a standpoint of quality, the production has moved into other Southeast Asia countries is on par. From a cost standpoint, it's on par. We got there because we've been able to lean into some of those partnerships and the know-how to do that. Where we are not quite at parity right now is from a throughput standpoint. And so that obviously is getting better every day. But the 2 most important components for us, quality and cost, we feel like we're on par and very proud of that.

Brian, maybe just one comment I would add is, as we've diversified to these other Southeast Asian countries, we've built up subcomponents and Tier 2 vendors in addition to our Tier 1 suppliers so that when we can produce in Vietnam, we can source all the parts in that local area, not be dependent on other countries for the subcomponents.

Got it. So the company launches or targets to launch about 25 new products a year. How do you avoid the boom-bust nature kind of inherent in new product launches?

Yes. So for the group, 25 new products from the ground up each year. That's really kind of the ethos of our innovation and also 2 categories a year. And so right now, as I mentioned earlier, we're in 37 new categories. In terms of like the boom-bust, I mean, maybe I'll give you kind of some insight from one of our larger categories. And so we'll give the air fryer example. And so from an air fryer standpoint, what we really do is, we don't look to introduce a product per se.

Of course, it is a product that's coming to marketplace. But our longer-term view is that product becomes more of a franchise. And then that franchise gives us credibility to move into adjacent parts of the home or increasingly outside of the home in terms of what we're doing now. And so what does that look like on just kind of like an evolution basis? We kind of exist, again, from an innovation standpoint to compel the consumer to buy our products. And so in many cases, we're trying to out-innovate ourselves.

And so using the air fryer as an example, when we entered into the air fryer marketplace, we really disrupted it in a significant way. And we went in initially through kind of single basket air fryer for those of you who are familiar with the products, kind of know what I'm talking about. And then we heard from our consumer insights folks that launching primarily through a U.S. lens at that point in time in our history, it's like, well, we want even a bigger air fryer basket. So the next innovation came in more like size and, to a lesser extent, cooking technology.

And then the next one was like, oh, even bigger. And so then it's like, okay, well, we've got kind of like SUV style air fryers. Then we started to hear from our European consumers and consumers that are in more urban metropolitan areas to say, "Hey, your SUV air fryer is taken up too much space on my counter," and so that's when we actually moved to the dual-stack air fryer, so kind of like an air fryer condominium almost. And so that was another innovation.

And then we heard at the same time that parents with kids, they want to be able to cook their teriyaki salmon and they want to be able to cook their chicken nuggets at the same time. And those things don't like cohabitate well together. And so the next step in the innovation for that was like the dual basket. It's like you could cook your salmon on one side, you could cook your nuggets on the other side and everybody is happy. So that's kind of how we go about trying to continue out innovating ourselves.

And then the next exciting product that's going to come in this space is just hitting the market right now and will start to gain more critical mass in the back part of this year is our crispy air fryer, which is completely different. It's a glass air fryer of varying sizes where you can actually physically watch whatever you're cooking and you could cook a whole chicken in it, by the way. In the larger size, you can watch that cook. And so to get out of like the boom-bust because we don't think of anything as just like a single product, we think of it as more of a franchise. So that's part of the thought process behind.

Really helpful. So understanding the company kind of plans for singles and doubles, not home runs with new product launches. What new product or innovation that should be material to 2025 results kind of surprised you the most in terms of success?

There's -- I mean, there's -- we try not to get surprised because we do a lot of research in advance in terms of how product is going to resonate with consumers. I would say that -- I mean, I'd be remiss if I just -- if I didn't talk about the SLUShi. I mean it's just been an incredible consumer reaction. I remember talking about the potential of -- and maybe by show of hands, when I say SLUShi, does anybody know what I'm talking about? Like 2 people, maybe like 5.

So SLUShi is like think 7-Eleven or Stop & Shop, the big -- and so about a year ago, as we were getting ready to bring this to market, we didn't necessarily know what we had. We had a lot of questions incoming and so like, well, how do you know this is going to be a hit? It's like what does the NPD data tell you? And we're like, well, there's no NPD data on SLUShi categories. It just doesn't exist. And so -- but what we did do is along the way in all steps of development from whiteboarding this to bringing it into production is get consumer feedback.

And the overwhelming consumer feedback that we did, and we do hundreds and hundreds and hundreds of consumer interactions in their homes, in our testing facilities, in our headquarter space to gauge the reaction. And we were becoming increasingly convinced that we had a hit on our hand. But even though we thought we had a hit on our hand with this, we were still aiming for just a double because as we go to market with these products, the one thing that we don't want to do is we don't want to get over inventoried in the marketplace. So we tend to take a cautious approach.

But as we launched and kind of went through our initial cycles of launch, the consumer reaction was incredible. We found ourselves chasing demand in a significant way and has just been an incredible success. But what's important is that it's not a one-hit wonder. And so the plans behind the plans of the SLUShi not dissimilar from what I talked about in the air fryer space. And so it's not like a one-and-done sort of thing. And think about it as growing into various iterations of a franchise that will help us prevent this kind of boom-bust concern that we get a lot of questions on from investors in terms of how we keep the growth going.

Great. So let's talk about international. The U.K. is your largest market there. I think you brought that in-house into a direct model, I think, 2014. Mexico just shifted to a direct model as well. Like what is the milepost you need to kind of achieve to kind of make that transition from maybe a distributor-oriented market into a direct model?

Yes. So for the group, we really have 2 ways that we go to market in a territory. One is we can go through a distributor model, which is a little bit what I would say, lighter touch for us. So we're working with the distributor, we sell the distributor and then the distributor just kind of blows out product to accounts. And so for us, it's kind of a low maintenance way to enter a marketplace. The owned version of marketplace is when we actually own the relationship with the retailers in market.

And what we've been learning in the last couple of years or so is whereas we initially had concerns about our ability to own our distribution and execute in a successful way as we've met with success in the U.K., in Germany, in France, in some of the Central European countries, it's given us the confidence to kind of move more from going primarily in through a distributor model to more of really having the confidence that we're better off owning our distribution and the relationships in the marketplace.

And so whereas maybe like a year ago or so, as Brian is alluding to, there probably would have been like a mark of like $100 million or a couple of hundred million dollars and we're like, okay, that's critical mass. Now we want to own it. We're getting more to the point now where we feel like it's better for us to own that distribution and that relationship and that marketing and that communication with the consumer from the jump versus going in through a distributor. Now distributor will still play an important part of our business, where will that be?

You can think of countries that may be a little bit less stable from a macro standpoint, from a geopolitical standpoint that we still have got a large customer base, but maybe we just don't want the exposure of what may happen in 2 years or 4 years, et cetera. And so what you'll see for us is, as Brian just mentioned, we bought back our distributor in Mexico this past Q1. We did that because we feel that how we had grown with the distributor, we've kind of gotten to like the maximum kind of contribution that they were going to give us and that we could kind of take it over and run the business in a better way.

You'll see us in Q4 of this year and Q1 of next year we're going to convert Spain, Portugal, Italy, the Benelux countries as well as the Nordics into own distribution. So we're excited about it. From a P&L standpoint, we'll capture more of the revenue. We think that there's -- longer term, there's more revenue to be captured that way. Our product gross margins will be higher. We'll invest a little bit more OpEx. But from a net bottom line standpoint, it's -- it will be more accretive going to market this way.

So the growth of this company has seen since 2008 a CAGR north of 20%. You did 32% growth last year. You just guided last week to a 14% top line kind of midpoint this year. This all in a market that might grow low single digits each year. So like what does a "normal" growth year look like for you guys?

Well, I mean, I don't know if there's normal anymore, to be honest. I mean what we aim for is we've got -- our approach to growth is really through what we call our 3-pillar growth strategy. And so it's fairly simple on the surface, but it's complex to execute on. And what it is, is really the 3 pillars of our growth strategy is growing our base business.

And so as we talk to investors, the vast majority of the questions that we tend to get are around some of our more viral products that are out in the marketplace, kind of the one-hit wonders or what we try to avoid as one hit wonders. And so a lot of time is spent on that. And a lot of time in terms of what we do is spent educating the investment community that the base part of our business, the day-to-day vacuum cleaners, blenders, carbon extraction, hair dryers, et cetera, that is -- we have a very healthy, strong base business, and we need to continue to preserve that.

And why is that important for us? It's important because it is an investment engine for us. So that strong, healthy business helps us to fuel the investment that we put into our product design and development, our research and development, into our supply chain and into our marketing and media spend. And so first pillar, base business, exceptionally important. It doesn't get a lot of play. It's the less sexy part of the business, but exceptionally important in terms of how we drive our business.

The second pillar of the 3 pillars is growth in new products. Now this tends to be the more sexy part. It's the things that you may have heard about recently. We launched a new grill this summer called the FlexFlame. We launched our first foray into kind of med spa beauty with our Shark CryoGlow face mask that has red light, blue light, under-eye cooling, which is something I've needed as we've gone through the tariff challenges. We -- the SLUShi is out there, the CREAMi is out there.

And so that's really what kind of constitutes new products. And that can also be in -- it can be new categories, but it can also be new products in existing categories, and that is kind of like to the franchise model that we talked about earlier. And then the other component is international expansion. And so when you think about the 3 pillars that we've got, it's the base business, it's the new product revenue that we've got. And then it's the international expansion road map that we're on.

So Dyson is probably your closest comp, right, out there. I think they last reported revenues of $9 billion in 2023. You'll be at a little -- you'll be north of $6 billion if you hit the midpoint of your guidance this year, $6 billion. So I'm sure Mark has a number in his head, but how big can this company get?

Mark definitely has a number. Yes, the -- we feel like there -- we've got a lot of white space. And so not going to pin me into a number, but we -- if you think about the prospects in terms of where we are and you think about how I was just talking through international growth. And I'll just give you a couple of stats and you can kind of interpret it a little bit. We've only been in the U.K. in a meaningful way for about 7, 8 years. We entered and then we kind of stumbled and then we went back in and so we've been really getting it right in just the last 5, 6 years.

We've just recently gone into Germany. We've just recently gone into France. In France and Germany, of the 37 categories of products that we've got, we're in roughly what is it, 10 categories. So I'll let you do the math on that from a white space perspective. All those other countries that I named earlier that we're converting from distributor to owned business, de minimis in terms of revenue at this point in time as it relates to our P&L. And so then if that's one leg, and then I've talked about how important and the focus on preserving and growing the base.

And then the next leg is from a new product standpoint, a new category standpoint, again, we stand by the new 2 categories per year. And for those of you that are familiar with some of our investor materials, our investor presentation, which you can get on our investor website, one of my favorite depictions of where we are is kind of a diagram of the home and everywhere where we are and maybe importantly, where we are not in the home space.

And so what we're trying to do, and as I talked earlier at the top of the discussion, how important it is for us to put the consumer first, solve problems on the behalf of the consumer and really put the consumer at the center of everything we do from an innovation standpoint. When we do that right, it gives us the license to travel to different parts of his or her home. And so if you think about SharkNinja from its kind of nascent space of where we were 10, 12, 15 years ago is primarily a vacuum cleaner business and a blender business.

And as you look at how we've built those 2 distinct brands, Shark and Ninja and where it's allowed us to travel both in the kitchen, outside of the kitchen into the living room, into the bathroom from like a hair dryer, hair straightener standpoint, then additional license by getting into hair, how that's allowed us to go deeper into beauty, into the med spa space with the CryoGlow. And we've got a product that just launched yesterday in beauty and another one that's launching later on this year in beauty that we're really excited about.

And so you kind of build that adjacency where by building credibility with the consumer, then you can go to the next thing and then the next thing. And so that's where we and I and all of us are really excited about is, we still feel like there's a lot of white space in terms of the home and problems that the consumer has and, in some cases, problem that the consumer doesn't even know that he or she has at this point in time that we can get behind.

Last question quickly since we're out of time, but we're asking this question of all of our consumer companies. How healthy is the consumer from your vantage point today versus a year ago? And how do you see consumer spending shaping up in the back half of this year and as we enter 2026?

Yes. I mean, listen, it's -- obviously, it goes without saying it's something that we watch and are very concerned about. And what I would say is, for us, we don't compete at the low end of the market in our industry and in our categories, and we don't compete at the very high end. And so we're competing on innovation. We're competing on price value. And so for us, we haven't seen -- and this is just a very SharkNinja specific. We have not seen at this point, slowdown in consumer spending with us.

Very aware of the fact that over the last couple of weeks, we've seen some remarks at the lower end of price point that there's seem to be some slowdown in that space. So we're very aware of that. We don't compete there, but these things can tend to work their way through. But for us, what we're focused on is the consumer and creating that value for the consumer. Because what we know is, as you go back over the last 20, 30 years and you look at Great Recession or you look at dot-com bust and all the other tremors that have been in the markets, the companies that win in the consumer space are the ones that are innovating on behalf of the consumer.

The ones that are competing more on price tend to be the ones that don't win in kind of down cycles. And so whether we're up or whether we're down or whether we're just kind of steady Eddie in the middle from an economy standpoint, I feel like we're positioned well.

Great. We're out of time, but thank you so much for joining us. Appreciate it.

Great. Thanks, Brian.

Good morning, and thank you all for attending the SharkNinja's Second Quarter 2025 Earnings Call. My name is Brika, and I will be your moderator 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 Second Quarter 2025 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, Patraic Reagan. Mark will start by providing a business update, followed by Patraic, who will review our Q2 financial results and share our outlook for 2025. Mark will then offer some closing remarks before we open the call to questions. During the Q&A session, please limit yourself to one question and one follow-up.

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

Thank you, James. Good morning, everyone, and thank you for joining us today. Our second quarter results exemplify SharkNinja at its best, executing on our differentiated growth strategy, even amid unprecedented global challenges. We believe we've built a durable business model that can deliver demonstrable success in all operating environments.

This quarter reinforces the power of creating disruptive and innovative products, supporting them with world-class marketing and demand generation, leveraging our diversified global supply chain and executing our omnichannel strategy to benefit our consumers, retail partners, employees and shareholders.

We did what we said we would do, and our efforts produced another outstanding quarter of results. Net sales growth of nearly 16% year-over-year, higher gross margins compared to the year-ago period and adjusted EBITDA growth of approximately 33% year-over-year.

Importantly, we also follow through on the expense discipline we committed to, with operating expenses as a percentage of net sales decreasing by more than 200 basis points compared to the prior-year quarter.

How did we achieve these results in such a challenging environment? Let's take a look at the underlying drivers of our strength, starting with the consumer.

Put simply, we're seeing strong demand for SharkNinja products globally. Our steadfast focus on solving consumer problems with innovative 5-star products is resonating worldwide. Year-over-year net sales growth was up nearly 14% domestically, and our International segment accelerated to over 20% growth year-over-year compared to roughly 14% year-over-year in the first quarter. This momentum reflects broad strength across our diversified portfolio of categories and geographies.

Consumers are demonstrating a healthy appetite for spending on products, offering differentiated performance and value that's synonymous with SharkNinja. We have a trusted relationship with consumers, one that we hold sacred. This trust grows as we drive towards an extraordinary value proposition no matter what is changing around us.

In the second quarter, we hit the challenges of global tariffs head-on in multiple ways. Supplier concessions, limited discounting activity and strategic pricing actions are all tools we utilized in a balanced way. Our targeted price changes to date have resulted in minimal, if any, demand degradation. We don't take price increases lightly, and we're constantly trying creative approaches and testing to measure their impact.

SharkNinja is deeply committed to ensuring the trust we've earned is durable. We do this by solving consumer problems, both known and undiscovered. We do this by innovating and relentlessly delivering value. These core principles allow us to continue to grow and take market share, even when the markets we serve are under pressure.

In the first half of 2025, our data indicates the end markets we participate in globally declined in the low single-digit range year-over-year when excluding SharkNinja's performance. Our relative strength is significant and positions us to play offense. This is a theme I will return to later.

Our reputation with consumers is the result of how we differentiate ourselves as a company. At SharkNinja, problem solving is in our DNA. The second quarter introduced unprecedented global supply challenges, but we did what SharkNinja does with any problem. We attacked it from all angles, mobilized the strategy and navigated our way to success. We view this capability as a foundational competitive advantage, particularly given the significant scale and complexity of our global operations.

While there are tariff dynamics at play everywhere we source products, we believe it's becoming clear that China will be subject to a higher rate than most other manufacturing centers in Southeast Asia. That's why it's so important to be diversified in other countries, another area where we feel we have an industry-leading optionality.

I'm pleased to confirm that we have now achieved our goal of enabling approximately 90% of our U.S. volume to be produced outside of China, and we remain on track to get to nearly 100% by the end of the year. This is a major milestone for SharkNinja and a significant competitive advantage.

The depth of investment in our supplier network is another edge. We spent multiple years and considerable resources developing independent sub-supplier and component vendors to support the expansion of our Tier 1 partners across Southeast Asia.

I will now turn to our three-pillar growth strategy. Starting with our first pillar, expanding into new and adjacent categories. Before I get into some of the exciting highlights from the second quarter, I want to remind everyone of three important elements that differentiate SharkNinja in new product development.

The first is the scope of our ambition. Our mission statement is to positively impact people's lives every day in every home around the world. This means we're always on the hunt for problems to solve and ways to delight the consumer. In turn, this mindset empowers SharkNinja to enter 2 new categories every year while simultaneously introducing 25 ground-up new products over the same period.

The second factor is the rigor of our process. We recognize the broad strength of our innovation engine that allows us to enter new categories, but it's not easy to do. We're constantly planting seeds, some of which will propel us into a new category quickly and some that might take time.

The process to enter a new category is challenging and not linear. There is lots of criteria, decisions and multiple stage gates at every step. We spent years developing this approach as a key enabler of consistently driving innovation. Like everything else at SharkNinja, there's always room for improvement. We'll continue to refine and reinvent our process as we evolve.

The third key differentiator is the size of our pipeline. We intentionally sequence new product introductions to maximize impact and success. For example, we're in 37 different categories in the U.S. But in fast-growing countries like France and Germany, that number is only roughly 10 today. As a result, our global geographies have multiple years of structural growth simply by continuing to introduce our already successful products in new categories within these markets.

As we continue to add to our innovation pipeline, where we're already deep into developing 2026 launches, we constantly build for the long term. Back to Q2 specifically, we saw tremendous strength across newer categories. Our Ninja SLUSHi remains a viral sensation. We earned 1.3 billion impressions globally, up from over 1 billion impressions last quarter and saw robust performance across geographies.

Our Ninja Luxe Cafe business continues its sizable contribution to growth as we establish ourselves as a disruptive player within the espresso category. We launched our Luxe Cafe Pro series in the second quarter with enhanced automation and versatility features to easily create even more beverage options.

Taking a step back, SLUSHi and Luxe Cafe are great examples of how we're transforming products into franchises. When we have a viral hit, we don't rest on our laurels because we realize that we need to continue to deliver an even better product the following year.

Over time, we've proven that SharkNinja's success comes from building large durable franchises. To do this, we have to create an assortment of products across price points, feature sets, sizes and do it globally. If we're successful, we'll capture additional new customers while keeping existing customers satisfied. This is important to keep in mind when we discuss new categories that eventually transition into existing categories.

Our fan business performed incredibly well during the quarter across key products like the FlexBreeze Go, an indoor/outdoor misting fan and the recently introduced TurboBlade that's gone viral on social media. Fans offer a great example of how SharkNinja completely rethinks categories that are, in this case, more than a century old.

We want you to take fans with you outdoors. We want you to sleep better with fans. We want fans to convert from pedestal to portable with ease, and we show consumers how to benefit from all these use cases using social media with tremendous success.

Other companies may look at fans and decide it's a break fix, no-growth category. At SharkNinja, leaning into our novel approach has turned into big growth and another proof point on building sustainable franchises. We introduced the Shark FlexBreeze last year and followed that up with multiple new products in 2025, all with stronger marketing support and broader channel reach.

Turning to Beauty. Momentum continues to build globally for Shark CryoGlow. The product is launched in the U.S., U.K. and LatAm markets with availability in Continental Europe starting this month. CryoGlow enables at-home access to high-quality skin care treatments, a market that we think can be huge. This is a prime example of the differentiated thinking we pursue with SharkNinja, and it's only the beginning.

We aspire to establish Shark Beauty as the runaway leader in beauty technology, an enormous white space opportunity we're seizing at full speed. We plan to introduce several significant and disruptive new products in hair and skin care before year-end with an exciting pipeline for 2026 and beyond.

Beauty is an incredibly attractive market that naturally aligns with our recipe for success, huge demand for innovation and prestige products, visual storytelling and social media interest, the potential for high margins and more.

Let's turn to our second growth pillar, growing share in existing categories. The foundation of SharkNinja's success is a healthy base business that delivers strong average selling prices, healthy gross margins and marketing efficiencies. In Q2, the story is about breadth and consistency. Across all 4 of our category groupings, cleaning, cooking, food prep and beauty and home environment; we drove market share gains.

A great example is cleaning, where multiple existing product lines contributed to sizable outperformance relative to the industry at large, including our cordless vacuums, robotics and carpet extraction products.

The ability to scale and reinvent existing categories is vital to how SharkNinja builds and maintains big businesses. The success of Ninja Crispi reflects the power of this concept within the air fryer category. Our leading position in this market presents a new challenge to solve, figuring out how to grow even bigger. This is where SharkNinja shines.

The portable glass system Crispi revolutionizes air fryer cooking. With this innovation, we're capturing new consumers into the market and even seeing existing consumers retiring their legacy air fryers to upgrade. Excitement for this product is a global phenomenon. Crispi first launched in the U.S. with great success, and we've just introduced it into the U.K., with France and Germany next in line.

By design, we don't expect to achieve full reach until year-end. And then we've got a big road map of innovation lined up to follow. Along the way, we're building a strong intellectual property moat around Crispi while we collect invaluable consumer feedback to power the next wave of new products.

Market share gains within existing categories do not happen by accident. Our ability to gain share comes from disruptive products like Crispi, but also the halo effect from our unstoppable innovation and marketing engines throughout the business.

Across our direct-to-consumer sites, we see more repeat buying behavior and more cross-brand shopping than ever before. The strength of our core product categories is a fundamental cornerstone of how we pursue durable success. Nearly 20 of the 25 new products per year come within existing categories to support the core business, and we'll never stop driving innovation as this space grows larger.

Our third pillar is international, where we're seeing significant white space for years to come. We experienced growth across all our international geographies in Q2 with continued strong trends in Europe, including France, Benelux and Central Europe.

Importantly, our U.K. business also returned to form more quickly than expected with traction across a wide range of products, SLUSHi, CREAMi, Luxe Cafe, Blenders, robots, fans, CryoGlow and more. In fact, sales momentum in the U.K. strengthened throughout the quarter.

This result shows the power of our diversified business model. Despite an approximately 25% year-over-year decline in air fryers, the largest category in the U.K., our net sales in this geography still grew in the second quarter.

The more we expand our portfolio of products and geographies, the more the power of diversification drives success. This is evident in places like France and Germany, where we're running the same playbook. We're further penetrating the market in these countries with a broader selection of products. We anticipate a big holiday selling season in 2025 in both France and Germany that can drive additional momentum, heading into next year.

As our other international geographies keep scaling rapidly, we'll continue evolving from distributor-led to direct model. The next geographies we have targeted include Benelux, Poland and the Nordics, with conversions happening over the coming quarters. Our goal is to execute more transitions in 2026 as another lever to drive strong international growth. There's a lot of growth potential ahead of us in Continental Europe.

We're equally excited about our opportunity in Latin America. Our Mexico business successfully transitioned to a direct model in Q1, with shipments accelerating throughout Q2. We expect to see further strength in the second half of 2025, and we're building our teams to support growth.

In fact, even as we continue using distributors in other Latin America countries, we're adding our own boots on the ground in areas like marketing and social media. These investments help SharkNinja build connections with local consumers directly as we learn about their insights and needs.

Our three-pillar growth strategy is the cornerstone of how we intend to deliver sustainable top line success, and it all stems from our outrageously extraordinary mindset. At SharkNinja, we're obsessed with winning. It's what drives our relentless innovation engine, breakthrough social media campaigns, agile and differentiated supply chain and deep relationships with retailers. We play to win big and cannot be more excited to be fully on offense in the second half of 2025 to drive momentum heading into 2026 and beyond.

This enthusiasm is reflected in our updated outlook, where we're once again raising our net sales and adjusted EBITDA growth ranges for FY 2025. Patraic will provide more details, but allow me to underscore how excited we are to attack growth opportunities by leveraging every advantage we have.

Momentum across both brands, a robust new product pipeline, healthy inventory availability and increasing interest from retail partners globally. We will also take advantage of the lessons we're learning related to pricing actions and promotional activity as we continue to experiment thoughtfully with both in the second half of the year.

Taken individually, these attributes are meaningful. Taken together, we feel as strongly about the degree of our competitive edge as we ever have. When it comes to our brand aspirations, SharkNinja is dreaming bigger and acting bolder.

In Q2, we broke new ground as a key sponsor featured in the Apple original films F1, the movie from Warner Bros. Pictures. With a focus on precision engineering and elite performance, the F1 audience is a perfect fit for SharkNinja. We saw tremendous consumer activation throughout multiple marketing events associated with the movie. F1, the movie also marks an important evolution in our branding strategy as we build consumer awareness of the combined Shark and Ninja brands.

We intend to take an even bigger step in this direction with the upcoming relaunch of our direct-to-consumer site at sharkninja.com, powered by the Salesforce e-commerce platform. We're on track to go live in North America in Q4 and expect to follow suit with international DTC sites in Q1 of 2026.

The more we demonstrate how our unique culture and innovation strategy drive success, the more outside recognition we receive. In the second quarter, we were deeply honored to be named to Time Magazine's list of TIME100 Most Influential Companies for 2025. It's a true privilege to be part of this elite list of disruptive companies and a major validation of how our relentless focus on solving consumer problems is resonating.

To wrap up, this quarter demonstrates the power of our proven operating model and competitive moat. Even with all the distractions and challenges around us, SharkNinja is winning because we're problem solvers at our core. This skill set extends from our products and consumer focus to our business strategy and execution.

Going forward, we believe we're poised to outperform our competitors from a position of strength. Even as we focus on delivering 2025, we're building a strong foundation for the future.

SharkNinja is making a concerted investment into our world-class team to enhance our ability to scale and globalize the business. The level of talent we're adding to the organization is profound and deliberate. I would like to thank all SharkNinja team members for their unwavering dedication to our success.

And now Patraic will walk you through our second quarter financial and updated 2025 outlook.

Thank you, Mark, and good morning, everyone. I'm excited to speak with you today about our outstanding Q2 results and increased outlook for 2025. SharkNinja is a product innovation powerhouse that thrives on solving problems, whether it's consumer need or a business challenge. Inherently, we believe that makes us an enormously resilient company.

Resiliency is one of the key themes that we have discussed today as we operate within a significant and sometimes unprecedented and unclear set of challenges. This applies to how our products are resonating with consumers and how our global teams are executing across our innovation and growth initiatives.

Our results this quarter also demonstrate the resiliency of our business model, which has adapted to the ever-changing macro backdrop and continues to deliver strong growth and profitability. While the environment may remain turbulent, we are increasingly confident in our ability to navigate through all while pursuing our growth agenda.

Now let's review the quarter. Net sales in Q2 increased 15.7% year-over-year to $1.4 billion. Adjusted EBITDA increased at more than twice the rate of net sales growth or 33% to $223 million. Adjusted EBITDA margin also improved to 15.5%, up 210 basis points year-over-year.

Strong top line growth, higher gross margins and disciplined management of our operating expenses all contributed to the robust performance in the quarter. We are pleased with these results and our overall execution in the first half of 2025 despite the significant challenges. As we mentioned last quarter, moments like these present SharkNinja with an opportunity to do what we do best, rallying together and taking quick actions to solve problems.

Turning to our geographical results, domestic net sales increased roughly 14% year-over-year, and our international net sales reaccelerated to more than 20% year-over-year. As previously communicated, our Mexico business successfully transitioned from distributor-led to a direct model in Q1, and I'm happy to report that results are right on track.

Our acceleration in EMEA continues with strong growth in countries like France, Germany, Belgium, the Netherlands and more. As Mark mentioned, we continue to believe we are in the early innings of our expansion in both existing and new countries, and this gives us great confidence in our future within Europe and beyond.

Looking at performance by category, net sales in the cleaning category increased 8% year-over-year to $501 million from $466 million in the prior-year period. Our robotics and extraction businesses were standouts in the quarter, offset slightly by corded vacuums. Our family of Shark StainStriker products in extraction and our power detect franchise across both robots and cordless led the way.

Net sales in food preparation category increased 53% year-over-year to $405 million compared to $265 million. This strong growth was driven by the continued viral success of our SLUSHi frozen drink maker as well as our CREAMi ice cream platform. Put simply, consumers around the globe want their frozen treats, and they are turning to our Ninja products in a big way.

Net sales in the cooking and beverage category decreased 4% year-over-year to $366 million compared to $379 million. Continued global momentum of the Ninja Luxe Cafe espresso business was offset by our air fryer and outdoor grill subcategories, mostly related to lapping a strong second quarter of 2024.

Finally, our Beauty and Home Environment category increased 25% year-over-year to $173 million compared to $138 million, primarily driven by continued strength of our air purifiers and fans like the Shark FlexBreeze and Shark TurboBlade as well as momentum behind our Shark CryoGlow skin care product.

Now let's move to gross profit. In the second quarter, adjusted gross profit increased 16% year-over-year to $714 million or 49.4% of net sales. Adjusted gross margin increased approximately 30 basis points year-over-year with cost optimization and favorability on pricing and promotional activity, partially offset by the impact of tariffs, with mix being a secondary offset in the quarter.

With our ever-expanding product and category offering focused on solving consumer problems, SharkNinja continues to prioritize investment across our growth driving engines of R&D, product innovation, sales and marketing, geographic expansion and supply chain diversification. The power of our sales growth and profitability profile enable us to reinvest purposefully in these areas while also working to drive down operating expenses as a percent to net sales.

We achieved OpEx leverage in the quarter, consistent with our focus on cost discipline and remain confident we will see leverage for the full year.

Research and development expenses were roughly flat year-over-year at $89 million compared to $90 million in the year-ago period. We continue to invest aggressively in key talent, as you've seen from recent announcements, to support our growth initiatives and new product development while driving efficiencies by incurring lower professional and consulting fees.

Sales and marketing expenses increased 18% year-over-year to $358 million compared to $303 million in the year ago period. As with previous quarters, this increase was driven primarily by our strategic investment in advertising and personnel to support our new product rollouts and expansion into new markets as well as higher delivery and distribution costs from increased order volumes.

Within DTC, we are seeing greater efficiency in our distribution expenses, driven by warehouse consolidation and favorable outbound and transfer freight negotiations in North America.

General and administrative expenses decreased 11% year-over-year to $92 million compared to $104 million in the year-ago period. This decrease was driven primarily by a reduction in legal, professional and consulting fees compared to the prior year.

Our GAAP effective tax rate was 22.8% in Q2, while our non-GAAP effective tax rate was 23.2%. Adjusted net income for the second quarter was $138 million or $0.97 per diluted share compared to $100 million or $0.71 per diluted share in the year-ago period. And as mentioned, adjusted EBITDA for the quarter increased by 33% year-over-year to $223 million or 15.5% of net sales compared to $168 million or 13.4% of net sales in the prior year.

Turning to the balance sheet and cash flow, the size and profile of our balance sheet is a critical strength for SharkNinja as we grow internationally and exercise flexibility on inventory purchases. We continue to prebuild inventory based on evolving tariff policies, but to a lesser degree with the dollar amount in the second quarter less than half of what we added in the first quarter.

At the end of the second quarter, cash and cash equivalents totaled $188 million, up 36% year-over-year, with total debt outstanding of $759 million. We also have nearly $490 million of capacity available to us on our $500 million revolving credit facility. Total inventories reached $1.1 billion exiting the quarter, up 25% year-over-year, as we continue to invest behind our growth initiatives globally.

Let's move to our updated outlook for 2025. As we discussed last quarter, our internal teams continue to model a wide range of macro and policy scenarios as an ongoing part of our tariff mitigation strategy. All three major components of this plan, how we source, how we sell and operating expense management; are contributing and poised to deliver more savings as we put our strategy into operation.

Relative to when we spoke on our last earnings call in May, we feel there is better clarity on the tariff outlook for our business. As a result, we have incrementally higher confidence in the rigor of our analysis and how this is reflected in our guidance ranges.

Our revised outlook assumes tariffs remain where they are today, including 30% for China, 20% for Vietnam and 19% for Indonesia, Thailand, Malaysia and Cambodia. Our guidance ranges incorporate these tariff assumptions and our mitigation efforts to offset, including the incremental headwind from tariff rates in our Southeast Asia footprint moving higher compared to the 10% rates we assumed in our guidance update in May.

It's important to note that the impact of tariffs will be more weighted towards the second half of the year based on the phasing of when the higher costs fully impact the P&L.

With the above context in mind, let's review our updated outlook. For the full year 2025, we now expect net sales to increase between 13% and 15% compared to our prior guidance of an 11% to 13% increase. Adjusted net income per diluted share is now expected to be in the range of $5 to $5.10 compared to $4.90 to $5 previously.

Adjusted EBITDA is now expected to be in the range of $1.1 billion to $1.12 billion, representing growth of 16% to 18% year-over-year compared to $1.09 billion to $1.11 billion, representing growth of 15% to 17% year-over-year. Net interest expense is still expected to be flat to 2024, and our GAAP effective tax rate expectations remain in the range of approximately 24% to 25%.

On capital expenditures, the cost control we are applying to our operating expense extends to our discipline on CapEx. We are reaffirming our previous guidance of $180 million to $200 million for the year, but would no longer point you to the higher end of the range.

To close, our performance in Q2 is a credit to the resiliency of our business model and our tenacious execution to deliver on behalf of our consumers, retailers, employees and shareholders.

As we have reinforced several times today, SharkNinja is all about solving problems and remaining resilient. We enter the second half of the year knowing that whatever new challenges come our way, we feel energized and confident in the path ahead. I would like to join Mark in thanking the entire SharkNinja team worldwide for their tireless efforts and ongoing commitment to our success.

With that, I will hand it back to Mark.

Thanks, Patraic. We're proud of our Q2 results and incredibly optimistic about the future because of how SharkNinja operates. We took on enormous challenges in the second quarter and did what we always strive to do, stay agile, act quickly and determine a path to win.

A big part of this is connecting with consumers in a way we feel stands out considerably from the competition. We listen, we innovate and we deliver disruptive 5-star products. And we do this all globally at massive scale while spanning more than 3 dozen product categories.

The reality of the current macro and policy environment is that we'll need to stay just as nimble to drive continued success. Accomplishing this at our size requires careful attention, new product introductions, continued supply chain diversification, geographic expansion and more.

For all of this complexity, our business strategy is actually quite simple: drive a solid base business franchise, add new and adjacent categories and replicate our success internationally. This 3-pillar growth strategy is powerful, and we're excited to play offense and push SharkNinja forward.

Thank you. This concludes our prepared remarks, and I will 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, you spoke about being fully on offense in the back half. How are you thinking about what that means for the growth opportunity between U.S. and international? And then for Patraic, can you help us understand your tariff commentary? How should we be thinking about gross margins for the year and the tariff pressure that you expect in each of the third and fourth quarters on a mitigated basis?

Yes. Thanks, Brooke. So look, we are excited that we had strong demand in our domestic business, our North America business in the second quarter. And we're continuing to see nice demand from the core domestic business. We've got a lot of new product introductions that are coming over the next 60 days. We've got a lot of strong retailer commitments in the back half of the year.

So we feel good about the domestic business, in spite of the market being down. I mean when you remove SharkNinja's numbers, the market was down kind of mid -- almost mid- to high single digits in the second quarter. So we're not seeing a strong market overall, but we're seeing strong consumer demand for our products domestically.

When we look at the international business, we talked about our business in the U.K. accelerated as we moved out of the second quarter. We're continuing to see those new product launches from last year move into the U.K. business. So we're expecting some acceleration from our U.K. business as we go into the second half of the year.

Germany and France continues to be strong. I've talked about the commitments that we have from retailers in those markets as we go into the third and fourth quarter. And we're starting to see some great traction. Mexico, we obviously had the transition in the first quarter. We didn't really get up and going until kind of mid-May in the second quarter, but we're seeing really nice POS growth in Mexico, countries like the Nordics, Benelux, Poland, we're seeing nice POS growth.

So overall, we feel like there's kind of balanced growth in the second half of the year, driven by lots of new product introductions in North America and the U.K. and just continued market penetration in the rest of the world.

Yes. And then Brooke, on kind of gross margin and tariff question, so one, if we go back 90 days ago, the biggest variable in our P&L and outlook for the year was the clarity of tariff assumptions for the balance of the year. And so we took our best guess at that point in time. And if you remember, our assumption was roughly 145% for China. It was roughly 10% for the balance of the Southeast Asia countries.

And so we said at the time, the thing that we were craving the most in terms of putting together what the balance of our year looks like was clarity. And we now feel like we're getting more clarity in terms of what the tariff rates look like for balance of year.

So now that we see China at 30%, the Vietnam in 20%, the rest of Southeast Asia, at least for right now, at 19%, and as you saw in the prepared remarks that we put forward; we feel like that gives us the clarity that we need to operate. And so that is reflected in terms of what you see relative to our raised guidance for the balance of the year on the EBITDA.

What I would say is the China rate going from 145 to 30, that's not a massive economic impact to us because we weren't planning on shipping a lot of product at the 145 rate. But what it does do is it gives us increased flexibility in our supply chain, which gives us the flexibility and balance of the year from a shipment standpoint if we choose to make certain decisions on product coming out of China.

So I kind of address that question saying that we feel better than where we did 90 days ago in terms of clarity on tariffs.

Your next question comes from Randy Konik with Jefferies.

I guess, Mark, I want to key in on the comments made around the talent acquisition. I think you've hired at least 5 key executives over the last few months here since the beginning of the year. What's the approach there? Are you adding additional types of capabilities into the organization, added muscle that you didn't have before?

Well, I think you said there's less use of external professional services as a result. Just maybe kind of dimensionalize that a little bit more on what these different leaders bring to the table and other capabilities that are going to be adding to the business to help continue to elevate the growth rate of the business over the long term.

Yes, Randy, I mean, look, we've grown our business so much over the last 24 months and not just in dollars but in complexity and scale. I mean, we're a much more international business than we were 24 months ago. I mean we're in more new product categories.

I mean, our product categories, our products are getting much more complex. I mean when you think about hires like Mike Harris, we're seeing a lot more software and a lot more electronics and mechatronics being driven into our products, we think that's only going to continue to escalate as we move forward on the product development side. Howard Nuk coming onboard.

We got to drive a big pipeline of innovation, and we're -- where we've got a great advanced development team. But we needed kind of strong leadership over that advanced development group reporting to Ross that would be able to keep driving that pipeline. So we're really excited. And I, in fact, just got out of a meeting last night for products for 2027 that I'm so excited about.

Adds like Michelle in the growth area, we've got to deliver significant growth every year, significant organic growth. And so where is it coming from by product category? Where is it coming from by geography? As we keep expanding into these new markets, there's operational challenges, there's compliance challenges. And so we felt like we really needed to develop this growth group in a big way.

You've heard me talk about the opening of our New York office that's going to be a real creative epicenter for us. I think that one way of driving demand, obviously, is efficiency in our media, but I think a big area is continuing to drive better and better content that consumers engage with.

And we're not just developing content now in the English-speaking world, we've got to develop it in the Spanish-speaking world, we've got to develop it in French, we got to develop it in German. I mean we've got to really scale that globally. And so on the creative side, that is an area that we need a lot more sophistication.

And then on the beauty piece, look, I mean, we're not -- we believe beauty tech is a real white space area for us to continue to develop in over the next 5 years. We've got some new hair care products that are coming out in the next 60 days, we've got some new skin care products that are coming out. We think there's other places for us to go in beauty tech. And so we felt like we needed to bring in a much stronger beauty marketing team to be able to support that growth.

So look, it's just a natural evolution of the business and how do we stay ahead. And we have this saying that we talk about here internally, which is we want to build unstoppable teams and we want to build teams that you would never want to compete against. And I think in a lot of areas of the business now, we're building teams that you would not want to compete against, and so I'm excited about that.

Last follow-up. With the F1 movie and its success in the SharkNinja brand being so apparent, I think it's the first time you've ever market that brand together. Does that kind of inform you? Or how do you think about changing the way you go to market with media?

And almost kind of bring the brands together over time you're doing, I think, on the website and kind of place products next to each other, and they're SharkNinja; just how should we be thinking about how you kind of do the marketing angle of the business, either the same or different over the coming years?

Yes. I mean let's start with the F1 movie was a huge success for us. I think that sometimes you go into these things, and you're not sure exactly how it's going to play out. But that the awareness that we've gotten, I mean, how consumers have really looked at, the car and what Brad Pitt was wearing and really associated kind of SharkNinja with Formula One, I mean we have every Formula One team for us right now in terms of how do we engage with them, it just seems like such a natural partnership from a performance and engineering standpoint and things like that; I would say, Randy, that the next evolution to that is going to be the launch of this website, where the consumer is going to land on a SharkNinja website for the first time in our history, where the consumers can have access to all of our SharkNinja products.

We're going to be able to much more easily cross-sell consumers, we're going to be able to drive much better loyalty programs across brands. So I think it's an evolution. I mean, I think the consumer is starting to recognize that there's this great company behind these 2 great brands. I think we need to take it in stages. I think the website will give us a lot of great data through the holiday season for us to think through.

I think there will be more and more opportunities for us to market the SharkNinja business and not just the Shark or Ninja brands. But it's an evolution. And I think we'll kind of take it as we get more data around it, we'll keep evolving our thinking.

And Randy, just one final point on that. As you brought up the website and Mark talked about it is one of the reasons we're so excited to kind of co-brand and bring these brands together on the website is if you think about from a consumer experience right now, the consumer is going to Shark Clean and Ninja Kitchen, two separate websites to kind of come together. And now we see just a lot of synergy and a lot of benefit for the consumer coming in through one funnel. So we're super excited about this as it lands in Q4.

Your next question comes from Alex Perry with Bank of America.

Congrats on a strong quarter. I guess, just first, as a follow-up, could you speak about sort of the domestic growth upside in the quarter? I think prior year you'd expect -- you had been expecting quite a lower growth rate domestically, but it came in materially better. Did the China shipment pause sort of not have as great an effect?

And then, how should we be thinking about back half domestic growth? Does it accelerate from here? And what are the key drivers?

Yes. Look, I think the China supply chain still had a little bit of impact in the quarter. But we really experienced good POS growth. We saw a lot of great demand for our products. That -- we actually saw that accelerate as we went through the quarter and into July. So I think, Alex, it's just really a virtue of strong demand.

Now in terms of how do we think about the back half, I mean, look, I think we've guided ourselves conservatively in the back half. There obviously continues to be uncertainty, albeit there is, I think, a clear playing field being laid out now as it relates to tariffs and what that tariff landscape is going to look like. But there are going to be some pricing increases in the second half of the year. We obviously want to see how consumers react from a demand perspective around those.

And so I could tell you that as we look at Q3 right now, we've seen strong demand continue in Q3 in our domestic business, we've got a lot of new products that we're launching. We will have some delays in some of the new products, as we talked about in our previous call, where we're launching some products outside of the U.S. and not in the U.S. this year because of that blip that we had during the China shutdown. But net-net, I think overall, we feel good about the domestic consumer.

Really helpful. And just a follow-up, what categories and products do you expect to drive outsized back-half growth? What categories do you have sort of more outsized innovation coming?

I think for the balance of this year, Alex, I think we have outsized innovation coming in beauty. And I think you'll see that over the course of the next 6 to 8 weeks with the products that we have coming out in the beauty space.

I think we have a really innovative product that's going to be launching in the Ninja brand outdoors. It's a new category that we've never been in. I can say that we don't plan any of these categories to be a home run. But I think it just, again, puts us in more places outside the home for the consumer.

So I'm excited about some of the new categories that are launching, but I think beauty presents a real exciting opportunity for us.

I think, Alex, the other thing you could do in terms of reading the tea leaves on -- in that space and beauty is last call, we talked about some key hires in the marketing space in beauty. And so that's kind of a little bit of insight into how we're thinking about teeing up the strength in the back half in the category and then going forward into 2026.

We now have Steve Forbes with Guggenheim.

Mark, I was curious if you can maybe give us a glimpse, right, into the conversations you're having with your retail partners. And the thought here or what I'm trying to explore is what opportunities are sort of being presented to you via those conversations, as it pertains to distribution point share opportunities or even just market share opportunities as you look to sort of solve all the pain points, right, or friction points that are out there for the retailer network in general.

Yes. I mean, look, it's timely, next week, myself and our Chief Commercial Officer, Neil, are off to see the senior leaders at Walmart and Target and talk to them about the back half of the year. Listen, the conversations are that they're excited about our innovation. I mean, they -- how do they partner with us in a better way upfront? I mean how do they get a leg up from a fair share standpoint when new products come out into the market?

So I think those conversations domestically have been great.

I think we've got a lot of support from our retailers. But I think what's most exciting for me is that we've got a lot of great support internationally. I mean I'll give you a good example.

Like I was on the phone with the President of a really strong retailer in Latin America and South America, and it was really pushing us how do we get more products in there faster, how do we take advantage of the holiday season, really pushing us to get into market and turn on our demand-generation engine.

I have the same conversation with a CEO of a European retailer in Italy. Again, Italy hasn't been a direct market for us. It's going to become a direct market. Him asking us, can we accelerate it, can we get certain products this holiday season to get a leg up on things into 2026?

So I think for me, Steve, the most exciting thing is we've been working with the U.S. Canadian retailers, even the British retailers for so many years. It's the engagement that I'm getting at the CEO levels of European and South American retailers that are really, really excited about how Shark and Ninja can drive growth for them.

Yes. It sort of gets back to sort of your comments right around the 10 products, right, being offered in France and Germany currently versus the portfolio as a whole. So any early teasers on what we should expect or model right, as it pertains to sort of product category expansion in some of those key markets, right, or even some markets that you haven't really framed up for us in the past, Spain, Italy in a broader detail? Like where does that [ 10 ] go? And how big could category expansion be internationally in 2026 and beyond?

Yes. So I mentioned to an earlier question, the hire of our Chief Growth Officer, and we have a project here internally, which is called our [ Global Growth High Impact Initiative ]. And that is really focusing on how do we drive 50% of our sales outside of the U.S. I mean that was something that we started earlier this year.

And I guess I can just say, Steve, that's where I think we're headed. I mean I think -- I don't know that we get there in 2026. But I think in the near term, we believe that 50% of our sales come from outside the U.S., we think that there's a lot of white space opportunity.

And as you mentioned, Spain and Portugal and Italy and the Nordics and Poland and Benelux in South America and the Middle East, but I think you can think about our business over the next few years as being a business that's going to be 50% of our sales coming from outside of the U.S.

Thank you. I can confirm that does conclude today's call. Thank you all for joining. You may now disconnect, and thank you, and please enjoy the rest of your day.