Axil Brands Reports 4% Sales Drop in Q4

Key Points

• Net sales (GAAP) declined 4.4% year over year to $26.3 million in fiscal 2025.

• Adjusted EBITDA margin improved to 9.3% in fiscal 2025 from 7.3% in fiscal 2024, and cash flow from operations (GAAP) rose sharply in fiscal 2025 even as net income (GAAP) fell from $2.0 million in fiscal 2024 to $0.9 million.

• Gross profit margin (GAAP) narrowed by 2.4 percentage points in FY2025.

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Axil Brands (NYSEMKT:AXIL), a company most known for its hearing enhancement and protection products, reported its fiscal 2025 results on August 21, 2025. The main headline: net sales (GAAP) totaled $26.3 million in FY2025, down 4.4% compared to fiscal 2024. Profitability also shrank, as diluted earnings per share (GAAP) dropped to $0.10 from $0.21 last year. Despite this contraction, adjusted EBITDA increased by 21.3% in fiscal 2025 compared to fiscal 2024, and net cash from operations increased from $3,000 in fiscal 2024 to $1.9 million as Axil Brands disciplined spending and executed on supply chain changes. No explicit analyst consensus was available, but these results reflect pressure on sales and margins even as cash flow, expense management, and strategic initiatives showed progress.

Understanding Axil Brands: Main Businesses and Recent Focus

Axil Brands is best known for its hearing enhancement and protection segment, which covers devices such as earplugs, earmuffs, and Bluetooth-enabled earbuds. These products are marketed mainly to tactical, professional, and consumer users who need hearing protection for work, recreation, or health. The company also operates a smaller haircare and skincare segment, offering specialized consumer health and beauty products.

This year, Axil Brands sharpened its focus on two fronts: improving the resilience of its supply chain and accelerating brand presence in hearing care. Key success factors include maintaining high margins, securing reliable supply, and leveraging brand reputation in the hearing segment, which generated approximately 94% of total revenue in FY2025. As of May 31, 2025, Axil Brands held three active U.S. patents and had one pending U.S. patent application covering various aspects of its technology.

Quarter Highlights: Sales Trends, Margins, and Strategic Moves

No major one-time events or discontinued product lines were highlighted. Segment reporting showed that hearing products -- still 94% of revenue -- remained the core driver. But the company did not provide detailed breakdowns between hearing, hair, and skincare sales.

Gross profit margin (GAAP) contracted to 71.0% in FY2025, down from the prior year. Management referenced these pressures directly, noting supply chain moves were aimed at lowering long-term tariff and regulatory risks. Offsetting these pressures, operating expenses as a percentage of sales improved, falling to 66.6% in FY2025. This was attributed to strict discipline on marketing and administrative spending. Net income (GAAP) dropped from $2.0 million in fiscal 2024 to $0.9 million, adversely impacted by not only lower gross profits but also a higher tax bill relative to the prior year.

Adjusted EBITDA, a non-GAAP measure that adds back noncash and certain nonrecurring expenses such as stock compensation, was a bright spot. Adjusted EBITDA was $2.43 million in fiscal 2025, with adjusted EBITDA margin rising to 9.3% in FY2025 (non-GAAP). However, much of the growth resulted from higher stock-based compensation add-backs -- a jump to $1.1 million from just $267,000 in FY2024 -- meaning underlying operating profitability was less robust than headline growth suggests.

Axil Brands made notable progress on strategic initiatives. It announced a wholesale agreement with a large, membership-based retailer, with initial purchase orders expected in Q1 FY2026. The company also reported advancement on its U.S.-based supply chain development, aiming for more control and lower exposure to tariffs. None of these initiatives produced material revenue yet in the period.

Looking Ahead: Management Outlook and Key Metrics to Watch

Management characterized the start of fiscal 2026 as positive, highlighting “flexibility to invest in growth without relying on outside capital” and a “solid balance sheet.” No explicit numerical guidance for revenue, earnings, or margin was offered for the upcoming period, leaving investors without hard figures to benchmark. The company noted expected incremental revenue from its new wholesale retail partnership.

Segment transparency and execution on new distribution channels will also be critical. Axil does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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