PSQ Holdings, Inc. (PSQH) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for joining us, and welcome to PSQ Holdings Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] I will now hand the conference over to William Kent, Head of Corporate Affairs. William, please go ahead.

Good morning, and thank you, Holly. Welcome to the PSQ Holdings Second Quarter 2026 Earnings Call. Joining me today are Dusty Wunderlich, our Chairman and Chief Executive. Also joining us are Mike Pena, our Chief Financial Officer; and Krista Wenzel, our Chief Accounting Officer. Before we begin, please note that information that we discuss today, including our outlook, is current as of today and includes forward-looking statements that involve risks and uncertainties. We are not required to update these statements if new information arises. For details on factors that could cause actual results to differ, please see today's earnings release and our SEC filings, including our 2025 Form 10-K. We may also present non-GAAP measures alongside financial measures calculated according to GAAP. Before I hand the call over to Dusty, if you'd like to submit a question for management to answer during the Q&A portion of today's call, please e-mail investment@publicsq.com. Once again, that's investment@publicsq.com. I will now hand the call over to Dusty.

Thanks, Will, and good morning. I took over this company 6 months ago. I'm going to share with you exactly what has happened since, exactly what we're telling you we believe happens next, and then I'm going to let you draw your own conclusions. First, let's start with the 6 months in the rearview mirror because numbers are not subtle. We more than doubled revenue, up 108% year-over-year in the second quarter, up 136% for the first half, and we did it while taking costs out, not adding them. Normalizing for a onetime stock comp reduction in last year's quarter, operating expenses were down about 12%. Headcount is down by roughly half. Operating cash burn in the quarter was cut 52%. Revenue per employee went from about $48,000 to about $198,000, up more than 300%. Non-GAAP operating income went from a $2.7 million loss a year ago to positive $400,000. I want to be blunt about what that combination means because it's rare. Most companies grow by spending more. We grew while spending less. We took a business built on addition, too many brands, too much scope, too much headcount, too much story, and we cut it down to the parts that actually move money and make margin. Growing your top line over 100% while you take cost out is not a normal result. It's a result we sought with focus and intentionality. Yesterday, we announced that we entered into a definitive agreement to sell EveryLife to FreeHold Brands for $5.5 million in cash. With the transaction expected to close by the end of September, three things about the sale. First, we told you we would divest what wasn't core, and we did it on a time line we laid out. That's the pattern I want you to get used to. We do what we say. Second, this wasn't a reaction to anything. We moved EveryLife into discontinued operations 3 quarters ago. This is the planned execution of a strategy we started back then, not a decision made under pressure. Third, we ran a deliberate process. In our view, we maximize the value of this asset. The proceeds come in as cash and go straight to a stronger balance sheet, and every piece of this sharpens the team's focus on the core even further. Here's where I'll be disciplined, and I want you to notice that I am. We're a company growing at 100%, cutting costs and bringing in cash. I'm well aware of where the stock trades against that. I told me in February, I'm not a market commentator, and I'm not going to become one today. I'll give you the facts. Pricing them is your job. My job is to say what we'll do, do what we say and ensure our results keep getting better, and they are. On the balance sheet, we ended the quarter with $11.8 million (sic) [ $8.3 million ] of restricted cash and cash equivalents. But the number I want you to actually look at is operating cash burn, $2.3 million in the quarter, down 52% from a year ago. We're spending about half of what we used to, to run a bigger business. EveryLife cash, our lower burn and the revenue trajectory I just walked you through are how we fund ourselves from here. Before I move on to guidance, I want to share a few KPIs that further demonstrate the direction the business is headed and the real results of the efforts our team has put in over the last 6 months. These numbers are critical because they show whether this is real. Payments. We moved $172.5 million of volume through the platform this quarter against $68.2 million a year ago. That's up 153%. For the first half, $374.3 million against $104.2 million, up 259%. Payments revenue was $3 million in the quarter against $1 million last year and $6.6 million for the half against $1.6 million. Credit. Credova did $14.1 million of GMV in the quarter against $10.7 million, up 32%, same 32% for the first half, $29.2 million against $22.1 million. Credit revenue was $4.1 million in the quarter against $2.4 million and $8.7 million for the first half against $4.9 million. And I want to be clear about the backdrop. The firearms market has begun to stabilize and show signs of improvement. That 32% is conversion, approval rates, attracting new borrowers and reengaging borrowers we already have. It's not a market tailwind. Credit quality remains strong. Losses and delinquencies are inside our expectations. Now the numbers some of you are going to circle, but GMV lines are down modestly for the first quarter. Payments was $186.2 million in Q1, credit was $15.1 million. So let me get in front of it rather than wait for the question. Two reasons, and we told you both of them in May. First, credit is seasonal, demand moderates after the first quarter every year. Mike said that on his call 3 months ago. Second, on payments, Q1 carried a full period step-up from agreements we signed in the back half of last year. We're now lapping that from a much higher base. Neither of those is a change in the business. What I'd point you to instead is the year-over-year comparison because that's the honest one, 153% and 32%. On the revolver, the facility that funds Credova's consumer originations, we had $7.3 million drawn on the $10 million line as of June 30. We draw on funds to finance loans and leases, and we pay them back as those receivables are collected or sold. That's mechanic, and it hasn't changed. Now guidance. And I'm going to be pointed because this is the part that matters. Companies in our position usually go quiet, they hedge, they hand you a range wide enough to drive a truck through, but they never have to be wrong. We're doing the opposite. We are affirming full year 2026 revenue of about $32 million. We expect positive non-GAAP operating income for the full year, and we're driving towards positive operating cash flow in 2027. I'm not going -- I'm not giving you these numbers because I have to, nobody makes a company at our stage put specific targets in public. I'm giving them to you because I'm confident enough in what we've built to say them out loud with my name attached to write them down, hold me to them. That's the entire point of being on this call. I know none of this earns your trust by itself. Trust doesn't get earned in one call or 1 quarter or one big print. It gets earned by doing this again and again and again until the pattern is impossible to argue with. I'm not asking you to believe me. I'm asking you to watch what we do against what I just told you we do. That's the deal. It's the only deal I'm interested in. We have nothing back until it earns its way in. We protect what's real, we move money and we compound. Thank you. I'll now turn the call over for questions.

[Operator Instructions] Your first question comes from the line of Thomas Forte with Maxim Group.

Sure. So first off, Dusty and Will, congrats on the quarter and on the EveryLife divestiture. So I am going to Dusty ask multiple questions. If you want to stop me at two and have me get back in the queue, I'm happy to do that. So -- but I'll go one at a time. Can you high level your long-term financial goals? For example, do you believe you can sustain double-digit top line growth for an extended period of time?

Tom, thanks for being on. Happy to answer a number of questions. Yes, look, I think the growth -- the first half, we're definitely seeing good triple-digit growth. The back half of last year, we made the pivot in Q3. Q4 of last year was our, I would say, our real first focus of fintech growth there. So I think we will see some softening of the growth. But based on our pipeline, how we're executing, how I'm seeing the team perform, I would say we're definitely going to see continued growth. It might come under the triple-digit mark, but I continue to see it at much aggressive levels above 50%, I would say, Tom, for the foreseeable future as we continue to scale the fintech divisions.

Excellent. And then, Dusty, for the next question, can you talk about your target customers, both inside and outside the firearms industry?

Yes, absolutely. I would say the firearm industry probably is the most targeted industry from a debanking perspective or just a lack of financial services that the industry has afforded. So this has always been our core target. It's the most complex. It's the most disenfranchised by the financial system. So that will continue to be -- we continue to see even in the era where executive orders are coming out against such behavior from banks and fintechs, we're still seeing it. So -- and that just broadly goes out beyond that, Tom. We've seen similar treatment to certain types of nonprofits. It can be ancillary businesses that are ancillary to an industry like firearms. And it could just be industries or people that are generally aligned with what we believe in and how we're running our business that might have no -- from an industry perspective, might have no real cancellation or debanking risk. But they might have a CEO that's outspoken about things that might lead to that. The banking system has used this just very insidious concept of reputational risk to really pick and choose who they want to do business with. So there's really no company out there that is not open to that type of exposure. So there's the obvious industries, Tom, and then there's those that I'd say are ancillary and then those that are just values aligned or targeted because of their views.

Excellent. All right. So then, Dusty, for my next question, can you clarify what positive cash flow in '27 means? Are you suggesting that you're going to exit '27 positive cash flow, positive cash flow on a full year basis? And then is your definition of positive cash flow, operating cash flow less CapEx?

It's a great question. Yes. So because we do run a balance sheet for our loans and leases, we point specifically to operating cash flow, Tom, because to us, that shows the unit economics are turning positive. And that doesn't mean that free cash flow can also be positive depending on how we're leveraging our balance sheet and whether we're putting loans and leases on the balance sheet or we're selling those loans and leases off. But for us, the step that we want to prove to the market is that, hey, here is operating cash flow. We have solid positive unit economics that are driving positive cash flow. So we expect to see that turn positive sometime next year. I wouldn't say the full year will be positive, but we'll start to make that turn probably mid next year. And from that foundation, I think we're going to keep pushing forward to really drive to not only a full year cash flow positive on the operating side, but also into a free cash flow as well. So we ran Credova as a private company with positive free cash flow, and I know it's possible, and we are going to get there, and this is our first step to getting there.

Excellent. All right. So two more for me, and then I'll step aside. So you successfully divested EveryLife for your finishing the process of doing so. But long term, how should we think about your strategic M&A strategy? So rather than focus on assets that you decided to part with, how should we think about assets you might add in the future?