Second Quarter 2026
Filed Aug 6, 2026Second Quarter Net Sales In-Line With Guidance; Adjusted EBITDA Above Guidance
Net sales declined 19.0% year over year, but gross margin expanded to 33.0% and Adjusted EBITDA improved sequentially and year over year following cost actions. The company remains loss-making, results are preliminary, and Q3 guidance calls for approximately $( 2.4 ) million of Adjusted EBITDA.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net SalesGAAP | $ 13,159 (in thousands) | – | -19.0 % |
| Gross ProfitGAAP | $4.3 million | – | – |
| Gross MarginGAAP | 33.0% | – | – |
| Operating ExpensesGAAP | $7.2 million | – | – |
| Net LossGAAP | $(4.4) million | – | – |
| Net Loss Attributable to Common ShareholdersGAAP | $(5.5) million | – | – |
| Net Loss Attributable to Common Shareholders per diluted shareGAAP | $(0.43) per diluted share | – | – |
| Adjusted EBITDAnon-GAAP | $(1.6) million | $3.0 million improvement | $0.6 million improvement |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| OEMOEM net sales declined year over year against an industry backdrop in which RV shipments were down 14.2% through midyear, reflecting continued macroeconomic pressure on industry production volumes. The Company continued to expand model placements and power system content across its existing OEM partnerships. | $ 8,432 (in thousands) | – | -16.1 % |
| DTCDTC sales declined due to macroeconomic pressures on consumer demand, as well as negative third-party online commentary regarding certain of the Company's products, which the Company believes has adversely affected customer sentiment. | $ 4,477 (in thousands) | – | -24.7 % |
| Licensing FeeNo driver was provided. | $ 250 (in thousands) | – | 0 % |
Q3 2026 outlook
- Revenueapproximately $ 13.5 million
- NoteAdjusted EBITDA of approximately $( 2.4 ) million
- NoteTarget of Adjusted EBITDA profitability at an annualized net sales run rate of approximately $70 million
What drove it
- A $1.1 million benefit related to tariff refund was recognized in cost of sales.
- Operating Expenses benefited from the Company’s cost reduction actions.
- Deliveries under the Stevens Transport purchase order commenced during the quarter.
- The Company expects heavy-duty trucking revenue to more than double sequentially in the third quarter as fleet programs expand.
- Subsequent to quarter-end, the Company acquired the assets of the Dakota Lithium brand, broadening its product portfolio and diversifying its revenue base beyond core RV and trucking markets.
- Dakota Lithium is expected to begin contributing meaningful revenue and to be accretive to Adjusted EBITDA starting in the fourth quarter.
Concerns
- Net sales declined 19.0% year over year.
- OEM net sales declined against continued macroeconomic pressure on RV industry production volumes.
- DTC sales declined amid macroeconomic pressure on consumer demand and negative third-party online commentary regarding certain products.
- The Company has initiated legal proceedings to address the third-party online commentary.
- The second quarter financial and operating results are preliminary and are subject to finalization and adjustment.
- Q3 Adjusted EBITDA guidance reflects continued expense associated with vacated facility space and incremental operating costs to restore Dakota Lithium’s commercial operations.
What to watch
- Completion of the principal remaining facility-consolidation actions during the third quarter.
- Heavy-duty trucking revenue, which the Company expects to more than double sequentially in the third quarter.
- The expected meaningful revenue contribution from Dakota Lithium beginning in the fourth quarter.
- Execution toward the target of Adjusted EBITDA profitability at an annualized net sales run rate of approximately $70 million.
- The impact of the amended debt arrangements, including deferred Senior Leverage Ratio and Fixed Charge Coverage Ratio covenant requirements until September 2027.
Balance sheet and cash flow
- Existing lenders amended the Company’s debt arrangements, including reducing the minimum cash covenant, converting the next two quarters of interest to paid-in-kind interest, and deferring the Senior Leverage Ratio and Fixed Charge Coverage Ratio covenant requirements until September 2027.
- Collectively, these amendments are expected to preserve approximately $1 million of near-term liquidity and provide the Company with meaningful additional financial flexibility.
Analysis
Dragonfly reported preliminary second-quarter net sales of $ 13,159 (in thousands), down -19.0 % from $ 16,248 (in thousands). Both primary customer channels declined, with OEM revenue of $ 8,432 (in thousands), down -16.1 %, and DTC revenue of $ 4,477 (in thousands), down -24.7 %. Management attributed the OEM decline to continued macroeconomic pressure on RV production volumes, while citing consumer-demand pressure and negative third-party online commentary as factors in the DTC decline. Licensing Fee revenue was $ 250 (in thousands), unchanged year over year.
Profitability improved despite the lower sales base. Gross margin expanded to 33.0% from 28.3%, while gross profit was $4.3 million versus $4.6 million. The company attributed the gross-profit decline primarily to lower battery and accessory unit volume, partially offset by a $1.1 million tariff-refund benefit recorded in cost of sales. Operating Expenses declined to $7.2 million from $7.9 million as cost-reduction actions took effect, and the company continued its facility consolidation during the quarter.
The company remained loss-making on a GAAP basis, reporting Net Loss of $(4.4) million and Net Loss Attributable to Common Shareholders of $(5.5) million, or $(0.43) per diluted share. However, Adjusted EBITDA improved to $(1.6) million from $(2.2) million in the second quarter of 2025 and $(4.6) million in the first quarter of 2026. Management identified its cost-reduction actions as the driver of the sequential improvement. The reported results remain preliminary and may be adjusted during the preparation and review of the quarterly financial statements.
Commercial developments center on heavy-duty trucking and the Dakota Lithium acquisition. Deliveries under the Stevens Transport purchase order began during the quarter, and management expects heavy-duty trucking revenue to more than double sequentially in the third quarter as fleets expand deployments. The Dakota Lithium asset acquisition occurred subsequent to quarter-end; management expects the brand to begin contributing meaningful revenue and to be accretive to Adjusted EBITDA starting in the fourth quarter.
For Q3 2026, the company guided to net sales of approximately $ 13.5 million and Adjusted EBITDA of approximately $( 2.4 ) million. Management said the Adjusted EBITDA outlook includes temporary expense for vacated facility space and incremental costs to restore Dakota Lithium’s commercial operations. The company also cited lender amendments that reduce the minimum cash covenant, convert the next two quarters of interest to paid-in-kind interest, and defer specified leverage and coverage covenant requirements until September 2027, amendments expected to preserve approximately $1 million of near-term liquidity.
Management, verbatim
Second-quarter net sales were in line with our guidance, while Adjusted EBITDA exceeded our expectations as the cost actions implemented earlier this year began to take effect.
Dr. Denis Phares, Chief Executive Officer
Adjusted EBITDA improved $3.0 million as compared to the first quarter of 2026 and $0.6 million year over year despite lower net sales, demonstrating the operating leverage inherent in our improved cost structure.
Dr. Denis Phares, Chief Executive Officer
We remain on track toward our target of Adjusted EBITDA profitability at an annualized net sales run rate of approximately $70 million.
Dr. Denis Phares, Chief Executive Officer
Not in the filing
stated, not guessed- Prior-quarter net sales, gross profit, gross margin, operating expenses, GAAP net loss, GAAP net loss attributable to common shareholders, and GAAP diluted loss per share
- GAAP operating income or loss
- GAAP basic loss per share and diluted weighted-average shares outstanding
- Non-GAAP earnings or loss per share
- Operating cash flow
- Free cash flow
- Cash balance
- Total debt balance
- Capital expenditures
- Share repurchases, dividends, or other capital-return figures
- Q3 2026 gross-margin guidance
- Q3 2026 operating-expense guidance
- Q3 2026 tax-rate guidance
- Prior-quarter guidance figures for comparison
- A complete GAAP financial-statement presentation and detailed Adjusted EBITDA reconciliation
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.