Q2 FY2026
Filed Aug 7, 2026Gross margin expanded despite lower sales as Expion360 exited low-margin accessory resales.
Second-quarter net sales declined 32% year over year and the company remained loss-making, but gross profit increased 6% and gross margin expanded to 32.4% from 20.8% through a higher-quality product mix and pricing discipline.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $2.0 million | up 30% | down 32% |
| Gross profitGAAP | $0.7 million | – | increased 6% |
| Gross marginGAAP | 32.4% as a percentage of net sales | – | – |
| Selling, general, and administrative expensesGAAP | $2.0 million | decreased sequentially from the first quarter | decrease of 0.7% |
| Net lossGAAP | $1.3 million | – | improved 6% |
| Net loss per basic and diluted shareGAAP | $(1.34) per basic and diluted share | – | – |
| First half net salesGAAP | $3.6 million | – | decrease of 29% |
| First half gross profitGAAP | $1.05 million | – | decrease of 6% |
| First half gross marginGAAP | 29.3% as a percentage of net sales | – | – |
| First half selling, general, and administrative expensesGAAP | $4.1 million | – | increased 14% |
| First half net lossGAAP | $3.0 million | – | – |
| First half net loss per basic and diluted shareGAAP | $(3.33) per basic and diluted share | – | – |
| Cash and cash equivalentsGAAP | $1,540,348 | – | – |
| Working capitalGAAP | $4.4 million | – | – |
| Stockholders’ equityGAAP | $4.8 million | – | – |
| Net cash used in operating activities for the six months ended June 30, 2026GAAP | $2.6 million | – | increased |
What drove it
- The decrease in second-quarter net sales was primarily attributable to discontinuing the resale of certain low-margin accessories in order to increase profit margins.
- Gross-profit improvement reflected a product-mix change excluding low-margin items and maintenance of healthy pricing across core battery product lines.
- First-half sales were also affected by elevated battery inventory levels carried into the year by certain OEM customers.
- Forest River selected Expion360 UL 1973-certified lithium-ion battery systems for its Georgetown and Dynamax Grand Sport motorized brands.
- The company stated that it remains on track to launch its first next-generation lithium battery in the second half of 2026.
Concerns
- Q2 2026 net sales declined 32% from the prior-year period to $2.0 million.
- First-half net sales declined 29% to $3.6 million and first-half net loss increased to $3.0 million from $2.5 million.
- Net cash used in operating activities increased to $2.6 million from $1.6 million for the first half of 2026.
- Cash and cash equivalents declined to $1,540,348 as of June 30, 2026 from $2,969,096 as of December 31, 2025.
- The company cited its ability to raise additional capital, manage operating expenses, and continue as a going concern among forward-looking risks.
What to watch
- Conversion of expanded Forest River and other OEM relationships into revenue growth.
- Normalization of OEM customer battery inventory levels.
- Launch of the first next-generation lithium battery in the second half of 2026.
- Ability to sustain and further improve gross margins while sales volumes recover.
- Cash usage, capital availability, and operating expense management.
Balance sheet and cash flow
- Cash and cash equivalents were $1,540,348 as of June 30, 2026, compared to $2,969,096 as of December 31, 2025.
- Accounts receivable, net were $638,281 as of June 30, 2026, compared to $718,964 as of December 31, 2025.
- Inventory was $2,049,571 as of June 30, 2026, compared to $2,858,780 as of December 31, 2025.
- Prepaid/in-transit inventory was $530,332 as of June 30, 2026, compared to $318,440 as of December 31, 2025.
- Prepaid expenses and other current assets were $560,761 as of June 30, 2026, compared to $179,645 as of December 31, 2025.
- Total current assets were $5,319,293 as of June 30, 2026, compared to $7,044,925 as of December 31, 2025.
- Property and equipment, net was $278,420 as of June 30, 2026, compared to $328,222 as of December 31, 2025.
- Operating leases right-of-use asset was $507,374 as of June 30, 2026, compared to $666,199 as of December 31, 2025.
- Net cash used in operating activities for the six months ended June 30, 2026 was $2.6 million, compared to $1.6 million in the prior-year period.
Analysis
Expion360 reported a mixed second quarter. Net sales fell 32% year over year to $2.0 million, principally because the company discontinued certain low-margin accessory resales. Management also cited elevated battery inventories held by certain OEM customers entering the year. Sales nevertheless increased 30% sequentially from the first quarter, although the filing did not provide the first-quarter sales amount.
The quarter showed a substantial improvement in gross-profit mix. Gross profit increased 6% to $0.7 million despite lower sales, while gross margin rose to 32.4% of net sales from 20.8% in the prior-year quarter. The company attributed the expansion to the removal of low-margin items from the sales mix and healthy pricing across its core battery products. This margin performance contrasts with first-half revenue, which declined 29% to $3.6 million, and first-half gross profit, which declined 6% to $1.05 million.
Operating costs and losses remain important constraints. Q2 selling, general, and administrative expenses were $2.0 million, down 0.7% from the prior-year period, while the net loss improved to $1.3 million from $1.4 million. For the first half, however, SG&A increased 14% to $4.1 million and net loss increased to $3.0 million from $2.5 million. Management cited higher legal and professional fees and salaries and benefits as contributors to the first-half SG&A increase.
Liquidity declined during the first half. Cash and cash equivalents were $1,540,348 as of June 30, 2026, versus $2,969,096 as of December 31, 2025, and net cash used in operating activities increased to $2.6 million from $1.6 million. The company reported working capital of $4.4 million and stockholders’ equity of $4.8 million. Cash use was attributed primarily to the timing of inventory purchases, prepaid expenses, accounts receivable, and accounts payable.
Commercial execution now centers on converting expanded OEM programs and introducing the next-generation battery product. Forest River added Georgetown and Dynamax Grand Sport to the existing Dynamax and East to West programs, and the company stated it remains on track for a second-half 2026 launch of a battery incorporating VHC internal heating, SmartTalk Bluetooth connectivity, and CANBus communication. Subsequent to quarter-end, Expion360 completed a one-for-12 reverse stock split on July 21, 2026 and stated that it regained Nasdaq minimum-bid-price compliance as of August 4, 2026.
Management, verbatim
Gross profit increased 6% year over year to $0.7 million even as net sales declined, and gross margin expanded more than 11 percentage points to 32.4% from 20.8% in the prior-year period. This is the direct result of our decision to discontinue the resale of certain low-margin accessories and to maintain disciplined pricing across our core battery product lines.
Joseph Hammer, Chief Executive Officer and Chairman of the Board of Directors of Expion360
We remain on track to launch the first next-generation lithium battery in the second half of 2026.
Joseph Hammer, Chief Executive Officer and Chairman of the Board of Directors of Expion360
Not in the filing
stated, not guessed- Formal quantitative revenue, gross-margin, operating-expense, tax-rate, or earnings guidance
- Prior outlook for comparison with reported results
- Segment revenue disclosure
- Operating income or loss
- Research and development expense amount
- Interest expense or income
- Income tax expense or benefit and tax rate
- Debt balances
- Free cash flow
- Capital expenditures
- Share repurchases or dividends
- Complete balance sheet, including liabilities and total stockholders’ equity balance-sheet line, because the supplied filing text is truncated
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.