AMASS Brands Inc. Common Stock Q2 FY2026 earnings call

Company Transition & Strategic Focus

• This is Amass Brands' first earnings call as a newly NASDAQ-listed public company, and Q2 2026 is characterized as an inflection quarter for the business.
• The company is executing a strategic shift from holding a broad portfolio of beverage brands to concentrating capital and management attention on a smaller set of high-potential, high-margin core brands, leveraging existing shared beverage infrastructure across sales, distribution, supply chain, and retail to scale efficiently while reducing costs and working capital allocation for non-core assets.

Non-Alcoholic & Functional Segment Progress

• The company split its reporting into two distinct segments starting in Q2 to reflect this new strategic priority and resource allocation framework.
• Amass Electrolytes launched in Q2 and generated initial revenue, with distribution commitments secured across California, Colorado, Illinois, Michigan, Georgia, and New York. Early consumer and partner feedback has increased management conviction in the brand, which is now the company's highest-conviction incubation opportunity.
• Good Twin, a non-alcoholic organic wine brand, has become one of the fastest-selling and top-selling organic non-alcoholic wine brands in the U.S. Short-term margin pressure occurred in Q2 due to expedited freight required to meet unexpectedly accelerated large national retail demand, which management expects to ease as inventory and logistics normalize.

Direct-to-Consumer (DTC) & E-Commerce Growth

• Q2 DTC and e-commerce revenue hit $178,000, a 480% year-over-year increase from $31,000 in the prior year period. All DTC revenue currently comes from non-alcoholic products.
• DTC provides strategic value by enabling direct consumer relationships, faster product feedback loops, and more controlled demand generation to support new product launches. Management plans to continue investing in this channel to leverage its combination with existing wholesale distribution as a competitive advantage.

Financial Performance Context

• Reported Q2 consolidated gross margin was 26.7%, with margin compression concentrated almost entirely in intentionally discontinued/non-core brands, which delivered product margins of 14.2% (compared to 43.7% for core brands).
• Margin compression stemmed from intentional actions including accelerated discounting of non-core slow-moving inventory, channel mix shifts, higher trade spending, and elevated freight and import tariff costs. Adjusted gross margin, excluding these one-time and non-core items, was 29.3%.
• Reported operating loss was $5.9 million and net loss was $7.5 million, including $4.3 million in add-backs to adjusted EBITDA for one-time public listing costs, non-cash accounting charges, and inventory-related write-downs. Adjusted EBITDA loss for Q2 was $1.7 million.

Consolidated net revenue for Q2 2026 was $5.6 million, a 2% year-over-year increase. There are two operating segments:

1. Non-alcoholic and functional: Q2 revenue reached $409,000, representing 132% year-over-year growth. For the first half of 2026, revenue was $933,000, up 133% year-over-year. This segment accounts for approximately 7.3% of consolidated Q2 net revenue.
2. Wine and spirits: Q2 revenue declined 3% year-over-year, and declined 5% year-over-year for the first half of 2026, driven by intentional portfolio rationalization of lower-priority brands. This segment remains the source of the majority of the company's operating cash flow to fund growth categories, and accounts for approximately 92.7% of consolidated Q2 net revenue.

Among the company's brand groupings, four priority core brands (Summerwater, Pizzolatto Muse, Good Twin, Amass Electrolytes) generated $3.9 million in Q2 brand-level revenue, a 12% year-over-year increase, and represented 67% of total brand-level revenue (up from 62% year-over-year). Discontinued brand revenue declined 27% year-over-year in Q2. Core brands delivered a 43.7% product gross margin in Q2.

This is Amass Brands' first public company guidance, with all targets set as minimum expected floors:

• Second half of fiscal 2026: Net revenue of at least $8.7 million, representing at least 10% year-over-year growth over H2 2025, with 10% growth expected for both Q3 2026 (minimum $4.4 million net revenue) and Q4 2026 (minimum $4.3 million net revenue).
• Full year fiscal 2026: Full-year net revenue of no less than $18.5 million, representing approximately 4% growth over fiscal 2025.
• Fiscal 2027: Net revenue growth of at least 20% over fiscal 2026, resulting in minimum full-year net revenue of $22.2 million.

• The company disclosed substantial doubt about its ability to continue as a going concern, and has an ongoing need to raise additional capital to fund operations and growth.
• The company received a NASDAQ notification on July 22, 2026 regarding non-compliance with continued listing requirements.
• Forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from expectations, including those outlined in the company's SEC filings.
• Regulatory uncertainty exists for the company's hemp THC beverage investment, with a looming federal ban that has only been temporarily delayed, and no permanent clear regulatory framework in place as of the call.
• Transition costs related to portfolio rationalization and public listing created near-term margin compression and operating losses that are expected to persist through the business restructuring period.

Q: How does Amass approach its current and future portfolio strategy, following past adjustments to add and subtract brands? / A: Management is focused on rationalizing the portfolio down to only high-potential brands with strong working capital profiles and margins, concentrating investment in the non-alcoholic/functional core brands while winding down lower-priority legacy assets. The current transition period creates near-term inefficiency, as the company carries costs to build the new portfolio while absorbing remaining costs of legacy assets. Management prioritizes removing complexity from non-core parts of the business that no longer meet growth threshold requirements. / Q: How is Amass positioning to capitalize on secular shifts in consumer drinking habits, including declining alcohol consumption among younger consumers? / A: Management views the shift toward moderation, non-alcoholic options, and functional beverages as a long-term secular trend, not a temporary fad. This is why non-alcoholic and functional is the company's core growth focus. Amass is also well-positioned in its remaining alcohol portfolio, which is concentrated in fast-growing sub-categories including organic, low/no sugar, and conscientiously produced beverages that align with modern consumer preferences. Core alcohol brands are already leaders in their premium niches, so they are not exposed to the same pressure as legacy alcohol categories. / Q: Can you outline the opportunity for Amass' small bets in the protein water and hemp THC categories? / A: For the HPO protein water brand, management sees a large tailwind from rising GLP-1 adoption, which increases consumer demand for easy, incremental dietary protein. HPO is a sparkling hydrolyzed pea protein water that fits this demand, and is currently a small but high-potential early bet. For the hemp THC investment, regulatory risk remains high, but a potential sensible federal regulatory framework would open a massive new market that could leverage Amass' existing alcohol distribution infrastructure, making the bet asymmetrically attractive if regulation is resolved favorably. / Q: How did Good Twin achieve its rapid growth and distribution ramp? / A: Good Twin is a premium organic non-alcoholic sparkling wine that has quickly become one of the top 1-2 brands in its U.S. category, demonstrating strong unmet consumer demand for high-quality adult non-alcoholic beverage options. Management now focuses on improving forecasting and scaling the brand with better unit economics after unexpected accelerated demand from a large national retail placement created near-term margin pressure from expedited shipping. Good Twin also serves as proof of Amass' ability to identify early consumer trends, test the market, and scale a successful leading national brand quickly. The ability to repeat this success with new products like Amass Electrolytes is core to the company's long-term strategy.