Newton Golf (NASDAQ: NWTG) reported Q2 2026 net sales of $1.316 million, down 36% from $2.068 million a year earlier, while basic and diluted EPS fell to -$0.49 from -$0.34. Gross margin increased by 160 basis points to 69.2%, but net loss widened to $2.278 million from $1.520 million.
The quarter was shaped by lower production throughput during the transition to updated 2.0 shaft products, compounded by temporary carbon fiber constraints. Newton Golf also reduced marketing to keep demand aligned with its ability to manufacture and ship orders.
Core earnings data
The production constraints lowered sales volume and gross profit. Expense reductions provided a partial offset: total operating expenses declined by $455,000, mainly because sales and marketing costs were lower, although idle-capacity costs, stock-based compensation and research and development spending limited the benefit.
Operating loss consequently widened by only $33,000. The larger increase in net loss primarily reflected a $644,000 non-cash loss from changes in warrant liability fair value, compared with a $42,000 loss in Q2 2025.
| Metric | Q2 2026 | Q2 2025 | Year-over-year change |
|---|---|---|---|
| Net sales | $1.316 million | $2.068 million | Down 36% |
| Gross profit | $911,000 | $1.399 million | Down $488,000 |
| Gross margin | 69.2% | 67.6% | Up 160 basis points |
| Operating expenses | $2.451 million | $2.906 million | Down $455,000 |
| Operating loss | $1.540 million | $1.507 million | Widened $33,000 |
| Net loss | $2.278 million | $1.520 million | Widened $758,000 |
| Basic and diluted EPS | -$0.49 | -$0.34 | Decreased $0.15 |
Production constraints cut revenue while channel mix supported margin
The 36% sales decline resulted primarily from reduced capacity as Newton Golf recalibrated machining operations, changed finishing workflows and paint mixtures, and performed maintenance related to the launch of updated Fast Motion and Motion shafts. Temporary carbon fiber shortages further constrained output and delayed customer shipments.
Gross margin nevertheless rose because direct-to-consumer sales represented a larger share of the quarter’s revenue, producing a more favorable product and channel mix. The margin increase should not be interpreted as a broad improvement in factory efficiency: the company continued to incur transition inefficiencies, and some costs associated with idle manufacturing capacity were classified as operating expenses.
The relationship between gross profit and expenses shows why operating results changed relatively little despite the sales decline. Gross profit fell by $488,000, while operating expenses decreased by $455,000, leaving operating loss only modestly above the prior-year level. Below operating income, however, the larger warrant liability loss caused the net loss to widen more substantially.
Product and channel performance
Direct-to-consumer deposits and open wholesale orders decreased to approximately $0.5 million at June 30 from $1.2 million at March 31. Newton Golf attributed the sequential decline primarily to fulfillment of orders delayed during the manufacturing transition. By early August, shipment times had improved to within seven business days, and the company said it had substantially fulfilled the delayed orders represented by the March balance.
Professional and fitting-channel adoption continued to expand despite the sales decline. More than 77 professional golfers were using Newton Motion or Fast Motion shafts at the end of Q2, up from more than 60 at the end of Q1. The professional club fitter network grew to approximately 273 accounts from 235, including 38 newly added fitter and golf course accounts.
Newton Golf also introduced the 2.0 versions of its Fast Motion driver shaft and Motion driver and fairway shafts. Management said the updated designs are intended to improve product consistency, manufacturing tolerances and fitting coverage. Additional Fast Motion fairway wood and hybrid shafts are expected to launch commercially in Q4 2026 or Q1 2027.
After the quarter, carbon fiber availability improved through additional supply from Toray Japan and better availability from Toray U.S. Newton Golf selectively resumed marketing in late July, although activity remained below historical levels while the company transitioned to a new marketing agency and kept spending aligned with available production capacity.
Liquidity and capital structure
Cash and cash equivalents stood at $0.4 million on June 30, 2026, down from $1.3 million at December 31, 2025. During the first six months of 2026, Newton Golf issued $2.25 million of convertible promissory notes and used the proceeds for working capital and general corporate purposes.
The company completed three additional financing actions after quarter-end. These measures added liquidity and reduced outstanding debt, but management also stated that Newton Golf expects to require more capital to support ongoing operations and growth initiatives.
| Date | Financing action | Amount and effect |
|---|---|---|
| July 1, 2026 | Senior secured revolving credit facility | $5.0 million facility; $0.8 million drawn as of August 13 |
| July 7, 2026 | Convertible note exchange | Approximately $2.3 million, including accrued interest, exchanged for Series A Convertible Preferred Stock |
| August 14, 2026 | Common-stock private placement | Approximately $1.0 million in gross proceeds and $0.9 million in net proceeds |
The note exchange reduced indebtedness and increased stockholders’ equity. The revolving facility and private placement added financial flexibility, but the low quarter-end cash balance and management’s expectation of further capital needs remain central considerations.
Recent insider transactions
The supplied six-month insider summary recorded no purchase or sale transactions and listed total insider holdings of 1.58 million shares. The separate transaction history included several stock awards and one purchase among its latest ten records; no share counts were supplied for these entries.
| Date | Insider | Role | Transaction | Reported value |
|---|---|---|---|---|
| June 24, 2026 | Jeffrey R. Clayborne | CFO | Stock award | $0 |
| June 24, 2026 | Akinobu Yorihiro | CTO | Stock award | $0 |
| June 24, 2026 | Brett Widney Hoge | Director | Stock award | $0 |
| June 24, 2026 | Jane Casanta | Director | Stock award | $0 |
| May 19, 2026 | Gregg Hemphill | Director | Stock award | $0 |
| January 30, 2026 | John B. Bode | Director | Stock award | $0 |
| January 30, 2026 | Brett Widney Hoge | Director | Stock award | $0 |
| January 30, 2026 | Jane Casanta | Director | Stock award | $0 |
| December 26, 2025 | Gregor Alasdair Campbell | CEO | Purchase at $1.59 per share | $15,879 |
| December 18, 2025 | Gregor Alasdair Campbell | CEO | Stock award | $0 |
The $0 figures reflect the award price and value reported in the supplied dataset and should not be interpreted as a valuation of the underlying compensation.
Risks investors need to watch
- Manufacturing execution: Production throughput must continue improving for Newton Golf to convert demand into shipments and revenue. Further transition problems could delay orders and restrict marketing activity again.
- Raw-material availability: Carbon fiber supply improved after quarter-end, but the Q2 results demonstrate how supply constraints can affect output, sales and fulfillment times.
- Liquidity requirements: Newton Golf ended the quarter with $0.4 million in cash and expects to need additional capital, despite completing debt, credit and equity financing transactions after June 30.
- Earnings volatility from warrant liabilities: The non-cash warrant fair-value loss increased to $644,000 and was a major reason the net loss widened more than the operating loss.
- Commercial conversion: Professional adoption and fitter-account growth expanded, but future results depend on translating that reach and the 2.0 product rollout into higher production volumes and sales.
Summary
Newton Golf’s Q2 2026 results reflected a manufacturing-constrained quarter rather than a completed production ramp. A more favorable direct-to-consumer mix lifted gross margin, and lower marketing spending kept the operating loss close to the prior-year level, but lower shipment volume and a larger warrant liability loss widened the net loss. The next operating tests are whether improved material availability and manufacturing capacity support faster fulfillment, a measured marketing recovery and higher sales without creating renewed liquidity pressure.
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