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SharkNinja, Inc. (SN)

CIK: 0001957132. SIC: 3630 Household Appliances. Latest 10-K as of: 2026-03-02.

SIC breadcrumb: Manufacturing > Electronic And Other Electrical Equipment And Components, Except Computer Equipment > SIC 3630 Household Appliances

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1957132. Latest filing source: 0001957132-26-000015.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue6,399,188,000USD20252026-03-02
Net income701,374,000USD20252026-03-02
Assets5,349,434,000USD20252026-03-02

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-02. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001957132.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Metric2022202320242025
Revenue4,253,710,0005,528,639,0006,399,188,000
Net income167,078,000438,705,000701,374,000
Operating income373,564,000644,162,000920,281,000
Gross profit1,907,852,0002,661,991,0003,136,490,000
Diluted EPS1.203.114.94
Assets4,394,159,0005,349,434,000
Liabilities2,458,187,0002,673,223,000
Stockholders' equity1,828,289,0001,478,893,0001,935,972,0002,676,211,000
Cash and cash equivalents363,669,000777,289,000
Net margin3.93%7.94%10.96%
Operating margin8.78%11.65%14.38%

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001957132.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

QuarterEnd DateRevenueNet IncomeDiluted EPSMethod
2026-Q12026-03-311,412,806,000121,462,0000.85reported discrete quarter

Quarterly Charts

Macro Cross-References

Latest quarter (10-Q)

Latest 10-Q source: 0001957132-26-000035.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-06. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q, as well as the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2026 (the “Form 10-K”), for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

26

Overview

SharkNinja is a global product design and technology company that creates innovative 5-star rated lifestyle solutions for consumers around the world. We have built two billion-dollar brands that drive strong growth and innovation across the 39 sub-categories in which we compete today. We have a proven track record of entering and establishing leadership positions by disrupting the market across household product categories, including Cleaning, Cooking and Beverage, Food Preparation, and Beauty and Home Environment. The Company has identified two operating segments, Domestic and International, based on geographic sales regions for which discrete financial information is available. Domestic consists of the United States and Canada, and International consists of markets outside the United States and Canada. The Company has determined that these two operating segments meet the aggregation criteria in ASC 280-10-50-11 and therefore are aggregated into one reportable segment. See “Note 3 - Segment Reporting” to our unaudited condensed consolidated financial statements found within Part I, Item 1 in this Quarterly Report on Form 10-Q for additional information.

Our success is centered around our advanced engineering and innovation capabilities coupled with our deep understanding of consumer needs. We relentlessly seek to deliver innovative home appliances at compelling value in order to delight consumers. Our continued growth in sales and increasing market share demonstrate that our products deliver lifestyle solutions that meet our consumers’ evolving needs and desires.

We drive high brand engagement through our dynamic approach to solutions-driven storytelling in categories that we believe have not been historically known for high engagement. This solutions-driven approach focuses on educating the consumer on our innovative solution to a consumer problem that makes their experience more efficient and more enjoyable. Our differentiated storytelling complements our innovative products across a variety of channels, including in-store, online, across social media and on television. This approach engages current and new consumers, fueling demand for our solutions across a variety of categories. Utilizing this strategy, we have built a global community of passionate brand ambassadors who we believe value our innovation, quality and performance.

We sell our products using an omnichannel distribution strategy that consists primarily of retail and direct-to-consumer (“DTC”) channels. Our retail channel covers brick-and-mortar retailers, e-commerce platforms, distributors and multichannel retailers, which, in turn, sell our products to the end consumers. Some of the largest retailers we sell to include Amazon, Costco, Walmart, Target and Best Buy, as well as a significant number of independent retailers. Our DTC channel covers sales directly to consumers through our websites and social media platforms. The goal of our omnichannel distribution strategy is to be the most prominent and relevant brand wherever our consumers choose to shop.

We have built an agile and efficient supply chain over time and have made significant investments to optimize manufacturing and sourcing. Our supply chain infrastructure harnesses three differentiating factors: (i) long-standing factory partnerships that allow us to rapidly develop and produce our products, (ii) factory flexibility that allows us to incorporate insights and adapt at any stage of the production process and (iii) our volumes and long-term strategic partnerships with key shippers allow us to attain competitive inbound freight rates, even when the market is constrained. We have also made significant investments in local talent to help oversee the production process and ensure that our manufacturers’ products meet our strenuous quality standards.

Recent Developments, Macroeconomic Conditions and Potential Impacts

We expect continued uncertainty in our business and the global economy due to tariffs and trade policies, including retaliatory tariff measures; inflationary trends; fluctuations in foreign currency exchange rates; swings in macroeconomic conditions and their effect on consumer confidence and discretionary spending; volatility in employment trends; geopolitical developments, including conflicts in the Middle East; and supply chain pressures, any of which may impact our results.

27

The tariff environment has been and continues to be highly dynamic. On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs. Following the decision, the President terminated the additional duties previously imposed under IEEPA and, effective February 24, 2026, imposed a 10% global import surcharge on most imported goods under Section 122 of the Trade Act of 1974. The Section 122 surcharge is temporary and, by statute, is set to expire on July 24, 2026, unless extended by an act of Congress. The administration has publicly indicated its intention to pursue tariff actions under alternative authorities, including new investigations initiated under Section 301 of the Trade Act of 1974, which could result in successor tariff actions; however, the scope, timing, and rates of any such actions remain uncertain. Additionally, the Section 122 surcharge is subject to pending legal challenges, the outcome of which could affect its scope or duration. Tariffs previously imposed under Section 301 and Section 232, including on goods imported from China, remain in effect and are unaffected by the Supreme Court's ruling.

We are monitoring developments related to the potential refund of IEEPA duties previously paid. The U.S. Court of International Trade is overseeing proceedings regarding the mechanism and process for any such refunds, and U.S. Customs and Border Protection is developing administrative processes to facilitate refund claims. The amount, timing, and availability of any refunds remain uncertain, and no receivable has been recognized in our condensed consolidated financial statements as of March 31, 2026.

In response to the evolving tariff environment, we have taken and continue to take mitigating actions across our buy-side and sell-side operations, including supply chain and geographic sourcing diversification, cost optimization and value engineering initiatives, targeted pricing actions, and supplier negotiations. We cannot predict the ultimate scope, duration, or impact of current or future tariff actions, or the extent to which our mitigation efforts will be successful. For additional discussion of risks associated with tariffs and trade policy, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Key Components of Results of Operations

Net Sales

We offer a broad range of products that span 39 sub-categories primarily within small household appliances. We generate net sales from product sales to retailers, both brick-and-mortar and online, as well as through DTC sales and distributors. We recognize sales upon transfer of control of products to retailers, consumers and distributors, net of returns, discounts and allowances provided to retailers and funding provided to retailers for promotions and advertising of our products. Control is generally transferred upon shipment or delivery of the products, depending on shipping terms. Net sales are impacted by the effect of foreign exchange rates, competition, consumer spending habits and general economic conditions.

We disaggregate the net sales of our products across four categories:

•Cleaning Appliances, which includes corded and cordless vacuums, including handheld and robotic vacuums, as well as other floorcare products including steam mops, wet/dry cleaning floor products and carpet extraction;

•Cooking and Beverage Appliances, which includes air fryers, multi-cookers, outdoor and countertop grills and ovens, propane grills, fire pits, coffee systems, carbonation, cookware, cutlery, kettles, toasters and bakeware;

•Food Preparation Appliances, which includes blenders, food processors, ice cream makers, juicers, frozen drink appliances and coolers; and

•Beauty and Home Environment Appliances, which includes beauty appliances in both haircare and skincare, as well as home environment products such as air purifiers and fans.

28

Gross Profit and Gross Margin

Gross profit reflects net sales less the cost of sales. Cost of sales primarily consists of the purchase cost of our products from third-party manufacturers, inbound freight costs, tariffs, product quality testing and inspection costs, the costs associated with receiving inventory into our warehouses, depreciation on molds and tooling that we own, warranty costs, damages, obsolescence and shrinkage costs and allocated overhead, including the service fee paid to JS Global for supply chain services.

We calculate gross margin as gross profit divided by net sales. Gross margin is generally impacted by changes in channel mix since our DTC sales usually generate a higher gross margin than sales to retailers and distributors. Additionally, gross margin is also impacted by product category mix, changes in foreign currency fluctuations, changes in tariff policies, fluctuations in inbound freight costs and fluctuations in commodity and component costs.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing and general and administrative expenses. Advertising expenses are the most significant component of our operating expenses and consist of digital advertising, social media and other advertising. Personnel-related expenses are the second most significant component of operating expenses and consist of salaries and bonuses, share-based compensation and employee benefit costs. Our operating expenses also include allocated overhead. Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount. Allocated overhead costs include shared costs associated with facilities, including rent and utilities and depreciation of property and equipment. We expect our operating expenses to increase on an absolute dollar basis for the foreseeable future as we continue to increase investments to support our growth including through increasing staff levels, expanding research and development and greater marketing activities.

Research and Development

Research and development costs primarily consist of personnel-related costs for our engineering and product development personnel responsible for the design, development and testing of our products, contractor

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-03-02. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provide information that management believes is relevant to an assessment and understanding of our results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Information pertaining to the year ended December 31, 2025 and discussions related to year-over-year comparisons between 2024 and 2023 are included in “Item 5. Operating and Financial Review and Prospects” of our Annual Report on Form 20-F for the year ended December 31, 2024, as filed with the SEC on March 31, 2025, and incorporated herein by reference.

Overview

SharkNinja is a global product design and technology company that creates innovative 5-star rated lifestyle solutions for consumers around the world. We have built two billion-dollar brands that drive strong growth and innovation across the 38 sub-categories in which we compete today. We have a proven track record of entering and establishing leadership positions by disrupting the market across household product categories, including Cleaning, Cooking and Beverage, Food Preparation, and Beauty and Home Environment. The Company has identified two operating segments, Domestic and International, based on geographic sales regions for which discrete financial information is available. Domestic consists of the United States and Canada, and International consists of markets outside the United States and Canada. The Company has determined that these two operating segments meet the aggregation criteria in ASC 280-10-50-11 and therefore are aggregated into one reportable segment. See “Note 3 - Segment Reporting” to our audited consolidated financial statements found within “Item 8. Financial Statements and Supplementary Data” in this Annual Report for additional information.

Our success is centered around our advanced engineering and innovation capabilities coupled with our deep understanding of consumer needs. We relentlessly seek to deliver innovative home appliances at compelling value in order to delight consumers. Our continued growth in sales and increasing market share demonstrate that our products deliver lifestyle solutions that meet our consumers’ evolving needs and desires.

We drive high brand engagement through our dynamic approach to solutions-driven storytelling in categories that we believe have not been historically known for high engagement. This solutions-driven approach focuses on educating the consumer on our innovative solution to a consumer problem that makes their experience more efficient and more enjoyable. Our differentiated storytelling complements our innovative products across a variety of channels, including in-store, online, across social media and on television. This approach engages current and new consumers, fueling demand for our solutions across a variety of categories. Utilizing this strategy, we have built a global community of passionate brand ambassadors who we believe value our innovation, quality and performance.

66

We sell our products using an omnichannel distribution strategy that consists primarily of retail and direct-to-consumer (“DTC”) channels. Our retail channel covers brick-and-mortar retailers, e-commerce platforms and multichannel retailers, which, in turn, sell our products to the end consumers. Some of the largest retailers we sell to include Amazon, Costco, Walmart, Target and Best Buy, as well as a significant number of independent retailers. Our DTC channel covers sales directly to consumers through our websites. The goal of our omnichannel distribution strategy is to be the most prominent and relevant brand wherever our consumers choose to shop.

We have built an agile and efficient supply chain over time and have made significant investments to optimize manufacturing and sourcing. Our supply chain infrastructure harnesses three differentiating factors: (i) long-standing factory partnerships that allow us to rapidly develop and produce our products, (ii) factory flexibility that allows us to incorporate insights and adapt at any stage of the production process and (iii) our volumes and long-term strategic partnerships with key shippers allow us to attain competitive inbound freight rates, even when the market is constrained. We have also made significant investments in local talent to help oversee the production process and ensure that our manufacturers’ products meet our strenuous quality standards.

Key Components of Results of Operations

Net Sales

We offer a broad range of products that span 38 sub-categories primarily within small household appliances. We generate net sales from product sales to retailers, both brick-and-mortar and online, as well as through DTC sales and distributors. We recognize sales upon transfer of control of products to retailers, consumers and distributors, net of returns, discounts and allowances provided to retailers and funding provided to retailers for promotions and advertising of our products. Control is generally transferred upon shipment or delivery of the products, depending on shipping terms. Net sales are impacted by the effect of foreign exchange rates, competition, consumer spending habits and general economic conditions.

We disaggregate the net sales of our products across four categories:

•Cleaning Appliances, which includes corded and cordless vacuums, including handheld and robotic vacuums, as well as other floorcare products including steam mops, wet/dry cleaning floor products and carpet extraction;

•Cooking and Beverage Appliances, which includes air fryers, multi-cookers, outdoor and countertop grills and ovens, propane grills, fire pits, coffee systems, carbonation, cookware, cutlery, kettles, toasters and bakeware;

•Food Preparation Appliances, which includes blenders, food processors, ice cream makers, juicers, frozen drink appliances and coolers; and

•Beauty and Home Environment Appliances, which includes beauty appliances in both haircare and skincare, as well as home environment products such as air purifiers and fans.

Gross Profit and Gross Margin

Gross profit reflects net sales less the cost of sales. Cost of sales primarily consists of the purchase cost of our products from third-party manufacturers, inbound freight costs, tariffs, product quality testing and inspection costs, the costs associated with receiving inventory into our warehouses, depreciation on molds and tooling that we own, warranty costs, damages, obsolescence and shrinkage costs and allocated overhead, including the service fee paid to JS Global for supply chain services.

67

We calculate gross margin as gross profit divided by net sales. Gross margin is generally impacted by changes in channel mix since our DTC sales usually generate a higher gross margin than sales to retailers and distributors. Additionally, gross margin is also impacted by product category mix, changes in foreign currency fluctuations, changes in tariff policies, fluctuations in inbound freight costs and fluctuations in commodity and component costs.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing and general and administrative expenses. Advertising expenses are the most significant component of our operating expenses and consist of digital advertising, social media and other advertising. Personnel-related expenses are the second most significant component of operating expenses and consist of salaries and bonuses, share-based compensation and employee benefit costs. Our operating expenses also include allocated overhead. Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount. Allocated overhead costs include shared costs associated with facilities, including rent and utilities and depreciation of property and equipment. We expect our operating expenses to increase on an absolute dollar basis for the foreseeable future as we continue to increase investments to support our growth including through increasing staff levels, expanding research and development and greater marketing activities.

Research and Development

Research and development costs primarily consist of personnel-related costs for our engineering and product development personnel responsible for the design, development and testing of our products, contractors and consulting expenses, the cost of components and test equipment used for product, tooling and prototype development, prototype expenses, overhead costs and amortization of intangible assets related to patents and amortization expenses related to capitalized development software.

Sales and Marketing

Sales and marketing expenses primarily consist of advertising, marketing and other brand-building costs, salaries and associated expenses for sales and marketing teams, shipping and fulfillment costs, including costs for third-party delivery services and shipping materials, overhead costs, amortization expenses of intangible assets related to customer relationships and depreciation expenses.

General and Administrative

General and administrative expenses primarily consist of personnel-related costs for finance, legal, human resources, information technology and administrative functions, third-party professional service fees for external legal, accounting and other consulting services, depreciation expenses, overhead costs and expenses associated with operating as a public company, including expenses to comply with the rules and regulations of the SEC and the listing rules of NYSE, as well as expenses for corporate insurance, director and officer insurance, and investor relations.

Interest Expense, Net

Interest expense, net of any interest earned on our cash and cash equivalents, primarily consists of interest on our borrowings, including our term loan facility. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness.”

68

Other Income (Expense), Net

Other income (expense), net primarily consists of gains and losses on foreign currency transactions, foreign currency forward contracts and other income and expenses that are not part of our normal operating activities. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Exchange Risk.”

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in the United States and other foreign jurisdictions in which we conduct our business.

Results of Operations

The following table sets forth our selected consolidated statements of income information for each of the periods indicated:

Year Ended December 31,

($ in thousands)

2025

2024

Net sales

$

6,399,188 

$

5,528,639 

Cost of sales

3,262,698 

2,866,648 

Gross profit

3,136,490 

2,661,991 

Operating expenses:

Research and development(1)

368,073 

341,289 

Sales and marketing(1)

1,458,027 

1,243,145 

General and administrative(1)

390,109 

433,395 

Total operating expenses

2,216,209 

2,017,829 

Operating income

920,281 

644,162 

Interest expense, net

(48,600)

(63,715)

Other income (expense), net

28,597 

(7,980)

Income before income taxes

900,278 

572,467 

Provision for income taxes

198,904 

133,762 

Net income

$

701,374 

$

438,705 

(1)     Includes share-based compensation as follows: 

Year Ended December 31,

($ in thousands)

2025

2024

Research and development

$

11,725 

$

10,411 

Sales and marketing

14,694 

13,576 

General and administrative

17,453 

60,544 

Total share-based compensation

$

43,872 

$

84,531 

69

The following table sets forth our selected consolidated statements of income information as a percentage of our total net sales for each of the periods indicated:

Year Ended December 31,

(in percentages)

2025

2024

Net sales

100.0 

%

100.0 

%

Cost of sales

51.0 

51.9 

Gross profit

49.0 

48.1 

Operating expenses:

Research and development

5.8 

6.2 

Sales and marketing

22.8 

22.5 

General and administrative

6.1 

7.8 

Total operating expenses

34.7 

36.5 

Operating income

14.3 

11.6 

Interest expense, net

(0.8)

(1.2)

Other income (expense), net

0.5 

(0.1)

Income before income taxes

14.0 

10.3 

Provision for income taxes

3.0 

2.4 

Net income

11.0 

%

7.9 

%

Comparison of the Years Ended December 31, 2025 and 2024

Net Sales

Year Ended December 31,

% Change

($ in thousands, except %)

2025

2024

2024 to 2025

Net sales

$

6,399,188 

$

5,528,639 

15.7 

%

Our net sales increased by $870.5 million, or 15.7%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in net sales resulted from growth in each of our four major product categories of Food Preparation Appliances, Beauty and Home Environment Appliances, Cleaning Appliances and Cooking and Beverage Appliances.

Net sales in our product categories were as follows:

Year Ended December 31,

($ in thousands, except %)

2025

2024

$ Change

% Change

Cleaning Appliances

$

2,205,757 

$

2,063,514 

$

142,243 

6.9 

%

Cooking and Beverage Appliances

1,816,349 

1,717,654 

98,695 

5.7 

Food Preparation Appliances

1,550,744 

1,178,735 

372,009 

31.6 

Beauty and Home Environment Appliances

826,338 

568,736 

257,602 

45.3 

Total net sales

$

6,399,188 

$

5,528,639 

$

870,549 

15.7 

%

•Cleaning Appliances net sales increased by $142.2 million, or 6.9%, to $2,205.8 million in the year ended December 31, 2025, compared to $2,063.5 million for the year ended December 31, 2024. This increase was driven by the carpet extraction and cordless vacuums sub-categories.

70

•Cooking and Beverage Appliances net sales increased by $98.7 million, or 5.7%, to $1,816.3 million in the year ended December 31, 2025, compared to $1,717.7 million for the year ended December 31, 2024. This increase was driven by sales of our Ninja Luxe Café espresso machine and the strength of Ninja Crispi, offset by declines in the core air fryer and outdoor grill sub-categories.

•Food Preparation Appliances net sales increased by $372.0 million, or 31.6%, to $1,550.7 million in the year ended December 31, 2025, compared to $1,178.7 million for the year ended December 31, 2024, driven by strong sales of our frozen drinks sub-category.

•Beauty and Home Environment Appliances net sales increased by $257.6 million, or 45.3%, to $826.3 million in the year ended December 31, 2025, compared to $568.7 million for the year ended December 31, 2024. This increase was driven by the strength of fans and air purifiers, as well as strong performance from the launch of face masks in 2025.

Geographically, Domestic net sales increased by $510.9 million, or 13.5%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This increase was driven by growth within existing categories and the success of new product categories. International net sales increased by $359.6 million, or 20.8%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This increase was driven by continued global expansion and the successful introduction of new product categories across the international markets.

Gross Profit and Gross Margin

Year Ended December 31,

% Change

($ in thousands, except %)

2025

2024

2024 to 2025

Gross profit

$

3,136,490 

$

2,661,991 

17.8 

%

Gross margin

49.0 

%

48.1 

%

Our gross profit increased by $474.5 million, or 17.8%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Our gross margin increased by 90 basis points for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in gross margin was primarily driven by cost optimization efforts, as well as a decline in the amounts owed under a contractual sourcing service fee paid to JS Global for supply chain services that ended July 31, 2025, partially offset by the impact of tariffs.

Operating Expenses

Year Ended December 31,

% Change

($ in thousands, except %)

2025

2024

2024 to 2025

Research and development

$

368,073 

$

341,289 

7.8 

%

Percentage of net sales

5.8 

%

6.2 

%

Selling and marketing

$

1,458,027 

$

1,243,145 

17.3 

%

Percentage of net sales

22.8 

%

22.5 

%

General and administration

$

390,109 

$

433,395 

(10.0)

%

Percentage of net sales

6.1 

%

7.8 

%

Total operating expenses

$

2,216,209 

$

2,017,829 

9.8 

%

Percentage of net sales

34.7 

%

36.5 

%

71

Research and Development

Research and development expenses increased by $26.8 million, or 7.8%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. This increase was primarily driven by incremental personnel-related expenses of $38.8 million resulting from increased headcount to support new product categories and market expansion, as well as an increase of $4.4 million in prototypes and testing expenses related to these initiatives. The overall increase was partially offset by a decrease of $12.2 million in professional and consulting fees and a decrease of $3.3 million in consumer insight initiatives.

Sales and Marketing

Sales and marketing expenses increased by $214.9 million, or 17.3%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. This increase was primarily attributable to increases of $66.1 million in delivery and distribution costs driven by higher volumes, $64.5 million in personnel-related expenses to support new product launches and new markets, $47.6 million in advertising-related expenses, $16.5 million in professional and consulting fees and $9.5 million in depreciation and amortization expense.

General and Administrative

General and administrative expenses decreased by $43.3 million, or 10.0%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. This decrease was primarily driven by a decrease of $36.8 million in personnel-related expenses, including a $43.1 million decrease in share-based compensation, a decrease of $32.3 million in legal fees, including a decrease of $36.0 million in litigation-related costs, and a decrease of $3.5 million in professional and consulting fees, offset by an increase of $13.2 million in credit card processing and merchant fees, an increase of $12.3 million in technology support costs associated with cloud computing solutions, and an increase of $5.9 million in transaction-related costs.

Interest Expense, Net

Year Ended December 31,

% Change

($ in thousands, except %)

2025

2024

2024 to 2025

Interest expense, net

$

48,600 

$

63,715 

(23.7)

%

Percentage of net sales

0.8 

%

1.2 

%

Interest expense, net decreased by $15.1 million, or 23.7%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. This decrease was primarily due to a $9.7 million decrease in interest expense on our term loan, which was driven by principal payments made throughout the year and a decrease in the average interest rate, and a $4.1 million decrease in interest expense on our revolving credit facility, primarily due to lower average outstanding borrowings compared to the prior year.

Other Income (Expense), Net

Year Ended December 31,

% Change

($ in thousands, except %)

2025

2024

2024 to 2025

Other income (expense), net

$

28,597 

$

(7,980)

458.4 

%

Percentage of net sales

0.5 

%

(0.1)

%

72

Other income (expense), net increased by $36.6 million, or 458.4%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily attributable to changes in foreign currency year over year, partially offset by a $5.0 million gain upon a settlement that was reached with a supplier in the prior year that did not exist in the current year.

Provision for Income Taxes

Year Ended December 31,

% Change

($ in thousands, except %)

2025

2024

2024 to 2025

Provision for income taxes

$

198,904 

$

133,762 

48.7 

%

Percentage of income before income taxes

22.1 

%

23.4 

%

Provision for income taxes increased by $65.1 million, or 48.7%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. Our effective tax rate (“ETR”) was 22.1% and 23.4% of our income before income taxes for the years ended December 31, 2025 and 2024, respectively. This decrease in the ETR was primarily related to one-time benefits recorded in the fourth quarter of 2025.

Non-GAAP Financial Measures

In addition to the measures presented in our consolidated financial statements, we regularly review other financial measures, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions.

The key non-GAAP financial measures we consider are Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin. These non-GAAP financial measures are used by both management and our Board, together with comparable GAAP information, in evaluating our current performance and planning our future business activities. These non-GAAP financial measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or which occur relatively infrequently and/or which management considers to be unrelated to our core operations, as well as the cost of sales from (i) inventory markups that are being eliminated as a result of the transition of certain product procurement functions from a subsidiary of JS Global to SharkNinja concurrently with the separation and (ii) costs related to the transitional Sourcing Services Agreement with JS Global that was entered into in connection with the separation (collectively, the “Product Procurement Adjustment”). Management believes that tracking and presenting these non-GAAP financial measures provides management and the investment community with valuable insight into our ongoing core operations, our ability to generate cash and the underlying business trends that are affecting our performance. We believe that these non-GAAP measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry and to better understand and interpret the results of the ongoing business following the separation and distribution. These non-GAAP financial measures should not be viewed as a substitute for our financial results calculated in accordance with GAAP and you are cautioned that other companies may define these non-GAAP financial measures differently.

We define Adjusted Gross Profit as gross profit as adjusted to exclude (i) certain items that we do not consider indicative of our ongoing operating performance following the separation, including the cost of sales from the Product Procurement Adjustment and (ii) the impact of a voluntary product recall. We define Adjusted Gross Margin as Adjusted Gross Profit divided by net sales. We believe that Adjusted Gross Profit and Adjusted Gross Margin are appropriate measures of our operating performance because each eliminates certain other adjustments that do not relate to the ongoing performance of our business.

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The following table reconciles Adjusted Gross Profit and Adjusted Gross Margin to the most comparable GAAP measure, gross profit and gross margin, respectively, for the periods presented:

Year Ended December 31,

($ in thousands, except %)

2025

2024

Net sales

$

6,399,188 

$

5,528,639 

Cost of sales

(3,262,698)

(2,866,648)

Gross profit

3,136,490 

2,661,991 

Gross margin

49.0 

%

48.1 

%

Product Procurement Adjustment(1)

18,725 

53,071 

Product recall(2)

4,616 

— 

Adjusted Gross Profit

$

3,159,831 

$

2,715,062 

Net sales

$

6,399,188 

$

5,528,639 

Adjusted Gross Margin

49.4 

%

49.1 

%

(1)Represents cost of sales incurred related to the Product Procurement Adjustment. As a result of the separation, we purchase 100% of our inventory from one of our subsidiaries, SharkNinja (Hong Kong) Company Limited (“SNHK”), and no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation is completely eliminated in consolidation. As a result of the separation, we pay JS Global a sourcing service fee to provide value-added sourcing services on a transitional basis under a Sourcing Services Agreement.

(2)Adjusted for gross profit impact from a voluntary product recall that was recognized during the year ended December 31, 2025.

We define Adjusted Operating Income as operating income excluding (i) share-based compensation, (ii) certain litigation costs, (iii) amortization of certain acquired intangible assets, (iv) certain transaction-related costs, (v) certain items that we do not consider indicative of our ongoing operating performance following the separation, including cost of sales from our Product Procurement Adjustment, and (vi) the impact of a voluntary product recall.

The following table reconciles Adjusted Operating Income to the most comparable GAAP measure, operating income, for the periods presented:

Year Ended December 31,

($ in thousands)

2025

2024

Operating income

$

920,281 

$

644,162 

Share-based compensation(1)    

43,872 

84,531 

Litigation costs(2)

827 

36,807 

Amortization of acquired intangible assets(3)

19,587 

19,587 

Transaction-related costs(4)

8,458 

1,342 

Product Procurement Adjustment(5)

18,725 

53,071 

Product recall(6)

11,188 

— 

Adjusted Operating Income

$

1,022,938 

$

839,500 

(1)Represents non-cash expense related to awards issued from the SharkNinja equity incentive plan.

(2)Represents litigation costs incurred and related settlements for certain patent infringement claims, false advertising claims, and any related settlement costs and recoveries, which were recorded in general and administrative expenses.

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(3)Represents amortization of acquired intangible assets that we do not consider normal recurring operating expenses, as the intangible assets relate to JS Global’s acquisition of our business. We exclude amortization charges for these acquisition-related intangible assets for purposes of calculating Adjusted Operating Income, although revenue is generated, in part, by these intangible assets, to eliminate the impact of these non-cash charges that are significantly impacted by the timing and valuation of JS Global’s acquisition of our business, as well as the inherent subjective nature of purchase price allocations. Of the amortization of acquired intangible assets, $3.7 million for the years ended December 31, 2025, 2024 and 2023 was recorded to research and development expenses, and $15.9 million for the years ended December 31, 2025, 2024 and 2023 was recorded to sales and marketing expenses.

(4)Represents certain costs incurred related to secondary offering transactions and transaction-related due diligence initiatives.

(5)Represents cost of sales incurred related to the Product Procurement Adjustment. As a result of the separation, we purchase 100% of our inventory from one of our subsidiaries, SNHK, and no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation is completely eliminated in consolidation. As a result of the separation, we pay JS Global a sourcing service fee to provide value-added sourcing services on a transitional basis under a Sourcing Services Agreement.

(6)Adjusted for operating income impact from a voluntary product recall that was recognized during the year ended December 31, 2025.

We define Adjusted Net Income as net income excluding (i) share-based compensation, (ii) certain litigation costs, (iii) foreign currency gains and losses, net, (iv) amortization of certain acquired intangible assets, (v) certain transaction-related costs, (vi) certain items that we do not consider indicative of our ongoing operating performance following the separation, including cost of sales from our Product Procurement Adjustment, (vii) the impact of a voluntary product recall, and (viii) the tax impact of the adjusted items.

Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the diluted weighted average number of ordinary shares.

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The following table reconciles Adjusted Net Income and Adjusted Net Income Per Share to the most comparable GAAP measures, net income and net income per share, diluted, respectively, for the periods presented:

Year Ended December 31,

($ in thousands, except share and per share amounts)

2025

2024

Net income

$

701,374 

$

438,705 

Share-based compensation(1)

43,872 

84,531 

Litigation costs(2)

827 

36,807 

Foreign currency (gains) losses, net(3)

(36,059)

16,063 

Amortization of acquired intangible assets(4)

19,587 

19,587 

Transaction-related costs(5)

8,458 

1,342 

Product Procurement Adjustment(6)

18,725 

53,071 

Product recall(7)

11,188 

— 

Tax impact of adjusting items(8)

(18,398)

(33,862)

Adjusted Net Income

$

749,574 

$

616,244 

Net income per share, diluted

$

4.94 

$

3.11 

Adjusted Net Income Per Share

$

5.28 

$

4.37 

Diluted weighted-average number of shares used in computing net income per share and Adjusted Net Income Per Share

142,089,766 

141,083,853 

(1)Represents non-cash expense related to awards issued from the SharkNinja equity incentive plan.

(2)Represents litigation costs incurred and related settlements for certain patent infringement claims, false advertising claims, and any related settlement costs and recoveries, which were recorded in general and administrative expenses.

(3)Represents foreign currency transaction gains and losses recognized from the remeasurement of transactions that were not denominated in the local functional currency, including gains and losses related to foreign currency derivatives not designated as hedging instruments.

(4)Represents amortization of acquired intangible assets that we do not consider normal recurring operating expenses, as the intangible assets relate to JS Global’s acquisition of our business. We exclude amortization charges for these acquisition-related intangible assets for purposes of calculated Adjusted Net Income, although revenue is generated, in part, by these intangible assets, to eliminate the impact of these non-cash charges that are significantly impacted by the timing and valuation of JS Global’s acquisition of our business, as well as the inherent subjective nature of purchase price allocations. Of the amortization of acquired intangible assets, $3.7 million for the years ended December 31, 2025, 2024 and 2023 was recorded to research and development expenses, and $15.9 million for the years ended December 31, 2025, 2024 and 2023 was recorded to sales and marketing expenses.

(5)Represents certain costs incurred related to secondary offering transactions and transaction-related due diligence initiatives.

(6)Represents cost of sales incurred related to the Product Procurement Adjustment. As a result of the separation, we purchase 100% of our inventory from one of our subsidiaries, SNHK, and no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation is completely eliminated in consolidation. As a result of the separation, we pay JS Global a sourcing service fee to provide value-added sourcing services on a transitional basis under a Sourcing Services Agreement.

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(7)Adjusted for net income impact from a voluntary product recall that was recognized during the year ended December 31, 2025.

(8)Represents the income tax effects of the adjustments included in the reconciliation of net income to Adjusted Net Income, determined using the tax rate of 23.5% for the year ended December 31, 2025 and 22.0% for the year ended December 31, 2024, which approximates our ETR, excluding certain share-based compensation costs and separation and distribution-related costs that are not tax deductible.

We define EBITDA as net income excluding: (i) interest expense, net, (ii) provision for income taxes and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA excluding (i) share-based compensation cost, (ii) certain litigation costs, (iii) foreign currency gains and losses, net, (iv) certain transaction-related costs, (v) certain items that we do not consider indicative of our ongoing operating performance following the separation, including cost of sales from our Product Procurement Adjustment, and (vi) the impact of a voluntary product recall. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are appropriate measures because they facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results according to GAAP, we believe provide a more complete understanding of the factors and trends affecting our business than GAAP measures alone.

The following table reconciles EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to the most comparable GAAP measure, net income, for the periods presented:

Year Ended December 31,

($ in thousands, except %)

2025

2024

Net income

$

701,374 

$

438,705 

Interest expense, net

48,600 

63,715 

Provision for income taxes

198,904 

133,762 

Depreciation and amortization

139,631 

123,109 

EBITDA

1,088,509 

759,291 

Share-based compensation (1)

43,872 

84,531 

Litigation costs (2)

827 

36,807 

Foreign currency (gains) losses, net(3)

(36,059)

16,063 

Transaction-related costs(4)

8,458 

1,342 

Product Procurement Adjustment(5)

18,725 

53,071 

Product recall(6)

11,188 

— 

Adjusted EBITDA

$

1,135,520 

$

951,105 

Net sales

$

6,399,188 

$

5,528,639 

Adjusted EBITDA Margin

17.7 

%

17.2 

%

(1)Represents non-cash expense related to awards issued from the SharkNinja equity incentive plan.

(2)Represents litigation costs incurred and related settlements for certain patent infringement claims, false advertising claims, and any related settlement costs and recoveries, which were recorded in general and administrative expenses.

(3)Represents foreign currency transaction gains and losses recognized from the remeasurement of transactions that were not denominated in the local functional currency, including gains and losses related to foreign currency derivatives not designated as hedging instruments.

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(4)Represents certain costs incurred related to secondary offering transactions and transaction-related due diligence initiatives.

(5)Represents cost of sales incurred related to the Product Procurement Adjustment. As a result of the separation, we purchase 100% of our inventory from one of our subsidiaries, SNHK, and no longer purchase inventory from a purchasing office wholly owned by JS Global. Thus, the markup on all inventory purchased subsequent to the separation is completely eliminated in consolidation. As a result of the separation, we pay JS Global a sourcing service fee to provide value-added sourcing services on a transitional basis under a Sourcing Services Agreement.

(6)Adjusted for the Adjusted EBITDA impact from a voluntary product recall that was recognized during the year ended December 31, 2025.

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations and our revolving credit facility (“2023 Revolving Facility”). Our principal uses of cash have been investing in international expansion, new product development, working capital, distributions to JS Global prior to the separation and distribution, and repayment of debt. As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents of $777.3 million and our available balance of $489.1 million under our 2023 Revolving Facility. Our cash and cash equivalents consist primarily of cash on deposits with banks.

We believe that our existing cash and cash equivalents together with cash provided by operations and the availability under our 2023 Revolving Facility will be sufficient to meet our needs for at least the next 12 months from the date of the filing of this Annual Report. We plan to use our current cash on hand, cash generated by operations and our 2023 Revolving Facility to support our core business operations and strategic plan to accelerate our go-to-market strategy, invest in new product development and enhance our global distribution. We may be required to seek additional equity or debt financing to fund our activities. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, the results of operations and financial conditions of the business would be materially and adversely affected.

We have lease obligations and other contractual obligations and commitments as part of our ordinary course of business. See “Note 9 - Operating Leases,” “Note 10 - Debt” and “Note 11 - Commitments and Contingencies” to our audited consolidated financial statements found within “Item 8. Financial Statements and Supplementary Data” in this Annual Report for information about our lease obligations and other contractual obligations. We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements involving commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our business, financial condition, results of operations, liquidity, cash requirements or capital resources.

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Indebtedness

In July 2023, we entered into a credit agreement (“2023 Credit Agreement”) with Bank of America, N.A., as administrative agent, and certain banks and financial institutions party thereto as lenders and issuing banks. The 2023 Credit Agreement provides for an $810.0 million term loan facility (the “2023 Term Loan”) and a $500.0 million 2023 Revolving Facility. The 2023 Term Loan and 2023 Revolving Facility mature in July 2028, and both facilities bear interest at the Secured Overnight Financing Rate (“SOFR”) plus 1.75%. All SOFR borrowings under the 2023 Credit Agreement also incur a 0.1% credit adjustment. We may request increases to the 2023 Term Loan or 2023 Revolving Facility in a maximum aggregate amount not to exceed the greater of $520.0 million or 100% of adjusted earnings before interest, taxes, depreciation, and amortization, as defined in the 2023 Credit Agreement, for the most recently completed fiscal year. As of December 31, 2025, we had $739.1 million debt outstanding under the 2023 Credit Agreement.

During the year ended December 31, 2024, there were $285.0 million in draw downs on the 2023 Revolving Facility, which were all repaid during 2024. No amounts were outstanding on the 2023 Revolving Facility as of December 31, 2024. During the year ended December 31, 2025, there were $350.0 million in draw downs on the 2023 Revolving Facility, which were all repaid during 2025. No amounts were outstanding on the 2023 Revolving Facility as of December 31, 2025. As of December 31, 2025, $10.9 million of letters of credit were outstanding, resulting in an available balance of $489.1 million under the 2023 Revolving Facility.

Cash Flows

The following table summarizes our cash flows for the periods presented:

Year Ended December 31,

($ in thousands)

2025

2024

Net cash provided by operating activities

$

634,132 

$

446,620 

Net cash used in investing activities

(159,779)

(151,181)

Net cash used in financing activities

(77,081)

(81,221)

Operating Activities

Net cash provided by operating activities for the year ended December 31, 2025 of $634.1 million was primarily related to our net income of $701.4 million, adjusted for non-cash charges of $267.2 million and net cash outflows of $334.5 million from changes in our operating assets and liabilities. Non-cash charges primarily consisted of depreciation and amortization of $139.6 million, share-based compensation of $43.9 million, deferred income tax of $38.7 million, non-cash lease expenses of $20.4 million, provision for excess and obsolete inventory of $10.5 million, other non-cash adjustments of $9.4 million and provision for credit losses of $4.7 million. The main drivers of the net cash outflows derived from the changes in operating assets and liabilities were related to an increase in accounts receivable of $350.5 million, an increase in inventories of $87.3 million, an increase in prepaid expenses and other assets of $84.0 million and a decrease in operating lease liabilities of $15.1 million, partially offset by an increase in accrued expenses and other liabilities of $162.8 million and an increase in accounts payable of $38.1 million.

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Net cash provided by operating activities for the year ended December 31, 2024 of $446.6 million was primarily related to our net income of $438.7 million, adjusted for non-cash charges of $185.3 million and net cash outflows of $177.4 million from changes in our operating assets and liabilities. Non-cash charges primarily consisted of depreciation and amortization of $123.1 million, share-based compensation of $84.5 million, non-cash lease expenses of $19.5 million, provision for credit losses of $4.7 million and other non-cash adjustments of $0.9 million, offset by deferred income tax of $47.4 million. The main drivers of the net cash outflows derived from the changes in operating assets and liabilities were related to an increase in accounts receivable of $299.2 million, an increase in inventories of $204.9 million, an increase in prepaid expenses and other assets of $57.9 million and a decrease in operating lease liabilities of $10.2 million, partially offset by an increase in accrued expenses and other liabilities of $222.0 million, an increase in accounts payable of $157.3 million and an increase in tax payable of $15.5 million.

Investing Activities

Investing activities consist primarily of purchases of property and equipment and intangible assets.

Cash used in investing activities for the year ended December 31, 2025 of $159.8 million consisted of purchases of property and equipment of $146.1 million, purchases of intangible assets of $12.4 million and capitalized software development costs of $1.3 million.

Cash used in investing activities for the year ended December 31, 2024 of $151.2 million consisted of purchases of property and equipment of $137.7 million, purchases of intangible assets for $9.9 million and capitalized software development costs of $3.6 million.

Financing Activities

Financing activities consist primarily of proceeds we receive from the issuance of debt and debt repayments, as well as dividend payments, and contributions and distributions to and from JS Global prior to the separation and distribution.

Cash used in financing activities for the year ended December 31, 2025 of $77.1 million consisted of net ordinary shares withheld for taxes of $51.4 million and principal payments on the 2023 Term Loan of $40.5 million, which was partially offset by proceeds from employee share purchase plan contributions of $14.8 million.

Cash used in financing activities for the year ended December 31, 2024 of $81.2 million consisted of net ordinary shares withheld for taxes of $61.4 million and principal payments on the 2023 Term Loan of $25.3 million, which was partially offset by proceeds from employee share purchase plan contributions of $5.5 million.

Contractual Obligations and Commitments

As of December 31, 2025, our contractual obligations consisted of: (i) operating lease commitments of $201.7 million, of which $32.5 million is due in 2026 and $169.3 million is due thereafter, and (ii) purchase commitments of $109.0 million, of which $23.3 million is due in 2026 and $85.7 million is due thereafter. Please refer to “Note 9 - Operating Leases” and “Note 11 - Commitments and Contingencies” to the Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for a discussion on our lease and purchase commitments.

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Critical Accounting Policies and Estimates

Our discussion and analysis of results of operations, financial condition, and liquidity are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may materially differ from these estimates under different assumptions or conditions. On an ongoing basis, we review our estimates to ensure that they appropriately reflect changes in our business or new information as it becomes available. For additional information on our significant accounting policies, please refer to “Note 2 - Summary of Significant Accounting Policies” to our consolidated financial statements included in this Annual Report. We believe that the following critical accounting policies and estimates have the greatest potential impact on our financial statements.

Net Sales Recognition

We recognize net sales when control of our products is transferred to retailers, consumers and distributors. Generally, control transfers when products are shipped or delivered to the customer, depending on the terms of the contract. Net sales related to service-type warranties recognized ratably over the contract period is immaterial.

Sales are made primarily under agreements allowing for rights of return in limited circumstances and various incentive rebates. We have an established history for these arrangements, and we record the estimated reserves as a reduction to net sales at the time the related net sales are recognized. Depending on whether we have the right to offset, the allowance for sales returns and the allowance for rebates are recorded on the balance sheet as either contra accounts receivable or accrued liabilities. Sales returns and rebates are estimated based on relevant historical and current data. Any significant changes in experience as compared to historical returns and rebates will impact the estimate.

We recognized $59.8 million, $86.6 million and $58.8 million in accrued returns and $409.7 million, $291.4 million and $207.6 million in accrued customer incentives as of December 31, 2025, 2024 and 2023, respectively. A hypothetical 10% change in the estimated ending liability balance would have resulted in a $6.0 million, $8.7 million and $5.9 million change in the estimated accrued return liability and a $41.0 million, $29.1 million and $20.8 million change in the estimated accrued rebate liability for the years ended December 31, 2025, 2024 and 2023, respectively, which would have been recognized as an increase or decrease to net sales.

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Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. During 2025, the Company identified two reporting units for goodwill impairment testing, Domestic and International, and reallocated the carrying amount of goodwill to each reporting unit using a relative fair value framework, determined using a market approach based on revenue multiples. Although the Company presents one reportable segment for ASC 280 purposes due to aggregation, goodwill is evaluated for impairment at the reporting unit level, prior to aggregation. Our annual goodwill impairment test date is October 1. Indefinite-lived intangible assets consist of trade name and trademarks acquired through business acquisitions and separate purchases. Goodwill and indefinite-lived intangible assets are not amortized but rather tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that they may be impaired. Evaluating goodwill for impairment involves determining the fair value of our reporting units in which goodwill is recorded using a qualitative or quantitative analysis. If the fair value of a reporting unit exceeds its carrying value, impairment is not indicated. If the carrying amount of a reporting unit is higher than its estimated fair value, the excess is recorded as an impairment expense. Evaluating indefinite-lived intangible assets for impairment involves determining the fair value of the related indefinite-lived intangible asset using a qualitative or quantitative analysis. If the fair value of an indefinite-lived intangible asset exceeds its carrying value, impairment is not indicated, and if the carrying value exceeds fair value, an impairment charge is recognized.

For the year ended December 31, 2025, we performed a qualitative (Step 0) goodwill impairment assessment for each of our two reporting units, Domestic and International, and concluded that it was more likely than not that the fair value of each reporting unit exceeded its carrying value. For the year ended December 31, 2024, when we concluded we had one reporting unit, we performed a qualitative (Step 0) assessment for that reporting unit and concluded it was more likely than not that its fair value exceeded its carrying value. Therefore, we did not recognize any goodwill impairment during the years ended December 31, 2025 and 2024. In addition, we did not recognize any impairment of our indefinite-lived intangible assets during the years ended December 31, 2025 and 2024.

Acquired intangible assets consist of identifiable intangible assets, primarily developed software technology, customer relationships and trade name and trademarks, resulting from business acquisitions. Other intangible assets consist of purchased patents. Intangible assets are initially recorded at fair value on the date of acquisition and are amortized over their estimated useful lives, with the exception of trade name and trademarks which were deemed to have an indefinite life and are tested for impairment as described above. We evaluate our intangible assets for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an asset’s carrying amount may not be recoverable. When measuring the recoverability of these assets, we will make assumptions regarding our estimated future cash flows expected to be generated by the assets. If our estimates or related assumptions change in the future, we may be required to impair these assets. An asset is considered impaired if the carrying amount exceeds the undiscounted future net cash flows that the asset or asset group is expected to generate.

Recent Accounting Pronouncements

Refer to the sections titled “Basis of Presentation,” “Adoption of New Accounting Pronouncements” and “Recently Issued Accounting Pronouncements” in Note 2 of the Notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for more information.