$85.4 million in second-quarter fiscal 2026 net sales puts Once Upon A Farm (NYSE: OFRM) 42.3% above the year-earlier $60 million, with reported growth outpacing underlying consumption gains in the low- to mid-30% range because of favorable cooler slotting comparisons, distribution additions and initial protein-pouch shipments. The company raised its fiscal 2026 revenue outlook to $327 million to $335 million from a prior range of $313 million to $323 million, implying growth of approximately 36% to 39%.
Baby and kid segment performance
Baby business sales grew 73% year over year to $41.5 million, with pouches and snacks advancing at similar rates. The company added more than 85,000 baby distribution points during the quarter at existing and new retailers. Kid business sales rose 22% to $43.9 million; more than 15,000 distribution points were added in the kid portfolio, and packaging updates to dairy-free kid smoothies produced velocity increases of 10% to 15% on the same distribution.
Household penetration reached 6.2% at the end of June, up from 5% a year earlier. Repeat purchases among households with children rose 351 basis points year over year to 52.1%.
Meat and legume protein pouches, launched in March, were 61% incremental to Once Upon A Farm and 63% incremental to the total baby category at certain retailers, according to management.
Margin compression and club program trade spend
Gross margin was 35.9% in Q2, down 485 basis points year over year. President and Chief Financial Officer Larry Waldman cited trade spending tied to the national club program launched in May, a heavier sales mix of snacks relative to pouches (snacks carry lower margins) and fuel and tariff costs, with pricing and lower cooler slotting costs partially offsetting those factors.
SG&A expense rose $11.9 million to $36.3 million, equal to 42.5% of net sales, with approximately $3.5 million attributable to stock-based compensation and performance payments related to the company's IPO. About $3 million of marketing spend shifted from Q2 to Q3 to align with back-to-school promotions.
Net loss improved to $5 million from $9 million a year earlier. Adjusted EBITDA was a loss of $1.7 million, against a gain of $2 million in the prior-year period.
Outlook, balance sheet and automation spend
The company now targets full-year gross margin of approximately 40%, about 100 basis points below its prior outlook. Third-quarter gross margin is expected to be similar to the Q2 level, with improvement in Q4 as the club program concludes and a low-single-digit price increase on selected, primarily snack-related products takes effect in late September.
Adjusted EBITDA guidance for fiscal 2026 was raised to $3 million to $4.5 million from $2 million to $4 million.
Once Upon A Farm ended Q2 with approximately $93.5 million in cash and no debt. Inventory rose 47.6% year over year to $51.9 million as the company prepared for back-to-school demand and a third-quarter club program featuring its Tractor Wheels toddler snacks. Supply chain automation initiatives with co-manufacturing partners carry an estimated capital investment of $25 million to $35 million, with initial benefits expected in 2027 and more substantial contributions beginning in 2028.
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