Arhaus, Inc.

Previous wording

For thethree months ended March 31, 2026, we generated $314.3 million of net revenue, $114.4 million of gross margin and $2.2 million of net and comprehensive income.

Current wording

For the six months ended June 30, 2026, we generated $699.2 million of net revenue, $286.5 million of gross margin and $41.9 million of net and comprehensive income. For the three months ended June 30, 2026, we generated $384.9 million of net revenue, $172.1 million of gross margin, and $39.6 million of net and comprehensive income.

Previous wording

Income tax expense was $1.2 million in the three months ended March 31, 2026 compared to $1.2 million in the three months ended March 31, 2025. Our effective tax rate was 35.3% and 19.7% for the three months ended March 31, 2026 and March 31, 2025, respectively. The increase in the effective tax rate was primarily driven by the section 162(m) limitation on the deductibility of certain employee compensation that has a disproportionate impact on the quarterly tax rate.

Current wording

Income tax expense was $16.9 million in the six months ended June 30, 2026 compared to $13.8 million in the six months ended June 30, 2025. Our effective tax rate was 28.8% and 25.7% for the six months ended June 30, 2026 and June 30, 2025, respectively. The increase in the effective tax rate was primarily driven by the section 162(m) limitation on the deductibility of certain employee compensation that has a disproportionate impact on the quarterly tax rate.

Previous wording

Net revenue increased $2.9 million, or 0.9%, to $314.3 million in the three months ended March 31, 2026 compared to $311.4 million in thethree months ended March 31, 2025. The increase was driven primarily by $9.3 million of revenue growth related to new Showrooms opened in 2025, partially offset by lower demand for our products.

Current wording

Net revenue increased $26.5 million, or 7.4%, to $384.9 million in the three months ended June 30, 2026 compared to $358.4 million in the three months ended June 30, 2025. The increase was driven primarily by increased demand for our products and $10.7 million of revenue growth related to new Showrooms opened in 2026 and 2025.

Previous wording

Gross margin decreased $1.2 million, or 1.0%, to $114.4 million in the three months ended March 31, 2026 compared to $115.6 million in the three months ended March 31, 2025. The decrease was primarily driven by increased product costs of $4.1 million, higher Showroom occupancy costs of $1.5 million, and higher fuel costs of $1.2 million, partially offset by lower delivery and transportation costs of $3.4 million and higher net revenue.

Current wording

Gross margin increased $23.9 million, or 16.1%, to $172.1 million in the three months ended June 30, 2026 compared to $148.2 million in the three months ended June 30, 2025. The increase was primarily due to higher net revenue, the benefit related to recoveries of IEEPA tariffs of $23.8 million, partially offset by increased product costs of $16.4 million, higher Showroom occupancy costs of $3.8 million, and higher fuel costs of $2.8 million.

Previous wording

As a percentage of net revenue, gross margin decreased 70 basis points to 36.4%of net revenue in thethree months ended March 31, 2026 compared to 37.1% of net revenue in thethree months ended March 31, 2025. The gross margin decrease was primarily driven by Showroom occupancy costs, which increased by 40 basis points and higher fuel costs, which increased by 40 basis points.

Current wording

As a percentage of net revenue, gross margin increased 330 basis points to 44.7% of net revenue in the three months ended June 30, 2026 compared to 41.4% of net revenue in the three months ended June 30, 2025. The gross margin increase as a percentage of net revenue was primarily driven by the benefit related to recoveries of IEEPA tariffs, which contributed 620 basis points, partially offset by higher product costs, which increased 190 basis points, higher fuel costs, which increased by 70 basis points, and Showroom occupancy costs, which increased 40 basis points.

Previous wording

SG&A expenses increased $2.1 million, or 1.9%, to $112.2 million in the three months ended March 31, 2026 compared to $110.1 million in the three months ended March 31, 2025. The increase was primarily due to a $1.9 million increase in general and administrative costs related to strategic investments to support and drive the growth of the business, including supply chain and technology improvements, and other corporate expenses.

Current wording

SG&A expenses increased $16.3 million, or 16.1%, to $117.8 million in the three months ended June 30, 2026 compared to $101.5 million in the three months ended June 30, 2025. The increase was primarily due to an $8.4 million increase in general and administrative costs, primarily related to strategic investments to support and drive the growth of the business, including technology improvements, and other corporate expenses, and a $7.9 million increase in selling expenses primarily related to new Showrooms and increased demand for our products.

Previous wording

As a percentage of net revenue, SG&A expenses increased 40 basis points to 35.7% of net revenue in thethree months ended March 31, 2026 compared to 35.3% of net revenue in thethree months ended March 31, 2025.

Current wording

As a percentage of net revenue, SG&A expenses increased 230 basis points to 30.6% of net revenue in the three months ended June 30, 2026 compared to 28.3% of net revenue in the three months ended June 30, 2025.

Previous wording

Net and comprehensive income decreased $2.7 million to $2.2 million in the three months ended March 31, 2026 compared to $4.9 million in the three months ended March 31, 2025. The decrease was driven by the factors described above.

Current wording

Net and comprehensive income increased $4.5 million to $39.6 million in the three months ended June 30, 2026 compared to $35.1 million in the three months ended June 30, 2025. The increase was driven by the factors described above.

Previous wording

Our primary cash needs have historically been for merchandise inventories, payroll, marketing, Showroom rent, capital expenditures associated with opening new Showrooms and renovating existing Showrooms, as well as the development of our infrastructure and information technology. We seek out and evaluate opportunities for effectively managing and deploying capital in ways that improve working capital and support and enhance our business initiatives and strategies. As of March 31, 2026, we had cash and cash equivalentsof $177.1 million.

Current wording

Our primary cash needs have historically been for merchandise inventories, payroll, marketing, Showroom rent, capital expenditures associated with opening new Showrooms and renovating existing Showrooms, as well as the development of our infrastructure and information technology. We seek out and evaluate opportunities for effectively managing and deploying capital in ways that improve working capital and support and enhance our business initiatives and strategies. As of June 30, 2026, we had cash and cash equivalentsof $226.4 million.

Previous wording

On February 29, 2024, the Board of Directors of the Company declared a special cash dividend on the Company’s Class A and Class B common stock of $0.50 per share, payable April 4, 2024, to shareholders of record at the close of business on March 21, 2024. The Company paid $0.1 million and $0.2 million of the aforementioned special cash dividend on its Class A common stock related to dividend equivalents on equity awards that vested during the three months ended March 31, 2026 and March 31, 2025, respectively.

Current wording

On February 29, 2024, the Board of Directors of the Company declared a special cash dividend on the Company’s Class A and Class B common stock of $0.50 per share, payable April 4, 2024, to shareholders of record at the close of business on March 21, 2024. The Company paid $0.1 million and $0.3 million of the aforementioned special cash dividend on its Class A common stock related to dividend equivalents on equity awards that vested during the six months ended June 30, 2026 and June 30, 2025, respectively.

Previous wording

On February 17, 2026, the Board of Directors of the Company declared a special cash dividend on the Company’s Class A and Class B common stock of $0.35 per share, payable March 31, 2026, to shareholders of record at the close of business on March 18, 2026. The Company paid $49.4 million of the aforementioned dividend on its Class A and Class B common stock to shareholders as of the Record Date during the three months ended March 31, 2026.

Current wording

On February 17, 2026, the Board of Directors of the Company declared a special cash dividend on the Company’s Class A and Class B common stock of $0.35 per share, payable March 31, 2026, to shareholders of record at the close of business on March 18, 2026. The Company paid $49.5 million of the aforementioned dividend on its Class A and Class B common stock to shareholders as of the Record Date during the six months ended June 30, 2026.

Previous wording

We have begun a multi-year transformation that will replace certain of our existing systems with a modern and integrated platform encompassing a new enterprise resource planning system (“ERP”), an order management system and a transportation management system. The total incremental investment in connection with these technology upgrades is expected to be approximately $30 million, including implementation and project staffing costs as well as licensing fees through 2030. Cash outflows were approximately $3 million during the three months ended March 31, 2026, and we anticipate approximately $12 million in 2026 and $10 million in 2027, with cash outflows tapering in early 2028 as we transition to annual licensing and maintenance costs of approximately $2 million per year through 2030.

Current wording

We have begun a multi-year transformation that will replace certain of our existing systems with a modern and integrated platform encompassing a new enterprise resource planning system (“ERP”), an order management system, a transportation management system and a point of sale system. The total incremental investment in connection with these technology upgrades is expected to be approximately $50 million, including implementation and project staffing costs as well as licensing fees through 2030. Cash outflows were approximately $5 million during the six months ended June 30, 2026, and we anticipate approximately $20 million in 2026 and $12 million in 2027, with cash outflows tapering in early 2028 as we transition to annual licensing and maintenance costs of approximately $6 million per year through 2030.

Previous wording

For thethree months ended March 31, 2026, net cash used in operating activities was $9.7 million and consisted of net income of $2.2 million adjusted for non-cash items of $35.7 million, which were partially offset by a decrease in working capital and other activities of $47.6 million. The use of cash from working capital was primarily driven by an increase in merchandise inventory of $30.7 million, a decrease in operating lease liabilities of $17.9 million primarily due to payments made under the related lease agreements, a decrease in accrued expenses of $16.1 million, a decrease in accounts payable $11.9 million, and an increase in prepaid and other current assets of $7.2 million, which was partially offset by an increase in client deposits of $35.3 million in the three months ended March 31, 2026.

Current wording

For the six months ended June 30, 2026, net cash provided by operating activities was $59.8 million and consisted of net income of $41.9 million adjusted for non-cash items of $76.6 million, which were partially offset by a decrease in working capital and other activities of $58.7 million. The use of cash from working capital was primarily driven by an increase in prepaid and other current assets of $38.2 million primarily due to the IEEPA tariff receivable, a decrease in operating lease liabilities of $35.2 million primarily due to payments made under the related lease agreements, an increase in merchandise inventory of $14.7 million, and a decrease in accounts payable $8.3 million, which was partially offset by an increase in client deposits of $27.8 million and a increase in accrued expenses of $8.1 million in the six months ended June 30, 2026.

Previous wording

For thethree months ended March 31, 2025, net cash provided by operating activities was $46.5 million and consisted of net income of $4.9 million an increase of non-cash items of $30.1 million and an increase in working capital and other activities of $11.5 million. The change in working capital was primarily driven by an increase in client deposits of $42.3 million, which was partially offset by a decrease in operating lease liabilities of $13.9 million primarily due to payments made under the related lease agreements, a decrease in accounts payable of $8.7 million, an increase in merchandise inventory of $4.4 million and a decrease in accrued expenses of $3.2 million in thethree months ended March 31, 2025.

Current wording

For thesix months ended June 30, 2025, net cash provided by operating activities was $81.4 million and consisted of net income of $39.9 million adjusted for non-cash items of $60.3 million, which were partially offset by a change in working capital and other activities of $18.8 million. The use of cash from working capital was primarily driven by a decrease in operating lease liabilities of $28.0 million primarily due to payments made under the related lease agreements and an increase in merchandise inventory of $14.1 million, which was partially offset by an increase in client deposits of $12.2 million, an increase in accrued expenses of $4.7 million, a decrease in prepaid and other assets of $4.4 million and an increase in accounts payable of $1.8 million in thesix months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026, net cash used in investing activities was $15.9 million primarily due to investments in Showrooms, investments in our supply chain, and information technology and systems infrastructure, which was partially offset by insurance proceeds for property, furniture, and equipment.

Current wording

For the six months ended June 30, 2026, net cash used in investing activities was $36.9 million primarily due to investments in Showrooms, investments in our supply chain, and information technology and systems infrastructure, which was partially offset by insurance proceeds for property, furniture, and equipment.

Previous wording

For thethree months ended March 31, 2025, net cash used in investing activities was $27.6 million primarily due to investments in Showrooms, vehicles, and information technology and systems infrastructure.

Current wording

For thesix months ended June 30, 2025, net cash used in investing activities was $41.6 million primarily due to investments in Showrooms, vehicles, investments in our supply chain, and information technology and systems infrastructure.

Previous wording

Total capital expenditures, net of landlord contributions decreased by $9.3 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Current wording

Total capital expenditures, net of landlord contributions decreased by $1.4 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Previous wording

For thethree months ended March 31, 2026, net cash used in financing activities was $50.6 million primarily due to the payment of the special dividend on our Class A and Class B common stock.

Current wording

For thesix months ended June 30, 2026, net cash used in financing activities was $51.7 million primarily due to the payment of the special dividend on our Class A and Class B common stock.

Previous wording

For the three months ended March 31, 2025, net cash used in financing activities was $1.9 million primarily due to the repurchase of shares for payment of withholding taxes for equity based compensation. These shares were not repurchased in connection with any publicly announced share repurchase programs.

Current wording

For the six months ended June 30, 2025, net cash used in financing activities was $2.3 million primarily due to the repurchase of shares for payment of withholding taxes for equity based compensation. These shares were not repurchased in connection with any publicly announced share repurchase programs.