Breaking Down AMMO, Inc. (POWW) Financial Health: Key Insights for Investors

You're looking at AMMO, Inc. (POWW) and trying to figure out if the underlying business can defintely stabilize after the dramatic shifts, and honestly, the Q1 fiscal year 2025 numbers tell a story of two wildly different companies operating under one roof. The direct takeaway is that while the Ammunition segment was a major drag, the core marketplace business remains a cash-generating machine, which is why the strategic separation was so critical. For the first quarter of fiscal 2025, the company reported total net revenues of just $31.0 million, a drop from the prior year, resulting in a significant net loss of $7.1 million on a diluted earnings per share (EPS) of ($0.07). Here's the quick math: the GunBroker.com marketplace delivered an incredible gross margin of 85.6%, but the Ammunition segment posted a negative gross margin of (4.0%), essentially burning cash to sell product. Still, the company ended the quarter with a strong current asset position of $134.0 million, including $50.8 million in cash, which gives them a real buffer to execute their turnaround plan-but you need to look past the top-line revenue decline to see the value trapped in that marketplace.

Revenue Analysis

The direct takeaway for AMMO, Inc. (POWW)'s revenue health in the 2025 fiscal year is that while the company is executing a critical, high-margin strategic shift, near-term revenue is under pressure. For the first quarter of fiscal year 2025 (Q1 FY2025), total net revenues came in at approximately $31.0 million, a noticeable decline from the prior year's quarter. This is defintely a transition period.

You need to see AMMO, Inc. as two distinct businesses to understand the revenue mix. The primary revenue sources are the Ammunition manufacturing segment and the GunBroker.com Marketplace segment, which is an e-commerce platform for firearms and related accessories. Here's the quick math on how they contributed in Q1 FY2025:

The year-over-year revenue growth rate for Q1 FY2025 was a decline of about 9.6%, falling from $34.3 million in Q1 FY2024 to $31.0 million. This drop reflects a slower market environment and the internal shift in the Ammunition segment, but the Marketplace segment is showing positive operational trends that could offset this drag over time.

Looking at the strategic changes, the Ammunition segment is deliberately transitioning its production mix. Management is focusing on higher-margin rifle and pistol ammunition instead of chasing lower-margin, high-volume contracts. This shift is critical for long-term profitability, but it means you see short-term revenue dips as the plant retools and builds inventory for new premium rifle hunting segments. They've also started delivering on specific contractual obligations, like the 12.7X108 cases for ZRO Delta.

The Marketplace segment is a different story, showing strength in its core business model. GunBroker.com is moving beyond a simple auction site to become a more innovative e-commerce leader. The average take rate-the percentage of the transaction value the company keeps-increased to 6.2% in Q1 FY2025, up from 5.8% in the prior year quarter. That's a 40 basis point increase, which is a sign of successful monetization through category fee changes, advertising, and enhanced listing options. Plus, they're pushing the Gearfire financing solution to drive higher-value transactions and increase non-firearm accessory sales.

• Ammunition: Shifting to premium, higher-margin rifle and pistol products.
• Marketplace: Take rate increased to 6.2%, showing better monetization.
• Overall: Near-term revenue is down, but the underlying strategic moves are sound.

For more on the company's long-term vision behind these shifts, check out their Mission Statement, Vision, & Core Values of AMMO, Inc. (POWW).

Profitability Metrics

You're looking at AMMO, Inc. (POWW) because you see the potential in GunBroker.com, but the historical results look messy. The key takeaway for fiscal year (FY) 2025 is that the company was in a deep transition, which severely compressed margins, but the strategic shift to a pure-play e-commerce model is already showing a dramatic turnaround in segment-level profitability.

For the first quarter of FY2025 (ended June 30, 2024), AMMO, Inc. reported a consolidated gross profit margin of 31.6%, which was a significant drop from 40.9% in the prior-year quarter. This was driven by production inefficiencies and a shift in sales mix within the Ammunition segment, which posted a negative gross margin of (4.0%). That's a clear operational red flag.

Here's the quick math on Q1 FY2025, which shows the near-term financial strain:

The operating loss of $4.16 million in Q1 FY2025, or a (13.4%) operating margin (Income from Operations / Net Revenues), highlights how quickly costs outpaced the gross profit during the ammunition plant's transformation. This was compounded by non-recurring expenses totaling $6.3 million, which included a $3.2 million litigation contingency that hit the bottom line hard. The net loss of $7.1 million is defintely a tough number to swallow, resulting in a net profit margin of (22.9%) for the quarter. You must look past the headline numbers to see the core business shift.

When you compare this to the broader Guns & Ammunition Manufacturing industry, where the average net profit margin is estimated to be around 12.7% in 2025, AMMO, Inc.'s Q1 FY2025 performance was clearly an outlier due to its internal restructuring. The company's operational efficiency was split between two extremes:

• Marketplace Segment (GunBroker.com): Generated a stellar gross margin of 85.6% on $12.3 million in revenue in Q1 FY2025. This is a high-margin, scalable e-commerce business.
• Ammunition Segment: Posted a negative gross margin of (4.0%) on $18.7 million in revenue, reflecting the cost of shifting production to higher-margin rifle and pistol ammunition. This segment was a drag on profitability.

The strategic move to divest the Ammunition segment, completed in April 2025, is the critical action that changes the entire profitability profile. The company is now focused solely on the high-margin marketplace. The subsequent Q2 FY2026 results (ended September 30, 2025) already show the impact: a return to profitability with a net income of $1.40 million and a marketplace gross margin of 87.1%. That's the real story. The near-term risk was the cost of the transition; the opportunity is the pure-play, high-margin model.

To dive deeper into the company's strategic pivot and who is betting on this new model, you should read Exploring AMMO, Inc. (POWW) Investor Profile: Who's Buying and Why?.

Debt vs. Equity Structure

You are looking at AMMO, Inc. (POWW)'s balance sheet to gauge its financial risk, and the direct takeaway is that the company is currently running with an extremely low-leverage structure. The transition to a pure-play online marketplace (GunBroker.com) has resulted in a capital structure that is heavily weighted toward equity, which is typical of asset-light technology businesses.

As of December 2025, AMMO, Inc. (POWW) reported total debt of just $1.56 million against a Stockholders' Equity of $222.03 million. This is a dramatic shift from its former life as a capital-intensive ammunition manufacturer. The quick math here shows a Debt-to-Equity (D/E) ratio of approximately 0.007, or about 0.7%, which is even lower than the already minimal recent reported D/E of 0.05 (5%). This means for every dollar of shareholder equity, the company has less than a penny of debt.

• Total Debt (Dec 2025): $1.56 million
• Total Equity (Dec 2025): $222.03 million
• Debt-to-Equity Ratio: 0.05 (5%)

This low D/E ratio is a major strength, signaling minimal financial risk. To be fair, a D/E ratio of 0.05 compares very favorably to the average for the broader Aerospace & Defense sector (where the old business was classified), which sits around 0.38 as of November 2025. Even for a tech-focused peer like Global-e Online, the D/E ratio is around 0.03, so AMMO, Inc. is right in line with the low-leverage profile of a modern, asset-light e-commerce company. They simply don't need much debt.

What this low debt figure hides is the recent restructuring activity. The company has been managing its capital structure following the sale of its ammunition segment. A key component of its long-term liabilities in Q1 Fiscal Year 2025 was a $10.71 million Construction Note Payable, which appears to have been largely cleared or reclassified as part of the transition, resulting in the current low debt balance. This is defintely a positive sign of a clean balance sheet post-restructuring.

The company does use a hybrid form of financing outside of traditional debt, which is important to note. They have 8.75% Series A Cumulative Redeemable Perpetual Preferred Stock (POWWP) outstanding. While this is technically equity on the balance sheet, it carries a fixed dividend payment like debt, so it acts as a permanent, high-cost form of capital. The company balances its minimal traditional debt with this preferred equity to fund operations and growth, favoring equity funding (common and preferred) over bank loans.

Here is a summary of the key financing components:

The overall structure is conservative. The risk isn't over-leverage; it's whether the high cost of preferred equity and the recent restructuring notes (like Note 1 and Note 2 mentioned in filings) will pay off with sufficient operating cash flow from the GunBroker.com platform. You can find a deeper dive into the company's full financial picture in our full post: Breaking Down AMMO, Inc. (POWW) Financial Health: Key Insights for Investors.

Next Step: Finance team: Model the impact of the 8.75% preferred stock dividend on the next four quarters of net income to assess true profitability.

Liquidity and Solvency

You're looking at AMMO, Inc. (POWW)'s balance sheet to gauge its ability to cover short-term debts, and the headline is strong: the company holds a significant buffer, but recent cash flow trends and operational shifts demand a closer look.

As of the end of the first quarter of fiscal year 2025 (Q1 FY2025), AMMO, Inc. (POWW) demonstrated a strong liquidity position, which is defintely a plus for weathering market volatility. This is particularly important as the company transitions its focus following the sale of its ammunition manufacturing assets.

Assessing AMMO, Inc. (POWW)'s Liquidity

The company's ability to meet its near-term obligations is excellent based on the core ratios. Here's the quick math using Q1 FY2025 data, which reported $134.0 million in current assets and $42.3 million in current liabilities.

• Current Ratio: At approximately 3.17, this ratio (Current Assets divided by Current Liabilities) is well above the safe benchmark of 2.0.
• Quick Ratio: This more conservative measure, which strips out inventory, stood at approximately 1.77. This calculation uses cash, accounts receivable, and due from related parties of roughly $75.0 million against current liabilities.

A Quick Ratio of 1.77 means AMMO, Inc. (POWW) can cover its immediate debts nearly twice over without selling a single item of inventory. That's a healthy cushion.

Working Capital Trends and Cash Flow Overview

The net working capital (Current Assets minus Current Liabilities) remains substantial, though it has seen a slight dip. It stood at a robust $91.7 million in Q1 FY2025, down from $100.6 million at the end of fiscal year 2024.

This reduction is manageable, but the cash flow statement shows a more complex picture. While the company generated $32.6 million in cash from operations in the full fiscal year 2024, the recent trend points to pressure. For instance, the Free Cash Flow (FCF) for the subsequent Q1 FY2026 was reported as a negative $-7.56 million, with Operating Cash Flow (OCF) also negative at $-6.67 million for the full FY2026. This shift from positive OCF in FY2024 to negative OCF in the near-term 2026 data suggests that while the balance sheet is strong, the underlying business is currently consuming cash, not generating it.

Liquidity Strengths and Near-Term Risks

The primary strength is the sheer volume of liquid assets. The company ended Q1 FY2025 with $50.8 million in cash and cash equivalents. Plus, the announced sale of the ammunition manufacturing business to Olin's Winchester for $75 million in cash, expected to close in the second calendar quarter of 2025, will provide a massive, one-time injection of capital.

However, you need to watch two key risks. First, the company reported a net loss of $7.1 million in Q1 FY2025, which, if sustained, will erode that cash buffer over time. Second, the company received a NASDAQ deficiency notice for delayed financial filings, which points to operational and accounting uncertainty that can spook investors and limit access to capital. The strong ratios are a snapshot; the negative cash flow and accounting issues are a motion picture you need to keep your eye on. For more on the shareholder base navigating this shift, see Exploring AMMO, Inc. (POWW) Investor Profile: Who's Buying and Why?

Valuation Analysis

You are looking at AMMO, Inc. (POWW) and wondering if the market has it right. My take is that the stock is currently trading at a discount based on its asset base, a classic sign of potential undervaluation, but its negative earnings metrics signal significant operational risks. It's a classic value-trap versus deep-value debate.

The core of the valuation story is unprofitability. As of late 2025, AMMO, Inc.'s trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio is a negative -3.06. This negative number simply means the company is losing money, so the P/E ratio is not useful for a traditional comparison. Also, its Enterprise Value-to-EBITDA (EV/EBITDA) ratio is negative, at approximately -5.75, which confirms the business is not currently generating positive Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). You can't value a company on earnings it doesn't have.

Here's the quick math on tangible assets: the Price-to-Book (P/B) ratio sits at about 0.86. Since a P/B under 1.0 suggests the stock is trading for less than the net value of its physical and financial assets (Book Value), this metric flags AMMO, Inc. as potentially undervalued on a liquidation or asset-based view. Still, assets don't matter if they don't generate cash.

• P/E Ratio (TTM): -3.06 (Indicates net loss)
• P/B Ratio: 0.86 (Suggests asset-based undervaluation)
• EV/EBITDA (TTM): -5.75 (Confirms negative operating profit)

The common stock (POWW) does not pay a dividend, so the dividend yield is 0.00%. However, a small but important note for income-focused investors: the company's preferred stock (POWWP) offers a high yield, recently around 9.07%, but that's a different security entirely and defintely not POWW.

Looking at the last 12 months, the stock has been volatile. The price has traded in a wide range, from a 52-week low of $0.95 to a high of $2.13. As of mid-November 2025, the stock is trading near $1.86. This trend shows the market is willing to pay a premium over the low point, likely on expectations of a turnaround following the sale of its ammunition manufacturing assets and a focus on the GunBroker.com e-commerce platform.

Analyst consensus leans toward cautious optimism. The average Wall Street price target is $2.38, which implies an upside of about 27.69% from the recent trading price. The overall consensus rating is a Hold or Moderate Buy, reflecting the dichotomy: the deep P/B discount provides a floor, but the negative earnings prevent a strong Buy rating. Your investment decision hinges on whether management can successfully execute their pivot to the higher-margin e-commerce business. You can dive deeper into the operational risks in the full blog post: Breaking Down AMMO, Inc. (POWW) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at AMMO, Inc. (POWW) and trying to map the near-term landscape, and honestly, the biggest risks right now are less about the general market and more about internal controls and production efficiency. The company is navigating a complex set of operational and regulatory headwinds that have materially impacted its fiscal year 2025 performance.

The most immediate and critical financial risk is the regulatory non-compliance stemming from internal accounting issues. On November 20, 2024, AMMO, Inc. received a deficiency notice from Nasdaq for failing to timely file its Q3 2024 Form 10-Q. This delay is directly tied to an ongoing independent investigation into the company's accounting practices for fiscal years 2020 through 2023. The company has until January 21, 2025, to submit a compliance plan, and failure to regain compliance by May 19, 2025, could lead to delisting. That's a massive uncertainty overhang on the stock.

Here's the quick math on the operational and financial risks visible in the Q1 2025 results (for the quarter ended June 30, 2024):

• Ammunition Segment Loss: The core Ammunition segment posted a negative gross margin of 4.0%, resulting in a loss of $0.7 million on $18.7 million in revenue.
• Profitability Compression: Total gross profit margin compressed sharply to 31.6% in Q1 2025, down from 40.9% in the prior year period.
• Wider Net Loss: The company reported a net loss of $7.1 million in Q1 2025, a significant widening from the $1.1 million loss in Q1 2024.

The operational drag is clear: production capacity for higher-margin rifle ammunition is ramping up slower than expected, leading to overhead absorption issues. The company is forced to sell older inventory at a loss to manage stock, which is what tanked the Ammunition segment's margin. This isn't just a market issue; it's a production execution challenge.

External factors still matter, of course. The post-pandemic industry downturn and reduced consumer discretionary spending have driven total net revenues down to $31.0 million in Q1 2025 from $34.3 million a year earlier. The marketplace segment, GunBroker.com, saw sales decline slightly, though management is mitigating this by increasing the take rate to 6.2% in Q1 2025 from 5.8% previously, plus they are focusing on platform enhancements like the new multi-item cart system. You can get a deeper dive into the ownership structure and market sentiment in Exploring AMMO, Inc. (POWW) Investor Profile: Who's Buying and Why?

The company also took a hit from non-recurring expenses, totaling $6.3 million in Q1 2025, which included a notable $3.2 million litigation contingency expense. This table summarizes the key financial risks and the company's stated mitigation efforts:

The path forward defintely hinges on resolving the Nasdaq compliance issue and showing a clear, sustained improvement in the Ammunition segment's gross margin. A negative gross margin is not sustainable.

Growth Opportunities

You need to look past the old AMMO, Inc. (POWW) and focus entirely on the new, streamlined e-commerce business. The core growth story now rests on scaling the GunBroker.com marketplace, a high-margin, tech-enabled platform, following the pivotal sale of the ammunition manufacturing assets.

This strategic shift, finalized in April 2025, injected $75 million in cash from Olin Winchester into the balance sheet, which is now earmarked for targeted investments and operational efficiency. The company is defintely pivoting to be a pure-play digital leader, rebranding as Outdoor Holding Company to better reflect its broader market focus.

Key Growth Drivers: E-commerce and Digital Innovation

The future revenue trajectory is now tied to increasing the Gross Merchandise Value (GMV) and the take rate (the percentage of sales the company keeps) on GunBroker.com. The platform is already the largest online marketplace for firearms, which is a significant competitive advantage in a specialized, regulated sector. The company is not just resting on its market position, though. It's pushing hard on product innovation within the platform itself.

• Scale the GunBroker.com digital platform.
• Increase the take rate beyond the Q1 FY2025 rate of 6.2%.
• Monetize algorithms for better cross-selling of non-firearm accessories.
• Launch the Gearfire financing solution to drive higher conversion.
• Maintain new user growth, which averaged 25,000 per month in Q1 FY2025.

That $75 million cash infusion gives them the capital to execute these digital strategies quickly.

Future Revenue and Earnings Estimates

The financial picture is transitioning from a low-margin manufacturing model to a high-margin marketplace model. For the first quarter of fiscal year 2025 (Q1 FY2025), the Marketplace segment (GunBroker.com) generated $12.3 million in revenue. This is the new baseline for continuing operations. Looking ahead, analysts are projecting the new entity's annual revenue for the fiscal period ending March 2026 to be around $173 million.

Here's the quick math on the new focus. While the company reported a GAAP EPS of $0.01 for the most recent quarter (Q2 FY2026, announced November 2025), analysts still forecast an annual EPS loss of -$0.09 for the full fiscal year ending March 2026. The market is pricing in the transition costs and the initial investment phase, but the consensus analyst rating is still a Strong Buy with a price target of $2.38 as of November 2025. That tells you the street believes in the margin expansion potential.

What this estimate hides is the potential for significant operating leverage. E-commerce platforms scale faster than factories.

Competitive Positioning

AMMO, Inc.'s competitive edge is its ownership of GunBroker.com, which is the largest online marketplace dedicated to firearms, hunting, and related products. This scale creates a powerful network effect: more buyers attract more sellers, and vice-versa. This moat is incredibly difficult for a new competitor to build, especially given the complex regulatory environment surrounding online firearm sales in the U.S.

The new, streamlined focus means the company can dedicate all its resources to platform enhancements, instead of splitting capital between digital development and managing a 185,000-square-foot manufacturing facility. This concentration of effort should accelerate their lead. For a deeper look at the financial mechanics of this pivot, you should read Breaking Down AMMO, Inc. (POWW) Financial Health: Key Insights for Investors.

Next Step: Strategy Team: Model the impact of a 100 basis point increase in the take rate on the FY2026 revenue forecast by the end of the week.