CarParts.com (PRTS) Q1 2026 earnings summary

Executive summary

• Achieved first positive adjusted EBITDA since Q1 2024, improving by nearly $7 million year-over-year to $0.59 million, driven by disciplined cost control and operational efficiency.

• Net sales for Q1 2026 were $132.0 million, down 10–10.5% year-over-year, primarily due to reduced and optimized marketing spend.

• Net loss narrowed significantly to $1.9 million from $15.3 million in Q1 2025, reflecting lower operating expenses and a gain on sale of the Philippines subsidiary.

• Gross margin increased to 32.5% from 32.1% year-over-year, benefiting from favorable product mix and freight costs.

• Strategic focus on integrating digital and physical layers, leveraging data, AI, and supply chain infrastructure for long-term competitive advantage.

Financial highlights

• Gross profit was $42.9 million with a gross margin of 32.5%, up 40 basis points year-over-year.

• Operating expenses dropped to $46.0 million from $62.5 million, mainly due to headcount reductions, lower marketing spend, and a $2.29 million gain on sale of the Philippines subsidiary.

• Cash and cash equivalents increased to $37.9 million as of April 4, 2026, up from $25.8 million at prior fiscal year-end.

• Net cash provided by operating activities was $7.3 million for the quarter, up from $5.51 million in the prior year period.

• Inventory reduced to $91 million from $95 million at year-end, reflecting a shift to drop ship and capital efficiency.

Outlook and guidance

• Targeting sustainable free cash flow in 2026, with continued focus on growing contribution margin, maintaining a lean cost base, and improving capital efficiency.

• Management believes existing cash, investments, and available credit will be sufficient to fund operations for at least the next twelve months.

• A-Premium partnership expected to reach $50 million in annualized revenue in the near term, with potential to exceed $100 million long-term.

• Last mile initiative aims to deliver 300,000 packages annually within 12-24 months, focusing on big and bulky parts.

• Strategic focus remains on technology investment, product expansion, and supply chain enhancements to drive long-term growth.