0001773751-25-000354
SEC filingRevenue grew 49% YoY to $599M but net income fell 79% due to investments and non-recurring charges.
Revenue for Q3 2025 reached $599.0M, a 49% increase YoY, driven by a 50% surge in Online Revenue to $589.1M. Gross profit rose 39% to $442.1M, but gross margin contracted to 74% from 79%, pressured by newer offerings with higher product costs and shorter shipping cadences. Operating income fell 47% to $11.8M, reflecting a 2% operating margin versus 6% a year ago, as operating expenses grew 46%. Net income plunged 79% to $15.8M, largely due to a $7.6M loss from fair value changes in earn-out liabilities and lower tax benefits (a $3.6M benefit vs. $52.0M last year, which included a $60.8M valuation allowance release). Adjusted EBITDA rose to $78.4M, maintaining a 13% margin, indicating core operational leverage.
Online Revenue, representing 98% of total revenue, grew 50% YoY, fueled by personalized offerings (70% of online revenue), subscriber expansion (2.47M, up 21%), and higher Monthly Online Revenue per Average Subscriber ($80, up 19%). Wholesale Revenue increased 10% to $9.9M, with no material new partnerships or campaigns.
Management expects continued investment in facilities (pharmacies, peptide manufacturing) and marketing to support growth, particularly in personalized offerings. They anticipate revenue from personalized solutions to increasingly drive Online Revenue. While operating expenses will rise in the near term, long-term gross margin stabilization and operating leverage are expected. No specific financial guidance was provided.
Cash and cash equivalents totaled $345.8M at September 30, 2025, up from $220.6M at year-end 2024. Short-term investments of $284.0M and long-term investments of $438.3M brought total liquidity to over $1.07B. The increase was largely driven by the $970M net proceeds from the 2030 convertible notes issuance, partially offset by $178.7M in capex and $121.8M for acquisitions. Total debt stood at $971.0M (carrying amount), reflecting the convertible notes; the revolving credit facility remained undrawn with $168M available. Shareholders' equity increased to $581.0M from $476.7M, supported by net income of $107.8M year-to-date.
Non-cancelable purchase obligations totaled $27.3M as of September 30, 2025, primarily for cloud-based software contracts. Payments due: $1.5M in remainder of 2025, $13.5M in 2026, $11.4M in 2027, $0.8M in 2028, and $0.1M in 2029. Additionally, operating lease commitments amounted to $218.2M on a gross basis (present value $147.0M), with weighted average remaining lease term of 12.1 years. The company also has contingent earn-out liabilities of $95.0M from the Zava acquisition.
Share repurchases: $9.5M during Q3 2025 (192,258 shares), with $55.5M remaining under the $100M authorization. Dividends: None. Debt: Issued $1.0B convertible notes (0% coupon, due 2030) in May 2025; net carrying value $971.0M. CapEx: $178.7M in the first nine months, driven by investments in manufacturing and fulfillment facilities (assets not placed in service increased to $172.6M). The company also spent $121.8M on acquisitions (Zava $258M total, including contingent consideration).
The company operates as a single segment. International expansion via Zava acquisition adds operations in the UK and EU, but no separate geographic revenue breakdown was provided in the notes. All revenue is derived from online sales ($1,702.3M year-to-date) and wholesale ($27.5M).
Operating cash flow (CFO) of $238.7M significantly exceeded net income of $107.8M, reflecting strong non-cash add-backs (depreciation & amortization $36.4M, stock-based compensation $100.8M) and favorable working capital changes. Key working capital drivers included a $76.1M increase in accounts payable, $43.1M deferred revenue growth, and $40.1M inventory buildup, partially offset by a $54.4M rise in prepaids and $41.1M decline in accrued liabilities.
Capex intensity rose dramatically: total capex (property, equipment, intangible assets, and software development) was $178.7M vs. $25.9M in the prior year, driven by heavy investment in property and equipment ($166.7M). This caused CFO minus capex to shrink to $60.0M from $138.8M a year ago.
Financing activities contributed $827.1M, primarily from $970.0M in convertible note issuance (net of discount, before capped call purchase of $47.8M). Share repurchases were modest at $9.5M, while tax withholdings on equity awards consumed $94.5M. The large investing outflow includes $713.6M in purchases of investments (likely short-term securities) and $121.8M for acquisitions.
Anomalies: A $7.6M change in fair value of liabilities and $4.96M non-cash acquisition costs. Cash paid for taxes increased sharply to $23.4M from $3.9M. Overall, cash generation remains healthy but capital allocation is heavily weighted toward growth investments and debt financing.