Why did XPEL's Q2 earnings exceed forecasts?

XPEL's Q2 earnings exceeded forecasts due to strong revenue growth and gross margin improvement, despite facing macroeconomic challenges and competitive pressures:

1. **Revenue Growth**: XPEL achieved a revenue growth of over 6% in 2024, reaching $420.4 million. This was driven by solid top-line performance in the fourth quarter, with revenue increasing by 1.9% to $107.5 million. Excluding China impacts, revenue grew by 10.5% in the fourth quarter.
2. **Gross Margin Improvement**: The company reported a gross margin improvement of 120 basis points over 2023, reaching 42.2% for the year. In the fourth quarter, the gross margin was 40.6%. This indicates enhanced operational efficiency and profitability.
3. **Regional Performance**: The US region saw a revenue increase of 6.2% in the fourth quarter, with dealership services revenue growing around 9%. Notably, revenue from China decreased, but this was partially offset by growth in other regions.
4. **Product and Service Expansion**: XPEL launched a new windshield protection film product, generating $1.5 million in revenue in just one month of sales. The company also completed five acquisitions, which contributed to its growth.

Despite these positive points, XPEL faced challenges such as a competitive market and macroeconomic pressures, which affected profitability. Normalizing for the FX impact, net income would have decreased 13.8%, and EPS would have been $0.35 per share.