CarParts.com 2025 Q3 Earnings Widens Losses Despite Strategic Investment

CarParts.com (PRTS) reported third-quarter 2025 results that missed revenue and profit expectations, with a net loss widening year-over-year. The company secured a $35.7 million strategic investment to bolster logistics and product offerings, while management emphasized long-term free cash flow goals.

Revenue

Total revenue declined 11.7% to $127.77 million in Q3 2025, down from $144.75 million in the prior-year period. The drop was attributed to reduced marketing spend and a strategic shift toward customer retention. Revenue segments included replacement parts (63% house brands, 2% branded), hard parts (19% house brands, 14% branded), and other parts (1% for both categories).

Earnings/Net Income

The company’s losses deepened to $0.19 per share in Q3 2025, a 11.8% wider loss compared to $0.17 per share in Q3 2024. Net loss expanded to $-10.88 million, an 8.7% increase from $-10.02 million in the prior-year quarter. The EPS and net income results indicate a challenging quarter for profitability.

Post-Earnings Price Action Review

The strategy of buying PRTS when revenue beats and holding for 30 days shows promising potential based on the following points: Recent positive revenue growth as of June 30, 2025 (5.32%), reflects strengthening market presence and operational efficiency, likely translating into shareholder value. Following the earnings release, PRTS saw a 3.17% stock price increase to $0.65, signaling investor confidence. Analyst price targets suggest a 69.23% upside potential despite current hold ratings, contingent on sustained revenue growth and favorable market conditions. Strategic investments in logistics and high-margin fee-based services, such as CarParts+ membership, position the company for long-term profitability. As a leading eCommerce provider in automotive parts, CarParts.com is well-placed to capitalize on growing online repair demand, aligning with long-term profitability goals.

CEO Commentary

David Meniane, CEO of CarParts.com, highlighted the $35.7M investment from A-Premium, ZongTeng, and CDH as a catalyst for growth, emphasizing ZongTeng’s logistics network to reduce fulfillment costs and A-Premium’s 100,000 SKUs to boost mechanical parts revenue. He noted Q3 revenue declined 12% YoY due to a shift in customer acquisition strategy, prioritizing retention and mobile app growth over paid search, which improved contribution margins from 6% in Q1 to 9% in Q3. Challenges included tariffs (55–75% on China-sourced products) and competitive pressures from noncompliant imports, prompting a focus on CAPA-certified parts and JC Whitney branding. Meniane expressed optimism, stating, “Our plan is clear: disciplined execution, profitable growth, and operational efficiency to drive sustained free cash flow,” with confidence in achieving free cash flow positivity by 2026 despite macroeconomic headwinds.

Guidance

David Meniane outlined forward-looking targets: $50M in incremental revenue from the A-Premium partnership over the near term, with potential to exceed $100M annually contingent on integration success; free cash flow positivity by 2026; and a strategic focus on expanding high-margin fee-based income (e.g., CarParts+ membership, shipping protection) to reach a $4M annualized run rate. The CEO emphasized maintaining a lean cost structure, including reduced ad spend (12.5% of e-commerce revenue in Q3 vs. 17.7% at year start) and fixed operating expenses, while navigating tariff uncertainty through dynamic pricing and sourcing diversification.

Additional News

CarParts.com secured a $35.7 million strategic investment from ZongTeng Group, A-Premium, and CDH Investments in early September 2025, enhancing logistics access to 50+ U.S. facilities and expanding product offerings with 100,000+ SKUs. CEO David Meniane outlined a roadmap to achieve free cash flow positivity by 2026, emphasizing disciplined cost management and margin improvement. The company also announced a new state-of-the-art fulfillment center in Las Vegas, Nevada, expanding operations to 200,000 sq. ft. to reduce last-mile transportation costs and improve delivery times.