FitLife's Q3 2025 Earnings Call: Contradictions Emerge on Subscribers, Growth Strategy, and Irwin's Online Potential

Business Commentary:

* Revenue Growth and Acquisition Impact: - FitLife Brands reported a 47% year-over-year increase in total revenue to $23.5 million for Q3 2025. - This growth was driven by the acquisition of Irwin Naturals, which contributed $6.8 million of the $7.5 million revenue increase during the quarter.

• Wholesale Revenue Increase:
• Wholesale revenue increased by 156% compared to the third quarter of 2024.

• Excluding Irwin's wholesale revenue, wholesale revenue for FitLife's other brands increased by 30% year-over-year.

• Online Revenue Decline:

• Online revenue was $10.3 million, representing 44% of total revenue, and declined by 5% year-over-year.
• 

• The decline is attributed to MRC online revenue declining by 16%, while Legacy FitLife's online revenue, excluding MRC, increased by 14%.

• Cost and Margin Pressures:

• The gross margin declined to 37.2% for Q3 2025 compared to 43.8% in the same period last year.
• This decline was primarily due to lower gross margins in the MusclePharm business and the addition of Irwin's lower gross margin during the quarter.
  

Contradiction Point 1

Subscribers and Revenue Growth

It directly impacts the understanding of FitLife's subscription-based revenue model and growth strategy, which are crucial for investors.

What percentage of revenue comes from recurring subscriptions? Was the decline due to fewer new subscribers or cancellations? - Ryan Meyers (Lake Street Capital Markets)

20251114-2025 Q3: Before acquiring Irwin, about 20% to 25% of FitLife's online revenue was from subscribers. Post-acquisition, this percentage has decreased as Irwin has little online revenue and no subscribers. - Dayton Judd(CEO)

What percentage of revenue comes from recurring subscriptions? Is the subscriber decline due to lower new sign-ups or increased churn? - Ryan Meyers (Lake Street Capital Markets)

2025Q3: Prior to acquiring Irwin, approximately 20%-25% of online revenue came from subscribers. - Dayton Judd(CEO)

Contradiction Point 2

Growth Strategy and Customer Base

It involves changes in the growth strategy and customer acquisition focus, which are critical for investor understanding of FitLife's market positioning and expansion plans.

How much of MusclePharm's growth came from new versus existing customers? - Ryan Meyers (Lake Street Capital Markets)

20251114-2025 Q3: The majority of MusclePharm's growth is from existing customers, with a focus on increasing sales to them rather than new customer acquisition. - Dayton Judd(CEO)

What portion of MusclePharm's growth came from new versus existing customers? - Ryan Meyers (Lake Street Capital Markets)

2025Q3: The MusclePharm growth in the third quarter was primarily from existing customers, with no major new accounts. Sales increased due to existing customers purchasing more. - Dayton Judd(CEO)

Contradiction Point 3

Irwin's Online Revenue Potential

It concerns the expected growth and revenue potential from Irwin's online sales, which is a key strategic focus for the company.

What is your outlook for online sales given the current SKU rollout and inventory situation? - Samir Patel (Askeladden Capital)

20251114-2025 Q3: Irwin's online sales potential is considerable, with $7 million to $8 million in annual sale opportunities. The company is prioritizing inventory for SKUs that will run out first to ensure Amazon availability. - Dayton Judd(CEO)

Are there potential revenue synergies between FitLife and Irwin? - Ryan Robert Meyers (Lake Street Capital Markets)

2025Q2: Irwin doesn't sell online and we will help them grow online revenue. - Dayton Judd(CEO)

Contradiction Point 4

MusclePharm Gross Margin Pressure

It involves the expected pressure on MusclePharm's gross margin due to protein cost increases, which impacts profitability.

How much will rising protein costs impact MusclePharm's gross margin in Q4? - Sean McGowan (ROTH Capital Partners)

20251114-2025 Q3: Protein costs are expected to continue to rise, potentially exacerbating MusclePharm's gross margin pressure. - Dayton Judd(CEO)

What is the margin difference for Irwin when selling through wholesale versus Amazon? - Samir Patel (Askeladden Capital Management)

2025Q2: We do note that we've had some cost increases in raw material costs, particularly protein costs. - Dayton Judd(CEO)

Contradiction Point 5

Dr. Tobias' Amazon Listing Performance

It involves the performance of Dr. Tobias' Amazon listings, which impacts sales and market share.

What is the current issue with Dr. Tobias, and how is it being addressed? - Sean McGowan (ROTH Capital Partners)

20251114-2025 Q3: Dr. Tobias' Amazon listings experienced a significant drop in traffic due to unexplained reasons. - Dayton Judd(CEO)

How is the Vitamin Shoppe's pilot program with MusclePharm Pro progressing? - William Anderson (Bard Associates)

2025Q1: At the end of the day, Dr. Tobias as a brand is still growing, and it's still expanding and gaining traction. - Dayton Judd(CEO)