Hydrofarm 2025 Q3 Earnings Sharp Revenue Drop and Widening Losses

Hydrofarm (HYFM) reported Q3 2025 results that significantly missed expectations, with revenue declining 33.3% year-over-year to $29.35 million and a net loss of $16.39 million. The company also issued cautious guidance for Q4 2025, forecasting $40 million in revenue, signaling ongoing challenges.

Revenue

Hydrofarm’s total revenue fell sharply to $29.35 million in Q3 2025, a 33.3% decline from $44.01 million in the same period last year. The drop was driven by a 32.2% reduction in volume/mix due to industry oversupply, compounded by lower manufacturing production volumes.

Earnings/Net Income

The company’s losses widened significantly, with a net loss of $16.39 million (or $3.51 per share) in Q3 2025, a 24.7% increase from the $13.15 million loss in Q3 2024. The EPS of -$3.51 represents a 22.7% wider loss compared to the prior year, underscoring deteriorating profitability.

Post-Earnings Price Action Review

Hydrofarm’s stock has experienced severe post-earnings declines, with a 14.29% drop in a single trading day, a 25.00% weekly plunge, and a 42.05% month-to-date slump. The company’s failure to beat consensus estimates for four consecutive quarters and its Q3 results—missing both revenue and EPS expectations—have eroded investor confidence. Despite a median 12-month price target of $7.50, the stock’s current valuation of $2.15 suggests limited short-term upside. A strategy of buying HYFM after revenue beats has historically underperformed, as the company’s consistent misses and weak guidance indicate structural challenges.

CEO Commentary

John Lindeman highlighted progress in proprietary brand sales, achieving the highest mix of 2025, but noted margin pressures from lower manufacturing volumes. The company plans to consolidate U.S. manufacturing facilities for $2 million in annual savings and has reduced SG&A expenses by 7.4% year-over-year. Lindeman emphasized a $5.1 million improvement in free cash flow and ongoing cost discipline, though risks include potential tariffs and industry oversupply.

Guidance

Hydrofarm expects a 2025 adjusted gross profit margin of ~20%, driven by higher proprietary brand sales and cost-saving initiatives. The company reaffirmed reduced SG&A expenses and anticipates positive free cash flow for the final nine months of 2025. Risks remain tied to external factors like tariffs and inventory management.

Additional News

Key developments include a CEO transition, with Bill Toler resuming the role on December 1, 2025, to lead operational turnaround efforts. The company announced $6 million in annual cost savings from facility consolidations and SG&A reductions. Additionally, Hydrofarm’s 10-Q filing revealed a 55.8% net loss margin for Q3 2025, underscoring the severity of its financial challenges.