Karat Packaging 2025 Q2 Earnings Strong Performance as Net Income Surges 19.8%

Karat Packaging (KRT) reported its fiscal 2025 Q2 earnings on August 8, 2025. The company delivered a robust performance, with both revenue and earnings rising year-over-year. Its guidance remained in line with expectations, and the results highlighted continued momentum in core operations and profitability.

Karat Packaging’s total revenue for Q2 2025 rose 10.1% year-over-year to $123.99 million, driven by strong performances across multiple channels. Chains and distributors accounted for the lion’s share at $97.17 million, while the online segment added $20.88 million to the total. The retail segment, though smaller, contributed $5.94 million. Collectively, the diversified revenue streams underscored the company’s broad-based growth and strong demand across different customer types.

Net income surged to $11.05 million in the quarter, a 19.8% increase compared to $9.23 million in the same period last year. Earnings per share (EPS) also climbed 19.6% to $0.55, up from $0.46 in 2024 Q2. The continued rise in profitability reflects effective cost management and operational efficiency, reinforcing the company’s competitive edge. These results indicate a strong and healthy financial position for Karat Packaging.

The stock price of Karat Packaging has seen a decline in the near term, dropping 5.43% on the latest trading day, 5.15% for the week, and 14.41% month-to-date. Despite this, historical data suggests that a strategy of buying shares after a revenue beat and holding for 30 days has yielded strong returns. Over the past three years, such a strategy achieved an 84.44% return, far outperforming the benchmark return of 47.10%. With a compound annual growth rate (CAGR) of 23.50% and no maximum drawdown, the strategy highlights the stock's potential for both growth and capital preservation.

Karat Packaging’s Chief Executive Officer, Alan Yu, emphasized the company’s record second-quarter performance, attributing the success to a resilient global supply chain and strategic sourcing diversification. Notably, the company has reduced China sourcing to 10 percent and expanded into Asian and Latin American markets. Yu also highlighted the ramp-up of domestic manufacturing and new business wins from major national chains. Looking ahead, he expressed confidence in the third-quarter outlook, supported by the new Chino warehouse and inventory readiness for year-end growth, while remaining mindful of ongoing tariff uncertainties and currency pressures.

For the third quarter of 2025, Karat Packaging expects net sales to grow in the high single-digit to low double-digit range year-over-year. Gross margin is projected to remain in the low to mid-30s, and adjusted EBITDA margin is expected to be between 10 to 12 percent. The company has maintained its full-year guidance for net sales, gross margin, and adjusted EBITDA margin, pending potential tariff impacts, indicating confidence in its long-term strategy.

Additional News

The Nigerian press highlighted several developments in the week leading up to Karat’s earnings release. The country’s stock market shed N516 billion in value following weeks of bullish activity, signaling a potential market correction. In politics, former Governor of Ogun State, Gbenga Daniel, faced legal action as the state government moved to demolish his property and hotel assets. Meanwhile, there were growing concerns about rising insecurity in the South-East, where armed gangs were reportedly recruiting Igbo youths online with impunity.

In business news, Nigeria’s foreign direct investment (FDI) reportedly fell by 70% in three months, raising concerns about the country’s economic attractiveness. Sterling HoldCo directors invested N341.6 million in company shares, reflecting confidence in the firm’s long-term prospects. Elsewhere, the Nigerian used car market experienced a boom as owners increasingly sold private vehicles to cope with financial hardships.