Karat Packaging 2025 Q3 Earnings Revenue Rises 10.4% Amid EPS Decline

Karat Packaging reported Q3 2025 results with revenue growth outpacing Wall Street expectations but earnings falling short. The company’s $124.52 million revenue beat estimates by $0.41 million, yet adjusted EPS of $0.37 missed by $0.02. Guidance for Q4 revenue was raised to $113.8 million, exceeding analyst projections, but margins remain under pressure from tariffs and import costs.

Revenue

Karat Packaging’s total revenue surged 10.4% year-over-year to $124.52 million in Q3 2025, aligning with Wall Street’s $124.1 million forecast. The growth was driven by volume expansion, favorable product mix, and pricing initiatives, with domestic sourcing increasing to 20% of global procurement. Despite tariffs and higher import duties, the company maintained a gross margin of 34.5%, .

Earnings/Net Income

, . , reflecting margin compression and elevated operating expenses. While the company has sustained profitability for six consecutive years, the earnings contraction highlights ongoing challenges from cost pressures. The EPS decline, , signals a mixed performance despite top-line strength.

Post-Earnings Price Action Review

Following the earnings release, , . The decline reflected investor concerns over margin erosion, . Analysts attributed the underperformance to higher import costs and missed EPS expectations, despite revenue outperforming forecasts. , though the company remains optimistic about long-term growth in its paper bag segment. .

CEO Commentary

CEO Alan Yu emphasized resilience in core markets, driven by demand and cost optimization. He acknowledged challenges in emerging markets but highlighted strategic supplier diversification. Key priorities include expanding R&D for and pursuing targeted acquisitions. , signaling confidence in shareholder returns.

Guidance

For FY2025, , supported by pricing adjustments and . . .

Additional News

, marking its first-ever buyback initiative. The company also relocated its subsidiary Lollicup’s headquarters to Rockwall, Texas, to optimize operations. Additionally, Karat secured a major contract to supply paper bags, , aligning with its strategy to expand .