MySize's Q2 Earnings: A Pivotal Moment for Retail AI Adoption

MySize (NASDAQ:MYSZ) just delivered a Q2 earnings report that reads like a blueprint for the future of retail. While the numbers may not scream “blockbuster,” they tell a story of strategic execution, margin discipline, and positioning in a sector poised for explosive growth. For investors, this is a rare opportunity to spot a company not just adapting to change but actively shaping it.

Let's start with the numbers. Revenue for Q2 2025 hit $2.0 million, a 2% year-over-year increase, driven by the May acquisition of Percentil, a European resale platform. That's not a headline-grabbing number, but it's a critical signal: MySize is no longer just a SaaS sizing company. It's a full-fledged player in the circular economy, a sector the EU is forcing brands to embrace. The six-month revenue dip to $3.5 million (down 30% YoY) is a red flag, but context matters. The Orgad division, once a cash cow, is being phased out in favor of Amazon's fulfillment services—a calculated move to cut costs and focus on higher-margin AI-driven solutions.

Here's where the magic happens. Operating losses shrank by 49% to $586,000 in Q2 and 25% to $1.6 million for the first half of 2025. That's not just cost-cutting—it's a pivot to profitability. MySize isn't burning cash to chase trends; it's investing in a triple-revenue model: SaaS sizing solutions, e-commerce, and resale. The Percentil acquisition isn't a side show—it's the engine. By integrating AI-powered product matching and garment grading, MySize is solving two problems at once: reducing returns for brands and helping them comply with EU regulations like the Circular Economy Action Plan.

The EU isn't just a regulatory hurdle—it's a $1.5 trillion opportunity. The bloc's push for Extended Producer Responsibility (EPR) and Digital Product Passports is forcing brands to rethink everything from design to disposal. MySize's Percentil platform is already a turnkey solution for this. Imagine a world where every garment has a digital twin, tracked from factory to landfill. That's not science fiction—it's the future MySize is building. And with $4.28 million in cash and $2.90 million in inventory, the company has the firepower to scale.

Now, let's talk scalability. MySize's triple-revenue model is a masterstroke. SaaS solutions like MySizeID and Naiz Fit are high-margin, recurring revenue streams. The Orgad e-commerce division is being streamlined, and Percentil's resale platform is the cherry on top. The global resale market is growing at 12% annually, and MySize is positioning itself to capture a slice of that. By 2025, resale could represent 10% of the global clothing market—$150 billion in revenue. If MySize secures even 1% of that, it's a $1.5 billion business.

But scalability isn't just about size—it's about margins. MySize's operating losses are shrinking, but the real test is whether it can flip to positive EBITDA. The transition to Amazon's fulfillment services is a smart move. It cuts logistics costs and frees up capital for R&D. And with Percentil already contributing $180,000 in revenue post-acquisition, the ROI is starting to show.

The sector momentum is undeniable. AI in retail is growing at a 17.84% CAGR, driven by demand for personalization and sustainability. MySize isn't just riding this wave—it's creating ripples. Its AI-powered FirstLook Smart Mirror and Smart Catalog are revolutionizing how consumers shop, reducing returns, and boosting conversion rates. For brands drowning in inventory, this is a lifeline.

Critics will point to the six-month revenue decline and ask, “Is this a one-trick pony?” But that's short-sighted. MySize is trading short-term pain for long-term gain. The Orgad division's decline is a strategic sacrifice to focus on higher-margin AI solutions. And with the EU's regulatory tailwinds, the company is in a unique position to dominate the circular economy.

So, what's the investment thesis? MySize is a buy for three reasons:
1. Strategic Positioning: It's at the intersection of AI and sustainability, two megatrends reshaping retail.
2. Margin Potential: Operating losses are shrinking, and the triple-revenue model offers a path to profitability.
3. Sector Momentum: The AI-driven retail market is accelerating, and MySize is ahead of the curve.

The risks? Regulatory delays in the EU or slower-than-expected adoption of circular economy practices. But given the EU's aggressive timeline for EPR and Digital Product Passports, those risks are shrinking.

In conclusion, MySize's Q2 earnings aren't just a snapshot—they're a roadmap. This is a company that's not just surviving in the AI-driven retail revolution but leading it. For investors with a long-term horizon, the message is clear: act now before the sector gains full momentum. The next big thing in retail isn't a product—it's a platform. And MySize is building it.