Nexgel's Q2 Earnings Call: Revenue Growth, Strategic Partnerships, and Challenges Ahead

NexGel reported Q2 2025 revenue of $2.9 million, a 100% YoY increase, and gross margins of 43.6%. Contract manufacturing revenue surged 103% YoY to $863,000, while consumer products revenue rose 95% YoY. The company announced new partnerships and product launches, including a $1 million non-dilutive funding from STADA. However, NexGel reported a net loss of $670,000 and faced delays in key partnerships and low plant utilization.

Title: NexGel's Q2 2025 Results: Strong Revenue Growth Amidst Operational Challenges

NexGel Inc. (NASDAQ:NXGL) reported its Q2 2025 financial results, showcasing a 100% year-over-year (YoY) increase in revenue to approximately $2.9 million. This growth was driven by significant improvements in both contract manufacturing and consumer products segments. Gross margins improved to 43.6% from 20.3% in Q2 2024, indicating better cost management and pricing strategies [1].

The contract manufacturing segment saw a 103% YoY increase in revenue, reaching $863,000, driven by new agreements and increased demand from existing customers. The consumer products segment also experienced strong growth, with revenue rising 95% YoY to $1.9 million. This growth was bolstered by the integration of the Silly George beauty accessories brand and the introduction of new product lines for skincare and beauty products [1].

NexGel secured a $1 million non-dilutive funding from STADA to support upcoming product launches and marketing initiatives. The company has expanded its product offerings, including new beauty products under the Silly George brand and new skincare solutions for Keoderm, indicating a robust pipeline for future growth [1].

However, despite the revenue growth, NexGel reported a net loss of $670,000 for Q2 2025, an improvement from the previous year. The company continues to operate at a low plant utilization rate, indicating underutilization of its manufacturing capacity. Additionally, there are ongoing delays with the ABB project, which was initially expected to contribute significantly to revenue [1].

The company faces potential risks from tariffs, which could impact margins on products sourced from overseas. NexGel is also heavily reliant on a few key partnerships, such as with Centos and iRhythm, which could pose a risk if these relationships were to change [1].

NexGel's management maintained its full-year 2025 revenue guidance of $13 million and expects to turn positive on an EBITDA (non-GAAP) basis. However, achieving these targets will require substantial acceleration in the second half of the year, with GAAP revenue for the first half of 2025 reaching $5.69 million. The company expects to generate over $7 million in GAAP revenue in the remaining two quarters of 2025 to meet its annual target [2].

Overall, while NexGel's Q2 2025 results demonstrate strong revenue growth and improved profitability, the company faces operational challenges and potential risks from tariffs and key partnership dependencies. Investors will closely monitor the pace of product launches, conversion of the sales pipeline, cash usage, and margin trends as NexGel scales its business [2].

References
[1] https://finance.yahoo.com/news/nexgel-inc-nxgl-q2-2025-071406476.html
[2] https://www.nasdaq.com/articles/nexgel-revenue-jumps-100-fiscal-q2