Reborn Coffee 2025 Q1 Earnings Net Income Decline Despite Revenue Growth

Reborn Coffee (REBN) reported its fiscal 2025 Q1 earnings on May 20th, 2025. Reborn Coffee's Q1 figures revealed an 11.5% revenue increase to $1.69 million, surpassing the previous year's $1.52 million. Despite this revenue boost, the net loss widened significantly, indicating challenges in maintaining profitability. The company adjusted its guidance, projecting continued revenue growth driven by marketing initiatives and strategic product launches. However, expected earnings per share (EPS) remain negative, suggesting ongoing efforts to improve financial stability.

Revenue

In the first quarter of 2025, Reborn Coffee saw its total revenue grow by 11.5% to reach $1.69 million, compared to $1.52 million in the same period of 2024. The company's store operations were the primary revenue driver, contributing $1.68 million, while wholesale and online channels added $14,326, culminating in a total net revenue of $1.69 million for the quarter.

Earnings/Net Income

Reborn Coffee reported an EPS improvement, narrowing losses from $0.60 per share in 2024 Q1 to $0.47 per share in 2025 Q1, marking a 21.7% enhancement. However, the net loss expanded to $-2.19 million, a 121.2% increase from the previous year's $-990,544 loss, highlighting continued financial challenges. The EPS improvement does not offset the net income decline.

Price Action

The stock price of Reborn Coffee has edged down 0.72% during the latest trading day, has dropped 4.81% during the most recent full trading week, and has plummeted 15.03% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Reborn Coffee shares following a revenue increase and holding them for 30 days has proven to be highly detrimental, resulting in significant losses. This approach yielded a return of -75.89%, starkly underperforming the benchmark return of 32.88%, leading to an excess return of -108.77%. The strategy exhibited poor risk-adjusted returns, as indicated by a Sharpe ratio of -0.25, and faced a maximum drawdown of -94.18%, underscoring its high risk and substantial losses. This highlights the inherent volatility and risks associated with investing in Reborn Coffee based solely on revenue growth without considering other financial metrics and market conditions.

CEO Commentary

David R. Lee, CEO of Reborn Coffee, highlighted the ongoing challenges faced by the company, particularly in maintaining profitability amid fluctuating consumer demand. He emphasized that despite these difficulties, the team remains committed to enhancing operational efficiencies and customer engagement. Lee noted that strategic investments in marketing and product innovation are crucial for future growth, aiming to strengthen Reborn's position in an increasingly competitive landscape. He expressed cautious optimism about the company's trajectory, acknowledging the need for ongoing adjustments to business strategies in response to market conditions.

Guidance

For the upcoming quarters, Reborn Coffee anticipates revenue growth driven by targeted marketing initiatives and new product launches. The company expects to improve its EPS, guiding towards a range of -$0.40 to -$0.45 for Q2 2025. Management aims to achieve revenue of approximately $2 million in the next quarter, as they continue to focus on operational improvements and expanding market reach.

Additional News

Recently, Reborn Coffee announced a strategic partnership with Tori AI to implement smart retail technology across its stores, aiming to enhance operational efficiency and personalize customer interactions. In a separate development, the company secured commitments for 33 new franchise locations, marking significant expansion both domestically and internationally. Additionally, Reborn Coffee is advancing its presence in China through a partnership with Eachome Shopping, leveraging media and retail innovation to scale operations across Asia and the UAE.