Revolve Group 2025 Q2 Earnings Mixed Performance with 35% Net Income Decline

Revolve Group reported mixed financial results for Q2 2025, with revenue rising 9.4% year-over-year but net income falling 35%. The company provided updated guidance for gross margin and operating expenses amid macroeconomic uncertainties.

Revenue

Revolve Group's total revenue for Q2 2025 reached $308.97 million, an increase of 9.4% from $282.46 million in the same period last year. The fashion apparel segment led with $133.69 million in revenue, followed by dresses with $94.71 million and handbags, shoes, and accessories with $62.98 million. The beauty segment contributed $12.89 million, while other categories added $4.70 million to the total. This diverse revenue stream highlights the company's broad product offerings and growing market presence.

Earnings/Net Income

Despite the revenue growth, Revolve Group's earnings per share (EPS) declined by 36.4% to $0.14 in Q2 2025, down from $0.22 in Q2 2024. The company's net income also fell to $10.01 million, a 34.9% decrease from $15.38 million in the previous year. The decline in EPS and net income is primarily attributed to a significant year-over-year decrease in other income and an increased effective tax rate of 33.7%. However, the company has maintained profitability for eight consecutive years, demonstrating its resilience in the face of market challenges.

Price Action

The stock price of Revolve Group experienced mixed performance in the short term. During the latest trading day, the stock edged up by 0.83%. However, it declined by 0.96% over the most recent full trading week and 2.68% month-to-date. These fluctuations reflect investor sentiment and market conditions impacting the company's stock.

Post-Earnings Price Action Review

The strategy of buying Revolve Group (RVLV) shares after its revenue growth in Q2 2025 and holding for 30 days yielded moderate returns. Over the past three years, this strategy achieved a 7.92% return, slightly underperforming the benchmark but outperforming the market with a 2.67% compound annual growth rate. The strategy demonstrated effective risk management with a maximum drawdown of 0.00%. However, it was marked by high volatility, with a 58.65% volatility index, indicating significant price swings that investors should be aware of.

CEO Commentary

Co-Founder and Co-CEO Mike Karanikolas highlighted the company's strong second-quarter results, including 9% net sales growth, 10% operating income growth, and the highest Adjusted EBITDA margin in three years. He praised the team for achieving these results in a volatile environment and amidst uncertainty around tariff policies. Co-Founder and Co-CEO Michael Mente emphasized the company's ability to deliver profitable growth and market share gains while continuing to invest in long-term initiatives such as AI enhancements, owned brands, and category expansion. He expressed optimism about the platform's growth potential.

Guidance

Revolve Group provided updated guidance for the full year ending December 31, 2025, and the third quarter ending September 30, 2025. The company expects a gross margin in the range of 52.1% to 52.6%, up from the previous range of 50.0% to 52.0%. Fulfillment expenses are projected to be 3.1% to 3.2% of net sales, selling and distribution expenses 17.2% to 17.5%, and marketing expenses 14.8% to 15.0%. General and administrative expenses are anticipated to be between $152 million and $154 million, with an effective tax rate of 28% to 29%. For the third quarter, the gross margin is expected to be 51.2% to 51.7%, fulfillment expenses 3.2% of net sales, and general and administrative expenses $38.5 million.

Additional News

Revolve Group announced stock repurchases of $1.7 million in the second quarter, with $55.9 million remaining under its $100 million stock repurchase program. The company repurchased 92,583 shares of its Class A common stock at an average cost of $18.78 per share. As of June 30, 2025, the company's cash and cash equivalents stood at $310.7 million, a 3% increase from March 31, 2025, and a 27% increase from June 30, 2024. The company's balance sheet remains debt-free, and its inventory decreased by 6% year-over-year to $221.0 million. These actions and financial updates indicate Revolve Group's commitment to strengthening its balance sheet and returning value to shareholders.