Revolve's Q2 2025 Earnings Call: Unraveling Contradictions in Tariff Strategies, Pricing, and Inventory Management

Tariff impact and pricing strategy, owned brand pricing strategy, inventory management and gross margin are the key contradictions discussed in Revolve's latest 2025Q2 earnings call.



Strong Financial Performance:
- Revolve Group reported net sales of $309 million for Q2 2025, a year-over-year increase of 9%.
- The growth was supported by a 17% increase in international net sales and improved gross margin performance, despite increased tariff pressures.

Inventory Management and Cash Flow Generation:
- The company achieved a significant improvement in inventory dynamics, with net sales increasing 9% while inventory declined 6% year-over-year.
- This led to strong cash flow generation, with free cash flow exceeding adjusted EBITDA by $10 million in the first half of 2025.

Brand and Market Share Expansion:
- The REVOLVE segment reported a 9% increase in net sales, with international growth a significant contributor, particularly in China.
- The expansion was driven by investments in brand awareness, market penetration, and successful marketplace partnerships.

Tariff Mitigation and Gross Margin Improvement:
- Despite increased tariff rates, Revolve achieved a slight expansion in gross margin, benefiting from tariff mitigation efforts and enhanced markdown algorithms.
- These efforts, which include partnerships with brands, are expected to provide long-term benefits to the company's margin structure.