XPEL's Q2 2025: Unpacking Contradictions in China Strategy, Growth Projections, and M&A Focus

Tariff impact on China business, China business growth expectations, marketing spend and strategy, China market strategy and growth expectations, and M&A focus and strategic acquisitions are the key contradictions discussed in XPEL, Inc.'s latest 2025Q2 earnings call.



Revenue Growth and Market Performance:
- XPEL, Inc. reported record revenue of $124.7 million for Q2 2025, up 13.5% year-on-year.
- The growth was driven by a strong performance in the U.S. and other international regions, despite a challenging automotive environment and tariff-related uncertainties.

U.S. Market Performance:
- The U.S. region's revenue grew by 8.4% to $70.4 million in Q2 2025.
- The growth was supported by an increase in new car sales and a stable inventory environment, although tariff anxiety caused some volatility.

International Market Performance and Strategy Adjustments:
- XPEL's international markets also saw growth, with notable contributions from Europe, India, and the Middle East, while Latin America experienced a revenue decline due to timing inconsistencies.
- The company is focusing on transitioning to a direct sales model in major car markets and expects this to positively impact future growth.

Gross Margin Stability and M&A Opportunities:
- XPEL maintained a gross margin of 42.9%, despite challenges from revenue mix and tariffs.
- The company is actively pursuing M&A opportunities, with a focus on consolidating international distribution and acquiring dealership businesses to expand its reach.

China Market Strategy and Growth Potential:
- China revenue reached $7.7 million, reflecting a more normalized revenue recognition pattern.
- The company is expecting low double-digit growth in the China market, driven by increased efforts to pursue OEM and PDI channels, which represent significant growth opportunities.