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A.K.A. BRANDS HOLDING CORP. (AKA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue rose 10.1% year over year to $128.657M, beating S&P Global consensus of $122.374M; diluted EPS was -$0.78 versus -$0.80 consensus, a modest beat. Adjusted EBITDA was $2.665M, above Q1 guidance of $1.5–$2.0M . Revenue and EPS consensus values marked with *; Values retrieved from S&P Global.
  • Gross margin expanded 100 bps to 57.2% on more full‑price selling and improved inventory; U.S. sales grew 14.2%, ANZ returned to growth (+6.2%), while Rest of World declined 19% .
  • Management reaffirmed FY net sales ($600–$610M) but lowered FY adjusted EBITDA to $24.0–$27.5M (from $27.5–$29.5M); introduced Q2 2025 guidance: revenue $154–$158M, adjusted EBITDA $7–$8M, GM 57.2–57.4% .
  • Stock reaction catalysts: revenue/EPS beat, gross margin expansion, and a detailed tariff mitigation plan (supply chain diversification and selective pricing), alongside strong U.S. momentum and omnichannel execution (Princess Polly SoHo opening, Nordstrom expansion) .

What Went Well and What Went Wrong

What Went Well

  • U.S. strength and multi‑channel expansion: “We grew net sales approximately 10% to $129M…with continued strength in the U.S. which grew 14%” and Princess Polly’s SoHo store was the strongest opening to date; early reads at Nordstrom were encouraging .
  • Customer metrics and margin discipline: Active customers +7.8% TTM to 4.13M; gross margin +100 bps to 57.2% on more full‑price selling and improved inventory .
  • Profitability above plan: Adjusted EBITDA of $2.665M (2.1% margin) exceeded expectations; management highlighted solid top-line growth and operating discipline .

What Went Wrong

  • GAAP loss persisted and debt increased: Net loss of -$8.350M; total debt rose to $119.9M driven by U.S. store investments, with net debt higher year over year .
  • Rest of World softness: ROW sales fell 19% YoY, offsetting some strength in U.S. and ANZ .
  • Tariff uncertainty and FY EBITDA guide reduction: FY adjusted EBITDA range cut to $24.0–$27.5M due to heightened tariffs, despite mitigation actions (discounts, supply chain diversification, selective pricing) .

Financial Results

Headline metrics (YoY and sequential context)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$149.903 $159.023 $128.657
Gross Margin (%)58.0% 55.9% 57.2%
Adjusted EBITDA ($USD Millions)$8.208 $6.216 $2.665
Diluted EPS ($USD)-$0.51 -$0.88 -$0.78

Q1 2025 vs Estimates (S&P Global consensus)

MetricConsensusActual
Revenue ($USD Millions)$122.374*$128.657
Diluted EPS ($USD)-$0.80*-$0.78

Consensus values marked with *; Values retrieved from S&P Global.

Segment (Region) breakdown

RegionQ4 2024 Net Sales ($USD Thousands)Q1 2025 Net Sales ($USD Thousands)
U.S.$96,106 $88,054
Australia & New Zealand$57,225 $35,593
Rest of World$5,692 $5,010
Total$159,023 $128,657

KPIs and operating metrics

KPIQ3 2024Q4 2024Q1 2025
Active Customers (Millions, TTM)4.05 4.07 4.13
Average Order Value ($USD)$81 $78 $78
Number of Orders (Millions)1.84 2.04 1.66

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)FY 2025$600–$610 $600–$610 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$27.5–$29.5 $24.0–$27.5 Lowered
Gross Margin (%)FY 2025—56.4–56.7 New/Specified
Capital Expenditures ($USD Millions)FY 2025$12–$14 $12–$14 Maintained
Weighted Avg Diluted Shares (Millions)FY 202510.8 10.8 Maintained
Net Sales ($USD Millions)Q2 2025—$154–$158 New
Adjusted EBITDA ($USD Millions)Q2 2025—$7–$8 New
Gross Margin (%)Q2 2025—57.2–57.4 New
Weighted Avg Diluted Shares (Millions)Q2 2025—10.7 New

Note: Q1 2025 was guided at revenue $121–$124M and adjusted EBITDA $1.5–$2.0M; actuals came in above both ranges .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs & Supply ChainMajority sourcing from China; ability to take price; monitoring tariff risk . FY25 guide contemplated tariffs; outlined flat GM and mitigation; AI mentioned for ops efficiency .Detailed 3‑pronged plan: vendor discounts, diversify production (Vietnam/Turkey), selective pricing; “predominantly out of China by Q4” for U.S. ops .Intensifying focus; execution underway.
Omnichannel ExpansionPrincess Polly store rollout and Nordstrom tests (Petal & Pup in 40 doors; Polly in 20) .SoHo store opened; seven total planned in 2025; Petal & Pup and Princess Polly expanded chain‑wide at Nordstrom; wholesale debuts exceeding expectations .Accelerating expansion across retail/wholesale.
Product PerformanceWomen’s brands strength; lifestyle category additions; test‑and‑repeat model driving newness .Dresses for key moments (prom/graduation); TikTok Shop activations; strong formal dress sell‑through at Nordstrom .Consistent momentum; marketing innovations.
Culture Kings (CK)In‑house brand Loiter on test‑and‑repeat; triple‑digit growth; U.S. growth; legal accrual impacted G&A in Q3 .ANZ back to growth; in‑house brands up >40% in Australia; WWE partnerships driving traffic; pursuing next U.S. store .Improving trajectory; experiential retail driving engagement.
Regional TrendsU.S. +19.5% in Q3; ANZ pressured; ROW soft .U.S. +14.2%; ANZ +6.2%; ROW -19% .U.S. sustained, ANZ turning positive.
Technology/AIPlan to explore AI for personalization, inventory, and ops efficiency (Q4 call) .No explicit update in Q1 call; focus on execution and tariffs .Early exploration; neutral near term.

Management Commentary

  • “This marks our fourth consecutive quarter of growth…We grew net sales approximately 10% to $129 million, with continued strength in the U.S. which grew 14%” — Ciaran Long, CEO .
  • “We anticipate our U.S. business will have minimal exposure to China in the fourth quarter…production already shifting to countries such as Vietnam and Turkey” — CEO prepared remarks .
  • “Adjusted EBITDA…$2.7 million…showcasing the power of our model when we scale on the top line” — Kevin Grant, CFO .
  • “Princess Polly opened its seventh store during the first quarter in Soho, which was our strongest opening to date” — press release .
  • “We continued to deepen customer engagement…nearly 8% growth in our active customer base over the trailing twelve months” — press release .

Q&A Highlights

  • Tariffs and margins: Management expects greatest tariff impact in Q2–Q3 before normalizing in Q4; mitigating via vendor discounts, supply diversification, and selective pricing; GM guide embeds these effects .
  • China exposure: Predominantly out of China by Q4 for U.S. operations, while maintaining China relationships for ANZ to balance long‑term optionality .
  • Demand trends and promotions: Solid Q2 demand; moderated vendor shipments and more selective promotions to manage tariff uncertainty .
  • Selling expense leverage: Despite pre‑opening costs, underlying selling expenses leveraged in Q1 with further optimization expected; modeling mid‑26% for the year .
  • Store/wholesale as acquisition channels: ~30% of store customers are new to the brand; wholesale expansion (Nordstrom, Dillard’s, Stitch Fix) broadening awareness .

Estimates Context

  • Q1 2025 actuals versus consensus: Revenue $128.657M vs $122.374M consensus; diluted EPS -$0.78 vs -$0.80 consensus; both beats. Management’s prior Q1 guidance ($121–$124M revenue; $1.5–$2.0M adjusted EBITDA) was exceeded . Consensus values marked with *; Values retrieved from S&P Global.
  • Forward estimates: Q2 2025 consensus revenue ~$155.821M*, EPS -$0.52*, alongside company guidance of revenue $154–$158M and adjusted EBITDA $7–$8M; FY 2025 consensus revenue ~$600.675M* and EPS -$2.397* vs company net sales $600–$610M and adjusted EBITDA $24.0–$27.5M . Values retrieved from S&P Global.
  • Implications: FY EBITDA guide reduction likely necessitates downward consensus adjustments for profitability, while top‑line consensus aligns with guidance; Q2 gross margin guide (57.2–57.4%) informs near‑term margin expectations .

Key Takeaways for Investors

  • The print was clean: revenue/EPS beats and 100 bps GM expansion signal pricing power and improved inventory quality; adjusted EBITDA outperformed Q1 guidance .
  • U.S. growth engine intact (+14.2%); ANZ inflecting positive; ROW remains a drag—regional mix favors margin resilience .
  • FY guide holds on revenue but EBITDA lowered due to tariffs; management’s concrete mitigation plan and supply chain diversification provide visibility into Q4 normalization .
  • Omnichannel execution is accelerating (SoHo opening, Nordstrom chain‑wide), with stores and wholesale demonstrably driving customer acquisition and online halo effects .
  • Watch Q2–Q3 tariff impact pacing, selling expense leverage (mid‑26% target), and gross margin range (57.2–57.4%) as near‑term KPIs .
  • Balance sheet shows rising debt from store investments; monitor net debt and working capital as store rollout continues .
  • Trading lens: near‑term stock reactions likely focus on revenue/EPS beat, margin expansion vs tariff headwinds, and confidence in Q2 guidance; medium‑term thesis hinges on U.S. TAM expansion via stores/wholesale and Culture Kings’ in‑house brand growth .