Executive Summary

Q4 2024 net revenue was $347.0M, up 0.9% YoY, with diluted EPS at $0.15; Adjusted EBITDA of $41.2M and margin of 11.9% as positive demand comparable growth (+5.7%) offset a still promotional backdrop .
Results significantly beat the company’s Q4 guidance set in November: revenue ($347.0M vs $306–$326M), net income ($21.3M vs $8–$13M), and Adjusted EBITDA ($41.2M vs $23–$33M), driven by product assortment strength and planned promotions; comparable growth at (6.4)% also far better than prior guide of (22)% to (16)% .
2025 outlook: net revenue $1.36–$1.40B, net income $63–$73M, Adjusted EBITDA $140–$150M; Q1 2025 guidance anticipates revenue $303–$323M and Adjusted EBITDA $17–$27M with slight gross margin deleverage from showroom occupancy and strategic investments .
Strategic catalysts: record footprint expansion to 103 showrooms, debt-free balance sheet with $198M cash, ERP and planning system rollouts, and resilient demand narrative; management expects comps and demand comps to align in 2025 as abnormal backlog effects fade .

What Went Well and What Went Wrong

What Went Well

Demand comparable growth turned positive in Q4 (+5.7%), reflecting strong product assortment, marketing, and planned promotions; management highlighted a “solid” start to spring demand with positive client engagement .
Showroom expansion reached a historic milestone: 103 locations across 30 states (11 openings, 5 relocations), strengthening brand awareness and client engagement; management emphasized showroom teams as a “secret sauce” and competitive advantage .
Q4 results materially exceeded prior guidance on revenue, net income, Adjusted EBITDA, and comps, signaling operational execution despite macro and promotional headwinds .

What Went Wrong

Gross margin dollars declined YoY in Q4 ($138.7M vs $141.2M) and net income fell ($21.3M vs $31.2M), reflecting higher showroom costs and promotional environment; Adjusted EBITDA margin compressed (11.9% vs 14.9%) .
Inventory increased to $297.0M (+16.8% YoY) ahead of outdoor season and broader footprint needs; management flagged Q1 gross margin deleverage (showroom occupancy) and strategic investment spend weighing near-term profitability .
Market remains “highly promotional,” and tariffs create planning uncertainty; guidance incorporates known tariff impacts, requiring continued pricing discipline and vendor contingency planning .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Net Revenue ($USD Millions)	$344.008	$319.133	$347.011
Gross Margin ($USD Millions)	$141.208	$123.072	$138.731
SG&A ($USD Millions)	$100.222	$112.401	$111.341
Net & Comprehensive Income ($USD Millions)	$31.216	$9.923	$21.294
Diluted EPS ($USD)	$0.22	$0.07	$0.15
Adjusted EBITDA ($USD Millions)	$51.235	$23.108	$41.176
Adjusted EBITDA Margin (%)	14.9%	7.2%	11.9%
Net Income Margin (%)	9.1%	3.1%	6.1%
Vs SPGI Consensus	N/A – S&P Global consensus unavailable	N/A – S&P Global consensus unavailable	N/A – S&P Global consensus unavailable

Segment breakdown: Not disclosed in press release/8‑K; company reports consolidated results only .

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Showrooms (count)	97	101	103
Comparable Growth (%)	(7.1)%	(9.2)%	(6.4)%
Demand Comparable Growth (%)	(3.0)%	(11.3)%	5.7%
Client Deposits ($USD Millions)	$210.268	$224.138	$220.873

Financials vs Prior Q4 Guidance (set Nov 7, 2024)

Metric	Prior Q4 2024 Guidance (Range)	Actual Q4 2024	Surprise
Net Revenue ($USD Millions)	$306–$326	$347.011	Bold beat (+$21–$41M)
Net & Comp. Income ($USD Millions)	$8–$13	$21.294	Bold beat (+$8–$13M)
Adjusted EBITDA ($USD Millions)	$23–$33	$41.176	Bold beat (+$8–$18M)
Comparable Growth (%)	(22)% to (16)%	(6.4)%	Bold beat (+9.6–15.6ppt)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue ($USD Billions)	FY 2025	N/A	$1.36–$1.40	New
Net Income ($USD Millions)	FY 2025	N/A	$63–$73	New
Adjusted EBITDA ($USD Millions)	FY 2025	N/A	$140–$150	New
Comparable Growth (%)	FY 2025	N/A	0%–3%	New
Company-funded Capex ($USD Millions)	FY 2025	N/A	$90–$110	New
Fully Diluted Shares (Millions)	FY 2025	N/A	~141	New
Effective Tax Rate (%)	FY 2025	N/A	~26%	New
Showroom Openings (count)	FY 2025	N/A	3–5	New
Net Revenue ($USD Millions)	Q1 2025	N/A	$303–$323	New
Net Income ($USD Millions)	Q1 2025	N/A	$3–$10	New
Adjusted EBITDA ($USD Millions)	Q1 2025	N/A	$17–$27	New
Comparable Growth (%)	Q1 2025	N/A	(6)%–1%	New

Management also guided to slight Q1 gross margin deleverage from showroom occupancy and elevated SG&A from strategic investments; guidance incorporates known tariff impacts as of the call .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024 and Q3 2024)	Current Period (Q4 2024)	Trend
Technology/Systems	WMS implementation impacted deliveries; continued supply chain/technology improvements .	ERP for upholstery manufacturing and inventory planning system launching in 2025; ongoing infra upgrades .	Execution advancing.
Promotions/Pricing	Promotional activity weighed on product margin in Q2; outlook lowered amidst choppy demand .	Market remains highly promotional; strategy aligned to premium positioning; testing/learning in messaging; solid Q4 execution .	Stable, disciplined.
Demand/Comps	Q2 demand comp (3.0)%; Q3 demand comp (11.3)%; 2024 outlook lowered .	Q4 demand comp +5.7%; comps (6.4)%; management expects comps and demand comps to align in 2025 .	Improving vs 2H choppiness.
Showroom Expansion	97 showrooms (Q2); 101 (Q3); aggressive footprint build .	103 showrooms by YE; 3–5 openings in 2025; relocations/remodels continue .	Sustained expansion.
Tariffs/Supply Chain	Planning around supply chain; technology upgrades .	Guidance includes known tariff impacts; diversified sourcing; U.S. manufacturing is a competitive edge .	Risk managed.
Macro/Housing	Tempered consumer environment; outlook reductions .	Assuming similar macro as 2024; clients more tied to stock market vs housing; caution on single-month reads .	Cautious stance.

Management Commentary

“Our showroom team is our secret sauce and a key competitive advantage… Their impact is evident in our fourth quarter performance where we saw demand comparable growth of 5.7%” — John Reed .
“2025 will see a launch of a new ERP system at our upholstery manufacturing facility and our planning system to optimize efficiencies and support our long-term growth” — John Reed .
“We continue to see a highly promotional market… we executed our planned strategy for Q4, and we were happy with that” — Jennifer Porter .
“We expect some slight deleverage in Q1 from showroom occupancy costs, but full-year gross margin is expected to be relatively consistent year-over-year” — Management .
“Our current guidance includes the potential impact of tariffs that we know of today” — Management .

Q&A Highlights

Demand trajectory and comps alignment: Management expects comps and demand comps to align in 2025 as 2023 abnormal backlog effects roll off; spring demand off to a solid start though monthly reads can be noisy .
Promotional strategy and pricing: Market remains highly promotional; Arhaus’s approach is consistent with premium positioning, with ongoing testing of messaging that delivered solid Q4 results .
Margin outlook and investments: Q1 gross margin deleverage expected from showroom occupancy; 2025 profitability reflects strategic systems investments and expansion costs baked into guidance .
Inventory build and outdoor season: Inventory up ahead of outdoor season and to support larger/new showrooms; aim to improve service levels with more in-stock products .
Store opening cadence/geographies: 3–5 openings planned in 2025 with notable sites (e.g., Pasadena), relocations and remodels continuing to drive sales lifts (e.g., Naples) .

Estimates Context

Wall Street consensus from S&P Global for Q4 2024 EPS and revenue was unavailable at the time of this analysis due to a data access limit; as a result, explicit comparisons to SPGI consensus are not provided and cells are marked N/A. Values would be anchored to S&P Global consensus when available [GetEstimates error: Daily Request Limit Exceeded].

Key Takeaways for Investors

Q4 delivered broad beats vs the company’s prior Q4 guidance across revenue, EPS, Adjusted EBITDA, and comps, supporting near-term sentiment despite ongoing promotional pressures .
Demand inflected in Q4 (+5.7% demand comps) and management cited a solid start to spring; narrative shift suggests improving trajectory into 2025 as comps normalize vs backlog distortions .
2025 guide implies modest top-line growth with margin headwinds near-term from footprint and systems investments; focus on ERP/planning implementations should aid efficiency and scalability medium term .
Balance sheet strength (no long-term debt; $198M cash) provides flexibility to continue expansion (3–5 openings in 2025) and fund strategic initiatives while navigating tariffs and promotions .
Inventory and client deposits trends support forward deliveries (inventory $297.0M; deposits $220.9M), including outdoor season setup; should underpin revenue realization into H1 .
Promotional environment remains intense; disciplined pricing aligned to premium positioning and vendor/tariff contingency planning are critical to protect product margins .
Trading lens: Positive guide beats vs prior Q4 guidance and demand reacceleration are near-term catalysts; watch Q1 margin deleverage and tariff developments as key risk variables for estimate revisions .

Arhaus, Inc. (ARHS)·Q4 2024 Earnings Summary