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Aterian, Inc. (ATER)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $15.36M, down 24% y/y, but modestly above S&P Global consensus ($14.95M*) as SKU rationalization and softer Amazon traffic weighed on volumes while mix supported margins (61.4%) .
  • Diluted EPS was -$0.52 vs consensus -$0.69*, a beat driven by lower fixed costs and narrower operating loss (-$3.7M vs -$5.3M y/y) .
  • Management withdrew FY25 net revenue and adjusted EBITDA guidance (previously $104–$106M and ~breakeven) amid tariff uncertainty, and launched a $5–$6M annualized cost optimization plan with ~$2.3M restructuring charges expected in Q2 2025 .
  • Strategic focus: accelerate diversification away from China (≤30% of goods by end-2025), expand into US-sourced consumables (e.g., Squatty Potty wipes in late Q3 2025), implement targeted price increases, and conserve cash (cash $14.3M; repurchase program paused) .

What Went Well and What Went Wrong

What Went Well

  • Operating loss narrowed ~30% y/y to -$3.7M; adjusted EBITDA loss improved slightly to -$2.5M despite 24% revenue decline, reflecting cost discipline and SKU rationalization .
  • Core products remained solid; management highlighted consistent seasonality and maintained rankings despite pricing actions: “we continued to see solid performance across our core products” and “most of our products still are in the top 5 or top 3…even with these pricing increases” .
  • Variable sales & distribution costs improved (48% of revenue vs 51% y/y), supporting contribution margin despite lower gross margin .

What Went Wrong

  • Revenue fell to $15.36M (from $20.21M) on SKU cuts and reduced Amazon affiliate traffic; gross margin declined to 61.4% (65.1% y/y) on mix .
  • Management withdrew FY25 guidance given tariff volatility and paused buybacks to preserve liquidity, signaling elevated macro uncertainty .
  • Inventory rose to $18.1M (from $13.7M at 12/31/24) ahead of seasonal air quality demand, with container constraints a watch point as many importers rush shipments .

Financial Results

P&L summary (y/y and seq comparison)

MetricQ1 2024Q4 2024Q1 2025
Net Revenue ($USD)$20.214M $24.607M $15.360M
Gross Margin %65.1% 63.4% 61.4%
Operating Loss ($USD)$(5.278)M $(1.612)M $(3.696)M
Net Loss ($USD)$(5.162)M $(1.299)M $(3.896)M
Diluted EPS ($)$(0.76) $(0.18) $(0.52)

Profitability (non-GAAP and contribution)

MetricQ1 2024Q4 2024Q1 2025
Adjusted EBITDA ($USD)$(2.625)M $(0.086)M $(2.505)M
Adjusted EBITDA Margin %(13.0)% (0.3)% (16.3)%
Contribution Margin ($USD)$2.848M $4.763M $2.051M
Contribution Margin %14.1% 19.4% 13.4%

Balance Sheet and Liquidity

MetricDec 31, 2024Mar 31, 2025
Cash and Equivalents ($USD)$17.998M $14.337M
Inventory ($USD)$13.749M $18.144M
Credit Facility Balance ($USD)$6.948M $7.511M

Estimates vs Actuals (Q1 2025)

MetricConsensus EstimateActual
Revenue ($USD)$14.950M*$15.360M
EPS ($)$(0.69)*$(0.52)
EBITDA ($USD)$(2.553)M*$(3.293)M

Values marked with * retrieved from S&P Global.

Segment/Phase Breakdown (Operations by product phase)

Phase Net Revenue ($USD)Q1 2024Q1 2025
Sustain$18.200M $14.638M
Launch$1.606M $0.336M
Sustain (minor)$0.408M $0.386M
Liquidation/Other$— $—
Total$20.214M $15.360M

KPIs

KPIQ1 2024Q1 2025
Variable S&D Expenses as % of Net Revenue51% 48%
Contribution Margin %14.1% 13.4%
Cash ($USD)$17.998M (12/31/24) $14.337M (3/31/25)
Inventory ($USD)$13.749M (12/31/24) $18.144M (3/31/25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$104–$106M (5–7% y/y; 9–12% pro forma) Withdrawn Lowered/Withdrawn
Adjusted EBITDAFY 2025Essentially breakeven Withdrawn Lowered/Withdrawn
Share Repurchase2025–2027$3.0M authorized (2 years) Paused initiation to conserve cash Paused
Cost Optimization SavingsRun-rateN/A$5–$6M annualized; ~$5M by YE25; balance in 2026 New
Restructuring ChargesQ2 2025N/A~$2.3M (primarily severance); payments through Q2 2026 New
China Sourcing TargetYE 2025<40% by 2H26 (prior) ≤30% by YE25 Accelerated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroPlanned for 20% China tariffs; pricing offsets; FY25 guide included ~$3.5M COGS impact Volatility led to guidance withdrawal; China tariffs cited at 30%; mitigation underway Negative near term; higher uncertainty
Supply Chain/ContainersMulti-supplier approach; higher container costs in 2H24/early 2025 Many goods pre-manufactured; container availability a watch point; diversifying geographies Managing, risk monitored
Product PerformanceStrong dehumidifiers, PurSteam steam mops/irons Core products solid; seasonality consistent Stable
Channel ExpansionTarget Plus, Mercado Libre; more channels in 2H25 Continuing omni-channel; paused Asian hard electronics launches Mixed near term; focus on consumables
Consumables PushPlanned Squatty Potty wipes (Q4 note) On track for late Q3 2025; portfolio of US-sourced consumables in 2025 Accelerating
Capital AllocationAuthorized $3M buyback Buyback initiation paused; no dividends; conserve cash Defensive stance
Manufacturing DiversificationTarget reduce China reliance by 2H26 Accelerated to ≤30% from China by YE25 Positive structural shift

Management Commentary

  • CEO: “While tariffs did not have a direct impact on our first quarter results, the uncertainty in the broader macroeconomic environment led to some softness in consumer demand.”
  • CEO: “Our new goal is to manufacture no more than 30% of goods from China by the end of 2025… [accelerating] our previous target… below 40% by the second half of 2026.”
  • CFO: “We are withdrawing our previously issued net revenue and Adjusted EBITDA guidance for 2025… steps underway will soften the impact of tariffs… we will continue to evaluate our ability to provide guidance.”
  • CEO: “We will preserve capital… and firmly believe that we can navigate these headwinds without raising equity capital in 2025.”

Q&A Highlights

  • Inventory/tariff logistics: Many products already manufactured and staged; container capacity a near-term bottleneck as importers rush shipments; diversified container partners (Amazon GL, other lines, Flexport) to secure capacity .
  • Pricing strategy: Targeted increases implemented; mixed velocity impact; rankings largely maintained; flexibility to adjust as tariffs stabilized at ~30% .
  • Diversification speed: Management intends to move “as fast as humanly possible” while maintaining product quality; consumables push accelerates sourcing diversity .
  • Capital returns: No dividends given ~$2.3M restructuring cash needs and macro uncertainty; buyback paused but to be revisited when environment stabilizes .
  • Stock-based comp: Tool to attract/retain talent and manage cash; policy reviewed over time .

Estimates Context

  • Results modestly exceeded consensus on revenue ($15.36M vs $14.95M*) and EPS (-$0.52 vs -$0.69*), aided by lower fixed costs and narrower operating loss despite mix-driven gross margin decline .
  • EBITDA missed consensus (-$3.29M actual vs -$2.55M*), reflecting tariff/mix headwinds and ongoing operating losses .
  • Note: Coverage depth is thin (single estimate for Q1 2025), implying higher revision sensitivity as management withdrew FY25 guidance and outlined cost measures [GetEstimates Q1 2025].
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: Guidance withdrawal and tariff volatility are likely to drive estimate uncertainty; watch for Q2/Q3 adjusted EBITDA moderation and Q4 tariff impact per management’s framing .
  • Structural actions: $5–$6M annual cost saves and accelerated China diversification (≤30% by YE25) should improve resilience and reduce tariff exposure over time .
  • Mix and pricing: Gross margin slipped y/y on mix; targeted price hikes seek margin preservation, but velocity remains a monitored variable — execution in consumables will be key .
  • Liquidity posture: Cash $14.3M and paused buyback indicate a conservative stance; no equity raise expected in 2025 per management, but progress on savings and inventory turns will matter .
  • Catalysts: Confirmation of cost savings trajectory, consumables launches (Squatty Potty wipes late Q3 2025), channel expansion milestones, and tariff relief would support narrative improvement .
  • Risk flags: Amazon ecosystem changes (affiliate traffic), container availability, and tariff policy shifts remain tangible headwinds; inventory build (~$18.1M) requires disciplined sell-through .
  • Estimate path: Expect revisions and wider dispersion near term; limited coverage underscores the importance of upcoming operational updates and clarity on pricing/volume under tariffs [GetEstimates Q1 2025].

Appendix: Source Documents

  • Q1 2025 8-K and Exhibit 99.1 (press release): results, guidance withdrawal, cost optimization plan, restructuring details .
  • Q1 2025 earnings call transcript: strategy and Q&A on tariffs, pricing, inventory, buyback, capital policy .
  • Prior quarters for trend: Q4 2024 press release and 8-K (FY25 initial guidance, buyback authorization) ; Q3 2024 call (product performance, margins, containers) .
  • Q1 2025 earnings announcement date PR (timing/logistics) .