Executive Summary

Q3 2025 delivered a sharp year-over-year improvement: net loss narrowed to $4.5M (-93% YoY), adjusted EBITDA loss improved to -$4.9M (-85% YoY), and gross margin expanded 420 bps to 25.3% as marketing and fulfillment efficiencies took hold .
Revenue was $257.2M (-17.4% YoY; -13.2% ex-Canada), with average order value up 3%; orders were nearly flat versus Q2, indicating stabilization despite lower customer counts .
Versus S&P Global consensus, BBBY posted a significant EPS beat (adjusted diluted EPS -$0.19 vs -$0.46*), while revenue ($257.2M vs $260.2M*) and EBITDA (-$11.3M vs -$10.6M*) were slight misses; overall, the print was mixed but quality improved, driven by margin and cost discipline .
Management emphasized 2026 top-line growth with margin consistency, a 12% marketing expense target, and an incremental $20M opex efficiency plan; the announced warrant dividend (BBBYW) adds a capital and trading catalyst into Q4/Q1 .

What Went Well and What Went Wrong

What Went Well

Margin and profitability metrics moved meaningfully: gross margin reached 25.3% (+420 bps YoY), adjusted EBITDA improved to -$4.9M (+$27M YoY), and net loss narrowed to $4.5M (+$57M YoY) .
Operating efficiency: sales & marketing fell to 14% of revenue (-260 bps YoY), technology and G&A declined by $13M YoY, reinforcing expense discipline .
Management tone and strategic clarity: “seventh consecutive quarter of measurable improvement towards profitability,” with AI-driven personalization, data clean-up, and omnichannel rollout underpinning conversion and growth plans .
- Quote: “We’ve stabilized the business and are positioned for growth… seventh consecutive quarter of measurable improvement towards achieving profitability.” — Marcus Lemonis .
- Quote: “Orders were nearly flat versus the second quarter, highlighting business stability.” — Adrianne Lee .

What Went Wrong

Top-line contraction: net revenue declined 17.4% YoY; active customers fell to 4.15M (from 5.96M), and orders per active customer slipped to 1.30 (from 1.39) .
Conversion remains the core gap; sales & marketing still higher than desired, with management targeting 12% in 2026; Q3 included a tech stack migration at Overstock that cost ~~30k orders (~~$6.2M) before recovery .
Mix and tariff headwinds continue to require category balancing; upholstered furniture and patio remain competitive areas where price elasticity and sourcing shifts complicate margin optimization .

Financial Results

Summary vs Prior Periods

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$311.4	$282.0	$257.2
Gross Profit ($USD Millions)	$66.0	n/a	$65.2
Gross Margin (%)	n/a	23.7%	25.3%
GAAP Diluted EPS ($)	-$1.33	-$0.34	-$0.07
Adjusted Diluted EPS ($)	-$0.96	-$0.22	-$0.19
Adjusted EBITDA ($USD Millions)	-$31.9	-$8.0	-$4.9
Net Loss ($USD Millions)	-$61.0	n/a	-$4.5
Liquidity (Cash+Restricted+Inventory) ($USD Millions)	n/a	$156.0	$202.0

Notes: Q2 2025 gross margin and EPS are from the Q2 call; Q3 2024 values from 8-K statement of operations.

KPIs

KPI	Q3 2024	Q3 2025
Active customers (000s)	5,961	4,151
LTM revenue per active customer ($)	248	259
Orders delivered (000s)	1,569	1,254
Average order value ($)	199	205
Orders per active customer	1.39	1.30

Estimate Comparison (S&P Global)

Metric	Q3 2025 Consensus	Q3 2025 Actual
Primary EPS (Adjusted)	-0.4633*	-0.19
Revenue ($USD)	260,183,330*	257,187,000
EBITDA ($USD)	-10,617,000*	-11,255,000

Values retrieved from S&P Global*. Conclusion: Bold EPS beat; modest revenue and EBITDA misses.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Marketing expense (% of revenue)	FY 2026	13.5%–14.75% (guardrails discussed in 2024/early 2025)	12% target	Lowered
Product margin (short- to medium-term goal)	Ongoing	24%–26% target	24%–26% target reaffirmed	Maintained
Operating expense efficiencies	FY 2026	Not previously quantified for 2026	Additional $20M efficiencies	New/raised
Revenue trajectory	FY 2026	No formal revenue guidance	Expect positive YoY revenue growth in 2026	New qualitative
Omnichannel store conversions	Through mid-2026	Ongoing plan	250 locations converted by mid-2026	Timeline reiterated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
AI/technology initiatives	Q2: unify tech stack, SKU rationalization, personalization testing at Overstock; mandate for AI efficiency and CX improvement	AI to drive personalization, staffing efficiency, conversion; tech committee, third-party partners; new unified stack at Overstock (temporary disruption, now improving)	Intensifying execution; broader deployment in 2026
Supply chain/tariffs	Q2: vendors absorbing tariffs; shift away from China; modest pricing pressure	Continued pricing pressure; blend between vendor absorption and BBBY frictions removal; category-specific competitiveness; sourcing shifts persist	Ongoing headwind; managed through mix and vendor strategy
Conversion	Q2: focus on site experience, promo cadence; conversion a core KPI	Conversion remains below target; push to 1.3%+ near-term; personalization/cart improvements emphasized	Improving but still below goal
Omnichannel rollout	Q2: Bed Bath & Beyond Home Store concept via Kirkland’s; asset-light strategy	250 locations converted by mid-2026; POS + unified code integration planned	Building toward mid-2026 milestone
PropTech/tZERO/GrainChain	Q2: unlock value (tZERO IPO/SPAC/SP); GrainChain expansion beyond ag; potential CVR concept	tZERO pursuing public listing paths; GrainChain investment (+$3M) and progress; ecosystem vision linking ownership and supply chain	Strategic optionality increasing
Capital actions	Q2: CVR exploration; Bitcoin reserve plan; repurchases/ATM balances	Warrant dividend (BBBYW) announced (1:10 ratio; $15.50 strike; Oct 7, 2025 Distribution)	New shareholder-aligned capital lever

Management Commentary

“The third quarter marked substantial progress towards achieving profitability… as well as material progress at both tZERO and GrainChain.” — Marcus Lemonis .
“For the past seven quarters, we have delivered on our commitment to improve key business metrics critical to achieving profitability… I am pleased with both the narrowing of the year-over-year revenue decline… and the stabilization of key metrics.” — Adrianne Lee .
“We expect year-over-year revenue trends to turn positive [in 2026]… combined with margin consistency, an additional $20 million in operating expense efficiencies, and improved site conversion.” — Marcus Lemonis .
Product margin goal of 24%–26% with margin accretion from textiles (55%–57% in-stock margin) balancing more competitive furniture/patio categories .
“AI is an absolute mandate… We will be able to operate with less people and have greater efficiency… and create a better customer experience [to drive conversion and retention].” — Marcus Lemonis .

Q&A Highlights

Marketing efficiency: Management targets 12% of revenue for sales & marketing in 2026, citing data cleanup, personalization, and ~$10M of inefficient spend to be eliminated; conversion uplift is central to achieving this goal .
Gross margin trajectory: Short- to medium-term product margin goal reaffirmed at 24%–26%, with textile margin offsets enabling competitiveness in furniture/patio while maintaining margin consistency as revenue grows .
2026 revenue growth: Commitment to positive YoY growth driven by omnichannel partner collaboration, category expansion (e.g., jewelry/luxury on Overstock), and conversion improvements to >1.3%, equating to ~$27–$35M revenue uplift at solid contribution margins .
Tariffs/vendor pricing: Expect continued pressure; strategy blends vendor absorption, margin management, SKU rationalization, and rebates/volume targets to protect 365-day margin profile .
Tech stack and conversion: Overstock unified stack migration temporarily cost ~~30k orders (~~$6.2M), with recovery and acceleration underway; Bed Bath code modifications targeted by mid- to late-2026 to align POS and unified stack .

Estimates Context

EPS: BBBY’s adjusted diluted EPS of -$0.19 beat S&P Global consensus (-$0.46*) decisively; a key quality signal amid ongoing top-line stabilization .
Revenue and EBITDA: Slight misses versus S&P Global consensus (revenue $257.2M vs $260.2M*; EBITDA -$11.3M vs -$10.6M*), reflecting continued customer base compression and competitive category mix .
Values retrieved from S&P Global*.

Key Takeaways for Investors

Q3 quality improved: margin expansion (+420 bps), adjusted EBITDA closer to breakeven, and materially narrower net loss indicate operational grip despite top-line headwinds .
Near-term narrative: Focus on conversion and personalization; watch 1.3%+ conversion threshold and marketing ratio progress toward 12%—both are direct catalysts for EBITDA trajectory .
2026 setup: Management’s commitment to positive YoY revenue, incremental $20M opex efficiencies, and omnichannel conversions by mid-2026 frame a path to profitability with balanced margin strategy (textiles offset; furniture competitiveness) .
Capital/catalysts: Warrant dividend (BBBYW) provides optional capital raising and trading dynamics into Q4/Q1; monitor take-up and any incremental capital deployment into tech/PropTech .
Blockchain/PropTech optionality: tZERO listing exploration and GrainChain expansion enhance non-retail asset value; updates could drive multiple re-rating if monetization paths crystallize .
Liquidity and balance sheet: ~$202M cash/restricted/inventory and ~$36M ATM settlements post quarter provide flexibility to execute on tech stack, merchandising, and omnichannel initiatives .
Risk checks: Customer base declines and tariff/sourcing volatility require ongoing mix management; category competitiveness in furniture/patio and execution on AI/personalization are critical to the bull case .

Additional Q3 Materials and Prior Quarter References

Q3 2025 8-K 2.02 press release, full GAAP/non-GAAP reconciliations, KPIs, and balance sheet/cash flow data .
Q3 2025 earnings call transcript with strategic commentary, AI/tech roadmap, omnichannel plans, and Q&A .
Warrant dividend 8-K press release (1 warrant per 10 shares; $15.50 strike; distribution Oct 7, 2025; ticker BBBYW) .
Q2 2025 earnings call transcript (revenue $282M; gross margin 23.7%; adjusted EBITDA -$8M; adjusted diluted EPS -$0.22; strategic guardrails and CVR exploration) .

BED BATH & BEYOND, INC. (BBBY)·Q3 2025 Earnings Summary