Executive Summary

Q2 2025 delivered modest top-line growth with consolidated revenue of $1.149B (+3.4% YoY) and the highest gross profit quarter in company history; adjusted diluted EPS was $4.23, above consensus, while GAAP EPS was a loss due to $737M in HEYDUDE impairments .
Versus estimates: revenue beat by ~$6.6M and EPS beat by ~$0.21; EBITDA also exceeded consensus, reflecting resilient margins despite a volatile consumer backdrop and tariffs (values marked * from S&P Global) *.
Management withdrew full-year 2025 guidance in Q1 and in Q2 provided only Q3 guidance: revenue down ~9–11% YoY and adjusted operating margin of ~18–19% with ~170 bps tariff headwind .
Strategic actions—pullback in North America discounting, conservative receipts, and HEYDUDE wholesale cleanup—create near-term topline pressure but aim to protect brand health, margins, and cash flow; free cash flow in Q2 was $269M with $133M buybacks and $105M debt reduction .

What Went Well and What Went Wrong

What Went Well
- Strong gross margin expansion: reported and adjusted gross margin rose 30 bps YoY to 61.7%, the highest gross profit quarter on record .
- Crocs brand strength internationally: Crocs brand revenues +5% to $960M; International +18% (DTC +24.6%, Wholesale +14.1%), with China >30% growth, and strong social commerce traction (TikTok) .
- Cash generation and capital returns: Q2 free cash flow $269M; ~$133M repurchases (1.3M shares at ~$102) and $105M debt repaid; net leverage at lower end of 1.0–1.5x target .
What Went Wrong
- HEYDUDE brand impairments: $430M trademark and $307M goodwill impairment drove GAAP operating loss and GAAP EPS of -$8.82; adjusted OPS down 240 bps YoY to 26.9% .
- North America softness and intentional promo pullback: Crocs NA revenue -6.5% as discounting was reduced to protect brand health; wholesale order books reflect cautious consumer and athletic category share competition .
- Tariff headwinds: incremental tariff impact approximated $40M in 2025 and ~$90M annualized given sourcing mix, contributing ~170 bps margin drag to Q3 guidance .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$1.111	$0.937	$1.149
GAAP Diluted EPS ($)	$3.77	$2.83	($8.82)
Adjusted Diluted EPS ($)	$4.01	$3.00	$4.23
Gross Margin (%)	61.4%	57.8%	61.7%
Adjusted Operating Margin (%)	29.3%	23.8%	26.9%
EBITDA ($USD Millions)	343.3*	241.5*	330.1*
Cash from Operations ($USD Millions)	$401.2	($67.2)	$285.8

Notes: EBITDA and values with * retrieved from S&P Global.

Versus Wall Street Consensus (S&P Global):

Metric	Q2 2024 Estimate	Q2 2024 Actual	Q1 2025 Estimate	Q1 2025 Actual	Q2 2025 Estimate	Q2 2025 Actual
Revenue ($USD Billions)	$1.103*	$1.111	$0.908*	$0.937	$1.1428*	$1.1494
Primary EPS ($)	$3.566*	$4.01	$2.488*	$3.00	$4.019*	$4.23
EBITDA ($USD Millions)	$311.9*	343.3*	$216.2*	241.5*	$315.8*	330.1*

Notes: All estimates marked * are retrieved from S&P Global.

Segment and Channel Breakdown (Q2 2025 vs Q2 2024):

Segment / Channel	Q2 2024 ($MM)	Q2 2025 ($MM)	YoY %
Crocs Brand Total	$913.99	$959.59	+5.0%
- Crocs DTC	$478.71	$494.91	+3.4%
- Crocs Wholesale	$435.28	$464.68	+6.8%
- Crocs North America	$488.72	$457.13	-6.5%
- Crocs International	$425.27	$502.46	+18.1%
HEYDUDE Brand Total	$197.51	$189.78	-3.9%
- HEYDUDE DTC	$83.68	$90.02	+7.6%
- HEYDUDE Wholesale	$113.83	$99.76	-12.4%

KPIs and Balance Sheet Highlights:

KPI	Q2 2024	Q2 2025
Free Cash Flow ($MM)	$384.2	$269.2
Share Repurchases ($MM)	—	$133; ~1.3M shares @ $102.24 avg
Debt Repayment ($MM)	—	$105
Cash & Equivalents ($MM)	$168	$201
Inventories ($MM)	$377	$405
Total Borrowings ($MM)	$1,530	$1,379

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth	FY 2025	+2.0% to +2.5% YoY (at Feb 10 FX); Crocs +4.5%; HEYDUDE -9% to -7%	Withdrawn (May 8)	Withdrawn
Adjusted Operating Margin	FY 2025	~24.0% (incl. ~60 bps headwind from FX/tariffs)	Withdrawn (May 8)	Withdrawn
Adjusted Diluted EPS	FY 2025	$12.70–$13.15 (excl. future buybacks)	Withdrawn (May 8)	Withdrawn
Revenue	Q3 2025	N/A	Down ~11% to 9% YoY (at Aug 4 FX)	New
Adjusted Operating Margin	Q3 2025	N/A	~18% to 19%, incl. ~170 bps tariff impact	New
Tariffs impact ($)	FY 2025 / Annualized	N/A	~$40M in 2025; ~$90M annualized based on current sourcing mix	New disclosure

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs/Macro	FY25 guide assumed ~60 bps margin headwind; consumer volatility noted	~$170 bps Q3 margin drag; ~$40M FY25 tariff impact; ~$90M annualized; cautious US consumer	Worsening headwind
North America demand & discounting	Q1 noted cautious consumer; Crocs NA -3.8%; proscribed promo levels	Intentional discount pullback; Crocs NA -6.5%; wholesale order books down; athletic share pressure	Near-term pressure by choice & competition
International growth	Crocs International +11.5% in Q4; +8.9% in Q1	Crocs International +18.1%; China >30%; social-first marketing success	Strengthening
HEYDUDE brand reset	Q4 DTC inflected; Q1 DTC +8%; wholesale down; brand work underway	Wholesale cleanup (returns/markdowns), performance marketing pullback; DTC +7%; brand awareness ~35%	Reset accelerates; near-term sales impact
Cost savings	FY25 OM target ~24%; investments continued	$50M actions already taken; $15M in Q2; further SG&A/GM opportunities	Expanding
Product & social commerce	Sandals franchise momentum; TikTok traction	Crocs sandals up double digits; Crocs #1, HEYDUDE #2 on TikTok Shop; new franchises (Echo, Bay, Emotion; Brooklyn/Getaway/Miami)	Positive

Management Commentary

CEO: “We reported a solid second quarter... delivering the highest ever gross profit quarter in company history... we returned shareholder value through $133 million in share repurchases, and $105 million in debt paydown” .
CEO: “The current operating environment is uncertain... we’ve chosen to focus on managing expenses including the $50 million in cost savings, reducing inventory receipts, and pulling back on promotional activity... These actions will impact the topline... but position our business to win, drive margin dollars, and support continued cash flow generation longer term” .
CFO: “Our non-GAAP effective tax rate was 17.7%... We ended the quarter with total borrowings of $1.4 billion and net leverage at the lower end of our target range... The impact from incremental tariff rates equates to approximately $40 million in 2025 and approximately $90 million on an annual basis” .
CEO on international: “Our international business represented more than half of our Crocs brand revenue mix this quarter... In China, we reported another quarter of strong revenue growth in excess of 30%” .

Q&A Highlights

North America dynamics and promo pullback: Management highlighted an intentional reduction in discounting impacting revenue but benefiting margins and brand health; noted cautious lower-end consumer and athletic category headwinds in wholesale channels .
HEYDUDE reset: Actions include wholesale inventory cleanup (returns/markdown allowances), and reduced bottom-of-funnel digital performance marketing; expect near-term margin and sales headwinds, but cleaner marketplace and refreshed floors should improve sell-through (e.g., stretch socks refresh, PAUL Pro, H2O) .
International performance sustainability: Continued mid-teens trajectory expected with strong DTC-led growth; China strength driven by social-first campaigns and personalization (Jibbitz) .
Tariff mitigation and pricing: Plan to mitigate via supply chain efficiencies, selective pricing, and SG&A reductions; selective price actions in certain Crocs styles and international markets; cannot fully offset via broad price hikes given broad consumer base .
Guidance framework: Q3 guide embeds current order books and conservative assumptions on returns/cancellations; not assuming sequential deterioration through the quarter from July levels .

Estimates Context

Q2 2025 beats: Revenue $1.149B vs $1.1428B consensus; Primary EPS $4.23 vs $4.019 consensus; EBITDA $330.1M vs $315.8M consensus (values marked * from S&P Global). Expect sell-side to trim second-half revenue and margin forecasts given Q3 down 9–11% guide and tariff burden; potential for re-rating based on execution of cost savings and international outperformance * * * .

Key Takeaways for Investors

Crocs brand is resilient and increasingly international, offsetting North America softness; continued investment in sandals and personalization supports diversification .
Near-term revenue pressure is largely self-imposed (promo pullback, conservative receipts) plus tariffs; focus on margin dollars and cash flow is intact (Q2 FCF $269M) .
HEYDUDE reset will weigh on wholesale volumes and margins in H2, but DTC growth and brand awareness improvements lay groundwork for recovery .
Tariffs are a meaningful headwind (~170 bps to Q3 margin), but mitigation via supply chain, selective pricing, and SG&A cuts should help stabilize profitability over time .
Capital returns remain active with ample authorization (~$1.1B); deleveraging continues with $105M debt repaid in Q2 .
Expect estimate revisions to reflect Q3 down 9–11% and lower margin profile; upside hinges on stronger international demand, sandals expansion, and effective HEYDUDE reset execution .
Watch catalysts: execution on cost savings, tariff policy developments, TikTok/social commerce momentum, China/India traction, and potential share repurchase pace .

Notes: All document-based facts include citations. All estimates marked * are values retrieved from S&P Global.

Crocs, Inc. (CROX)·Q2 2025 Earnings Summary