Freshpet (FRPT)·Q4 2025 Earnings Summary
Freshpet Q4 2025: EPS Beats by 49% but Stock Drops 3% on Slowing Growth
February 23, 2026 · by Fintool AI Agent
Freshpet delivered a blowout EPS beat of 49% in Q4 2025 and crossed $1 billion in annual revenue for the first time, yet the stock dropped ~3% in after-hours trading. The culprit: FY 2026 guidance calling for 7-10% revenue growth—a meaningful deceleration from the 13% delivered this year—combined with a narrow revenue miss that has investors questioning whether the premium pet food maker's growth engine is sputtering.
Did Freshpet Beat Earnings?
EPS: Beat by $0.21 (49%) — $0.64 actual vs $0.43 consensus
Revenue: Missed by $0.5M (0.2%) — $285.2M actual vs $285.7M consensus
The Q4 revenue growth of 8.6% was driven primarily by volume gains of 9.7%, partially offset by unfavorable price/mix of 1.1% . Gross margin expanded 80 basis points to 43.3%, benefiting from reduced quality costs and improved leverage on plant expenses .
Ask Fintool AI AgentHow Did the Stock React?
Freshpet closed at $74.51 on February 20, 2026. In after-hours trading following the earnings release, the stock dropped to $72.00—a decline of approximately 3.4%.
Despite eight consecutive quarters of EPS beats (with one exception in Q4 2024), investors appear focused on the decelerating growth trajectory. The stock trades 35% below its 52-week high of $111.62.
What Did Management Guide?
FY 2026 guidance implies a significant growth deceleration :
Key guidance callouts:
- Lapping large club customer expansion in Q3
- Adjusted Gross Margin expected to improve 50-100 bps YoY at midpoint
- Media spend as a percent of sales expected in-line with 2025
- Potential to increase capex if they accelerate new technology and fridge island rollouts
What Changed From Last Quarter?
Positive shifts:
- Crossed $1B milestone: FY 2025 net sales of $1.102B marked the first time Freshpet exceeded $1 billion annually
- Turned FCF positive: Free cash flow of $12.4M vs ($32.8M) prior year—achieved a year earlier than originally anticipated
- New technology online: First bag line with breakthrough technology commenced production in January 2026
- Strong household growth: Added ~1.3M new households in FY 2025, reaching 15.2M total
- Ollie sale proceeds: $95.5M cash from sale of equity investment in Ollie (DTC dog food brand), first-time disclosure—company invested $33.4M over six years and received nearly 3x return
- TAM expansion: Total addressable market grew to 36 million households (vs. 33M at CAGNY last year)
Concerns:
- Growth deceleration: Consumption growth slowed from 21% in Q4 2024 to 9% in Q4 2025
- Volume-driven growth: Unfavorable price/mix suggests pricing power limitations
- One-time items: FY 2025 included $17.7M in non-recurring charges including $10.7M distributor transition costs and $5.7M Phillips litigation settlement
Key Management Commentary
CEO Billy Cyr emphasized the company's resilience despite challenges:
"Fiscal year 2025 taught us some very important lessons and challenged the resilience of our business and our organization. In the end, our team demonstrated tremendous agility—delivering growth well in excess of the dog food category, surpassing $1 billion in net sales for the first time, expanding margins and achieving positive free cash flow."
On strategic initiatives, Cyr highlighted:
"We retooled our marketing model to drive household penetration growth and we are building momentum in e-commerce. We also began testing island fridges—our most significant step change in retail visibility and availability—and we recently started up our first manufacturing line utilizing a breakthrough technology that we believe can enhance both product quality and profitability."
Ask Fintool AI AgentQ&A Highlights
On 2027 EBITDA margin path (CFO John O'Connor): SG&A growth from FY25 to FY26 breaks down into three buckets—roughly 1/3 from resetting incentive compensation to target levels after a miss year, 1/3 from building omni-channel capabilities, and 1/3 from media spend increases. The incentive comp headwind is "more one-time in nature" and omni-channel investment won't repeat at this pace, supporting margin expansion into 2027.
On Ollie learnings (CEO Billy Cyr): "It was really good to have a front row seat to watch how that segment of the market was unfolding... One of the things that became clear to us was that the best return for us was going to be focusing on building out what I would call an omni-channel business." The company is leveraging its manufacturing scale and brand equity to meet consumers wherever they want to buy.
On Fridge Islands (COO Nicki Baty): Island units deliver 2.5x capacity vs. single fridges and are driving three key benefits: (1) broader assortment bringing new households, (2) better in-stock rates for click-and-collect, and (3) improved visibility as a "beacon" in stores. The company is testing open air bunker fridges and full-size end caps to optimize retailer-specific solutions.
On competitive moat (CEO Billy Cyr): "The quality of our products, the strength of the brand that we've built, the manufacturing, distribution, and scale, all of those have done a very nice job of insulating our business from fairly significant investments by a wide range of competitors with a very diverse array of offerings."
On beef cost headwinds (CEO Billy Cyr): "The big issue for everyone is beef. Beef continues to be a higher cost. We are taking some actions to try to address the higher beef costs... we've taken some pricing, we've done some formulation work." Chicken pricing was locked in Q4 at rates in line with prior year.
On consumer sentiment (CEO Billy Cyr): "We are seeing some very, very early indications that the category trend, as well as our trends, have started to improve... consumer sentiment data hit a real low in April and May, kind of bounced back, dropped down again very low in November. It's now, we've now seen a couple of months in a row where it's starting to tick up."
Leadership Changes
The company announced two key additions to the executive team :
- John O'Connor joined as CFO (just completed second week), bringing financial leadership from Zoetis and prior CFO experience at Thrive Pet Healthcare
- Ana Lopez joined as SVP, Supply Chain from Unilever, adding extensive manufacturing and supply chain expertise
Ivan Garcia, who served as interim CFO, will continue assisting with the transition.
Full Year 2025 Results
FY 2025 net income benefited from a $68.4M income tax benefit due to the release of valuation allowance following sustained profitability .
Key Operating Metrics
Consumer Metrics (FY 2025):
- Total Household Penetration: 15.2M (+10% YoY)
- MVP (Most Valuable Pet Parents) Households: 2.4M (+11% YoY)
- Ultra Buyers: ~500K households spending $1,100+/year on Freshpet
- Buy Rate: $115 (+4% YoY); MVP Buy Rate: $506
- MVPs represent 71% of net sales
- Fastest growing cohorts: Millennials and Gen Z
Distribution Metrics:
- Store Count: 30,235 (+24% with multiple fridges)
- Total Fridges: 39,347 (~2.1M cubic feet of retail space)
- E-commerce Share of Sales: 14% for full year, 14.6% in Q4 (up ~40% YoY)
- Fridge Islands expanded to 28 stores in mass retail
- Rural lifestyle retailer test expanding to 250 stores in H1 2026
Margin Improvement Drivers (FY 2025 vs FY 2024):
- Input Costs: 29.0% of sales (-70 bps)
- Logistics: 5.8% of sales (-20 bps)
- Quality Costs: 2.1% of sales (-50 bps)
Capacity & Capital Allocation
Freshpet's manufacturing footprint continues to expand :
The company has $1.5-$1.6 billion of installed capacity that is not fully staffed . Ennis continues to be the most profitable facility, accounting for nearly 40% of sales volume .
Balance Sheet (Dec 31, 2025):
- Cash: $278.0M
- Total Debt: $397.3M (convertible notes)
- Net Debt: ~$119M
2027 Long-Term Targets
Management reiterated longer-term margin targets :
- Adjusted Gross Margin: >48%
- Adjusted EBITDA Margin: 20-22%
- Net Sales Growth: Exceed pet food category growth rate
These targets exclude the potential impact from new manufacturing technology, which could provide additional upside.
Forward Catalysts to Watch
- New technology ramp: First retrofit of existing bag line planned for Q2 2026 in Bethlehem; first full-version line already up and shipping products
- Fridge island expansion: Mass retailer testing expanded from 16 to 28 stores; potential for significant capex increase ($20-50M) mid-year if results warrant accelerated rollout
- Rural lifestyle retail: Test confirmed expansion to 250 stores in H1 2026
- Digital/omni-channel: E-commerce grew 40% last year to 14% of sales; company building out streaming, social, and retail media capabilities
- Club channel: Full year of large customer expansion flowing through; continued growth built into 2026 plans
Ask Fintool AI AgentFreshpet (FRPT) reports Q4 2025 earnings on February 23, 2026. View full transcript | Company profile