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HERBALIFE LTD. (HLF)·Q3 2025 Earnings Summary

Executive Summary

  • Herbalife delivered a modest top-line reacceleration with Q3 revenue of $1.27B (+2.7% YoY; +3.2% in constant currency) and North America’s first quarterly growth since Q2’21; adjusted EBITDA of $163M exceeded guidance while margins were pressured by FX and mix .
  • Results beat Wall Street on revenue and adjusted EPS: $1.274B vs $1.266B consensus and $0.50 adjusted EPS vs $0.46 consensus; EBITDA was roughly in line on an unadjusted basis but above company guidance on an adjusted basis (constant-currency adj. EBITDA $175M) . Values marked with * from S&P Global.
  • FY25 guidance ranges were tightened (net sales: (0.3)% to +0.7%; adjusted EBITDA: $645–$655M; CapEx: $80–$90M). Q4 guides to 1.5%–5.5% reported net sales growth and $144–$154M adjusted EBITDA, with currency a +$12M tailwind to sales and a ~$10M headwind to adjusted EBITDA vs prior year .
  • Catalysts: return to growth in North America, expanded Pro2col beta and AI features, and new product momentum (MultiBurn, HL/Skin, Baseline) alongside debt paydown reducing total leverage to 2.8x .

What Went Well and What Went Wrong

  • What Went Well

    • North America returned to growth (+1% YoY), and worldwide sales increased 2.7% YoY; management highlighted “turning the corner” with sequential momentum and engagement improvements .
    • Adjusted EBITDA ($163M) exceeded guidance; on a constant-currency basis, adjusted EBITDA was $175M, highlighting underlying operating strength despite FX .
    • Strategic initiatives are gaining traction: expanded Pro2col beta (coach dashboard, customizable sales funnels, AI features), HL/Skin launch with AI assessment tool, and lab investments to accelerate innovation cycles .

  • What Went Wrong

    • Margins were pressured: gross margin fell ~60 bps YoY to 77.7% (pricing +80 bps offset by ~90 bps FX, ~30 bps input costs, and ~10 bps each from inventory write-downs and mix) .
    • China declined 4.7% YoY (local currency -4.8%), driven by a 12% volume drop; management continues to see regional variability and volume headwinds in certain markets .
    • Higher adjusted effective tax rate (32.7% in Q3 vs 22.3% last year) negatively impacted adjusted EPS by ~$0.08; FX remained a meaningful headwind to EPS and EBITDA .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$1.240 $1.259 $1.274
GAAP Diluted EPS ($)$0.46 $0.48 $0.42
Adjusted Diluted EPS ($)$0.57 $0.59 $0.50
Gross Margin (%)78.3% 78.0% 77.7%
Adjusted EBITDA ($USD Millions)$166.5 $173.6 $163.0
Adjusted EBITDA Margin (%)13.4% 13.8% 12.8%
Net Income Margin (%)3.8% 3.9% 3.4%

Vs. S&P Global consensus (Q3 2025): Revenue $1.266B*, Adjusted EPS $0.461*, EBITDA $158.2M*; actuals: Revenue $1.274B (beat), Adj. EPS $0.50 (beat), EBITDA $157.3M (near in-line vs unadjusted; company adjusted EBITDA $163M exceeded guidance) . Values marked with * from S&P Global.

Segment breakdown – Q3 2025 vs Q3 2024

RegionQ3’24 Net Sales ($M)Q3’25 Net Sales ($M)YoY Incl. FXYoY Ex-FX
North America260.4 263.1 +1.0% +1.1%
Latin America207.1 229.6 +10.9% +10.7%
EMEA261.9 272.3 +4.0% +2.3%
Asia Pacific436.1 437.4 +0.3% +2.8%
China74.8 71.3 (4.7)% (4.8)%
Worldwide1,240.3 1,273.7 +2.7% +3.2%

KPI and operating metrics

KPIQ3 2025
Cash from Operations ($M)$138.8
Capital Expenditures ($M)$20.8
Total leverage ratio2.8x
2025 notes repaid (principal)$147.3M (in Sept)
New distributors – North America YoY+17%
New distributors – worldwide YoY(2)%; +11% on two-year stack
Pro2col Beta scale/engagement~7,900 beta distributors; ~32M steps, 200k usage schedules, 36k meals, 42k lifestyle hacks logged to date

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (reported YoY)FY 2025(1.0)% to +3.0% (Aug 6) (0.3)% to +0.7% Tightened (narrower range)
Net Sales (const. currency YoY)FY 20250.0% to +4.0% (Aug 6) +1.2% to +2.2% Tightened; midpoint higher
Adjusted EBITDA ($M)FY 2025640–660 (Aug 6) 645–655 Tightened; midpoint raised
CapEx ($M)FY 202575–95 (Aug 6) 80–90 Tightened (narrowed)
Net Sales (reported YoY)Q4 2025n/a+1.5% to +5.5% New
Adjusted EBITDA ($M)Q4 2025n/a144–154 (154–164 const. currency) New; FX: +$12M sales tailwind, ~$10M EBITDA headwind vs PY
CapEx ($M)Q4 2025n/a18–28 New

Earnings Call Themes & Trends

TopicQ1 2025 (prior-2)Q2 2025 (prior-1)Q3 2025 (current)Trend
AI/Tech (Pro2col)Announced Pro2col and Link Bioscience asset deals; commercial launch targeted for Q4’25 US Pro2col Beta unveiled to >7,000 distributors; early data plans Expanded beta to retail customers; added coach dashboard, sales funnels, AI Health Guide/Food Scanner; Beta 2.0 targeted YE’25 (US/PR) Scaling features; broader access
Product innovationMomentum on personalized/supplement roadmap Launched MultiBurn; early subscription capability HL/Skin launch with AI assessment; Baseline healthy lifespan supplement commercialization by YE’25 Broadening portfolio; engagement tools
Macro/FX480 bps FX headwind; constant-currency growth 170 bps FX headwind ~50 bps FX headwind to sales; ~$12M FX hit to adj. EBITDA YoY Persistent FX pressure
TariffsMonitoring; embedded in outlook Embedded preliminary estimates Enacted tariffs immaterial; not expected to materially impact performance Low impact
Regional trendsNA -4.3% YoY; LATAM mixed; China -13.8% NA -3.8% YoY; several regions stabilizing NA +1% YoY (first growth since Q2’21); LATAM +11%; China -5% Improving breadth; China lagging
R&D executionBuilding science/quality backbone —Opened Torrance Center of Excellence (R&D/QC), accelerating innovation cycles Strengthened infrastructure
Regulatory/legalFTC Consent Order remains a risk factor disclosure Same Same Unchanged disclosure

Management Commentary

  • “Herbalife returned to net sales growth in North America and on a worldwide basis… Adjusted EBITDA of $163 million exceeded guidance… leverage ratio of 2.8x” — CEO Stephan Gratziani .
  • “On a constant currency basis, Adjusted EBITDA was $175 million… The non-repeat of China government grant income and FX were headwinds” — CFO John DeSimone .
  • “Across our business, product innovation, digital evolution and disciplined execution are driving momentum… equipping and supporting our distributors to grow stronger businesses” — CEO Stephan Gratziani .

Q&A Highlights

  • Capital allocation: Priority is investing behind strategy and reducing gross debt to $1.4B by end of 2028; buybacks not a near-term priority .
  • SG&A outlook for new products: No incremental distributor training costs beyond normal cadence expected .
  • Pro2col beta: Strong engagement and rich feedback; expansion to retail customers is informing features ahead of Beta 2.0 launch .
  • Category mix/GLP-1: Global skew toward healthy active lifestyle and targeted nutrition; MultiBurn brings some weight loss focus back in U.S.; Herbalife aims to support customers on and off GLP-1s .
  • Subscription: Building capabilities; subscription expected to be a bigger part of the model over time (e.g., MultiBurn) .

Estimates Context

  • Q3 2025 vs S&P Global consensus: Revenue $1.274B vs $1.266B* (beat); Adjusted EPS $0.50 vs $0.461* (beat); EBITDA $157.3M vs $158.2M* (roughly in line; company adjusted EBITDA $163M exceeded guidance) . Values marked with * from S&P Global.
  • Q4 2025 consensus: Revenue $1.247B*; EPS $0.453*; EBITDA $150.2M*; company guidance brackets revenue growth and $144–$154M adjusted EBITDA (154–164M constant currency), with currency providing a top-line tailwind but EBITDA headwind . Values marked with * from S&P Global.

Consensus (S&P Global) snapshot

MetricQ3 2025 Estimate*Q3 2025 ActualQ4 2025 Estimate*FY 2025 Estimate*
Revenue ($USD Billions)$1.266*$1.274 $1.247*$4.999*
Primary EPS ($)$0.461*$0.50 $0.453*$2.119*
EBITDA ($USD Millions)$158.2*$157.3 (unadjusted) / $163.0 adj. $150.2*$642.7*

Values marked with * from S&P Global.

Key Takeaways for Investors

  • Return to growth plus better-than-expected adjusted profitability is a constructive inflection; North America’s first positive quarter since 2021 is a notable sentiment catalyst .
  • Mix/FX pressures remain real—gross margin dipped 60 bps YoY, and Q4 guide embeds currency headwinds to EBITDA even as FX modestly lifts sales; monitor FX and input cost trajectories .
  • Product/tech pipeline should sustain engagement: expanded Pro2col beta with AI features, HL/Skin AI tool, and Baseline launch support a higher-quality, data-driven funnel that can translate into recurring/subscription revenue over time .
  • China is still a drag; balanced regional strength (LATAM, EMEA) and U.S. stabilization reduce single-region risk, but China volume trends merit caution .
  • Deleveraging ahead of plan (2.8x) de-risks the balance sheet; management remains focused on debt reduction over buybacks, supporting equity value through lower financial risk .
  • Near-term trading: evidence of sustained NA growth and subscription uptake could drive multiple expansion; conversely, any setback in Pro2col rollout, China, or FX could pressure margins and sentiment .
  • Medium-term: if tech-enabled coaching and personalized formulation (Link Bioscience) scale as planned, Herbalife’s high-touch model may gain a defensible edge in personalized wellness .

Additional details and cross-references:

  • Q3 highlights and financial statements: revenue $1.274B; net income margin 3.4%; adjusted EBITDA $163M; gross margin 77.7% .
  • Regional net sales: NA +1.0%, LATAM +10.9%, EMEA +4.0%, APAC +0.3%, China -4.7% .
  • Guidance tables, FX/tariff assumptions, and Q4/FY25 ranges .
  • Pro2col beta expansion, features, and engagement metrics; HL/Skin and R&D center investments .

Note: All consensus estimate figures marked with * are Values retrieved from S&P Global.