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Leatt Corp (LEAT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $14.34M, up 18% year over year, while diluted EPS was $0.08; operating income rose to $0.63M and net income to $0.54M, reflecting continued recovery but a sequential step-down from Q2 seasonal strength .
  • Gross margin improved to 44% (from 43% YoY), supported by better domestic trading conditions and efficient shipping/logistics; direct-to-consumer grew 61% YoY and international distributor sales increased 17% YoY, underscoring multi-channel momentum .
  • Management highlighted double-digit growth across core product categories year-to-date (body armor +30%, helmets +60%, other parts and accessories +49%, neck braces +18%), and called ADV a key growth vector; the team also added a new Head of Brand, Marketing and Creative .
  • No formal numerical guidance was provided; management remains constructive but flagged tariff/geopolitical risks; the authorized share repurchase program of up to $750,000 adds capital allocation support and potential stock-supportive optics .

What Went Well and What Went Wrong

What Went Well

  • Sustained growth: “double-digit profitability and double-digit revenue growth for the fourth consecutive quarter” with Q3 revenues up 18% YoY to $14.34M and net income up 366% YoY to $0.54M; operating income up 2,333% YoY to $0.63M. Bold sequential momentum in DTC (+61% YoY) and international distributors (+17% YoY) .
  • Margin improvement: “Gross profit as percentage of sales continued to improve, from 43% to 44%,” aided by improving domestic conditions and logistics efficiency—supporting strategic focus on multi-channel scale and cost discipline .
  • Product/category breadth: YTD category growth—body armor +30%, helmets +60%, other products/parts/accessories +49%, neck braces +18%; CEO: “We believe that the ADV market represents an exceptional growth opportunity for us” .

What Went Wrong

  • Sequential moderation: Q3 revenue ($14.34M) and diluted EPS ($0.08) were below Q2 ($16.18M and $0.18), and operating income fell QoQ ($0.63M vs. $1.40M), indicating seasonal/sequential normalization after a strong Q2 .
  • Tariff/macro risk: Ongoing “tariff uncertainty” mentioned in Q3 and more detailed tariff risk commentary in Q1 call (proposed tariffs up to 145% paused; ~30% currently), potentially impacting landed costs, pricing and shipments .
  • Liquidity optics: Cash and cash equivalents declined from $15.73M (Q2) to $12.28M (Q3), and current ratio moved from 7.4x (Q2) to 5.0x (Q3), reflecting working capital dynamics and treasury actions (including $0.137M repurchases YTD) .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$15,367,864 $16,176,339 $14,343,992
Gross Profit ($USD)$6,721,013 $6,889,193 $6,316,128
Gross Margin %43.8% (6,721,013/15,367,864) 42.6% (6,889,193/16,176,339) 44.0% (6,316,128/14,343,992)
Operating Income ($USD)$1,429,282 $1,399,918 $630,180
EBIT Margin %9.3% (1,429,282/15,367,864) 8.7% (1,399,918/16,176,339) 4.4% (630,180/14,343,992)
Net Income ($USD)$1,121,124 $1,138,734 $539,256
Net Income Margin %7.3% (1,121,124/15,367,864) 7.0% (1,138,734/16,176,339) 3.8% (539,256/14,343,992)
Diluted EPS ($USD)$0.17 $0.18 $0.08
EBITDA ($USD)$1,756,290 (OpInc+Dep) $1,732,524 (OpInc+Dep) $973,745 (OpInc+Dep)

YoY/QoQ change highlights:

  • Q3 YoY: Revenue +18%; Net income +366%; Operating income +2,333%; gross margin +100bps (44% vs. 43%) .
  • Q3 QoQ: Revenue -11.3%; Diluted EPS -55.6%; Operating income -55.0% .

Segment/Product Breakdown (mix of absolutes and YoY increases where disclosed):

CategoryQ1 2025 Revenue ($USD)Q2 2025 YoY Increase ($USD)Q3 2025 YoY Increase ($USD)
Neck Braces$680,000 +$0.11M +$0.11M
Body Armor$6.87M +$2.70M +$0.36M
Helmets$3.40M +$1.68M +$0.32M
Other Products, Parts & Accessories$4.42M +$1.60M +$1.41M

KPIs and Operating Metrics:

KPIQ1 2025Q2 2025Q3 2025
Direct-to-Consumer Sales Growth YoY (%)+14% +35% +61%
International Distributor Sales Growth YoY (%)+79% —+17%
U.S. Dealer Direct Growth YoY (%)-9% ——
Current Ratio (x)7.32x 7.4x 5.0x
Cash and Cash Equivalents ($USD)$12,699,342 $15,726,188 $12,278,149

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q4 2025None providedNone provided; management expects continued category momentum and DTC growth, with tariff risks monitored Maintained (no formal guidance)
Gross MarginFY/Q4 2025None providedQualitative: improvement YoY; continued cost management and logistics efficiency Maintained (no formal guidance)
OpExFY/Q4 2025None providedLong-term operating leverage commentary (from Q1 Q&A): $20–$22M OpEx base could support higher sales before step-ups Maintained (no formal guidance)
Tax RateFY/Q4 2025None providedNot disclosed—
Segment-specificFY/Q4 2025None providedADV expansion emphasis; no numeric targets Maintained (no formal guidance)
Capital Returns2025—Share repurchase authorization up to $750,000; $136,686 repurchased YTD New program (Aug’25)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
DTC momentumQ1: +14% YoY; Q2: +35% YoY Q3: +61% YoY; brand momentum and digital engagement highlighted Improving
International distributors/restockingQ1: +79% YoY; broad-based recovery in ordering patterns Q3: +17% YoY; continued improvement and double-digit category growth YTD Improving
U.S. dealer dynamicsQ1: -9% YoY amid inventory digestion; restructuring sales force Q3: “gaining momentum” at dealer level; no numeric Stabilizing
Tariffs/macroQ1 Q&A: proposed tariffs up to 145% paused; ~30% level manageable; potential port congestion risk Q3 PR: domestic trading conditions improved despite tariff uncertainty Mixed risk, better ops execution
Supply chain/logisticsQ2/Q1: active cost management; shipments and vendor engagement Q3: efficient shipping/logistics costs; aiding margin Improving
Product/ADV strategyQ1: ADV pipeline; strong helmets, apparel Q3: ADV called “exceptional growth opportunity”; all categories double-digit YTD Expanding
Awards/brand equityQ2: Eurobike Gold and Winner awards (helmet/jacket) Q3: New Head of Brand/Marketing/Creative added Strengthening brand

Management Commentary

  • CEO Sean Macdonald: “The third quarter of 2025 was a solid quarter… double-digit profitability and double-digit revenue growth for the fourth consecutive quarter… fifth consecutive quarter of year-over-year growth” .
  • CEO: “Gross profit as percentage of sales continued to improve, from 43% to 44%… our supply chain team is managing shipping and logistics costs efficiently” .
  • CEO: “All our product category revenues have grown by double digits on a year-to-date basis… we believe that the ADV market represents an exceptional growth opportunity for us” .
  • Chairman Dr. Christopher Leatt: “…encouraged and energized by the growth… continuing to invest in a pipeline of cutting-edge products and categories for a much wider rider community” .
  • Q1 Q&A (tariffs): “A tariff of 145%… has now been paused… currently we’re sitting on about 30%… we can work with our suppliers on pricing… and customers in the U.S.” .

Q&A Highlights

  • Tariffs and supply chain: Management discussed tariff scenarios (paused 145%, ~30% current) and potential shipment congestion risk, emphasizing proactive vendor/customer coordination .
  • Distributor network: New/emerging market distribution additions (South America, U.K.) and broad-based restocking across Europe, Oceania; improving confidence and normalized stock levels .
  • Operating leverage: Management indicated current OpEx ($20–$22M) can support materially higher sales (e.g., $70–$80M) before significant OpEx increases .
  • Note: A Q3 2025 earnings call transcript was not available in our document set; highlights reflect Q1 2025 Q&A .

Estimates Context

  • Consensus comparisons were unavailable for LEAT this quarter; S&P Global did not return EPS or revenue consensus for Q1–Q3 2025 (common for OTC microcaps). Actuals are shown for context; estimates-based beat/miss analysis is not possible. Values retrieved from S&P Global*.
MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus MeanN/A*N/A*N/A*
Revenue Consensus MeanN/A*N/A*N/A*
EBITDA Consensus MeanN/A*N/A*N/A*

Key Takeaways for Investors

  • Multi-quarter recovery intact: Five consecutive YoY growth quarters; Q3 delivered +18% revenue and +366% net income YoY, with category breadth and DTC strength underpinning the rebound .
  • Margin resiliency: Gross margin improved to 44% amid logistics efficiency; watch for continued mix/scale support vs. tariff-related cost headwinds .
  • Sequential normalization: Q3 moderated from a very strong Q2 (revenue/EPS/OpInc lower QoQ); seasonal cadence and ordering patterns should be monitored heading into Q4 .
  • Channel momentum: DTC acceleration (+61% YoY) and international distributors (+17% YoY) highlight the multi-channel thesis; U.S. dealer momentum improving qualitatively .
  • Liquidity and capital returns: Strong balance sheet, though cash/cash equivalents down QoQ; repurchase program ($750k authorization, $136.7k YTD) adds shareholder return optionality .
  • ADV vector: Management continues to frame ADV as a core growth opportunity; awards and brand investments (new Head of Brand/Marketing/Creative) support product-led expansion .
  • Risk monitor: Tariff/macro remain primary exogenous risks; management is actively managing pricing/shipping dynamics and mix to mitigate impacts .

Additional source documents reviewed:

  • Q3 2025 8-K and press release (Nov 6, 2025) .
  • Q3 conference call date press release (Oct 31, 2025) .
  • Q2 2025 8-K and press release (Aug 7, 2025) .
  • Q1 2025 8-K and full earnings call transcript (May 14, 2025) .
  • Share repurchase authorization (Aug 12, 2025) .

*Values retrieved from S&P Global