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2H

23andMe Holding Co. (ME)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue was $40.4M, down 34% year over year, with adjusted EBITDA loss improving to $(35.2)M from $(49.8)M YoY; gross profit was $20.5M and diluted EPS was $(0.14) .
  • Mix shift: Consumer Services comprised ~97% of revenue; Research Services ~3%, reflecting the post-GSK exclusivity environment but with offset from membership services growth .
  • Management highlighted improved membership retention, higher upgrades, increased telehealth LTV, and a YoY PGS margin uptick of 4 percentage points; however, marketing discipline and lower kit/telehealth volumes pressured top line .
  • Strategic changes: the Therapeutics Discovery unit was ceased; development of two clinical assets continues; cash and equivalents ended at $170.0M (vs. $216.5M prior quarter), and cybersecurity incident costs are reflected in non-GAAP adjustments .
  • No FY2025 guidance provided; consensus estimates via S&P Global were unavailable for ME this quarter, limiting beat/miss analysis .

What Went Well and What Went Wrong

What Went Well

  • Membership momentum: improved retention, higher upgrades, and increased telehealth LTV, with continued feature additions (Biological Age, expanded PRS reports); Consumer Services ASP improvement and subscription margin tailwinds .
  • Explicit PGS margin expansion: “we did see our margins in this quarter grow, year-over-year, up 4 percentage points in the PGS business” .
  • Therapeutics progress: completed enrollment in Phase 1/2a for 23ME-00610; 23ME-01473 initiated Phase 1; oncology data presented at AACR/ASCO, and AI research advances published in preprint .

What Went Wrong

  • Top-line decline: revenue fell 34% YoY to $40.4M, driven by lower research revenue post-GSK exclusivity and reduced kit/telehealth volumes amid marketing efficiency focus .
  • Operating loss persists despite cost actions: operating expenses were $92.5M; adjusted EBITDA deficit of $(35.2)M, reflecting ongoing scale challenges and lower Research Services gross profit .
  • Segment pressure: Consumer & Research Services adjusted EBITDA loss widened vs prior year (-$8.8M vs -$5.6M), indicating mix and revenue headwinds despite margin work .

Financial Results

MetricQ3 FY2024Q4 FY2024Q1 FY2025
Revenue ($USD Millions)$44.747 $64.028 $40.414
Gross Profit ($USD Millions)$19.936 $27.031 $20.514
Gross Profit Margin %44.6% (19.936/44.747) 42.2% (27.031/64.028) 50.8% (20.514/40.414)
Operating Expenses ($USD Millions)$301.146 $238.895 $92.469
Net Loss ($USD Millions)$(277.976) $(208.835) $(69.400)
Diluted EPS ($USD)$(0.58) $(0.43) $(0.14)
Adjusted EBITDA ($USD Millions)$(47.735) $(33.209) $(35.162)
Cash and Equivalents ($USD Millions)$242.418 $216.488 $169.971

Segment breakdown:

Segment Metric ($USD Millions)Q3 FY2024Q4 FY2024Q1 FY2025
Consumer & Research Services Revenue$44.747 $64.028 $40.414
Consumer & Research Services Adjusted EBITDA$(20.620) $(3.874) $(8.841)
Therapeutics Adjusted EBITDA$(16.528) $(17.135) $(12.417)
Unallocated Corporate Adjusted EBITDA$(10.587) $(12.199) $(13.904)
Total Adjusted EBITDA$(47.735) $(33.209) $(35.162)

KPIs and composition:

KPIQ3 FY2024Q4 FY2024Q1 FY2025
Consumer Services % of Revenue~96% ~99% ~97%
Research Services % of Revenue~4% ~1% ~3%
Weighted Avg Shares (Millions)480.810 485.952 495.893
Deferred Revenue — Current ($M)$80.468 $64.827 $68.015
Deferred Revenue — Noncurrent ($M)$15.000 $10.000 $5.000

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company financial guidanceFY2025Not provided due to strategic review (continuation from FY2024 stance) Not provided Maintained: no guidance

Earnings Call Themes & Trends

TopicQ3 FY2024 (Previous Mentions)Q4 FY2024 (Previous Mentions)Q1 FY2025 (Current)Trend
Membership & Total HealthIntroduced Total Health; added HealthTracks and Health Action Plan; disciplined pricing hurt kit volumes 41% YoY membership revenue growth; improved retention; rollout to existing customers targeted calendar Q3 Improved retention/upgrade/LTV; Biological Age feature; PRS expansion; Nightingale metabolomics pilot Improving engagement, expanding features
Telehealth (Lemonaid)Margin improvement post UK disposition; pipeline additions (e.g., STENDRA) Positive gross margins with reduced advertising spend GLP-1 telehealth membership launch planned; enhanced LTV Scaling GLP-1 offering; margin focus continues
AI & Data StrategyAI-driven drug discovery emphasis; DNA language models vision Advancing deep learning for risk prediction and target discovery Active AI model development; LLM preprint for genetics interpretation Intensifying investment and publications
Therapeutics (00610/01473)00610 Phase 1 data at SITC; 01473 IND cleared; expanded cohorts 00610 Phase 2a data timing; 01473 Phase 1 dosing started; more data in 2025 00610 continued safety/tolerability and potential combinations; 01473 trial ongoing Continued clinical progression
GSK/Data LicensingNon-exclusive $20M data license signed Minimal FY2024 impact; majority recognized in FY2025 Expect recognition in 2H FY2025 Revenue timing shift to FY2025 H2
Strategic Alternatives / ListingConsidering split options; NASDAQ compliance plans including possible reverse split Special Committee formed; take-private exploration disclosed; NASDAQ extension to Nov 4, 2024 NASDAQ compliance extension, reverse split option disclosed to shareholders Ongoing, potential structural actions
CybersecurityIncident costs disclosed and recoveries noted Additional cybersecurity costs and insurance recovery updates Non-GAAP adjustments include cybersecurity incident expenses Costs recognized; security measures strengthened

Management Commentary

  • “We remain focused on adding value to and prioritizing memberships in our PGS segment, driving growth in Telehealth and leveraging our data assets to create a thriving, profitable Research Data business.” — Anne Wojcicki .
  • “We are actively developing a suite of AI models to enhance both our consumer and research data businesses... leverage the size and scale of 23andMe's unique database to deliver more effective personalized health recommendations and accelerate therapeutic target discovery.” .
  • “Q1 saw us present data at both AACR and ASCO... 23ME-610 continues to demonstrate therapeutic potential... and we are seeing evidence of CD200 emerging as a potential biomarker associated with 23ME-610 monotherapy efficacy.” — Anne Wojcicki .
  • “Today's news does not impact... Therapeutics development... we are still moving both forward in the clinic and exploring optimal development and funding paths for these assets.” — on ceasing Therapeutics Discovery ; formal 8-K disclosure on ceasing Therapeutics Discovery .

Q&A Highlights

  • Total Health rollout: “Total Health has not rolled out to existing customers yet... thinking about [a relaunch] for the fall.” ; prior color targeted calendar Q3 rollout to existing customers .
  • Pricing and margins: 23andMe+ subscription price increased from $29 to $69; retention and upgrades remained strong; PGS margin up ~4 ppt YoY .
  • Therapeutics strategy: Ceasing discovery group does not impact clinical assets; focus on funding and advancing 23ME-00610 and 23ME-01473 .
  • NASDAQ compliance and capital: Extension to November 4, with potential reverse split pending shareholder approval; exploring financing options to extend cash runway .
  • Clinical development: Considering combinations for 23ME-00610 (e.g., TKIs) consistent with preclinical rationale; further data expected at upcoming meetings (e.g., ESMO) .

Estimates Context

  • Wall Street consensus from S&P Global for Q1 FY2025 was unavailable due to missing mapping for ticker ME; comparisons vs consensus could not be provided this quarter. We attempted retrieval but no data was returned [GetEstimates error].

Key Takeaways for Investors

  • Membership-led pivot is gaining traction: improved retention/upgrades and subscription margin dynamics support a path toward more recurring, higher-margin revenue in Consumer Services .
  • GLP-1 telehealth launch is a near-term catalyst to drive telehealth LTV and revenue mix, though initial kit/order volumes remain pressured by marketing efficiency prioritization .
  • Gross margin improved sequentially with Q1 FY2025 gross profit margin ~50.8%, aided by membership strength and telehealth margin improvements, despite lower revenue scale .
  • Research monetization timing: expect revenue recognition from the non-exclusive GSK data license in 2H FY2025; watch for additional data/AI partnerships .
  • Therapeutics optionality continues: clinical progress on 23ME-00610 and 23ME-01473, plus exploration of combination strategies and potential funding/structural alternatives .
  • Balance sheet: cash and equivalents at $170.0M; focus remains on cost discipline, adjusted EBITDA as cash burn proxy, and possible financing actions to extend runway .
  • Corporate actions and listing compliance are stock narrative drivers: reverse split authorization option and ongoing strategic review frame medium-term equity structure risk/reward .

Guidance Changes

  • No financial guidance provided for FY2025 due to ongoing strategic review; the company maintained a stance of not issuing guidance following FY2024 .

Notes on Non-GAAP Adjustments

  • Adjusted EBITDA excludes interest income, other income/expense, D&A, amortization of intangibles, stock-based compensation, transaction costs, goodwill impairment (prior periods), and cybersecurity incident expenses; management views Adjusted EBITDA as the best proxy for cash burn .