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23andMe Holding Co. (ME)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 revenue rose to $60.3M, up 35% YoY, driven by a $19.3M non‑recurring research services recognition tied to the 2023 GSK Amendment; underlying Consumer Services revenue fell 8% YoY to $39.6M as kit volumes and ASPs declined and telehealth softened .
  • Net loss narrowed to $(45.5)M (EPS $(1.73) total; $(1.02) continuing ops) versus $(278.0)M YoY, with improvement driven by lapping a $198.8M goodwill impairment and lower operating expenses; Adjusted EBITDA loss improved to $(13.0)M from $(32.5)M YoY .
  • Liquidity deteriorated: cash and equivalents fell to $79.4M from $126.6M in Q2; management disclosed substantial doubt about going concern and the need to raise capital, while implementing a 40% RIF targeting >$35M in annualized cost saves and discontinuing Therapeutics .
  • No formal revenue/EPS guidance; Street consensus via S&P Global was unavailable for ME this quarter (SPGI mapping error), limiting beat/miss analysis versus estimates.

What Went Well and What Went Wrong

What Went Well

  • Recognition of $19.3M non‑recurring research services revenue from the 2023 GSK Amendment lifted the quarter; this represents “substantially all” remaining revenue associated with that amendment .
  • Subscription momentum: PGS membership services revenue increased by $4.6M YoY, offsetting part of consumer weakness; prior quarter commentary highlighted membership revenue share rising to 21% of total vs 9% YoY as the company pivots to recurring revenue .
  • Adjusted EBITDA improved materially YoY (loss $(13.0)M vs $(32.5)M), helped by lower advertising/brand spend and opex reductions; operating expenses fell sharply YoY due to lapping the prior year’s goodwill impairment and lower stock‑based comp .
    • “We implemented a 40% reduction in force with anticipated cost savings of more than $35 million annually, and discontinued our Therapeutics business to reduce expenses.”

What Went Wrong

  • Core Consumer Services revenue declined 8% YoY to $39.6M on lower PGS kit sales and ASPs and a $1.5M drop in telehealth, highlighting underlying demand pressure despite subscription gains .
  • Liquidity and going concern: cash fell to $79.4M (from $126.6M in Q2 and $216.5M at FY24 YE); management stated substantial doubt about the ability to continue as a going concern absent capital raise or strategic actions .
  • Litigation overhang: the $30M U.S. class action settlement tied to the 2023 cyber incident was conditionally approved but excluded arbitration claimants; efforts to reach a comprehensive settlement have not succeeded to date .

Financial Results

Sequential Performance (oldest → newest)

MetricQ1 FY25Q2 FY25Q3 FY25
Revenue ($USD Millions)$40.414 $44.071 $60.262
Gross Profit ($USD Millions)$20.514 $22.407 $39.826
Gross Profit Margin (%)50.8% (calc from revenue and gross profit) 50.0% (calc) 66.1% (calc)
Operating Expenses ($USD Millions)$92.469 $83.575 $68.199
Net Loss ($USD Millions)$(69.400) $(59.103) $(45.535)
EPS (Total, Basic & Diluted, $USD)$(0.14) $(2.32) (adjusted for reverse split) $(1.73) (adjusted for reverse split)
Adjusted EBITDA ($USD Millions)$(35.162) $(33.412) $(12.999)

Note: Q2 and Q3 EPS figures reflect the 1‑for‑20 reverse stock split effective October 16, 2024; Q1 EPS does not reflect the split, limiting comparability .

Year-over-Year (Q3 FY24 → Q3 FY25)

MetricQ3 FY24Q3 FY25YoY Change
Revenue ($USD Millions)$44.747 $60.262 +35% (calc)
Gross Profit ($USD Millions)$19.685 $39.826 +102% (calc)
Operating Expenses ($USD Millions)$282.619 $68.199 −76% (calc)
Net Loss ($USD Millions)$(277.976) $(45.535) +$232.4M improvement (calc)
EPS (Total, Basic & Diluted, $USD)$(11.56) (adjusted) $(1.73) (adjusted) +$9.83 improvement (calc)

Revenue Mix (Service vs Product)

MetricQ1 FY25Q2 FY25Q3 FY25
Service Revenue ($USD Thousands)$34,679 $38,514 $54,767
Product Revenue ($USD Thousands)$5,735 $5,557 $5,495

Selected KPIs and Balance Sheet Items

KPIQ1 FY25Q2 FY25Q3 FY25
Cash & Cash Equivalents ($USD Thousands)$169,971 $126,601 $79,350
Deferred Revenue (Current) ($USD Thousands)$68,015 $69,751 $62,919
Total Gross Profit ($USD Thousands)$20,514 $22,407 $39,826
Total Operating Expenses ($USD Thousands)$92,469 $83,575 $68,199
Adjusted EBITDA (Total) ($USD Thousands)$(35,162) $(33,412) $(12,999)
DebtNone (no debt) None None

Additional Q3 FY25 Consumer and Research Details

  • Consumer Services revenue: $39.6M (−8% YoY), driven by a $6.4M decline in PGS kit revenue (lower volumes and ASPs) and a $1.5M decline in telehealth, partially offset by +$4.6M growth in PGS membership services revenue .
  • Research Services: $19.3M non‑recurring revenue recognition associated with the 2023 GSK Amendment (cash collected in Q3 FY24) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Annualized Cost Savings from RIFOngoing (FY25+)“At least $35M per year” (Q2 call) “More than $35M annually” (Q3 press release) Raised tone (more than vs at least)
Liquidity OutlookNext 12 months from Q3 filing date“Company will need additional liquidity; restructuring to reduce opex, exploring capital raise” (Q2 8‑K) “Substantial doubt about going concern; must raise additional capital or pursue strategic transaction; additional cost cuts and lease terminations planned” (Q3 press release) Worsened risk disclosure
Formal Revenue/EPS GuidanceFY25None provided None provided Maintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 FY25)Previous Mentions (Q2 FY25)Current Period (Q3 FY25)Trend
Subscriptions / Recurring RevenueMembership improvements; pricing increased 23andMe+ from $29 to $69; retention/upgrade gains Recurring revenue mix more than doubled to 21% of total; Total Health accessible to all customers Membership services revenue +$4.6M YoY (PGS); focus on recurring cash‑flow positive model Positive mix shift to subscriptions
Telehealth (GLP‑1)Planned launch end of Q1; GLP‑1 genetics study announced GLP‑1 membership launched; enrolled thousands in GLP‑1 genetics study Telehealth revenue down $1.5M YoY; focus on execution and unit economics Mixed: product launched, near-term revenue pressure
AI / Technology InitiativesDeveloping AI models; LLMs to interpret genetic associations Launched DaNA AI assistant for 23andMe+ Continued platform/data focus; no new AI announcements in Q3 press release Ongoing investment, cadence slowed in Q3 disclosure
Therapeutics StrategyContinuing development of 23ME‑00610 and 23ME‑01473; Discovery group eliminated Discontinuing further development of all therapeutic programs; exploring strategic alternatives/out‑licensing Therapeutics discontinued; discontinued operations loss $(18.8)M; wind‑down costs Exit completed; cost reduction priority
Regulatory/Legal (Cyber Incident)N/AGoing concern disclosure; NASDAQ compliance regained via reverse split and board changes $30M class action settlement conditionally approved excluding arbitration claimants; no comprehensive settlement yet Legal overhang persists
Liquidity / Capital MarketsCash $170M; careful cash usage Cash $127M; exploring capital raise and restructuring Cash $79M; substantial doubt about going concern; capital raise needed Deteriorating liquidity

Management Commentary

  • “We implemented a 40% reduction in force with anticipated cost savings of more than $35 million annually, and discontinued our Therapeutics business to reduce expenses.” (Q3 press release)
  • “We are making significant progress to ensure the long-term success of the business… we’ve more than doubled our membership services revenue from the prior year quarter. We will continue to prioritize driving recurring revenue through our subscription business...” (Q2 press release, CEO)
  • “We expect annualized cost savings of at least $35 million per year, and… approximately $12 million in… one‑time severance, transition and termination‑related costs.” (Q2 call, CFO)

Q&A Highlights

  • Total Health rollout: Not yet rolled out to existing customers post cyber incident; relaunch planning for fall (Q1 call) .
  • Pricing and margins: 23andMe+ price increased from $29 to $69; retention strong; PGS margins up ~4pp YoY (Q1 call) .
  • Therapeutics: Discovery group wind‑down does not affect internal assets; considering combinations (e.g., TKI combos) and further data presentations (Q1 call) .
  • NASDAQ compliance and corporate actions: Reverse stock split option executed; ongoing consideration of financing options (Q1 call) .
  • AI and data partnerships: AI to enhance genome interpretation and clinical trial design; pharma collaborations on genotype‑specific recruitment (Q1 call) .

Estimates Context

  • S&P Global consensus estimates for Q3 FY25 could not be retrieved due to a missing Capital IQ mapping for ME in the SPGI database. As a result, we cannot provide a definitive beat/miss analysis versus Street expectations this quarter. Values normally retrieved from S&P Global.

Key Takeaways for Investors

  • The headline beat on revenue is driven by a $19.3M one‑time GSK research revenue recognition; underlying Consumer Services remains weak (kits, telehealth), though membership services momentum is real and accretive to gross margins .
  • Liquidity risk is acute: cash fell to $79.4M, management flagged substantial doubt about going concern and the need to raise capital or execute strategic transactions; trading implications include heightened financing/going‑concern risk premium and volatility around capital raise/strategic alternatives headlines .
  • Structural shift to subscriptions should support margin resilience, but near‑term consumer demand headwinds (kit ASPs/volumes, telehealth softness) could pressure topline ex‑one‑time items; monitor membership penetration and renewal metrics in subsequent quarters .
  • Cost actions (40% RIF; >$35M annual saves; Therapeutics discontinued) materially reduce opex run‑rate, aiding Adjusted EBITDA trajectory; watch for severance/lease termination charges and Special Committee/legal expenses .
  • Legal overhang from the 2023 cyber incident persists with incomplete settlement coverage; scope/timing of resolution remains a risk to sentiment and cash use .
  • With Street estimates unavailable via SPGI, focus on intrinsic drivers: subscription mix, cash burn trajectory (Adjusted EBITDA as proxy), and visibility into replacement research revenues post GSK amendment completion .
  • Near‑term trades should be positioned around financing/settlement catalysts; medium‑term thesis hinges on successful transition to a subscription‑led, data‑licensing model with stabilized consumer demand and restored liquidity .