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MS

Maison Solutions Inc. (MSS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 revenue rose 125.3% year over year to $31.0M, driven by the Lee Lee acquisition; sequential revenue increased versus Q1’s $29.6M, while gross margin was 26.3% (vs. 22.7% YoY) .
  • Profitability mixed: Q2 EBITDA was $0.7M and net loss was ~$0.26M, versus Q1 net income of ~$0.70M; the company reiterated FY2025 guidance of $120–$125M revenue and positive net income .
  • Operational execution included completion of the El Monte renovation in October, with “significant improvement in sales” post-renovation; management emphasized margin optimization and acquisition-driven growth .
  • Financing overhang: amended note terms increased interest to 10% (14% default), added weekly payments, and included new default conditions, implying tighter liquidity; company regained Nasdaq bid-price compliance in October, removing a near-term listing risk .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line growth: Q2 revenue $31.0M, +125.3% YoY, with both perishable ($16.0M, +114.3% YoY) and non-perishable ($15.0M, +138.5% YoY) categories expanding; management attributes growth to Lee Lee acquisition .
  • Gross margin improvement YoY to 26.3% from 22.7%, reflecting higher gross profit from Lee Lee and ongoing margin optimization efforts .
  • Execution on store renovation: El Monte store completed and saw a “significant improvement in sales”; management view renovations as a cornerstone for margin and traffic gains across California .
    • Quote: “One of our key milestones this past quarter was the successful completion of our El Monte store renovation… aimed at enhancing in-store sales performance, leveraging new technologies…” .

What Went Wrong

  • Sequential margin compression and bottom-line volatility: Q2 gross margin 26.3% (down from Q1’s 27.9%) and net loss of ~$256k versus Q1 net income ~$700k, highlighting the challenge of achieving consistent profitability during integration .
  • Financing constraints tightened: amendments raised note interest to 10%, set weekly payments, increased default rate to 14%, and added default triggers around financing and listing status; a $40k restructuring fee was paid, adding near-term cash pressure .
  • Competitive dynamics (noted in Q3): gross margin compressed to 22.1% in Q3 due in part to competition in Monterey Park, implying ongoing pricing/mix challenges in core markets; relevant to trajectory assessment post-Q2 .

Financial Results

Quarterly Summary (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$29.6 $31.0 $34.1
Gross Profit ($USD Millions)$8.3 $8.2 $7.5
Gross Margin (%)27.9% 26.3% 22.1%
EBITDA ($USD Millions)—$0.7 $1.5
Net Income (Loss) ($USD Millions)~$0.70 ~(0.26) ~$1.00
Cost of Revenues ($USD Millions)$21.4 $22.9 $26.6

Revenue YoY Growth

MetricQ1 2025Q2 2025Q3 2025
Revenue YoY Growth (%)+115.6% +125.3% +151.1%

Segment Revenue Breakdown

SegmentQ1 2025 ($M)Q2 2025 ($M)Q3 2025 ($M)
Perishable Goods Revenue$15.2 $16.0 $17.4
Non-Perishable Goods Revenue$14.5 $15.0 $16.7

EPS vs Estimates

MetricQ1 2025Q2 2025
Diluted EPS (Reported)n/a (not disclosed in press release)n/a (not disclosed in press release)
EPS Consensus (S&P Global)UnavailableUnavailable

Note: We attempted to retrieve Wall Street consensus via S&P Global, but data was unavailable at the time of query; therefore, no estimate comparisons are included.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$120–$125M $120–$125M Maintained
Net IncomeFY 2025Positive Positive Maintained

Additional reiteration in Q3: FY2025 guidance again maintained ($120–$125M revenue; net income positive) .

Earnings Call Themes & Trends

Note: We did not find a Q2 FY2025 earnings call transcript for MSS after document search; themes are derived from press releases and filings.

TopicPrevious Mentions (Q1 & Q3)Current Period (Q2)Trend
Lee Lee Acquisition & IntegrationQ1: First full quarter with Lee Lee; synergies via central CA warehouse and supply chain optimization . Q3: Lee Lee performing in line with expectations, contributing to sequential and YoY growth .Q2: Lee Lee continues to drive top-line growth and gross profit .Positive integration momentum (revenue, margin mix)
Margin OptimizationQ1: Gross margin improved to 27.9% with supply chain synergies . Q3: Margin pressure in Monterey Park due to competition (GM 22.1%) .Q2: GM 26.3%, improved YoY but down sequential .Mixed: YoY expansion; sequential variability amid competitive dynamics
Store RenovationsQ1: El Monte renovation targeted by year-end .Q2: El Monte renovation completed; significant sales improvement; plan to roll out across CA .Positive: renovation strategy driving sales and brand refresh
Capital Structure / LiquidityQ3: No new guidance change; consultancy revenue added .Q2 period filings (Oct): Note amendments raised interest, weekly payments, added default triggers .Cautious: tighter financing terms elevate liquidity risk
Listing ComplianceQ1/Q2: September deficiency letter; October regained compliance .Q2: Compliance regained confirmed in October .Resolved near-term listing risk

Management Commentary

  • “I am pleased to announce another quarter of sequential and year-over-year top-line growth, a clear reflection of the successful and immediate impacts of our Lee Lee acquisition… we delivered organic year-over-year growth across our operating entities… encouraging indicators as we work to further optimize margins and maintain consistent bottom-line profitability.” — John Xu, CEO .
  • “We are encouraged by the immediate financial impact Lee Lee has had… gross margins… improved from 22.6%… to 27.9%… streamlining Lee Lee’s supply chain into the HK Good Fortune fold by leveraging our central warehouse in California…” — John Xu, CEO (Q1) .
  • “The El Monte store is the first in a planned series of renovations… Following its renovation, the store saw a significant improvement in sales.” — Company press release .
  • “We remain confident in achieving our previously stated guidance and executing our growth strategies.” — John Xu, CEO (Q3 reiteration) .

Q&A Highlights

We did not locate a Q2 FY2025 earnings call transcript or Q&A. No additional clarifications beyond press release disclosures were found.

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 FY2025 EPS and revenue was unavailable at the time of query; as a result, estimate comparisons cannot be provided. Expect sell-side to recalibrate upward on FY revenue trajectory (given $60.7M in 1H and $94.8M in first nine months) and to monitor margin sustainability given sequential compression .

Key Takeaways for Investors

  • Revenue momentum intact: Q2 revenue $31.0M (+125.3% YoY) with balanced perishable/non-perishable growth; sequential revenue higher vs Q1 .
  • Margins: YoY gross margin expansion to 26.3% driven by Lee Lee; monitor sequential margin compression and competitive pressures referenced subsequently in Q3 .
  • Profitability path: EBITDA positive ($0.7M) but net loss in Q2 versus net income in Q1; execution on renovations and supply-chain synergies is pivotal to margin stability .
  • Guidance intact: FY2025 revenue $120–$125M and positive net income reiterated across Q1–Q3, supporting a constructive fundamental narrative .
  • Liquidity/financing risk: tighter note terms (10% interest, weekly payments, 14% default) and new default triggers warrant caution on cash management near-term .
  • Operational catalysts: El Monte renovation drove sales; broader renovation plan and acquisition pipeline remain integral to margin/traffic enhancement in CA and AZ .
  • Listing risk mitigated: Nasdaq minimum bid-price compliance regained, removing a technical overhang observed in September .