Executive Summary

Q3 FY2025 delivered strong top-line growth on Lee Lee consolidation: revenue rose 151% YoY to $34.15M, with EPS of $0.06 versus $(0.03) last year; however, gross margin compressed sequentially to 22.1% from 26.3% in Q2 as California stores faced competitive pressure .
Profitability inflected: net income attributable to MSS was $1.01M vs. a $(0.55)M loss a year ago; quarterly EBITDA reached $1.53M vs. $(0.21)M, reflecting operating scale and the Lee Lee acquisition benefit .
Guidance maintained: FY2025 revenue $120–$125M and “net income positive” reiterated; nine-month revenue of $94.82M suggests attainment is supported by the current quarterly run-rate; management expressed confidence in execution .
Strategic catalysts: a 12‑month $1.3M annual consultancy with four Good Fortune supermarkets (East Coast) diversifies income and supports the “solutions provider” pivot; new COO appointment aims to tighten execution across markets .
Balance sheet watch items: cash was $0.45M with working capital deficit of ~$11.5M and $8.29M remaining on the Lee Lee seller note (maturity extended to May 11, 2026; higher effective rates); a $3.0M unsecured convertible note was issued 3/12/25 to bolster liquidity .

What Went Well and What Went Wrong

What Went Well
- Material revenue and profit inflection: Q3 revenue +151% YoY to $34.15M; net income attributable to MSS $1.01M vs. $(0.55)M YoY; EBITDA $1.53M vs. $(0.21)M YoY .
- Integration/scale: Lee Lee drove the step-up in sales and higher gross profit dollars; management reiterated FY guidance and confidence in growth strategies .
- Strategic expansion into services: signed a 12‑month consultancy generating ~$1.3M annually, aligned with the pivot “beyond a traditional grocery chain into a solutions provider” .
What Went Wrong
- Margin pressure in California: gross margin fell to 22.1% (from 26.3% in Q2) as Monterey Park saw competition from newly opened Asian supermarkets; Q3 gross margin also trailed prior year’s 23.4% .
- Sequential mix headwind: perishable/non-perishable mix and occupancy costs weighed on margins versus Q2, despite higher revenue; operating expenses rose with scale and Lee Lee costs, though OPEx % of sales improved YoY .
- Liquidity/obligations: low cash ($0.45M), working capital deficit (~$11.5M), and remaining $8.29M seller note (higher rates post-modifications) create funding execution risk despite subsequent $3.0M convertible raise .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$13.60	$29.65	$31.02	$34.15
Gross Margin (%)	23.4%	27.9%	26.3%	22.1%
Operating Income ($USD Millions)	$(0.31)	$1.63	$0.67	$1.11
Net Income to MSS ($USD Millions)	$(0.55)	$0.70	$(0.26)	$1.01
Diluted EPS ($)	$(0.03)	$0.04	$(0.01)	$0.06
EBITDA ($USD Millions)	$(0.21)	—	$0.74	$1.52

Notes: EBITDA is non-GAAP; reconciliation provided in company 8-Ks for Q2 and Q3 .

Product mix KPIs (Q3)

KPI	Q3 2024	Q3 2025
Perishables Revenue ($USD Millions)	$7.24	$17.43
Non-Perishables Revenue ($USD Millions)	$6.36	$16.71
Total Revenue ($USD Millions)	$13.60	$34.15

Balance sheet and cash flow watch

Metric	Latest
Cash and Equivalents	$0.45M at 1/31/25
Working Capital (Deficit)	$(11.50)M at 1/31/25
Seller Note Outstanding (Lee Lee)	$8.29M at 1/31/25; maturity extended to 5/11/26; interest stepped up via amendments/modification
Operating Lease Liabilities (PV)	$41.51M at 1/31/25
9M Operating Cash Flow	$6.39M for nine months ended 1/31/25
Subsequent Financing	$3.0M senior unsecured convertible note issued 3/12/25 (OID 8.5%, initial fixed conversion price $1.38; variable reset mechanics)

Consensus vs. Actuals

Wall Street consensus (S&P Global) for Q3 2025 was unavailable at the time of analysis; therefore, we do not present “vs. estimates” deltas. Values would ordinarily be sourced from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$120M–$125M (Q2 reiteration)	$120M–$125M (Q3 reiteration)	Maintained
Net Income	FY 2025	Net income positive (Q2 reiteration)	Net income positive (Q3 reiteration)	Maintained

Context: Nine-month revenue reached $94.82M, supporting the revenue target at the current quarterly run-rate; management stated confidence in achieving prior guidance .

Earnings Call Themes & Trends

No Q3 FY2025 earnings call transcript was available. We summarize evolving themes from management commentary (press releases, 10‑Qs):

Topic	Previous Mentions (Q1 & Q2 FY2025)	Current Period (Q3 FY2025)	Trend
Technology/AI, Digitization	Purchased/planned systems using AI/IoT for merchandising and supply chain; JD.com collaboration referenced for store tech and app (ongoing, limited new progress) .	“Evolve beyond grocery into solutions provider” and East Coast consultancy scope (tech support, POS/CRM) .	Broadening from internal tech upgrades to externalized services.
Supply Chain & Vendor Management	Central warehouse leveraged to supply Lee Lee to improve margins; vendor concentration evolving .	Continued focus on operational efficiency under new COO; consulting scope includes supply chain optimization .	Ongoing optimization; extending into service revenue.
Macro/Inflation/Labor	Inflation and higher minimum wages cited; post‑pandemic benefit roll-offs weighed on California traffic .	Similar headwinds persisted; margin compression in CA markets due to competition .	Headwinds steady.
Competition/Product Performance	CA stores down due to new competitors; El Monte renovation underway .	“Slight increase” at El Monte post-renovation; Lee Lee inline with expectations .	CA stabilizing selectively; Lee Lee steady.
Regional Trends	AZ (Lee Lee) drove growth; CA stores declined YoY .	Narrative unchanged; growth largely AZ-driven; CA mixed .	Stable pattern.
Legal/Regulatory	Securities class actions/derivative suits; SEC subpoena disclosed in Q2 .	Legal matters ongoing; no new adverse resolution disclosed in Q3 10‑Q .	Unresolved; monitoring.

Management Commentary

“The third quarter marked the first step in our mission to evolve beyond a traditional grocery chain into a solutions provider…[the Good Fortune] agreement…will generate $1.3 million in annual compensation…strengthens our ability to execute [M&A]…enhance operational efficiency, improve margins, and drive profitability.” — John Xu, CEO .
“Our Lee Lee stores have performed in line with our expectations…another quarter of growth in both top‑ and bottom‑line performance…El Monte store…slight increase in revenue for the quarter” .
On COO appointment: “With our Lee Lee stores fully integrated…we’ll begin exploring synergistic growth opportunities…we are confident that Jacob will play a pivotal role in enhancing our financial profile and brand presence.” — John Xu .

Q&A Highlights

An earnings call transcript for Q3 FY2025 was not available; no Q&A themes or clarifications to report.

Estimates Context

S&P Global/Capital IQ consensus estimates for Q3 FY2025 were unavailable at the time of analysis; as a result, we do not present comparisons to Street for revenue, EPS, or EBITDA. Where estimates are critical for your process, we recommend re-checking S&P Global for updated availability.

Key Takeaways for Investors

Acquisition-driven scale now translating to profits: Q3 EPS $0.06 and EBITDA $1.53M reflect the Lee Lee contribution and operating leverage, despite sequential margin pressure .
California competitive intensity remains the near-term swing factor for margins; El Monte’s post-renovation uptick is encouraging but broader margin recovery requires continued execution and pricing/mix optimization .
FY2025 guidance intact; nine-month revenue trajectory supports $120–$125M; management tone confident, increasing odds for a positive guidance credibility reset if delivery continues .
Services revenue adds a new lever: the $1.3M consultancy should modestly de-risk cash generation while reinforcing the solutions-provider strategy (marketing, supply chain, tech support) .
Liquidity/obligation risk is the key overhang: low cash, working capital deficit, large lease obligations, and the seller note (now extended with higher economics) mandate tight cash discipline; the March 2025 $3.0M convertible adds runway but introduces dilution risk via resettable conversion terms .
Monitoring list: California comp trends and margin mix, pace of consultancy cash receipts, progress on debt service/refinancing, and any developments in legal/SEC matters disclosed earlier .

Sources: 
- Q3 FY2025 8‑K Press Release and 10‑Q: **[1892292_0001213900-25-024616_ea023467701ex99-1_maison.htm:0]** **[1892292_0001213900-25-024616_ea023467701ex99-1_maison.htm:2]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:4]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:15]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:44]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:40]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:23]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:24]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:6]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:3]** **[1892292_0001213900-25-024574_ea0234238-10q_maison.htm:31]** 
- Q2 FY2025 8‑K and 10‑Q: **[1892292_0001213900-24-109381_ea022492901ex99-1_maison.htm:0]** **[1892292_0001213900-24-109381_ea022492901ex99-1_maison.htm:2]** **[1892292_0001213900-24-109372_ea0224813-10q_maison.htm:4]** **[1892292_0001213900-24-109372_ea0224813-10q_maison.htm:42]** **[1892292_0001213900-24-109372_ea0224813-10q_maison.htm:41]** **[1892292_0001213900-24-109372_ea0224813-10q_maison.htm:16]** **[1892292_0001213900-24-109372_ea0224813-10q_maison.htm:36]** **[1892292_0001213900-24-109372_ea0224813-10q_maison.htm:30]** **[1892292_0001213900-24-109372_ea0224813-10q_maison.htm:31]** 
- Q1 FY2025 8‑K and 10‑Q: **[1892292_0001213900-24-081035_ea021535001ex99-1_maison.htm:0]** **[1892292_0001213900-24-081035_ea021535001ex99-1_maison.htm:1]** **[1892292_0001213900-24-081017_ea0214677-10q_maison.htm:4]** **[1892292_0001213900-24-081017_ea0214677-10q_maison.htm:39]** **[1892292_0001213900-24-081017_ea0214677-10q_maison.htm:38]** **[1892292_0001213900-24-081017_ea0214677-10q_maison.htm:18]** **[1892292_0001213900-24-081017_ea0214677-10q_maison.htm:33]** 
- Consultancy & COO 8‑Ks: **[1892292_0001213900-25-008400_ea0229203-8k_maison.htm:1]** **[1892292_0001213900-25-008400_ea022920301ex99-1_maison.htm:0]** **[1892292_0001213900-25-018158_ea0232476-8k_maison.htm:1]** **[1892292_0001213900-25-018158_ea023247601ex99-1_maison.htm:0]**

Maison Solutions Inc. (MSS)·Q3 2025 Earnings Summary