Executive Summary

Net sales declined 7.4% year over year to $25.68M; sequentially down 3.3% vs Q1 2025 ($26.56M), reflecting demand softness and FX headwinds .
Gross margin compressed 350 bps YoY to 73.6% due to higher freight from back-ordered items and promotional activity; sequentially down ~70 bps vs Q1 2025 (74.3%) .
Net loss widened to -$4.31M (-$2.27 diluted EPS) vs -$0.62M (-$0.33) a year ago and -$1.53M (-$0.80) in Q1, with a large swing in Other (expense) income to -$2.74M from +$1.12M YoY, a negative surprise relative to recent quarters .
Active network positions fell to ~125k (vs ~129k in Q1 and ~133k in Q4 2024), while recruiting decreased 22.7% YoY; management highlighted tariff/macro risks and near‑term supply chain constraints .
Street estimates were unavailable; no formal guidance was provided. Key stock narrative centers on deteriorating profitability, margin pressure, and distributor network contraction .

What Went Well and What Went Wrong

What Went Well

Commissions as a percent of sales improved to 37.0% from 40.0% YoY, partly mitigating revenue decline .
Asia/Pacific maintained the majority of mix (59.5%), indicating continued regional engagement despite macro challenges .
Management continues to frame constant currency analysis to isolate FX impact, showing net sales down 6.5% YoY on a constant dollar basis vs 7.4% reported .

Quote: “Changes in current trade policies, including with respect to tariffs, could affect our cost structure and profitability… our ability to [mitigate] may be limited… especially in the short term.”

What Went Wrong

Gross margin fell to 73.6% from 77.1% YoY due to increased freight tied to back orders and promotions; profitability deteriorated sharply .
Other (expense) income swung to -$2.74M vs +$1.12M YoY, materially pressuring pre‑tax income beyond core operations .
The distributor network weakened: active positions ~125k vs ~142k YoY, and recruiting down 22.7% YoY, implying demand and network momentum issues .

Financial Results

Consolidated P&L and Margins

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$27.74	$26.56	$25.68
Gross Profit Margin (%)	77.1%	74.3%	73.6%
EBIT / Operating Income ($USD Millions)	-$1.14	-$0.83	-$1.44
Net Income ($USD Millions)	-$0.62	-$1.53	-$4.31
Diluted EPS ($USD)	-$0.33	-$0.80	-$2.27
Other (Expense) Income, net ($USD Millions)	$1.12	-$0.42	-$2.74
Commissions (% of Sales)	40.0%	37.7%	37.0%
Selling & Administrative (% of Sales)	n/a	37.7%	42.0%

EBITDA and Margin (S&P Global)

Metric	Q2 2024	Q1 2025	Q2 2025
EBITDA ($USD Millions)	$1.26*	-$0.54*	-$1.17*
EBITDA Margin (%)	3.97%*	-2.03%*	-4.54%*
EBIT Margin (%)	2.80%*	-3.14%*	-5.62%*

Values retrieved from S&P Global.*

Net Sales by Region

Region	Q2 2024 ($M, %)	Q1 2025 ($M, %)	Q2 2025 ($M, %)
Americas	$9.5, 34.3%	$9.0, 33.8%	$8.3, 32.3%
Asia/Pacific	$15.9, 57.4%	$15.4, 57.9%	$15.3, 59.5%
EMEA	$2.3, 8.3%	$2.2, 8.3%	$2.1, 8.2%
Total	$27.7, 100.0%	$26.6, 100.0%	$25.7, 100.0%

KPIs and Balance Sheet Highlights

KPI	Q4 2024	Q1 2025	Q2 2025
Active network positions (approx.)	~133,000	~129,000	~125,000
Recruiting YoY change	-19.5%	-13.9%	-22.7%
Cash & Equivalents ($M)	$11.40	$9.32	$5.53
Deferred Revenue ($M)	$3.03	$2.32	$2.05
Inventory ($M)	$10.41	$11.82	$12.59

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	n/a	n/a	No formal guidance provided	n/a
Gross Margin	n/a	n/a	No formal guidance provided	n/a
OpEx	n/a	n/a	No formal guidance provided	n/a
OI&E	n/a	n/a	No formal guidance provided	n/a
Tax Rate	n/a	n/a	No formal guidance provided	n/a
Dividends	n/a	n/a	Not discussed	n/a

No explicit quantitative guidance was issued in Q2 2025 materials .

Earnings Call Themes & Trends

No earnings call transcript was available for Q2 2025; themes are derived from press releases.

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Asia/Pacific macro	“Challenging year… particularly in Asia/Pacific” (CEO)	Weakened demand in Asia; FX unfavorable	Demand softness in certain regions; FX unfavorable	Persistent headwind
Supply chain/freight	GP improved YoY in Q4, cost focus	Back-ordered items; freight pressure; promos	Higher freight tied to back orders; promos reduced margin	Margin pressure rising
Tariffs/macro policy	Not highlighted	Not highlighted	Explicit tariff risk statement, mitigation limited near term	New explicit risk
Network health (recruiting/positions)	133k positions; recruiting -19.5% YoY	129k; recruiting -13.9% YoY	125k; recruiting -22.7% YoY	Deteriorating
FX impact	Q4: FX reduced sales $0.7M	FX reduced sales $1.2M	FX reduced sales $0.2M	Ongoing, smaller in Q2
Other (expense) income	+$2.10M in Q4 2024	-$0.42M	-$2.74M	Sharp negative swing

Management Commentary

“Changes in current trade policies, including with respect to tariffs, could affect our cost structure and profitability… our ability to [mitigate] may be limited by operational and supply chain constraints and uncertainties, especially in the short term.” (Q2 press release)
“2024 was a challenging year… particularly in the Asia/Pacific region, due to persistent economic challenges. However, through strict cost management, we were able to achieve a positive net income.” (Q4 press release, CEO Landen Fredrick)

Q&A Highlights

No Q2 2025 earnings call transcript was available; thus no Q&A details or clarifications can be provided [ListDocuments returned none for earnings-call-transcript].

Estimates Context

S&P Global consensus for MTEX Q2 2025 was unavailable for EPS and number of estimates; revenue consensus was not published in the dataset returned. Therefore, a formal beat/miss analysis vs Street cannot be determined for Q2 2025. Values retrieved from S&P Global.*

Key Takeaways for Investors

Revenue momentum remains negative, with sequential and YoY declines; Asia/Pacific remains the largest region but macro softness persists .
Margin pressure is intensifying from freight and promotions; gross margin fell 350 bps YoY to 73.6% .
The network is weakening (positions and recruiting down), which risks forward sales and increases the urgency of distributor engagement strategies .
The sharp deterioration in Other (expense) income (-$2.74M) materially impacted profitability and warrants scrutiny for non-operational drivers in future disclosures .
Liquidity trend is negative: cash fell to $5.53M from $11.40M at year-end; working capital pressures evident as inventories rose while deferred revenue declined .
No guidance and no call transcript increase uncertainty; monitor upcoming disclosures for clarity on tariffs, supply chain normalization, and promotional strategy .
Near term, sentiment likely hinges on stabilization of margins and network KPIs; medium term thesis requires evidence of demand recovery and expense discipline translating to sustainable profitability .

MANNATECH INC (MTEX)·Q2 2025 Earnings Summary