Executive Summary

Q2 revenue grew 4% to $114.8M (2% constant currency), driven by strength in Japan, Central Europe, and accelerating North America digital, while gross margin held at 71.7% .
GAAP diluted EPS was $0.28 and adjusted diluted EPS was $0.35; both exceeded S&P Global consensus EPS of $0.16, while revenue of $114.8M surpassed consensus of $112.3M; full-year guidance was raised for both revenue ($460–$475M from $445–$470M) and adjusted EBITDA ($41–$45M from $38–$44M) .
Adjusted EBITDA increased 8% to $11.3M despite higher SG&A (38.1% of sales), supported by lower volume incentives and FX gains; balance sheet remains strong with $81.3M cash and zero debt .
Stock-relevant narrative: a guidance raise, 34% YoY digital growth, and Subscribe & Thrive autoship reaching >50% of DTC (53% per CFO) position North America as a re-accelerating growth driver into H2, while APAC faces tough comps; management expects modest GM improvement despite tariff volatility .

What Went Well and What Went Wrong

What Went Well

North America digital grew 34% YoY, with Subscribe & Thrive autoship reaching 53% of DTC revenue; management added ~$1M of incremental digital media spend given strong returns .
APAC delivered 5% reported growth, led by Japan’s 27% local-currency growth and stabilization in China; Central Europe reported robust growth and disciplined execution .
Company raised FY25 guidance for both revenue and adjusted EBITDA, citing improved momentum and visibility; adjusted EBITDA grew 8% YoY in Q2 .

What Went Wrong

SG&A increased to $43.7M (38.1% of sales) on timing of compensation, incremental digital marketing, and non-recurring expenses, pressuring operating income to $4.3M (3.7% margin) .
APAC growth moderated in Taiwan and Korea due to macro headwinds, with management signaling low-to-mid single-digit growth for APAC in H2 amid tough comps .
Mix and FX headwinds muted gross margin expansion; inventory rose to $69.3M to pre-empt tariff/supply chain risks, impacting working capital .

Financial Results

Consolidated P&L and Key Ratios

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$118.2	$113.2	$114.8
GAAP Diluted EPS ($)	$(0.02)	$0.25	$0.28
Adjusted Diluted EPS ($)	—	—	$0.35
Gross Margin (%)	72.0%	72.1%	71.7%
Volume Incentives (% of Sales)	31.1%	30.8%	29.9%
SG&A ($USD Millions)	$43.7	$40.6	$43.7
Operating Income ($USD Millions)	$4.6	$6.2	$4.3
Adjusted EBITDA ($USD Millions)	$10.3	$11.0	$11.3

Segment Net Sales

Segment	Q4 2024 ($M)	Q1 2025 ($M)	Q2 2025 ($M)
Asia	$56.3	$48.7	$52.7
Europe	$21.3	$24.1	$21.7
North America	$35.1	$35.0	$35.0
Latin America & Other	$5.5	$5.5	$5.4
Total	$118.2	$113.2	$114.8

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
North America Digital Sales Growth YoY	+17%	+19%	+34%
Subscribe & Thrive Autoship (DTC mix)	~26% of sales (NA)	~45% of DTC (NA)	>50% of DTC; 53% per CFO (NA)
Cash & Equivalents ($M)	$84.7	$86.5	$81.3
Debt	Zero	Zero	Zero
Share Repurchases	540k FY24 ($8.9M)	38k in Q1 ($0.5M)	1,011k YTD ($12.4M)

Results vs S&P Global Consensus (Q2 2025)

Metric	Consensus	Actual
Revenue ($USD Millions)	$112.3*	$114.8
Primary EPS ($)	$0.16*	GAAP: $0.28 ; Adjusted: $0.35
EBITDA ($USD Millions)	$9.84*	$7.77*; Company Adjusted EBITDA: $11.27

Values marked with an asterisk were retrieved from S&P Global.

Highlights: Revenue beat (+$2.5M, +2.2%); EPS beat on both GAAP and adjusted; S&P’s EBITDA actual (definition differs) is below consensus, but company’s Adjusted EBITDA exceeded prior year and aligns with raised guidance .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($USD Millions)	FY 2025	$445–$470	$460–$475	Raised
Adjusted EBITDA ($USD Millions)	FY 2025	$38–$44	$41–$45	Raised
SG&A ($USD Millions per quarter)	H2 2025 assumption	~$40–$42	$41–$42	Maintained/Specified
Gross Margin	FY 2025 outlook	Flat to modestly higher	Modestly higher in H2	Maintained
Tax Rate/Other	FY 2025	Not specified	Not specified	—

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Digital acceleration & toolkit	Digital +17% (Q4); toolkit planned for H2’25; NA digital +19% (Q1); toolkit launch late Q3/early Q4	Digital +34%; autoship >50% DTC (53%); ~$1M extra digital media spend with strong ROI	Accelerating execution; higher investment
Autoship Subscribe & Thrive	~26% of NA sales (Q4); ~45% of DTC (Q1)	>50% of DTC; 53% per CFO	Growing penetration
APAC regional trends	Q4 strong: TW +29%, JP +27%, KR +21%; China up slightly	Q2: JP +27% LC; China stabilized; TW/KR softer; guide low-to-mid single-digit APAC growth H2	Tough comps; moderated growth
Europe execution (Power Line, Baltics)	Central Europe +17% (Q4); Europe +8% LC; Power Line drives growth	Central Europe robust; Europe +1% reported, -2% LC; expect CE double-digit H2	Continuing strength in CE
Supply chain/tariffs/FX	Modeled tariffs $2–$3M GM impact if fully enacted (Q4); inventory build; diverse supply chain	Inventory up ($69.3M) to mitigate tariffs; GM headwinds from mix/FX; expect modest GM improvement	Proactive mitigation; gradual GM improvement
Product innovation	Power Line success (CE); digital expansion (Q1); toolkit	New Marine Glow collagen performing above expectations; focus on daily-use categories	Early wins; cumulative impact expected

Management Commentary

“We delivered another strong quarter, with net sales of $115 million and adjusted EBITDA of $11 million, up 4% and 8%, respectively, year-over-year.” — Terrence Moorehead, CEO .
“We now expect full-year revenue of $460–$475 million… For Adjusted EBITDA, we are now guiding to $41–$45 million… assumes gross margin will be modestly higher in Q3 and Q4, and that quarterly SG&A will be $41–$42 million.” — Shane Jones, CFO .
“Digital grew 34%… Subscribe and Thrive… now constitutes 53% of DTC revenue.” — Shane Jones, CFO .
“Marine Glow… launched just over a month ago… beating our expectations.” — Shane Jones, CFO .

Q&A Highlights

Guidance Range Drivers: Digital acceleration determines reaching top end vs mid/lower end; APAC comps (Taiwan, Korea) drive variability .
Incremental Digital Investment: ~$1M extra Q2 digital media spend with strong payback; intent to invest more if returns persist .
Gross Margin Outlook: Modest improvement in H2 as FX headwinds abate and pricing/sourcing initiatives flow through; mix remains a headwind if NA outgrows APAC .
Capacity/Co-manufacturing: Throughput efficiency improvements create capacity headroom; early-stage third-party opportunities under review .
North America Core: Improved activation via touch management, staffing changes, stronger sales support; continued acceleration expected .

Estimates Context

Q2 2025 results vs S&P Global consensus: Revenue $114.8M vs $112.3M*; Primary EPS GAAP $0.28 and adjusted $0.35 vs $0.16*; EBITDA company Adjusted $11.3M vs S&P EBITDA estimate $9.84M* (note definition differences) .
H2 models likely revise upward on revenue/EPS given guidance raise and digital momentum; watch EBITDA definitions in sell-side models versus company’s adjusted presentation .
Values marked with an asterisk were retrieved from S&P Global.

Key Takeaways for Investors

Guidance raise is a clear positive catalyst; company is executing with balanced growth, cost control, and targeted digital investment, while maintaining a net-cash, zero-debt balance sheet .
North America has turned the corner: 34% digital growth, autoship >50% of DTC, and improved core activation support sustained mid-single-digit regional growth in H2 .
APAC strength remains anchored by Japan; expect moderated growth due to tough comps; stabilization in China reduces downside risk .
Gross margin trajectory modestly up in H2 as FX headwinds ease and sourcing/pricing initiatives mature; mix could cap upside if NA outpaces APAC .
Adjusted EBITDA growth (+8% YoY) alongside higher SG&A reflects disciplined spend in high-ROI digital; management will flex investment based on returns .
Inventory build and supply-chain actions mitigate tariff risk; any tariff-driven shocks likely near-term and manageable given proactive stance .
Near-term trading: favor on guidance raise and EPS beat; medium-term thesis: digital-led transformation, recurring autoship, CE expansion, and product innovation (Marine Glow, Power Line) underpin sustainable growth .

NATURES SUNSHINE PRODUCTS INC (NATR)·Q2 2025 Earnings Summary