OLAPLEX HOLDINGS, INC. (OLPX)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue modestly declined 1.9% YoY to $97.0M but exceeded Street revenue consensus by ~3.6% and came in “ahead of our expectations,” while diluted EPS was $0.00, missing Street EPS consensus of ~$0.02 as marketing spend ramped and margins compressed . Consensus: Revenue $93.6M*, EPS $0.0179*.
• Mix was mixed by channel: Specialty Retail +12% to $38.6M, offset by Professional −10.9% to $34.5M and DTC −7.2% to $23.9M; U.S. grew 0.6%, international −4.5% .
• FY2025 guidance reaffirmed: net sales $410–$431M, adjusted gross margin 70.5%–71.5%, adjusted EBITDA margin 20%–22%; management flagged a full-quarter impact from higher marketing in Q2 and assumes no material tariff impact .
• Balance sheet actions are a positive catalyst: post-quarter $300M voluntary debt paydown lowers leverage to ~4x from ~7x and saves an estimated ~$20M annual interest, improving flexibility to invest through the transformation .

What Went Well and What Went Wrong

• What Went Well

  • Revenue beat vs Street as retailer support and U.S. execution improved; “first quarter sales came in ahead of our expectations” and specialty retail shipments were “ahead of plan” .
  • Brand/marketing engine gaining traction: launched “Designed to Defy” platform in April with ~1B press impressions, higher share of voice, search and engagement; Q2 to see a full-quarter spend impact .
  • Deleveraging/capital discipline: $300M debt repaid after quarter-end, lowering leverage to ~4x and unlocking an estimated ~$20M interest savings annually .

• What Went Wrong

  • Margin compression as investment ramped and innovation not yet at scale: adjusted gross margin 71.9% (−240 bps YoY) and adjusted EBITDA margin 26.5% (−940 bps YoY) .
  • DTC softness by design as promotions were pulled back to rebuild brand equity; DTC −7.2% YoY .
  • International remained a headwind (−4.5% YoY) amid distributor realignment; Professional channel declines were driven by international weakness .

Financial Results

Revenue and EPS vs S&P Global consensus (Q1 2025)

Channel/Geography (Q1 2025)

KPIs and Balance Sheet

Non-GAAP notes: Beginning Q1 2025, adjusted metrics exclude certain litigation costs related to the Lilien securities class action; management believes this aids comparability of core operations .

Guidance Changes

Guidance assumes: Q2 reflects a full-quarter of increased marketing investment that began late Q1; no material impact from tariffs .

Earnings Call Themes & Trends

Management Commentary

• CEO: “We had a solid start to the year…first quarter sales coming in ahead of our expectations.”
• CEO on brand: “Designed to Defy…captures our history and looks forward…we drove nearly 1 billion press impressions…increased share of voice…and social engagement.”
• CFO on margins: “Adjusted gross margin…down 240 bps…largely reflects our new innovation…not yet…full production scale or margin efficiency.”
• CFO on tariffs: “95% of our finished goods sold in the U.S. are manufactured in the U.S….less than 1% of our product sourcing costs imported to the U.S. from China.”
• CFO on deleveraging: “We utilized $300 million in cash to reduce outstanding debt…lowering our gross leverage ratio to around 4x…unlocking an estimated $20 million in annual interest savings.”

Q&A Highlights

• DTC strategy: Intentional shift away from always-on promos to “surgical” tentpole promotions; new site and full-funnel digital focus to build loyalty and storytelling .
• Marketing cadence: Spend began ramping late Q1; Q2 will be first full-quarter impact; upper-funnel brand investment prioritized, early KPIs encouraging .
• Specialty Retail dynamics: Upside driven by retailer enthusiasm and support for brand refresh; inventory at retail “in a healthy position” .
• International: Realignment progressing with tiered partner model; pacing methodical; NA to lead while international transformation continues .
• Tariffs: Exposure expected to be relatively small; no quantification provided; levers include sourcing shifts and selective pricing .
• Capital allocation: $300M debt reduction prioritized near term; positions company to invest through cycle .

Estimates Context

• Street revenue consensus for Q1 2025 was ~$93.6M*, actual $97.0M (+~3.7% vs consensus), a top-line beat driven by stronger-than-expected specialty retail shipments and U.S. execution .
• Street EPS consensus was ~$0.0179*, actual diluted EPS $0.00, missing by ~2c as marketing spend rose and adjusted gross margin fell YoY due to innovation scale effects .
• Coverage depth: ~7 estimates for both revenue and EPS*.

Values retrieved from S&P Global.

Key Takeaways for Investors

• Revenue beat with reaffirmed FY guide suggests early traction from brand refresh and retailer support; watch Q2 for full-quarter marketing impact and potential inflection in sell-through .
• Near-term EPS pressure likely as marketing ramps and innovation scales; margin recovery depends on scaling new SKUs and mix normalization—monitor adjusted gross margin trajectory .
• U.S. stabilizing while international remains in controlled reset; catalysts include partner upgrades and localized execution—expect gradual improvement rather than rapid rebound .
• Deleveraging materially de-risks the equity story and adds optionality; ~$20M annual interest savings can buffer investment and macro noise .
• Promotional discipline in DTC should improve brand health/LTV but may weigh on near-term DTC revenue; look for improving conversion on the rebuilt site and better omni coordination .
• Limited tariff exposure reduces exogenous risk; pricing and sourcing levers provide flexibility if policy tightens .
• Trading stance: Near-term setup favors revenue resilience and brand momentum vs. EPS; watch Q2 KPIs (sell-through, U.S. growth, adjusted gross margin) and international execution milestones as stock drivers .

Footnotes:

• S&P Global consensus figures (Primary EPS Consensus Mean, Revenue Consensus Mean, and number of estimates) retrieved via S&P Global.