Executive Summary

Q4 FY2025 was not fully reported; the company issued preliminary unaudited results and delayed its earnings release and call amid an Audit Committee investigation into autoship revenue recognition timing, a $50 coupon promotion’s KPI impact, and culture/control environment; management stated it does not expect a material change to prelims based on evidence to date .
Preliminary Q4 net sales were $51.1–$53.1M vs. $66.5M a year ago (down ~20.1%–23.2% YoY); preliminary net loss was $9.9–$10.4M vs. $5.0M YoY, including a $6.4M valuation allowance on deferred tax assets; cash was $54.7M and no debt .
Prior quarters showed revenue declines and margin discipline: Q2 sales $59.6M, GM 29.1%, EPS $0.11 ; Q3 sales $53.0M, GM 28.1%, EPS $(0.03) . Marketing pullback and competitive promotions were cited as drivers of softer sales in Q3 .
Street coverage is thin; for Q4, consensus EPS was −$0.49*, while revenue coverage appears limited; FY2025 consensus revenue was ~$231.7M* vs. FY2025 actual ~$227.0M*; consensus target price ~$2.75* and limited recommendation data*.

What Went Well and What Went Wrong

What Went Well

Margin discipline persisted: Q3 gross margin 28.1% (+80 bps YoY) on favorable mix and lower discounting .
Cost reductions tracked to plan: management reiterated $5M in annualized savings from integrating PetCareRx and consolidating operations .
Operational upgrades and customer experience progress: modernized website and relaunched iOS/Android apps; improved call center metrics with AI workforce tools; inventory turns improved to 1.5x and inventory down ~66% YoY to $11.8M in Q3 .
- “In just nine months…we achieved $2 million in Adjusted EBITDA…while successfully reducing G&A expenses by $2.6 million compared to last year.” — CEO Sandra Campos .

What Went Wrong

Q4 preliminary results show a larger net loss ($9.9–$10.4M) driven in part by a $6.4M tax valuation allowance; net sales fell sharply vs. prior year ($66.5M) .
Q3 revenue softness due to highly promotional holiday period and strategic marketing pullback; gross advertising spend reduced by ~$2.8M YoY, new customer acquisition fell short of expectations .
Audit Committee investigation delayed the 10-K and Q4 call; Nasdaq deficiency notice received for late filing, requiring a remediation plan (no impact on listing status immediately) .

Financial Results

Quarterly P&L and Margins vs. Prior Periods

Metric	Q2 FY2025 (Sep 30, 2024)	Q3 FY2025 (Dec 31, 2024)	Q4 FY2025 (Mar 31, 2025)
Revenue ($USD Millions)	$59.57	$52.98	$51.1–$53.1
Gross Margin %	29.1%	28.1%	—
Net Income ($USD Millions)	$2.33	$(0.71)	$(9.9)–$(10.4)
Diluted EPS ($USD)	$0.11	$(0.03)	—

Notes: Q4 figures are preliminary and unaudited; Q4 EPS was not provided in filings; Q4 net loss includes $6.4M valuation allowance on net deferred tax assets .

Liquidity

Metric	Q2 FY2025	Q3 FY2025	Q4 FY2025
Cash and Equivalents ($USD Millions)	$52.05	$50.10	$54.7
Total Debt	$0	$0	$0

KPIs and Operational Metrics

KPI	Q2 FY2025	Q3 FY2025	Q4 FY2025
New Customers (Shipped Orders)	~77,000	~63,000	—
AOV – Shipped Orders ($USD)	—	$97 (vs. $93 LY)	—
AOV – Gross Orders ($USD)	—	$108 (vs. $101 LY)	—
Inventory ($USD Millions)	$13.09	$11.80 (end of Q3)	—
Inventory Turns (x)	—	1.5x (vs. 1.1x in Q2; 0.9x LY)	—
Advertising Spend (YoY)	Intentional reduction	~$2.8M lower YoY	—

Segment breakdown: Not disclosed in available filings.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company Guidance	FY2025/Q4	None provided	None provided	Maintained (no quantitative guidance)
Earnings Release/Call Timing	Q4 FY2025	Scheduled for June 10, 2025	Delayed; preliminary results issued; call to be rescheduled post 10-K	Lowered (timing)

Dividend disclosures: No cash dividends declared in Q2–Q3 FY2025; prior-year period showed dividends (historical) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY2025)	Previous Mentions (Q3 FY2025)	Current Period (Q4 FY2025)	Trend
Technology & UX Modernization	Relaunched website; AI recommendations planned; mobile app updates	Full site refresh; app relaunch; BNPL; improved PDP views, lower bounce	Continued focus per updates; call postponed	Improving UX; execution ongoing
Marketing & Promotions	Intentional pullback to rebalance profitability; plan to increase spend in H2	Heavy holiday promotions; pulled back marketing; $2.8M lower gross ad spend YoY	No call; prelim only; marketing reset implied by prior commentary	Rebuild and targeted spend
Consumer/Macro Pressure	Customers pressured; conversion lifts with promotions	Continued pressure; fewer vet visits; compliance issues; shift to opening price points	Investigation mentions autoship KPIs	Persistent headwinds
Subscription/AutoShip	Replatform planned	AutoShip replatformed in mid-Nov; better signup and CC rejection rates	Not updated in Q4 press releases	Positive trajectory
Supply Chain/Last Mile	Emphasis on customer experience and delivery speed	Focus on last-mile delivery investments	Not updated in Q4 press releases	Investment priority
Regulatory/Legal	—	—	Audit Committee investigation; Nasdaq deficiency for late 10-K (no immediate trading impact)	New risk factor
Product/SKU Optimization	Assortment refinement	Eliminated ~4,000 underperforming SKUs; margins focus	Not updated in Q4 press releases	Margin-supportive

Management Commentary

“We achieved $2 million in Adjusted EBITDA…while successfully reducing G&A expenses by $2.6 million compared to last year.” — CEO Sandra Campos, Q3 .
“Net sales were $53 million…a 19% decline primarily driven by a 34% reduction in gross advertising as we rebalanced for profitability.” — CFO Robyn D’Elia, Q3 .
“We intentionally pulled back our marketing efforts to reset our marketing foundation and improve profitability for the quarter.” — CEO Sandra Campos, Q3 .
“We are focused on last-mile delivery…those investments are coming…in this quarter of Q4 as well as starting to increase more on marketing.” — CEO Sandra Campos, Q3 .

Q&A Highlights

Revenue softness drivers: Competitive holiday promos and purposeful ad spend reduction; consumers seeking discounts; compliance and vet-visit frequency lower .
SKU rationalization: Removal of ~4,000 underperforming SKUs had minimal revenue impact; focus on products with consistent sales .
Cost savings: Phase II consolidation to reduce technology and duplicate services over coming quarters .
Investment priorities: Marketing spend ramp post-foundation reset; last-mile delivery improvements in Q4 .

Estimates Context

Coverage is thin (often 1–2 estimates). Q2 and Q3 show mixed performance vs consensus; Q4 consensus EPS was negative with limited revenue visibility.

Period	Revenue Consensus Mean ($USD)	Revenue Actual ($USD)	Primary EPS Consensus Mean ($USD)	Primary EPS Actual ($USD)	Revenue – # of Estimates	Primary EPS – # of Estimates
Q2 FY2025	66,000,000*	59,570,000*	−0.055*	0.11*	1*	2*
Q3 FY2025	60,000,000*	52,984,000*	0.01*	−0.03*	1*	1*
Q4 FY2025	n/a*	46,466,000*	−0.49*	n/a*	n/a*	1*
FY2025	231,731,030*	226,972,000*	−0.24*	n/a*	—	—

Values retrieved from S&P Global.*

Implications: Expect estimate revisions lower given preliminary Q4 weakness and investigation-related uncertainty; thin coverage increases volatility in consensus.

Key Takeaways for Investors

Near-term caution: Preliminary Q4 indicates significant YoY revenue decline and widened net loss; the Audit Committee investigation and late filing add headline risk until resolved .
Margin defense: Q2–Q3 gross margin improvement reflects mix and discount discipline; sustaining margins amid promotional competition remains key .
Execution watchpoints: Track last-mile investments, AutoShip performance, and conversion gains from the new website/apps; KPIs like AOV and inventory turns improved in Q3 .
Marketing inflection: As foundational resets complete, re-accelerating acquisition spend should aid top-line recovery; timing and ROI will be critical .
Liquidity provides flexibility: ~$54.7M cash and no debt at Q4 supports investment and transition; monitor cash burn vs. marketing ramp .
Governance/legal overhang: Resolution of whistleblower investigation and 10-K filing are catalysts; Nasdaq compliance plan to be submitted, with an exception window through December 29, 2025 .
Position sizing: Thin sell-side coverage and delayed disclosures increase event risk; consider tactical exposure adjustments around filing/announcement dates and any management changes .

Appendix: Q4 Preliminary Press Releases and Status

Preliminary Q4/FY2025 results and Form 12b-25 filing .
Delay announcement for Q4 call and 10-K .
Update on investigation and 10-K status .
Nasdaq deficiency notice (timely filing non-compliance; no immediate listing impact) .
Strategic partnerships during Q4 window (Dutch telehealth and Wagmo benefits) .

Earnings call transcript for Q4 FY2025 was not available; the company stated it would reschedule after the 10-K filing .

PETMED EXPRESS INC (PETS)·Q4 2025 Earnings Summary