Revolve Group, Inc. (RVLV)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered healthy growth and operating leverage: net sales $296.7M (+10% YoY), diluted EPS $0.16, operating income +57% YoY, and adjusted EBITDA $19.3M (+45% YoY), with operating cash flow of $45.1M strengthening cash to $300.8M, debt-free .
• Versus S&P Global consensus, RVLV posted a small EPS beat ($0.16 vs $0.15*) and a slight revenue miss ($296.7M vs $297.8M*); EBITDA was above consensus ($19.3M adjusted vs EBITDA actual 15.7M vs 15.3M*). The company’s guidance cut to FY25 gross margin (50–52% from 52.4–52.9%) and higher tax rate (27–28% from 24–26%) are the primary negatives likely to drive estimate revisions lower . (Estimates marked with an asterisk are from S&P Global.)
• April trends remained positive: net sales grew mid-single digit YoY with stronger international growth, but management moderated internal revenue expectations given weakening sentiment and tariff uncertainty .
• Key stock narrative catalysts: tariff path and mitigation outcomes; owned brands (higher-margin) re-acceleration; continued logistics/returns efficiency; LA “The Grove” store opening and Cardi B JV; and international growth outperformance .

What Went Well and What Went Wrong

• What Went Well

  • Strong operating leverage: operating income +57% YoY and adjusted EBITDA +45% YoY; “outstanding first quarter results” with adjusted EBITDA margin up ~160 bps YoY and cash >$300M (no debt) .
  • Marketing and logistics efficiency gains, aided by nearly 3pt reduction in product return rate YoY; selling & distribution improved to 16.8% of sales (from 17.9%), fulfillment to 3.2% (from 3.5%) .
  • Brand-building and engagement: REVOLVE Festival drove >40% press impressions and >25% social impressions YoY with reduced spend; CreatorIQ ranked REVOLVE #1 in earned media value around Coachella window .

• What Went Wrong

  • Gross margin contracted 30 bps YoY to 52.0% on lower full-price mix and deeper markdowns; management highlighted consumer shift to more accessible price points .
  • AOV declined 1% YoY to $295, pressuring shipping leverage; S&D guided slightly higher near-term given lower AOV .
  • Tariffs are the key overhang: FY25 gross margin guidance cut to 50–52% and tax rate raised to 27–28%; Canada has been a soft spot tied to tariff/policy-related sentiment .

Financial Results

Headline financials by quarter

Q1 2025 actuals vs S&P Global consensus

• Note: Adjusted EBITDA (non-GAAP) differs from EBITDA used in consensus; RVLV reported Adjusted EBITDA of $19.3M for Q1 .
• Estimates marked with an asterisk are Values retrieved from S&P Global.

Segment net sales

Geographic net sales

KPIs

Additional Q1 notes

• GM down 30 bps YoY to 52.0% due to lower full-price mix and deeper markdowns, partially offset by higher owned-brand mix .
• 2024 comp EPS included ~$0.03 benefit from an insurance recovery in other income .

Guidance Changes

Management framed the FY25 GM range sensitivity explicitly to tariff timing/levels and mitigation impact; higher tariff impact is expected to step up in 3Q–4Q, while 2Q assumes “some” impact .

Earnings Call Themes & Trends

Management Commentary

• “Our strong execution within a dynamic macro environment resulted in outstanding first quarter results, highlighted by double-digit top-line growth, 57% growth in operating income year-over-year, and $45 million in operating cash flow…” — Co-CEO Mike Karanikolas .
• “Adjusted EBITDA margin increased by 160 basis points year-over-year and cash and cash equivalents on the balance sheet exceeded $300 million.” — Co-CEO Mike Karanikolas (prepared remarks) .
• “The percentage of U.S. packages we deliver… in only 1 business day has increased by 6 percentage points in the past 3 years…” — Co-CEO Mike Karanikolas .
• “Press impressions from REVOLVE Festival in 2025 increased by more than 40% year-over-year while social media impressions increased by more than 25% year-over-year, achieved on reduced spending year-over-year… CreatorIQ [ranked] REVOLVE’s earned media value #1” — Co-CEO Michael Mente .
• “Owned brands… significantly outperformed our third-party brands on key comparable metrics… we can further increase owned brand penetration” — Co-CEO Michael Mente .
• “We purchased the majority of our inventory… where we are not the importer of record… approximately 78%… we do not pay the tariffs.” — CFO Jesse Timmermans .

Q&A Highlights

• Tariff math and GM guidance: The low end reflects elevated tariffs with best-estimate mitigation; dollar GM impact for 2H is “meaningful” (no precise figure given) .
• Tariff exposure and mitigation: ~22% of 2024 inventory receipts were directly imported by RVLV (with tariff exposure), ~72% of that from China; mitigation via cost-sharing with vendors, source diversification, logistics optimization, selective pricing .
• Demand and pricing: Consumers shifting to accessible price points, pressuring AOV; RVLV not changing markdown strategy beyond algorithms/merchandising discipline .
• April trend: Mid-single-digit YoY growth; international outpaced U.S.; macro cited as primary driver of decel .
• Selling & distribution cadence: Line typically higher in Q2 seasonally; lower return rates have been the largest driver of efficiency .
• Owned brands: Momentum continues; additional launches in 2H25/early ’26; no broad pullback despite tariffs .

Estimates Context

• Q1 2025 vs consensus (S&P Global): EPS $0.16 vs $0.15* (beat), revenue $296.7M vs $297.8M* (slight miss), EBITDA 15.7M actual vs 15.3M* (beat); note RVLV’s adjusted EBITDA was $19.3M (non-GAAP) . (Estimates marked with an asterisk are Values retrieved from S&P Global.)
• FY 2025: Consensus EPS $0.78*; given lower FY GM (50–52%) and higher tax rate (27–28%) introduced this quarter, Street models may need to recalibrate margin/tax assumptions downward despite ongoing opex efficiencies . (Values retrieved from S&P Global.)

Key Takeaways for Investors

• Quality execution with operating leverage and cash generation: operating income +57% YoY, adjusted EBITDA +45% YoY, OCF $45M; balance sheet at $300.8M cash, no debt .
• The near-term debate is margins under tariffs: FY25 GM cut to 50–52% with heavier impact in 2H; tax rate higher; these are the primary estimate headwinds .
• Structural positives are intact: logistics and return-rate efficiencies, marketing ROI, and owned-brand momentum should support profitability once tariff headwinds normalize .
• Top-line cadence remains constructive: April grew mid-single digit YoY with international outperformance; management is prudently moderating buys amid softer sentiment .
• Brand heat and customer acquisition engines are strong (REVOLVE Festival EMV #1; AI personalization tests; physical retail at The Grove; Cardi B JV) — potential share gains vs peers pulling back .
• Watch items: AOV pressure from consumer trade-down; Canada softness; luxury (FWRD) stabilizing but still below core growth .
• Setup: A tariff resolution or clear mitigation could be a positive catalyst; sustained owned-brand mix gains and continued returns/logistics efficiencies offer medium-term margin tailwinds .

Notes:

• April net sales increased mid-single digit YoY with stronger international growth .
• Prior-year Q1 EPS included ~$0.03/sh insurance recovery, flattering the YoY compare .
• Estimates marked with an asterisk are Values retrieved from S&P Global.