Executive Summary

Q1 2025 delivered record revenue of $14.63M, up 48% year over year, but gross margin compressed to 23% due to one-time start-up costs tied to a large multi-SKU launch; net income was breakeven as reported by management .
Management expects margins to rebound in Q2 and indicated Q2 would be a record revenue quarter, which subsequently occurred with $20.36M revenue and 29% gross margin, validating the Q1 guidance trajectory .
Operational flexibility and throughput were increased to support a new strategic brand partner; shipment volume rose 95% YoY and production volume rose 120% YoY in Q1, with an order book exceeding $45M, positioning for continued sequential growth .
Strategic visibility improved with an April Nasdaq uplisting under SLSN; management framed this as a catalyst to broaden investor awareness and capital access .
Street consensus for Q1 2025 EPS/revenue was unavailable via S&P Global, limiting beat/miss analysis; near-term narrative drivers remain execution on margin recovery, order conversion, and scaling efficiencies (Estimates via S&P Global; consensus unavailable*).

What Went Well and What Went Wrong

What Went Well

“We kicked off 2025 with record revenue, fueled by strong sales across our suite of consumer products,” underpinned by large orders and a new product line with a key brand partner .
Throughput was “significantly increased” to execute a multi-SKU launch for a new brand partner; shipment volumes rose 95% YoY and production volumes rose 120% YoY to support demand .
Order visibility improved: “current shipped and open orders…in excess of $45 million,” alongside Nasdaq uplisting to enhance visibility and capital access .

What Went Wrong

Gross margin fell to 23% (from 36% YoY) due to one-time start-up costs and additional labor to resolve packaging-related issues for the new launch, pressuring profitability to breakeven .
Gross profit declined to $3.31M vs $3.58M YoY, and adjusted EBITDA fell to $0.61M from $1.51M YoY, reflecting the temporary cost burden of launch execution .
Management acknowledged margin impact and the need to further scale operations to improve fixed-cost absorption and reduce controllable variable costs in subsequent quarters .

Financial Results

Quarterly Performance and Trend

Metric	Q1 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$9.87	$14.63	$20.36	$14.60
Gross Profit ($USD Millions)	$3.58	$3.31	$5.88	$3.37
Gross Margin (%)	36%	23%	29%	23%
Net Income ($USD Millions)	$0.89	$0.08	$2.67	$(1.12)
EPS (Diluted, $)	$0.02	— (breakeven)	$0.04	$(0.02)
Adjusted EBITDA ($USD Millions)	$1.51	$0.61	$3.49	$(0.44)

Notes:

Q1 2025 revenue growth +48% YoY; margin compression tied to one-time launch costs .
Q2 2025 validated guidance on margin rebound/record revenue .
Q3 2025 softness and operational restructuring context shown for trajectory .

Versus Estimates (Q1 2025)

Metric	Actual	Consensus	Surprise
Revenue ($USD Millions)	$14.63	N/A*	N/A*
EPS ($)	— (breakeven)	N/A*	N/A*
EBITDA ($USD Millions)	$0.48*	N/A*	N/A*

Estimates disclaimer: Values retrieved from S&P Global; consensus unavailable for Q1 2025*.
EBITDA actual shown from S&P Global data to reconcile with reported adjusted EBITDA; company-reported adjusted EBITDA was $0.61M .

KPIs and Operational Metrics

KPI	Q1 2024	Q1 2025	Q2 2025	Q3 2025
Shipment Volume YoY (%)	—	+95%	+102%	—
Production Volume YoY (%)	—	+120%	+127%	—
Shipped & Open Orders ($USD Millions)	$40	>$45	~$60	~$64

Segment breakdown: Not disclosed; company reports consolidated results .

Non-GAAP: Adjusted EBITDA adds back interest, D&A, non-cash equity comp, and (in Q2) taxes; Q2 adjusted EBITDA includes $1.234M ERC cash income .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Outcome	Change
Revenue	Q2 2025	“Record revenues for Q2 2025”	Delivered $20.36M (record)	Achieved
Gross Margin	Q2 2025	“Margins to rebound starting in Q2”	29% (up from 23% in Q1)	Raised
FY Revenue	FY 2025	—	“Project around $64M for the year” (shifted/open orders framework)	Initiated
Gross Margin LT Target	FY 2026+	—	“30% is the floor; objective 40%+ over time”	Initiated
Tariffs Impact	2H 2025	Modest topline impact; muted cost impact through most of Q3; pass-through on packaging components	Management reiterated muted impact through Q3; ability to pass through costs	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2025)	Trend
Operational scaling	Prior two quarters not available in filings; Q2 subsequently showed margin improvement	Throughput increased to support multi-SKU launch; one-time start-up costs pressured margins	Improving post-launch; validated by Q2 margin rebound
Supply chain/packaging	—	Additional labor to resolve packaging-related launch issues; learnings to reduce future risk	Process improvements; lower risk going forward
Tariffs/macro	—	Modest topline impact; muted cost impact through most of Q3; pass-through on packaging	Monitoring; expectation of muted cost impact through Q3
Technology/IP	—	Three new patent allowances (Japan, South Korea, Mexico) across Kleair™, antioxidant, skin healing platforms	Strengthening IP moat
Order book visibility	—	Shipped/open orders >$45M; sequential growth expected	Expanded to ~$60M by Q2 and ~$64M by Q3
Nasdaq uplisting	—	Uplisted in April; expected to broaden visibility and capital access	Strategic milestone completed

Note: Prior two quarters (Q3/Q4 2024) filings were not available; subsequent Q2/Q3 2025 are used to illustrate trajectory .

Management Commentary

“Large customer orders, including a new product line with a key new brand partner, are driving growth…our relentless focus remains on delivering unique, high-performance products” — Jess Jankowski, CEO .
“One-time start-up costs…impacted our gross margins for the quarter…we anticipate our gross margin levels will substantially improve as we further scale our operations” — Kevin Cureton, COO .
“We anticipate continued sequential revenue growth based on…shipped and open orders…in excess of $45 million” — Jess Jankowski .
“Trading on Nasdaq…will increase awareness…marketability, liquidity and access to the capital markets” — Jess Jankowski .

Q&A Highlights

Profitability/Margins: Investors pressed on margin forecasting and operational execution; management targeted a 30% gross margin “floor” with a long-term objective of 40%+, acknowledging work needed on indirect costs and operations .
Revenue Trajectory: Management indicated FY 2025 revenue projection around ~$64M, with the first nine months up ~$10M YoY and a strong shipped/open order position .
Operations Discipline: Questions focused on repeated execution details; management emphasized unified product integrity (R&D+Quality), improved labor efficiency (OEE, automation), and inventory control initiatives .
ERC Timing/Impact: Clarified ERC cash/interest receipts belonged to 2025, supporting Q2 “other income”; later correction noted it was received in Q2, not Q3 .

Estimates Context

S&P Global consensus estimates for Q1 2025 EPS and revenue were unavailable, limiting beat/miss assessment (Estimates via S&P Global; consensus unavailable*).
Company reported actuals: Revenue $14.63M and breakeven net income; non-GAAP adjusted EBITDA $0.61M .
Implication: Sell-side models likely need to incorporate the temporary start-up cost drag and sequential margin improvement evidenced in Q2, with order conversion underpinning top-line trajectory .

Key Takeaways for Investors

Record Q1 revenue with margin compression was transitory; Q2 execution validated the margin rebound and “record revenue” guidance, reducing risk to near-term profitability trajectory .
Order visibility and brand partner momentum (>$45M in Q1, ~$60M in Q2, ~$64M in Q3 shipped/open orders) support sustained growth, though inventory management and indirect costs remain focal points for improving returns .
Nasdaq uplisting enhances liquidity and access to capital, supporting scaling initiatives (automation, consolidation) that should lift margins over the next few quarters .
Long-term margin ambition (≥30% floor; 40%+ objective) requires continued operational discipline; early actions on product integrity, labor efficiency, and inventory control are in place .
Near-term trading: Positive catalysts include evidence of margin recovery and order conversion; watch for improved indirect costs run-rate and any tariff pass-through effects on packaging costs .
Medium-term thesis: Strengthening IP moat, diversified brand partnerships in mineral-based SPF beauty, and CDMO positioning suggest above-industry growth with margin upside as operations mature .

Citations:

Q1 2025 press release and financials
Q2 2025 press release and financials
Q3 2025 press release, financials, and call outline

Estimates disclaimer: Values retrieved from S&P Global; consensus unavailable for Q1 2025*.

SOLESENCE, INC. (SLSN)·Q1 2025 Earnings Summary