Name: SOLESENCE, INC. Q2 2025 Earnings Call
Start: 2025-07-31T21:00:00.000Z

Executive Summary

Record Q2 revenue of $20.359M (+56% year-over-year; +39% sequential), driven by strong commercial execution and peak seasonal demand .
Gross margin improved sequentially to 29% (vs 23% in Q1), flat year-over-year; operating margin expanded QoQ on higher throughput .
Net income rose to $2.667M, aided by an Employee Retention Credit cash receipt of ~$1.234M and related interest; tax expense recorded at $0.390M .
Liquidity enhanced: borrowing capacity expanded to $23.0M (from $14.2M), maturities extended to April 30, 2027, supporting working capital and growth initiatives .

What Went Well and What Went Wrong

Record revenue and unit volumes; “strong commercial execution and the consistent, on-time delivery of products” in the seasonally strongest quarter .
Quote: “Innovation remains at the heart of our unique value proposition and is why leading brands continue to choose us.” — Jess Jankowski .
Operations scaled effectively: shipment volumes +102% YoY and production volumes +127% YoY; gross margin improved sequentially .
Quote: “Operationally, we improved gross margin sequentially from the first quarter, while ramping up production during our peak demand season.” — Kevin Cureton .
Increased financial flexibility via amended debt facilities (capacity to $23.0M; maturities to 2027), enabling better procurement, packaging lead times, and support for partner launches .

Gross margin unchanged YoY at 29% despite volume surge, indicating lingering cost pressures and mix; Q1 margin had been depressed by start-up costs, only partially rebounding in Q2 .
Earnings quality included non-operating ERC cash income of ~$1.234M; adjusted EBITDA disclosure highlights addbacks and ERC component .
Interest expense persisted ($0.087M in Q2) and tax expense appeared ($0.390M), offsetting part of operational gains; limited external estimate coverage restricts market context .

Metric	Q2 2024	Q1 2025	Q2 2025
Net Revenue ($USD Millions)	$13.046	$14.625	$20.359
Gross Profit ($USD Millions)	$3.740	$3.313	$5.877
Gross Margin %	29%	23%	29%
Operating Income (EBIT) ($USD Millions)	$1.047	$0.256	$1.910
EBIT Margin %	8.0%	1.7%	9.4%
Net Income ($USD Millions)	$0.856	$0.080	$2.667
Diluted EPS ($USD)	$0.01	$0.00	$0.04

Revenue Breakdown	Q2 2024	Q1 2025	Q2 2025
Product Revenue ($USD Millions)	$12.923	$14.575	$20.261
Other Revenue ($USD Millions)	$0.123	$0.050	$0.098

Non-GAAP and Items	Q2 2024	Q1 2025	Q2 2025
Adjusted EBITDA ($USD Millions)	$1.438	$0.609	$3.489 (incl. $1.234M ERC)
Interest Expense, net ($USD Millions)	$0.191	$0.176	$0.087
Provision for Income Taxes ($USD Millions)	$0.000	$0.000	$0.390

KPIs (Operations)	Q2 2024	Q1 2025	Q2 2025
Shipment Volume YoY Growth	—	+95%	+102%
Production Volume YoY Growth	—	+120%	+127%

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q2 2025	“Record revenues for Q2” (anticipated)	Delivered $20.359M	Achieved
Gross Margin	2025 trajectory	“Substantially improve as we scale; minimal Q2 impact from start-up costs”	Q2 gross margin 29% (vs 23% Q1)	Improved QoQ
Tariffs (Packaging)	Q2–Q3 2025	Minimal cost impact Q2 and most of Q3; expect to pass through packaging tariffs	No quantified update provided in Q2 materials	Maintained (directional)
Liquidity / Borrowing	Through 2027	$14.2M capacity; maturities Oct 1, 2025	$23.0M capacity; maturities Apr 30, 2027	Raised/Extended

Note: No Q2 2025 earnings call transcript was available. Q1 2025 call script (Exhibit 99.2) was reviewed.

Topic	Previous Mentions (Q-2: Q4 2024)	Previous Mentions (Q-1: Q1 2025)	Current Period (Q2 2025)	Trend
Technology/IP	n/a	Three new patent allowances (Kleair™, plant-based antioxidant, skin healing) expanding global IP	Continued emphasis on innovation as core proposition	Strengthening
Supply Chain/Packaging	n/a	Start-up challenges on multi-SKU launch; additional labor costs; issues resolved by April	Improved on-time delivery; ramped production in peak season	Improving execution
Tariffs/Macro	n/a	Minimal impact expected on costs in Q2/Q3; packaging tariffs to be passed through	No incremental update quantified	Watchlist (neutral)
Product Performance	n/a	Record revenue; major new launch; strong demand from brand partners	Record revenue; shipments +102% YoY; production +127% YoY	Positive
Margin Trajectory	n/a	Q1 margin depressed by one-time start-up costs; expected rebound	Gross margin improved sequentially to 29%	Improving
Liquidity/Capital	n/a	Uplisting to Nasdaq; visibility/liquidity benefits	Debt facilities expanded; maturities extended	Improved flexibility

CEO (Q2 press release): “Innovation remains at the heart of our unique value proposition and is why leading brands continue to choose us.”
COO (Q2 press release): “Operationally, we improved gross margin sequentially from the first quarter, while ramping up production during our peak demand season.”
CEO (Q1 call): “Excluding the one-time start-up costs, our gross margin would have been similar to last year’s margin... we anticipate a rebound in our margins starting in the second quarter.”
COO (Q1 call): “We have strengthened this customer relationship through our steadfast collaboration... we raised the bar on how we will approach future inbound packaging components.”
CEO (Q1 call): “We anticipate continued topline growth with record revenues for the second quarter of 2025.”

No Q2 2025 earnings call transcript was available; Q1 2025 filing provided a prepared “Conference Call Script” but did not include detailed Q&A content .

S&P Global consensus estimates for Q2 2025 were not available for EPS or revenue; coverage appears limited following the recent uplisting. Actual revenue was $20.359M. Values retrieved from S&P Global.* [GetEstimates]

Metric	Q2 2025
Revenue Consensus Mean ($USD Millions)	N/A*
Primary EPS Consensus Mean ($USD)	N/A*
Revenue - # of Estimates	N/A*
Primary EPS - # of Estimates	N/A*

*Values retrieved from S&P Global.

Topline scaling: Q2 revenue surged to $20.359M with unit volume growth >100% YoY; sequential momentum remains strong entering seasonally high demand periods .
Margin recovery underway: Gross margin rebounded to 29% from 23% in Q1 as start-up inefficiencies subsided; watch for additional cost absorption benefits in 2H .
Quality of earnings: Q2 net income benefited from ~$1.234M ERC cash income; adjusted EBITDA disclosures helpful for isolating operating performance .
Liquidity de-risking: Expanded borrowing capacity ($23.0M) and extended maturities (to 2027) support working capital for procurement and packaging lead-time improvements .
Customer execution: Resolved Q1 launch challenges; continued delivery cadence and re-orders suggest durable demand across prestige/mass beauty segments .
Estimates gap: Lack of consensus coverage may increase volatility around prints; internal milestones (order book, margin trajectory) will be key investor anchors [GetEstimates].
Monitoring list: Tariffs (packaging pass-through), mix-driven margin dynamics, interest/tax expense trends, and CFO search progress (organizational scaling) .