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Synergy CHC Corp. (SNYR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered the tenth consecutive profitable quarter: EPS of $0.17 (+86% y/y), net income of $1.47M (+125% y/y), and EBITDA of $3.80M (+136% y/y), supported by high-margin license revenue and a gain on settlement of notes payable .
  • Revenue of $8.13M grew 1% y/y but missed S&P Global consensus of $10.80M; EPS beat consensus $0.08 as reported $0.17 benefited from licensing mix and the notes settlement gain *.
  • Gross margin expanded to 76.7% (+720 bps y/y) on licensing mix; operating expenses rose with public-company costs; operating income ticked up 2.5% y/y to $1.62M .
  • Strategic catalysts: $20M debt refinancing extends maturities to 2029 (interest-only through 2025), major retail/distribution wins (Core-Mark national authorization; Walmart Canada Q4 launches), and international expansion (UAE/Turkey licensing; Mexico subsidiary shipping to Costco/Walmart) .
  • RTD beverages ramp shifted later: Q2 RTD revenue ~$0.15M (Amazon), with broader contributions expected in Q3–Q4 following the refinancing and distribution build-out; licensing revenue likely lumpy near term .

What Went Well and What Went Wrong

What Went Well

  • Tenth straight profitable quarter; CEO: “Revenue, gross profit, net income and earnings per share all grew year-over-year…” .
  • Margin strength: gross margin 76.7% (+720 bps y/y), driven by $1.4M license revenue and mix .
  • Balance sheet/capital structure: $20M term loan due 2029 (interest-only through 2025) enhanced flexibility; CEO: refinancing “extends our maturity profile, enhances financial flexibility and supports our long-term growth strategy” .

What Went Wrong

  • Top-line below Street: $8.13M vs $10.80M consensus; product sales down y/y with licensing mix masking underlying softness; operating expenses up 16% y/y on public-company costs *.
  • RTD revenue below prior commentary ($2M expected in Q2 per Q1 call) as ramp shifted post-refinancing; Q2 RTD Amazon revenue ~$0.148M .
  • Higher interest burden ($2.11M) offset operating gains; EPS benefited from a $2.15M gain on settlement of notes payable, highlighting non-operating volatility .

Financial Results

Headline P&L and Margins (y/y, q/q, vs estimates)

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD)$8.02M $8.17M $8.13M
Diluted EPS ($USD)$0.09 $0.10 $0.17
Gross Margin %69.5% 75.4% 76.7%
Income from Operations ($USD)$1.58M $1.95M $1.62M
Net Income ($USD)$0.66M $0.88M $1.47M
EBITDA ($USD)$1.61M $1.98M $3.80M
EBIT Margin %19.7% (/)23.8% (/)20.0% (/)
Net Margin %8.2% (/)10.7% (/)18.1% (/)
EBITDA Margin %20.1% (/)24.2% (/)46.7% (/)

Segment/Revenue Mix

Revenue ComponentQ2 2024Q1 2025Q2 2025
Product Sales ($USD)$8.02M $6.67M $6.73M
License Revenue ($USD)$0.00M $1.50M $1.40M
Total Revenue ($USD)$8.02M $8.17M $8.13M

Operating Expenses and Selected KPIs

MetricQ2 2024Q1 2025Q2 2025
Total OpEx ($USD)$3.99M $4.22M $4.61M
Cash & Equivalents ($USD)$0.69M (Dec-24) $0.18M (Mar-25) $1.46M (Jun-25)
Working Capital ($USD)$(1.12)M (Dec-24) N/A$12.4M (Jun-25)
Inventory ($USD)$1.72M (Dec-24) $2.35M (Mar-25) $2.36M (Jun-25)
Accounts Receivable ($USD)$5.32M (Dec-24) $4.38M (Mar-25) $7.07M (Jun-25)
Total Liabilities ($USD)$32.97M (Dec-24) $31.30M (Mar-25) $32.11M (Jun-25)

Actual vs S&P Global Consensus (Q2 2025)

Note: Asterisks indicate values retrieved from S&P Global; comparisons use company-reported actuals.

MetricActualS&P Consensus*Surprise
Revenue ($USD)$8.13M $10.80M*Miss
EPS (Primary/Diluted) ($USD)$0.17 $0.08*Beat
EBITDA ($USD)$3.80M $2.27M*Beat

Values retrieved from S&P Global.*

Drivers: revenue shortfall vs consensus amid product sales softness; EPS/EBITDA upside aided by high-margin licensing and the $2.15M gain on settlement of notes payable offsetting high interest expense .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RTD Beverage RevenueQ2 2025~$2M expected (Q1 call) ~$0.148M Amazon sell-through; broader ramp in Q3–Q4 Lowered (timing shifted post-refinancing)
License RevenueQ3 2025N/A“Don’t really expect anything in the third quarter” (lumpy) Clarified none near term
Walmart Canada (FOCUSfactor SKUs)Q4 2025N/ATwo SKUs to launch nationally New item placement
G&A/Professional FeesFY 2025“G&A… probably be pretty flat” (as % of sales; Q1) Higher professional/legal expenses due to public-company status (Q2) Raised near term
International Expansion RevenueH2 2025UAE license to begin in Q4; Mexico early Q3 UAE+Turkey licensing; Mexico shipments late Q3/early Q4; Australia/Taiwan early Q4 Expanded scope/timing updates
Capital Structure2025–2029Refinancing term sheets (Q1) $20M term loan closed; interest-only through 2025; maturities to 2029 Finalized, improves liquidity

No formal quantitative guidance provided for total revenue, margins, opex lines, OI&E, tax rate, or dividends in Q2 materials .

Earnings Call Themes & Trends

TopicQ4 2024 (Prev-2)Q1 2025 (Prev-1)Q2 2025 (Current)Trend
RTD BeveragesSuccessful tests; plan broader rollouts ~$30k Q1; ~$2M expected in Q2; adding leadership; Amazon POs nearly $1M ~$148k Amazon sell-through; Core-Mark national authorization; ramp in Q3–Q4 Accelerating later than planned
Licensing/InternationalRebranding and new retail footprints UAE license fee $1.5M; Mexico subsidiary formed Added Turkey; expect lumpy license revenue; pursue partners Expanding footprint
Retail DistributionBJ’s/Publix added in 2024 Growing convenience store network in Canada Walmart Canada national; McKesson Canada agreement; Core-Mark authorization Broadening channels
Tariffs/MacroNot highlightedMinimal expected impact due to local sourcing strategy Not emphasized in Q2Neutral
Capital StructureIPO completed Oct-24 Refinancing term sheets; reduce 2025 principal $20M term loan closed; maturities extended; interest-only 2025 Improved flexibility
OpEx/Public CostsCost control aided 2024 Expect G&A flat %; add limited headcount Higher professional/legal costs as public company Slightly higher baseline

Management Commentary

  • CEO (Q2 PR): “We are pleased to report another strong quarter, marking our tenth consecutive quarter of profitability.”
  • CEO (Q2 PR): “We successfully completed a $20 million debt refinancing… extends our maturity profile, enhances financial flexibility and supports our long-term growth strategy.”
  • CFO (Q2 call): “Operating expenses… were primarily due to incremental costs associated with being a public company.”
  • CEO (Q2 call): “Core-Mark… granted national item authorization… unlocking access to sell to over 50,000 retail locations… Walmart Canada will be launching two SKUs nationally in Q4.”
  • CEO (Q2 call): On licensing cadence: “We don’t really expect anything in the third quarter… it might get a little bumpy.”

Q&A Highlights

  • RTD revenue realization: ~$148k in Q2 from Amazon; broader retail contributions mostly to come in Q3–Q4 post-refinancing and distribution build-out .
  • Licensing economics: Near-100% gross margin implied; cadence likely “lumpy”; no Q3 license revenue expected .
  • Expenses: Higher professional/legal fees in Q2 tied to public-company status; selling/operations “in line” .
  • Mexico: Revenue (not licensing) via own footprint; shipping to Costco/Walmart Mexico late Q3/early Q4 .
  • Flat Tummy: “Staying pretty steady”; no new developments in Q2 .

Estimates Context

  • EPS: $0.17 actual vs $0.08 S&P Global consensus → Bold beat driven by mix and non-operating gain *.
  • Revenue: $8.13M actual vs $10.80M S&P Global consensus → Miss amid product sales softness; license revenue provided margin support *.
  • EBITDA: $3.80M actual vs $2.27M S&P Global consensus → Beat on high-margin licensing and notes settlement gain offsetting interest expense *.

Values retrieved from S&P Global.*

Where estimates may adjust: Street likely revises near-term revenue lower (RTD ramp later; Q3 licensing minimal) and raises margin/EBITDA assumptions due to licensing mix and capital structure relief (interest-only through 2025) .

Key Takeaways for Investors

  • Mix-driven margin expansion with licensing now a meaningful contributor ($1.4M in Q2) supports EBITDA and EPS resilience despite top-line variability .
  • The $20M refinancing (interest-only 2025; maturity to 2029) is a critical de-risking step that improves near-term FCF and supports H2 growth initiatives .
  • RTD ramp is real but back-half weighted; Core-Mark authorization, Canadian pharmacy distribution (McKesson), and Walmart Canada Q4 placements should be monitored as near-term catalysts .
  • Q2 EPS outperformance benefited from a $2.15M gain on settlement of notes payable; normalize non-operating items when modeling run-rate earnings quality .
  • Working capital inflected to a $12.4M surplus by 6/30 (from a $(1.12)M deficit at year-end), providing operational flexibility for H2 execution .
  • Expect estimate dispersion: license revenue lumpy (no Q3), RTD scaling in Q3–Q4; shift modeling toward margin/EBITDA resilience vs near-term revenue growth .
  • Post-earnings equity financing ($4.375M gross) adds incremental liquidity for growth; watch dilution vs growth ROI and deployment pace into RTD and international expansion .