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Vital Farms, Inc. (VITL)·Q2 2025 Earnings Summary

Executive Summary

  • Strong quarter with broad-based beats and a guidance raise: revenue $184.8M (+25.4% y/y), EPS $0.36, gross margin 38.9%, and record Adjusted EBITDA $29.9M; management raised FY25 outlook to at least $770M revenue and at least $110M Adjusted EBITDA . Versus S&P Global consensus, VITL beat on revenue, EPS, and EBITDA for Q2 2025 (see Estimates Context)*.
  • Supply constraints eased; inventory rebuild underway heading into peak Q4 demand. Management plans heavier promotions in H2 and flagged tariffs on imported items as a key wildcard (mainly Q4), which are incorporated into guidance .
  • Accelerating capacity: ECS third line remains on track for Q4 2025; Seymour, IN build-out expanded to two lines in parallel plus onsite cold storage, lifting expected revenue capacity to >$900M by early 2027. FY25 capex raised to $90–$110M; free cash flow expected to turn negative in 2025 as they “put the balance sheet to work” .
  • Brand and demand momentum: aided brand awareness at 31% persists; new “The Bear” campaign supports engagement; farm network surpassed 500 (+~50 q/q) with 9M hens under contract, positioning for sustained growth .

What Went Well and What Went Wrong

What Went Well

  • Revenue growth and profitability: “Net revenue grew to $184.8M, up 25.4% y/y… Adjusted EBITDA of $29.9M represents a new quarterly record” .
  • Supply/demand balance improving: “Volume growth constraints we faced in the first quarter have begun to ease… we’ve been able to start rebuilding our inventory,” enabling accelerated back-half growth and a FY guide raise .
  • Capacity expansion ahead of demand: Seymour accelerated to two lines plus onsite cold storage (> $900M revenue capacity by early 2027) and ECS third line on track for Q4 2025, expanding capacity and efficiency .
  • Brand momentum: “record high aided brand awareness of 31%… we know how to turn this increased awareness into purchases,” complemented by a new national campaign around FX’s The Bear .

What Went Wrong

  • Slight margin dilution: Gross margin edged down y/y (38.9% vs 39.1%) due to crew investments and less efficient operations as ag supply normalized after an exceptional prior-year quarter .
  • Internal controls deficiency: Material weakness (design) in revenue recognition process (lack of automated reconciliation). No revenue inconsistencies found; remediation on track by year-end FY25 .
  • Near-term margin headwinds: H2 pressures from tariffs (timing/magnitude variable), higher promotions, and back-half-weighted marketing; FY25 FCF to turn negative given capex acceleration .

Financial Results

Sequential Trend (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Net Revenue ($M)$166.0 $162.2 $184.8
Gross Margin %36.1% 38.5% 38.9%
Net Income ($M)$10.6 $16.9 $16.6
Diluted EPS ($)$0.23 $0.37 $0.36
Adjusted EBITDA ($M)$19.1 $27.5 $29.9
Adjusted EBITDA Margin %11.5% 16.9% 16.2%

Q2 YoY Comparison

MetricQ2 2024Q2 2025
Net Revenue ($M)$147.4 $184.8
Gross Margin %39.1% 38.9%
Net Income ($M)$16.3 $16.6
Diluted EPS ($)$0.36 $0.36
Adjusted EBITDA ($M)$23.3 $29.9
Adjusted EBITDA Margin %15.8% 16.2%

Q2 2025 vs S&P Global Consensus

MetricActualConsensus*Result
Revenue ($M)$184.8 $170.8*Beat
Diluted EPS ($)$0.36 $0.27*Beat
Adjusted EBITDA ($M)$29.9 $22.9*Beat
EPS - # of Estimates—9*—
Revenue - # of Estimates—10*—

Values marked with * retrieved from S&P Global.

KPIs (Q2 context)

  • Family farms: “more than 500 family farms,” +~50 q/q; hens under contract: ~9.0M .
  • Inventory: just over one week of eggs on hand; target 2–3 weeks ahead of peak baking season; continued rebuild expected .
  • Cash, cash equivalents & marketable securities: $155.0M; no debt .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY2025≥ $740M ≥ $770M Raised
Adjusted EBITDAFY2025≥ $100M ≥ $110M Raised
Capital ExpendituresFY2025$50–$60M $90–$110M Raised/Accelerated
Digital Transformation Go-LiveFY20252H 2025 Early Fall 2025 Pulled forward/clarified
Margin ColorH2 2025n/aPressure from tariffs, promotions, higher marketing (incorporated into guide) —

Additional color: Management expects 2025 FCF to turn negative due to capex acceleration; funded with cash and operating cash flow .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 → Q1’25)Current Period (Q2’25)Trend
Supply chain & capacityAnticipated supply constraints early 2025; ECS additional line slated for Q4 2025 ECS third line on track for Q4 2025; Seymour expanded to dual lines + onsite cold storage; >$900M capacity by early 2027 Accelerating capacity
Pricing, promotions & elasticityPrice/mix tailwinds; awareness rising Mid-May price increase well-received; H2 promotions step-up planned; elasticity favorable Supportive pricing; promo increasing
Tariffs/macroMacro uncertainty; trade/tariffs risk noted Tariffs remain wildcard; likely Q4 impact; factored into guide Watch Q4 impact
Brand & awarenessAwareness rising; butter +41% y/y in Q1 Aided awareness 31% sustained; “The Bear” campaign launched Strengthening
Farm network>425 farms at 2024 YE >500 farms (+~50 q/q); 9M hens under contract Expanding
Inventoryn/aRebuilding from ~1 week toward 2–3 weeks pre-holiday Improving buffer
Internal controlsn/aRevenue recognition design deficiency; no misstatements; remediation by YE25 Remediation on track
Digital transformationGo-live in 2H 2025 Early Fall 2025 On schedule

Management Commentary

  • “Our second quarter performance exceeded our initial top and bottom line expectations… Adjusted EBITDA of $29.9 million represents a new quarterly record for us.” — Russell Diez‑Canseco, CEO .
  • “At Egg Central Station… our third production line remains on track to be operational in the fourth quarter… With [Seymour] updated approach, we expect to have more than $900,000,000 of revenue capacity… by early 2027.” — CEO .
  • “We now expect net revenue of at least $770 million… [and] adjusted EBITDA… at least $110 million for the full year 2025… [H2] margin pressure from tariffs, promotions and higher marketing… factored into our guidance.” — Thilo Wrede, CFO .
  • “We will… construct both production lines at our Seymour, Indiana facility simultaneously… We expect free cash flow to turn negative this year after two very strong positive years.” — CFO .
  • “We continue to see the record high aided brand awareness of 31% that we hit in the first quarter… and we believe we know how to turn this increased awareness into purchases over time.” — CEO .

Q&A Highlights

  • Volume cadence and pricing: Volume accelerated through Q2 and is expected to increase sequentially in Q3 and Q4; price increase outperformed expectations, enabling the guide raise while promotions proceed as planned in H2 .
  • Promotions vs tariffs: Promotions remain back-half weighted; if tariffs land more favorably, VITL may lean further into promotions while monitoring gross margin protection .
  • Seymour acceleration rationale and funding: Pulling forward the second line helps “catch up” to demand; management expects to self-fund via cash and operating cash flow without needing loans .
  • Cold storage co-location: Onsite cold storage in Seymour removes inter-facility trucking, improving throughput and economics; Springfield will also benefit from a nearer facility .
  • Inventory rebuild: Egg inventory at ~1+ week; target 2–3 weeks for smoother ECS operations and Q4 seasonality; working capital to remain a 2025 drag .
  • Commodity egg dynamics: Lower commodity egg prices have limited impact on VITL’s demand given differentiated proposition and consumer base .

Estimates Context

  • Q2 2025 actuals vs S&P Global consensus: Revenue $184.8M vs $170.8M*, EPS $0.36 vs $0.27*, Adjusted EBITDA $29.9M vs $22.9M* — broad-based beat (see table above) .
  • Forward consensus snapshot (as of latest S&P Global data):
    • Q4 2025: Revenue $231.1M*, EPS $0.40* (9 estimates for EPS; 9 for revenue)*.
    • Q1 2026: Revenue $216.9M*, EPS $0.43* (6 EPS; 7 revenue estimates)*.
      Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Demand remains resilient with favorable elasticity; Q2 delivered a clean top- and bottom-line beat and a guidance raise, supporting momentum into H2 despite planned promotions .
  • Supply-side unlock is the near-term catalyst: inventory rebuild + ECS line 3 in Q4 should support holiday volumes; watch gross margin under promo/tariff mix .
  • Strategic capex acceleration (Seymour dual-line + onsite cold storage) expands long-term capacity and lowers per‑unit logistics; near-term FCF turns negative but balance sheet is strong .
  • Brand equity is compounding (31% aided awareness; cultural campaigns), sustaining premium pricing and mix while expanding the customer funnel .
  • Farm network scale (>500 farms; 9M hens) underpins growth runway and reduces risk of supply bottlenecks as velocities and distribution deepen .
  • Risk monitor: Q4 tariff magnitude/timing and back-half promo intensity; track margin trajectory and any updates on internal control remediation (target YE25) .
  • Longer-term, the >$900M capacity at Seymour by early 2027 plus ECS expansion aligns with the $1B revenue target, reinforcing a credible multi-year growth path .