Where Food Comes From, Inc. (WFCF)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 results modestly weaker amid ongoing beef-cycle headwinds: revenue $5.27M, diluted EPS $0.01; gross margin held at 41.6% as SG&A stayed flat, preserving profitability despite volume pressure .
• Demand softness centered in Verification & Certification (–$252K YoY within segment), driven by smaller cattle herds, record beef prices, and near-cessation of China beef exports; avian influenza also disrupted poultry/dairy verifications .
• Offsets: Upcycled Certified® remained the fastest-growing standard (111 companies, 628 products) and WFCF added two prominent retailers to its CARE Certified labeling program (initial ~20 stores, targeting +111 more locations in 2025), building a licensing tailwind and brand visibility .
• Capital returns continued: 31,345 shares repurchased for $383K; cash from operations was $0.6M in Q1, with cash & equivalents of $2.24M at quarter-end .
• No formal financial guidance; Street consensus from S&P Global not available for Q1 (limited coverage), so no beat/miss framing versus estimates; near-term stock narrative hinges on resilience of non-beef programs (Upcycled, Organic/SOW) and execution on new retail labeling wins while beef macro normalizes .

What Went Well and What Went Wrong

What Went Well

• Margin and cost discipline: Gross margin stable at 41.6% and SG&A flat YoY at ~$2.1M, helping maintain profitability despite volume declines; “disciplined approach to cost management” cited by management .
• Diversification traction: Upcycled Certified® is fastest-growing; conducting certifications for 111 companies and 628 products, with bundling to Organic/Non-GMO standards supporting cross-sell .
• Retail labeling expansion: Two major retailers added to CARE Certified labeling program; ~20-store initial launch with expectation to add 111 locations in 2025, creating incremental licensing revenue and consumer visibility .

What Went Wrong

• Beef-cycle headwinds: Verification & Certification revenue was $252K lower YoY in Q1; fewer cattle due to herd reduction and drought, reducing initial taggings and “right-to-ship” fee opportunities .
• Macro/trade friction: Record-high beef prices and tariffs that “virtually ceased” beef exports to China pressured verification activity and engagement incentives for ranchers .
• Disease disruption: Avian influenza outbreaks created high mortality among poultry customers, impacting poultry/dairy verification activity (partially offset by biosecurity services demand) .

Financial Results

Core P&L metrics (chronological: oldest → newest)

Notes: Management attributed >50% of the YoY net income decline to a non-cash $76K charge on digital assets in Q1; they reiterated strong retention and margin stability despite volume headwinds .

Segment revenue mix ($M)

KPIs and balance-sheet snapshots

Guidance Changes

The company did not provide formal quantitative guidance for revenue, EPS, margins, or other metrics in the Q1 2025 press release or call; commentary remained qualitative regarding macro headwinds and growth vectors (Upcycled, retail labeling) .

Earnings Call Themes & Trends

Management Commentary

• “Our beef verification business… continued to feel the effects of smaller herd sizes and record high beef prices. In addition, beef exports to China have virtually ceased due to tariffs… We have also experienced disruptions in our poultry and dairy cow verification business due to high path avian influenza.”
• “Despite all the factors… revenue declined by less than 6% and gross margins remained fairly stable at 41.6%. We attribute this to our disciplined approach to cost management… SG&A… was flat year over year at $2.1 million.”
• Upcycled Certified® “continues to be our fastest growing service offering… Today we are conducting certifications for 111 companies and 628 products… Upcycled Certified customers often contract for Organic and Non-GMO Project certifications.”
• Retail labeling: “Two prominent retailers… will display our CARE Certified labeling… initial launch… approximately 20 stores with the expectation of adding another 111 locations during the current year.”
• Bitcoin/digital assets disclosure nuance: mgmt cited a $76K non-cash digital-asset charge; also noted prior quarter’s $345K bitcoin FMV gain and a newswire policy issue limiting crypto mentions in press releases .

Note: There is an inconsistency across transcript versions regarding Upcycled 2024 growth (one version references 17% vs. another 70%). The 8-K Exhibit 99.2 narrative cites 17% YOY growth; we treat the 8-K exhibit as authoritative .

Q&A Highlights

• No analyst Q&A; the operator announced no questions and the call concluded after prepared remarks .

Estimates Context

• S&P Global consensus for Q1 2025 EPS and revenue was not available; coverage appears limited. Accordingly, no beat/miss versus estimates can be assessed this quarter.*
• Actuals: Revenue $5.273M; Diluted EPS $0.01 (see Financial Results tables for details) .

*Consensus estimates sourced from S&P Global; unavailable for this period.

Key Takeaways for Investors

• Beef-cycle pressure persisted, but the business defended margins and profitability via cost control—suggesting earnings resilience through the downcycle .
• Non-beef engines (Upcycled Certified®, Organic/SOW, labeling) are scaling and should cushion near-term volatility while positioning the mix for medium-term growth .
• New retail labeling wins provide a visible, high-quality pipeline (20 stores initially; +111 targeted in 2025) that can compound licensing revenue and brand equity with premium consumers .
• Capital allocation remains shareholder-friendly (31,345 shares repurchased in Q1); buybacks may continue to reduce float while cash generation funds investment in growth programs .
• Watch for normalization catalysts: herd rebuilding, easing tariff frictions with China, and RFID adoption tailwinds that could reaccelerate beef verification volumes over time .
• Bitcoin-related fair value swings may add non-operating P&L volatility; underlying operating health is better gauged via revenue mix, gross profit, and SG&A trajectory .
• With no Street consensus and no formal guidance, the stock may trade on narrative/updates around retailer rollouts, Upcycled adoption, and any signs of beef-cycle inflection .

Appendix: Additional Q1 2025 Press Releases and Prior Quarters

• Q1 2025 earnings schedule PR (May 5, 2025) provided call logistics .
• Q4 2024 PR: revenue $6.7M, diluted EPS $0.18; full-year 2024 revenue $25.7M and diluted EPS $0.40; highlighted $345K FMV bitcoin gain and ongoing buybacks .
• Q3 2024 8-K: revenue $7.1M, diluted EPS $0.09; commentary on USDA RFID rule as potential long-term tailwind and SOE rule driving organic/traceability demand .

Sources: Q1 2025 press release and financial tables ; Q1 2025 8-K and call transcript (Exhibits 99.1, 99.2) ; Q1 2025 call transcripts ; Q4 2024 PR and financials ; Q3 2024 8-K, call and financials ; Q1 2025 earnings schedule PR .