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XPEL, Inc. (XPEL)·Q2 2025 Earnings Summary

Executive Summary

  • XPEL delivered record Q2 2025 revenue of $124.7M (+13.5% YoY) and gross margin of 42.9%; EPS was $0.59 and EBITDA was $23.4M, with normalized EBITDA at $25.0M after ~$1.6M one-time SG&A costs .
  • The company beat Wall Street consensus on revenue ($118.4M*), EPS ($0.47*), and EBITDA ($19.6M*) for Q2; strength was broad-based with U.S. +8.4% YoY, China +75.1% YoY, and Asia Pacific +54.1% YoY .
  • Management guided Q3 2025 revenue to $117–$119M and indicated gross margin stability with potential for upward trend over time; tariff impacts are expected to be minimal given supply chain optionality .
  • Strategic catalysts: accelerating dealership services, emerging personalization platform, and upcoming launch of colored paint protection films; management highlighted active M&A pipeline supported by ~$50M net cash .

Values retrieved from S&P Global for estimates marked with *.

What Went Well and What Went Wrong

What Went Well

  • Record revenue with broad regional strength; U.S. $70.4M (+8.4% YoY) and strong performance in Europe, India, and Middle East. “We had a record quarter in Q2…performing quite well in this environment” — Ryan Pape .
  • Margin execution and cash generation: gross margin 42.9% (+6 bps sequentially), operating cash flow ~$27.9M; management expects opportunity to trend gross margin upward over time .
  • Strategic initiatives gaining traction: “Really good momentum with our personalization platform… grown substantially even in the past two months,” and COLOR PPF launch slated end of Q3/start of Q4 .

What Went Wrong

  • SG&A elevated: +19.3% YoY to $34.2M driven by prior acquisitions and ~$1.6M one-time costs (restructuring, legal/due diligence, other) .
  • Gross margin down YoY (42.9% vs 43.5%) on revenue mix with higher distributor sales in China; Latin America revenue declined 10.1% YoY on distributor timing, with plan to pursue direct model in Brazil .
  • Normalization needed to show true earnings power: normalized EBITDA would have been $25.0M (20.0% margin) and normalized net income $17.5M ($0.63 EPS), highlighting non-recurring SG&A drag in quarter .

Financial Results

Headline Financials vs Prior Year, Prior Quarter, and Consensus

MetricQ2 2024Q1 2025Q2 2025Q2 2025 Consensus
Revenue ($USD Millions)$109.9 $103.8 $124.7 $118.4*
Gross Margin %43.5% 42.3% 42.9% —
EBITDA ($USD Millions)$21.8 $14.4 $23.4 $19.6*
Net Income ($USD Millions)$15.0 $8.6 $16.2 —
Diluted EPS ($)$0.54 $0.31 $0.59 $0.47*

Values retrieved from S&P Global for estimates marked with *.

Product/Service Mix

MetricQ2 2024 ($USD Millions)Q2 2025 ($USD Millions)
Product Revenue$83.2 $94.8
Service Revenue$26.7 $29.9
Total Revenue$109.9 $124.7

Geography Breakdown (Q2 2025 vs Q2 2024)

RegionQ2 2024 ($M)Q2 2025 ($M)YoY %Q2 2024 MixQ2 2025 Mix
United States$64.9 $70.4 8.4% 59.0% 56.4%
Canada$13.3 $14.3 7.4% 12.1% 11.5%
North America$78.2 $84.6 8.3% 71.1% 67.9%
China$4.4 $7.7 75.1% 4.0% 6.2%
Asia Other$4.1 $5.4 31.7% 3.8% 4.3%
Asia Pacific$8.5 $13.1 54.1% 7.8% 10.5%
EU, UK, and Africa$15.3 $17.4 13.8% 13.9% 13.9%
India & Middle East$4.8 $6.7 40.5% 4.4% 5.4%
Latin America$3.2 $2.8 (10.1%) 2.8% 2.3%
Total$109.9 $124.7 13.5% 100.0% 100.0%

KPIs and Margins

KPIQ2 2024Q2 2025
EBITDA Margin %19.9% 18.7%
Net Income Margin %13.7% 13.0%
Operating Cash Flow ($M)$26.9 $27.9
Window Film Revenue Growth32.9% (Q4 2024 context) 27.0%
Installation Revenue Growth16.1% (Q4 2024 context) 17.9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 2025$117–$119M (as of Q1 call) N/A (actual reported)N/A
RevenueQ3 2025N/A$117–$119M New
Effective Tax Rate (planning)Future QuartersN/A~21% assumed by CFO New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/MacroFX headwind in Q4; tariff uncertainty; supply chain optionality across 3 countries Tariff impact expected minimal; some short-term noise; SAAR uncertainty noted Stabilizing view with mitigations
China StrategyMove to direct; normalize sell-in/sell-through; baseline $8–$9M/quarter China $7.7M; low double-digit in-country growth; pursuing OEM/PDI/4S channels Improving cadence; new channels targeted
Dealership ServicesInventory returning to equilibrium; focus on pre-install options; record dealer conference Bright spot; July record vehicles/revenue; expansion to other markets Strengthening
Product InnovationWindshield protection film ramp; architectural surface films; COLOR PPF planned COLOR PPF launch end Q3/beg Q4; window tint +22.5% Accelerating
SG&A DisciplineWorkforce reduction; vendor optimization; acquisition-related SG&A load SG&A +19.3% YoY with $1.6M one-time costs; moderation expected as acquired SG&A laps Transitional but improving
Personalization PlatformReferral/OEM partnerships building; DAP enhancements “Really good momentum… grown substantially” and consumer satisfaction Positive momentum
M&AFive 2024 acquisitions; pipeline in services and distribution Advanced pipeline; seeing distressed opportunities; ~$50M net cash Increasing activity

Management Commentary

  • “We had a record quarter in Q2… really think we're performing quite well in this environment relative to our competitors” — Ryan Pape .
  • “Gross margin… 42.9%, which is up six basis points sequentially… we still expect the opportunity to trend this gross margin upward going forward” — Ryan Pape .
  • “We did have about $1,600,000 in one time cost in SG&A for the quarter… legal and due diligence for M&A… If we normalize for those, EBITDA would have grown 14.7% to $25,000,000” — Ryan Pape .
  • “Our total window film product line grew 27% in the quarter… automotive window tint grew 22.5%” — Barry Wood .
  • “Q3 revenue should be in the $117,000,000 to $119,000,000 range” — Ryan Pape .

Q&A Highlights

  • Dealer services strength: stability in U.S. inventory and record July metrics; plans to expand to other countries; layering personalization/referral platform to increase upsell .
  • Personalization platform: online sales/referrals through OEMs/dealers to raise attach rates; strong consumer feedback; continued investment and partner development .
  • OpEx/Mix: SG&A up on acquisitions and one-timers; mix effects tied to China distributor revenue; expectations of moderation in SG&A growth as the year progresses .
  • M&A: prioritizing international distribution consolidation and dealership services; mix of larger and bolt-on deals; intent not to allow cash to accumulate unused .
  • China runway: low double-digit in-country growth from current base; substantial upside in OEM/PDI/4S channels over several years .

Estimates Context

  • Q2 actuals vs consensus: Revenue $124.7M vs $118.4M* (beat); EPS $0.59 vs $0.47* (beat); EBITDA $23.4M vs $19.6M* (beat) .
  • Forward: Q3 revenue guidance $117–$119M sits around consensus ($119.3M*) and suggests seasonally strong but difficult comp vs Q3 2024 record; management frames tariff and SAAR as manageable uncertainties .
  • Implications: Given normalized EBITDA margin (~20%) and strong cash generation, estimates may drift higher on margin resilience and dealer services traction; SG&A normalization supports FY profitability trajectory .

Values retrieved from S&P Global for estimates marked with *.

Key Takeaways for Investors

  • Q2 was a high-quality beat with record revenue, resilient margins, and strong operating cash flow; normalized EBITDA indicates underlying earnings power above reported levels .
  • Dealer services and the personalization platform are emerging growth engines that can sustain attach rates irrespective of SAAR volatility; July dealer metrics hit records .
  • China volatility has eased; strategy turning to OEM/PDI/4S channels with low double-digit in-country growth potential from a normalized ~$8–$9M quarterly baseline .
  • SG&A should moderate as acquisition-related expenses lap and one-timers disappear; margin trajectory has potential to trend upward over the medium term .
  • Near-term guide (Q3: $117–$119M) aligns with seasonality and tough comp; watch for execution in U.S./Europe and continued strength in Asia Pacific .
  • Capital allocation optionality is high with ~$50M net cash and no revolver balance; management is disciplined on M&A and sees increasingly attractive opportunities .
  • Trading setup: Stock should respond to sustained estimate beats and improving margin visibility; key watch items are SG&A normalization pace, dealer services expansion, and tangible progress on China OEM channel .