Arhaus(US:ARHS)2025-08-07 10:36Arhaus Q2 2025 Earnings Release Second Quarter 2025 Highlights Arhaus achieved record net revenue of $358 million in Q2 2025, a 15.7% year-over-year increase, driven by strong brand performance and efficient conversion of demand Q2 2025 Key Financial Metrics vs. Q2 2024 | Metric | Q2 2025 | Change vs. Q2 2024 | | :--- | :--- | :--- | | Net Revenue | $358 million | +15.7% | | Gross Margin | $148 million | +19.1% | | Net and Comprehensive Income | $35 million | +57.7% | | Adjusted EBITDA | $60 million | +51.2% | | Comparable Growth | 10.5% | N/A | - Successfully brought the Dallas Distribution Center operations in-house, which ramped up ahead of schedule, enabling more efficient conversion of strong Q1 demand into net revenue5 - Demand comparable growth was (3.6)% in Q2 due to macro headwinds, but rebounded sharply to 15.7% in July58 - Launched the new Arhaus Bath Collection, expanding the company's product offerings into a new home category5 Showroom and Balance Sheet Highlights The company operated 103 showrooms and maintained a strong financial position with $235 million in cash, no long-term debt, and increased inventory - Operated 103 Showrooms across 30 states at the end of Q2 20259 - Completed 3 Total Showroom Projects in Q2 and expects to complete 12 to 15 total projects in 2025, including 4 to 6 new openings9 Balance Sheet and Liquidity Highlights (as of June 30, 2025) | Metric | Value | Change from Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $235 million | +18.9% | | Long-term debt | None | N/A | | Net merchandise inventory | $311 million | +4.7% | | Client deposits | $233 million | +5.5% | | Net cash from operating activities (YTD) | $81 million | N/A | Company Outlook Arhaus reaffirmed its full-year 2025 guidance, reduced its capital expenditure forecast by $10 million, and introduced specific guidance for Q3 2025 Q3 and Full-Year 2025 Guidance | Metric | Q3 2025 Guidance | Full-Year 2025 Guidance | | :--- | :--- | :--- | | Net Revenue | $320M - $350M | $1.29B - $1.38B | | Net Revenue Growth | 0.3% to 9.7% | 1.5% to 8.6% | | Comparable Growth | (4)% to 5% | (5)% to 1.5% | | Net Income | $7M - $17M | $48M - $68M | | Adjusted EBITDA | $23M - $33M | $123M - $145M | | Company-funded Capital Expenditures | N/A | $80M - $100M (reduced by $10M) | Financial Statements Condensed Consolidated Balance Sheets Total assets grew to $1.32 billion as of June 30, 2025, driven by increases in cash, inventory, and right-of-use assets Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $234,797 | $197,511 | | Merchandise inventory, net | $311,117 | $297,010 | | Total current assets | $577,569 | $531,043 | | Total assets | $1,318,376 | $1,206,316 | | Liabilities & Equity | | | | Client deposits | $233,070 | $220,873 | | Total current liabilities | $434,723 | $402,451 | | Total liabilities | $932,763 | $862,571 | | Total stockholders' equity | $385,613 | $343,745 | Condensed Consolidated Statements of Comprehensive Income For Q2 2025, net revenue increased 15.7% to $358.4 million and net income rose 57.7% to $35.1 million compared to the prior-year period Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $358,435 | $309,801 | $669,807 | $604,963 | | Gross Margin | $148,227 | $124,372 | $263,814 | $239,426 | | Income from Operations | $46,765 | $29,381 | $52,186 | $47,742 | | Net and Comprehensive Income | $35,066 | $22,234 | $39,948 | $37,333 | | Diluted EPS | $0.25 | $0.16 | $0.28 | $0.27 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operations was $81.4 million, resulting in a net cash increase of $37.5 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $81,428 | $84,304 | | Net cash used in investing activities | ($41,622) | ($62,158) | | Net cash used in financing activities | ($2,316) | ($71,052) | | Net increase (decrease) in cash | $37,490 | ($48,906) | Reconciliation of Non-GAAP Measures For Q2 2025, Net Income of $35.1 million was reconciled to an Adjusted EBITDA of $60.3 million, yielding an Adjusted EBITDA margin of 16.8% Reconciliation to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net and comprehensive income | $35,066 | $22,234 | | Interest income, net | ($744) | ($606) | | Income tax expense | $12,593 | $7,828 | | Depreciation and amortization | $11,597 | $9,106 | | EBITDA | $58,512 | $38,562 | | Equity based compensation | $1,795 | $1,327 | | Adjusted EBITDA | $60,307 | $39,889 | | Adjusted EBITDA as a % of net revenue | 16.8% | 12.9% |