Revolve Group reported operating income improved 9.5 percent in the second quarter June 30 on a 9.4 percent revenue gain, helping drive its highest adjusted EBITDA margin in three years. The fashion e-tailer aimed Millennial and GenZ raised its guidance for margins for the year.

Co-Founder and Co-CEO Commentary
“We delivered strong second quarter results, highlighted by 9 percent growth in net sales year-over-year, 10 percent growth in operating income year-over-year, our highest adjusted EBITDA margin in three years, and our highest operating cash flow for any second quarter in the past four years,” said co-founder and co-CEO Mike Karanikolas. “I am especially proud of the team for delivering the strong second quarter results within such a volatile environment and amidst all the macro uncertainty surrounding tariff policy announcements in early April.”

“Our ability to deliver profitable growth and market share gains in the second quarter, while at the same time continuing to invest in exciting long-term growth drivers, is a true reflection of the platform we have built, our operating excellence, and the team’s ability to execute,” said co-founder and co-CEO Michael Mente. “Importantly, our healthy cash flow generation gives us the capacity to continue to invest in exciting initiatives such as AI enhancements, developing new owned brands, physical retail exploration, and category expansion that collectively have the potential to accelerate our profitable growth and market share gains for years to come.”

Second Quarter 2025 Financial Summary

Additional Second Quarter 2025 Metrics and Results Commentary

  • Trailing 12-month active customers grew to 2,743,000 as of June 30, 2025, an increase of 6 percent year-over-year.
  • Net sales were $309.0 million, a year-over-year increase of 9 percent.
  • Gross profit was $167.1 million, a year-over-year increase of 9 percent.
  • Gross margin was 54.1 percent, an increase of 4 basis points year-over-year. The increase primarily reflects a higher mix of Owned Brand net sales that carry higher margins than third-party brands, partially offset by a lower mix of full price sales year-over-year.
  • Fulfillment costs were $9.8 million, or 3.2 percent of net sales, compared to $9.3 million, or 3.3 percent of net sales, in the second quarter of 2024. The increased fulfillment efficiency year-over-year as a percentage of net sales primarily reflects a lower proportion of returned purchases, partially offset by a decrease in average order value.
  • Selling and distribution costs were $53.8 million, or 17.4 percent of net sales, compared to $50.4 million, or 17.9 percent of net sales, in the second quarter of 2024. The increased efficiency year-over-year as a percentage of net sales primarily reflects a lower proportion of returned purchases and lower shipping rates year-over-year, partially offset by a decrease in average order value.
  • Marketing costs were $47.1 million, or 15.2 percent of net sales, compared to $43.0 million, or 15.2 percent of net sales, in the second quarter of 2024.
  • Income from operations was $18.0 million, a year-over-year increase of 10 percent.
  • Other expense (income) was $2.9 million recorded in other expense, a decrease of $7.2 million year-over-year compared to $4.3 million recorded in other income in the second quarter of 2024. The swing from other income to other expense year-over-year primarily reflects a $2.8 million year-over-year increase in losses from foreign currency exchange and a non-cash charge of $2.4 million in the second quarter of 2025 related to the disposal of a subsidiary, as compared to a bargain purchase gain of $1.9 million related to the acquisition of the same subsidiary in the second quarter of 2024.
  • The effective tax rate was 33.7 percent, an increase of approximately 8 points from 25.7 percent in the second quarter of 2024. The increased effective tax rate primarily reflects certain discrete tax items recorded in the second quarter of 2025 that the company had previously expected to be reflected in its tax provision for the third quarter of 2025.
  • Net income was $10.0 million, a decrease from $15.4 million in the second quarter of 2024, primarily due to the significant year-over-year decrease in other income and the increased effective tax rate as described above.
  • Adjusted EBITDA was $22.9 million, a year-over-year increase of 12 percent that primarily reflects a year-over-year increase in net sales and gross profit combined with increased year-over-year efficiency in its selling and distribution and fulfillment costs, partially offset by increased general and administrative expenses year-over-year.
  • Diluted earnings per share (EPS) was 14 cents per share, a decrease from 21 cents per share in the second quarter of 2024, primarily due to the significant year-over-year decrease in other income and the increased effective tax rate as described above.

Additional Net Sales Commentary

  • Revolve segment net sales were $268.4 million, a year-over-year increase of 9 percent.
  • FWRD segment net sales were $40.6 million, a year-over-year increase of 10 percent.
  • Domestic net sales were $241.6 million, a year-over-year increase of 7 percent.
  • International net sales were $67.3 million, a year-over-year increase of 17 percent.

Cash Flow and Balance Sheet

  • Net cash provided by operating activities was $12.6 million for the quarter and $57.8 million for the six months ended June 30, 2025, a year-over-year increase of $44.1 million, or 321 percent, compared to the six months ended June 30, 2024.
  • Free cash flow was $9.6 million for the quarter and $52.4 million for the six months ended June 30, 2025, a year-over-year increase of $42.4 million, or 424 percent, compared to the six months ended June 30, 2024.
  • Stock repurchases were $1.7 million for the second quarter ended June 30, 2025, exclusive of broker fees and
excise taxes. The company repurchased 92,583 shares of its Class A common stock during the second quarter at an
average cost of $18.78 per share. $55.9 million remained available under the company’s $100 million stock
repurchase program as of June 30, 2025.
  • Cash and cash equivalents: The strong cash flow generation has further strengthened our balance sheet and liquidity. Cash and cash equivalents as of June 30, 2025 were $310.7 million, an increase of $9.9 million, or 3 percent, from $300.8 million as of March 31, 2025, and an increase of $66.0 million, or 27 percent, from $244.7 million as of June 30, 2024. Our balance sheet as of June 30, 2025 remains debt free.
  • Inventory as of June 30, 2025 was $221.0 million, a decrease of $13.3 million, or 6 percent, year-over-year, from the inventory balance of $234.3 million as of June 30, 2024.

Results Since the End of the Second Quarter of 2025
Net sales in July 2025 increased approximately 7 percent year-over-year.

2025 Business Outlook
Revolve reported its outlook for gross margin is based on the current level of tariffs as of August 5, 2025 and its estimate of the impact of mitigating activities that it is currently undertaking or will undertake. However, actual gross margin will be particularly susceptible to variability based on the timing and level of tariffs that will ultimately be in effect during relevant periods, as well as the potential impact from mitigating activities that we are undertaking or may undertake.

 

Image and Charts courtesy Revolve