Revolve Group reported adjusted EBITDA grew 45 percent in the third quarter ended September 30, boosted by a mid-single digit sales gain and an uptick in gross margins due to reduced promotional rates and more full-price selling.

“We had a very solid third quarter, highlighted by exceptional gross margin performance that drove an 11 percent increase in gross profit year-over-year and a 45 percent increase in Adjusted EBITDA to $25 million, our highest ever for a third quarter,” said Co-founder and Co-CEO Mike Karanikolas. “Particularly in the current tariff environment, I am extremely pleased by our nearly 350 basis point increase in gross margin year-over-year that further validates the competitive advantage of our data-driven merchandising and puts us on track to expand our gross margin and Adjusted EBITDA margin in the full year 2025 for the second straight year.”

“At a time when the dynamic operating environment has forced key competitors to dial back investment, our healthy cash flow and rock-solid balance sheet, highlighted by a cash balance of $315 million, enables us to continue to invest in exciting long-term initiatives such as international expansion, development of new owned brands, further leveraging AI technology, and the physical retail opportunity that we believe positions us to accelerate our market share capture and achieve profitable growth for years to come,” said co-founder and co-CEO Michael Mente.

Additional Third Quarter 2025 Metrics and Results Commentary

  • Trailing 12-month active customers grew to 2,747,000 as of September 30, 2025, an increase of 5 percent year-over-year.
  • Net sales were $295.6 million, a year-over-year increase of 4 percent.
  • Gross profit was $161.5 million, a year-over-year increase of 11 percent.
  • Gross margin was 54.6 percent, an increase of 347 basis points year-over-year. The increase primarily reflects shallower markdowns within the markdown sales, a higher mix of full price sales year-over-year and increased margins on these sales, and a higher mix of Owned Brand net sales that carry higher margins than third-party brands.
  • Fulfillment costs were $9.8 million, or 3.3 percent of net sales, compared to $9.3 million, or 3.3 percent of net sales, in the third quarter of 2024.
  • Selling and distribution costs were $51.7 million, or 17.5 percent of net sales, compared to $47.9 million, or 16.9 percent of net sales, in the third quarter of 2024. The reduced efficiency year-over-year as a percentage of net sales primarily reflects a higher proportion of returned purchases and higher shipping rates year-over-year, partially offset by an increase in average order value.
  • Marketing costs were $40.4 million, or 13.7 percent of net sales, compared to $39.5 million, or 14.0 percent of net sales, in the third quarter of 2024. The increased efficiency year-over-year as a percentage of net sales reflects increased efficiencies in our marketing investments across both performance marketing and brand marketing.
  • General and administrative costs were $38.6 million, or 13.0 percent of net sales, compared to $33.9 million, or 12.0 percent of net sales, in the third quarter of 2024. The decreased efficiency year-over-year as a percentage of net sales primarily reflects our increased investment in strategic growth initiatives and a $1.0 million increase in non-routine costs year-over-year.
  • Net income was $21.2 million, a year-over-year increase of 97 percent, and included an insurance recovery of $4.5 million ($3.4 million, net of taxes) within other income, net.
  • Adjusted EBITDA was $25.3 million, a year-over-year increase of 45 percent, that primarily reflects a year-over-year increase in net sales and gross profit combined with increased year-over-year efficiency in our marketing investments, partially offset by increased general and administrative expenses and reduced efficiency in selling and distribution costs year-over-year.
  • Diluted earnings per share (EPS) was $0.29, a year-over-year increase of 93 percent from $0.15 in the third quarter of 2024. EPS for the third quarter of 2025 included the insurance recovery mentioned above equivalent to approximately $0.05 per diluted share.

Additional Net Sales Commentary

  • Revolve segment net sales were $254.6 million, a year-over-year increase of 5 percent.
  • Fwrd segment net sales were $41.0 million, a year-over-year increase of 3 percent.
  • Domestic net sales were $231.4 million, a year-over-year increase of 4 percent.
  • International net sales were $64.2 million, a year-over-year increase of 6 percent.

Cash Flow and Balance Sheet
Net cash provided by operating activities was $11.8 million for the quarter and $69.6 million for the nine months ended September 30, 2025, a year-over-year increase of 31 percent and 206 percent, respectively, compared to the three and nine months ended September 30, 2024.

Free cash flow was $6.6 million for the quarter, a year-over-year increase of 7 percent, primarily due to increased net income year-over-year, partially offset by increased capital expenditures related to the build out of our retail store in Los Angeles. For the nine months ended September 30, 2025, free cash flow was $59.0 million, an increase of 265 percent year-over-year that primarily reflects increased net income and favorable movements in working capital, partially offset by increased capital expenditures year-over-year.

Stock repurchases were $0.3 million for the third quarter ended September 30, 2025, exclusive of broker fees and excise taxes. We repurchased 14,612 shares of our Class A common stock during the third quarter at an average cost of $19.36 per share. $55.6 million remained available under our $100 million stock repurchase program as of September 30, 2025.

Cash and cash equivalents: The cash flow generation has further strengthened our balance sheet and liquidity. Cash and cash equivalents as of September 30, 2025 were $315.4 million, an increase of $4.7 million, or 2 percent, from $310.7 million as of June 30, 2025, and an increase of $62.6 million, or 25 percent, from $252.8 million as of September 30, 2024. Our balance sheet as of September 30, 2025 remains debt free.

Inventory as of September 30, 2025 was $238.8 million, a decrease of $1.2 million, or 1 percent, year-over-year, from the inventory balance of $240.0 million as of September 30, 2024.

Results Since the End of the Third Quarter of 2025
Net sales in October 2025 increased by a mid-single digit percentage year-over-year.

2025 Business Outlook

Image courtesy Revolve Group