Freshpet entered the first quarter with positive momentum, delivering revenue growth above Wall Street expectations and a notable increase in sales volumes. Management attributed these results primarily to continued household penetration across all income and age groups, as well as the success of targeted advertising and new product offerings. CEO Billy Cyr noted that Freshpet “continued to significantly outperform the category amongst every age and income group,” emphasizing that the company’s data-driven approach helped identify and respond to changing consumer behavior. Despite facing a rapidly shifting macroeconomic climate, Freshpet maintained strong execution in its core operations, with production efficiency improvements and expanded retail distribution underpinning the quarter’s performance.
Is now the time to buy FRPT? Find out in our full research report (it’s free).
Freshpet (FRPT) Q1 CY2025 Highlights:
- Revenue: $263.2 million vs analyst estimates of $259.6 million (17.6% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.09 vs analyst estimates of $0.09 (in line)
- Adjusted EBITDA: $35.53 million vs analyst estimates of $34.28 million (13.5% margin, 3.7% beat)
- The company dropped its revenue guidance for the full year to $1.14 billion at the midpoint from $1.2 billion, a 5% decrease
- EBITDA guidance for the full year is $200 million at the midpoint, below analyst estimates of $205.1 million
- Operating Margin: -4.4%, down from 3.8% in the same quarter last year
- Organic Revenue was up 17.6% year on year
- Sales Volumes rose 14.9% year on year (30.6% in the same quarter last year)
- Market Capitalization: $3.31 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Freshpet’s Q1 Earnings Call
- Ken Goldman (JPMorgan) asked if guidance sufficiently accounts for macro risks. CEO Billy Cyr responded that guidance assumes current conditions continue, but the company has contingency plans if the environment worsens.
- Peter Benedict (Baird) inquired about the most impactful changes among value products, marketing, and channel strategies. President Scott Morris said Freshpet is accelerating all three areas, especially affordability and targeted marketing.
- Robert Moskow (TD Cowen) questioned Freshpet’s flexibility to adjust capital spending if growth slows further. CFO Todd Cunfer explained that capital expenditures can be deferred and production lines can be managed to preserve margins and cash flow.
- Michael Lavery (Piper Sandler) asked how Freshpet plans to increase buy rates among less-engaged households. Morris said the focus remains on building the MVP (most valuable purchaser) base rather than pursuing episodic users with discounts.
- Steve Powers (Deutsche Bank) probed the outlook for direct-to-consumer expansion. Morris described the channel as small but fast-growing, with high retention and potential to drive higher buy rates.
Catalysts in Upcoming Quarters
In the coming quarters, our team will monitor (1) the effectiveness of new value-oriented product launches and expanded distribution in driving household penetration, (2) the impact of targeted advertising and creative adjustments on customer acquisition costs and buy rates, and (3) Freshpet’s ability to manage capital spending and production flexibility to protect margins in a slower growth environment. Progress in e-commerce and club channels will also be key indicators of sustained momentum.
Freshpet currently trades at $69.79, down from $76.37 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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