Vital Farms reported first quarter results that met Wall Street’s revenue expectations but were met with a negative market reaction, reflecting investor concerns about underlying trends. Management attributed the performance to ongoing supply constraints in its egg business and a year-over-year decline in operating margin. CEO Russell Diez-Canseco emphasized that volume growth was below trend due to limited egg supply and depleted inventory, stating, “Volume-related growth was below trend due to egg supply constraints and depleted inventory levels.” Despite these challenges, management highlighted robust butter segment growth and continued brand momentum.
Is now the time to buy VITL? Find out in our full research report (it’s free).
Vital Farms (VITL) Q1 CY2025 Highlights:
- Revenue: $162.2 million vs analyst estimates of $162.6 million (9.6% year-on-year growth, in line)
- Adjusted EPS: $0.37 vs analyst estimates of $0.26 (43% beat)
- Adjusted EBITDA: $27.48 million vs analyst estimates of $21.33 million (16.9% margin, 28.8% beat)
- The company reconfirmed its revenue guidance for the full year of $740 million at the midpoint
- EBITDA guidance for the full year is $100 million at the midpoint, below analyst estimates of $100.9 million
- Operating Margin: 13.4%, down from 16.3% in the same quarter last year
- Market Capitalization: $1.66 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 Vital Farms’s Q1 Earnings Call
- Robert Moskow (TD Cowen) asked about the size and timing of price increases, to which CEO Russell Diez-Canseco explained they are primarily aimed at maintaining gross margins and that retailer pricing is outside the company’s direct control.
- Jon Andersen (William Blair) inquired about the volume growth trajectory for the year. Diez-Canseco highlighted that branded business volume was stronger than headline numbers suggest, due to improved processing efficiency and reduced waste.
- Matt Smith (Stifel) questioned whether the price increase had been anticipated in initial guidance and about tariff impacts on costs. CFO Thilo Wrede clarified that the price increase was not included in the original outlook and detailed limited but manageable tariff exposure.
- Ben Klieve (Lake Street Capital Markets) asked for clarification on reported distribution gains. Wrede explained the apparent increase from 24,000 to 26,000 stores was due to a change in data provider, not underlying expansion.
- Eric Des Lauriers (Craig Hallum Capital Group) sought insights into consumer behavior amid macro uncertainty. Diez-Canseco reported no significant change in consumer purchasing patterns and highlighted increased brand awareness as a positive for future demand.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace at which newly added family farms ramp up egg production and relieve supply constraints, (2) the effectiveness of price increases in offsetting tariff-related cost pressures without impacting demand, and (3) the timely execution of capacity expansion projects in Indiana and Missouri. Progress on digital transformation and brand penetration trends will also be important markers for long-term growth.
Vital Farms currently trades at $36.59, up from $36 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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