Freshpet swings to profit in Q2 but lowers 2025 sales outlook

Freshpet reversed its previous year’s losses by ramping up advertising and distribution, cutting capital expenditures and improving operations.

The New Jersey-based pet player reported a net income of $16.4 million (€14.2M) in Q2 FY2025, compared to a net loss of $1.7 million (€1.5M) during the same period in 2024. 

This increase was driven by higher sales, improved gross profit as a percentage of net sales and decreased selling and general and administrative expenses (SG&A).

Net sales increased by 12.5% year-over-year (YoY) to $264.7 million (€228.6M), primarily driven by volume gains of 10.8% and a favorable price/mix of 1.7%.

Gross profit also rose to $108.2 million (€93.4M) compared to $94 million (€81.2M) in Q2 FY2024. The increase in reported gross profit as a percentage of net sales was primarily due to lower input costs and reduced quality costs, partially offset by reduced leverage on plant expenses. 

“As a nimble growth company that is adapting to an economically constrained consumer, we are intensely focused on what we can control,” says Billy Cyr, CEO at Freshpet. “That includes accelerating our advertising and distribution programs, reducing our capital expenditures and strengthening our operations.”

H1 performance

For the first half of FY2025, Freshpet’s net sales rose 15% to $527.9 million (€455.9M), compared to $459.1 million (€396.5M) in H1 FY2024. This growth was mainly driven by volume gains of 12.8% and a favorable price/mix of 2.2%.

Gross profit also increased to $212 million (€183.1M) from $182.1 million (€157.3M) last year, representing 40.2% of net sales. The growth in net sales was primarily due to lower input costs and reduced quality costs, partially offset by reduced leverage on plant expenses.

Net income dropped 78% to $3.7 million (€3.2M) from $16.9 million (€14.6M) during the same period the prior year. The decrease was mainly due to increased SG&A expenses. 

This was partially offset by contributions from higher sales and improved gross profit as a percentage of net sales.

Revising guidance

Freshpet has updated its FY2025 guidance to represent a 13% to 16% YoY growth compared to an increase of 15% to 18% previously.

The company also slashed its capital expenditure forecast to $175 million (€151.1M) from $225 million (€194.3M) in the previous guidance.

“We will be pragmatic about what we can’t control, so we are revising our current year’s net sales target and removing our long-term net sales target to match the environment we are facing today,” adds Cyr. “We still believe we will deliver outsized growth for a long period of time, but we need to plan for the current economic realities.” 

The firm also updated its long-term guidance, removing the $1.8 billion (€1.6B) net sales target for 2027 to reflect slower recent growth. However, the company still expects to achieve growth well above the overall dog food category.