Freshpet’s Q2 results beat expectations as heavy buyers drive 71% of sales

Freshpet reported net sales of $305.6 million (€269M) for the second quarter of fiscal year (FY) 2026, which ended on 30 June, up 15.5% year-over-year (YoY).

The New Jersey-based manufacturer attributed the growth to a 15.7% increase in sales volume, partially offset by an unfavorable price/mix of 0.2%.

Gross profit rose 18.9% YoY to $128.7 million (€113.3M), representing 42.1% of net sales. The improvement reflected lower input costs and stronger manufacturing efficiencies, partly offset by higher quality-related expenses associated with the startup of new production technology.

Net income climbed 19% YoY to $19.5 million (€17.2M). Higher sales and a one-time gain on an equity investment supported earnings, although increased selling, general and administrative (SG&A) expenses and income tax costs partially offset the gains.

“Our second quarter financial results were ahead of our guidance range for the year, demonstrating the power of our business model. We delivered our strongest growth rate in over a year and our highest adjusted gross margin since Q1 of 2020,” says Billy Cyr, CEO of Freshpet.

Retail performance

Household penetration expanded 5% YoY during the quarter, adding approximately 800,000 households, while Freshpet’s buy rate increased 7% to $117 (€103).

The company’s MVPs – its ultra- and super-heavy buyers – recorded an 11% YoY increase in household penetration. According to Cyr, these consumers spend five times more annually than the average household and account for 71% of Freshpet’s sales, with an average buy rate of $515 (€453).

Year to date, Freshpet’s retail footprint reached 39,938 fridges across 30,721 stores. The company says the network also serves as a series of micro-fulfillment centers for omnichannel orders, with 78% of delivered sales fulfilled through its in-store fridges. Approximately one-quarter of its US and Canadian stores now operate multiple fridges.

Digital sales grew 41% YoY and represented 16.7% of total sales, up from 16.1% in the previous quarter.

According to Nielsen Omnichannel, Freshpet’s share of the US dog food and treats market reached 4.3%, adding that Freshpet is the fastest-growing dog food brand by dollar sales and the second most popular brand among Gen Z and millennial dog-owning households. 

The company expects to expand into at least 700 rural lifestyle retail stores by the end of the year and is testing a third SKU in selected warehouse club stores.

Half-year results

For the first 6 months of FY2026, net sales reached $603.2 million (€530.8M), an increase of 14.3% YoY, driven by 15.1% volume growth that offset an unfavorable price/mix of 0.8%.

Gross profit totaled $249.4 million (€219.5M), equivalent to 41.3% of net sales. Net income increased to $68 million (€60M), compared with $3.7 million (€3.3M) in the prior-year period, largely reflecting a gain on the sale of an equity investment, as well as higher sales and lower nonrecurring SG&A charges.

Improved guidance

Freshpet raised its FY2026 outlook and now expects net sales growth of 10%-12% YoY, compared with its previous guidance of 8%-11%. Adjusted EBITDA guidance was also raised to $210 million (€185M) to $220 million (€194M), up from the previous range of $205 million (€178M) to $215 million (€186M).

The company continues to expect adjusted gross margin to improve by approximately 100-150 basis points YoY, primarily driven by operational improvements, while capital expenditure guidance remains unchanged at $150 million (€132M). However, it anticipates higher logistics, packaging and other operating costs.

Challenging scenario

Despite the improved outlook, CFO John O’Connor says Freshpet expects more challenging year-over-year comparisons in the third quarter following a significant expansion with a large warehouse club customer and changes in ordering patterns around the Fourth of July last year.

Together, these factors are expected to reduce third-quarter YoY sales growth by just over 2 percentage points. O’Connor also cautions that household penetration growth could remain subdued as inflation continues to pressure consumer spending.

“To achieve the low end of our sales guidance, we assume the macro environment stays the same as it is today, with little to no sequential sales or household penetration growth. To meet or exceed the high end of our guidance, we would need to see greater impact from our advertising, an outperformance of our omnichannel efforts, and additional distribution gains,” the CFO concludes.