Here’s why Citi says crypto prices have been weak recently
Introduction & Market Context
Haypp Group AB (STO:HAYPP) shares fell nearly 10% following the release of its Q3 2025 results on November 5, despite reporting record gross margins and continued growth in its nicotine pouch business. The stock closed at 139.2 SEK, down 15.4 points from its previous close of 154.6 SEK, approaching its 52-week low of 52.2 SEK.
The Swedish e-commerce company, which specializes in smokeless nicotine products, delivered mixed results that highlighted the tension between its long-term growth strategy and near-term performance metrics. While management emphasized strong fundamentals in risk-reduced products, investors appeared concerned about flat profitability and strategic shifts in certain markets.
Quarterly Performance Highlights
Haypp reported modest 1% growth in reported net sales for Q3 2025, though like-for-like sales excluding foreign exchange effects grew by a more substantial 15%. This growth was primarily driven by nicotine pouches, which saw volume increase by 21% on a like-for-like basis.
The company achieved a record gross margin of 18.8% in Q3, a significant improvement from 14.3% in the same period of 2024. This expansion demonstrates the increasing potential of Haypp’s business model, particularly through its Media & Insights value and fulfillment scale benefits.
As shown in the following chart of gross margin progression:
Despite the impressive margin growth, adjusted EBIT for the quarter grew by just 0.9% to SEK 33.4 million, with the adjusted EBIT margin remaining flat year-over-year at 3.5%. This stagnation in profitability, despite higher gross margins, likely contributed to investor disappointment.
The company’s overhead investments increased significantly, rising 51% compared to Q3 2024, primarily driven by expanding US local team capabilities, strengthening Media & Insights teams, and activities to increase online channel awareness:
Detailed Financial Analysis
Haypp’s financial performance varied significantly across its market segments. Core markets, which include the Nordic countries, saw net sales increase by 4.3% to SEK 677.5 million, with nicotine pouches representing 57% of Core volume and growing 15% during the quarter. The EBITDA margin for Core markets improved to 10.0%, up from 8.7% in Q3 2024.
The following chart illustrates Core markets performance:
Growth markets, primarily the US, presented a more complex picture. Reported net sales decreased by 14% to SEK 234.4 million, affected by the absence of US Zyn products, discontinuation of tobacco product sales, and state closures. However, like-for-like net sales at constant currency increased by 39%, highlighting the underlying strength of the business when adjusting for these factors.
The company’s emerging markets showed promising growth, with net sales increasing by 91.5% to SEK 40.1 million, driven primarily by Sweden and Germany. However, EBITDA for this segment was negative at SEK -13.1 million, reflecting ongoing investments in these developing markets.
The sales development across different market segments is illustrated here:
Strategic Initiatives
A key development in Q3 was the resumption of Zyn sales in the US market, with direct supply and Media & Insights cooperation re-established. The company is now focusing on reactivating Zyn consumers as part of its Q4 commercial activities.
Haypp also highlighted potential improvements in the US regulatory landscape, with the FDA implementing a pilot program to streamline the PMTA (Premarket Tobacco Product Application) process. The FDA has cited the ’continuum of risk’ concept, noting that FDA Marketing Granted Order nicotine pouches can generally pose lower health risks compared to combustible products.
The US market performance is shown in the following chart:
The company is also making strategic shifts in certain markets, including discontinuing UK nicotine vaping and Heat-not-Burn sales in Q4 2025 to focus more sharply on the rapidly growing UK nicotine pouch market.
Additionally, Haypp is completing an infrastructure overhaul by year-end to enable a faster, more agile technology ecosystem, which management believes will support future growth and operational efficiency.
Forward-Looking Statements
Haypp Group maintained its long-term financial targets set by the Board of Directors for 2028, which include:
1. Revenue growth of 18-25% CAGR annually (though 2025 growth is expected to be below this range)
2. Adjusted EBIT margin of 5.5% +/- 150 basis points
3. No dividends as cash flows will be reinvested into continued expansion
CEO Gavin O’Dowd emphasized that long-term fundamentals remain robust for risk-reduced products, the online channel, and Haypp specifically. He noted that conditions within the US continue to improve and that the Group’s operating model continues to deliver increasing value for consumers and suppliers while growing gross margins over the medium term.
The company’s operational highlights and market share progression are illustrated in this chart:
Despite management’s optimistic outlook, investors appear concerned about the company’s ability to translate gross margin improvements into bottom-line growth in the near term. The flat EBIT growth, significant overhead investments, and strategic shifts in certain markets may have contributed to the negative stock reaction following the earnings release.
As Haypp continues its focus on nicotine pouches and US market expansion, investors will likely watch closely for signs that these investments are translating into improved profitability beyond gross margin gains.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.