Waldencast Q1 2025 slides: Mixed brand performance amid retail expansion push

Introduction & Market Context

Waldencast Acquisition Corp (NASDAQ:WALD) presented its Q1 2025 earnings results on May 14, 2025, revealing mixed performance across its brand portfolio. The beauty and wellness company’s stock plunged 15.02% following the presentation, trading at $2.58, as investors reacted to revenue declines and an earnings miss.

The company reported Q1 revenue of $65.4 million, representing a 4.1% year-over-year decrease, falling short of analyst expectations of $68.34 million. Earnings per share came in at -$0.07, missing the forecasted -$0.038, according to the company’s presentation.

Quarterly Performance Highlights

Waldencast’s Q1 results revealed stark contrasts between its two main brands. Obagi Medical (TASE:BLWV) delivered solid growth with revenue increasing 7.1% to $36.2 million, while Milk Makeup experienced a significant 15.1% decline to $29.3 million.

Despite the revenue challenges, the company maintained strong profitability metrics. Overall adjusted gross profit margin reached 76.4%, with Obagi Medical achieving an impressive 82.0% margin. Adjusted EBITDA totaled $4.4 million, representing a 6.7% margin for the combined business.

The company identified several factors driving Q1 performance, including successful product innovation with the sold-out launch of Hydro Grip Gel Tint, continued digital channel growth, and retail expansion through Ulta Beauty (NASDAQ:ULTA). However, these positives were offset by supply chain issues affecting Obagi Medical, international softness for Milk Makeup, and retailer inventory adjustments.

Strategic Initiatives

Waldencast highlighted several strategic initiatives aimed at driving future growth. A key focus is Milk Makeup’s expansion into Ulta Beauty, with products now available in over 1,400 Ulta Beauty stores nationwide and 500+ Ulta Beauty @Target locations.

As shown in the following retail expansion slide, this partnership represents a significant distribution opportunity for the brand:

The company also showcased its partnership with Nike (NYSE:NKE), demonstrating Milk Makeup’s ability to collaborate with major lifestyle brands to reach new consumers:

For Obagi Medical, the company emphasized its position as the leading physician-recommended brand for top skin concerns, ranking #1 in pigmentation, fine lines and wrinkles, sagging skin, and loss of elasticity:

Product innovation remains central to Waldencast’s strategy, with Milk Makeup’s Hydro Grip Gel Skin Tint generating significant social media buzz. The company reported the product achieved $18 million in earned media value (EMV), 245 million impressions, and 406 million reach:

Challenges & Headwinds

Waldencast acknowledged several challenges affecting its business. The company is navigating ongoing supply chain restructuring for Obagi Medical, which has impacted fulfillment rates. International markets have shown softness for Milk Makeup, creating unfavorable comparisons against the prior year’s expansion.

Tariffs represent another significant headwind, with the company expecting a low single-digit percentage increase in cost of goods sold. Management outlined several mitigating actions, including optimizing supply chain flows, implementing modest pricing actions, and deepening collaboration with supplier partners:

The company’s liquidity position shows some constraints, with cash and cash equivalents of $10.8 million and net debt of $172.1 million as of March 31, 2025. However, management noted that a new credit facility extends the debt maturity profile to March 2030, enhancing financial flexibility.

Forward-Looking Statements

Despite current challenges, Waldencast maintained an optimistic outlook for fiscal year 2025, projecting mid-teens net revenue growth and mid-to-high teens adjusted EBITDA margin:

Key drivers for this anticipated growth include Milk Makeup’s expansion in both brick-and-mortar and e-commerce channels in the U.S., improved fulfillment rates for Obagi Medical as operational initiatives take effect, and new product innovation across both brands.

The company’s guidance assumes no further changes to current tariffs and relies heavily on the successful execution of its retail expansion strategy and supply chain improvements.

CEO Michel Brousset expressed confidence in the company’s trajectory, stating, "We are building a unique and strong platform for growth and profitability," while CFO Manuel Manfredi added, "We expect a strong positive adjusted EBITDA to cash conversion."

As Waldencast works to overcome its current challenges, investors will be closely watching whether the company can deliver on its ambitious growth targets for the remainder of fiscal year 2025.

Full presentation:

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