Earnings call transcript: Goodfood Market Q3 2025 sees revenue beat, EPS miss

Goodfood Market Corp (FOOD) reported its third-quarter 2025 earnings, revealing a revenue beat but a significant miss in earnings per share (EPS). The company achieved net sales of $30.68 million, surpassing the forecast of $30.31 million by 1.22%. However, EPS fell short, with actual earnings at $0 against a forecast of -$0.02, marking a negative surprise. According to InvestingPro data, the stock has shown significant volatility, with a YTD return of 4.59% despite recent pressure. The market reacted negatively, with the stock declining by 20.41% to close at $0.19, nearing its 52-week low of $3.29.

Key Takeaways

• Revenue exceeded expectations by 1.22%, reaching $30.68 million.
• EPS missed forecasts, remaining at breakeven instead of the expected loss.
• Stock price dropped by 20.41%, reflecting investor concerns.
• Gross margin improved to 44.3%, up 30 basis points year-over-year.
• Positive cash flow from operations stood at $600,000.

Company Performance

Goodfood Market maintained its profitability streak for the tenth consecutive quarter, despite facing a challenging macroeconomic environment. The company’s focus on cost control and strategic product launches contributed to its robust performance. However, a reduction in the active customer base from 105,000 to 76,000 raised concerns about demand sustainability. InvestingPro analysis reveals a WEAK Financial Health Score of 1.36, with analysts anticipating sales decline in the current year. For comprehensive insights and additional ProTips about Goodfood Market’s financial health, subscribers can access the detailed Pro Research Report.

Financial Highlights

• Revenue: $30.7 million, down $7.9 million year-over-year.
• Adjusted EBITDA: $2.7 million, representing 8.6% of sales.
• Gross Margin: 44.3%, an increase of 30 basis points year-over-year.
• Net Income: Break-even at $100,000.
• Cash Flow from Operations: Positive $600,000.

Earnings vs. Forecast

Goodfood Market’s EPS of $0 was below the forecasted -$0.02, resulting in a negative surprise of -100%. This miss contrasts with the company’s historical trend of profitability. However, the revenue beat of 1.22% suggests strong sales performance, partially offsetting investor concerns.

Market Reaction

Following the earnings announcement, Goodfood Market’s stock fell by 20.41% to $0.19, approaching its 52-week low of $0.14. This decline indicates investor apprehension regarding the EPS miss and potential challenges in maintaining customer engagement. Trading at $3.98 USD, the stock currently sits 0.91% below its 52-week high of $4.37, with InvestingPro data showing a strong return over the last month despite recent volatility.

Outlook & Guidance

The company plans to deepen member relationships, expand its meal solutions portfolio, and explore targeted acquisitions. Goodfood Market is also preparing to scale its Heat and Eat offering across new markets, pending regulatory approvals. With the stock’s significant movement over the past six months, investors seeking detailed valuation analysis and growth projections can access comprehensive insights through the Pro Research Report, available exclusively on InvestingPro.

Executive Commentary

"This quarter marks an important milestone, our tenth consecutive quarter of profitable execution," stated Jonathan Ferrari, CEO. CFO Ross Awamour added, "Our results reflect strong contributions from lean logistics, SG&A discipline, and labor and product cost control."

Risks and Challenges

• Supply chain disruptions could affect product availability.
• Continued reduction in active customers may impact sales.
• Economic pressures could limit consumer discretionary spending.
• Market saturation in existing regions poses growth challenges.
• Regulatory hurdles in geographic expansion could delay plans.

Q&A

During the Q&A session, analysts focused on customer acquisition challenges and strategies for reactivating the customer base. Executives detailed plans for expanding the Heat and Eat product and optimizing marketing channels to enhance engagement.

Full transcript - Goodfood Market Corp (FOOD) Q3 2025:

Conference Operator: Good morning, ladies and gentlemen. Welcome to the Good Food q three of fiscal twenty twenty five earnings call and webcast. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions.

Please note that questions will be taken from financial analysts only. If anyone has any difficulties hearing the conference, please press followed by 0 for operator assistance at any time. I would like to remind everyone that this conference call is being recorded today, July 22 at 8AM Eastern Time. Furthermore, I would like to remind you that today’s presentation may contain forward looking statements about Goodfood’s current and future plans, expectations and intentions, results, level of activity, performance, goals or achievements, or other future events or developments. As such, please take a moment to read the disclaimer on forward looking statements on slide two of the presentation.

Please be aware that during the call, presenters will refer to certain metrics and non IFRS measures. Where possible, these measures are identified and reconciled to the most comparable IFRS measures in our MD and A. Finally, let me remind you that all figures expressed on today’s call are in Canadian dollars unless otherwise stated. I would now like to turn the meeting over to your host for today’s call, Jonathan Ferrari, Good Food Chief Executive Officer. Mister Ferrari, you may proceed.

Jonathan Ferrari, Chief Executive Officer, Good Food: Thank you. Good morning, everyone. Welcome to our Good Food earnings call in which we will present our results for the third quarter ended June 7. Ross Awamour, our Chief Financial Officer, is with me today. You can find our press release, presentation and other filings on our website and SEDAR plus and all figures on this call are in Canadian dollars.

Let’s begin with Slide three. This quarter marks an important milestone, our tenth consecutive quarter of profitable execution as we look to scale a digital platform designed to build long term shareholder value in Canada’s food and beverage e commerce landscape. Adjusted EBITDA reached nearly $3,000,000 in Q3 or 8.6% of net sales. On a year to date basis, adjusted EBITDA stands at approximately $6,000,000 representing a 6% margin. Despite macroeconomic headwinds weighing on consumer discretionary spending, we have maintained strict discipline on unit economics and operational efficiency.

Our strong and consistent margin performance confirms our ability to deliver profitably even in uncertain times. Our product strategy also continues to evolve to meet customer needs. Recent enhancements, including heat and eat meals in Quebec and expanded customization features are enabling more convenience and deeper engagement. These customer driven innovations are driving record basket sizes as more members are choosing to build out their orders with a wide variety of meals and grocery add ons. We also continued to execute on our capital allocation strategy with precision anchored in enhancing intrinsic value per share.

Our acquisition of Genuine Tea is proving to be both growth accretive and margin supportive. The brand is growing sales at over 30% annually, while delivering consistent and healthy EBITDA. Meanwhile, we have added $1,000,000 to our Bitcoin ETF treasury reserves and our BTC investment generated gains that contributed positively to our balance sheet flexibility this quarter. With those highlights in mind, I will now turn it over to Ross for a closer look at the financials.

Ross Awamour, Chief Financial Officer, Good Food: Thank you, John. Let’s move to Slide four to discuss our top line metrics. Net sales for the third quarter were $30,700,000 down $7,900,000 year over year, though showing some sequential improvement compared to the second quarter of fiscal twenty twenty five. The year over year decline reflects a lower active customer base, 76,000 this quarter versus 105,000 last year, reflecting both macroeconomic caution lowering order rates and a deliberate reduction in incentive led customer acquisition to enable our margin driven approach. While total customers were lower, our targeted approach is yielding higher quality cohorts.

Net sales per active customer reached a record $404 this quarter, supported by record average basket size. This reflects the strength of our product offering and customer engagement. We are also deepening wallet share and lifetime value through value driven personalized experiences. In parallel, we are expanding a profitable b to b relationships with Canadian companies, offering good food and genuine tea products to employee to their employees or cross marketing select partners, brands, and brands through our platform. Now turning to slide five and discussing margins and profitability.

Gross profit came in at $13,600,000 with gross margin improving to 44.3%, up 30 basis points from last year and 170 basis points from the second quarter. We have maintained margin resilience through disciplined cost controls, reduced promotional activity and continuous improvement in fulfillment and procurement operations. Adjusted EBITDA reached 2,700,000 or 8.6% of sales, with breakeven net income of $100,000 Beyond operational efficiency, we are increasingly making our cost structure flexible to ensure sustainable profitability. Our results hence reflect strong contributions from lean logistics, SG and A discipline and labor and product cost control. This is the outcome of embedding a cash flow first culture and maintaining financial agility amidst a tempered demand environment.

Moving now to Slide six, cash flow from operations turned positive at $600,000 this quarter. Adjusted free cash flow came in at 200,000 a meaningful improvement over Q2 supported by margin and cost improvements. Capital expenditures were $500,000 largely related to the final stages of fire code compliance and kitchen relaunch at our Montreal facility. We expect normalized levels in Q4 and beyond, which should further enhance our cash generation capacity. Our liquidity remains solid with $17,000,000 in cash and marketable securities.

With that improved cash flow profile, let’s turn to slide seven to review how our financial performance continues to support sustainable profitability and flexibility. We are overall pleased with the resilience of our core metrics, especially in a tough consumer landscape. Gross margin remained at over 44%, adjusted EBITDA margin held above 8%, and we posted positive net income and adjusted free cash flow. This performance reinforces our disciplined approach to cost management, capital allocation, and consistent EBITDA positive trend, all with the goal of optimizing shareholder return on capital. With that, I will now pass it back to John to walk through our outlook.

Over to you, John.

Jonathan Ferrari, Chief Executive Officer, Good Food: Thanks, Ross. Let’s now turn to Slide eight. Over the next six to twelve months, our focus is clear. We aim to deepen member relationships, expand our differentiated portfolio of meal solutions, and strengthen our balance sheet through capital discipline and targeted acquisitions, all to build long term per share value. We are encouraged by the early success of our Heat and Eat offering.

Without advertising, this offering has already reached a $1,000,000 annualized revenue run rate in Quebec. The blend of convenience, health and flavor is resonating with our members. With expanded delivery zones and recipe development underway, we are now preparing to scale this line across new markets supported by growing product market fit, recipe expansion, and careful risk management as we scale. Our value plan continues to serve as an effective entry point, driving high conversion and upsell into high higher value recipes. With global cuisine offerings and premium chef designed meals, we are meeting diverse needs while maximizing order economics.

On the M and A side, Genuine Tea remains a high performing asset. The brand is expanding into a larger facility and showing strength in both foodservice and e commerce segments. Margins remain in the mid double digits, and it’s been a margin accretive contributor to consolidated EBITDA. This acquisition has validated our thesis. Founder led brands that benefit from shared capabilities like fulfillment, logistics, and procurement are a scalable growth engine.

We are actively reviewing new opportunities with similar DNA and are excited about the potential to success. In parallel, reserve continues to serve its dual purpose, hedging inflation and enhancing optionality. We realized gains this quarter even before the recent BTC price acceleration and believe the reserve will continue supporting long term value creation and remain confident in the optionality it adds to our balance sheet. In closing, we are confident that our customer first margin discipline and innovative innovation driven approach uniquely positions Good Food to thrive in the years ahead. We look forward to continuing to deliver differentiated experiences to our members and consistent value creation for our shareholders.

With that, I will now turn it over to the operator for the Q and A.

Conference Operator: And with that, our first question comes from the line of Frederic Tremblay with Desjardins Capital Markets. Please go ahead.

Frederic Tremblay, Financial Analyst, Desjardins Capital Markets: Thank you. Good morning.

Ross Awamour, Chief Financial Officer, Good Food: Morning, Fred.

Frederic Tremblay, Financial Analyst, Desjardins Capital Markets: Just on your previous call, you had mentioned that the, you know, the q two active customer account had been impacted by lower seasonal order rate. Just wondering if you could maybe give us an update on what you saw in terms of the trends in order rates in in q three relative to q two and if that was still a driver in the change of inactive customer count in q three.

Ross Awamour, Chief Financial Officer, Good Food: Yeah. Good question, Fred. I think there’s definitely less of the the holiday seasonality impact here, which was pretty big in in q two. So I think if if you think of order rates in two ways, basically, have the subscriber order rates that that convert subscribers into active customers. And that one, I’d say, remained, you know, pretty challenged even even in q two towards the January and February.

We saw some some declines there, and and that part has been stable. But once an active customer starts ordering, then the the order rate is actually higher than it was in q two, meaning that once someone places an order, they tend to place more orders after. So converting a subscriber into an active customer will be will be key in continuing to to stabilize sales and and provide room for growth.

Frederic Tremblay, Financial Analyst, Desjardins Capital Markets: Okay. Thanks for that. And, I know we’re in the, the slower summer season now, but just wanted to get your take on, on when you think we might see some, stabilization in the active customer account. And maybe more importantly, what are some of the levers that you think you have to reverse the current trend in active customers?

Ross Awamour, Chief Financial Officer, Good Food: Yeah. I think, obviously, you mentioned the July June, July, and August are are not the right months to really do that, meaning that, you know, people travel, go to cottages, they eat out more. So, there’s usually less active customers during that period. December won’t be an exception. Think as we move to to q one of twenty six, and there’s, both the September back to school, a bit of an increased marketing intensity, but also, I think more routines in developing, that doesn’t provide the platform.

I think from the levers perspective, beyond the the usual marketing lever lever, sorry, I think there’s the there’s the the the initiatives that we’re working on, including heat and eat. Heat and eat is now mostly an add on, meaning that people can add it to their weekly meals. But we are just launching an a heat and eat plan, meaning that people can order ready to eat as part of a weekly plan where they get recipes just like ready to cook. So it’s currently only in launch stage, but by September, it it’ll be available more and more and and more and more visible. And then I think depending on on regulatory approval, accessing the rest of Canada beyond Quebec, I think, will be will be also a lever in in making heat and meat more available across the country.

And then I think from a from a ready to cook perspective, there’s there’s the the good food travel series that that provides a a more of an adventure. There’s always partnerships and and collaborations that we do that that provide new flavor and and give us some sort of a ramp to to go and and market to folks and both to increase order rate and and to bring in new customers. I think maybe lastly on on the genuine key side, there’s a there’s a you know, some exciting campaigns coming up, but also generally, the periods just pre preholidays is a pretty big period starting with just before Black Friday and and throughout November and early December. So that’ll be another lever to both increase overall sales and and active customers.

Frederic Tremblay, Financial Analyst, Desjardins Capital Markets: K. That’s great. And just maybe coming back to the eat and eat aspect there. The press release mentions that that part of the business is ready for scaling in early fiscal twenty six. Is that referring to the launch of the eat and eat plan, or is it more of a geo geographic initiative?

And if it’s geographic, can you maybe speak to some of the regions you would target and if there’s incremental CapEx involved with, you know, adding capacity and that sort of thing?

Ross Awamour, Chief Financial Officer, Good Food: Yeah. I think it it refers to really three facets. The first one is the the completion of of the CapEx here, both for fire safety and and some modifications to the kitchen. That’s mostly complete. So that that’s step one to being ready.

I think step two is is geographical. So currently only allowed to sell the product in Quebec given our you know, the right the CFIA, the regulator, has to to approve your facility to be able to sell across provinces. You know, in the barriers, we look forward to seeing we approved over time, but for now, it it’s still there. So I think the estimate we were given was sometime in the summer, so we’re hoping that by the August, we’ll be able to to have that approval and and then be able to target Atlantic Canada and Ontario first. And then shortly thereafter, with a few looking at a few options on how to do things out West, there’s always the the ability to do it from here, but then seeing what what the options are over there.

And and I think we’ll we’ll we’ll share further developments at West as they come because they they, you know, they may not require CapEx. But if they do, we’ll make sure to to make that clear, that that’s not our our base plan. So that’s that’s and then the sorry. The last piece, the plan, making it a plan. So making people, customers, members, having the ability to come on the platform and subscribe to Heatmeat plan where they get a heat and eat meals only as part of their plan is is sort of the third pillar to to how we’re ready to scale the the offering.

Frederic Tremblay, Financial Analyst, Desjardins Capital Markets: Okay. And last question for me. Just curious on the what you’re seeing for customer acquisition cost, the trends there. And then maybe just remind us what are your main sort of marketing channels that are bringing you new customers these days? Are you is it mainly, like, social media?

Is it sort of now from existing customers? Just, just curious to see what’s what’s driving sort of first time orders these days.

Ross Awamour, Chief Financial Officer, Good Food: Yeah. I’ll I’ll start on the CAC, and and John will take over on the second part. I think on the CAC, it it’s been, relatively stable, and and still a meaningful improvement over, over a year ago. I think it’s it’s managing, you that the CAC curve and making sure that you’re investing the right amount of dollars that don’t get you into those marginal tax that get higher and and reduce really the return you make on on the customers you acquire. So I I think from a CAC perspective, stable.

I think from a a scaling of the the the marketing spend to keep it stable is is where we’re we’re very, very disciplined. So we we’re keeping that in in check. And John, we’ll we’ll talk about the channels and and reactivations.

Jonathan Ferrari, Chief Executive Officer, Good Food: Yeah. That’s fair. Yeah. I would say we’re constantly optimizing our media mix. We have been leaning into some of the channels like online video that have been performing quite well.

And our core focus continues to be on acquiring the highest quality customers, and I think that was evidenced through our, record sales per, subscriber this quarter, which was over, $400 per quarter. So the idea is really to make sure that we’re optimizing our mix not specifically for the volume of new customers, but for the quality of the, of the customers that we’re bringing in.

Frederic Tremblay, Financial Analyst, Desjardins Capital Markets: Makes sense. Thanks for taking the questions.

Ross Awamour, Chief Financial Officer, Good Food: Thanks, Kent.

Conference Operator: Alright. Thank you. And we have no further questions at this time. I would like to turn it back to mister Jonathan Ferrari for closing remarks.

Jonathan Ferrari, Chief Executive Officer, Good Food: Thank you for joining us on this call. We look forward to speaking with you again at our next call.

Conference Operator: Thank you, presenters. And ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.

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