Earnings call transcript: GrowGeneration Q2 2025 beats EPS forecast, stock surges

GrowGeneration Corp (GRWG) reported its second-quarter earnings for 2025, surpassing expectations with an earnings per share (EPS) of -$0.08, compared to the forecasted -$0.10. The company’s revenue also slightly exceeded expectations, coming in at $41 million against a forecast of $40.95 million. Following the announcement, GrowGeneration’s stock price surged by 20% in aftermarket trading, reflecting investor optimism about the company’s performance and future prospects. According to InvestingPro data, the company maintains a strong liquidity position with a current ratio of 4.38, indicating robust short-term financial health. This is particularly noteworthy as InvestingPro analysis shows the company holds more cash than debt on its balance sheet.

Key Takeaways

• GrowGeneration beat EPS expectations by $0.02, showing improvement in financial performance.
• Revenue for Q2 2025 was $41 million, slightly above forecasts.
• Stock price increased by 20% in aftermarket trading.
• Gross margin improved to 28.3%, up from 26.9% the previous year.
• The company is focusing on expanding its proprietary brand portfolio.

Company Performance

GrowGeneration demonstrated a notable improvement in its financial performance during the second quarter of 2025. Despite a year-over-year revenue decline from $53.5 million to $41 million, the company managed to enhance its gross margin to 28.3%, compared to 26.9% in the previous year. The net loss narrowed to $4.8 million from $5.9 million, reflecting the company’s efforts to streamline operations and reduce expenses. InvestingPro analysis reveals the company’s trailing twelve-month revenue decline of 18.56%, though it’s trading at an attractive revenue multiple. Discover 10+ additional exclusive InvestingPro Tips and comprehensive financial metrics in the Pro Research Report.

Financial Highlights

• Revenue: $41 million (YoY decline from $53.5 million)
• Earnings per share: -$0.08 (improved from -$0.10)
• Gross margin: 28.3% (up from 26.9% YoY)
• Cash position: $48.7 million with no debt

Earnings vs. Forecast

GrowGeneration’s actual EPS of -$0.08 beat the forecasted -$0.10 by 20%. Revenue also slightly surpassed expectations, coming in at $41 million compared to the anticipated $40.95 million. This marks a positive deviation from the company’s previous financial trends, where meeting or exceeding forecasts has been challenging.

Market Reaction

The company’s stock experienced a significant 20% rise in aftermarket trading, reaching $1.26, up from the last close of $1.05. This movement reflects investor confidence following the earnings beat and the company’s strategic initiatives. The stock’s performance is notable, given its 52-week range, indicating a positive market sentiment towards GrowGeneration’s future prospects. InvestingPro analysis indicates the stock is currently undervalued, with a beta of 3.29 suggesting high volatility. For more insights on market valuations, explore our Most Undervalued Stocks list and comprehensive Pro Research Reports covering 1,400+ US equities.

Outlook & Guidance

Looking ahead, GrowGeneration expects Q3 revenue to exceed $41 million, with gross margins anticipated in the 30% range. The company is focusing on growing its proprietary brand portfolio, aiming for private label products to constitute 40% of its revenue next year. This strategic emphasis on proprietary products is expected to drive future growth and profitability.

Executive Commentary

CEO Darren Lambert emphasized the company’s proactive approach, stating, "We are seeing the largest backlog that we’ve seen in three years." He also highlighted the company’s innovation efforts: "We continue to bring new products to market on a weekly, monthly basis." CFO Greg Sanders commented on the company’s adaptability, noting, "We are continuously monitoring and adapting to changes in the global trade environment."

Risks and Challenges

• Continued softness in B2C demand could impact revenue growth.
• Potential supply chain disruptions might affect product availability.
• Regulatory changes in cannabis rescheduling could alter market dynamics.
• Global economic conditions may influence consumer spending.
• Intense competition in the hydroponics market could pressure margins.

Q&A

During the earnings call, analysts inquired about GrowGeneration’s acquisition strategy, particularly regarding Viagro, and the company’s tariff mitigation plans. Executives also addressed questions about the growing industry backlog and the increasing demand for durable equipment, which are seen as positive indicators for future growth.

Full transcript - GrowGeneration Corp (GRWG) Q2 2025:

Conference Operator: Hello, everyone, and welcome to the GrowGeneration’s Second Quarter twenty twenty five Earnings Conference Call. My name

John: is John, and I will

Conference Operator: be your operator for today’s call. At this time, participants are in a listen only mode. Following prepared remarks, we will open the call to questions from analysts with instructions to be given at that time. This conference call is being recorded, and a replay of today’s call will be available on the Investor Relations section of GrowGeneration’s website. I will now hand the call over to Phil Carlson with KCSA for introductions and reading of the safe harbor statement.

Please go ahead.

Phil Carlson, KCSA Representative, KCSA: Thank you, and welcome, everyone, to GrowGeneration’s Second Quarter twenty twenty five Earnings Results Conference Call. With us today are Darren Lambert, Co Founder and Chief Executive Officer and Greg Sanders, Chief Financial Officer of GrowGeneration. The company’s second quarter twenty twenty five earnings press release was issued after the market closed today. A copy of this press release is available on the Investor Relations section of the GrowGeneration website at ir.growgeneration.com. I would like to remind everyone that certain comments made on this call include forward looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward looking statements are based on management’s current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements. Please refer to today’s press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward looking statements made today. During the call, we’ll use some non GAAP financial measures as we describe business performance, The SEC filing as well as the earnings press release, which provide reconciliations of non GAAP financial measures to the most directly comparable GAAP measures, are all available on our website. Following prepared remarks, management will be happy to take your questions. We ask that you please limit yourself to one question and one follow-up.

If you have additional questions, please reenter the queue and we will take them as time allows. Now I will hand the call over to GrowGeneration’s Co Founder and CEO, Darren Lambert. Darren, please go ahead.

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: Thanks, Phil, and good afternoon, everyone. And thank you for joining us as we review our second quarter twenty twenty five results. In the second quarter, we continued executing on our strategic plan to transform GrowGeneration into a leaner, more profitable, product driven business with a strong focus on business to business customers. The results are beginning to show with sequential improvements for revenue, gross margin, and operating expenses. We’ve also continued investing in high growth initiatives, such as building our B2B e commerce platform and expanding our proprietary brand portfolio.

These efforts are essential to our long term vision of sustainable, profitable growth. We are fortunate because we have a solid foundation to build on. As GrowGeneration remains one of the largest hydroponic suppliers in The United States and our mission is clear, to deliver the best selection, service, and solutions to cultivators, retailers, and garden centers. First, let’s look at the second quarter. Our Q2 net revenue came in at approximately $41,000,000 which was an improvement of $1,000,000 to our second quarter guidance.

This performance underscores the resiliency of our commercial and B2B focused business. However, our focus is not only on growing revenue, but also improving the quality of it. That includes increasing our proportion of higher margin proprietary brand sales. In the second quarter, proprietary product sales accounted for nearly 32% of total revenue, up from 21.5% in the same period last year. This increase shows the growing strength of our proprietary brands, including Charcor, Drip Hydro, The Harvest Company, ION LED lighting, and most recently, Viagro.

This improved product mix, combined with enhanced procurement discipline, contributed to gross margins expanding to 28.3% in the second quarter compared to 26.9% for the same period in 2024. Complementing this, we’ve continued our shift to a more flexible fulfillment centric model. During the quarter, store and other operating expenses decreased 23% and SG and A was reduced by 13.4%, reflecting our disciplined cost execution and progress towards sustainable profitability. We continued executing our infrastructure rightsizing plan during the second quarter and subsequent weeks by closing two stores in the second quarter and two additional stores so far in the third quarter. This brings our current total retail locations to 27.

In addition, we are in the process of closing another two stores, which will bring our store count to 25 by the end of the third quarter, in line with our broader strategy to consolidate and streamline operations. Another key initiative is our ongoing digital transformation of sales. In April, we formally launched our digital B2B platform, the GrowGen Pro portal. This e commerce portal continues to gain traction with commercial customers and has already shown tremendous adoption by our wholesale customers well beyond our original expectations. Our goal remains to migrate more commercial transactions from brick and mortar onto our B2B portal as we continue to improve operational efficiencies across our supply chain.

As I mentioned earlier, we’ve taken other steps to increase our growth prospects. One of these is our recent expansion into the home gardening market through our acquisition of Viagro, a domestic brand with distribution across retailers such as Amazon, the Home Depot, Walmart, Lowe’s, and Tractor Supply. This transaction strengthens our proprietary portfolio and provides a scalable platform to serve home gardeners and hobbyists, cultivators across national retail channels. We continued expanding internationally in the second quarter. In June, we signed a distribution agreement with V1 Solutions to support commercial sales across the European Union.

We also launched a proprietary product line in Costa Rica, where the government has issued more than 50 hemp and cannabis licenses over the past year, positioning us in one of Central America’s most promising cultivation markets. These new markets allow us to scale with minimal capital investments by leveraging strategic distribution partnerships to grow our brand presence. In our MMI storage solutions segment, we posted $8,100,000 in revenue for the quarter, up over 69% sequentially. This growth was fueled by increasing product diversification, including our mobile luggage solution that we debuted in partnership with the Waldorf Astoria. We are pleased with MMI’s performance and expect it to remain a strong revenue contributor through the remainder of the year.

Beyond our operating results and other achievements, we’ve continued to maintain a strong balance sheet. We ended the second quarter with $48,700,000 in cash, cash equivalents, and marketable securities, and no debt. This gives us the flexibility to support working capital, inventory investments, and opportunistic growth initiatives. In terms of guidance for the 2025, we currently expect revenue in excess of $41,000,000 While we’re not providing full year 2025 guidance at this time through the ongoing tariff uncertainty, we remain focused on gross margin expansion, EBITDA profitability, and execution of our transformational plan. Before I turn the call over to Greg to review our financial results, I want to briefly talk about a recent development related to cannabis reform that we’ve been watching closely.

This is the confirmation of Terrence Cole as administrator of the DEA. Cole was appointed by President Trump to play a pivotal role in the potential rescheduling of cannabis from Schedule one to Schedule three. While this does not directly affect GrowGen today, we believe any regulatory shift would be a net positive for the entire cultivation ecosystem. Thank you. And now I will turn the call over to our CFO, Greg Sanders.

Greg? Thank you, Darren,

Phil Carlson, KCSA Representative, KCSA: and good afternoon, everyone. Starting with our second quarter twenty twenty five results, GrowGeneration reported net revenue of $41,000,000 exceeding our guidance of $40,000,000 and compared to $53,500,000 in the same period last year. The year over year comparison reflects our smaller retail footprint, consistent with our restructuring plan, alongside ongoing softness in business to consumer demand, which was partially offset by growth in our business to business customer base. Net sales in our cultivation and gardening segment were $32,900,000 for the 2025 compared to $46,100,000 for the comparable year ago period. Proprietary brand sales increased to 32% of cultivation and gardening revenue for the 2025, up from 21.5% for the 2024.

This increase exceeded our expectations and reinforces our ability to drive long term gross margin expansion through higher private label penetration. In our Storage Solutions segment, net sales of commercial fixtures reached $8,100,000 compared to $4,800,000 in 2025 and $7,400,000 in 2024. Both sequential and year over year growth reflect strong demand across product lines. While our core focus remains on the retail and agricultural markets, we’re encouraged by the momentum in this segment. In the second quarter, we showcased our diversification strategy through new partnerships in hospitality and country club development, as highlighted in our recent press release.

Total company gross profit margin was 28.3% for the 2025 compared to twenty six point nine percent for the 2024. The improvement was primarily due to higher private label penetration, partially offset by pricing compression on third party vendor products. On the expense side, store and other operating expenses declined approximately 23% year over year to $7,900,000 compared to $10,200,000 in the 2024. Selling, general, and administrative expenses for the quarter were $6,200,000 compared to $7,100,000 in the 2024, a 13.4 percent improvement. As noted in our non GAAP footnote, we also incurred approximately $05,000,000 in corporate reorganization and consolidation costs in the quarter.

We expect additional cost savings to be realized in the 2025. Depreciation and amortization was $2,700,000 down from $3,600,000 in 2024 and is expected to remain stable for the remainder of the year. Net loss was $4,800,000 in the 2025, or negative $08 per share, an improvement compared to a net loss of $5,900,000 or negative $0.10 per share in the 2024. Adjusted EBITDA, as defined in our press release, was negative $1,300,000 compared to negative $1,100,000 in the same period last year. The decrease in adjusted EBITDA was primarily driven by lower sales volume, partially offset by gross margin percentage improvements, as well as reductions in our operating costs.

Encouragingly, adjusted EBITDA improved by $2,700,000 on a quarter over quarter basis, primarily due to progress made in our expense structure. Now turning to the balance sheet. We ended the quarter with $48,700,000 of cash, cash equivalents and marketable securities and no debt. We purposed $1,000,000 of cash in the quarter for the purchase of Viagro, an undercapitalized lawn and garden business that has the potential for an attractive return on invested capital period. We continue to maintain a strong cash position and do not anticipate any near term financing needs.

As Darren mentioned, we are expecting sequential top line growth in the third quarter, but are not issuing full year 2025 guidance given uncertainties in both global trade policy and cannabis reform and the downstream potential variability in consumer demand. In summary, during the second quarter, we continued to rationalize our operations and execute our strategy to drive increased profitability, as reflected in both our sequential and year over year improvements in gross profit margin and operating expenses. With a strong balance sheet and no debt, we remain focused on disciplined execution, margin expansion, and identifying revenue opportunities to drive long term shareholder value. With that, I will hand the call over to Darren for closing remarks.

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: Thanks, Greg. And thank you, everyone, for joining us today. In the second quarter, we continued to execute our business plan, position GrowGen for increased profitability and long term revenue growth. We’ve increased our proprietary brand sales, launched our online B2B portal, streamlined our operations, and reduced costs across our entire enterprise. Combined with the recent growth in our MMI storage solutions segment, the acquisition of Viagro, and our expansion abroad, we have multiple growth levers across our business.

To support our future growth, we continue to preserve cash and remain debt free, which we think is extremely important in today’s environment. We’ll keep implementing our growth plans and look forward to providing you with more updates as we continue to execute. That concludes our prepared remarks. Operator, please open the line for questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer Should you have a question, please press star followed with the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed with the number 2. If you are using a speakerphone, please lift the handset before pressing any keys.

Your first question comes from the line of Aaron Grey from Alliance Global Partners. Your line is now open.

John: Hi. Good evening, and thank you for the questions. First one for me, just wanted to talk a little bit about the Viagro acquisition and the broader opportunity there in the guarding space. Are you seeing that acquisition more so of dipping your toe into the category and kind of feeling how things go? Or do you feel like there’s more robust near term opportunity for you guys to dig your feet deeper into that type of category?

I know you guys have been talking about it for some time, saw the acquisition in June. So just wanted get some more color in terms of why you felt like this was the right acquisition and we feel like the opportunities are more broadly for that category over the near to medium term. Thank you.

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: Yeah, Aaron, I think that there’s tremendous opportunity within the lawn and garden space and we have been speaking about it for a few years. You know, Viagro brings some incredible relationships to GrowGen on the big box side of it, and also brings some tremendous products that we believe have crossover into the cannabis space. And we certainly believe that a bunch of our products have crossover into lawn and garden. So I think it was a really, again, it was an effective acquisition in a lot of ways. It was an undercapitalized company that was built over the last ten years that came with very little inventory and very little operational expenses.

We’ve already shut down their warehouses and molded them into our warehouses. And we’re in the midst of building inventory and relabeling certain of their products and bringing our marketing in. But we do believe that you’ll see tremendous growth out of the Viagro acquisition next year. Right now, it’s certainly moving slowly as We build our relationships, so we also build up inventory to go into the lawn and garden markets.

John: Appreciate that color. Second question for me on the gross margin, saw some nice improvement sequentially there, Andy, over year. Last quarter, we did talk about some of the tariff risk. You guys mentioned more so exposure to Mexico and India versus China. So if you could just walk through maybe how we should think about the gross margin?

I know you’re not giving guidance now, but as you think about the different dynamics of tariffs and also sales mix that you have, how best to think about the gross margin going forward? Thank you.

Phil Carlson, KCSA Representative, KCSA: Yes, Aaron. Thanks for the question. We are still aiming as a company to get into the 30% range as a total reportable company. In the second quarter we saw some amount of impact, probably in the tune of half a million in terms of import surcharge tariffs that came into play after that April 2 announcement. But I can tell you we are continuously monitoring and adapting to changes right now in the global trade environment, particularly in India as news was updated last week.

And tariffs introduced additional cost pressures into the business. We’ve implemented a handful of strategic measures to mitigate their impact and to maintain competitive pricing where the industry still needs it. First, we diversified our sourcing strategy across the board and are continuing to work through that. We’re working closely with our suppliers to optimize costs and explore alternative manufacturing options where feasible. Additionally, we’re leveraging our scale and purchasing power to negotiate better terms and minimize cost increases across the board.

Next we’ve enhanced our supply chain efficiency by optimizing logistics and fulfillment strategies, ensuring we reduce the necessary costs and improving operational margins where possible. Part of the benefit of the closure of stores that we’ve been engaged in over the past couple of years, we did two in the second quarter, we announced two more in the third already, is it helps lower our cost from that perspective as well. And then lastly, while tariffs present challenges, we remain well positioned due to our strong supplier relationships. Our vertically integrated approach and our ability to adapt. We’re continuing to evaluate all opportunities to offset costs where possible, particularly in India right now.

And ensuring that we remain a leader in providing high quality products at competitive prices for the long term.

John: Okay, great. Really appreciate that color. I’ll go

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: ahead and jump back to the queue.

Conference Operator: Your next question comes from the line of Mark Smith from Lake Street. Your line is now open.

Mark Smith, Analyst, Lake Street: Hi, guys. I wanted to just hit on some of the expense, reductions, really solid, you know, improvements quarter to quarter here. But curious kind of where you are in the plan today? Are you mostly done? Is there still some more cuts that you think can be made?

Would love kind of any insights that you can give us.

Phil Carlson, KCSA Representative, KCSA: Hey, Mark. Thanks for the question. We are continuing to cut costs and we will in the back half of the year. We brought our store and other operating expense down below $8,000,000 which was in line with the goals that we’ve discussed historically. SG and A was down closer to $6,000,000 as of the second quarter.

Quite frankly, we were down year over year in terms of total expense in the neighborhood of $4,000,000 plus. We think there is additional improvements that you’ll see into the third and fourth quarters of this year, both on the SG and A side of our business as well as store operating expenses as we continue to rationalize our footprint. So hopefully that helps.

Mark Smith, Analyst, Lake Street: Yeah, absolutely. Next question for me is really just on industry outlook. Darren, you called out some of the recent reporting around kind of reclassification and rescheduling. Are you seeing any signs out there of kind of capital investments in the industry? Or is it still kind of a wait and see approach, do you think, for most in the industry?

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: I think right now, you saw guidance even for third quarter forty one plus, and that’s with six flex stores ending the third quarter. And we feel pretty confident with that number and pretty confident we will beat that number. We are probably seeing right now the largest backlog that we’ve seen in three years on the durable side of it, lighting, dehumidification, benching and related products. So we are seeing certain of our clients jumping back in, starting to refurbish their portfolio, looking at some older equipment and bringing in new equipment. We are also seeing a bunch of new builds around the country right now, back on the East Coast and Minnesota, something new states coming on.

So we’re pretty excited that we’re starting to see that durable side of our business starting to pick up a notch. And again, as I said, our backlog is as big as it’s been in a long time. And we are seeing tremendous adoption of our private label brands on the consumable side of it, both on the Charcot and Drip Hydro side of it. And we do believe that Buy It Grow will start contributing, I would imagine fourth quarter, first quarter next year. But we are seeing sales coming through Viagro, but we are refurbishing their portfolio also, rebranding certain of the products.

So it’s a wait and see on that, but we do see money coming back into the industry. Excellent. Thank you.

Conference Operator: Your next question comes from the line of Brian Nagel from Oppenheimer. Your line is now open.

Brian Nagel, Analyst, Oppenheimer: Hey, guys. Good afternoon.

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: Good afternoon, Brian.

Brian Nagel, Analyst, Oppenheimer: So the question, I guess, bigger picture question, Darren. So we now we’ve been talking for, I guess, several quarters or at least a few quarters, but I know there’s a real significant repositioning of the business away from retail more to commercial. How the question I want to ask is, how long will this take? The repositioning, we recognize it’s probably an ongoing process. But as you’re looking at with your team now, is there a more of a clearer timetable?

So from time perspective, and then what type of investments, I mean, we talked about an acquisition today, but what other type of investments will need to be undertaken in order to sort of say reposition the company fully?

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: Believe it or not, I think we have most of what we need internally right now. We continue to bring new products to market on a weekly, monthly basis. And we do believe that you’ll see our private label portfolio into the 40% range next year. And with the acquisition of Viagro, you’re going to see a whole new opportunity opening for GrowGen. As I spoke about a little earlier, we are entering the European market right now and also Latin America.

So there’s a lot of leverage right now that certainly have tremendous upside to it right now. And as Greg discussed a little early, we’re bringing down expenses. We’re bringing them down pretty quickly. I think you’ll see probably by the end of the fourth quarter a tremendous amount of savings that we’re going to realize over the next four months of the year. So there’s a lot going on right now.

We are always looking at tuck in acquisitions on the product side of it. But we do believe GrowGen right now has the ability to start growing again that we certainly have the portfolio of products within GrowGen that are high margin products and with the durable business coming back. And even with MMI that we believe this company will be profitable to what we have in house right now and will start growing and growing nicely.

Brian Nagel, Analyst, Oppenheimer: That’s helpful. And then second question and I think it’s a follow-up to the prior question but is it are you saying you are starting to see some solidification in demand particularly in the durable side?

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: We definitely are. Our backlog has not been this large since 2021. So we are starting to sign up deals. We have deposits in house and we have lights coming in from China. We have a new product coming out under Canopy lighting right now under the dialed in brand that we believe is going to be a tremendous winner on Wall Street.

We believe that it’s going to bring yield to our customers. We test for months before they come out. And again, we have some new products coming out under the DRIP name this month that have gone through registration. Registration process is quite timely. So the products are coming out, and I do believe that they said a little early that you’ll see our private label division in this year somewhere in that 35% mark, but I do believe you’ll see it in the 40s next year, which will start increasing margins and getting this company and sustainable profitability on a go forward basis.

Brian Nagel, Analyst, Oppenheimer: So, improved demand or solicitation demand, you think that’s more is it more internal to what grow gen is doing or is there more of a more an industry dynamic out there?

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: There’s an industry dynamic, but the customers certainly have their choice where they shop and a lot of them are our customers. We represent the largest customers in the industry right now. And as the industry goes from whether you want call it the illegal market to the legal market, and there will be certainly consolidation within the industry. Our customers will be the ones consolidating the industry. So we believe our business will grow with that.

Brian Nagel, Analyst, Oppenheimer: Very helpful. I appreciate it. Thanks.

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: Thank you, Brian.

Conference Operator: There are no further questions at this time. I will now turn the call over to Darren. Please go ahead.

Darren Lambert, Co-Founder and Chief Executive Officer, GrowGeneration: I want to thank our shareholders for their continued support, and I look forward to providing you with more updates as we continue to execute. Thank you, and have a beautiful day.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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