Freshpet rebounds to profitability with strong Q2 results

USA – Freshpet has staged an impressive turnaround, reporting US$16.4 million in net income for the second quarter of 2025, reversing a US$1.7 million net loss in the same period last year. 

The pet food company said the gains reflect higher sales, improved margins, and disciplined cost management, despite lingering economic uncertainty and weaker consumer sentiment.

“Against a more challenging consumer sentiment backdrop, we continue to significantly outperform the dog food category,  delivering both category-leading sales growth and strong improvements in operations,” said Billy Cyr, Freshpet’s chief executive officer, during the company’s August 4 earnings call.

Net sales for the quarter ended June 30 reached US$264.7 million, up 12.5% from US$235.3 million a year earlier. 

Freshpet attributed the increase to volume growth of 10.8% and a favorable price/mix impact of 1.7%. Gross profit climbed to US$108.2 million, compared with US$94 million last year, while adjusted gross profit rose to US$124 million, or 46.9% of net sales.

The company said lower input and quality costs offset reduced leverage on plant expenses, boosting profitability. Selling, general and administrative expenses declined to US$90.4 million from US$95.7 million last year, falling to 34.1% of net sales from 40.7%. Adjusted EBITDA came in at US$44.4 million, up from US$35.1 million a year ago.

Cyr credited the improvements to operational efficiencies and a focus on areas within the company’s control. “As a nimble growth company that is adapting to an economically constrained consumer, we are intensely focused on what we can control,” he said.

Innovation and expansion plans

Freshpet highlighted several initiatives aimed at sustaining growth. These include the rollout of new production technologies designed to improve quality and efficiency, such as a system for manufacturing its bag products that will be tested at scale later this year. 

The company expects the technology to lower costs and close the profitability gap between bagged and rolled products.

Cyr said Freshpet is also prioritising marketing, distribution and value-focused product offerings. 

Advertising has been refreshed to highlight the benefits of fresh food, with new campaigns planned across TV, digital and social platforms. 

Distribution will expand in club and mass channels, as well as through Freshpet’s direct-to-consumer business, Custom Meals. 

On the product side, Freshpet plans to add to its Complete Nutrition line and introduce multipacks and bundles in the coming months.

Household penetration grew 11% year-on-year to 14.4 million, with heavy users — defined as customers spending more than US$500 annually — increasing 18% to 2.2 million households. These customers now account for 70% of sales.

Adjusted outlook amid economic headwinds

Despite the strong quarter, Freshpet lowered its long-term targets to reflect softer category growth and fewer new pet additions. 

The company withdrew its US$1.8 billion sales goal for 2027, though it reaffirmed its adjusted EBITDA guidance of US$190 million to US$210 million for 2025. Capital expenditures are expected to reach about US$175 million this year, down significantly from earlier projections.

“In regard to our long-term outlook, today, we are removing the US$1.8 billion net sales target and the related 20 million household target in fiscal year 2027,” Cyr said. 

“The sizable reduction in the category growth rate and new pet additions have made it increasingly difficult to maintain our previously projected rate of growth, so we believe it is prudent to remove those targets.”

Still, Cyr remained optimistic about Freshpet’s ability to deliver sustainable growth. “We believe we have an incredible opportunity to improve the lives of pets everywhere through the power of fresh, natural food, and we’ve not lost sight of that mission,” he said.

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