SharkNinja, Inc. (SN) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A reveal positive growth in key categories, strong adjusted gross profit, and strategic international expansion plans. Despite some challenges like tariffs and inventory increases, the company's clear guidance and strategic initiatives in product innovation and market penetration support a positive outlook. The Q&A further highlights management's proactive approach to talent acquisition and marketing strategy, which are likely to drive future growth. Overall, the sentiment leans towards a positive market reaction in the short term.
Key Financial Performance
Net Sales Net sales increased 15.7% year-over-year to $1.4 billion. This growth was driven by strong demand for SharkNinja products globally, innovative product launches, and effective marketing strategies.
Adjusted EBITDA Adjusted EBITDA increased by 33% year-over-year to $223 million, with an adjusted EBITDA margin of 15.5%, up 210 basis points. This was due to higher gross margins, disciplined management of operating expenses, and strong top-line growth.
Domestic Net Sales Domestic net sales increased roughly 14% year-over-year. This reflects strong demand for SharkNinja products in the domestic market.
International Net Sales International net sales reaccelerated to more than 20% year-over-year. This was driven by strong growth in Europe, including France, Germany, and Benelux, as well as the successful transition of the Mexico business to a direct model.
Cleaning Category Net Sales Net sales in the cleaning category increased 8% year-over-year to $501 million. Growth was driven by robotics and extraction businesses, offset slightly by corded vacuums.
Food Preparation Category Net Sales Net sales in the food preparation category increased 53% year-over-year to $405 million. This was driven by the viral success of the SLUSHi frozen drink maker and the CREAMi ice cream platform.
Cooking and Beverage Category Net Sales Net sales in the cooking and beverage category decreased 4% year-over-year to $366 million. This was due to a decline in air fryer and outdoor grill subcategories, offset by the continued momentum of the Ninja Luxe Cafe espresso business.
Beauty and Home Environment Category Net Sales Net sales in the Beauty and Home Environment category increased 25% year-over-year to $173 million. This was driven by strong performance in air purifiers, fans, and the Shark CryoGlow skin care product.
Adjusted Gross Profit Adjusted gross profit increased 16% year-over-year to $714 million, with an adjusted gross margin of 49.4%, up 30 basis points. This was due to cost optimization, favorable pricing, and promotional activity, partially offset by tariffs.
Cash and Cash Equivalents Cash and cash equivalents totaled $188 million, up 36% year-over-year. This reflects strong cash flow management and operational efficiency.
Total Inventories Total inventories reached $1.1 billion, up 25% year-over-year. This increase supports growth initiatives globally and prebuilds inventory based on evolving tariff policies.
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Operating Highlights
Ninja SLUSHi: Continued to be a viral sensation with 1.3 billion impressions globally, up from 1 billion last quarter.
Ninja Luxe Cafe Pro series: Launched with enhanced automation and versatility features, contributing significantly to growth in the espresso category.
Shark FlexBreeze and TurboBlade fans: Performed well, showcasing innovation in the fan category with features like portability and misting.
Shark CryoGlow: Momentum continues globally, with launches in the U.S., U.K., and LatAm markets, and expansion into Continental Europe.
International expansion: Achieved over 20% year-over-year growth in international sales, with strong performance in Europe (France, Germany, Benelux) and Latin America (Mexico transitioned to a direct model).
U.K. market: Sales grew despite a 25% decline in air fryer sales, showcasing diversification and product portfolio strength.
New geographies: Targeting Benelux, Poland, and the Nordics for distributor-to-direct model transitions in 2026.
Supply chain diversification: Achieved 90% of U.S. volume production outside China, aiming for nearly 100% by year-end.
Cost management: Operating expenses as a percentage of net sales decreased by over 200 basis points year-over-year.
Three-pillar growth strategy: Focused on expanding into new categories, growing share in existing categories, and international expansion.
Branding and marketing: Key sponsorship in Apple original films F1 and upcoming relaunch of direct-to-consumer site to enhance brand awareness.
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Risk or Challenges
Global Tariffs: The company faces challenges from global tariffs, particularly higher rates in China compared to other Southeast Asian manufacturing centers. This has necessitated supply chain diversification and increased costs.
Supply Chain Complexity: The global supply chain is under pressure due to unprecedented challenges, requiring significant investment in supplier networks and diversification to mitigate risks.
Economic Uncertainty: The macroeconomic environment remains turbulent, with unclear and sometimes unprecedented challenges that could impact operations and financial performance.
Category Growth Challenges: Entering new product categories is a complex and non-linear process with significant criteria and decisions, posing risks to successful execution.
Tariff Mitigation Costs: Efforts to mitigate tariffs, including shifting production outside of China, have led to increased costs and operational adjustments.
Market Decline: The end markets globally declined in the low single-digit range year-over-year, excluding SharkNinja's performance, indicating broader market pressures.
Geographic Expansion Risks: Expanding into new geographies, such as transitioning to direct models in Latin America and Europe, involves operational risks and requires significant investment.
Product Innovation Pressure: The need to consistently innovate and introduce new products to maintain competitive advantage creates ongoing pressure and resource allocation challenges.
Regulatory and Policy Risks: Changes in tariff policies and regulatory environments in key markets could adversely impact costs and operations.
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Guidance & Outlook
Revenue Growth: SharkNinja has raised its net sales growth guidance for FY 2025 to 13%-15%, up from the previous 11%-13% range.
Adjusted EBITDA: The company now expects adjusted EBITDA to grow by 16%-18% year-over-year, reaching $1.1 billion to $1.12 billion, compared to the prior guidance of $1.09 billion to $1.11 billion.
Adjusted Net Income: Adjusted net income per diluted share is projected to be in the range of $5 to $5.10, up from the previous guidance of $4.90 to $5.
Capital Expenditures: Capital expenditures for 2025 are reaffirmed at $180 million to $200 million, with a focus on the lower end of the range.
Tariff Impact: The company assumes tariffs will remain at current levels, including 30% for China, 20% for Vietnam, and 19% for other Southeast Asian countries. Tariff impacts are expected to weigh more heavily in the second half of the year.
International Expansion: SharkNinja plans to continue its international growth, with a focus on expanding in Europe and Latin America. The company anticipates a strong holiday season in France and Germany and plans to transition to direct models in Benelux, Poland, and the Nordics in 2026.
Product Pipeline: The company is developing new products for 2026 and plans to introduce several disruptive products in the beauty and skincare categories before the end of 2025.
Supply Chain Diversification: SharkNinja aims to produce nearly 100% of its U.S. volume outside of China by the end of 2025, achieving a significant competitive advantage.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How is the company approaching growth opportunities between the U.S. and international markets?
A:The company is seeing strong demand in its North America business despite a declining market. They are launching new products and have strong retailer commitments. Internationally, the U.K. business is accelerating, and markets like Germany, France, Mexico, and others are showing positive growth. The company expects balanced growth in the second half of the year driven by new product introductions and market penetration.
Q:What is the company's outlook on gross margins and tariffs for the year?
A:The company has gained clarity on tariff rates, which are now 30% for China, 20% for Vietnam, and 19% for the rest of Southeast Asia. This clarity has allowed them to raise EBITDA guidance. The reduction in China's tariff rate from 145% to 30% provides supply chain flexibility but has minimal economic impact as they were not planning significant shipments at the higher rate.
Q:What is the company's approach to talent acquisition and its impact on the organization?
A:The company has hired key executives to address the growing complexity and scale of the business. These hires bring expertise in areas like software, electronics, advanced development, growth, creative content, and beauty marketing. The goal is to build 'unstoppable teams' that drive innovation, growth, and global content development.
Q:How does the company plan to evolve its marketing strategy, particularly with the SharkNinja brand?
A:The company is launching a unified SharkNinja website to improve consumer experience, cross-sell products, and drive loyalty. The success of the F1 movie campaign has increased brand awareness, and the company plans to gather data from the new website to refine its marketing strategy. They aim to market the SharkNinja business as a whole while continuing to evolve their approach.
Q:What drove the domestic growth upside in the quarter, and what are the expectations for the back half of the year?
A:Domestic growth was driven by strong demand and good POS growth, despite some impact from the China supply chain. The company expects continued strong demand in Q3, supported by new product launches. However, they are cautious about pricing increases and consumer reactions in the second half.
Q:What categories and products are expected to drive growth in the back half of the year?
A:The beauty category is expected to drive significant growth with new hair care and skin care products launching soon. Additionally, the Ninja brand is entering a new outdoor category. These innovations are expected to contribute to back-half growth.
Q:What opportunities are being presented through conversations with retail partners?
A:Retail partners are excited about the company's innovation and are seeking ways to collaborate more effectively. Internationally, retailers in Latin America, South America, and Europe are showing strong interest in accelerating product availability and leveraging the company's demand-generation capabilities.
Q:What is the company's strategy for international market expansion?
A:The company aims to achieve 50% of its sales from international markets in the near term. They are focusing on expanding product categories and market presence in regions like Spain, Portugal, Italy, the Nordics, Poland, Benelux, South America, and the Middle East.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the expected consumer reaction to pricing increases in the second half of the year and the exact timeline for achieving 50% of sales from international markets.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America
Asia
Crispi
CryoGlow
France Germany
Luxe Cafe
Research Division
SLUSHi
SharkNinja problem
SharkNinja product
action
activity
advantage
air fryer
challenge SharkNinja
consumer problem
discipline
efficiency
engine
expansion
fan
franchise
geography
ground
investment
marketing
medium
movie
period
pillar
power
process
product category
product sale
set
share
success
way
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