23andMe (ME) Q2 2025 earnings summary

Executive summary

• Revenue declined 12% year-over-year to $44.1 million for the quarter, driven by lower PGS kit sales, telehealth, and research services revenue.

• Gross margin improved to 51% from 43% year-over-year, primarily due to growth in membership services and cost reductions.

• Net loss narrowed to $59.1 million for the quarter, improved from $75.3 million year-over-year, reflecting lower operating expenses.

• Major restructuring included discontinuing all therapeutics development, closing the Therapeutics segment, and reducing workforce by 40%.

• Board reconstituted with three new independent directors and regained Nasdaq compliance after a 1-for-20 reverse stock split.

Financial highlights

• Q2 FY25 revenue was $44.1 million, with service revenue at $38.5 million and product revenue at $5.6 million.

• Gross profit for the quarter was $22.4 million, up 3% year-over-year.

• Operating expenses declined 17% year-over-year to $83.6 million, reflecting workforce reductions and lower R&D spend.

• Adjusted EBITDA loss improved to $33.4 million from $45.1 million year-over-year.

• Cash and cash equivalents at quarter end were $126.6 million, down from $216 million as of March 31, 2024.

Outlook and guidance

• Business restructuring expected to yield at least $35 million in annualized cost savings, with $11.7 million in one-time restructuring costs.

• Company expects to complete workforce reduction and Therapeutics segment closure in Q3 FY2025.

• Focused on growing recurring revenue through subscriptions and research partnerships.

• Exploring additional capital raising to address liquidity needs and extend cash runway.

• Expect to recognize revenue from the GSK data license in the second half of fiscal 2025.