PetMed Express (PETS) Q3 2025 earnings summary

Executive summary

• Net sales for Q3 FY2025 were $53.0 million, down 18.9% year-over-year, primarily due to reduced advertising and macroeconomic headwinds.

• Gross margin improved by 80 basis points to 28.1%, driven by favorable sales mix and lower promotional activity.

• Adjusted EBITDA rose to $2.0 million, up 116% year-over-year, reflecting cost controls and operational efficiencies.

• Strategic transformation included the integration of PetCareRx, digital upgrades, and a focus on younger demographics.

• Marketing spend was intentionally reduced by $2.8 million year-over-year to protect margins amid a highly promotional environment.

Financial highlights

• Q3 net loss was $0.7 million (3 cents per share), improved from $2.0 million (10 cents per share) last year.

• Gross profit for the quarter was $14.9 million, down from $17.9 million year-over-year.

• Cash and cash equivalents totaled $50.1 million at quarter end, with no debt.

• Working capital was $20.4 million at quarter-end, down $1.1 million from March 31, 2024.

• Net cash used in operating activities for the nine months was $2.3 million, a slight improvement from $2.8 million used in the prior year period.

Outlook and guidance

• Management expects continued impact from inflation, higher interest rates, and macroeconomic uncertainty on consumer demand and revenue growth rates.

• Continued investments planned in customer engagement, acquisition, and infrastructure, with a focus on last-mile delivery and product assortment.

• Marketing strategy reset underway to drive sustainable, profitable growth, with increased spend expected as foundational improvements are completed.

• Ongoing cost optimization from PetCareRx integration, with further technology consolidation expected.

• Focus on cost efficiency, operational streamlining, and aligning staffing to current business levels.