Revolve’s second quarter performance exceeded Wall Street’s expectations for both revenue and profit, but the market responded unfavorably, reflecting investor concern over external headwinds and the durability of recent gains. Management attributed the quarter’s results to a combination of strong international sales—particularly in China—continued expansion of owned brands, and improved inventory efficiency. Co-CEO Michael Karanikolas highlighted, “Our net sales growth rebounded strongly from mid-single digits in April into the low double-digit growth territory for the months of May and June,” citing broad-based category strength and lower return rates as supporting factors. While gross margin outperformed expectations due to tariff mitigation and improved markdown algorithms, management was cautious about ongoing volatility in the tariff environment and its potential impact in the second half of the year.
Is now the time to buy RVLV? Find out in our full research report (it’s free).
Revolve (RVLV) Q2 CY2025 Highlights:
- Revenue: $309 million vs analyst estimates of $298 million (9.4% year-on-year growth, 3.7% beat)
- Adjusted EPS: $0.15 vs analyst estimates of $0.13 (14.7% beat)
- Adjusted EBITDA: $22.89 million vs analyst estimates of $15.1 million (7.4% margin, 51.6% beat)
- Operating Margin: 5.8%, in line with the same quarter last year
- Active Customers : 2.74 million, up 166,000 year on year
- Market Capitalization: $1.47 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Revolve’s Q2 Earnings Call
-
Nathaniel Jay Feather (Morgan Stanley) pressed for details on tariff mitigation and its long-term margin impact. Co-CEO Michael Karanikolas explained that deeper partnerships and pricing adjustments should help margins normalize over time as tariff costs flow through.
-
Oliver Chen (TD Cowen) asked about U.S. versus international performance and full-price sales mix. CFO Jesse Timmermans confirmed a healthy full-price mix against tough comps and cited continued strength in dresses, shorts, and owned brands for growth.
-
Anna Andreeva (Piper Sandler) inquired about FWRD and international growth sustainability. Management shared that while July saw more volatility, overall international momentum and category diversification remain core to the strategy.
-
Jay Daniel Sole (UBS) sought more color on the outlook for return rates and AI initiatives. Karanikolas said further progress on returns is likely slower in the near term but expects new AI-driven initiatives to support customer experience and operational gains longer term.
-
Rakesh Babarbhai Patel (Raymond James) asked about anti-American sentiment abroad and the durability of international growth. Karanikolas acknowledged lingering effects in Canada but said most regions are growing well, and China is an early-stage opportunity with significant upside.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) execution on new owned brand launches and their impact on margin and category expansion, (2) progress on opening and scaling the Los Angeles physical retail store as a testbed for broader retail growth, and (3) continued effectiveness of tariff mitigation strategies, especially as global trade policy remains volatile. Additional attention will be given to the ongoing rollout of AI-powered site enhancements and their contribution to conversion and customer engagement.
Revolve currently trades at $20.59, in line with $20.65 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
