Herbalife’s second quarter saw a negative market reaction as the company missed Wall Street’s revenue expectations, with sales declining year over year. Management attributed the results to ongoing transformation efforts, including shifts in product strategy and increasing digital engagement. CEO Stephan Gratziani highlighted the progress in launching new categories, such as the healthy lifespan supplement and MultiBurn, while also emphasizing operational efficiencies. Despite these initiatives, softness in North America and adverse currency impacts weighed on performance. Gratziani described the quarter as showing “clear signs of accelerating momentum,” but acknowledged that bold changes require time to impact sales.
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Herbalife (HLF) Q2 CY2025 Highlights:
- Revenue: $1.26 billion vs analyst estimates of $1.27 billion (1.7% year-on-year decline, 1% miss)
- Adjusted EPS: $0.59 vs analyst estimates of $0.50 (18.6% beat)
- Adjusted EBITDA: $173.6 million vs analyst estimates of $167.4 million (13.8% margin, 3.7% beat)
- Revenue Guidance for Q3 CY2025 is $1.27 billion at the midpoint, above analyst estimates of $1.25 billion
- EBITDA guidance for the full year is $650 million at the midpoint, in line with analyst expectations
- Operating Margin: 10.5%, up from 6.3% in the same quarter last year
- Organic Revenue was flat year on year vs analyst estimates of 1.7% growth (168.7 basis point miss)
- Market Capitalization: $944.4 million
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 Herbalife’s Q2 Earnings Call
- Chasen Bender (Citi): Asked about Pro2col’s monetization strategy and its impact on distributor economics. CEO Stephan Gratziani emphasized the platform’s dual role as a sales tool and a channel for new premium offerings, while CFO John DeSimone noted only slight differences in unit economics compared to the core portfolio.
- Chasen Bender (Citi): Sought clarification on the sales contribution from Pro2col in the fourth quarter guidance. DeSimone said incremental Q3 benefit would be modest, with most impact expected in Q4 and beyond.
- Chasen Bender (Citi): Inquired about ongoing price increases and the risk of consumers trading down. DeSimone said price increases are being matched to the market, and that digital tools are enhancing perceived value, reducing the risk of negative volume impact.
- Douglas Lane (Water Tower Research): Asked if the Pro2col app and healthy lifespan supplement would always be bundled or sold separately. Gratziani confirmed both standalone and bundled options would be available, fitting multiple distributor business models.
- Douglas Lane (Water Tower Research): Probed the company’s plans for expanding the subscription model. Gratziani explained that improving the consumer-friendliness of subscriptions is a priority and expects subscriptions to become a larger part of the business over time.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be tracking (1) the commercial launch and adoption trajectory of the Pro2col platform in the U.S., (2) the ramp-up of subscription-based product offerings and their impact on retention rates, and (3) sequential improvements in North American sales and volume trends. We will also watch for regulatory progress that could accelerate international expansion of personalized wellness solutions and further integration milestones from recent acquisitions.
Herbalife currently trades at $9.16, down from $9.26 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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