Barfresh revises 2025 revenue guidance to $12.5M–$14M as manufacturing capacity grows

Earnings Call Insights: Barfresh Food Group (BRFH) Q2 2025

MANAGEMENT VIEW

* Riccardo Delle Coste, CEO, reported that "we've reached an important milestone with our second co-manufacturing partner completing its equipment installations during the second quarter." He highlighted that "we now have 2 co-manufacturers producing product as we enter the third quarter" and are focused on building consistent operational capacity.
* Delle Coste explained that Barfresh will transition to "a higher capacity bottling manufacturer for our Twist & Go bottles" in January 2026, replacing an existing partner and expecting this new supplier's capacity to "exceed the volume of the manufacturer we are replacing by approximately 400%."
* The CEO noted revenue of $1.6 million for the second quarter, which he said was "driven by expanded bottle capacity at our existing manufacturer as we work through the final stages of our co-manufacturing transition."
* He acknowledged that "because of the capacity issues we had in the second quarter, a few of our customers temporarily had to take our offerings off their menus, but we expect them to add our offerings back during the fourth quarter of 2025 and the first quarter of 2026."
* Delle Coste stated, "we're revising our fiscal year 2025 revenue guidance to $12.5 million to $14 million, reflecting the greater-than-anticipated impact of our manufacturing constraints in the first half, this still represents strong 17% to 31% year-over-year growth despite the earlier product supply challenges."
* CFO Lisa Roger said, "Revenue for the second quarter of 2025 increased to $1.6 million compared to $1.5 million for the second quarter of 2024. The year-over-year increase is primarily driven by our ability to expand bottle capacity from a new contract manufacturing relationship, which also resulted in higher processing and logistical costs."
* Roger added, "Gross margin for the second quarter of 2025 was 31% compared to 35% for the second quarter of 2024. The year-over-year decrease is a result of product mix and new manufacturer trial and development costs, including inefficiencies during the early production period incurred to gain additional production volume."

OUTLOOK

* The company revised its fiscal year 2025 revenue guidance to $12.5 million to $14 million, citing manufacturing constraints in the first half but reaffirming an expectation for "strong 17% to 31% year-over-year growth."
* Management expects "progress we're making on manufacturing consistency to contribute to margin improvement in the second half of the year."
* Delle Coste indicated that "with our high selling season in the education channel ahead of us, we're focused on aligning our production capabilities with market demand."

FINANCIAL RESULTS

* For Q2 2025, Barfresh reported revenue of $1.6 million, up from $1.5 million in Q2 2024, attributed to expanded bottle capacity.
* Gross margin for Q2 2025 was 31%, down from 35% in the same period last year, due to "product mix and new manufacturer trial and development costs."
* Selling, marketing and distribution expense for Q2 2025 increased to $634,000 or 39% of revenue, compared to $583,000 or 40% last year, with the increase driven by "higher storage and outbound freight due to our product mix."
* G&A expenses in Q2 2025 were $673,000, down from $865,000 a year ago, reflecting "a reduction in personnel-related expenses, a reduction in legal, professional and consulting fees and lower stock-based compensation."
* Net loss for Q2 2025 was ($880,000), improved from a net loss of ($1 million) in Q2 2024. Adjusted EBITDA loss was approximately ($600,000), compared to a loss of approximately ($682,000) last year.
* As of June 30, 2025, the company reported $1.3 million in cash and accounts receivable and $1.8 million in inventory.

Q&A

* Thomas McGovern, Maxim Group: Asked about progress on school contracts and the Pop & Go product's impact on expanding into the lunch market. Riccardo Delle Coste: "We have seen some good pickup on the pops... we've actually got some large school districts that have approved us already. The bidding process is completing... the pops have had a very positive start to the year."
* McGovern: Asked about customer re-engagement after product supply disruptions. Delle Coste: "It's a bit of a mixed bag. I mean the products are already approved. So we don't need to worry about getting them reapproved... it's more a matter of when we have consistent supply."
* McGovern: Requested comments on geographic expansion. Delle Coste: "Having more capacity is going to allow us to get a broader general penetration across the whole country."
* William R. Gregozeski, Greenridge Global: Queried inventory composition and timing of customer menu removals. Lisa Roger: "It's actually mostly bottle because we are able to build over the summer."
* Gregozeski: Asked for an update on new school additions. Delle Coste: "Soon."
* Gregozeski: Requested manufacturing capacity details. Roger: "It's about even between bottles and cartons. It's probably 80% Twist & Go, just to give you a sense." Delle Coste: "So with the new manufacturing coming up, we should be in the $20 million to $25 million range. Just on the bottles."

SENTIMENT ANALYSIS

* Analysts expressed a slightly positive to neutral sentiment, with questions focusing on contract momentum, product re-acceptance, and manufacturing progress. Their tone was generally inquisitive, but not overtly skeptical.
* Management maintained a confident and reassuring tone, emphasizing progress in manufacturing and supply chain improvements. Phrases like "we have seen some good pickup" and "the pops have had a very positive start to the year" indicated optimism.
* Compared to the previous quarter, analyst sentiment shifted from cautious optimism to a more measured curiosity, while management's tone remained confident but acknowledged recent operational challenges.

QUARTER-OVER-QUARTER COMPARISON

* The company revised revenue guidance downward from the previous expectation of 35%–55% growth to a new range of $12.5 million to $14 million, citing greater-than-anticipated manufacturing constraints in the first half of the year.
* In Q1, management was focused on completing the onboarding of new manufacturing partners and anticipated margin normalization in the second half. In Q2, they reported completion of equipment installations and are now building inventory.
* Analyst questions shifted from concerns about manufacturing readiness and staffing in Q1 to questions about contract wins, inventory build, and geographic expansion in Q2.
* Key metric changes include a sequential decline in quarterly revenue and a slight improvement in net loss and adjusted EBITDA.
* Management's confidence in operational improvements remained strong, but guidance was tempered to reflect actual manufacturing headwinds encountered.

RISKS AND CONCERNS

* Management cited "capacity issues" and "manufacturing constraints" as ongoing challenges that impacted revenue and customer retention in the first half.
* The company is addressing these concerns by completing equipment installations with new co-manufacturers and building inventory ahead of peak selling season.
* Higher processing and logistical costs associated with expanded bottle capacity and new manufacturing partnerships were noted as contributors to cost pressures.
* Management is focused on aligning production capabilities with market demand and expects margin improvement as manufacturing normalizes.

FINAL TAKEAWAY

Barfresh Food Group signaled that despite persistent manufacturing challenges in the first half of 2025, the company has now completed key operational upgrades and is poised for improved growth and margin expansion in the second half. Revised revenue guidance reflects the near-term headwinds, but management maintains confidence that expanded manufacturing capacity and product momentum, especially in the education channel, will support long-term growth objectives.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/brfh/earnings/transcripts]

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