Xpel, Inc.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 5 November 2025: press release. Guidance figures: 4 new. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue rose 11.1% to $125.4 million: Revenue was $125.4 million, up 11.1%. The second quarter release had given third quarter revenue guidance of $117 - $119 million. Source
• Net income and EBITDA declined: Net income fell 11.8% to $13.1 million, or $0.47 per diluted share, from $14.9 million, or $0.54. EBITDA fell 8.1% to $19.9 million, or 15.9% of revenue, from 19.2%. Source
• Gross margin fell on price increases: Gross margin was 41.8%, down from 42.5%. Management attributed the pressure to unfavorable, non-tariff related price increases that were not in line with the market. Source
• Gross margin expected to recover: Management said the pressure has been mitigated and expects gross margin to return to its normal trajectory beginning in the fourth quarter. Source
• Operating cash flow was a record: Operating cash flow was $33.2 million, up 69.5% from $19.6 million. Management described it as the highest quarter in the company's history. Source
• $75-150 million over two years: Company anticipates investing $75 million to $150 million over two years to raise manufacturing and supply chain capacity, through capital expenditures, acquisitions and/or joint ventures. Source
• Margin targets set for end of 2028: Stated goals are gross margin of 52% to 54% and operating margin in the mid to high 20% range by the end of 2028. Source

“The Company delivered record revenue performance in the quarter as we continue to see momentum in the business.”

Barry Wood, Senior Vice President and Chief Financial Officer of XPEL

Guidance

What changed from last quarter

• New: Company announced increased investment in manufacturing and supply chain through capital expenditures, acquisitions and/or joint ventures. Source
• New guidance: Margin goals for the end of 2028 were given for the first time in this release. Source
• New: The release notes a China distributor acquisition that closed late in the quarter, with minimal effect on third quarter revenue. Source

Results and growth drivers

• Revenue rose 11.1% to $125.4 million: Revenue was $125.4 million, up 11.1%. The second quarter release had given third quarter revenue guidance of $117 - $119 million. Source
• Net income and EBITDA declined: Net income fell 11.8% to $13.1 million, or $0.47 per diluted share, from $14.9 million, or $0.54. EBITDA fell 8.1% to $19.9 million, or 15.9% of revenue, from 19.2%. Source
• Nine-month revenue rose 13.1%: For the first nine months, revenue rose 13.1% to $353.9 million, gross margin was 42.3%, and EBITDA rose 4.6% to $57.8 million, or 16.3% of revenue. Source

Segments and regions

• North America and Asia Pacific grew: North America revenue rose 7.2% to $84.7 million. Asia Pacific rose 21.0% to $15.6 million. United States revenue rose 11.1%; Canada fell 10.0%. Source
• EU, UK and Africa rose 28.8%: EU, UK and Africa revenue rose 28.8% to $16.5 million. India and Middle East rose 7.9% to $5.7 million. Latin America was up 0.5% to $2.8 million. Source
• China acquisition had minimal effect: China revenue rose 11.2% to $10.1 million. Management said the China distributor acquisition had minimal impact because it closed late in the quarter. Source

“We did see some gross margin pressure during the third quarter due to unfavorable, non-tariff related price increases that were not in line with the market.”

Barry Wood, Senior Vice President and Chief Financial Officer of XPEL

Products and services

• Window film revenue rose 22.2%: Window film revenue rose 22.2% and was 22.0% of total revenue. Total product revenue rose 9.8% and was 76.1% of total revenue. Source
• Service revenue rose 15.7%: Service revenue rose 15.7% and was 23.9% of total revenue. Installation revenue, labor and product combined, grew 21.3%. Source
• Adjusted product revenue rose 9.0%: Adjusted product revenue, which combines cutbank credits revenue with product revenue, increased 9.0% year over year. Source

Costs, margins and pricing

• Gross margin fell on price increases: Gross margin was 41.8%, down from 42.5%. Management attributed the pressure to unfavorable, non-tariff related price increases that were not in line with the market. Source
• Gross margin expected to recover: Management said the pressure has been mitigated and expects gross margin to return to its normal trajectory beginning in the fourth quarter. Source
• Operating expenses rose 20.8%: Operating expenses rose 20.8% to $35.7 million, or 28.4% of revenue. Sales and marketing rose 29.7% and general and administrative rose 15.8%. Source
• Cost leverage expected in coming quarters: Management said it believes it is well positioned to drive leverage in the cost structure in the coming quarters. Source

“Given our scale today, we believe this is the right time to further invest in manufacturing and our supply chain with the intention of driving significant margin improvement.”

Ryan Pape, President and Chief Executive Officer of XPEL

Cash flow and balance sheet

• Operating cash flow was a record: Operating cash flow was $33.2 million, up 69.5% from $19.6 million. Management described it as the highest quarter in the company's history. Source
• Acquisition payments and share consideration: Cash paid for acquisitions, net of cash acquired, was $15.0 million in the quarter. Non-cash acquisition consideration was $33.5 million. Source
• Cash and receivables rose: Cash and cash equivalents were $64.5 million at September 30, 2025, up from $22.1 million at December 31, 2024. Accounts receivable rose to $36.9 million. Source

Strategy and investment plan

• $75-150 million over two years: Company anticipates investing $75 million to $150 million over two years to raise manufacturing and supply chain capacity, through capital expenditures, acquisitions and/or joint ventures. Source
• Margin targets set for end of 2028: Stated goals are gross margin of 52% to 54% and operating margin in the mid to high 20% range by the end of 2028. Source
• Investment called an inflection point: CEO Ryan Pape said the company believes this is the right time to invest, given its current scale, and described the initiative as a meaningful inflection point. Source

Coming up, as management said on 5 November 2025

• Quarterly report filing date: Full third quarter financial information is expected in the Form 10-Q, anticipated on or prior to November 7, 2025. Source

Risks management discussed

• Operational: Gross margin was pressured by non-tariff price increases that management said were not in line with the market; management said it has mitigated them. Source
• Financial: Operating expenses rose 20.8%, with sales and marketing up 29.7% and G&A up 15.8%, reflecting channel and service investment. Source

Earlier plans management reported on

• Not stated: Management expects gross margin to return to its normal trajectory beginning in the fourth quarter. Source
• Not stated: Management said it believes it is well positioned to drive leverage in its cost structure in the coming quarters. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.