FOX FACTORY HOLDING CORP (NASDAQ:FOXF) Stock Plummets After Q3 Earnings and Guidance Miss Estimates

Fox Factory Holding Corp (NASDAQ:FOXF) reported financial results for the third quarter of fiscal 2025, delivering a performance that fell short of analyst expectations on key profitability metrics. The market reaction was swift and severe, with the stock declining sharply in after-hours trading.

Earnings and Revenue Versus Estimates

The company's third-quarter results presented a mixed financial picture, with revenue narrowly missing expectations while adjusted earnings per share came in significantly below analyst forecasts.

• Revenue: Reported Q3 revenue of $376.4 million, compared to analyst estimates of $390.97 million.
• Adjusted EPS: Reported Q3 adjusted earnings per share of $0.23, substantially below the estimated $0.5568.

The divergence between the top-line performance and bottom-line results highlights pressures on profitability. While sales grew 4.8% year-over-year, the company faced headwinds from higher tariff costs and strategic investments, which compressed earnings.

Market Reaction and Price Action

The market's response to the earnings release was decisively negative, reflecting investor disappointment with the earnings miss and a cautious near-term outlook. The stock experienced a pronounced sell-off, declining over 22% in after-hours trading. This sharp drop erases gains from the past month and underscores the market's heightened sensitivity to earnings guidance and profitability in the current economic environment.

Third Quarter Performance Overview

The company's performance was characterized by strong growth in two of its three core divisions, offset by a significant decline in its bicycle segment.

• Segment Performance:

  • Aftermarket Applications Group (AAG): Sales increased 17.4% year-over-year to $117.8 million.
  • Powered Vehicles Group (PVG): Sales rose 15.1% to $125.9 million.
  • Specialty Sports Group (SSG): Sales decreased 11.2% to $132.7 million, attributed to inventory reductions across the supply chain.

• Profitability Metrics:

  • Gross margin improved slightly to 30.4%, up 50 basis points from the prior year.
  • The company reported a GAAP net loss of $0.6 million, or $0.02 per diluted share, compared to net income of $4.8 million in the same quarter last year.
  • Adjusted EBITDA grew 5.7% to $44.4 million.

Updated Financial Outlook

Management provided a revised outlook for the remainder of fiscal 2025, which appears conservative compared to existing analyst projections.

• Q4 2025 Guidance: The company expects net sales between $340 million and $370 million, falling short of the analyst estimate of $379.01 million. Adjusted EPS is projected in the range of $0.05 to $0.25.
• Full-Year 2025 Guidance: Net sales are now anticipated to be between $1.445 billion and $1.475 billion, below the analyst sales estimate of $1.514 billion. Adjusted EPS guidance was set between $0.92 and $1.12.

CEO Mike Dennison cited a "challenging environment" and inventory reductions in the SSG segment as primary factors impacting results and the updated outlook. He noted that strategic investments, while creating near-term margin pressure, are intended to strengthen the company's competitive position for the long term.

Conclusion

Fox Factory's third-quarter results reflect a company navigating a complex macroeconomic landscape. While its AAG and PVG segments demonstrated robust growth, the significant downturn in the bicycle segment and associated inventory corrections proved to be a substantial drag on overall performance. The substantial miss on earnings and the issuance of guidance below analyst expectations for the critical fourth quarter were the key drivers behind the negative market reaction. Investors will be closely watching the company's ability to execute its cost-reduction initiatives and manage inventory levels as it heads into fiscal 2026.

For a detailed look at historical earnings and future analyst estimates for Fox Factory Holding Corp., you can review the data here.

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