GrowGeneration Q3 2025 Earnings Report

GrowGeneration EPS Results

• Actual EPS: -$0.04
• Consensus EPS: -$0.09
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

GrowGeneration Revenue Results

• Actual Revenue: $47.25 million
• Expected Revenue: $41.56 million
• Beat/Miss: Beat by +$5.70 million
• YoY Revenue Growth: N/A

GrowGeneration Announcement Details

• Quarter: Q3 2025
• Date: 11/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, November 6, 2025
• Conference Call Time: 4:30PM ET

GrowGeneration (NASDAQ:GRWG) (NASDAQ: GRWG) is a specialty retailer and distributor of hydroponic and indoor gardening products. The company serves commercial and home growers through its retail stores and e-commerce platform, offering equipment and supplies used to cultivate plants in controlled environments.

Its product range includes hydroponic systems, growing media, nutrients and plant supplements, grow lights, environmental-control equipment, irrigation products, propagation supplies, seeds, and related gardening accessories. GrowGeneration also sells products under private-label brands and provides cultivation supplies to customers operating in the cannabis, specialty agriculture, and other controlled-environment growing markets.

Founded in 2014 by Darren Lampert and Michael Salaman, GrowGeneration expanded through a network of retail locations across the United States as well as its online business. The company has also used acquisitions and new store openings to broaden its geographic reach and product offering. Salaman has served in senior leadership roles, including as co-founder and executive chairman, while Lampert has held executive responsibilities within the company.

GrowGeneration Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q3 turnaround: Reported net sales of $47.3 million (+15.4% sequential), gross margin expanded to 27.2%, and adjusted EBITDA returned to positive $1.3 million, a $3.7M YoY improvement.
• Positive Sentiment: Proprietary brand momentum: Proprietary brands rose to 31.6% of cultivation & gardening revenue (from 23.8%), with Charcor +30% YoY, and management targets ~40% in 2026 to drive higher margins.
• Neutral Sentiment: Cost and footprint optimization continue—store operating expenses down 27.8% and total operating expenses down 31.5% YoY, with five store closures this quarter (24 total closures) and additional targeted closures planned.
• Negative Sentiment: Near-term caution: management guides Q4 revenue of ~$40 million and expects some gross-margin compression due to higher durable/CapEx sales, tariff impacts (~1% of sales), and year-end inventory risks.
• Positive Sentiment: Strategic diversification and expansion: ViaGro acquisition, new distribution partnerships (Aritz, V1) and MMI growth broaden non-cannabis channels, B2B e‑commerce adoption, and international market entry.

Presentation

[Operator]

Hello everyone and welcome to GrowGeneration's third quarter 2025 earnings conference call. My name is Joanna, and I will be your operator for today's call. At this time, participants are in a listen-only mode. Following prepared remarks, we will open the call to questions from analysts with instructions to be given at that time. This conference call is being recorded, and a replay of today's call will be available on the investor relations section of GrowGeneration's website. I will now hand the call over to Phil Carlson with KCSA for introductions and the reading of the safe harbor statement. Please go ahead.

[Phil Carlson, Managing Director of Investor Relations at KCSA]

Thank you and welcome everyone to GrowGeneration's third quarter 2025 earnings results conference call. With us today are Darren Lampert, Co-founder and Chief Executive Officer, and Greg Sanders, Chief Financial Officer of GrowGeneration. The company's third quarter 2025 earnings press release was issued after the market closed today. A copy of this press release is available on the investor relations section of the GrowGeneration website at ir.growgeneration.com. I would like to remind everyone that certain comments made on this call include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

[Phil Carlson, Managing Director of Investor Relations at KCSA]

Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements made today. During the call, we'll use some non-GAAP financial measures as we describe business performance. The SEC filing, as well as the earnings press release which provide reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures, are all available on our website. Following prepared remarks, management will be happy to take your questions. We ask that you please limit yourself to one question and one follow-up. If you have additional questions, please re-enter the queue and we will take them as time allows. Now, I will hand the call over to GrowGeneration's Co-founder and CEO, Darren Lampert. Darren, please go ahead.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

Thanks, Phil. Good afternoon, everyone. Thank you for joining us to review our third quarter 2025 results. Our third quarter marked an inflection point for GrowGeneration. We delivered net sales of $47.3 million, up 15.4% sequentially, expanded gross margins to 27.2%, and returned to positive adjusted EBITDA of $1.3 million, a $3.7 million improvement from the same quarter last year. This performance reflects the successful execution of our restructuring plan, lowering operating expenses, improving gross margins, and shifting our revenue mix towards higher margin proprietary brands. What's even more encouraging is that this momentum is being driven by the quality of our revenue, not just volume. Proprietary brands grew to 31.6% of cultivation and gardening revenue, compared to 23.8% a year ago. Our leading brands, CharCoir, Drip Hydro, The Harvest Company, Dialed In, and PowerSI, all demonstrated strong performance.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

CharCoir grew more than 30% year over year, while Drip Hydro increased over 20%. These brands remain in the early stages of adoption and we're expanding into new revenue channels and product extensions to position proprietary brands to achieve approximately 40% of cultivation and gardening revenue in 2026. On the cost side, we reduced store operating expenses by 27.8% and total operating expenses by 31.5% year over year. This operating discipline, combined with a stronger revenue mix, resulted in our first positive Adjusted EBITDA quarter in several years. We also continue to optimize our retail footprint. During the quarter, we closed five stores, bringing our total to 24 locations. We expect to complete a small number of additional closures in the fourth quarter to focus on higher volume, higher margin markets, consistent with our goal of becoming a leaner, more efficient, brand-led organization positioned for profitable growth.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

At the same time, we completed over $7 million in cultivation infrastructure projects. These projects include lighting, benching, fertigation, HVAC, irrigation, and automation systems, helping commercial and craft operators modernize existing facilities or build new ones. Demand remains strong across both multi-state operators and craft cultivators, and we expect this business to remain a meaningful contributor to revenue going forward. Our MMI storage solution segment also delivered a second consecutive quarter of sequential growth with $8.9 million in revenue. MMI continues to benefit from diversification into industrial, agriculture, and specialty end markets, and we expect steady growth from this segment in 2026. Strategically, we are broadening our reach beyond cannabis into larger specialty agriculture and controlled environmental markets. During the quarter, we began selling our brand into the independent garden center channel and relaunched theharvestco.com to serve greenhouse and specialty crop growers.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

In addition, we announced a distribution partnership with Arett Sales, expanding our wholesale and B2B reach into thousands of new retail stores across 32 states. This is a major step in our transition from a cannabis-focused retailer to a national controlled environment agricultural supplier. Furthermore, we're taking additional steps to increase our growth trajectory, including our recent entry into the home gardening market through our second quarter acquisition of ViaGrow, a domestic brand with distribution across retailers such as Amazon, The Home Depot, Walmart, Lowe's, and Tractor Supply. More importantly, it supplies us with a scalable platform to serve home gardeners and hobbyist cultivators across multiple retail channels nationwide. We're also seeing strong adoption of our B2B Pro portal by commercial and wholesale customers. Increasingly, these customers are moving their purchasing online, where they have access to automated ordering, customer catalogs, and real-time inventory visibility.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

This improves order accuracy, reduces transaction costs, and drives reoccurring revenue. Another growth area for GrowGeneration involves further international expansion by entering new high-growth cultivation markets with growing numbers of hemp and cannabis licenses. We are working to accomplish this through the distribution partnerships such as our distribution agreement with V1 Solutions to support commercial sales across the European Union. We also recently launched our proprietary products in Costa Rica, one of Central America's most promising cultivation markets. By leveraging these strategic distribution partnerships, we can quickly scale with minimal capital investments to grow our brand presence in these new markets. With $48.3 million in cash and no debt, we have a strong balance sheet to support our inventory needs, infrastructure projects, and proprietary brand expansion. This financial strength positions us for sustainable and profitable growth.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

Looking ahead, we expect fourth quarter revenue of approximately $40 million, and as we move into 2026, we anticipate positive revenue growth as well as positive Adjusted EBITDA. Our focus will be on driving proprietary brand mix towards 40% of cultivation and gardening sales, scaling B2B portal automation and reoccurring commercial orders, expanding revenue across independent garden centers, greenhouse agriculture, specialty crops, and cannabis, and continuing cultivation infrastructure projects and offering we are now branding as GrowGeneration builds. The controlled environmental agriculture industry remains in the early stages of its growth cycle. We believe GrowGeneration has substantial runway ahead and is well positioned to lead this evolution with proprietary brands, infrastructure builds, and system integration, longstanding customer partnerships, a proven management team supported by a strong balance sheet and track record of execution. With that, I'll turn the call over to our CFO, Greg Sanders.

[Greg Sanders, CFO at GrowGeneration]

Thank you, Darren, and good afternoon, everyone. Starting with our third quarter 2025 results, GrowGeneration reported net sales of $47.3 million, exceeding our guidance of $41 million and representing 15.4% sequential growth from our second quarter of 2025. As expected, net sales were lower versus $50 million in the third quarter of 2024, primarily reflecting 19 fewer retail locations since July of 2024 as part of our ongoing footprint optimization strategy. This was partially offset by continued growth in our business-to-business and commercial channels. Net sales in our cultivation and gardening segment were $38.4 million for the quarter, compared to $41.4 million in the same period last year. Proprietary brand sales represented 31.6% of cultivation and gardening revenue, up from 23.8% in the prior year, driven by strong demand for Drip Hydro and CharCoir. This mix shift continues to expand gross margins and enhance profitability.

[Greg Sanders, CFO at GrowGeneration]

In our storage solution segment, net sales were $8.9 million, up from $8.6 million in the third quarter of 2024, reflecting steady demand across product lines and the success of our diversification efforts into new end markets. Gross profit increased to $12.9 million, up approximately $2 million from $10.8 million in the prior year period. Gross margin expanded to 27.2% compared to 21.6% in the third quarter of 2024, primarily due to higher proprietary brand penetration and the absence of restructuring-related costs that impacted the prior year. On the expense side, store and other operating expenses declined 27.8% year over year to $7.2 million, compared to $10 million in 2024. Total operating expenses decreased 31.5% to $15.7 million, reflecting the continued benefit of our cost reduction initiatives. Selling, general, and administrative expenses were $5.7 million compared to $7.4 million last year, a 22.9% improvement.

[Greg Sanders, CFO at GrowGeneration]

Depreciation and amortization totaled $2.6 million, down from $5 million in the same period last year, and we expect this level to remain stable throughout year-end. GAAP net loss narrowed to $2.4 million or negative $0.04 per share, compared to a net loss of $11.4 million or -$0.19 per share in the prior year period. The improvement was primarily driven by higher gross margins, lower operating expenses, and the absence of restructuring-related charges incurred in 2024. Non-GAAP adjusted EBITDA turned positive to $1.3 million compared to a loss of $2.4 million in the prior year, reflecting improved sales mix from our proprietary brands and the continued realization of cost reduction initiatives. This represents a $3.7 million year-over-year improvement and a clear indicator that our operating leverage is strengthened.

[Greg Sanders, CFO at GrowGeneration]

Turning to the balance sheet, we ended the quarter with $48.3 million of cash, cash equivalents, and marketable securities and no debt. Our balance sheet remains one of the strongest in our industry, and we do not anticipate any near-term financing needs. In summary, the third quarter demonstrated that our transformation strategy is delivering tangible results. We achieved our strongest adjusted EBITDA performance in four years, delivered double-digit sequential sales growth, expanded gross margins, and significantly reduced operating expenses, all while maintaining a debt-free balance sheet and ample liquidity to support continued investment in initiatives that drive sustained profitability. With that, I will turn the call back over to Darren for closing remarks.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

Thanks, Greg, and thank you, everyone, for joining us today. In closing, the restructuring actions we've executed over the past few years are clearly working. In the third quarter, we delivered $47.3 million in revenue, 15.4% sequential revenue growth, exceeded our own forecast, and returned to profitability with $1.3 million in Adjusted EBITDA. Proprietary brands grew to 32% of cultivation and gardening sales, a meaningful year-over-year increase. This continues to be a key driver of our margin expansion and long-term growth strategy. At the same time, we are becoming a more efficient company. We're reducing operating expenses, closing underperforming stores, exiting leases, and shifting more transactions to our B2B e-commerce portal, where adoption continues to exceed expectations. These efforts are helping us build a leaner, more scalable platform.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

With no debt, $48.3 million in cash, and growing demand across commercial, specialty agriculture, and retail channels, we are well positioned to continue investing in our proprietary brands. While we're proud of what we've accomplished this quarter, we know we're still early in this transformation, and there's more progress ahead. We appreciate your continued support and look forward to updating you on our execution and growth in the quarters to come. That concludes our prepared remarks. Operator, please open the line for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the handset before pressing any keys. The first question comes from Aaron Gray at Alliance Global Partners. Please go ahead.

[Aaron Gray, Managing Director and Head of Consumer Research at Alliance Global Partners]

Hi, good evening. Thank you for the question and nice job on the inflection back to profitability there. Quick question for me. Just as we think about the mix of sales going forward, appreciate the color, expecting proprietary brands 40% for next year. Just wanted to take a step back and think, as we think about the channels you're going to, obviously, you've done a good job diversifying. How do you think about the mix of sales for cannabis today versus where it might be 12-18 months from now, and how much of that is a driver in terms of the increased overall proprietary brand mix? Thank you.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

I think what you're seeing right now, Aaron, is our forecast at 40%. Still take a large percentage of that into cannabis. Anything else as we transition into lawn and garden specialty ads, we certainly believe that proprietary brands will drive 50%-60%. Right now, the 40% that you're seeing from us next year, I'd say probably around that 35% minimum will be into the cannabis space.

[Aaron Gray, Managing Director and Head of Consumer Research at Alliance Global Partners]

Okay, great. Thanks, right, Darren. That's helpful color. Second question for me. Just how best to think about the puts and takes specifically for the gross margin? I know you guys had some expectations earlier this year, some changes that occurred when you took away the guidance, but any color specifically on the gross margin, how would you think about that over the next upcoming quarters? Imagine some lift from the higher proprietary brand mix, but also some offsets given continued pricing pressure and discounting? Thank you.

[Greg Sanders, CFO at GrowGeneration]

Hey, Aaron. Thank you for the question. I think when you look at our third quarter results, we're still seeing some impact from tariffs, maybe in the range of 1% of sales. We're working through expanding those costs throughout the supply chain, renegotiating with vendors where applicable, passing on costs to our end customers where appropriate as well, while still maintaining competitiveness in the market. When you look at the concentration of revenue in the third quarter, we had about $8.9 million coming from MMI at that low to mid-40% range. What drove down margins slightly was the amount of durable sales that we had in the period. We ran from $7 million in durable sales in the second quarter up to $13 million in the third quarter. We are seeing our pipeline of CapEx or durable sales continue to expand into the fourth.

[Greg Sanders, CFO at GrowGeneration]

First quarter of next year. We are excited about that. We think that is going to help our revenue growth quite a bit, but we are tempering some expectations around gross margin in the fourth quarter, just relative to the amount of durable activity that we are seeing. With a margin ratio of 27.2% in the third quarter, we felt pretty good about just the blend of different activities that fell into the period. We are expecting some compression in the fourth quarter. We also execute all of our full end-of-year inventory counts in December, so there is some risk associated with that, although we have sufficient reserves in our minds for that activity. I would expect probably slightly down in the fourth quarter, just relative to CapEx and a lower total sales volume.

[Greg Sanders, CFO at GrowGeneration]

I think MMI, you'll see, go from a number close to $9 million down to $6 million, so less contribution on the margin side from them as well. We're still excited about the business in the quarter we just had.

[Aaron Gray, Managing Director and Head of Consumer Research at Alliance Global Partners]

Helpful color

[Darren Lampert, Co-founder and CEO at GrowGeneration]

Aaron, the fourth quarter, we are looking for our first sequential year-over-year revenue growth since 2021. As you may recall, again, last year, fourth quarter, we were in that $37 million range. This will be, we do believe that this fourth quarter will be our first sequential revenue growth year-over-year since 2021.

[Aaron Gray, Managing Director and Head of Consumer Research at Alliance Global Partners]

Great. Appreciate that, Darren. Thank you for the color, Darren, and nice job on some of that progress. I'll go ahead and jump back into the queue.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

Thank you, Aaron.

[Operator]

Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press star one. This concludes the Q&A session. I'll turn the call back over to Darren Lampert for closing comments.

[Darren Lampert, Co-founder and CEO at GrowGeneration]

I'd like to thank our shareholders and all our supporters. We look forward to updating you in March for year-end and look forward to a strong 2024. Thank you.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Participants

Executives

• Darren Lampert, Co-founder and CEO
• Greg Sanders, CFO

Analysts

• Phil Carlson, Managing Director of Investor Relations at KCSA
• Aaron Gray, Managing Director and Head of Consumer Research at Alliance Global Partners