Revolve Group (NYSE:RVLV) executives struck an upbeat tone on the company’s fourth quarter and full-year 2025 earnings call, pointing to accelerating revenue growth, margin expansion, and rising profitability while continuing to invest in initiatives spanning owned brands, artificial intelligence, international growth, and physical retail.
Fourth-quarter results show improved growth and margin expansion
Co-founder and co-CEO Mike Karanikolas said the company ended 2025 with an “outstanding” fourth quarter, highlighted by double-digit year-over-year net sales growth and a faster increase in profitability. Net sales were $324 million, up 10% year-over-year, with the company citing improved trends across both segments and geographies versus third-quarter comparisons. On a two-year stacked basis, management said Q4 growth improved to 26%, up from 15% in Q3 2025.
Gross margin was 53.3%, up 78 basis points year-over-year, with management emphasizing benefits from markdown algorithm improvements, a higher mix of owned brands, and meaningful improvement in the FWRD segment. Operating discipline helped drive net income to $19 million, up 58%, with diluted EPS of $0.26, up 53%. Adjusted EBITDA was $26 million, up 44%, and adjusted EBITDA margin expanded 188 basis points to 8.1%.
Full-year 2025: higher profitability, stronger cash generation, and no debt
For full-year 2025, Karanikolas said net sales increased 8% year-over-year, with improved growth in active customers and higher revenue per active customer. Management said international continued to outperform, up 12% year-over-year, and noted that both beauty and men’s products rose by a “healthy” double-digit percentage.
Management also highlighted the company’s full-price selling model. Revolve generated 81% of net sales at full price in 2025, which it described as substantially above industry benchmarks. Owned brands contributed 20% of REVOLVE segment net sales for the year, increasing by nearly 2 points year-over-year.
Profitability increased faster than sales. Net income for 2025 was $61 million, and adjusted EBITDA was $94 million, up 25% and 35%, respectively. The company emphasized cash generation and balance sheet strength, reporting $59 million in operating cash flow and $46 million in free cash flow, up 123% and 157% year-over-year. Revolve ended the year with $303 million in cash and cash equivalents (including $11 million in restricted cash) and no debt.
Inventory at December 31, 2025 was $252 million, up 10% year-over-year, which management said was consistent with Q4 sales growth. Timmermans said the company felt good about inventory health, noting some lag from Q3 supply chain difficulties that affected the top line, and added that having FWRD inventory in a “really healthy position” was particularly positive given longer inventory cycles in luxury.
AI, personalization, and operations efficiency remain central themes
Management repeatedly pointed to AI-driven improvements as a contributor to both growth and efficiency. Karanikolas said Revolve drove “several million dollars” in annualized revenue gains from AI personalization and enhanced search, and also cited AI improvements in product recommendations and a virtual styling feature. Operationally, Revolve said internal AI algorithms now transcribe customer service calls, automate invoice processing, and reduce fraudulent transactions.
Executives also highlighted early testing of an internally developed generative AI feature designed to surface contextually relevant product Q&A, which they described as a foundational step toward potential future conversational shopping tools. In the Q&A, management said AI investments primarily appear in SG&A, with some CapEx, and described AI applications spanning marketing targeting, content creation, landing page optimization, customer service, logistics, and even fashion design workflows.
Brand investments, owned brands, luxury opportunities, and retail expansion
Co-founder and co-CEO Michael Mente said brand-building efforts helped accelerate active customer growth while improving marketing efficiency year-over-year in Q4. He highlighted a December brand identity campaign that combined physical events and AI imagery, including displays of the updated Revolve logo on landmarks and at Crypto.com Arena through the company’s Lakers partnership. Management said A/B testing on its e-commerce sites supported consumer adoption of the refreshed identity.
Within luxury, Mente said the company sees an opportunity for financially stronger players to take share from struggling competitors. He pointed to FWRD’s 14% Q4 net sales growth and said FWRD gross profit dollars increased 33% year-over-year in the quarter, representing approximately 6.5 points of margin expansion and the highest-ever FWRD margin for a fourth quarter. He also said Q4 was the strongest quarter ever for FWRD new-customer acquisition. Additionally, management highlighted the FWRD personal shopping program, which they said delivered approximately 100% sales growth in 2025.
On owned brands, management reiterated confidence that penetration can rise materially over time. In response to an analyst question, executives referenced prior periods when owned brands were at “mid-30s” penetration and said they believe that level is “well within reach,” though they emphasized they are “in no rush” and want growth to remain sustainable. Management said they expect owned brand penetration to build sequentially through 2026 and suggested there are multiple upcoming initiatives, though they declined to provide details.
International expansion was also emphasized, with Karanikolas noting international has grown from 17% to 21% of total net sales over the past four years. In the Q&A, management called China a standout region and said it was one of the company’s two fastest-growing regions in Q4, nearly 2x the overall international growth rate, with mainland China growing even faster. Management also discussed localization efforts, including a China-focused owned brand collection and a livestream event described as the company’s most successful ever, as well as logistics savings from a Hong Kong fulfillment hub via logistics partners.
On physical retail, Mente said Revolve opened its second permanent store at The Grove in Los Angeles and described encouraging early demand, including lines outside the store during busy periods. He highlighted an event featuring Dwyane Wade and the U.S. debut of new apparel and footwear from the Li-Ning Way of Wade collection through a strategic partnership described as the brand’s first omnichannel distribution in the U.S. While management said interest from Tier 1 landlords has increased since The Grove opening, they emphasized a measured approach to expansion. In Q&A, the company said it is not providing specific store-count guidance but suggested “an additional store or two” could open in 2026 depending on timing, and clarified that 2026 modeling includes the Aspen and Grove stores but not incremental locations.
Early 2026 trends and margin framework amid tariff uncertainty
Timmermans said the company began 2026 with strong momentum, with net sales through the first seven weeks of Q1 2026 up approximately 16%, supported by strength across REVOLVE and FWRD and both domestic and international markets. He cautioned that comparisons become more difficult later in the quarter, noting January 2025 demand was softer than normal due to Los Angeles wildfires that temporarily affected California demand and led the company to pause social media activity.
For guidance, management emphasized uncertainty tied to tariffs, stating their outlook is based on tariff status as of February 24, 2026 and excludes potential refunds related to a recent Supreme Court decision. Revolve guided for Q1 2026 gross margin of 52.8% to 53.3% and full-year 2026 gross margin of 53.7% to 54.2%. The company expects marketing investment to rise to approximately 15.7% of net sales in Q1 and 15.3% to 15.8% for full-year 2026, driven primarily by increased brand marketing investments tied to planned initiatives.
When asked about longer-term profitability, Timmermans said the near-term goal is to achieve adjusted EBITDA margin in the high single digits consistently, with longer-term improvement expected to come primarily from gross margin expansion through owned brand mix and some leverage in G&A over time.
About Revolve Group (NYSE:RVLV)
Revolve Group, Inc operates as a leading online fashion retailer primarily serving millennial and Gen Z consumers through its flagship e-commerce platform. The company offers a curated assortment of apparel, accessories and beauty products from more than 500 established and emerging brands, alongside private label labels covering contemporary and premium segments. With a focus on trend-driven merchandise and seamless user experience, the website features shoppable editorial content and digital styling advice aimed at strengthening customer engagement and brand loyalty.
Founded in 2003 and headquartered in Cerritos, California, Revolve has expanded its footprint beyond North America by launching localized sites and logistics centers in Europe and the Middle East.
