Online fashion retailer Revolve (NASDAQ: RVLV) fell short of the markets revenue expectations in Q3 CY2025 as sales rose 4.4% year on year to $295.6 million. Its GAAP profit of $0.29 per share was significantly above analysts’ consensus estimates.
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Revolve (RVLV) Q3 CY2025 Highlights:
- Revenue: $295.6 million vs analyst estimates of $298.1 million (4.4% year-on-year growth, 0.8% miss)
- EPS (GAAP): $0.29 vs analyst estimates of $0.12 (significant beat)
- Adjusted EBITDA: $25.35 million vs analyst estimates of $14.28 million (8.6% margin, 77.5% beat)
- Operating Margin: 7.1%, up from 5% in the same quarter last year
- Free Cash Flow Margin: 2.2%, down from 3.4% in the previous quarter
- Active Customers : 2.75 million, up 119,000 year on year
- Market Capitalization: $1.52 billion
"We had a very solid third quarter, highlighted by exceptional gross margin performance that drove an 11% increase in gross profit year-over-year and a 45% increase in Adjusted EBITDA to $25 million, our highest ever for a third quarter," said co-founder and co-CEO Mike Karanikolas.
Company Overview
Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve (NASDAQ: RVLV) is a fashion retailer leveraging social media and a community of fashion influencers to drive its merchandising strategy.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Revolve’s sales grew at a sluggish 3.4% compounded annual growth rate over the last three years. This fell short of our benchmark for the consumer internet sector and is a tough starting point for our analysis.
This quarter, Revolve’s revenue grew by 4.4% year on year to $295.6 million, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 6% over the next 12 months. While this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.
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Active Customers
Buyer Growth
As an online retailer, Revolve generates revenue growth by expanding its number of users and the average order size in dollars.
Over the last two years, Revolve’s active customers , a key performance metric for the company, increased by 5.7% annually to 2.75 million in the latest quarter. This growth rate lags behind the hottest consumer internet applications. If Revolve wants to accelerate growth, it likely needs to engage users more effectively with its existing offerings or innovate with new products. 
In Q3, Revolve added 119,000 active customers , leading to 4.5% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating buyer growth just yet.
Revenue Per Buyer
Average revenue per buyer (ARPB) is a critical metric to track because it measures how much customers spend per order.
Revolve’s ARPB has been roughly flat over the last two years. This isn’t great when combined with its weaker active customers performance. If Revolve tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether buyer growth would be sustainable. 
This quarter, Revolve’s ARPB clocked in at $107.62. It was flat year on year, worse than the change in its active customers .
Key Takeaways from Revolve’s Q3 Results
We were impressed by how significantly Revolve blew past analysts’ EPS and EBITDA expectations this quarter. On the other hand, its revenue slightly missed and its number of active customers fell short of Wall Street’s estimates. Overall, this quarter was mixed. The stock traded up 5.4% to $21.05 immediately after reporting due to its bottom-line outperformance.
Big picture, is Revolve a buy here and now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
