Online fashion retailer Revolve (NASDAQ: RVLV) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 9.7% year on year to $296.7 million. Its GAAP profit of $0.16 per share was 14.7% above analysts’ consensus estimates.
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Revolve (RVLV) Q1 CY2025 Highlights:
- Revenue: $296.7 million vs analyst estimates of $297.4 million (9.7% year-on-year growth, in line)
- EPS (GAAP): $0.16 vs analyst estimates of $0.14 (14.7% beat)
- Adjusted EBITDA: $19.3 million vs analyst estimates of $15.3 million (6.5% margin, 26.1% beat)
- Operating Margin: 5%, up from 3.4% in the same quarter last year
- Free Cash Flow Margin: 14.4%, up from 0.7% in the previous quarter
- Active Customers : 2.7 million, up 152,000 year on year
- Market Capitalization: $1.36 billion
"I am very proud of our team's continued outstanding execution and flexibility that has driven our strong performance," said co-founder and co-CEO Michael Mente.
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.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Revolve grew its sales at a sluggish 5.1% compounded annual growth rate. This fell short of our benchmark for the consumer internet sector and is a tough starting point for our analysis.
This quarter, Revolve grew its revenue by 9.7% year on year, and its $296.7 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 7.9% over the next 12 months. While this projection suggests its newer products and services will fuel 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 7.4% annually to 2.7 million in the latest quarter. This growth rate is slightly below average for a consumer internet business. If Revolve wants to reach the next level, it likely needs to enhance the appeal of its current offerings or innovate with new products. 
In Q1, Revolve added 152,000 active customers , leading to 6% 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 fell over the last two years, averaging 4% annual declines. 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 $109.77. It grew by 3.5% year on year, slower than its buyer growth.
Key Takeaways from Revolve’s Q1 Results
We were impressed by how significantly Revolve blew past analysts’ EPS and EBITDA expectations this quarter. On the other hand, its revenue was in line. Overall, this print was mixed. The market seemed to be hoping for faster growth, and the stock traded down 8.1% to $17.40 immediately following the results.
So should you invest in Revolve right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
