Roots (ROOT) investor relations material

Executive summary

• Q3 2025 revenue reached $71.5 million, up 6.8% year-over-year, with direct-to-consumer (DTC) sales rising 4.8% and comparable sales up 6.3% due to strong omnichannel and in-store performance.

• Adjusted EBITDA was $7.5 million, up 5.3% year-over-year; excluding DSU/share-based compensation revaluation, adjusted EBITDA was $7.6 million, a 7.3% increase.

• Net income was $2.3 million, down 4.5% year-over-year, or $0.06 per share; adjusted net income was $3.3 million, up 17.2%, with adjusted EPS of $0.08.

• Brand strength, product innovation, and omnichannel strategy drove customer acquisition and engagement, despite a dynamic retail environment and an unusually warm fall.

• Maintained a strong balance sheet with declining net debt and healthy inventory ahead of the holiday season.

Financial highlights

• Total sales increased 6.8% year-over-year to $71.5 million; DTC sales reached $56.8 million, up 4.8%.

• DTC gross margin improved 140 basis points to 65.4%, reflecting reduced markdowns and better product mix.

• Total gross profit was $43.4 million, up 8.1% year-over-year; total gross margin was 60.8%, up 80 basis points.

• SG&A expenses rose 10.6% to $38.2 million, driven by higher marketing, personnel, variable selling costs, and DSU revaluation.

• Free cash outflow improved to $4.6 million from $6 million last year.

Outlook and guidance

• Early Q4 Black Friday and holiday trends show positive consumer engagement and strong response to curated offers and partnerships.

• Marketing investments in Q4 are expected to increase by $2–3 million, focusing on both brand equity and immediate sales.

• Marketing strategy for next year will be refined based on learnings from this year's mix of top-of-funnel and conversion-driving activities.