Arhaus (ARHS) Q3 2024 earnings summary

Executive summary

• Q3 2024 net revenue was $319 million, net income $10 million, and adjusted EBITDA $23 million, reflecting a 9.2% comp decline year-over-year due to lower demand and non-recurrence of prior year backlog deliveries.

• Net revenue for the nine months ended September 30, 2024, was $924 million, with net income of $47 million and adjusted EBITDA of $92 million, all down year-over-year.

• Gross margin declined to 38.6% in Q3 2024, primarily due to higher showroom, delivery, and transportation costs.

• SG&A expenses increased to $112 million in Q3 2024, mainly from legal, marketing, and strategic investments.

• Ten new showrooms opened year-to-date, with a total of 101 showrooms across 29 states as of September 30, 2024.

Financial highlights

• Q3 2024 net revenue: $319 million, down 2.2% year-over-year; net income: $10 million, down from $20 million in Q3 2023.

• Gross margin for Q3 2024 was $123 million (38.6% of net revenue), down from $131 million in Q3 2023.

• SG&A expenses for Q3 2024 were $112 million, up 5.1% year-over-year.

• Adjusted EBITDA for Q3 2024 was $23 million (7.2% margin), down from $34 million in Q3 2023.

• Cash and cash equivalents totaled $178 million as of September 30, 2024, with no long-term debt.

Outlook and guidance

• Full-year 2024 net revenue expected at $1.23–$1.25 billion, with adjusted EBITDA at $115–$125 million.

• Net income guidance for 2024 is $55–$60 million; comparable growth forecasted at (12.0)% to (11.0)% for the year.

• Q4 2024 net revenue expected between $306 million and $326 million, with comparable growth of (22)% to (16)% and net income of $8–$13 million.

• Company-funded capital expenditures for 2024 estimated at ~$80 million, mainly for new showrooms.

• Management expects operating cash flows to be sufficient for working capital and capital needs for at least the next 12 months.