RH (RH) Q2 2025 earnings summary

Executive summary

• Demand increased 7% in Q2, with July up 10% and August up 12%, showing accelerating momentum despite a challenging housing market.

• Revenue for Q2 was $830 million, up 3.6% year-over-year, with adjusted operating margin at 11.7% and adjusted EBITDA margin at 17.2%.

• Aggressive investment in product transformation and platform expansion is driving significant market share gains in North America and laying groundwork for global expansion.

• Major new gallery openings and product launches are expected to further boost demand and brand presence.

Financial highlights

• Q2 revenue reached $830 million, a 3.6% increase compared to the same quarter last year.

• Adjusted operating margin was 11.7%, and adjusted EBITDA margin was 17.2% for Q2.

• Product margins have inflected positive and are expected to remain strong for the rest of the year.

• Inventory increased over 20% faster than sales, reflecting strategic investments to support new product rollouts and gallery resets.

Outlook and guidance

• Full-year 2024 guidance: demand growth of 8%-10%, revenue growth of 5%-7%, adjusted operating margin of 11%-12%, and adjusted EBITDA margin of 17%-18%.

• Q3 2024 guidance: demand growth of 12%-14%, revenue growth of 7%-9%, adjusted operating margin of 15%-16%, and adjusted EBITDA margin of 21%-22%.

• Revenue is expected to lag demand by 4-8 points in 2024 due to assortment transformation and backlog, with an anticipated year-end backlog of $80-$100 million.

• International expansion investments are expected to be a 230 basis point drag on 2024 margins.