Hims & Hers Shocking Update!

Added: 2026-05-14

[00:00:04]Hi everyone. Hope you're all doing well.

[00:00:05]Today we're going to do a full breakdown into Hims and Hairs earnings. And I've got to say this one completely shocked me. I was completely sidetracked. It was like walking down the street and then somebody hits you behind the back of the head or side of the head. You're like, "What just happened there?"

[00:00:21]And it's a very interesting time for him to hate us because what shocked me was the level of profitability sacrifice that has gone on in the short term and that could really punish the stock. But in the long term, if they do hit their guide, I'm kind of giving you the full video in like a 30 seconds brief here, but please stay with me. But if they do hit their financial guide from these levels that they're at right now, then it could be a serious winner. And it's a very very piv p pivotal point for him and hers and totally sidracked me. I did not think we would be doing this earnings video saying something like that. But what has completely shocked me is a level of investment and sacrifice into the gross margins and profit margins that did go on in this quarter.

[00:01:08]Now normally, you know, I would kind of say to you guys, oh that stock price moving absolutely stupid or it was welld deserved or uh you know or it was bad earnings. I'll be honest with you with this one. When I look at him and hairs, I can see why the stock is down 14% in pre-market. I can see why the market would look at those levels of sacrifice they're doing and go, "This better work for you. This better work for you."

[00:01:32]Because even I'm looking at that and thinking, "If you don't recover those profit margins, it could be a little bit of a stinker."

[00:01:40]And for the first time for a little bit, I look at him to hers. I never look at him and hers in that position, but I look at it today and go, this has got to work out for you because the risk that you're taking is uh is a pretty big risk. So, we'll get on to those earnings. Now, Him and Hairs, look at the headline numbers. EPS of negative0.48, missed by 0.43.

[00:02:00]Yeah. Um, totally did not see what was going on in that EPS numbers. Granted, there was a couple of onetime charges in there, but still, uh, even without the onetime charges, I would have missed the EPS estimate. So big miss on the EPS front. Revenue growth of plus 3% which missed by 8.75 million. Subscriber growth of 9% year-over-year. And looking at the moment for the second quarter guide, it came in with revenue expecting 680 million to 700 million. That was above the consensus of 64 650 652 million uh on the revenue guy. This is what happens when you record videos at 6 a.m. guys.

[00:02:42]Um so yeah um so EPS numbers not great revenue numbers about where we expected for Q1. Q2 revenue guide looks very strong. So clearly expecting some revenue expansion coming forward which we have spoke about before that that would be the case with the likes of uh the eucalyptus acquisition coming in here and just in general they're going past those tough GLP1 comps at the moment and uh now they're past it then we would see the revenue explosion. So not too surprising from that point of view and adjusted eB5 million which is an eB range of 5 to 8%.

[00:03:18]So that's a lot lower than what they were getting towards at the back end of last year. Last year I think they were touching towards like a 12 13% adjust margin. So expecting the lower profitability next quarter as well. Then we get to the full year guide. So the full year guide was 2.8 billion to 3 billion which is higher than the consensus. So expecting a decent revenue acceleration towards the back end. And check this out. So for the adjusted eBay margin of 10 to 12% for the full year.

[00:03:48]So if you're doing adjusted eBay margins right now or for the second quarter, let's say, of five to 6%, but by the back end of the year, you're expecting those EBID margins to double when So you're saying to us that those EBID margins are going to be what? 13 14 15% by the end of the year.

[00:04:10]And and this is where the big kind of thing goes on about Hims and Hairs is like there's so many moving parts here like the revenue acceleration that's expected. Are they going to do it? The adjusted eBay revenue and eB margin acceleration are they going to do it?

[00:04:27]And as we know the market can get quite are they going to hit it towards you know when you are have such a strong second half waiting you do get a bit nervous from that point of view. I mean if they hit those levels the stock's going to be flying but if they don't and they maintain at these levels then we're probably going to see more days like what we have had this morning really. So looking at the earnings here uh there was a change in how they're going to report. So they are going to do they they normally do a shareholder letter. They're going to change that from a quarterly to a full year letter which does make sense. It does take up a lot of time to do it and realistically does that much change in your business every 3 months? Probably not. So yearly letter is absolutely fine. Obviously they'll still report quarterly earnings as they have to do really. So they one of the opening lines is that they still have high not just conviction high conviction of the 2030 targets of at least 6.5 billion in revenue. So from the levels that they're at right now which for this year they're expected to close off at around about 3 billion to get to in 2030 to get to 6.5 billion would be some serious kagger. The fact that they've kept it in there is, you know, that target and they still believe and high convictions it is great. And to get to 6.5 billion, that would be significant amounts of revenue increases. And they still expect to get to 1.3 billion in adjusted EBIDA, which is, you know, significantly higher from where they're at right now. You're talking 3x to 4x the IB levels. So if they hit that, I mean, this company's going to fly. And that's the million-doll question. Are they going to hit it? Because if you are talking about a company that is going to start putting up 1.3 billion in adjusted eBay on a 6.7 well after the drop today the drop today is going to put it down to what a five billion mark 5 billion market capish well five and a halfish you're going to be trading like five times eida which just isn't going to happen for the a company if they have those growth rates you know you're talking where this is realistically going to be what 20 times eidish so you're talking that if they hit those targets this stock would be probably about three to five uh three to four times higher than where it is right now.

[00:06:47]It's just a million dollar question if they're going to hit that that guidance at the moment considering where the financials are currently at. So you see here subscribers is up 9%. So good to see the more subscribers coming onto the platform. However, monthly revenue per average subscriber was down 6% as we know the GLP ones that they have had coming off at the moment. So that was always going to happen with the month monthly revenue per average subscriber during this period of time. United States revenue was down 8%. Same again GLP1, we knew that was going to be the a bit of a situation there, but that should start going back to growth by the end of the year. Rest of the world revenue was up 969%.

[00:07:24]Although a lot of that did come from acquisitions rather than organic um growth. So just bear that in mind. But you know, not a bad number there. Now here's where we start getting to the sticky point. So gross margin was 65% for the first quarter compared to 73% for the first quarter 2025. So you've had a 8% contraction in the gross margins there which is uh pretty significant. They also swung to a net loss net loss of 92 million uh compared to a net income of 49 million for the first quarter 2025. And that's why for me the market spoots is because it's seeing that big pull down in those gross margins and also going to a net loss position at the moment. We talked about the guide which for the second quarter remains even at about the same levels as where we're at right now but a hike up in the revenue and revenue starting to reacelerate again. Full year would show good signs of growth and adjusted eb would show a big uh return to good e levels at the back end of the year if they are going to hit that. Now here's the breakdown here of the uh financials.

[00:08:27]So revenue here and then we have the cost of revenue which had a pretty significant jump uh increasing more than the actual revenue which is not what you want to see. So that led to a lower gross profit and then your gross margins. So right now the products that they are making they are making less money off. So we'll get on to that. Let's get on to that when we get to the conference call.

[00:08:48]actually um if we look at operating expenses, marketing actually decreased.

[00:08:52]The first time I think I've ever seen Hint and Hairs decrease the marketing spend uh at the moment.

[00:08:57]But when we look at operations and support, that was a very big jump there.

[00:09:01]Technology and development, that was a very big jump there. And you saw GNA basically the cost double at the moment.

[00:09:08]And with those GNA costs nearly doubling, that's where you had a big swing from your loss or from income to operations during this period of time.

[00:09:16]And then that's where we see the adjusted EVA margins went from 16% down to a 7% uh EVA margin uh during this period of time. So looking at the conference call and remarks about what is going on here with the business. So they said in March in March we made a deliberate strategic pivot to our weight loss specialtity. One that we knew would create near time near-term financial noise but unlock immense potential for the platform to accelerate at scale.

[00:09:43]Today I will walk you through the initial impact of that decision. Early evidence that gives us conviction that it was the right one. Our investment priorities moving forward and finally our financial pro profile built from here. So you can see here that they are talk about like that this was a choice.

[00:09:57]We made some big investments and let's see if we get the rewards from it. Our financial focus will be on accelerating growth as we see in the guide. We have seen the uh guide that shows that there could be a big acceleration of growth at the moment and international markets while maintaining discipline to ensure continued healthy free cash flow generation to reach our long-term targets. They said that revenue in just eBay margin of US operations were temply pressured by revenue recognition dynamics from short shorter shipping cadences further compounding by a tougher comparable period. We have talked about that as well. An international growth driven quarter by uh the acquisitions they that they made.

[00:10:34]The pivot in the weight loss speciality impacted our financials in the first quarter while they made the pivot with meaningful investment in product technology and other capabilities to support their GLP1 compounding supply chain at the moment. They said that they had a 33 million right down to the GLP1 supply chain. 28 million of one-time charges that negatively impacted gross margins by roughly five points. uh in the first quarter and also the remaining was a 5 million of one-time restructuring charges uh impacted operations and support costs.

[00:11:07]In the first quarter, we continue to investing in talent and capabilities across several areas inclusive of technology and operations. We expect to continue investing in technology in the near term as benefits cascade across multiple areas of the platform. So they're saying there's a there's a lot of changes at the moment with that GLP1 supply chain that they have going on at the moment and also the investments that that looks like they've been investing in people and hiring and other areas like warehouses at the moment for some of the supply chain that they currently have uh with the likes of the international growth at the moment. They said that these insights have the ability to increase the tenure of the platform. Lastly, AI talent in particular has the potential to reduce both both organizational and operating costs in a way that not only does sacrifice service and quality for subscribers but enhance it. So they're saying as well like one thing they're investing in is this AI side of the platform which in the long term they can get higher margins from it and obviously cut down costs because of that. Uh and that's one thing that they're uh you know invested in at the moment.

[00:12:09]They said, "At the moment, we do expect to be positioned to return to net income profitability in 2027. Our primary focus will be on driving strong growth and cash flow generation in the first quarter. We generated 89 million of cash flow from operations and 53 million of free cash flow."

[00:12:25]They also talked about the eucalyptus transaction at the moment and they said that they do not have that baked into the financial guide at the moment.

[00:12:35]Obviously, if that's to come in and close at the midpoint of the year, which we're expecting, that's going to see a significant jump up in the outlook as well. And then they said, first off, previously mentioned, our focus will remain uh maintain on strong growth. We expect gross margins to compress as we prioritize scaling areas such as weight loss, labs, and international markets, which will have a lower gross margin profile than the our longerterm business. So this is the thing is that if they are saying that this is going to compress margins and then you expect a big jump up in the back end of the year.

[00:13:07]We'll see if they are doing it. That statement there kind of contradicts what they said about the the return to the higher gross margins at the moment. But then they gave some clarity around the step up in eBay. So said that we expect meaningful step up in just dollars in the third and fourth quarters. The compounding effect of monthly co-arts acquired through the years expected to result in accelerating revenue in Ibida.

[00:13:25]Additionally, we expect to gain operating leverage in GNA as we drive continued market marketing efficiency gains. Lastly, we continue marketing investments in technology on our platform. We believe we can elevate the overall experiences for cons consumers on our platform where in the form of new apps and tooling of faster care and deeper insights. So, yeah, I'm looking at this guide here.

[00:13:50]It does look a big ask, but they seem to think they can that they can do it. And why would you doubt a management team like Kim and Hertz? You know, the track record that they have, you know, why would you why would you doubt them? But clearly the next quarter isn't going to be great, but they are expecting that leverage to start kicking in by the third and fourth quarter. And I sit here right now and I go, I don't know. I don't know if they're going to do it.

[00:14:13]Um, you know, from the information they give me here, like they are really thinking that's going to start flowing through to the bottom line. I'm not sure. You know, they clearly say that the international markets are a lower profile. So, you are really putting pressure on that US business to drive up those eBay margins. And that's why I go to the stock and I can go I can see why the stock market doesn't like it because there's a big ass there in that H2.

[00:14:38]There's a big big ask. And for the first time, I look at that stock and I go, I think they can hit it, but there is certainly a part of me right now that goes, it's a big ass to get that lift up in that Q in in that second half of the year to get that to that target. So, um, we we'll see if they if they do achieve it, but like we said, if they do hit those long-term targets, I mean, certainly the stock does look good value from here, but it's just a question of like are they going to get the leverage like they are saying that they are planning on doing. Look at the earnings here. Uh, revenue growth of 10, 15, 20% growth, profit margin of 5, 8, 10%. I have lowered my revenue growth forecast down slightly. Um, which I should just put them under the 20 20 2030 target because that was six billion, was it? You know what? I'm going to hike it up again. I'm going to put that actually up to 25%.

[00:15:27]No, maybe not. Maybe 20. Yeah, let's go 22 on that high side. And let's put that midside up a little bit higher to maybe 17%. Profit margin of five, eight, 10%.

[00:15:37]So, I have um lowered the profit margins there, which not looking at 600 million of profitability. And if they were aiming to do what was it 1 point is it 1.8 billiona maybe that's a little bit on the low side I might up that in a second and 30 times earnings on the low side you make no money on this but obviously 10% growth would be very disappointing profit margins of 5% would be a you know a contraction to kind of where they're at at the moment realistically. So uh that would be very disappointing. Uh midside of 17% growth which I think is achievable. 8% profit margin, which seems about fair. And you got about 88% upside, and then kind of where you want to see them be, which is around about 22% profit mar uh 22% revenue growth, 10% profit margin, uh 30 times earnings, 177% upside. I mean, let's say, for example, like the market really does fall back in love with him and hers and puts it back up to like a 40 times earnings. I mean, that's not too bad. 270% upside. um if they are able to drag those profit margins up a little bit higher and uh let's say like a 13% profit margin and then a 40 times earnings is this that does provide yeah 381% upside. So yeah um overall the earnings I'm a little bit shocked. I still don't know what to say about it. I'm very surprised about this the sacrifice in profitability. Um, if they do get the results and hit the long-term guide, it looks very cheap from here. If these profit margins stay where they are, and you know, it's not going to be good for him and hers, and I can see why the market is nervous today.

[00:17:18]Um, yeah, I I don't know what to say really.

[00:17:23]Like the obviously the Q2 isn't going to show much sign of improvement. I think Q3 is where we kind of go, okay, show us the operating leverage a little bit more now.

[00:17:32]So, um, yeah, I probably need a little bit more time to decide what to do with my position because I'm in a position now where I'm like, do I kind of reduce the position and just protect myself in case they don't hit that H2 waiting? But with the track record, should I believe them?

[00:17:52]Am I in a position to really buy the stock at the moment? There's a lot of trust in that waiting that they do, you know, they do get there. Um, I don't know like the easy the copout answer is really to wait until Q2 to Q3 and see if that operating leverage does show the signs of kicking in. And if it does show the signs of kicking in, then you're like, okay, um, it looks like this is going to absolutely fly now. Uh but at the same time, if the market gets a sniff of like, yeah, you aren't hitting that Q2 target, then Hairs will start pushing back down into, you know, the $1 range realistically at the moment. So, it's a tricky one. It's a tricky one because this update has kind of come out of nowhere. It's a surprising update and um the how much they are investing into the business is a very very big surprise.

[00:18:43]Um, I kind of want to believe them that when they look at those gross margins and they give the reasons why those gross margins were down with the likes of the investments and also the changes in the supply chain and the GLP1 side of it, it does all kind of make sense really. So, I am swinging towards like a believe in them and see where we're at in Q3 and also with the track record.

[00:19:01]You know, I've owned this company for five, six years now. Um, and all they've done is execute and execute. So, why would they not execute right now and and not believe them? and they've hit all the targets they've always set out to do. So, and we always knew it was going to be a tough period of time with all this GLP1 changeover going on. So, um yeah, it's a it's a it's there's a lot of moving parts a lot of moving parts in this one to digest. So, that's my thoughts at the moment. I'm I'm holding and then I'm kind of deciding where I go with the terms of like the position sizing and if it's worth buying. I'll be honest with you, I think I probably won't buy unless it falls into the teen range again. Um, but yeah, it shocked me. It shocked me and I can see why the market's nervous today over the these earnings. I'll be honest with you, because uh there's a lot of pressure on that back end guide now. So, yeah, I mean, if it hits the full year guide though, like I said, even this is going to fly. So, um, crazy. Absolutely crazy. Um, it shocked me. It's what I It's certainly the most shocking earnings report I've read this earning season for sure. So, yeah, we'll keep an eye on it. Thanks for watching anyway, guys. See you in a bit.