Executive Summary / Key Takeaways

• Strategic Transformation Underway: Ranpak is undergoing a significant transformation, shifting from a traditional protective packaging provider to a leader in end-of-line automation and sustainable solutions. This is evidenced by major partnerships with e-commerce giants like Amazon.com, Inc. and Walmart, Inc. , and healthcare leader Medline, which are expected to drive substantial long-term revenue growth and deepen customer relationships.
• Automation as a Growth Engine: The automation segment is a critical growth driver, projected to achieve 50%+ top-line growth in the near term and contribute at least 15% of the company's targeted $800 million organic revenue within five years. This segment is also on track to reach near breakeven by year-end 2025, transitioning from a historical drag on profitability to a significant positive contributor.
• Sustainable Packaging Innovation: Ranpak's proprietary paper-based protective packaging solutions (PPS) and continuous innovation, including new cushioning products like the Guardian line, position it to capture market share from plastic and foam alternatives, aligning with global sustainability trends.
• Financial Discipline and Deleveraging: Despite recent macroeconomic headwinds, particularly in Europe, Ranpak is focused on margin enhancement initiatives, cost reductions, and cash generation. The company aims to deleverage to 2.5x-3x within 18-24 months, supported by expected free cash flow generation of $15 million to $20 million in 2026.
• Geographic Divergence and Risks: While North America shows robust growth, driven by enterprise accounts and automation, Europe and Asia Pacific present a more volatile and challenging operating environment. Investors should monitor paper cost volatility, inflationary pressures, and the impact of tariffs on capital expenditures.

A New Chapter in Sustainable Packaging and Automation

Ranpak Holdings Corp. ($PACK), founded in 1972, has long been a stalwart in environmentally sustainable, systems-based product protection. Operating on a "razor/razor-blade" model, the company provides proprietary paper-based Protective Packaging Solutions (PPS) systems to distributors and end-users, generating recurring revenue from the sale of paper consumables. This foundational business, encompassing void-fill (FillPak®), cushioning (PadPak®), and wrapping (WrapPak, Geami, ReadyRoll) systems, offers fiber-based, biodegradable, renewable, and curbside recyclable alternatives to traditional plastic packaging.

The company is now embarking on a transformative journey, strategically pivoting to become a leader in end-of-line automation solutions for e-commerce and industrial supply chains. This strategic evolution is a direct response to the "mega theme" of industrial automation, driven by rising labor costs and the critical need for efficiency in modern supply chains. Ranpak's vision is to be the global leader in sustainable paper packaging solutions, recognized for innovation, customer satisfaction, and environmental stewardship.

Technological Edge: Powering Efficiency with Physical AI and Machine Vision

Ranpak's competitive advantage is deeply rooted in its proprietary technology, which seamlessly integrates sustainable paper packaging with advanced automation and artificial intelligence. The company's core technology revolves around its paper conversion systems, which efficiently transform paper into protective packaging materials. This technology offers tangible benefits by reducing material waste, improving operational efficiency, and enhancing the overall customer experience during unboxing. For instance, the FillPak Trident™ converter, when paired with DecisionTower™ technology, can achieve up to a 35% paper reduction due to active void measurement and the use of unique triangle-shaped paper pads. This system automatically adjusts to different box types and void volumes, requiring minimal operator training.

Beyond its core paper conversion, Ranpak is making significant strides in automation. Its solutions include box customization equipment like Cut'it!, automated dunnage insertion systems such as Autofill, and robotic pad insertion with Pad'it!. The Pad'it! system, for example, offers a fully automated solution for applying corrugated paper padding to packages using a robotic arm, capable of handling up to 15 cans per minute. These innovations are designed to reduce touches and labor, minimize waste, and deliver attractive return on investments (ROIs) for customers.

Ranpak's R&D initiatives are focused on integrating cutting-edge AI and machine vision technologies. Its R2 Robotics division has internally developed the Decision Tower, which applies 2D and 3D AI-supported computer vision to tasks like quality assurance, throughput maximization, and precision void filling. The company also leverages data and analytics through its Precube'it cartonization software, which uses historical order data to simulate machine utilization and optimize box fill rates. Strategic partnerships further bolster its technological moat, including an exclusive commercial partnership with Rabot, a leader in computer and machine vision, to bring AI to the pack station. Ranpak also holds an 8.8% ownership stake in Pickle Robot Co., a market leader in using generative AI and machine learning for autonomous truck and trailer unloading, a notoriously challenging problem in warehouses. These technological differentiators are crucial for Ranpak's competitive moat, contributing to higher efficiency, lower costs, and a stronger market position, particularly in the rapidly evolving e-commerce and logistics sectors.

Strategic Alliances and Market Expansion

Ranpak's strategic initiatives are centered on deepening relationships with enterprise customers and expanding its global footprint. A "transformational deal" was struck with Walmart, Inc. in August 2025, involving a potential spend of up to $300 million over 10 years, excluding paper costs. This includes over $100 million allocated to automation equipment and services, with an additional $200 million focused on PPS products. This partnership is expected to drive significant PPS growth, as each Autofill unit deployed is projected to consume over $100,000 of paper annually, creating a robust recurring revenue stream. Walmart, Inc. is anticipated to become Ranpak's second-largest customer, with management expecting the full spend to occur in a period "meaningfully shorter than 10 years".

Adding to this momentum, Ranpak entered a multiyear enterprise sales agreement with Medline in August 2025, providing Decision Tower and right-sizing solutions for up to 14 distribution centers. These strategic alliances, including the earlier warrant agreement with Amazon.com, Inc. in January 2025, underscore Ranpak's ability to forge deep economic alignments with "the most demanding and sophisticated customers in the world". These partnerships are expected to generate well over $1 billion in revenue from Amazon.com, Inc. and Walmart, Inc. alone over the next 8 to 10 years.

Geographically, Ranpak is expanding its presence in Asia Pacific, with its Malaysia factory ramping up production to reduce lead times and costs, enhancing competitiveness in markets like Japan, Korea, and Australia. The company has also qualified its first local paper vendor in Asia Pacific, further optimizing its supply chain in the region.

Financial Performance and Liquidity: A Path to Deleveraging

Ranpak's financial performance in the third quarter of 2025 showed mixed results but with clear signs of improvement in key areas. Consolidated net revenue increased 8.0% year-over-year to $99.6 million, or 4.4% on a constant currency basis. This growth was primarily driven by increases in automation, void-fill, and wrapping revenue. Automation revenue notably surged by 56% on a constant currency basis in Q3 2025, keeping the company on track to achieve its expected full-year automation revenue of $40 million to $45 million.

Gross profit improved sequentially to 34.5% in Q3 2025 from 31.3% in Q2, reflecting the impact of margin enhancement initiatives. Adjusted EBITDA for the third quarter increased 8.1% year-over-year to $21.4 million, or 3.5% on a constant currency basis. However, the company reported a net loss of $10.4 million for the quarter, wider than the $8.1 million net loss in the prior year period. The warrant expense, a non-cash reduction to net revenue, impacted gross margin by 0.5 points and EBITDA margin by 0.6 points in Q3 2025.

From a liquidity perspective, Ranpak maintains a strong position. As of September 30, 2025, the company held $49.90 million in cash and cash equivalents and had no drawings on its $50 million revolving credit facility. This translates to a reported net leverage of 4.4x on an LTM basis and 3.8x according to its bank leverage ratio. Ranpak is committed to deleveraging, targeting a net leverage ratio of 2.5x to 3x within the next 18 to 24 months. The company expects to end 2025 with $65 million to $70 million in cash on the balance sheet and anticipates generating $15 million to $20 million in free cash flow in 2026, with capital expenditures projected at approximately $35 million. This cash generation will be crucial for paying down debt and reducing interest burden.

Competitive Landscape and Positioning

Ranpak operates in a competitive packaging industry, facing rivals such as Sealed Air Corporation , Sonoco Products Company , and International Paper Company . While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Ranpak differentiates itself through its specialized focus on sustainable, paper-based protective packaging and its advanced automation solutions.

Ranpak's core strength lies in its proprietary paper conversion technology and its integrated automation platforms, which offer superior efficiency and sustainability compared to broader packaging portfolios. This allows Ranpak to effectively compete in the rapidly growing e-commerce sector, where demand for eco-friendly and automated solutions is high. Its strategic partnerships with major e-commerce players like Amazon.com, Inc. and Walmart, Inc. further solidify its competitive standing, providing deep customer relationships and significant revenue opportunities.

In contrast, larger competitors like Sealed Air Corporation (SEE) offer a wider range of materials, including plastics, providing versatility but potentially less focus on pure paper-based sustainability. Sonoco Products Company (SON) and International Paper Company (IP) benefit from extensive manufacturing footprints and raw material sourcing advantages, often excelling in bulk industrial solutions. Ranpak's agility in innovation and its ability to offer integrated, AI-powered solutions for end-of-line packaging give it an edge in targeted market segments, particularly where labor savings and waste reduction are paramount. The company's new Guardian product line, offering smaller footprint and lower cost alternatives to foam in place, is an example of its innovation directly challenging competitors' offerings.

While Ranpak's P/S ratio of 1.15x is in line with the packaging industry median of 0.9x, its negative P/E ratio of -10.83x reflects its current unprofitability, contrasting with profitable competitors like Sylvamo (SLVM) which has a net margin of 6.11%. This highlights a key challenge for Ranpak: translating its innovative solutions and revenue growth into consistent profitability. However, the anticipated breakeven for the automation business by year-end 2025 and its long-term EBITDA margin target of over 25% indicate a clear path to improved financial performance.

Outlook and Risks

Ranpak's management maintains a positive long-term outlook, targeting $800 million in organic revenue within the next five years, with automation contributing at least 15% of that total. Near-term automation growth is projected to be over 50%. For the second half of 2025, the company expects to come in at the low end of its revenue guidance of $216 million to $230 million and adjusted EBITDA guidance of $44.5 million to $54.5 million, primarily due to volatility in Europe and Asia Pacific.

Despite the promising outlook, several risks warrant investor attention. Paper cost volatility remains a significant concern, as it is the largest input cost and can fluctuate due to inflation, supply/demand, and energy prices. The competitive market makes it challenging to immediately pass on these increases to customers, potentially pressing gross margins. Inflationary pressures continue to impact end-users and net revenue, and Ranpak's ability to offset these costs may be limited by competition. Tariffs, particularly on PPS converters sourced from China, also pose a risk to capital expenditures, though the company is actively seeking alternative suppliers and focusing on refurbishment to mitigate this.

The operating environment in Europe and Asia Pacific remains "choppy" and "inconsistent," leading to volume fluctuations and impacting growth. Geopolitical and economic instabilities in these regions could continue to affect financial performance. Furthermore, Ranpak has identified material weaknesses in its internal control over financial reporting, with remediation plans underway, though full remediation is still in progress.

Conclusion

Ranpak Holdings Corp. stands at a pivotal juncture, transforming its legacy in sustainable packaging into a future powered by automation and strategic partnerships. The company's core investment thesis hinges on its ability to leverage proprietary paper-based solutions and cutting-edge AI-driven automation to capture significant market share in the burgeoning e-commerce and industrial supply chain sectors. Strategic alliances with industry titans like Amazon.com, Inc. (AMZN) and Walmart, Inc. (WMT), coupled with the Medline agreement, are not merely revenue drivers but foundational elements deepening customer relationships and validating Ranpak's technological leadership.

While macroeconomic headwinds, particularly in Europe, and the initial profitability drag from automation investments present challenges, Ranpak's commitment to margin enhancement, cost reduction, and deleveraging paints a picture of a company focused on long-term financial health. The anticipated breakeven of the automation segment by year-end 2025 and ambitious long-term targets underscore the potential for substantial value creation. Investors should closely monitor the execution of these strategic initiatives, particularly the ramp-up of automation deployments and the successful navigation of global economic volatility, as Ranpak endeavors to package a future of sustainable growth and enhanced shareholder returns.