XPEL reported third‑quarter 2025 revenue of $125.4 million, an 11.1% year‑over‑year increase that surpassed the consensus estimate of $119.25 million by $6.15 million. The company’s earnings per share fell short of expectations, posting $0.47 versus the consensus $0.48 and the $0.52–$0.527 range, a miss of $0.01–$0.057. Gross margin contracted to 41.8% from 42.5% in Q3 2024, reflecting pricing pressure from non‑tariff related price increases that were not aligned with market conditions.
Revenue growth was driven by a 22.2% rise in window‑film sales and a 15.7% increase in service revenue, while product revenue grew 9.8%. Geographic expansion also contributed, with the United States adding 11.1% of revenue, EU/UK/Africa up 28.8%, and Asia Pacific (excluding China) up 44.0%. These gains offset a decline in legacy product sales and the impact of higher input costs.
The margin compression was attributed to the CFO’s observation that “unfavorable, non‑tariff related price increases that were not in line with the market” squeezed gross margin. Despite the margin dip, operating income remained robust, and the company’s record operating cash flow of $33.2 million underscored its ability to fund future initiatives.
Management guided for Q4 2025 revenue of $123 million to $125 million, above the consensus of $118.6 million, and reiterated a plan to invest $75 million to $150 million over two years in manufacturing and supply‑chain infrastructure. CEO Ryan Pape described the investment as a “meaningful inflection point for the potential future profitability of the business,” while CFO Barry Wood noted that margin pressure would be temporary and expected to rebound in Q4.
The market reacted positively, with the stock rising 5.8% in pre‑market trading. Analysts highlighted the revenue beat and the forward‑looking investment plan as key drivers, while the EPS miss was viewed as a short‑term issue amid broader margin improvement expectations. The guidance and strategic focus signal confidence in sustained demand and long‑term profitability, despite current headwinds.
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