Black Rifle (BRCC) Q2 Revenue Rises 6.5%

Key Points

• Net revenue rose 6.5% to $94.8 million, beating net revenue expectations by approximately $2.0 million, led by Wholesale channel growth.

• Gross margin declined by 7.9 percentage points to 33.9%, driven by higher input costs and increased marketing and legal expenses.

• Direct-to-Consumer revenue and subscriber count dropped compared to the prior-year quarter, while Black Rifle Energy™ and retail channel expansion showed early momentum, with Black Rifle Energy™ reaching 21% all commodity volume (ACV) in the first quarter and 22.5% ACV in the second quarter.

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Black Rifle Coffee Company (NYSE:BRCC), the mission-driven veteran-focused coffee company, reported its fiscal second quarter 2025 earnings on August 4, 2025, for the period ended June 30, 2025. The most important news was a revenue beat: net revenue reached $94.8 million, surpassing analysts' estimate of $92.75 million. However, profitability came under pressure, with gross margin dropping significantly and net loss widening to $14.5 million. Earnings per share held steady at $(0.03), in line with consensus. Overall, the quarter highlighted gains in retail channel expansion and energy drink distribution, but also raised concerns about ongoing cost increases and a 7.8% decline in Direct-to-Consumer revenue.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in the first quarter 2025 earnings report.

Company overview and key business drivers

Black Rifle Coffee Company is a coffee company known for its strong support of Veterans and first responders. It sells products like packaged coffee, ready-to-drink beverages, and the new Black Rifle Energy™ energy drink through Wholesale, Direct-to-Consumer (DTC), and Outpost (coffee shop) channels. Its brand stands out for a mission-focused culture that appeals to a loyal customer base and includes a high percentage of Veteran and military spouse employees.

The recent business focus has revolved around expanding omnichannel retail distribution, rolling out innovative new drinks like Black Rifle Energy™, and growing partnerships with major retailers. Key success factors include the ability to drive growth through retail shelves, maintain high brand loyalty, and manage costs in a competitive, inflation-impacted landscape. Black Rifle Coffee Company’s shift toward Wholesale channels and product innovation is central to its ongoing growth strategy.

Quarterly highlights: Sales channels, margin trends, and key developments

The quarter showed mixed performance across Black Rifle Coffee Company’s main distribution channels. Wholesale revenue jumped 14.1% year over year to $61.3 million, driven by wider in-store distribution at food and mass retailers and more packaged coffee and energy drink availability. Packaged coffee distribution, measured by all commodity volume (ACV), which shows how much shelf space a brand secures across the market, rose to 56.6%, up 14.9 percentage points. Ready-to-drink coffee climbed to 53.5% ACV, and Black Rifle Energy™ achieved 22.5% ACV, marking steady retail expansion for new product lines.

By contrast, Direct-to-Consumer channel revenue contracted 7.8% to $27.6 million, reflecting both ongoing softness in direct web sales and fewer subscribers in the Coffee Club. Subscriber numbers dropped to 175,500 from 201,200 in the prior year, following a change to rewards expiration policy and reduced advertising spend for online channels. Outposts revenue, which comes from company-owned and franchise coffee shops, improved to $5.9 million, up 11.3%, supported by rising franchise fees and higher average order value. The Outposts footprint grew with more franchise locations, despite one fewer company-run store compared to last year.

Profitability was a key challenge. Gross margin dropped sharply to 33.9%, down from 41.9% in the prior-year period. Black Rifle Coffee Company attributed this margin decline to coffee bean inflation, price and trade adjustments, and the impact of changes to customer loyalty accruals made last year. Marketing expenses surged 31.8% to $9.8 million and general and administrative costs also climbed, due in part to increased legal spending around non-routine litigation. These expense increases put significant pressure on earnings, resulting in adjusted EBITDA of $2.4 million, down 68% year over year, and a net loss of $14.5 million.

Black Rifle Coffee Company took steps to shore up its balance sheet by raising $40.25 million in a follow-on equity offering after quarter-end. This capital infusion helps reduce net debt and allows the company to invest in strategic initiatives, such as growing Black Rifle Energy™ distribution. The company expects to save more than $2 million annually in interest expense as a result of this transaction. Cash on hand stood at $4.3 million at quarter end, down from $6.8 million at year-end 2024, with net cash flow from operations turning negative for the first half of 2025.

On the product front, Black Rifle Energy™, an energy drink brand, continued its early rollout with incremental shelf gains. Market share in packaged coffee and ready-to-drink coffee increased, reflecting successful execution in grocery and convenience channels.

Financial outlook and what to watch ahead

Management reaffirmed guidance for fiscal 2025, forecasting net revenue between $395.0 million and $425.0 million. This represents up to 9% growth from fiscal 2024. Gross margin for fiscal 2025 is expected to remain under pressure, with a forecast of 35% to 37%, below the 41.2% level in fiscal 2024. Adjusted EBITDA is projected between $20.0 million and $30.0 million, lower than fiscal 2024’s $37.1 million. The continued impact of input cost inflation and increased marketing spending are likely to weigh on margin and profitability throughout the year.

Looking ahead, investors should monitor the Wholesale channel’s ability to drive revenue growth and whether Direct-to-Consumer subscriber losses can be stabilized. Progress on cost-control efforts and legal expense normalization will be important in future periods. The rollout and momentum of Black Rifle Energy™ and product innovation will also play a role in meeting sales targets and building brand relevance on store shelves.

Revenue and net income presented using U.S. generally accepted accounting principles unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends BRC. The Motley Fool has a disclosure policy.