Ranpak (PACK) Q2 Revenue Rises 7%

Key Points

• Net revenue (GAAP) of $92.3 million missed analyst estimates in Q2 2025 and fell short of expectations for both revenue and profit on a GAAP basis.

• Eighth consecutive quarter of volume growth, with strong North American e-commerce and automation activities driving gains.

• Gross margin compressed substantially to 31.3%, with management now forecasting a three to five percentage point gross margin recovery in North America in the second half of 2025.

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Ranpak (NYSE:PACK), a global supplier of environmentally sustainable packaging solutions, released its second-quarter 2025 earnings on August 5, 2025. The most important news was that it posted net revenue (GAAP) of $92.3 million and a net loss per share of $0.09 (GAAP). Both revenue and earnings (GAAP) fell short of analysts’ expectations: GAAP revenue missed consensus by about $2.15 million, and Adjusted EBITDA decreased from the same period last year. Gross margin suffered a notable decline. Management shared an outlook for margin recovery and highlighted robust trends in automation and system placements. The quarter showed progress in key areas, but cost pressures and weaker margins remain a significant challenge.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Ranpak delivers fiber-based, recyclable, and biodegradable packaging systems aimed at reducing plastic waste. The company’s packaging machines, deployed at customer sites, use proprietary consumable materials, ensuring recurring revenue by requiring customers to buy refill materials exclusively from Ranpak.

The current priorities for Ranpak are clear: capitalize on demand for sustainable packaging, nurture recurring revenue via its installed base of converter systems, and expand its automation offerings. Automation solutions include automated dunnage (void-fill) insertion and box-sizing machines, designed to make packaging processes more efficient for large e-commerce and industrial users. Ranpak also emphasizes geographic expansion, particularly in North America and select Asian markets, and is closely managing operating costs as it scales up its automation segment.

Quarter in Review: Financial and Operational Developments

However, Profit margins declined sharply. Gross margin narrowed by 5.4 percentage points year over year, reaching 31.3%. Higher production and logistics costs, especially in North America, weighed on profitability. The company’s adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization adjusted for certain items, also declined compared to last year. This was attributed to higher input costs, volume declines in Europe and Asia-Pacific, and increased spending on scaling its automation segment.

Performance varied across product lines. Void-fill packaging systems, which create paper cushions to fill empty space in boxes, grew revenue by 9.0%. Cushioning systems, which produce protective pads for heavier or more fragile goods, saw revenue growth of 5.1%. Revenue from wrapping systems, designed to protect items from scratches or breakage, fell 13.1% year over year (GAAP). Notably, revenue categorized as “other”—including automation systems and accessories—increased 32.1% to $7.1 million (GAAP), reflecting Ranpak’s growing emphasis on automated solutions for large logistics users.

Regionally, North America continued as the principal growth engine thanks to enterprise e-commerce customers and an expanding installed base. Over 145,000 packaging systems were in place as of June 30, 2025, an increase of 2.7% year over year. At the same time, global paper volume processed through these systems rose 5.2%. Europe and Asia-Pacific, however, posted volume declines and higher costs, underlining ongoing challenges outside North America. Management acknowledged these issues and pointed to recent cost-cutting steps, such as reducing staff and moving to lower-cost warehouse and logistics providers.

Leadership stated that these automation solutions are expected to drive “meaningful improvement” in Ranpak’s financial profile as they scale, despite the negative profit impact year-to-date.

Looking Ahead: Guidance and Watchpoints

Ranpak offered updated guidance for the rest of fiscal 2025. The company projects net revenue between $216 million and $230 million for the second half of 2025, with adjusted EBITDA (non-GAAP) is expected to range from $44.5 million to $54.5 million for the second half of 2025. At the guidance midpoints, full-year net revenue (GAAP) is forecast to reach about $406.5 million in 2025, with adjusted EBITDA of $83.3 million in 2025. This takes into account approximately $4–6 million in non-cash adjustments related to warrant accounting in 2025, an issue that will continue to impact reported results for both revenue and adjusted EBITDA.

Management expects the margin recovery will come mainly from North America, driven by cost actions and the continued ramp-up of high-margin automation projects, primarily in the second half of 2025. Specifically, it is forecasting a three to five percentage point improvement in gross margin for North America over the second half of 2025. Investors will want to watch for evidence that these cost and margin initiatives take effect, if automation revenues are realized as planned, and whether operating cash flow (GAAP, for the first half of 2025) improves after a reported outflow of $4.9 million. PACK does not currently pay a dividend.

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

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