Harley-Davidson (HOG -2.79%), the storied American motorcycle manufacturer, reported its Q2 2025 results on July 30, 2025. The most important news from the release was the company's revenue beat, with GAAP sales reaching $1,307 million—well ahead of the $1,099 million analyst consensus. However, earnings per share (GAAP) fell short at $0.88, under the expected $0.96. Year-over-year, most core metrics showed steep declines: revenue dropped 19%, operating income slid 53%, and earnings per share were down 46%. While the revenue performance was stronger than anticipated, margins contracted and the bottom line disappointed. Management offered no full-year guidance, citing uncertainty with global tariffs and continued weakness in demand for discretionary goods. The quarter reflected short-term pressures.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.88 | $0.96 | $1.63 | (46.0 %) |
| Revenue (GAAP) | $1,307 million | $1,099 million | $1,619 million | (19.3 %) |
| Operating Income (GAAP) | $112 million | $241 million | (53.5 %) | |
| Net Income Attributable to Harley-Davidson, Inc. | $108 million | $218 million | (50.5 %) | |
| HDMC Operating Margin | 5.9 % | 14.7 % | (8.8 pp) |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Success Factors
Harley-Davidson manufactures heavyweight motorcycles known for their distinctive style, sound, and brand image. It also operates Harley-Davidson Financial Services, which offers financing and insurance, and LiveWire, its electric motorcycle business. The company's global presence is supported by a widespread dealer network and a robust lifestyle brand.
Recent business priorities have centered on brand desirability, innovation—particularly in electric motorcycles—and disciplined inventory management. Capturing growth in international markets and responding to evolving environmental regulations remain critical. Strong dealer relationships and financial services also play a key role, enabling accessibility and supporting sales volume.
Notable Developments in the Quarter
The quarter was marked by a significant strategic move in financial services. Harley-Davidson executed a partnership deal involving the sale of a 4.9% stake in its financial arm to KKR and PIMCO, monetizing a portion of its loan receivables. This transaction unlocks $1.25 billion in discretionary cash, about 40% of Harley-Davidson’s market capitalization as of Q2 2025, and is expected to fund $450 million in debt repayment and $500 million in share repurchases in the second half of 2025.
The core motorcycle segment saw further contraction, with global retail sales down 15% and shipments falling 28%. North America retail sales declined by 17%; the Asia-Pacific region showed a sharper 21% drop, with management citing weak demand in China and Japan. The company continued its dealer inventory reduction plan, with inventory levels 28% lower compared to Q2 2024. Tariff-related costs reached $13 million, part of a $130–175 million estimated full-year impact for 2025. These cost pressures, combined with lower shipment volumes, contributed to the margin compression—HDMC (Harley-Davidson Motor Company) operating margin fell to 5.9% from 14.7% a year earlier.
Product innovation was highlighted by new launches such as the limited CVO Road Glide RR, a high-performance touring motorcycle. Management confirmed upcoming launches targeting smaller displacement and classic motorcycle segments, aiming for both affordability and profitability starting next year. Parts and accessories revenue decreased 4%, while apparel revenue was down 13% in the second quarter of 2025, as discretionary spending slowed. Pricing gains and foreign exchange provided only modest offsets to the volume and tariff headwinds.
In electric motorcycles, LiveWire revenue remained subdued at $6 million and units delivered plunged 65%, totaling just 55. Harley-Davidson restricted further investment in LiveWire, limiting future outlays to an existing $100 million credit line. Full-year 2025 LiveWire guidance calls for operating losses of $59–69 million, with cash use expected between $50–60 million. Management identified slow progress in charging infrastructure and the absence of purchase incentives as factors suppressing electric motorcycle demand.
Harley-Davidson Financial Services continues to play a key role. Segment revenue slipped 2% to $257 million, in line with lower originations and retail loan balances. Operating income also fell 2% but maintained a high 27.1% margin. While credit losses returned to more typical levels, a smaller provision partially offset lower net interest income. Receivables fell 9% year over year. These trends reinforce the importance of the financial services segment as both a sales enabler and a stabilizer—though its future weight in total profits may decline given the recent transaction.
Dividend payments continued, with a distribution of $0.18 per share. This represented a small increase over the previous year’s $0.1725 per share cash dividend. The company executed no share repurchases in the quarter, but plans to accelerate repurchases with proceeds from the KKR and PIMCO transaction in the second half of 2025.
Looking Ahead: Guidance and Key Issues
Management withheld any full-year 2025 financial guidance, citing ongoing tariff uncertainty and continued caution among consumers regarding big-ticket discretionary purchases. The only guidance provided was for LiveWire—the electric motorcycle segment—which is expected to incur a $59–69 million operating loss (with cash use of $50–60 million) for full year 2025, and for Financial Services, with operating income estimated at $525–550 million for the year, reflecting benefits from the recent transaction.
Looking forward, investors face several uncertainties. The sharp drop in demand for both gasoline and electric motorcycles remains a key concern, echoed by management’s proprietary research that shows 60% of potential new customers and half of current owners are delaying purchases due to economic concerns. The impacts of tariffs are significant, and their future path remains unresolved. Investors should also track developments in the LiveWire electric motorcycle segment, the integration and future profitability of Harley-Davidson Financial Services, and the reception of new product launches—especially in smaller and entry-level model categories. The quarterly dividend paid was $0.18 per share, up from $0.1725 per share a year earlier.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
