Fox Factory (FOXF 2.91%), a maker of premium suspension systems for bikes, powersports, and vehicles, reported its second quarter fiscal 2025 earnings on August 7, 2025. The most important news: the company delivered GAAP revenue of $374.9 million, topping analyst estimates of $349.5 million (GAAP). However, Adjusted earnings per share (non-GAAP) came in at $0.40, below the $0.44 expected. While The GAAP revenue figure beat expectations, profit measures—especially net income (GAAP), which dropped to $2.7 million from $5.4 million year-over-year—reflected continuing margin pressures from tariffs and an unusually high tax rate. Taken together, the quarter showed notable progress in sales and operational execution, but ongoing challenges in converting those gains into stronger profits.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $0.40 | $0.44 | $0.38 | 5.3 % |
| Revenue (GAAP) | $374.9 million | $349.5 million | $348.5 million | 7.6% |
| Net Income (GAAP) | $2.7 million | $5.4 million | (50.0 %) | |
| Adjusted EBITDA | $49.3 million | $44.1 million | 11.8% | |
| Adjusted EBITDA Margin | 13.1 % | 12.7 % | 0.4 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Focus Areas
Fox Factory is known for designing and making high-performance suspension systems. Its products appear in mountain bikes, powersports like motorcycles and off-road vehicles, and trucks. The company divides its operations into three key groups: Specialty Sports Group (bike and sports products), Aftermarket Applications Group (replacement and upgrade parts), and Powered Vehicles Group (automotive and motorcycle systems).
Recently, Fox Factory’s strategy has centered on launching new products, expanding relationships with original equipment manufacturers (OEMs), and strengthening its aftermarket and international sales. Fox Factory increased insourcing at its US facilities, particularly in Gainesville, which has improved its ability to respond and support customers. Key success factors include product innovation, deep OEM partnerships, a strong premium brand, and the ability to control costs, especially with ongoing tariff impacts.
Quarter Highlights: Operational and Financial Developments
GAAP revenue surged past expectations, powered by growth across all business units. The Specialty Sports Group, which covers bike and sports suspension products, led the way with net sales up 11.0% to $137.2 million. Management pointed to “stabilization in bike sales” after a stretch of market volatility, with recent high-end bike forks and shock launches helping results. The group also benefited from investments in research and development, with spending rising to $17.8 million for Q2 FY2025, up from $14.8 million in Q2 FY2024.
The Aftermarket Applications Group posted a 6.5% GAAP sales increase, reaching $114.1 million in Q2 FY2025. Increased demand for replacement and upgrade products drove results, even as high interest rates and vehicle prices held back broader dealer and consumer activity. Adjusted EBITDA for the Aftermarket Applications Group increased from $14.2 million in Q2 FY2024 to $16.0 million in Q2 FY2025, a year-over-year increase of 13.2%.
Powered Vehicles Group, which supplies suspension systems and parts for automotive and motorcycle manufacturers, delivered a 4.9% sales increase to $123.5 million in Q2 FY2025 (GAAP). Progress was driven by new motorcycle partnerships and ongoing relationships with major brands. This offset softness in the original equipment automotive market. Aided by higher efficiency and factory insourcing, especially in the Gainesville, Georgia plant, which ramped up local production from 60% to 70% over the past year.
Gross margin, the profit rate after direct production costs, declined slightly to 31.2%. Management cited “shifts in our product line mix and impact” as key reasons. Sequential margin improvement from the prior quarter signaled progress in cost controls—Adjusted EBITDA margin for the company was 13.1% in Q2 FY2025, up from 12.7% in Q2 FY2024 and 11.2% in Q1 FY2025. Operational efficiencies were also visible in a $25 million cost reduction plan that remains on track.
For 2025, Fox Factory’s pre-mitigated tariff expense increased from prior expectations of approximately $38 million to upwards of $50 million. To address this, the company adjusted prices, shifted suppliers, and increased in-house manufacturing. CEO Mike Dennison commented, “•Cost reduction initiatives progressing in line with expectations and helping mitigate tariff impacts”
Net income (GAAP), however, dropped sharply, mainly due to the higher tax rate of 50.9% for the quarter (driven by one-time tax items and low pre-tax profit). Goodwill, which measures the value of prior acquisitions, declined following a non-cash impairment in Q1 FY2025, a result of tariff pressure and lower stock prices.
FOXF does not currently pay a dividend.
Looking Ahead: Guidance and Key Areas to Watch
Management raised guidance for FY2025 net sales to a range of $1.45 billion to $1.51 billion. This reflects the company’s year-to-date performance and current visibility to tariff impacts. Adjusted earnings per diluted share guidance for FY2025 is $1.60 to $2.00, unchanged at the midpoint but narrowed from the earlier projection, signaling greater clarity on profit expectations. Q3 FY2025 revenue is projected at $370 million to $390 million. Adjusted earnings per diluted share is forecasted between $0.45 and $0.65 for Q3 FY2025.
Investors should watch for Fox Factory’s ability to sustain margin improvements and manage ongoing challenges in converting sales growth into stronger net income. Ongoing tariff costs remain a risk, but management continues to implement actions they expect will reduce future impact. The company also emphasized continued investment in new product launches and innovation, especially in bikes, motorcycles, and expanding international markets. Management provided specific figures but did not give additional surprises or major one-time events for the next quarter.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
