Vital Farms (VITL) Q2 Revenue Jumps 25%

Vital Farms (VITL 17.56%), a leading U.S. provider of pasture-raised eggs and butter, reported its Q2 FY2025 results on August 7, 2025. The headline news: the company outperformed expectations, posting stronger-than-expected GAAP sales and profits. Earnings per share (GAAP) came in at $0.36 for Q2 FY2025 compared to the analyst consensus of $0.28, while GAAP revenue reached $184.8 million -- ahead of estimates by $13.96 million. Revenue (GAAP) was up 25.4% from the prior year period. Adjusted EBITDA (non-GAAP) also jumped, driven by a mix of pricing, volume growth, and ongoing operational investments. While gross margin (GAAP) was virtually flat year over year, management raised guidance for both full-year FY2025 net revenue and adjusted EBITDA, but also cautioned about margin declines in the second half of FY2025 from tariffs and promotional activities. Overall, the quarter demonstrated solid execution across core business areas and set the stage for accelerated investment in capacity and infrastructure.

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

Inside Vital Farms: Business Model and Success Factors

Vital Farms specializes in producing pasture-raised eggs and butter, sourcing from a network of more than 500 family farms across the United States. The company focuses on ethical and sustainable farming practices, appealing to consumers seeking transparency and responsible sourcing.

Its recent priorities have centered on scaling its supply chain, growing its family farm network, and investing in new production capacity and digital infrastructure. The core of its business model rests on brand trust, a unique ethical position in the market, and the ability to maintain product quality and supply reliability as volume increases. Continued expansion of its product portfolio, ongoing innovation, and an increasing retail footprint underpin its growth strategy.

Quarter Highlights: Performance Drivers and Key Developments

Vital Farms delivered a materially stronger quarter, reporting GAAP revenue of $184.8 million, representing 25.4% growth over the prior year and beating analyst expectations by over $13 million (GAAP). Volume growth and higher average pricing contributed to top-line performance. Price and mix benefits added $15.7 million to revenue in Q2 FY2025, while higher volumes generated another $21.7 million, fueled by rising demand for existing products, new product launches, and increased store distribution at existing retailers. Notably, butter—which had seen rapid growth in prior quarters (including 41% net sales growth in Q1 FY2025)—continued to expand after the company secured a consistent supply of imported Irish butter, eliminating prior bottlenecks.

The company’s retail distribution stabilized at over 23,500 stores as of August 2025, with a reported uptick in tracked store count mainly due to a change in data provider methodology rather than a genuine surge in retail doors. On the production side, exactly 50 additional family farms joined Vital Farms’ network during Q2 FY2025, increasing the contracted hen population to 9 million and reinforcing supply for future growth. Groundbreaking on a new production facility in Seymour, Indiana, and the addition of a third line at the Springfield, Missouri, Egg Central Station plant are designed to meet future demand, while a first company-owned “accelerator farm” aims to scale innovation and support reliable supply.

Gross margin (GAAP) held steady at 38.9% in Q2 FY2025, compared to 39.1% in Q2 FY2024. Management attributed this nearly flat result in gross margin to the offsetting effects of higher labor and overhead costs against favorable pricing and product mix, though it noted that both margins and net income could come under pressure in upcoming quarters. Adjusted EBITDA margin rose to 16.2% in Q2 FY2025 from 15.8% in Q2 FY2024 as the business benefited from scale but still faces cost pressures from labor, tariffs, and promotional efforts.

The brand’s positioning as a Certified B Corporation and a public benefit corporation remains central to its customer loyalty. Brand awareness jumped from 26% to 31% in Q1 FY2025. Management highlighted that household penetration, while rising, remains only 11.3% of U.S. homes, signaling continued upside potential.

Operating cash flow (GAAP) for the first half of FY2025 fell sharply to $4.5 million from $40.1 million in the same period of FY2024 Capital expenditures also rose and are now budgeted at $90–110 million for FY2025, up considerably from earlier forecasts. Inventory and working capital both increased. Vital Farms carries no debt and maintains strong liquidity, with $155.0 million in cash and marketable securities.

Looking Ahead: Guidance and Expectations

Management raised its financial outlook for FY2025. Net revenue is now projected to reach at least $770 million, while adjusted EBITDA (non-GAAP) is expected at a minimum of $110 million. Both projections are up from earlier guidance of $740 million in net revenue and $100 million in adjusted EBITDA for FY2025, respectively. The updated outlook reflects robust consumer demand, expected benefits from strategic price increases, and improved supply dynamics from the expanding farm network. However, management acknowledged that gross margins will likely face some pressure in the second half of FY2025 due to tariffs on imported inputs like packaging and butter, as well as higher promotional spending.

Vital Farms affirmed that it remains on course to reach $1 billion in annual net revenue by FY2027. Plans for new digital infrastructure and added processing capacity continue on schedule. Continued monitoring of capital execution, working capital build, and cost containment will be important, given the much higher capital expenditures now underway. The company offers no dividend at this time.

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