Aterian (ATER), a consumer products company known for brands like Squatty Potty and HomeLabs, released its earnings for the quarter ended June 30, 2025, on August 13, 2025. The company reported GAAP revenue of $19.5 million in Q2 2025, coming in below the $20.37 million GAAP revenue expected by analysts. GAAP loss per share reached $(0.63) in Q2 2025, missing the $(0.54) GAAP consensus forecast and widening from $(0.52) GAAP a year ago. Results highlighted operational hurdles, with lower GAAP net revenue, shrinking margins, and a larger GAAP net loss as tariff pressures and weak sales continued. The period underscored ongoing challenges for Aterian as it works to cut costs, diversify its supply chain, and expand outside the Amazon platform.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(0.63) | $(0.54) | $(0.52) | (21.2 %) |
| Revenue | $19.5 million | N/A | $28.0 million | (30.4 %) |
| Gross Margin | 54.3 % | 60.4 % | (6.1 pp) | |
| Adjusted EBITDA | $(2.2 million) | $0.2 million | N/A | |
| Contribution Margin | $1.5 million | N/A | N/A |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Focus
Aterian operates as an e-commerce-driven consumer goods company selling household and personal care products under brands such as Squatty Potty and HomeLabs. Its portfolio includes categories such as kitchen appliances and air quality devices, with most revenue coming from online marketplaces.
The company’s recent focus includes managing disruptions from trade tariffs and supply chain constraints, as well as shifting into higher-margin consumable products. Success depends on how well Aterian can diversify sales channels, streamline sourcing, and develop new products that catch on with consumers while keeping costs under control.
Quarter in Review: Financial and Operational Developments
During the period, Aterian’s GAAP revenue dropped sharply to $19.5 million, falling short of GAAP expectations and decreasing by 30.4% from the same period last year. The GAAP revenue miss reflects both lower unit sales—driven by consumer pushback on price hikes following tariff increases—and softer demand across the company’s main product lines. About 92% of total sales still came from Amazon's U.S. marketplace in 2024, indicating slow progress on diversifying beyond its primary channel.
Margins compressed further. GAAP gross margin shrank to 54.3%, a drop of 6.1 percentage points from Q2 2024. The company pointed to a less favorable product mix and higher costs due to tariffs. Contribution margin, a non-GAAP metric that factors in e-commerce platform commissions, marketing, and logistics, fell steeply to 7.8% in Q2 2025 from 17.4% in Q2 2024, signaling that cost increases outpaced the higher prices Aterian could charge. Adjusted EBITDA—a measure of earnings before interest, taxes, depreciation, and amortization, excluding certain non-cash and one-time items—was a loss of $(2.2) million in Q2 2025, reversing a small Adjusted EBITDA profit of $0.2 million a year earlier. GAAP operating expenses declined to $15.1 million from $20.1 million in Q2 2024, aided by restructuring moves, but these savings were offset by one-time charges of $1.8 million related to restructuring costs.
Most new product launches were paused, especially for imported electronics impacted by tariffs. Aterian’s entrance into consumables—especially the Squatty Potty flushable wipes (a personal care product)—is scheduled for full rollout in September 2025 but contributed little to sales in the reported quarter. Revenue from new product launches was just $334,000, down from $485,000 in Q2 2024. Inventory levels reached $18.5 million as of June 30, 2025, up from $13.7 million at the end of 2024 (GAAP, calendar year basis). GAAP cash on hand was $10.5 million as of Q2 2025, a result of ongoing operating losses and restructuring payments.
The quarter saw continued movement in supply chain strategy. The percentage of dehumidifiers sourced from China fell from 100% in 2024 to approximately 65% in 2025, as Aterian shifted production to regions with lower tariffs such as Indonesia. On average, the incremental tariff on imported goods was 30% in Q2 2025—substantially less than the peak of 145%—but still a significant drag on the cost structure. Expansion into other online channels—such as Walmart and Temu for core products, and Mercado Libre in Latin America—remains in early stages, with no breakout of material sales impact in the period.
Importantly, the company reported little progress offsetting the heavy dependence on Amazon, and the slow ramp for branded consumables meant that channel and product mix diversification is still a work in progress. Technology and automation investment included the launch of artificial intelligence (AI) tools in customer service, aiming to improve response times and service quality. The company did not specify material financial results from these investments in the quarter.
One-time restructuring costs totaling $1.8 million were recognized in Q2 2025, weighed on cash flow, and were associated with workforce reductions and streamlining vendor contracts. Management plans to realize approximately $5.5 million in annual pre-tax savings from these actions.
Looking Ahead
For the second half of fiscal 2025, management projects net revenue in the range of $36 million to $38 million and Adjusted EBITDA between $0 and $(1.0) million for the six months ending December 31, 2025. These targets imply revenue stability and narrowing of losses, with further cost savings expected from restructuring and operational improvements, as reflected in Aterian's guidance for net revenue of $36 million to $38 million and Adjusted EBITDA of $0 to a loss of $(1.0) million for the six months ending December 31, 2025, compared to net revenue of $34.8 million and an Adjusted EBITDA loss of $(4.7) million for the six months ended June 30, 2025. However, the outlook carries caution, with management highlighting ongoing market volatility and uncertainty in consumer spending, particularly in reaction to the company’s price increases and changes in tariff policy.
Investors should watch for updates on the rollout of Aterian’s first major consumables product, as well as progress in moving more sales away from Amazon to channels like Walmart, Temu, and Mercado Libre. Sustained improvement in liquidity will also depend on successful cost cutting, sales growth in new categories, and the pace of supply chain realignment. Aterian does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
