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Date
Thursday, July 24, 2025 at 9:30 p.m. ET
Call participants
Chief Executive Officer — Andres Campos
Chief Financial Officer — Rodrigo Munoz
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Takeaways
Consolidated revenue-- Consolidated revenue increased 5.1% year-over-year in fiscal Q2 2025 (period ended June 30, 2025) and rose 1.8% quarter-over-quarter, with each business unit contributing to the increase.
Betterware de México(BWMX 4.58%) revenue -- Revenue increased 4% quarter-over-quarter, narrowing the year-over-year decline to negative 1.1% from negative 9.8% in Q1 2025.
Consolidated EBITDA-- EBITDA rose 3.5% year-over-year to 679 million pesos, with a margin of 19.1% and quarter-over-quarter recovery to normalized profitability levels.
Free cash flow-- Free cash flow reached 592 million pesos, with a conversion of 87% of EBITDA in Q2 2025 and 44.2% year-to-date conversion of EBITDA to free cash flow, trending toward a full-year historical target of approximately 60% conversion of EBITDA to free cash flow in 2025.
Betterware de México EBITDA margin-- Achieved a 19.9% EBITDA margin in Q2 2025 despite year-over-year gross margin compression due to pricing actions.
Associate base-- Betterware de México net associate count expanded 3.3% quarter-over-quarter, reaching 670,000 associates, marking the first net associate growth since Q1 2021; distributor base increased 3.5% quarter-over-quarter.
Jafra Mexico revenue and profitability-- Revenue grew 10.9% year-over-year with EBITDA margin expanding to 21.2% in Q2 2025; main drivers included fragrance rebranding and category management.
Jafra US performance-- Revenue declined 8.9% year-over-year in US dollars, but rebounded 15.6% quarter-over-quarter; Jafra US associate base grew 8.5% sequentially, with engagement gains.
Gross margins by segment-- Consolidated gross margin was 67.1% in Q2 2025. Betterware de México gross margin was 55.2%, down 127 basis points year-over-year; Jafra Mexico's gross margin was 75.3%, down 167 basis points year-over-year; Jafra US gross margin improved to 76% in Q2 2025, driven by mix and procurement effects.
Dividend-- The Board proposed a 200 million peso dividend for Q2 2025, marking the twenty-second consecutive dividend since the IPO, subject to shareholder approval.
Net debt / EBITDA ratio-- Improved to 1.97x from 2.08x in Q1 2025, though higher than 1.8x in Q2 2024; this increase was attributed to additional short-term debt incurred in Q1 2025.
Geographic expansion-- Betterware Ecuador was launched in May, surpassing the Q2 2025 target with 2,500 active associates; Guatemala showed return to positive sales growth under new management.
Guidance maintained-- Management upheld full-year 2025 guidance of 6%-9% revenue and EBITDA growth, citing associate expansion and stabilization in the macro environment as key assumptions.
Summary
An internal overhaul of pricing, merchandising, and incentives was credited as the primary contributor to sequential and year-over-year improvement in key financial and operating metrics for fiscal Q2 2025, according to CEO commentary. Major product launches and segment-specific innovation drove targeted sales growth, with technology enhancements to sales platforms improving associate productivity. Management confirmed continued advances in international expansion, including new market entries and early overperformance in Ecuador. The company highlighted ongoing expense reduction and productivity initiatives as key to margin goals for the remainder of 2025.
Campos stated, "Q2 was the first quarter since 2021 that we grew in associates in Betterware de México," underscoring strategic execution over market stabilization.
Munoz reported the company's free cash flow reached 592 million pesos in Q2 2025, "bringing year-to-date conversion to 44.2% of EBITDA and 87% conversion for the second quarter."
Campos emphasized deployment of new compensation, loyalty, and innovation programs in the US, targeting "constant growth" with market-specific product launches starting in Q3 2025.
Dividend continuity was positioned as a demonstration of financial discipline and "unwavering commitment to delivering sustainable long-term shareholder value."
Industry glossary
Associate base: The network of independent sellers (non-employees) for direct sales companies, central to revenue generation and market expansion.
Distributor base: Individuals or entities in the sales network who recruit, support, and manage sub-groups of associates, playing a vital leadership role in direct selling models.
Full Conference Call Transcript
Andres Campos: Thank you, operator, and good afternoon, everyone. I'm pleased to share our results for this second quarter of 2025, a quarter that highlights the resilience and agility of our business. Following a challenging first quarter, we returned to top-line and EBITDA growth, along with a strong quarter-over-quarter rebound and positive free cash flow generation. These results are a clear signal of our ability to effectively navigate economic uncertainty, respond with agility, and build momentum across our businesses towards our long-term goals. BEPFRA's consolidated revenue grew 5.1% year-over-year and 1.8% quarter-on-quarter, driven by all of our business units.
Importantly, we expanded our associate base from 1,120,000 at the end of Q1 2025 to 1,130,000 by the end of Q2 2025, a 0.5% quarter-on-quarter growth, also driven by growth across all business units. Betterware de México, S.A.P.I. de C.V. returned to sequential growth with revenue up 4% quarter-over-quarter, a strong recovery from the 9.8% year-over-year decline in Q1, narrowing that gap to negative 1.1% versus last year in the quarter. The sequential improvement was not simply due to a modest consumption rebound in Mexico, but rather the result of aggressive pricing strategies and product investments that achieved the following in the quarter. First, affordability and accessibility.
We revised the pricing of our line products, the core of our average orders, making them more competitive without relying heavily on promotions that cut into margins. This made our most popular items more attractive, boosting seller engagement as well as sales. We also simplified some products as another way to increase affordability. Second, a return to associate-based growth. As a result of a new incentive program launched at the beginning of the year, we achieved net associate growth for the first time since Q1 2021, expanding from 649,000 to 670,000 associates, a 3.3% growth quarter-on-quarter. Our distributor base also grew, increasing 3.5%. This is important as distributors are key drivers of team activity, retention, and growth.
A more attractive points program also attracted more associates to Betterware during the quarter. In addition, we have rolled out a new personal tagging system enabling more targeted sales support and initiatives that help increase associate productivity, retention, and ticket size. Third, innovation. New product launches in our home solutions and kitchen categories led Betterware sales growth this quarter, with seasonality concepts such as heat, insect, and rain control outperforming the previous year. And fourth, technology. We improved the functionality of our sales app, improving the backorder process and making digital payments much easier. Betterware de México, S.A.P.I. de C.V. also achieved strong profitability, with an EBITDA margin of 19.9% and contributed to generating strong cash flow for the quarter.
Now turning to our beauty and personal care business, Jafra Mexico started delivering double-digit growth again and returned to profitability, with its revenue up 10.9% year-on-year and its EBITDA margin expanding to 21.2%. Three key drivers behind this performance were first, category strength. Our main source of category growth this quarter came from our rebranding efforts, which are the highlight of 2025. Fragrance rebranding led growth, boosted by the success of Navigo and Double Nature, while skincare was also positively impacted with the revitalization of royal jelly, our main franchise in that category. The branding efforts gave these products a modern look and also incorporated new sizes to make them more attractive to the consumer.
Looking forward, we are particularly excited about the rebranding of our Royal Body brand in the third quarter, as well as the upcoming launch of a new spot remover under our higher-end BioLabs skincare brand. Second, Salesforce productivity. Jafra's associate base increased 2.3%, while the average monthly ticket rose more than 9%. This was driven by a revamped leadership program, compelling incentives, and a refreshing brand identity that is resonating strongly with our seller community. And third, margin investments. Like Betterware, we also adjusted price to drive volume and increase competitiveness.
While this slightly impacted margins in the short term, we expect the mid to long-term benefits to include higher household penetration and an improved sales mix comprising more higher-margin products. Now turning into Jafra US, while revenue decreased 8.9% year-on-year in US dollars, we delivered a 15.6% rebound quarter-over-quarter versus the first quarter of 2025. At the same time, the associate base grew 8.5% sequentially, while engagement improved significantly. We are excited about this progress and look forward to more sequential growth going forward, given the enormous opportunity of the American market for Jafra US. After some years of understanding the business and the market, we have undergone deep transformation activities aimed to achieve constant growth.
This includes a compensation plan revamp. In April and May, we rolled out our new incentives plan, which fosters growth and activity and includes a new loyalty program as well. We believe this new compensation plan will be key for growth in the coming quarters and years. Second, US market-specific innovations. We will begin launching innovations targeting the US market, starting in Q3 2025, namely our Around the World fragrance collection. We continue working with our innovation team to bring newness that caters to US market niches more directly. And third, a new catalog design which we will launch in September. Turning briefly to geographic expansions, one of BEPFRA's growth pillars.
We are pleased to announce that we successfully launched Betterware Ecuador in May, surpassing our second-quarter goal by reaching 2,500 active associates. This early success stems from replicating our proven Mexico playbook. At Betterware Guatemala, our new management team is already showing better results, with Q2 sales returning to positive growth. These developments reinforce our conviction on Central America and the Andean region of Latin America as important markets, which should add growth to the group in the midterm. They represent a total addressable market equal to Mexico's. Accordingly, we are currently assessing the Colombian market for entry in 2026. With that, I'll turn it over to Rodrigo to go over the financials in more detail.
Rodrigo Munoz: Thank you, Andres, and good afternoon, everyone. I will now get into some of the other key figures of the quarter. Please have in mind that all figures that I'll be referencing are in Mexican pesos, our functional and reporting currency, and that all period comparisons are year-over-year unless otherwise stated. Additional details are available in our earnings release published earlier on our investor relations website. Our consolidated gross margin was 67.1%, mainly in line with last year's results and reflecting our commercial investments and proactive pricing strategies. Betterware de México, S.A.P.I. de C.V. gross margin was 55.2%, down 127 basis points year-over-year due to proactive pricing strategies that Andres explained before.
But we expect to see a continuation of the shift in consumer purchases towards a higher mix of line items and fewer promotional ones, which is projected to further improve margins in the second half of the year. Jafra Mexico's gross margin was 75.3%, down 167 basis points versus last year's quarter due to pricing changes made to support underweighted categories, such as skincare and cosmetics, which were not priced competitively before. It is important to mention that last year's gross margin showed nonrecurring effects and the level achieved in 2025 is in line with our expectations and above historical growth marks.
Jafra US's gross margin improved to 76%, supported by a more favorable mix of higher-margin products and procurement savings. Consolidated EBITDA increased 3.5% year-over-year to 679 million pesos, with a margin of 19.1%, experiencing a strong quarter-over-quarter rebound after the temporary effects seen in Q1 2025 and returning to our normal profitability levels of 19%. Betterware de México, S.A.P.I. de C.V. EBITDA margin remained healthy despite the gross margin commercial investment, thanks to higher SG&A efficiencies and improved supply chain management. Jafra Mexico's EBITDA increased 14.2% year-over-year, driven by revenue growth and disciplined expense control.
While the EBITDA loss of the US business has narrowed, a continued improvement in the top line paired with disciplined cost controls is expected to bring Jafra US to the breakeven point by year-end. Free cash flow rose to 592 million pesos in this quarter, bringing year-to-date conversion to 44.2% of EBITDA and 87% conversion for the second quarter. After a challenging first quarter, we expect this trend to continue, aiming to reach our historical conversion level of around 60% of EBITDA to free cash flow in total year 2025.
Consolidated EPS grew 7.7% year-over-year, supported by the increases in revenue and EBITDA, lower financial costs in Mexico, and a 45 million peso decrease in income tax as a result of a positive adjustment related to the tax audit report of 2024. Debt leverage improved with our net debt to EBITDA ratio at 1.97 times, down from 2.08 times in Q1 2025, but still higher than the level reported in Q2 2024 of 1.8 times. The increase was mainly due to undertaking incremental short-term debt in Q1 in response to lower operating cash flow from nonrecurring events explained before.
In light of the quarter's free cash flow, and considering current and expected market conditions, our board of directors is proposing a 200 million peso dividend for Q2 2025, subject to ratification at the ordinary general shareholders meeting on July 31. This would mark our twenty-second consecutive dividend since our IPO in 2020, underscoring our unwavering commitment to delivering sustainable long-term shareholder value. We remain committed and are maintaining our full-year guidance for 2025. As always, we will continue to closely monitor our approach. I will now pass the call to the operator for any questions you may have. Thank you.
Operator: Thank you. We will now begin the question and answer session. To ask a question, dial in by phone, then press star then 1 on your telephone keypad. Make sure your mute function is turned off. To assemble our roster. Our first question is from Cristina Fernandez with Telsey Advisory Group. Please proceed.
Cristina Fernandez: Hi, Andres, Rodrigo, everyone. I have a couple of questions. First, I wanted to see if taking a step back and looking at the quarter, the sequential improvement versus Q1, how much should you attribute to a better macro and consumer environment versus the company-specific initiatives that you discussed on the call?
Andres Campos: Hi, Cristina. This is Andres. How are you? I think that we have seen, in general, a drop in consumption, I would say, in the fourth quarter of last year a little bit and more so in the first quarter of this year. We saw a slight stabilization or slight rebound in consumption in the second quarter. So that's a reality. It was just a slight stabilization or recovery. So we believe that while this helps, we also took internal measures which is what weighs more in our result. We have always said that with a stable consumption trend, we can really deliver growth as we have done before and outperform the markets.
So we do attribute more to our internal strategies. As we spoke, in both Jafra and Betterware de México, S.A.P.I. de C.V., we worked very hard on our merchandising techniques, on our pricing techniques, promotion techniques, and even on our product techniques to make our portfolio more accessible to the consumer and to perfect some of our strategies in terms of pricing, product, and all our commercial strategies. We think that this really kicked in and helped to deliver such a strong result for Q2.
Cristina Fernandez: Thanks. And following up on that commentary, you kept your guidance for the year at 6% to 9% revenue and EBITDA growth. It implies an acceleration from what you saw in the first half. So what, I guess, are the key drivers to get to that number for the full year?
Andres Campos: Yeah. Andres again. I think that in the macroeconomic environment and consumption, we do expect stability. Not necessarily a rebound in consumption, but we do predict stability in consumption trends. And then second, we were able to see in the second quarter that with this stability, we can really achieve growth in our revenues. It is very important to state that Q2 was the first quarter since 2021 that we grew in associates in Betterware de México, S.A.P.I. de C.V. We also grew in associates for Jafra Mexico, and we also grew in associates at Jafra US versus Q1.
So, you know, seeing this ability to not only grow our revenue but also grow our associate base is a positive sign of what we can achieve in the coming quarters. I want to state that obviously we still there's still some uncertainty in the macro environment. Obviously, there's still some room for uncertainty. And if the macro environment gets worse, that will not help, and it will be more challenging. But stating again, with a stable macro environment, we can achieve this growth going forward.
Cristina Fernandez: Thanks. And the last question I had was on the Betterware segment. On the letter, you talked about finding efficiencies to return to a 23% to 24% EBITDA margin. What areas are there more efficiencies to get back to those figures?
Andres Campos: Yeah. So the first part where we expect an improvement is in the gross margin. There's two well, there's actually three factors behind us expecting this. The first factor is a strong peso against the dollar that you have seen. I think today it was close to $18.50. The second one is lower freight costs. Freight costs have come down. Even now in peak season, they are at low rates, and we expect this to continue at lower and more stable rates at that point.
And the third point is that our internal strategy of making our line items more accessible and relying less on promotional activity that cuts into our margin is going to help us to, in the mix of our revenue, have a higher margin mix and those help margins. So with these three things in mind, the first thing that we are expecting is for margin improvement. Now the second thing that we're working on is also expense reduction and expense efficiencies. This is something that we do continuously. And, obviously, it's not like we're seeing a big factor or a special factor.
It's just a matter of constantly looking into productivity in our expenses, into efficiency in our expenses, and we think we can continue to find these different efficiencies. So together with both, we believe we can drive our EBITDA margin up and have a strong EBITDA margin in the second half of this year.
Cristina Fernandez: Thanks so much, Andres.
Andres Campos: Thank you, Cristina.
Operator: As a reminder, our next question is from Eric Beder with SmallCap Consumer Research. Please proceed.
Eric Beder: Hey, Andres. How are you?
Andres Campos: Hi, Eric. Let's talk a little bit about some of these other things. Obviously, you're still a major player in the Chinese market in terms of getting your product. What opportunities are you seeing there given some of the shifts in the US in terms of how their production from China and other pieces in terms of you being able to kind of fill some of those gaps maybe and get better economic terms?
Andres Campos: Yeah. I think that we are seeing opportunities to work more profoundly with our suppliers, work more profoundly with the factories that we work with, to improve the design of the products or find ways to make our products more efficient. I think we're not seeing yet, like, I think the right word is, like, a cataclysmic change that opens up a very relevant opportunity. But we are seeing opportunities, and this is helping us to improve our products, to improve our costs. And I think that's something that is helping, helping both from the cost side of the products and also from our innovation capabilities that we're being able to innovate faster and better every day.
Eric Beder: Great. And when you look at inventory, saw that you've made material progress and you mentioned it in the works on the piece. How should we think about the opportunities here in terms of turns and other pieces for the inventory? And where should it be going for the rest of the year, let's say, and going into 2026? In terms of productivity and being able to prove the productivity on the inventories.
Rodrigo Munoz: So, again, we're looking at very good assumptions for the inventory. If you see actually quarter to quarter this year, we're actually getting down again to the same rates that we had in 2024. As you may remember, we had an up on inventory in the last quarters of 2024. But that's already coming down as we speak. We usually we right now are at about 200 million lower than we started the year. And it will continue to decline. So part of our strategy is still to push the products that we have on inventory and try to reduce our purchases so we can get back to our normal position in inventories.
Eric Beder: Okay. The Betterware catalog. So we've seen the last few months that you started really ramp up on this thirtieth anniversary celebration. How should we be thinking about that as a potential nice driver here? It seems to be a new section and lets you kind of expand out in terms of some of the products. Should we be thinking about that forward as an opportunity?
Andres Campos: Yeah. Eric, this is Andres again. I think that the main drivers for revenue growth this year are the ones we spoke about in the earnings release and talking about our price strategies, our promotion strategies. Everything.
Eric Beder: Hello?
Andres Campos: I'm kind of hearing some voices there. I know if okay. There you go. So sorry, Eric. I just heard some voices in the background, but as I was saying, pricing strategies, product strategies, our incentive program strategy, are the main drivers behind it. But we definitely think that celebrating our thirty-year anniversary has given us the chance to reinforce trust and certainty with our Salesforce, with our associates, with our distributors. And this brings a lot of confidence and trust in them to continue working with us and to have a more solid trust not only in the past but in the future of the company, which builds upon all these strategies to help with growth.
So anniversary, we are taking advantage of this being such an important event that reinforces the trust in our associates and distributors going forward.
Eric Beder: Congrats on the quarter, and good luck for the rest of the year.
Andres Campos: Thank you, Eric.
Operator: There are no further questions at this time. I would like to turn the floor back over to management for closing remarks.
Andres Campos: Thank you, operator. While the external environment, particularly in Mexico and in the US, remains challenging, I want to emphasize that this is not a reflection of BEPFRA's fundamentals. On the contrary, we remain a highly financially disciplined group, and our Q2 results demonstrate a strong rebound against the first quarter, showing the resilience and flexibility of our commercial model. Our revenue is growing, our sales force is expanding, our profitability recovered strongly, and remained robust. Our international footprint is growing. We're generating cash, and our brands continue to build consumer trust. Strong fundamentals along with a solid foundation supported by BEPFRA's strategic pillars give us a good starting point to achieve a positive second half of the year.
We would also like to invite you to explore our new corporate presentation now available on our Investor Relations website, where we provide further detail on our business model, our strategy, and the key levers that drive our performance. Thank you again for your trust and continued support. We look forward to updating you on the next quarter. Have a great evening, everyone.
Operator: Ladies and gentlemen, this concludes BEPFRA's second quarter 2025 earnings conference call. We would like to thank you again for your participation. You may now disconnect.