Coty’s QQ2 2025 results show a modest top-line decline versus the prior-year period and a resilient but still narrow profit profile. Revenue reached USD 1.6699 billion, down 3.34% year over year and -0.10% quarter over quarter, reflecting ongoing mix shifts toward prestige and higher-margin categories, offset by currency and cost pressures. Gross profit was USD 1.1142 billion with a margin of 66.72%, while operating income was USD 268.2 million (margin ~16.06%). Net income stood at USD 23.7 million, yielding a net margin of 1.42% and diluted EPS of USD 0.0233–0.0234. Free cash flow was positive USD 418 million for the quarter, supporting discretionary cash flow despite a negative near-term balance sheet liquidity signal. Cash flow from operations was USD 464.5 million, capex was modest at USD 46.5 million, and free cash flow coverage remains a meaningful strength in the context of Coty’s leverage. On the balance sheet, total debt approached USD 3.66 billion with net debt of USD 3.41 billion, and liquidity metrics remain tight (current ratio 0.711, quick ratio 0.454). The company posted a sizable negative swing in total other income/expenses (USD -211.6 million) that weighed on net income this quarter. Management commentary (not provided in the supplied transcript) would be essential to understand the durability of margins amid ongoing cost inflation, FX headwinds, and a portfolio reweighting toward higher-margin lines. Overall, the investment thesis rests on cash generation, deleveraging potential, and the ability to realize operating leverage as the revenue mix matures; however, near-term profitability remains sensitive to cost structure and macro-driven demand.