Coty Inc (0I4A.L) Q3 2025 Earnings Report

Revenue analysis:
- QQ3 2025 revenue: 1,299,100,000 USD; YoY change: -6.24%; QoQ change: -22.20%
- Implication: Revenue decline amid seasonality and demand softness; potential impact from mix shifts toward lower-margin channels or regions.

Gross profit and margin:
- Gross profit: 832,400,000 USD; Gross margin: 64.08%
- YoY gross profit margin change: -7.28%; QoQ: -25.29%
- Implication: While gross margin is robust, the deterioration in gross profit dollars and margin QoQ signals pressure from cost of goods sold leverage or product mix shifts, against a backdrop of fixed overhead absorption.

Operating profitability:
- Operating income: -280,400,000 USD; Operating margin: -21.58%
- EBITDA: -280,400,000 USD; EBITDARatio: -0.216
- YoY operating income delta: -460.41%; QoQ delta: -204.55%
- Implication: Large operating losses driven by fixed cost base and SG&A load; indicates need for volume growth or cost discipline to drive a constructive margin profile.

Net income and earnings per share:
- Net income: -405,700,000 USD; Net margin: -31.22%
- EPS: -0.47; diluted EPS: -0.47
- YoY EPS delta: -11,030.23%; QoQ delta: -2,108.55%
- Implication: The dramatic YoY EPS deterioration reflects bottom-line leverage on negative profitability and charges; near-term earnings power remains weak without a material improvement in top-line growth or cost structure.

Cash flow and liquidity:
- Net cash from operating activities: -122,500,000 USD; Free cash flow: -165,400,000 USD
- Cash (end): 259,400,000 USD; Cash (beginning): 268,600,000 USD
- Capex: -42,900,000 USD
- Implication: Operating cash flow remains negative; continued capex and working capital needs may pressure liquidity without meaningful improvement in profitability or financing actions.

Balance sheet health:
- Total assets: 11,470,500,000 USD; Total liabilities: 7,551,000,000 USD; Total shareholders’ equity: 3,637,400,000 USD
- Cash and equivalents: 243,500,000 USD; Net debt: 3,845,400,000 USD; Total debt: 4,088,900,000 USD
- Current ratio: 0.818; Quick ratio: 0.514; Cash ratio: 0.103
- Implication: Leverage remains a material constraint; liquidity metrics are tight, suggesting a priority on deleveraging and working capital optimization.

Valuation context:
- Price to book value: ~1.31x; Price to sales: ~3.67x; Negative enterprise value multiple reported in ratios context; Price to earnings is negative due to loss; dividend yield effectively zero.
- Implication: Valuation reflects high leverage and earnings volatility; any recovery requires tangible improvements in profitability and cash flow to re-rate shares.

Bottom-line takeaway:
- The QQ3 2025 quarter shows deteriorating profitability and negative cash flow amid a stable but pressured gross margin. The near-term outlook hinges on reducing fixed costs, improving SG&A efficiency, stabilizing revenue, and progress on deleveraging. Investors should monitor management’s execution on cost discipline, portfolio optimization, and cash conversion cycles for a potential turnaround.

Transcript highlights could not be compiled from the provided data because the earnings transcript is not included. No management quotes or themes are available in the input to group by strategy, operations, or market conditions.

Coty faces a challenging near-term earnings trajectory highlighted by a negative EBITDA and net loss for QQ3 2025 alongside a leveraged balance sheet. The core strength remains its broad brand portfolio and robust gross margin, which provides a foundation for a potential margin recovery as the company focuses on cost discipline and portfolio optimization. The investment case hinges on successful deleveraging, stabilization of free cash flow, and improved revenue mix from higher-margin prestige products and faster e-commerce growth. Until visible progress materializes in operating efficiency and cash generation, the stock is rated as high-risk with limited near-term upside. Key catalysts to watch include deleveraging progress (net debt/EBITDA trajectory), evidence of revenue stabilization or growth, and any announced portfolio actions or strategic reviews that could unlock value. Investors should monitor liquidity headroom, the pace of capital allocation toward debt reduction, and signs of margin normalization in subsequent quarters.