Luvu Brands’ QQ3 2025 results reflect a small-scale consumer cyclical player navigating a stretched discretionary environment. Revenue for the quarter was 5.846 million USD, down 1.3% year-over-year and down 18.65% quarter-over-quarter, signaling modest demand normalization after a softer prior period. Gross profit was 1.603 million USD with a gross margin of 27.42%, up 4.36% YoY but down 19.12% QoQ, indicating some gross margin volatility tied to mix or input costs. Operating income was essentially breakeven at -1 thousand USD, aligning with an EBITDA of -1 thousand USD and an EBITDA margin of approximately -0.00017. Net income of -88 thousand USD represented a YoY improvement (+6.38%) but a sharp QoQ deterioration (-145.6%), with earnings per share of -0.0011 (diluted).
From a liquidity and balance sheet perspective, liquidity remains modest but adequate for near-term needs: cash and cash equivalents stood at 1.11 million USD, while total debt was 3.70 million USD and net debt was 2.59 million USD. The company reported a current ratio of 1.26 and a quick ratio of 0.55, with cash conversion metrics implying modest operating cash generation in the quarter (-160 thousand USD from operations) and negative free cash flow (-191 thousand USD). Working capital dynamics show inventory at 3.46 million USD and receivables at 1.42 million USD, contributing to a cyclical cash burn despite a lean cost base (G&A and SG&A combined 1.07 million USD; DSP/BD optimization potential). No formal forward-looking guidance was disclosed in the filing; investors should monitor any subsequent commentary for management’s view on trajectory, particularly around cost controls and growth initiatives.
Overall, LUVU remains a small-scale, bolt-on player with limited scale and a constrained cash flow profile. The stock’s valuation metrics reflect substantial discounting for near-term profitability risk, but the company could unlock upside if it can drive revenue growth and margin stability while tightening working capital. The near-term thesis is cautiously constructive on margin stabilization but remains conditional on top-line progression and disciplined expense management.