Starbucks delivered a modest revenue decline in QQ2 2025, with total revenue of $8.7616 billion, down 3.4% year over year and 6.8% quarter over quarter. Despite a solid gross margin of 21.1%, profitability tightened significantly; operating income was $0.601 billion and net income was $0.384 billion, producing operating and net margins of approximately 6.86% and 4.39% respectively. EBITDA stood at $1.0647 billion, while interest expense and depreciation and amortization totaled $0.1273 billion and $0.4353 billion, respectively.
Cash flow remained fragile in the quarter: cash provided by operating activities was $0.292 billion, capital expenditures were $0.5892 billion, and free cash flow was negative $0.2972 billion. The quarter also featured a substantial working capital swing, with a negative change in working capital of about $0.9667 billion, contributing to weak free cash flow despite positive operating cash flow. The balance sheet shows a heavily levered profile: total debt of $26.01 billion and net debt of $23.34 billion, with cash and cash equivalents of $2.671 billion and total stockholders’ equity of negative $7.622 billion, implying a stressed balance sheet and negative book value.
Looking ahead, management commentary (within the scope of the provided data) suggests ongoing emphasis on international expansion, digital and loyalty-driven growth, and store-level productivity to restore margins and cash generation. The near-term outlook will hinge on improving operating leverage, managing input costs and currency effects, and mobilizing higher-return channels to reduce leverage and strengthen liquidity. Given the current level of leverage and negative equity, the investment case depends on a clear path to deleveraging, margin expansion, and sustained free cash flow generation.