What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-30 · 148 added, 106 removed, 212 unchanged (55% of the section changed)

3 unchanged sentences

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, “Risk Factors” of the Form 10-K and other factors set forth in the Form 10-K and Quarterly Reports on Form 10-Q.

The Vita Coco Company pioneered packaged coconut water in 2004 and have extended our business into other categories.

The Vita Coco Company pioneered packaged coconut water in 2004 and we have extended our business into other categories.

Our mission is to deliver great tasting, natural and nutritious products that we believe are better for consumers and better for the world.

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Additionally, we generate revenue from bulk product sales to beverage and food companies.

As of March 31, 2025, we source our coconut water from a diversified global network of 16 factories across six countries supported by thousands of coconut farmers.

As of June 30, 2025, we source our coconut water from a diversified global network of 16 factories across six countries supported by thousands of coconut farmers.

As we do not own any of these factories, our supply chain is a fixed asset-lite model designed to better react to changes in the market or consumer preferences.

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Our products are also available in a variety of on-premise locations such as corporate offices, fitness clubs, airports and educational institutions.

Recent Events

During the first quarter of 2025, the U.S.

government announced tariffs on certain imports, including imports from Mexico, and Canada.

We currently believe that our production in Mexico and Canada is exempt from these tariffs under the United States-Mexico-Canada Agreement ("USMCA").

On April 2, 2025, the U.S.

announced a new universal baseline tariff of 10%, plus significant additional country-specific tariffs for select trading partners, on all U.S.

The reciprocal country-specific tariffs were subsequently paused for 90 days on most countries.

The uncertainty around the long-term tariff rates that could be applied to our importation of products into the U.S.

presents significant challenges to our operations and supply chain, and may result in future results being significantly different than any outlook given.

We cannot predict what additional actions might be considered or implemented by the U.S.

or its trade partners, particularly in the current geopolitical environment.

We anticipate that the imposition of the baseline 10% tariff will increase our cost of goods sold.

The uncertainty could also cause disturbances in ocean shipping capacity that could affect our ability to secure ocean freight containers for our products, and create inflationary effects on our costs, in addition to the direct impact of tariffs.

We are closely monitoring the evolving tariff landscape and attempting to mitigate these impacts, including using pricing adjustments, sourcing strategies and other cost-mitigation measures.

However, there can be no assurance that we will be able to fully mitigate the impacts of such tariffs or that the imposition of tariffs, and the resulting economic impact on the U.S.

market and consumer, will not be material to our financial results.

We primarily source from the Philippines and Brazil, with additional sourcing from Sri Lanka, Thailand, Malaysia, Vietnam, Canada, and Mexico.

There have been significant proposed reciprocal tariffs on certain of these countries.

At this time, the overall impact on our business related to tariffs remains uncertain and depends on multiple factors, including the duration and potential expansion of current tariffs, future changes to tariff rates, scope, or enforcement, reciprocal measures by impacted trade partners, inflationary effects, changes to consumer purchasing behavior, and the effectiveness of our responses in managing these challenges.

Our sales to one of our major customers include branded and private label product.

As discussed in our Form 10-K, the private label coconut oil business with this customer discontinued in early 2024 and we expect private label coconut water net sales with this customer to be impacted by the loss of some regions during 2025.

Key Factors Affecting Our Performance

We believe that our performance and future success depend on a number of factors that present significant opportunities for us.

There have been no material changes to such factors from those described in the Form 10-K under the heading “Key Factors Affecting our Performance” and the changes noted below in "Impact of Global Events Causing Macroeconomic Uncertainty." Those factors also pose risks and challenges, including those discussed in Part I, Item 1A.

There have been no material changes to such factors from those described in the Form 10-K under the heading “Key Factors Affecting our Performance” and the changes noted below.

Those factors also pose risks and challenges, including those discussed in Part I, Item 1A.

“Risk Factors” of the Form 10-K.

Impact of Global Events Causing Macroeconomic Uncertainty

• Uncertainty in the macroeconomic environment resulting from geopolitical and economic instability (including the effects of current wars and other international conflicts) and variability in interest rates, foreign exchange rates, tariffs and other import related fees, and inflationary cost environments may affect our global supply chain.

Additionally, the extent and duration of tariffs imposed by the U.S.

Additionally, as further discussed below, the extent and duration of tariffs imposed by the U.S.

government on other countries and reciprocal tariffs placed on U.S.

6 unchanged sentences

“Risk Factors” of the Form 10-K.

• During the first quarter of 2025, the U.S.

government announced tariffs on certain imports, including imports from Mexico, and Canada.

We currently believe that our production in Mexico and Canada is exempt from these tariffs under the United States-Mexico-Canada Agre ement ("USMCA").

On April 2, 2025, the U.S.

announced a new

universal baseline tariff of 10%, plus significant additional country-specific tariffs for select trading partners, on all U.S.

The reciprocal tariffs were subsequently paused for 90 days on most countries;

however the 10% baseline tariff is currently being applied, which has increased our cost of goods sold.

The baseline tariffs are being challenged in the U.S.

legal system and it is unclear whether the tariffs will be upheld and remain in place, or if they will be struck down by the courts.

Currently, we are assuming for purposes of our business operations that the baseline tariffs will be in effect indefinitely .

However, the uncertainty around the long-term tariff rates that could be applied to our importation of products into the U.S.

presents significant challenges to our operations and supply chain, and may result in future results being significantly different than any outlook given.

We cannot predict what additional actions might be considered or implemented by the U.S.

or its trade partners, particularly in the current geopolitical environment.

We are closely monitoring the evolving tariff landscape and attempting to mitigate these impacts, including using pricing adjustments, sourcing strategies and other cost-mitigation measures.

However, there can be no assurance that we will be able to fully mitigate the impacts of such tariffs or that the imposition of tariffs, and the resulting economic impact on the U.S.

market and consumer, will not be material to our financial results.

We primarily source from the Philippines and Brazil, with additional sourcing from Sri Lanka, Thailand, Malaysia, Vietnam, Canada, and Mexico.

Recently, the administration delayed the reciprocal tariff implementation, but then announced significant proposed tariffs on certain of these countries replacing the initially announced reciprocal tariffs, which may further increase our cost of goods sold.

In particular, a 50% tariff has been proposed for Brazil, which was not initially listed as one of the proposed reciprocal tariffs.

At this time, the overall impact on our business related to tariffs remains uncertain and depends on multiple factors, including the timing, duration and size of any tariffs, future changes to tariff rates, scope, or enforcement of such tariffs, reciprocal measures by impacted trade partners, inflationary effects, changes to consumer purchasing behavior, and the effectiveness of our responses in managing these challenges.

These tariff actions, retaliatory measures, or other trade restrictions, could materially and adversely affect our business.

• Our sales to one of our major customers include branded and private label product.

As discussed in our Form 10-K, the private label coconut oil business with this customer discontinued in early 2024 and we expect private label coconut water net sales in 2025 with this customer to be impacted by the loss of some regions, which started primarily in the second quarter of 2025.

Components of Our Results of Operations

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• Vita Coco Coconut Water —This product category consists of all branded coconut water product offerings under the Vita Coco labels, where the majority ingredient is coconut water.

For these products, control is

transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

• Private Label —This product category consists of all private label product offerings, which includes coconut water and coconut oil.

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Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024, respectively:

(in thousands) Three Months Ended March 31,

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the three and six months ended June 30, 2025 and 2024, respectively:

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net sales $ 168,759 $ 144,116 $ 299,680 $ 255,814

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Unrealized gain/(loss) on derivative instrument 1,067 (5,963) 3,884 (8,488)

Foreign currency gain

Foreign currency gain/(loss)

482 (136) 1,062 (78)

Interest income 1,500 1,627 3,018 3,150

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The following table provides a comparative summary of net sales by operating segment and product category:

(in thousands) Three Months Ended March 31, Change

2025 2024 Amount Percentage

(in thousands) Three Months Ended June 30, Change Six Months Ended June 30, Change

2025 2024 Amount Percentage 2025 2024 Amount Percentage

Americas segment

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Total net sales $ 168,759 $ 144,116 $ 24,643 17.1 % $ 299,680 $ 255,814 $ 43,866 17.1 %

For the three months ended March 31, 2025, the primary driver of the consolidated net sales increase of 17.2% was strong Vita Coco Coconut Water volume growth.

Vita Coco Coconut Water net sales increased 25.4%, with a case equivalents ("CE") volume increase of 25.2%.

This was partially offset by a 11.8% decrease in private label net sales, which was in part due to the transition out of private label coconut oil sales to a major customer, partially offset by higher private label coconut water volumes.

For the three months ended June 30, 2025, the primary driver of the consolidated net sales increase of 17.1% was strong Vita Coco Coconut Water volume growth.

Vita Coco Coconut Water net sales increased 24.8%, with a case equivalents ("CE") volume increase of 20.9% and growth in the Other category, driven by the U.S.

rollout of Vita Coco Treats.

This was partially offset by a 25.2% decrease in private label net sales, which was due largely to the loss of private label coconut water service regions for multiple customers that started in the first six months of 2025.

For the six months ended June 30, 2025, the consolidated net sales increase of 17.1% was driven by Vita Coco Coconut Water, which had a 25.0% net sales increase, with a case equivalents CE volume increase of 22.7%.

This was partially offset by private label net sales decline of 18.3% resulting from the loss of private label coconut water service regions for multiple customers in addition to the transition out of private label coconut oil sales to a major customer that began in the first quarter of 2024.

Volume in Case Equivalents

The following table provides a comparative summary of the percentage change in our volume in CE for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, by operating segment and product category:

Percentage Change - Three Months Ended March 31, 2025 vs.

The following table provides a comparative summary of the percentage change in our volume in CE for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024, by operating segment and product category:

Percentage Change - Three Months Ended June 30, 2025 vs.

International

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Total volume (CE) 12.2 % 24.1 % 14.1 %

Percentage Change - Six Months Ended June 30, 2025 vs.

International

Vita Coco Coconut Water 21.7 % 27.7 % 22.7 %

Private Label (18.5) % 20.3 % (10.8) %

Other 202.0 % 27.0 % 189.3 %

Total volume (CE) 15.2 % 25.4 % 16.9 %

A CE is a standard volume measure used by management, which is defined as a case of 12 bottles of 330ml liquid beverages or the same liter volume of oil.

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Americas Segment

Americas net sales increased $16.5 million, or 17.2%, to $112.6 million for the three months ended March 31, 2025 from $96.1 million for the three months ended March 31, 2024.

The increase was primarily driven by CE volume growth of 23.5% of Vita Coco Coconut Water and private label coconut water growth, partially offset by private label oil due to the transition out of private label coconut oil at a major customer.

Vita Coco Coconut Water net sales increased $16.6 million, or 23.9%, to $86.1 million for the three months ended March 31, 2025, from $69.5 million for the three months ended March 31, 2024.

Americas net sales increased $17.5 million, or 14.0%, to $142.0 million for the three months ended June 30, 2025 from $124.5 million for the three months ended June 30, 2024.

The increase was primarily driven by CE volume growth of 20.6% of Vita Coco Coconut Water, partially offset by volume lost due to the loss of private label coconut water service regions for several customers that started in the first six months 2025.

Americas net sales increased $34.0 million, or 15.4%, to $254.6 million for the six months ended June 30, 2025 from $220.6 million for the six months ended June 30, 2024.

The increase was primarily driven by CE volume growth of 21.7% of Vita Coco Coconut Water, offset by the private label decline.

Vita Coco Coconut Water net sales increased $22.0 million, or 22.3%, to $120.5 million for the three months ended June 30, 2025, from $98.5 million for the three months ended June 30, 2024.

The increase was the result of CE volume growth of 20.6% due to increased demand.

Private label net sales decreased $3.1 million, or 12.7%, to $21.2 million for the three months ended March 31, 2025, from $24.3 million for the three months ended March 31, 2024, due to a decrease in the private label coconut oil business, resulting in CE volume decline of 2.3%.

The decrease was partially offset by 7.2% CE volume growth in private label coconut water.

Net sales from Other products increased by $3.0 million, or 130.2%, to $5.3 million for the three months ended March 31, 2025 from $2.3 million for the three months ended March 31, 2024, primarily due to the national rollout of Vita Coco Treats.

Vita Coco Coconut Water net sales increased $38.6 million, or 22.9%, to $206.6 million for the six months ended June 30, 2025, from $168.0 million for the six months ended June 30, 2024.

The increase was the result of CE volume growth of 21.7% due to strong consumer demand.

Private label net sales decreased $8.5 million, or 36.5%, to $14.7 million for the three months ended June 30, 2025, from $23.1 million for the three months ended June 30, 2024, due to a decrease in the private label business as outlined above, resulting in CE volume decrease of 34.0%.

Private label net sales decreased $11.5 million, or 24.3%, to $35.9 million for the six months ended June 30, 2025, from $47.4 million for the six months ended June 30, 2024.

The decrease was the result of CE volume decline of 18.5% due to the aforementioned losses of private label coconut oil and coconut water business.

Net sales from Other products increased by $4.0 million, or 137.6%, to $6.8 million for the three months ended June 30, 2025 from $2.9 million for the three months ended June 30, 2024, primarily due to the national rollout of Vita Coco Treats in the U.S.

Net sales from Other products increased by $6.9 million, or 134.3%, to $12.1 million for the six months ended June 30, 2025 from $5.2 million for the six months ended June 30, 2024, driven by CE volume increase of 202.0%, driven by the rollout of Vita Coco Treats.

International Segment

International net sales increased by $2.7 million, or 17.4%, to $18.3 million for the three months ended March 31, 2025, from $15.6 million for the three months ended March 31, 2024.

The increase of 27.2% is primarily driven by CE volume growth in Germany and the United Kingdom.

Vita Coco Coconut Water net sales increased by $3.5 million, or 36.3%, to $13.2 million for the three months ended March 31, 2025, from $9.7 million for the three months ended March 31, 2024.

The increase was driven by higher volume in both Europe and the Asia Pacific region due to strong demand of our product.

Private label net sales decreased $0.4 million, or 7.6%, to $4.8 million for the three months ended March 31, 2025 from $5.2 million for the three months ended March 31, 2024.

The decrease was driven primarily by a decrease in the private label coconut oil business, partially offset by growth in private label water.

Net sales from Other products decreased 51.3% for the three months ended March 31, 2025, primarily driven by the decrease in sales of Vita Coc o coconut oil.

International net sales increased by $7.2 million, or 36.6%, to $26.8 million for the three months ended June 30, 2025, from $19.6 million for the three months ended June 30, 2024.

The increase of 24.1% in CE volume is primarily driven by growth in Germany and the United Kingdom, partially offset by softness in China.

International net sales increased by $9.9 million, or 28.1%, to $45.1 million for the six months ended June 30, 2025, from $35.2 million for the six months ended June 30, 2024.

The increase is primarily driven by CE volume growth of 25.4% in Germany and United Kingdom partially offset by softness in China.

Vita Coco Coconut Water net sales increased by $5.9 million, or 42.5%, to $19.9 million for the three months ended June 30, 2025, from $14.0 million for the three months ended June 30, 2024.

The increase was driven by higher volume in Europe due to strong demand for our products, along with some pricing and foreign exchange rate benefits.

Vita Coco Coconut Water net sales increased by $9.4 million, or 40.0%, to $33.1 million for the six months ended June 30, 2025, from $23.6 million for the six months ended June 30, 2024.

The increase was primarily driven by strong CE volume growth in Europe coupled with pricing benefits.

Private label net sales increased $1.4 million, or 29.2%, to $6.2 million for the three months ended June 30, 2025 from $4.8 million for the three months ended June 30, 2024.

The increase was driven primarily by private label coconut water CE volume growth in Europe, which was partially offset by a decrease in the private label coconut oil business in Asia.

Private label net sales increased $1.0 million, or 10.2%, to $11.0 million for the six months ended June 30, 2025 from $10.0 million for the six months ended June 30, 2024.

The increase was driven primarily by CE volume growth in Europe private label coconut water sales, partially offset by a decrease in private label coconut oil volume.

Net sales from Other products decreased 18.0% and 34.0% for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year, primarily driven by the decrease in sales of Vita Coco coconut oil.

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Three Months Ended June 30, Change Six Months Ended June 30, Change

2025 2024 Amount Percentage 2025 2024 Amount Percentage

Cost of goods sold

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Consolidated 36.3 % 40.8 % (4.5) % 36.5 % 41.4 % (4.9) %

On a consolidated basis, cost of goods sold increased by $18.3 million, or 28.4%, to $82.8 million for the three months ended March 31, 2025, from $64.5 million for the three months ended March 31, 2024.

On a consolidated and segment basis, the increase was primarily driven by higher sales volume and higher rates for finished goods and transportation costs.

On a consolidated basis, gross profit increased by $0.9 million, or 1.9%, to $48.1 million for the three months ended March 31, 2025, from $47.2 million for the three months ended March 31, 2024.

The increase in gross profit resulted from higher CE volume and slightly improved net pricing on Vita Coco Coconut Water, which were partially offset by higher finished goods and transportation costs.

The decrease in gross margin resulted from higher year-on-year ocean freight rates and finished goods product costs, partially offset by branded coconut water pricing and favorable product mix.

On a consolidated basis, cost of goods sold increased $22.1 million, or 25.9%, to $107.5 million for the three months ended June 30, 2025, from $85.4 million for the three months ended June 30, 2024.

On a consolidated and segment basis, the increase was primarily driven by higher CE volume and higher rates for finished goods and transportation costs and the initial impact of baseline tariffs.

Cost of goods sold increased by $40.4 million, or 27.0%, to $190.3 million for the six months ended June 30, 2025, from $149.9 million for the six months ended June 30, 2024.

On a consolidated basis, the increase was primarily related to increased CE volume and higher finished goods and transportation costs, and to a lesser extent, the initial impact of baseline tariffs.

For the three months ended June 30, 2025, consolidated gross profit increased $2.5 million, or 4.3%, to $61.3 million, from $58.7 million for the three months ended June 30, 2024, primarily driven by higher CE volume.

The increase was partially offset by increased rates for finished goods and transportation costs and the initial impact of baseline tariffs, these costs also resulted in gross margin decline, which was partially offset by branded coconut water pricing and favorable product mix.

For the six months ended June 30, 2025, consolidated gross profit increased $3.4 million, or 3.2%, to $109.4 million, from $105.9 million for the six months ended June 30, 2024, also primarily driven by higher CE volume, and partially offset by increased rates for finished goods and transportation costs and the initial impact of baseline tariffs.

Similar to the quarterly results, higher year-on-year ocean freight and finished goods costs resulted in a decrease in gross margin, partially offset by branded coconut water pricing and favorable product mix.

Operating Expenses

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Three Months Ended June 30, Change Six Months Ended June 30, Change

2025 2024 Amount Percentage 2025 2024 Amount Percentage

Selling, general, and administrative $ 36,143 $ 28,756 $ 7,387 25.7 % 64,935 56,974 7,961 14.0 %

Selling, General and Administrative Expenses

During the three months ended March 31, 2025, SG&A increased by $0.6 million, or 2.0%, versus the three months ended March 31, 2024.

The increase in SG&A expense was primarily driven by an increase of $1.8 million in personnel related expenses for the three months ended March 31, 2025 versus the prior year period, and $0.4 million related to the overlap of rent expense for the new New York and London offices with that of the current offices.

This increase was partially offset by a $2.0 million decrease in selling related expenses.

For the three months ended June 30, 2025, SG&A increased $7.4 million, or 25.7%, versus the three months ended June 30, 2024.

The increase was primarily driven by an increase of $3.1 million in marketing expense primarily due to new product awareness campaigns for Vita Coco Treats, $2.7 million in personnel-related expenses, $0.9 million in higher reserves for bad debt, and $0.4 million related to an overlap of rent expense for the new New York office with the current New York office.

During the six months ended June 30, 2025, SG&A increased $8.0 million, or 14.0%, versus the six months ended June 30, 2024.

The increase was primarily driven by an increase of $4.6 million in personnel-related expenses and $3.0 million in marketing expense due to new product awareness campaigns for Vita Coco Treats, $0.8 million of higher reserves for bad debt expenses, $0.7 million related to the overlap of rent expense for the new New York office with the current New York office.

The increases were partially offset by a reduction of $2.3 million in sales related expenses.

Other Income (Expense), Net

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Unrealized gain/(loss) on derivative instruments $ 2,817 $ (2,525) $ 5,342 n/m

Foreign currency gain

580 58 522 n/m

Three Months Ended June 30, Change Six Months Ended June 30, Change

2025 2024 Amount Percentage 2025 2024 Amount Percentage

Unrealized gain/(loss) on derivative instruments $ 1,067 $ (5,963) $ 7,030 n/m $ 3,884 $ (8,488) $ 12,372 n/m

Foreign currency gain/(loss)

482 (136) 618 n/m 1,062 (78) 1,140 n/m

Interest income 1,500 1,627 (127) (7.8 %) 3,018 3,150 (132) (4.2 %)

155 — 155 n/m

$ 5,070 $ (944) $ 6,014 n/m

— — — n/m 155 — 155 n/m

$ 3,049 $ (4,472) $ 7,521 n/m $ 8,119 $ (5,416) $ 13,535 n/m

Unrealized Gain/(Loss) on Derivative Instruments

For the three months ended March 31, 2025 and 2024, we recorded gains of $2.8 million and losses of $2.5 million, respectively, for the mark-to-market changes in fair value on the outstanding derivative instruments for forward foreign currency exchange contracts, with the largest gain for the three months ended March 31, 2025 related to the contracts hedging the BRL and THB.

Foreign Currency Gain

For the three months ended March 31, 2025, the change in foreign currency gain was $0.5 million as compared to March 31, 2024.

For the three months ended June 30, 2025 and 2024, we recorded gains of $1.1 million and losses of $6.0 million, respectively, for the mark-to-market changes in fair value on the outstanding derivative instruments for forward foreign currency exchange contracts, with the largest gain for the three months ended June 30, 2025 related to the contracts hedging the BRL and THB.

For the six months ended June 30, 2025 and 2024, we recorded gains of $3.9 million and losses of $8.5 million, respectively, for the mark-to-market changes in fair value on the outstanding derivative instruments for forward foreign currency exchange contracts, with the largest gain for the six months ended June 30, 2025 related to the contracts hedging the BRL and THB, partially offset by loss on GBP, CAD, and EUR hedges.

Foreign Currency Gain/(Loss)

For the three months ended June 30, 2025, the change in foreign currency gain was $0.6 million as compared to June 30, 2024.

For the six months ended June 30, 2025, the change in foreign currency gain was $1.1 million as compared to June 30, 2024.

The change in all periods was a result of movements in various foreign currency exchange rates related to transactions denominated in currencies other than the functional currency.

1 unchanged sentence

Interest Income

The change in interest income was immaterial.

For the three months ended March 31, 2025, the change in Other income is due to the sale of intellectual property.

For the three months ended June 30, 2025, interest income decreased $0.1 million compared to June 30, 2024 primarily due to lower interest rates in the 2025 period compared to the 2024 period.

For the six months ended June 30, 2025, interest income decreased $0.1 million as compared to June 30, 2024.

The decrease in interest income was due to lower interest rates compared to prior year.

For the six months ended June 30, 2025, Other income of $0.2 million is due to the sale of intellectual property.

Income Tax Expense

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Three Months Ended June 30, Change Six Months Ended June 30, Change

2025 2024 Amount Percentage 2025 2024 Amount Percentage

Income tax expense 5,263 6,416 $ (1,153) (18.0) % $ 10,744 $ 10,193 $ 551 5.4 %

2 unchanged sentences

The effective income tax rate is based upon the estimated income for the year, the composition of that income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies.

For the three months ended March 31, 2025 and 2024, our effective tax rate was 22.5% and 21.0%, respectively.

The effective tax rate for the period is higher than the U.S.

For the six months ended June 30, 2025 and 2024, our effective tax rate was 20.5% and 23.4%, respectively.

The effective tax rate for the current period is lower than the U.S.

statutory rate of 21% primarily as a result of discrete items recorded during the period.

The effective tax rate for the period ending June 30, 2024 was higher than the U.S.

statutory rate of 21% primarily as a result of state income taxes for the U.S.

company and other nondeductible expenses for tax purposes, and is partially offset by lower statutory tax rates in countries outside the U.S.

that the Company operates in.

The increase in the effective tax rate when comparing the periods was primarily driven by the increase in pre-tax profits in jurisdictions outside the U.S.

with higher statutory tax rates and the relative impact of other nondeductible expenses in relation to the pre-tax profits.

The change in effective tax rates between the periods is primarily driven by the jurisdictional mix of the Company’s pre-tax profits and the relative impact of other non-deductible expenses in relation to the pre-tax profits.

Non-GAAP Financial Measures

6 unchanged sentences

A reconciliation from net income to EBITDA and Adjusted EBITDA is set forth below:

Three Months Ended March 31,

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(in thousands) (in thousands)

Net income 22,908 19,093 41,790 33,331

6 unchanged sentences

Foreign currency (gain)/loss (b) (482) 136 (1,062) 78

Other adjustments (c)

Secondary Offering Costs (c) — (324) — (324)

Other adjustments (d)

952 — 1,621 —

Adjusted EBITDA $ 29,242 $ 32,238 51,747 $ 53,468

2 unchanged sentences

(b) Unrealized gains or losses on derivative instruments and foreign currency gains or losses are not considered in our evaluation of our ongoing performance.

(c) Other adjustments include $0.6 million related to a one-time 2023 incentive program that is measured based on full-year 2025 performance and is structured differently from our other ongoing employee incentive programs, and $0.4 million of non-cash rent charges related to our new New York City office that overlap with our current New York City office rent charges.

(c) The amounts for the three and six months ended June 30, 2024 relate to an expense waiver of certain costs incurred during the November 9, 2023 block trade.

The Company did not receive any proceeds from the sale of the shares.

For additional information regarding the expense waiver for the three and six months ended June 30, 2024, see Note 15, Related Party Transactions , in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

(d) The three months ended June 30, 2025 includes $0.6 million related to a one-time 2023 incentive program that is measured based on full-year 2025 performance structured differently from our other ongoing employee incentive

programs, and $0.4 million of rent expense related to our new New York City office that overlap with our current New York City office rent charges.

The six months ended June 30, 2025 includes $1.2 million related to a one-time 2023 incentive program that is measured based on full-year 2025 performance structured differently from our other ongoing employee incentive programs, and $0.7 million of dual rent expense related to our New York City office.

These amounts were offset by $0.1 million of partial recoveries of prepaid inventory from a supplier (refer to the Form 10-K for further details) and a gain of $0.2 million from a sale of intellectual property.

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Since our inception, we have financed our operations primarily through cash generated from our business operations and proceeds on borrowings through our credit facilities and term loans.

We had $153.6 million and $164.7 million of cash and cash equivalents as of March 31, 2025 and December 31, 2024, respectively.

We had $167.0 million and $164.7 million of cash and cash equivalents as of June 30, 2025 and December 31, 2024, respectively.

From time to time, we may supplement our liquidity needs with incremental borrowing capacity under the 2020 Credit Facility.

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The following tables summarize our sources and uses of cash:

Three Months Ended March 31, Change

Six Months Ended June 30, Change

2025 2024 Amount Percentage

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Cash flows provided by (used in):

Operating activities $ (9,800) $ (267) $ (9,533) n/m

Operating activities $ 12,010 $ 26,652 $ (14,642) (54.9 %)

Investing activities (1,508) (414) (1,094) n/m

Financing activities (1,099) (9,086) 7,987 n/m

Financing activities (9,081) (8,562) (519) 6.1 %

Effects of exchange rate changes on cash and cash equivalents 961 (106) 1,067 n/m

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Our primary use of cash in operating activities are for cost of goods sold and SG&A expenses.

During the three months ended March 31, 2025, cash used in operating activities increased $9.5 million compared to the three months ended March 31, 2024, driven by timing differences in the collection of accounts receivable and payments made in the three months ended March 31, 2025 period for inventory build-up during the end of 2024.

The decreases in operating cash used were partly offset by an increase in net income after non-cash adjustments.

During the six months ended June 30, 2025, cash provided by operating activities decreased $14.6 million compared to the six months ended June 30, 2024.

The decrease is driven by timing differences in the collection of accounts receivable and payments made and higher inventory purchases, partly offset by increase in net income, net of non-cash adjustments.

Investing Activities

During the three months ended March 31, 2025, cash used in investing activities was $0.6 million as compared to $0.1 million for the three months ended March 31, 2024.

The increase was primarily due to capital expenditures related to the new New York and London offices.

During the six months ended June 30, 2025, cash used in investing activities was $1.5 million as compared to $0.4 million for the six months ended June 30, 2024.

The increase was primarily due to capital expenditures related to the new New York, London and Singapore offices.

Financing Activities

During the three months ended March 31, 2025 compared to the three months ended March 31, 2024, net cash used by financing activities decreased by $8.0 million, primarily driven by less share repurchases in the three months ended March 31, 2025 compared to the prior year period.

During the six months ended June 30, 2025 compared to the six months ended June 30, 2024, net cash used by financing activities increased by $0.5 million, primarily driven by higher volume of share repurchases in the six months ended June 30, 2025 compared to the prior year period.

See Note 10, Stockholders' Equity, in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, for further discussion on share repurchases.

We had an immaterial amount of debt outstanding as of March 31, 2025 and December 31, 2024, which was related to vehicle loans.

We had an immaterial amount of debt outstanding as of June 30, 2025 and December 31, 2024, which was related to vehicle loans.

Revolving Credit Facility

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In addition, the Company was subject to unused commitment fees ranging from 0.10% and 0.20% on the unused amount of the line of credit in the year ended December 31, 2024, with the rate based on the Company’s leverage ratio (as defined in the credit agreement).

As of February 14, 2025, the effective date of the amendment, the unused commitment fees ranges from 0.13% and 0.23% on the unused amount of the line of credit, with the rate being based on the Company’s leverage ratio (as defined in the credit agreement).

The outstanding balance on the Revolving Facility was zero as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025, we were compliant with all financial covenants.

As of February 14, 2025, the unused commitment fees range from 0.13% and 0.23% on the unused amount of the line of credit, with the rate being based on the Company’s leverage ratio (as defined in the credit agreement).

The outstanding balance on the Revolving Facility was zero as of June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025, we were compliant with all financial covenants.

Vehicle Loans

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Interest rates on these vehicle loans range from 4.56% to 5.68%.

The outstanding balance on the vehicle loans as of March 31, 2025 was less than $0.1 million.

The outstanding balance on the vehicle loans as of June 30, 2025 was less than $0.1 million.

For additional information, see Note 6, Debt , in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Our consolidated financial statements are prepared in accordance with U.S.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the

reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

We evaluate our estimates and assumptions on an ongoing basis.

our estimates and assumptions on an ongoing basis.

Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in the Form 10-K and the notes to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

During the three months ended March 31, 2025, there were no material changes to our critical accounting policies from those discussed in the Form 10-K.

During the six months ended June 30, 2025, there were no material changes to our critical accounting policies from those discussed in the Form 10-K.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis