RH Q3 Earnings: Revenue Beat, EPS Miss
RH Q3 earnings showed revenue and cash-flow gains but an EPS miss, preserving full-year outlook and prompting analyst cuts and share strength
KEY TAKEAWAYS
- RH reported third-quarter net revenue of $883.8 million and non-GAAP EPS of $1.71.
- Adjusted EPS missed analysts' consensus by roughly 19-21%, prompting estimate cuts.
- Year-to-date operating cash flow improved and equity moved from a deficit to positive.
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RH reported mixed third-quarter fiscal 2025 results for the 13 weeks ended November 1, 2025, as revenue growth and stronger cash generation offset an adjusted EPS shortfall. The company maintained its full-year outlook, prompting analysts to revise estimates.
Quarter Results and Market Reaction
RH filed its Form 10-Q and issued a press release on December 11, 2025, announcing third-quarter fiscal 2025 results and providing a shareholder letter on its investor site. The company reported net revenues of $883.8 million for the quarter, an 8.9% increase from the prior year.
GAAP net income was $36.3 million, with GAAP diluted earnings per share of $1.83 and non-GAAP diluted EPS of $1.71. The adjusted EPS fell roughly 19–21% below analyst estimates, leading to the quarter’s “mixed” characterization.
For the nine months ended November 1, 2025, RH posted net revenues of $2.6 billion, net income of $96.0 million, and diluted EPS of $4.84, compared with prior-year net income of $58.5 million and EPS of $2.96. These results reflect improved operating performance year to date.
Management maintained its full-year fiscal 2025 outlook after the quarter. Analysts revised near-term forecasts, balancing revenue momentum and cash flow gains against the earnings miss.
Cash Flow, Balance Sheet, and Acquisition
Operating cash flow improved sharply, with net cash from operating activities rising to $356.2 million for the nine months, up from $35.9 million a year earlier. This was partly driven by a $155.3 million reduction in merchandise inventories.
Stockholders’ equity shifted from a deficit of $163.6 million at the start of the fiscal year to positive equity of $3.3 million by November 1, 2025, supported by higher earnings and foreign-currency translation gains. The company continues to carry substantial leverage through term loans and significant lease obligations.
During the period, RH completed a $32.1 million acquisition of the Formations and Dennis & Leen home-furnishings business. The deal added about $2.8 million of goodwill and expanded RH’s luxury product assortment.
