Egg and butter company Vital Farms (NASDAQ:VITL) met Wall Street’s revenue expectations in Q1 CY2025, as sales rose 9.6% year on year to $162.2 million. Its non-GAAP EPS of $0.37 per share was 43% above analysts’ consensus estimates.
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Vital Farms (VITL) Q1 CY2025 Highlights:
- Revenue: $162.2 million (9.6% year-on-year growth)
- EBITDA guidance for the full year is $100 million at the midpoint, below analyst estimates of $100.9 million
- Operating Margin: 13.4%, down from 16.3% in the same quarter last year
- Market Capitalization: $1.38 billion
StockStory’s Take
Vital Farms’ first quarter results were shaped by ongoing supply constraints and investments in growth initiatives. CEO Russell Diez-Canseco cited “significantly lower egg inventory relative to the same period last year,” which tempered volume growth despite strong underlying demand. The company’s butter business delivered notable year-over-year expansion, yet egg supply constraints limited the ability to fully capitalize on consumer interest. Management discussed how improved processing efficiencies have boosted yields, but still acknowledged the need for additional farms to meet growing demand. As Diez-Canseco explained, “volume growth headwinds we experienced in the first quarter will ease beginning this quarter, setting the stage for net revenue growth to reaccelerate as the year progresses.”
Looking forward, Vital Farms’ guidance for 2025 is anchored by expectations of easing supply constraints, ongoing investments in farm expansion, and recently implemented price increases designed to offset tariff-driven cost pressures. Management reaffirmed its outlook for the year, noting that “recently added farms ramp up production and new farms continue to come online,” which should support sequential growth in capacity and sales. CFO Thilo Wrede emphasized that the new pricing was not originally anticipated in guidance but is now expected to “ensure we deliver both on our long-term goal of building a sustainable brand and our short-term financial commitments.” The company remains attentive to macroeconomic risks but maintains confidence in the resilience and loyalty of its consumer base.
Key Insights from Management’s Remarks
Management attributed first quarter performance to egg supply constraints, robust butter demand, and investments in supply chain capacity, while addressing the impact of tariffs on cost structure and pricing.
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Egg supply constraints: The company experienced limited volume growth due to lower egg inventory and ongoing supply challenges. Management indicated these constraints were anticipated and should ease as new farms become productive during the year.
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Butter business momentum: Butter segment revenue grew 41% year-over-year, driven by the company’s transition to sourcing from Ireland, which has removed prior bottlenecks and enabled more consistent supply to meet demand.
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Farm network expansion: Vital Farms added approximately 25 new family farms in the quarter, growing its network to over 450 farms and increasing contracted hens. This expansion is intended to support both current demand and long-term growth targets.
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Investments in infrastructure: Construction on a new facility in Indiana and an additional egg grading system at the Missouri Egg Central Station is progressing as planned. These projects are expected to boost capacity by 30% and support the company’s goal of reaching $1 billion in annual revenue by 2027.
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Tariff and cost management: Management acknowledged recently announced tariffs will increase costs for imported butter, packaging, and equipment. To counteract this, the company announced a low double-digit percentage price increase on shell egg products, effective this quarter.
Drivers of Future Performance
Vital Farms’ 2025 outlook is shaped by anticipated supply improvements, the timing of new farm capacity, and the implementation of price increases to offset tariff-related costs.
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Supply ramp and farm onboarding: Management expects sequentially accelerating volume growth as newly added family farms ramp up production and additional farms come online, alleviating prior supply constraints and supporting higher sales in the second half of the year.
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Tariff exposure and pricing actions: The company has factored in the impact of tariffs on imported butter, packaging, and farm equipment. A recent price increase is intended to cover these additional costs, with management expressing confidence that its premium consumer base will remain resilient despite higher prices.
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Margin pressures and cost investments: Gross margin is expected to remain below last year’s levels due to higher staffing costs, less efficient operations during periods of supply constraint, and increased investments in digital transformation and infrastructure. Management is monitoring costs closely to ensure long-term targets are met.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the pace at which new family farms ramp up and resolve supply constraints, (2) the effectiveness of recent price increases in offsetting tariff-related cost pressures, and (3) continued strength in butter segment growth following the supply chain transition. Additional focus will be placed on the timely completion of infrastructure projects and progress in expanding household penetration.
Vital Farms currently trades at a forward P/E ratio of 22.5×. Should you double down or take your chips? Find out in our full research report (it’s free).
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