Earnings Call Insights: Herbalife Ltd. (HLF) Q2 2025
Management View
- CEO Stephan Paulo Gratziani described Herbalife’s ongoing transformation, emphasizing “the progress we’ve made has only reinforced my conviction that Herbalife is uniquely positioned to lead in this new era of health and wellness.” He highlighted the company’s shift from weight management to becoming “the #1 active and lifestyle nutrition brand in the world,” and its journey toward being “the world’s premier health and wellness company, community and platform.”
- Product innovation was a key focus in Q2, with Herbalife entering a new category through its first healthy lifespan product and the launch of MultiBurn, a nonpharmaceutical weight loss supplement. Gratziani explained, “initial sales are outpacing our expectations” for MultiBurn, and excitement is building ahead of the U.S. and Puerto Rico launch of the new healthy lifespan supplement in Q4.
- The company is accelerating its digital strategy with the Pro2col app beta, integrating AI, data, and personalized recommendations. “Just over 7,000 distributors signed up to participate in the exclusive Pro2col beta group,” Gratziani stated, noting the app’s four pillars: measurement, daily AI-assisted recommendations, adaptive nutrition tracking, and community support.
- Herbalife completed the integration of Link Biosciences to enable personalized supplements, stating, “this positions us to deliver data-driven personalized supplement formulations, which gives us a unique competitive advantage in the U.S. today.”
- CFO John G. DeSimone reported, “We delivered another solid quarter with adjusted EBITDA exceeding guidance, reflecting our continued focus on operational efficiencies.” He noted operating cash flows of $96 million, net sales of $1.3 billion (down 1.7% year-over-year), and a $55 million debt repayment, maintaining leverage at 3x.
Outlook
- Management raised and narrowed full year net sales guidance to a range of down 1% to up 3% year-over-year, and constant currency guidance to flat to up 4%.
- Q3 net sales growth is expected between 0.5% and 4.5% both on a reported and constant currency basis.
- Adjusted EBITDA guidance for Q3 is set at $150 million to $160 million, and $155 million to $165 million on a constant currency basis.
- Full year adjusted EBITDA guidance is $640 million to $660 million, while constant currency guidance is $685 million to $705 million.
- CFO DeSimone stated, “We do not believe that the impact will be material to our full year 2025 expected results” regarding recently enacted tariffs.
Financial Results
- Net sales for Q2 were $1.3 billion, down 1.7% versus Q2 2024; on a constant currency basis, net sales were flat year-over-year.
- Adjusted EBITDA for Q2 was $174 million, exceeding the high end of guidance.
- Adjusted EBITDA margin was 13.8%, down 30 basis points year-over-year due to currency impacts.
- Operating cash flows were $96 million for the quarter; CapEx was $23 million.
- Gross profit margin improved by 10 basis points to 78%.
- Second quarter net income attributable to Herbalife was $49 million with adjusted net income of $61 million.
- Adjusted diluted EPS was $0.59, including an $0.11 FX headwind; adjusted effective tax rate was 27.7%.
Q&A
- Chasen Louis Bender, Citi: Asked about Pro2col monetization, bundling, and unit economics. Gratziani responded that the beta allows for distributor feedback, and the app is designed as a tool to support existing business and attract new customer segments. DeSimone added, “the economic model is not materially different, but it is slightly different” due to subscription and earn-based variations.
- Bender also clarified guidance assumptions for Pro2col’s Q4 release. DeSimone replied, “Very little at this point. Mostly it’s just mostly upside.”
- Bender inquired about pricing strategy. DeSimone stated, “our strategy on pricing hasn’t changed, which is to take pricing commensurate with what we’re seeing in the marketplace.”
- Douglas Matthai Lane, Water Tower Research: Asked about app and supplement bundling options and the future of subscriptions. Gratziani confirmed flexible options: “There will be an option also. So it is fitting current models, and it’s going to also create a new model.”
- Lane followed up on global rollout timing for Pro2col. Gratziani stated, “we have plans for expansion in 2026… our goal is to globalize this as quickly as possible.”
- Lane asked about refinancing high-cost debt. DeSimone replied, “we’ll actively consider refinancing if the conditions are right… So we’ll look at the economics and do it as soon as it makes sense.”
- Unidentified Analyst, Mizuho: Inquired about the slight reduction in constant currency guidance midpoint. Gratziani explained, “we did come in below our constant currency midpoint for Q2. that’s the majority of the reason why the year — the midpoint for the year has come down.”
Sentiment Analysis
- Analysts were moderately constructive but probed for details on monetization, guidance assumptions, and the sustainability of momentum, showing a slightly positive tone.
- Management maintained a confident and proactive stance, frequently emphasizing transformation and distributor engagement. Gratziani repeatedly referenced the company’s “unique position” and “momentum,” while DeSimone’s responses were detailed and direct.
- Compared to the previous quarter, management’s tone was more assertive and optimistic about growth inflection, while analysts maintained similar levels of cautious optimism, with questions focused on execution and financial impact.
Quarter-over-Quarter Comparison
- The company increased the upper end of its full year net sales and adjusted EBITDA guidance versus Q1, signaling improved confidence in second half momentum.
- Product innovation discussion advanced from strategic intent to actual launches (MultiBurn, healthy lifespan supplement) and active distributor participation in digital initiatives.
- Q2 featured concrete progress on digital transformation, with the Pro2col beta launched and significant distributor uptake, compared to a more conceptual discussion in Q1.
- Net sales decline narrowed from Q1’s 3.4% to Q2’s 1.7%, with constant currency sales stabilizing.
- Management’s tone shifted from transformational vision-setting in Q1 to execution and early results in Q2.
- Analysts focused more on monetization and the operational impact of new launches, while previously they asked about strategic fit and market rollout.
Risks and Concerns
- Currency fluctuations and FX headwinds negatively impacted both sales and EBITDA, though the company noted improvement versus prior expectations.
- Guidance includes preliminary tariff impact estimates, with management stating no material effect expected for 2025.
- Volume declines persisted in several regions, with North America and China highlighted for ongoing pressure.
- Management acknowledged the nascent stage of new digital initiatives and subscription models, noting that “it’s new. So it’s going to take time, and we’re going to work with our distributors through the process.”
Final Takeaway
Herbalife management expressed strong conviction in the company’s transformation into a digital-first health and wellness platform, citing the successful launch of the Pro2col beta, new product introductions, and expanding distributor engagement as catalysts for renewed growth. With raised sales and EBITDA guidance, ongoing debt reduction, and robust operational cash flow, Herbalife believes it is positioned to capitalize on evolving consumer demand and deliver long-term value for shareholders as it progresses toward its goal of becoming the world’s premier health and wellness platform.