Revenue missed estimates by 0.3% & met guidance. Subscriber count missed estimates by 5%. As we’ll discuss later, revenue was held back by pacing marketing spend ahead of expected product improvements. This is also why subscribers unexpectedly fell Q/Q. Next, revenue didn’t include an $18M boost from membership-related revenue that was deferred to Q4. Still, as we’ll see later, the net impact of that in Q4 is positive $2M and the revenue guide still materially missed.

Notably, growth got a $135M Y/Y boost from the Eucalyptus M&A. Without this help, international growth was 80% Y/Y and overall growth was 26% Y/Y compared to 30% Y/Y organic growth last quarter.

The sharp gross margin deterioration is related to rapidly scaling its international and weight loss products, which have a lower gross margin than the overall company. They’re actually finding operating leverage in ex-USA weight loss products, but the overall international margin is still well below the overall company’s, so it’s still a sizable headwind.

GPM pressure weighed heavily on EBITDA margin as expected, with leverage across marketing (thanks to temporarily slower spending) and ongoing operations/support improvements helping offset some of the pressure. Still, the EBITDA result was worse than expected, as the GPM headwind was far too large to overcome with OpEx-related efficiencies… especially amid an investment period that included record engineering hires during the quarter. Over the long haul, they hope these engineers will drive platform-wide efficiencies alongside scale and automation gains across their fulfillment centers.

The Q4 revenue and EBITDA misses are despite $18M in margin-rich membership-related revenue slipping from Q3 to Q4. Q4 EBITDA guidance was significantly cut due to expected price cuts to gain market share in weight loss, as well as a re-acceleration in marketing spend across the U.K. and Germany. At the same time, while they accelerate spend abroad, HIMS continues to hold back more on U.S. advertising. This will lead to another quarter of subscriber growth headwinds and explains why international revenue guidance was boosted while the domestic target was cut.

Finally, they think the pace of sequential gross margin declines will moderate as the pace of mix shift to international slows. I would hope so, considering another quarter like this one would push them pretty close to 50%. They were near 80% 2 years ago when they were still able to sell all of the personalized weight loss medication knockoffs.

I think there will be more negative revisions to consensus estimates in the coming days. As of right now, at $19/share, HIMS trades for about 12x forward EPS. EPS is expected to fall by 77% this year and then grow by 110% next year and 122% the year after. That would bring it to $1.20 in 2028 EPS compared to $1.10 in 2025.