XPEL Sees $117M–$119M Q3 Revenue Growth with Direct Sales Expansion and New Products

Strong Q2 Performance and Strategic Shifts at XPEL

XPEL, Inc. (XPEL) delivered a record quarter in the second quarter of 2025, with revenue increasing by 13.5% to $124.7 million. This performance exceeded internal expectations despite ongoing market volatility. The CEO, Ryan L. Pape, highlighted the strong U.S. performance, which saw a growth of 8.4% to $70.4 million. He also noted that the Canadian region experienced a 7.4% revenue increase for the quarter, with July being particularly strong.

Pape addressed the impact of market conditions, mentioning "tariff anxiety" at the start of the quarter in the U.S., as well as mixed consumer behavior that initially showed strength but slowed later. He also mentioned that the company is finalizing its strategy for the China market, where revenue reached $7.7 million during the quarter.

The CEO outlined a shift toward a more focused and decentralized profit and loss model, emphasizing regional leadership. He also highlighted progress with a personalization platform, stating that volume has grown substantially over the past two months.

Barry R. Wood, SVP, CFO & Secretary, added that total product revenue increased by 13.9%, while total service revenue grew by 12% quarter-over-quarter. On a year-to-date basis, revenue reached $228.5 million, reflecting a 14.2% increase.

Wood reported that the total window film product line grew by 27% in the quarter, driven primarily by automotive window tint, which saw a 22.5% increase. The newest product, Windshield Protect, also contributed to the results.

In terms of margins and expenses, gross margin for the quarter reached $53.5 million, or 42.9%. Total SG&A expenses rose by 19.3% to $34.2 million, with an adjusted growth rate of 13.7% when excluding one-time costs. EPS was $0.59 per share, with an adjusted figure of $0.63 per share.

Outlook and Financial Results

Looking ahead, Pape guided for Q3 revenue to be in the range of $117 million to $119 million. He noted that Q3 2024 was the company's highest revenue quarter up until Q2 2025. Management expects seasonality to play a role, with Q2 and Q3 typically trading off as peak quarters.

Pape indicated that gross margin improvement is ongoing, stating that the company still sees opportunities to trend this margin upward as it continues with its initiatives. No annual guidance was provided, consistent with the approach taken in the previous quarter.

Financial results for Q2 included revenue of $124.7 million, with the U.S. contributing $70.4 million and China reporting $7.7 million. Gross margin was $53.5 million, or 42.9%. SG&A expenses were $34.2 million, including $1.6 million in one-time costs. Operating cash flow was just under $28 million, and the company ended the quarter with approximately $50 million in net cash.

EPS was $0.59 per share, or $0.63 per share excluding one-time items. EBITDA for the quarter was $25 million, representing about 20% of revenue. Product highlights included a 27% growth in total window film revenue, with automotive window tint up 22.5% and new product Windshield Protect contributing to the results.

Q&A Highlights

During the Q&A session, analysts asked about various aspects of the business. Jeffrey Wallin Van Sinderen from B. Riley Securities inquired about dealer service business trends. Pape responded that revenue there is growing faster than the aftermarket channel, with July setting an all-time record for vehicles and revenue.

Van Sinderen also asked about the personalization platform, to which Pape explained that the challenge lies in raising awareness for invisible products. He mentioned that through partnerships with OEMs and dealerships, the platform can reach consumers in a more comfortable manner online.

On questions regarding mix, gross margin, and operating expenses for the second half, Pape stated that the gross margin profile remains consistent, with no significant movement expected unless there are unexpected tariff-related issues.

Matthew Joseph Raab from Craig-Hallum asked about M&A focus and cash deployment. Pape emphasized consolidating international distribution to serve key markets directly, while also pursuing smaller bolt-on acquisitions. He also discussed the importance of SAAR (Seasonally Adjusted Annual Rate) for the U.S. market, noting that the company focuses on creating awareness to increase attach rates.

Regarding China, Pape said that current in-country growth is likely in the low double digits, with substantial upside from OEM and PDI channels.

Sentiment and Market Positioning

Analysts focused on execution details rather than skepticism, showing a neutral tone. Management maintained a confident stance, frequently highlighting strong execution, internal stability, and opportunities. Pape expressed confidence in the company’s internal workings, stating that he feels the best about the company in the past two years.

The tone was slightly more optimistic than the previous quarter, with management displaying increased confidence in the business model and growth prospects.

Quarter-over-Quarter Comparison

Revenue growth slowed slightly from 15.2% in Q1 to 13.5% in Q2, but Q2 set a new company record. U.S. growth moderated from 11.6% in Q1 to 8.4% in Q2, while Canada rebounded to 7.4% after a significant decline in Q1. China revenue remained within guidance, with management emphasizing the success of a more stable revenue pattern.

Gross margin improved sequentially to 42.9%, with ongoing initiatives to trend upward. SG&A expenses rose, driven by one-time and acquisition-related costs, but are expected to moderate in the second half.

Management's tone was more upbeat, emphasizing successful execution and confidence in regional leadership, while analysts' focus shifted toward the sustainability of margin and new growth engines.

Risks and Concerns

Management cited ongoing market volatility, tariff-related uncertainty, and timing inconsistencies in Latin American distributor markets as key challenges. Pape stated that things will remain volatile, but with the right ownership and good leaders, these challenges can be solved.

SG&A growth included $1.6 million of one-time restructuring and legal costs, but management expects moderation as acquisition-related expenses are lapped. Tariff impacts are expected to be minimal due to flexibility in supply chain and product sourcing.

Final Takeaway

XPEL delivered record Q2 revenue, highlighted by strong U.S. and global performance, a growing window film product line, and continued momentum in its personalization platform. Management anticipates Q3 revenue between $117 million and $119 million, expects gross margin improvement, and is prioritizing M&A to build direct market presence and expand dealer and consumer channels. With internal stability at its highest in two years and ongoing investment in both product and digital platforms, the company sees itself well positioned to navigate volatility and capture future growth.