BRBR Q2 Deep Dive: Category Expansion and Margin Pressures Challenge BellRing Brands

Nutrition products company Bellring Brands (NYSE:BRBR) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 6.2% year on year to $547.5 million. The company expects the full year’s revenue to be around $2.3 billion, close to analysts’ estimates. Its non-GAAP profit of $0.55 per share was 9.9% above analysts’ consensus estimates.

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StockStory’s Take

BellRing Brands’ Q2 results were met with a significant market selloff following a quarter where revenue and non-GAAP profit exceeded Wall Street expectations, but profitability metrics drew scrutiny. Management attributed the quarter’s results to robust demand in ready-to-drink protein shakes, with CEO Darcy Horn Davenport noting that the category remains “one of the fastest-growing” in the store and highlighted Premier Protein’s role as a leader in household penetration. However, gross margin compression, driven by increased promotional activity and input cost inflation, weighed on operating income, and management acknowledged intensified competition in key retail channels, particularly club stores.

Looking ahead, management expects continued top-line momentum fueled by expanded distribution, increased merchandising activity, and new product launches, while cautioning that cost headwinds may persist. CFO Paul Rode stated that protein cost inflation, higher promotional spend, and the impact of tariffs on dairy inputs are expected to pressure margins into next year. Davenport emphasized the company’s strategy to maintain category leadership by leveraging innovation and targeted marketing, but signaled that navigating competitive dynamics and input cost volatility will be critical for sustaining growth in the coming quarters.

Key Insights from Management’s Remarks

Management credited Q2’s growth to distribution gains, brand support, and promotional activity in Premier Protein, while also outlining risks tied to rising competition, margin pressures, and evolving retail strategies.

• Category demand remains strong: The ready-to-drink (RTD) shake segment continues to see rapid growth, with BellRing’s Premier Protein driving significant household penetration. Management described the RTD category as “thriving” due to health and wellness trends, convenience, and increased consumer focus on protein intake, as well as the influence of medications like GLP-1s.
• Distribution and merchandising gains: Premier Protein benefited from new shelf space and enhanced in-store visibility, with the company acting as category captain for several leading retailers. These efforts included expanded displays, improved packaging, and increased promotional activity, all aimed at boosting brand awareness and attracting new users.
• Increased competition in club channels: Management acknowledged intensified competition in club stores, where both BellRing and rivals gained short-term shelf space as a result of temporary resets. While viewing expanded competition as positive for overall category growth, leadership noted that it could temporarily elevate promotional activity and affect near-term growth rates.
• Innovation pipeline advances: Two new product lines—an indulgence shake targeting new consumption occasions and a nondairy Almondmilkshake—were launched this year. Early results for indulgence flavors showed strong incrementality, with about half of sales coming from category expansion, while Almondmilkshake is still being rolled out with initial traction online.
• Margin pressure from input costs and promotions: CFO Paul Rode pointed to rising protein and packaging costs, higher promotional spend, and one-time expenses related to packaging redesign as key drivers of lower gross margins. Management expects these pressures to persist, with additional headwinds from tariffs on dairy inputs anticipated in the next year.

Drivers of Future Performance

Management expects category growth, innovation, and expanded distribution to drive revenue, but warns that input cost inflation and competitive promotional activity could pressure margins.

• Sustained category and brand expansion: Management believes the RTD protein shake category remains in early growth stages, with household penetration and retail space well below those of mature packaged goods. The company’s focus on expanding distribution, driving trial through merchandising, and investing in new product formats is expected to support high-single-digit to low-double-digit revenue growth.
• Ongoing margin headwinds: Rode said that gross margins will likely remain under pressure due to higher protein costs, increased promotional spending, and the upcoming impact of tariffs on dairy protein imports from New Zealand and the EU. The company is exploring cost-saving initiatives and supply chain optimization, but expects these headwinds to persist in the near term.
• Innovation and marketing investments: BellRing plans to increase marketing and in-store promotional activity to defend and grow market share in a more competitive landscape. Management expects continued innovation—including product line extensions and format changes—to attract new users and expand consumption occasions, but acknowledged that these investments may weigh on short-term profitability.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be monitoring (1) the effectiveness of distribution gains and merchandising initiatives in driving incremental sales, (2) the impact of input cost inflation and new tariffs on gross margins, and (3) competitive responses in club and mainstream retail channels as the category expands. Sustained momentum from new product launches and successful shelf resets will also be critical signposts.

BellRing Brands currently trades at $39.50, down from $53.71 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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