Once Upon a Farm Q2 net sales rose 42.3% to $85.4M, beating estimates. The company raised its full-year outlook. Baby sales surged 73%, kid sales up 22%.
Alpha Score of 40 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Once Upon a Farm posted second-quarter net sales of $85.4 million, up 42.3% from a year earlier, and raised its full-year revenue forecast. The company now expects fiscal 2026 revenue of $327 million to $335 million, up from a prior range of $313 million to $323 million.
Chief Executive Officer John Foraker said consumption growth stayed in the low- to mid-30% range during the quarter. The gap between consumption and reported sales reflected favorable cooler slotting comparisons, distribution gains and initial shipments of new protein-focused products, he said.
Baby business sales jumped 73% to $41.5 million. Pouches and snacks grew at similar rates. The company added more than 85,000 baby distribution points during the quarter. Kid business sales rose 22% to $43.9 million, with snack growth slightly outpacing the segment. Protein-focused bar products and protein-and-probiotic pouches entered kid dairy sets.
Household penetration reached 6.2% at the end of June, up from 5% a year earlier. Repeat purchases among households with children climbed 351 basis points to 52.1%. “Our funnel is widening,” Foraker said, pointing to growth in penetration, retention and spending per household.
Gross margin fell 485 basis points to 35.9%. President and Chief Financial Officer Larry Waldman attributed the decline to trade spending, including a national club program; a greater sales mix of snacks, which carry lower margins than pouches; and fuel and tariff costs. Pricing and lower cooler slotting costs partly offset those pressures. The company now expects full-year gross margin of around 40%, about 100 basis points below its prior outlook. Third-quarter gross margin is expected to be similar to the second-quarter level. Improvement should come in the fourth quarter as the club program ends and a September price increase begins contributing.
SG&A expense rose $11.9 million to $36.3 million, or 42.5% of net sales. Advertising and planned headcount additions drove the increase, while logistics expenses fell as a percentage of sales. About $3.5 million of SG&A was tied to stock-based compensation and performance payments related to the company's initial public offering.
Net loss improved to $5 million from $9 million a year earlier. Adjusted EBITDA swung to a loss of $1.7 million from a gain of $2 million. Waldman said roughly $3 million in marketing spending shifted from the second quarter to the third quarter to align with back-to-school promotions.
The company plans to invest $25 million to $35 million in supply-chain automation with co-manufacturing partners. Initial benefits are expected in 2027, with more substantial gains beginning in 2028. Management said its expectation for profitability improvement in 2027 does not depend on realizing the full benefit of the larger automation projects.
Once Upon a Farm ended the quarter with about $93.5 million in cash and no debt. Inventory rose 47.6% from a year earlier to $51.9 million as the company prepared for back-to-school demand and an additional national club program. Management expects inventory to remain elevated through the third quarter before moderating in the fourth quarter.
Foraker said retailers broadly accepted a targeted low-single-digit price increase on selected snack products, effective in late September. He expects only a nominal impact on unit demand based on historical price elasticity and current consumption trends.
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