Freshpet missed its sales growth goal last year and guided to a slower print in 2026 but is largely confident in hitting its short-term targets.
The Nasdaq-listed pet-food maker had already flagged a “headwinds” backdrop when it revised down sales estimates and adjusted EBITDA guidance in May. However, last year, Freshpet broke through the $1bn sales barrier for the first time and noted it bagged almost a $100m from a six-year-old category investment.
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“We learned that after more than a decade of strong, reliable, and predictable growth, the pet-food category and the Freshpet growth algorithm are not immune to swings in consumer sentiment,” CEO Billy Cyr said yesterday (23 February) as he discussed the annual results with analysts.
“Category growth last year slowed dramatically and our net sales growth rate dropped from 27% in fiscal year 2024 to 13% in fiscal year 2025.”
That 13% was below the 15-18% guide presented in May – cut from 21-24% – although sales just about came in on target at $1.10bn, compared to the forecast $1.12bn to $1.15bn, which had been lowered from $1.18-1.21bn.
For fiscal 2026, New Jersey-based Freshpet expects 7-10% growth.
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By GlobalDataAdjusted EBITDA grew 21% in 2025 to $195.7m, within the anticipated $190-$210m range that was cut in May from “at least” $210m. The outlook for the new year was set at $205-215m.
“We believe this is a prudent place to start our guidance after a challenging year,” newly installed CFO John O’Connor said.
“This guidance for the year assumes that there is no material change in the macroeconomic environment compared to where we exited 2025. It does not include any significant fridge island expansion.”
Fridge islands are a new in-store concept for Freshpet, what CEO Cyr described as “a major new driver of growth and profitability”.
They are testing in a “major retailer” and have been expanded from 16 to 28 stores.
Despite last year’s challenges, Freshpet remains confident it can meet its 2027 sales target which includes hitting an adjusted gross margin goal of 48%.
Despite a “slowdown in volume growth”, the margin increased 20 basis points to 46.7% last year, Cyr said.
However, the adjusted EBITDA margin target of 22% in 2027 has been tweaked to 20-22%. It edged up to 17.8% in 2025 from 16.6% in the prior 12 months, when Freshpet reached the net profit milestone.
Net income surged to $139.1m last year from $46.9m.
“In regard to our fiscal year 2027 targets, we remain confident in our ability to deliver net sales growth well in excess of the US dog-food category growth and thus grow market share,” Cyr said yesterday.
“Depending on the macroeconomic conditions and the health of the dog-food category, that growth could be in the high single digits or low double digits.”
Cyr noted an investment Freshpet made in the dog-food category six years ago when the name of the target business was not identified.
He revealed the $33.4m investment was channelled into Ollie, a direct-to-consumer brand. Freshpet pocketed around $95.5m when it exited in January, the CEO said.
“We invested so that we could learn more about the DTC business and maintain some level of optionality if we wanted to enter that space,” Cyr explained.
“We learned quite a bit from that ownership position that is helping us develop our omnichannel approach to the Freshpet, Inc. business. And it was also a successful investment from a financial perspective.”
