Starco Brands Reports 24% Revenue Decline but Achieves Net Income Turnaround in Q1 2025

Starco Brands, Inc. reported a significant decline in revenue for the first quarter of 2025, generating $9.8 million compared to $12.9 million in the same period last year, marking a decrease of approximately 24%. This decline was attributed primarily to reduced product sales from its subsidiaries, Soylent and Skylar. The company's gross profit also fell to $4.7 million from $7.0 million year-over-year, reflecting a decrease of $2.3 million. Despite the drop in revenue, Starco Brands achieved a net income of $1.98 million, a notable turnaround from a net loss of $4.27 million in the prior year, largely due to a favorable change in the fair value of share adjustments.

In terms of operational efficiency, Starco Brands managed to reduce its total operating expenses significantly, from $11 million in Q1 2024 to $2.2 million in Q1 2025. This reduction was driven by lower compensation expenses, which decreased by 33% to $1.74 million, and a substantial cut in marketing and administrative costs, which fell by 36% to $3.38 million. The company also reported a gain of $3.69 million from fair value share adjustments, contrasting with a loss of $1.92 million in the previous year, contributing to the improved profitability.

Starco Brands continues to navigate its strategic growth through acquisitions, having previously acquired Soylent, AOS, and Skylar. The company is focused on leveraging synergies from these acquisitions to enhance operational efficiencies and expand its product offerings. As of March 31, 2025, the company had a working capital deficit of approximately $11.2 million, although it reported an increase in cash reserves to $1.62 million from $1.21 million at the end of 2024.

The company’s management has acknowledged substantial doubt regarding its ability to continue as a going concern, primarily due to its accumulated deficit of $79.5 million and ongoing financial obligations. To address these challenges, management plans to increase revenue across its segments while reducing expenses as a percentage of revenue. The company is also exploring alternative financing options to manage its debt and improve working capital.

Looking ahead, Starco Brands aims to continue its growth trajectory by launching new products and expanding its market presence. The company is committed to enhancing its brand portfolio and driving sales through strategic marketing initiatives. However, the effectiveness of these strategies will be critical in determining the company's financial stability and growth potential in the coming quarters.