A month has gone by since the last earnings report for Revolve Group (RVLV Quick QuoteRVLV - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Revolve Group due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Revolve Group, Inc. before we dive into how investors and analysts have reacted as of late.

Revolve Q2 Earnings Beat on Expanding Customer Base & Higher Margins

Revolve delivered a strong second quarter of 2026, marked by broad-based sales growth, accelerating customer acquisition and improved profitability. Double-digit gains across both segments and geographies reflected accelerating customer demand, while a lower return rate and better markdown execution supported margins. The company continued to invest in owned brands, beauty, international expansion and physical retail.

Earnings of 26 cents per share increased 85.7% year over year and surpassed the Zacks Consensus Estimate of 20 cents by 30%. Net sales rose 12.4% to $347.4 million and topped the consensus mark of $343 million by 1.2%. Results included a 6-cent-per-share benefit resulting from IEEPA tariff refunds received during the quarter.

Demand indicators remained favorable. Trailing 12-month active customers increased 11% year over year to 3.041 million. Total orders grew 11% to 2.701 million. Average order value was $299 compared with $300 a year earlier, with the slight decline reflecting a greater contribution from lower-priced Grow-Good beauty products.

RVLV Shows Broad-Based Growth Across Segments

Revolve’s segment results underscored the balance of the quarter’s top-line performance. Net sales in the REVOLVE segment rose 13% year over year to $302.5 million, while FWRD net sales increased 11% to $44.9 million. This marked the third consecutive quarter of double-digit growth across both operating segments. 

Geographically, U.S. net sales climbed 11% year over year to $269.1 million. International net sales grew 16% to $78.4 million and accounted for nearly 23% of total revenues, the highest mix reported by the company. Management noted growth across all regions, with Mexico remaining strong and the Middle East rebounding from a weak start to deliver double-digit growth for the quarter.

Revolve Expands Gross Margin on Tariff Refunds

RVLV posted gross profit of $196.7 million, up 18% year over year, as gross margin expanded 254 basis points to 56.6%. The increase included a 162-basis-point benefit from IEEPA tariff refunds. Excluding the refunds, gross margin still improved about 92 basis points, helped by AI and data-driven recalibration of markdown algorithms.

The REVOLVE segment’s gross profit increased 18% year over year to $176.9 million. Its segment gross margin was about 58.5%, compared with roughly 55.9% a year earlier, and included a $5.2 million tariff-refund benefit.

FWRD gross profit rose 15% to $19.7 million. The segment’s gross margin improved to about 44.0% from roughly 42.2% in the prior-year quarter and included a $0.5 million tariff-refund benefit.

Income from operations increased 23% year over year to $22.1 million. The operating margin expanded to 6.4% from 5.8%, despite higher investments in marketing, physical retail, the REVOLVE Los Angeles label and the Grow-Good beauty venture.

Adjusted EBITDA rose 17% to $26.8 million, including a $5.6 million benefit from tariff refunds. The adjusted EBITDA margin increased 30 basis points year over year to 7.7% from 7.4%.

RVLV Raises Marketing Spend as Distribution Costs Climb

Revolve increased marketing spending to support major growth initiatives during the second quarter. Marketing expenses rose to $57.5 million, or 16.5% of net sales, from $47.1 million, or 15.2%, in the year-ago quarter. The increase mainly reflected investments in the REVOLVE Los Angeles namesake label, brand-building initiatives and newer marketing channels, including connected television.

Selling and distribution expenses increased to $62.1 million, or 17.9% of net sales, from $53.8 million, or 17.4%, a year earlier. Management attributed the reduced efficiency to higher customer shipping costs, including variable fuel and other surcharges in international markets, partially offset by a lower product return rate.

Fulfillment costs were $11.6 million, or 3.3% of net sales, compared with $9.8 million, or 3.2%, in the prior-year quarter. The increase primarily reflected higher compensation expenses for fulfillment staff, partly offset by the lower return rate.

General and administrative expenses rose to $43.4 million, or 12.5% of net sales, from $38.3 million, or 12.4%. Higher spending was tied largely to investments in the REVOLVE Los Angeles label, physical retail expansion and the Grow-Good beauty venture developed with Cardi B.

Revolve Maintains Strong Liquidity Despite Q2 Cash Outflow

RVLV used $8.2 million of cash in operating activities during the second quarter, compared with $12.6 million generated in the year-ago period. Free cash flow was negative $10.9 million versus positive $9.6 million a year earlier, primarily because unfavorable working-capital movements more than offset the increase in net income.

For the first six months of 2026, operating cash flow remained positive at $41.2 million, while free cash flow totaled $34 million. The company repurchased 497,675 Class A shares for $9.9 million during the quarter at an average price of $19.98 per share.

The balance sheet remained a key financial strength. Cash and cash equivalents were $311.6 million at June 30, 2026, up slightly from $310.7 million a year earlier and the company remained debt-free.

Inventory ended the quarter at $275.8 million, up 25% year over year and 9.5% from the end of 2025. Management noted that the year-over-year comparison was affected by tariff-related shipment delays that reduced inventory in the prior-year period. On a two-year stacked basis, net sales growth exceeded inventory growth by approximately 5 percentage points.

RVLV Details Growth Initiatives

Revolve said the second REVOLVE Los Angeles collection delivered stronger early sell-through than the initial assortment. Management plans to establish the namesake label with premium products before expanding into additional categories and price points to support more meaningful sales volumes from 2027 onward.

Grow-Good beauty products, developed with Cardi B, also generated strong early demand, with the first three product drops selling out within hours. The company expects to begin receiving a significantly larger inventory restock in the fall. Management added that Grow-Good carries gross margins that are highly accretive to the overall business and attracts customers with limited overlap with REVOLVE and FWRD.

Management also emphasized international expansion, physical retail and artificial intelligence. Mexico continued to post strong growth following marketing and service improvements, while the Middle East rebounded from a weak start to deliver double-digit growth for the quarter. Revolve remains on track to open its third physical store at Aventura Mall in greater Miami during the fourth quarter.

On the technology front, RVLV plans to test an AI-powered image-search feature that will allow shoppers to upload a photograph and find identical or similar products. The company is using AI-powered internal analytics tools that allow employees to query enterprise data in plain English while monitoring traffic and conversion trends across its physical stores.

Revolve Updates 2026 Outlook

Revolve’s updated 2026 outlook reflects continued investment in growth initiatives amid geopolitical uncertainty, tariffs, inflation, supply-chain pressures and foreign currency volatility. Management noted that the gross margin forecast excludes any additional IEEPA tariff refunds.

For 2026, RVLV maintained its gross margin outlook at 53.5-54%. Fulfillment expenses are still expected to be 3.2-3.4% of net sales, while selling and distribution expenses remain projected at 17.1-17.3%.

The company raised its marketing expense forecast to 15.8-16% of net sales from 15.3-15.8%, reflecting second-quarter spending and continued investment in long-term growth initiatives. General and administrative expense guidance was also increased to $170-$172 million from $164-$168 million. The effective tax rate is still expected to be 24-26%.

For the third quarter of 2026, Revolve expects gross margin of 53.5-54%. Fulfillment expenses are projected at approximately 3.4% of net sales, while selling and distribution expenses are expected to account for roughly 17.5%.

Marketing expenses are forecast at approximately 15% of third-quarter sales, while general and administrative expenses are expected to be about $43.5 million. Management also said fourth-quarter marketing spending is likely to exceed 16% of sales because of planned brand-building investments.

The outlook follows an encouraging start to the third quarter, with July net sales increasing approximately 18% year over year. Management continued to target double-digit revenue growth for 2026.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -8.71% due to these changes.

VGM Scores

Currently, Revolve Group has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Revolve Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.